Noble Corp. Hits Ch. 11 With Deal To Cut $3.4B In Debt

By Rick Archer
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Law360 (July 31, 2020, 2:17 PM EDT) -- The COVID-19 pandemic claimed another energy sector victim Friday as offshore oil drilling contractor Noble Corp. filed for Chapter 11 bankruptcy in a Texas court with an equity swap agreement to cut $3.4 billion in debt.

In an announcement, the Texas-based company said in order to deal with slumping oil prices, it had reached an agreement with its two largest bondholders that will eliminate its entire bond debt with cancellation and an equity exchange, secure $200 million in capital with new second lien notes and set up a new $675 million revolving credit facility.

"The significant reduction of debt and annual interest expense, combined with a strong liquidity position, will enable the company to reorient itself toward future growth and value creation for all stakeholders," it said.

Headquartered near Houston, Noble operates 24 drillships and portable drilling platforms.

In the statement, CEO Robert Eifler said the company has been affected by the same price slump and COVID-19 demand drop that has sent a steady stream of oil and gas companies into bankruptcy court over the last few months.

"After many months exploring our strategic options, we concluded that a substantial deleveraging transaction implemented through a Chapter 11 filing, supported by our largest creditors, provides the best outcome for Noble and our stakeholders," he said.

According to the announcement, the company has enough capital to continue normal operations and does not require debtor-in-possession financing at this time. It said it hopes to confirm a Chapter 11 plan by the fall and emerge from bankruptcy by the end of the year.

The company's Chapter 11 petition puts its liabilities at between $1 billion and $10 billion, and lists its largest unsecured creditors as the Bank of New York with $1.46 billion in senior notes, Wilmington Trust with just under $1.27 million in senior notes and U.S. Bank with $769.1 million in notes. It also lists a nearly $550 million revolving loan facility provided by J.P. Morgan Chase, which Noble said in the announcement would be the agent for the new revolver.

The company said it had retained Evercore as its financial adviser and AlixPartners as its operations adviser.

Noble said Kramer Levin Naftalis & Frankel LLP and Akin Gump LLP are serving as co-legal counsel and Ducera Partners LLC is serving as financial adviser to an ad hoc group of the company's priority guaranteed noteholders, that Milbank LLP is serving as legal counsel, and Houlihan Lokey Capital as financial adviser to an ad hoc group of the company's senior noteholders.

Noble is represented by John F. Higgins of Porter Hedges LLP and George N. Panagakis, Mark A. McDermott, Jason N. Kestecher, Stephen J. Della Penna, Nicholas S. Hagen, Anthony Joseph, Frank E. Bayouth, George Knighton, Brian Krause, Peter Benesch, Sarah M. Ward and Michelle Gasaway of Skadden Arps Slate Meagher & Flom LLP.

J.P. Morgan is represented by Robert Rabalais and Sandy Qusba of Simpson Thacher & Bartlett LLP.

The case is In re: Noble Corp. PLC, case number 20-33826, in the U.S. Bankruptcy Court for the Southern District of Texas.

--Editing by Alyssa Miller.

Update: This story has been updated with additional counsel and adviser information.

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