Noble Corporation, the offshore rig owner previously known as Noble Drilling, is filing for Chapter 11 bankruptcy in order to shed all of its $3.4 billion in bond debt. In addition, its creditors will backstop its finances with a new $200 million investment, and it will emerge with a $675 million revolving credit facility.
The voluntary filing is backed by two groups of its largest bondholders in a consensual debt-for-equity swap agreement. Noble says that its operations will continue without interruption and that it has the liquidity to continue to pay its employees and vendors throughout the process.
The largest unsecured creditors include Bank of New York Mellon ($1.5 billion), Wilmington Trust ($1.3 billion), U.S. Bank ($770 million) and JP Morgan Chase ($550 million).
"Along with many other businesses in our industry, Noble has been affected by the severe downturn in commodity prices which has been compounded by the Covid-19 pandemic. 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," said Noble president and CEO Robert Eifler.
Noble's NYSE-listed stock was trading down 10 percent after the news Friday, declining to a new low of 20 cents per share. Its value has been in decline since the start of the oil price downturn six years ago, falling from about $40 per share in late 2013 to about $1.25 at the end of 2019.
Noble is the latest in a long string of offshore rig operators to file for bankruptcy protection as oil majors turn to shoreside fields with lower breakeven costs. Diamond Offshore filed for bankruptcy in April, and Seadrill delisted from the NYSE and issued a "going concern" warning in June - a common prelude to financial restructuring.