Photo: Pacific Khamsin drillship; Source: Pacific Drilling

Pacific Drilling to delist from NYSE following Chapter 11 filing

Trading of Pacific Drilling common shares on the New York Stock Exchange (NYSE) has been suspended and the drilling contractor is facing delisting following its Chapter 11 filing last week.

Pacific Drilling last Friday filed for Chapter 11 bankruptcy amid significant disruption in the offshore drilling market caused by the Covid-19 pandemic.

This consensual financial restructuring transaction will eliminate the company’s approximately $1.1 billion in principal amount of outstanding bond debt through the cancellation and exchange of debt for new equity in the reorganized company.

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In a statement on Tuesday, Pacific Drilling said it has received notice from the NYSE that, as a result of the filing of its voluntary petition for reorganization under Chapter 11, the NYSE has started proceedings to delist Pacific Drilling’s common shares from the NYSE.

The NYSE also indefinitely suspended trading of Pacific Drilling’s common shares effective 2 November 2020.

The NYSE will apply to the Securities and Exchange Commission (SEC) to delist the company’s common shares upon completion of all applicable procedures.

In reaching its determination, the NYSE noted the uncertainty as to the ultimate effect of the bankruptcy process on the value of the company’s common shares.

The NYSE also noted that holders of the common shares will receive no recovery under the prearranged plan of reorganization.

According to Pacific Drilling, it does not intend to appeal the determination and, therefore, it is expected that the common shares will be delisted.

The company’s common shares started trading in the over-the-counter (OTC) market on the Pink Open Market on Tuesday, 3 November.

The company’s NYSE ticker symbol “PACD” was discontinued and its OTC ticker symbol is “PACDQ.”

This transition to the OTC market does not affect the company’s business operations and will not change its obligation in the near-term to file periodic and certain other reports with the SEC under applicable federal securities laws.

However, in addition to providing that holders of the company’s commons shares will receive no recovery for their shares, the plan of reorganization also calls for the company to suspend its SEC reporting obligations either before or shortly after its emergence from the Chapter 11 proceedings.

Until completion of the Chapter 11 proceedings, shareholders will continue to own their company common shares and starting 3 November 2020 are able to trade them on the Pink Open Market.

However, due to the risks and uncertainties resulting from the Chapter 11 proceedings, trading in the company’s common shares during the pendency of the Chapter 11 proceedings poses substantial risks.

NYSE warnings flood offshore drilling market

The situation in the offshore drilling market has been dire over the last six months and longer with several contractors receiving NYSE delisting warnings.

Following Chapter 11 filing in late April 2020, Diamond Offshore also received a delisting notice from the NYSE.

Borr Drilling in May had also received the notice from the NYSE but the contractor was able to win back the compliance in July.

In June 2020, Seadrill decided to delist from the NYSE and focus solely on its Oslo listing after booking a huge loss in the first quarter of the year due to impairment charges amid a significant reduction in global oil demand.

Later that month, Seadrill transitioned to quotation on OTC Capital Markets following its delisting from the NYSE with Oslo Stock Exchange now being its primary listing.

Come August 2020 and Valaris joined the list of drilling contractors who received a notice of immediate suspension of trading and delisting of common stock from the NYSE.