SeaDrill Spikes On News Of Potential Refinancing

Shares of SeaDrill Ltd SDRL jumped more than 25 percent following reports of a possible refinancing option.

While Bloomberg reported that the company's biggest shareholder, John Fredriksen, is ready to infuse $1.2 billion to restructure the debt load, SeaDrill indicated there is nothing to disclose. However, the company indicated it was in discussion with stakeholders on its refinancing and recapitalization plans.

The company faces pressure of servicing its debt burden of about $9.1 billion, which is highest among its rivals. According to the report, the offshore driller needed a minimum of $1 billion immediately.

The oil and gas drilling has been facing rough weather after a steep drop in global oil prices that started in September 2014. As a result, the sector has been facing reduction drilling activities leading to liquidity issues in the absence of credit facilities and ambiguity in market scenario.

Therefore, investors view Fredriksen's proposal as a positive one for the company. His current plan is to lend the amount as a loan and not as fresh equity due to tepid outlook of the industry.

The proposal would be examined by a group of 42 lenders and bondholders of SeaDrill. CEO Per Wullf indicated earlier that he hoped to find a solution before the end of November.

At time of writing, the stock climbed $0.63, or 29.30 percent, to $2.78.