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September 12, 2018 – Pacific Drilling filed the final form of its Equity Commitment Agreement with Quantum Pacific (Gibraltar) Limited [Docket No. 582]. The agreement includes a commitment premium (the “Commitment Premium”) of $40 million in new equity which the Debtors believe is necessary to induce support for its comprehensive $1.5 billion capital raising effort. As previously reported [Docket No. 535], “Specifically, the Debtors seek: (a) authority to (i) pay to the Commitment Parties contemporaneously with the effective date of the Plan a commitment premium payable in a number of New Shares equal to 8.0% of the aggregate number of New Shares issued pursuant to the $500 million Equity Issuance or, in the event that the Equity Commitment Agreement is terminated under certain circumstances, in cash in the amount of $40 million (the ‘Commitment Premium’); (ii) reimburse and pay the reasonable and documented fees and out-of-pocket costs and expenses of the Commitment Parties, including the fees, out-of-pocket costs, and expenses of the counsel, financial advisors, and consultants of the Commitment Parties (the ‘Expense Reimbursement’); and (iii) incur certain indemnification obligations pursuant to the terms of the Equity Commitment Agreement (the ‘Indemnification Obligations’); and (b) the allowance of the Commitment Premium, Expense Reimbursement, and Indemnification Obligations as administrative claims in accordance with the terms of the Equity Commitment Agreement….Pursuant to the Plan, the Reorganized Company shall issue New Shares in the aggregate amount of $500 million (plus an additional amount of New Shares to pay the Commitment Premium), consisting of $350 million pursuant to the Rights Offering, $100 million pursuant to the AHG Private Placement, and $50 million pursuant to the QPGL Private Placement….The Debtors believe the Commitment Premium is necessary to induce the Ad Hoc Group to fully backstop and commit to the Equity Issuance. The Debtors are incurring substantial expenses in connection with the marketing of the New Notes and require assurance that the entire $500 million of equity required under the Plan is raised. Failure to pay the Commitment Premium creates the risk that the Debtors will be unable to raise the equity required by the Plan and potentially incur significant costs without being able to consummate the Plan….Without assurance that the comprehensive $1.5 billion capital raise contemplated by the Exit Financing Transactions pursuant to the Plan will be achieved, the Debtors would be unable to fund the repayment of all secured claims in full (other than the Under-secured Claims), which may result in such creditors no longer supporting the Plan. Moreover, having $500 million of fully committed equity capital will facilitate the marketing and issuance of the New Notes.” The Court scheduled a September 18, 2018 hearing to consider the equity commitment agreement, with objections due by September 14, 2018.
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