Diamond Offshore Drilling, Inc. – Emerges from Bankruptcy Having Equitized $2.1bn of Debt, Names New Board and Announces Departure of Chairman/CEO Edwards

April 26, 2021 – The Debtors notified the Court that their Second Amended Plan of Reorganization had become effective as of April 23, 2021 [Docket No. 1285]. The Court had previously confirmed the Debtors’ Plan on April 8, 2021 [Docket No. 1231].

On April 26, 2020, Diamond Offshore Drilling, Inc. and 14 affiliated Debtors (NYSE: DO, “Diamond Offshore” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of Texas, lead case number 20-32307 (Judge Jones). At filing, the Debtors, providers of contract drilling services to the energy industry that are 53% owned by Loews Corporation, noted estimated assets of $5.8b (the Debtors 2019 10-K noted that almost $5.2bn of that amount was comprised of property and equipment) and estimated liabilities of $2.6bn. 

The Debtors were represented by (i) Porter Hedges LLP as local bankruptcy counsel (ii) Paul, Weiss, Rifkind, Wharton & Garrison LLP as general bankruptcy counsel, (iii) Alvarez & Marshall North America, LLC (“A&M”) as financial advisors, (iv) Lazard Frères & Co. LLC (“Lazard”) as investment bankers and (v) Prime Clerk LLC as claims agent.

Deadlines to file administrative claims and professional fee claims have been set for May 24, 2021 and June 7, 2021, respectively

In press release announcing the emergence from bankruptcy, the Debtors stated, “The restructuring significantly delevers the Company’s balance sheet and provides substantial liquidity for the Company, resulting in the equitization of approximately $2.1 billion in senior unsecured note obligations and providing the Company with over $625 million of new available capital.

In accordance with the joint plan of reorganization, a newly constituted Board of Directors of the Company was appointed, consisting of Raj Iyer (Chairman), Neal Goldman, John Hollowell, Ane Launy, Patrick ‘Carey’ Lowe and Adam Peakes.

In connection with its emergence from chapter 11, the Company also announced that Marc Edwards has retired as Chairman, President and Chief Executive Officer, effective immediately. Mr. Edwards joined the Company in March 2014 and has played a key role in transforming Diamond into a leader in offshore drilling, including leading the Company through its successful chapter 11 restructuring process. The Company is currently in discussions regarding appointment of an Executive Chairman and a Chief Executive Officer and expects to make announcements in the near future. Until a Chief Executive Officer is appointed, Ronald Woll, Executive Vice President and Chief Operating Officer, will serve as Interim CEO in addition to his current position.”

Plan Overview

The memorandum of law in support of Plan confirmation (the "Memorandum") [Docket No. 1207] provides the following pre-Plan confirmation summation: ‘The Plan has the support of the requisite majorities of the Ad Hoc Group of Senior Noteholders (the ‘Consenting Noteholders’) and 100% of the RCF Lenders under the RCF Credit Agreement (the ‘Consenting RCF Lenders’ and, together with the Consenting Noteholders, the ‘Consenting Stakeholders’), as well as the support of the Committee … Such support was memorialized in three related agreements filed contemporaneously with the Plan:

1. the Plan Support Agreement (the ‘Plan Support Agreement’), among the Debtors and the Consenting Stakeholders, pursuant to which the Consenting Stakeholders agreed to support and vote in favor of the Plan on the terms and conditions set forth therein;
2. the Backstop and Private Placement Agreement (the ‘Backstop Agreement’) pursuant to which certain members of the Ad Hoc Group of Senior Noteholders agreed to backstop up to $114,675,000 (not including pay-in-kind amounts from the Commitment Premium Exit Notes) of new first lien, last out Exit Notes, with $85.0 million constituting the Funded Notes (not including the Commitment Premium Exit Notes), which will be issued  and funded on the Effective Date, and $39.675 million constituting the Delayed Draw Notes, which will be in the form of commitments to purchase additional Exit Notes post- emergence pursuant to the Delayed Draw Subscription Agreements (as defined in the Rights Offerings Procedures); and
3. the Exit Facility Commitment Letter (the ‘Commitment Letter’) among Diamond Offshore Drilling, Inc., Diamond Foreign Asset Company, Wells Fargo Bank, National Association (‘Wells Fargo Bank’), Wells Fargo Securities, LLC (‘Wells Fargo Securities’ and, together with Wells Fargo Bank, ‘Wells Fargo’), and certain of the Consenting RCF Lenders party thereto (the ‘Initial Lenders’ and, collectively with Wells Fargo Bank and Wells Fargo Securities, the ‘Exit Revolver Commitment Parties’), together with the Agent Fee Letter and the Lender Fee Letter (each as defined in the Commitment Letter) entered into in connection with the Commitment Letter, pursuant to which the Initial Lenders committed to fund up to $400 million of commitments under the Exit Revolving Credit Facility (as defined below) on the terms set forth in the Commitment Letter, the Agent Fee Letter, and the Lender Fee Letter (collectively, the ‘Exit Revolver Commitment’).

The Restructuring embodied in the Plan: (i) deleverages the Debtors’ balance sheet, including through the equitization of over $2 billion of the Debtors’ Senior Notes, to afford the Reorganized Company a fresh start and to provide a strong foundation for the Debtors’ business post-emergence; (ii) provides for payment in full, Reinstatement, or other such treatment necessary to render General Unsecured Claims Unimpaired; and (iii) allows Holders of Existing Parent Equity Interests to receive their pro rata share of the New Warrants on the Effective Date, which will be exercisable into 7% of the New Diamond Common Shares in accordance with the terms thereof, subject to dilution by the MIP Equity Shares.

Pursuant to the Plan and the related documents, the Restructuring will be implemented through a series of transactions providing for, among other things:

1. a new $400 million first lien, first out exit revolving credit facility (the ‘Exit Revolving Credit Facility’);
2. a new $100 million first lien, last out exit term loan facility (the ‘Exit Term Loan Facility’);
3. (i) a fully backstopped rights offering (the ‘Primary Rights Offering’) for (A) $46,875,000 of Exit Notes and (B) New Diamond Common Shares representing approximately 12.26% of the total New Diamond Common Shares outstanding on the Effective Date, subject to dilution by the MIP Equity Shares and the New Warrants (collectively, the ‘Primary Rights Offering Stapled Securities’), and (ii) a fully backstopped rights offering (the ‘Delayed Draw Rights Offering’ and, together with the Primary Rights Offering, the ‘Rights Offerings’) for (A) commitments to purchase $21,875,000 of Exit Notes and New Diamond Common Shares representing approximately 5.72% of the total New Diamond Common Shares outstanding on the Effective Date, subject to dilution by the MIP Equity Shares   and the   New   Warrants   (collectively, the ‘Delayed Draw Rights Offering Stapled Securities’ and, together with the Primary Rights Offerings Stapled Securities, the ‘Rights Offerings Stapled Securities’), which shall allow each eligible Holder of Senior Notes Claims to purchase its pro rata share of the Rights Offerings Stapled Securities; and
4. (i) a private placement sale (the ‘Primary Private Placement’) to certain of the Consenting Note holders that are party to the Backstop Agreement (in such capacity, the ‘Primary Private Placement Investors’) of (A) $28,125,000 of Exit Notes and (B) New Diamond Common Shares representing approximately 7.36% of the total l New Diamond Common Shares outstanding on the Effective Date, subject to dilution by the MIP Equity Shares and the New Warrants (collectively, the ‘Primary Private Placement Stapled Securities’), and (ii) a private placement sale (the ‘Delayed Draw Private Placement’ and, together with the Primary Private Placement, the ‘Private Placements’) to certain of the Consenting Noteholders that are   party to the   Backstop Agreement (in such capacity, the ‘Delayed Draw Private Placement Investors’ and, together with the Primary Private Placement Investors, the ‘Private Placement Investors’) of commitments to purchase $17,800,000 of Exit Notes and (B) New Diamond Common Shares representing approximately 4.66% of the total New Diamond Common Shares outstanding on the Effective Date, subject to dilution by the MIP Equity Shares and the New Warrants (collectively, the ‘Delayed Draw Private Placement Stapled Securities’ and, together with the Primary Private Placement Stapled Securities, the ‘Private Placement Stapled Securities’).

These contributions will allow for a holistic restructuring that will enable the Debtors to reduce their total funded debt by over $1.8 billion."

The following is a summary of classes, claims, voting rights and expected recoveries (defined terms are as defined in the Plan and/or Disclosure Statement, see also the Liquidation Analysis below):

• Class 1 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
• Class 2 (“Other Priority Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
• Class 3 (“RCF Claims”) is impaired and entitled to vote on the Plan. Expected recovery is 100%. Each Holder of an RCF Claim will receive, either: (i) if such Holder elects to participate in the Exit Revolving Credit Facility, (A) first, its Participating RCF Lender Share of the RCF Cash Paydown; (B) second, to the extent such Holder’s RCF Claims have not been satisfied in full after the application of the RCF Cash Paydown under clause (A) above, its Participating RCF Lender Share of up to $100 million of funded loans under the Exit Revolving Credit Facility, with such amount subject to change based upon the Effective Date and interest accrued on RCF Claims through such date; and (C) third, to the extent such Holder’s RCF Claims have not been satisfied in full after the application of the RCF Cash Paydown under clause (A) above and the allocation of funded loans under clause (B) above, a share of $200 million (less the amount of aggregate funded loans under the Exit Revolving Credit Facility on the Effective Date allocated pursuant to clause (B) above) of the Exit Term Loan Facility that is equal to the remaining unsatisfied amount of such Holder’s RCF Claims, with such amount subject to change based upon the Effective Date and interest accrued on RCF Claims through such date, provided that the aggregate amount of any such Holder’s shares of the amounts described in the foregoing clauses (A), (B) and (C) will not exceed the amount of such Holder’s RCF Claims; or; or (ii) if such Holder does not elect to participate in the Exit Revolving Credit Facility, (A) first, a share of $200 million, with such amount subject to change based upon the Effective Date and interest accrued on RCF Claims through such date (less the amount of aggregate funded loans under the Exit Revolving Credit Facility on the Effective Date allocated pursuant to clause (i)(B) above) of the Exit Term Loan Facility that is equal to the lesser of (x) its RCF Claims and (y) its Non-Participating RCF Lender Share of the portion of the $200 million, with such amount subject to change based upon the Effective Date and interest accrued on RCF Claims through such date, of the Exit Term Loan Facility that is not allocated to participating Holders pursuant to clause (i)(C) above and (B) second, solely to the extent such Holder’s RCF Claims have not been satisfied in full after the allocation of the Exit Term Loan Facility under clause (A) above, a portion of the RCF Cash Paydown equal to the lesser of (x) such Holder’s remaining unsatisfied RCF Claims and (y) such Holder’s Non-Participating RCF Lender Share of the amount of the RCF Cash Paydown that has not been allocated to the participating RCF Lenders pursuant to clause (i)(A) above.
• Class 4 (“Senior Notes Claims”) is impaired and entitled to vote on the Plan. Expected recovery is 37%. Each Holder will receive (i) its Pro Rata share of 70% of the New Diamond Common Shares, subject to dilution by the New Warrants and the MIP Equity Shares; and (ii) Subscription Rights to participate in the Rights Offerings to (a) pursuant to the Primary Rights Offering, purchase such Holder’s Pro Rata portion of $46,875,000 of Exit Notes and 12.26% of the issued and outstanding New Diamond Common Shares as of the Effective Date, subject to dilution by the New Warrants and the MIP Equity Shares and (b) pursuant to the Delayed Draw Rights Offering, subscribe for such Holder’s Pro Rata portion of commitments to purchase up to $21,875,000 of Delayed Draw Notes and 5.72% of the total New Diamond Common Shares outstanding on the Effective Date, subject to dilution by the New Warrants and the MIP Equity Shares. With respect to subsection (ii) above, pursuant to, and in accordance with, the Backstop Agreement and the Rights Offerings Procedures, each Financing Party has agreed to, severally and not jointly, (i) fully exercise all Subscription Rights that are properly issued to it on the applicable Subscription Commencement Date on account of its Senior Notes Claims and (ii) duly purchase all Exit Notes on account of its Senior Notes Claims.
• Class 5 (“General Unsecured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. Expected recovery is 100%.
• Class 6 (“Intercompany Claims”) is impaired/unimpaired, deemed to accept/reject and not entitled to vote on the Plan.
• Class 7 (“Existing Parent Equity Interests”) is impaired and entitled to vote on the Plan. Projected recovery is $3.0mn.
• Class 8 (“Intercompany Interests”) is impaired/unimpaired, deemed to accept/reject and not entitled to vote on the Plan.

Voting Results

On April 2, 2021, the Debtors' claims agent notified the Court of the Plan voting results [Docket No. 1190], which were as follows:

• Class 3 (“RCF Claims”): 11 claim holders, representing $444,673,189.83 (100%) in amount and 100% in number, voted in favor of the Plan. 2 claim holders, representing $68,068.29 (0.13%) in amount and 2.47% in number, rejected the Plan.
• Class 4 (“Senior Notes Claims”): 927 claim holders, representing $1,653,855,917.25 (99.89%) in amount and 95.27% in number, voted in favor of the Plan. 46 claim holders, representing $1,788,648.75 (0.11%) in amount and 4.73% in number, rejected the Plan.
• Class 7 (“Existing Parent Equity Interests”): 1759 claim holders, representing $91,363,929.40 (98.62%) in amount and 86.56% in number, voted in favor of the Plan. 273 claim holders, representing $1,282,741.62 (1.38%) in amount and 13.44% in number, rejected the Plan.

Key Documents

The Disclosure Statement [Docket No. 1067] attached the following:

• Exhibit A: Second Amended Joint Chapter 11 Plan of Reorganization of Diamond Offshore Drilling, Inc. and Its Debtor Affiliates
• Exhibit B: Plan Support Agreement
• Exhibit C: Joinder Notice for Holders of Senior Notes
• Exhibit D: Corporate Structure Chart
• Exhibit E: Valuation Analysis
• Exhibit F: Liquidation Analysis
• Exhibit G: Financial Projections
• Exhibit H: Rights Offerings Procedures

The Debtors filed Plan Supplements at Docket Nos. 1157 and 1210 which attached the following:

• Exhibit A: Form of New Organizational Documents [Docket No. 1210]
• Exhibit B: Section 1129(a)(5) Disclosures Regarding Directors and Officers [Docket No. 1157]
• Exhibit C: Form of New Warrants Agreement [Docket No. 1210]
• Exhibit D: Schedule of Rejected Contracts [Docket No. 1157] 
• Exhibit E: Form of Exit Term Loan Credit Agreement [Docket No. 1157] 
• Exhibit F: Form of Exit Revolving Credit Facility Agreement [Docket No. 1157] 
• Exhibit G: Form of Exit Notes Indenture [Docket No. 1157] 
• Exhibit H: Schedule of Preserved Causes of Action [Docket No. 1157] 
• Exhibit I: Restructuring Transaction Memorandum [Docket No. 1157]
• Exhibit J: Form of Registration Rights Agreement [Docket No. 1210]
• Exhibit J-1: Redline of Form of Registration Rights Agreement [Docket No. 1210] 

Exit Financing

On March 23, 2021, the Debtors filed a Plan Supplement to their Second Amended Plan of Reorganization [Docket No. 1157], which attaches, among other things, an Exit Term Loan Credit Agreement and Exit Revolving Credit Facility Agreement.

 The term loan agreement outlines the terms of a $100.0mn Exit Term Loan, and the revolver agreement gives the terms of an Exit Revolving Credit Facility.

Exit Term Loan

• Borrower: Diamond Offshore Drilling Inc., as Parent, Diamond Foreign Asset Company
• Administrative Agent: Wells Fargo Bank, N.A.
• Commitment: $100.0mn
• Interest Rate: (a) if the Borrower has not delivered a PIK Election, LIBOR plus 6% or Base rate plus 5%, (b) if a Partial PIK Election has been delivered by the Borrower, LIBOR plus 8% or Base rate plus 7% and (c) if a Full PIK Election has been delivered by the Borrower, with respect to any Loan, the Borrower’s written election to pay in kind all of the interest due and payable on such Loan by adding an amount equal to 100% of such interest to the balance of the principal amount of such Loan.
• Maturity/Termination: the earliest to occur of (a) an unspecified date in 2027, (b) the date of termination of the Credit Facility pursuant to Section 2.5 of the agreement and (c) the date of termination of the Credit Facility pursuant to Section 9.2(a). 

Exit Revolving Credit Facility

• Borrower: Diamond Offshore Drilling Inc., as Parent, Diamond Foreign Asset Company
• Administrative Agent: Wells Fargo Bank, N.A.
• Commitments: $100.0mn in prepetition loans will be converted into revolving loans on the closing date. In addition, each Lender shall be deemed to have made a PIK Loan in Dollars to the Borrower on the Closing Date in an amount equal to the PIK Upfront Fee owed to such Lender on the Closing Date in accordance with a Lender Fee Letter. 
• Interest Rate: LIBOR plus 4.25% or Base rate plus 3.25%
• Commitment Fee: 0.50%
• Maturity Date: The earliest to occur of (a) an undetermined date in 2026, (b) the date of termination of all Commitments by the Borrower pursuant to Section 2.5 of the agreement and (c) the date of termination of all Commitments pursuant to Section 9.2(a).

Prepetition Debt

As of the Petition  Date, the Debtors’ principal  non-contingent liabilities consisted of outstanding funded debt under the Revolving Credit Facility and four series of unsecured notes with an aggregate outstanding principal amount of approximately $2.4 billion (the “Prepetition Debt”).

Petition Date Perspective

According to the Edwards Declaration (defined below), "The Debtors determined to commence these Chapter 11 Cases to preserve their valuable contract backlog and preserve their approximately $434.9 million in unrestricted cash on hand while avoiding annual interest expense of approximately $140.1 million under the Revolving Credit Facility and the Senior Notes and to stabilize operations while proactively restructuring their balance sheet to successfully compete in the changing global energy markets.

The Debtors and their Advisors believe cash on hand provides adequate funding at the outset of these cases. The Debtors are well-positioned to successfully emerge from bankruptcy with a highly marketable fleet, a solid backlog of activity, a strong balance sheet and liquidity position and a differentiated approach and set of capabilities. Despite the volatile and current uncertain market conditions, the Debtors remain confident in the need for their industry, its importance around the world and the critical services they provide."

Events Leading to Chapter 11 Filing

Marc Edwards, the Debtors' (now departed) president and chief executive officer filed a declaration in support of the Debtors' Chapter 11 petitions (the "Edwards Declaration" [Docket No. 17]). The Edwards Declaration summarized the events leading to the Debtors' Chapter 11 cases, stating, "The offshore drilling industry has experienced a prolonged period of declining dayrates and demand for contract drilling services. This general industry downturn has worsened precipitously in recent months due to two unprecedented global events: an oil 'price war' between OPEC and Russia and the COVID-19 pandemic. These developments adversely impacted both the Company and its customers.

Starting in December 2019, the Debtors considered a variety of liability management and liquidity preservation initiatives, including possible out-of-court exchange transactions. At that time, the Debtors retained the services of Lazard Frères & Co. LLC ('Lazard') as financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison LLP ('Paul, Weiss') as legal advisor to assist Company management and the Board (defined below) in analyzing and evaluating various alternatives with respect to the Company’s capital structure. In addition to taking proactive cost-cutting measures and efficiency improvements, the Company explored several potential transactions that would have extended maturities and potentially captured a trading discount in its Senior Notes through exchange transactions. As the COVID-19 pandemic rapidly escalated, and the oil markets reeled from the OPEC dispute with Russia, the Company pivoted its focus to preserving its existing contract backlog and liquidity position.

On March 16, 2020, the Company delivered a notice of termination (the 'Notice') under the 5-Year Revolving Credit Agreement, dated as of September 28, 2012, as amended (the '2012 Credit Facility'), among Diamond Offshore, Diamond Foreign Asset Company ('DFAC'), the lenders party thereto and Wilmington Trust, National Association, as administrative agent…Pursuant to the Notice, the 2012 Credit Facility was terminated effective March 17, 2020 (the 'Termination'). As of the time of the Notice, there were no borrowings outstanding under the 2012 Credit Facility. The Company did not incur any early termination penalties in connection with the Termination.

The Company delivered the Termination in connection with certain transactions undertaken to preserve its financial flexibility. As noted above, certain of the Debtors are party to the Revolving Credit Facility with a maximum borrowing availability of $950.0 million. On March 17, 2020, the Company provided notice to the lenders to borrow an aggregate of $400.0 million under the Revolving Credit Facility (the 'Drawdown'). Following the March 17 draw, the Company borrowed an additional $36 million under the Revolving Credit Facility. The Company increased its borrowings under the Revolving Credit Facility as a precautionary measure in order to increase their cash position and preserve financial flexibility in light of current uncertainty in the global markets resulting from the COVID-19 outbreak. In accordance with the terms of the Revolving Credit Facility, the proceeds from borrowings under the Revolving Credit Facility may in the future be used for general corporate purposes, including investments, capital expenditures and other purposes permitted by the Revolving Credit Facility.

On March 20, 2020, the Board formed a Finance Committee to review, consider, evaluate and make recommendations to the Board regarding one or more strategic transactions. Since its inception, the Finance Committee has worked closely with management and the Company’s advisors, including Paul, Weiss, Lazard and Alvarez & Marsal North America, LLC ('A&M') (collectively, the 'Advisors') to determine the optimal path forward for the Company. In addition to adverse market conditions, the Company faced approximately $36 million of interest payments due under the Senior Notes on or before May 1, 2020. Specifically, $14 million was due on April 15, 2020 under the 2039 Notes, and $4 million and $18 million would become due on May 1, 2020 under the 2023 Note and 2043 Notes respectively. 

On April 15, 2020, the Company elected not to make the semiannual interest payment due in respect of the 2039 Notes. Under the terms of the indenture governing the Notes, the interest payment was due on April 15, 2020, and Diamond Offshore has a 30-day grace period to make the payment. Non-payment of the interest on the due date was not an event of default under the indenture governing the Notes but would have become an event of default if the payment was not made within the 30-day grace period or these Chapter 11 Cases were not commenced. An event of default under the indenture governing the Notes would have resulted in a cross default under the Revolving Credit Facility, whereupon the Notes and the Company’s borrowings under the Revolving Credit Facility Agreement would have been subject to acceleration. The acceleration of the Notes or the Company’s borrowings under the Revolving Credit Facility would have resulted in a cross-default under the indentures governing the 2023 Notes, the 2025 Notes and the 2043 Notes, whereupon such notes would then be subject to acceleration, subject to a 10-day cure period. During the grace period, the Company is not permitted to borrow additional amounts under the Revolving Credit Facility.

Prior to and during the grace period, the Company actively engaged with its customers to preserve the Debtors’ contract backlog. The Company’s customers are also facing challenges as a result of current market conditions and almost all have requested some form of concessions from the Company under their existing contracts, which, subject to ongoing discussions with Beach Energy, the Debtors have so far successfully navigated. As of the Petition Date, management effectively managed customer demands to preserve the Company’s backlog and customer relationships by, among other things:

• (a) Entering into an amendment of the Company’s contracts with one customer to transfer backlog between rigs and leverage more favorable dayrates;
• (b) Negotiating standby arrangements to cover the Company’s costs while rigs are subject to travel restrictions and other COVID-19 related limitations; and
• (c) Managing through multiple operational and logistical challenges to ensure the continued operation of the Company’s rigs, including social distancing, sequestering and other policies implemented in response to COVID-19.

Despite the Company’s successful negotiations with the majority of their customer counterparties, on April 20, 2020, the Company received a purported notice of termination from Beach Energy (Operations) Limited ('Beach') of its drilling contract for the Ocean Onyx. The drilling contract was entered into on December 19, 2018, and the Ocean Onyx had recently completed shipyard modifications requested by Beach and relocated for commencement of the Victorian Otway Basin offshore drilling campaign for Beach. Although the Company does not believe that Beach had a valid or lawful right to terminate the contract or that the purported notice of termination is effective, it remains in discussions with Beach to resolve this dispute consensually and commercially. In addition, the Debtor party to the Beach contract has filed, contemporaneously with the chapter 11 filing, an adversary complaint against Beach seeking a determination that Beach’s purported termination is invalid and that the drilling contract remains in effect.

Given the need to preserve liquidity and protect contract backlog, management and the Advisors began analyzing the potential benefits of filing voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. In addition, the Company, in consultation with Paul, Weiss, also considered whether Diamond Offshore and any of its subsidiaries are eligible for relief under the Coronavirus Aid, Relief, and Economic Security Act (the 'CARES Act') and whether that eligibility counseled in favor of delaying the filing of the Chapter 11 Cases to pursue such relief. Among other programs, the Company considered its eligibility for a loan under the Paycheck Protection Program ('PPP') of the Keeping American Workers Paid and Employed Act or under section 4003(b) of the Coronavirus Economic Stabilization Act of 2020. The Company concluded that its size renders it ineligible for a PPP loan, and it remains unclear whether the Company is eligible for a section 4003(b) loan. Moreover, even if the Company was eligible, loan proceeds likely would not be available until June 2020 and would not enable the Company to improve its balance sheet. After careful consideration, the Company concluded that waiting for potential benefits the receipt of which are uncertain at best, while continuing to pay existing debt service and risking the Company’s contract backlog, was not in the best interests of the Company or its stakeholders.

Shortly before the Petition Date, the Company commenced preliminary discussions with the Prepetition RCF Agent, represented by Bracewell LLP and FTI Consulting, and with an ad hoc group of holders of the Senior Notes (the 'Ad Hoc Group' and the holders, the 'Ad Hoc Group of Senior Noteholders') represented by Milbank LLP ('Milbank') and Evercore Inc. (together with Milbank, the 'Ad Hoc Group Advisors'). On April 20, 2020, the Company entered into non-disclosure agreements with the Ad Hoc Group Advisors and began sharing certain financial and other information regarding the Company’s business and the commencement of these Chapter 11 Cases with the Prepetition RCF Agent and the Ad Hoc Group. The Ad Hoc Group Advisors and the Prepetition RCF Agent have reviewed and commented on substantially all of the First Day Motions prior to Petition Date. The Company expects to work constructively with the Ad Hoc Group and Prepetition RCF Agent during these Chapter 11 Cases."

Key Prepetition Shareholders

The Debtors' Chapter 11 Petition listed each of Loews Corporation, Contrarius Investment Management Ltd., Fidelity Management & Research Company and BlackRock Institutional Trust Company, N.A. as having greater than 5% shareholdings. A Schedule 14A provided the following further details: Loews Corporation (53.1%), Contrarius Investment Management Ltd.(9.6%), Fidelity Management & Research Company (5.4%) and BlackRock Institutional Trust Company, N.A. (7.4%).

Liquidation Analysis (see Exhibit F Disclosure Statement [Docket No. 1075] for notes)

About the Debtors

Diamond Offshore Drilling, Inc. provides contract drilling services to the energy industry around the globe with a fleet of 15 offshore drilling rigs, consisting of four drillships and 11 semisubmersible rigs, including two rigs that are currently cold stacked.

Corporate Structure Chart

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