pacd_Current_Folio_6K_MediationSettlement

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

Date of Report: August 20, 2018

Commission File Number 001-35345

PACIFIC DRILLING S.A.

8-10, Avenue de la Gare

L-1610 Luxembourg

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F ☒

Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Yes ☐

No ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

Yes ☐

No ☒

Indicate by check mark whether the registrant by furnishing the information contained in this Form, is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes ☐

No ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): n/a

INFORMATION CONTAINED IN THIS FORM 6-K REPORT

Background

As previously disclosed, on November 12, 2017, Pacific Drilling S.A. (the “Company”) and certain of its subsidiaries (collectively with the Company, the “Debtors”) filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”), which are being jointly administered under the caption In re Pacific Drilling S.A., et al., Case No. 17-13193 (MEW).

On July 26, 2018, the Bankruptcy Court approved our request for an extension of the time during which the Debtors have the exclusive right to file a plan of reorganization (the “Exclusive Filing Period”) to July 31, 2018, without prejudice to seek further extensions of the Exclusive Filing Period, in order to permit the Debtors to file a plan of reorganization based on the proposal presented to the Company’s board of directors by the ad hoc group of holders of the Company’s Term Loan B, 2017 Notes and 2020 Notes (the “Ad Hoc Group”).

The Bankruptcy Court’s order approving the extension of the Debtor’s Exclusive Filing Period was without prejudice to the Company’s majority shareholder, Quantum Pacific (Gibraltar) Limited, and potential co-investors (collectively, the “QP Group”) filing a proposed order on the QP Group’s oral motion, made during the July 26, 2018 Bankruptcy Court hearing, to terminate the Exclusive Filing Period, attaching its own Chapter 11 plan.

Plan of Reorganization

On July 31, 2018, the Debtors filed with the Bankruptcy Court the Debtors’ Joint Chapter 11 Plan of Reorganization (the “Plan”), that provides for the comprehensive restructuring and recapitalization of the Debtors through the following principal transactions:

a $700.0 million issuance of notes maturing at least five years following their issuance, secured by a first-priority security interest in and lien on certain of the Debtors’ assets (the “New First Lien Notes”);

a $300.0 million issuance of notes maturing at least seven years after their issuance, with interest payable in kind or in cash, at the option of the issuer, secured by a second-priority security interest in and lien on certain of the Debtors’ assets (the “New Second Lien PIK Toggle Notes”);

$500.0 million in new equity offered through a rights offering and a private placement to Holders of Allowed Term Loan B Claims, Allowed 2017 Notes Claims, and Allowed 2020 Notes Claims (each as defined in the Plan); and

the issuance of common shares to Holders of Allowed Term Loan B Claims, Allowed 2017 Notes Claims, and Allowed 2020 Notes Claims.

Pursuant to the Plan, the Company’s senior secured credit facility and revolving credit facility would be paid in full. Holders of the Company’s Term Loan B, 2017 Notes, and 2020 Notes would be fully equitized and receive all common shares issued under the Plan. Under the Plan, existing holders of the Company’s common shares would receive no recovery. Additionally, upon consummation of the Plan, the Company expects to pay all unsecured trade creditors in full.

Consummation of the Plan is subject to execution and delivery of definitive agreements, Bankruptcy Court approval, completion of the Restructuring transactions and other customary conditions.

Mediation Settlement

On August 2, 2018, the QP Group filed with the Bankruptcy Court a statement (the “Competing Plan Statement”) in support of an order (i) modifying the Debtors’ exclusive periods to permit the QP Group to solicit acceptances of its own Chapter 11 plan of reorganization and (ii) authorizing and directing the Debtors to reimburse the fees and expenses of the QP Group associated with its continued participation in our bankruptcy proceedings, and submitted with such statement a draft of its plan of reorganization. The Competing Plan Statement provided that the QP Group’s willingness to file a competing plan of reorganization was conditioned on the Bankruptcy Court’s approval of such reimbursement. On August 9, 2018, the Bankruptcy Court entered an order denying the request for reimbursement of the QP Group’s fees and expenses associated with its continued participation, and as a result of such denial, the request to terminate exclusivity to allow the QP Group to file a competing plan of reorganization was denied as moot.

The QP Group also sought the entry of an order allowing as administrative priority claims, and authorizing the Debtors to reimburse, the reasonable fees and expenses incurred by the QP Group for making a substantial contribution to the Chapter 11 cases for the period from the Petition Date through and including date of its application, including a total of approximately $8.7 million owed to counsel and financial advisors. This motion is scheduled to be heard on September 18, 2018.

On August 10, 2018, the Bankruptcy Court entered an order requiring the QP Group, Ad Hoc Group and the Debtors to participate in additional Mediation and extending the Mediation period to August 24, 2018 in order to explore the possibility for the QP Group and the Ad Hoc Group to reach agreement on a consensual plan.

As a result of the additional Mediation, on August 15, 2018, the QP Group and the Ad Hoc Group reached an agreement, pursuant to which QP and its investment partners will commit to purchase $100 million of the first lien secured notes and $100 million of the second lien secured notes to be issued pursuant to the third-party syndicated financing contemplated by the Plan, and will commit to purchase $50 million of the new equity in the Company through a private placement. Under the agreement, the Company agrees to pay QP’s reasonable fees and out-of-pocket expenses incurred in connection with the Company’s Chapter 11 proceedings. A copy of the settlement term sheet is attached to this report on Form 6-K as Exhibit 99.1.

The Plan, which was already supported by all of the Company’s major creditor interests, was developed over the course of comprehensive mediation discussions between the Company’s Board of Directors and its stakeholders. The Plan will strengthen the Company’s balance sheet by reducing its leverage and delivering a substantial amount of new capital. Upon consummation of the Plan, Pacific Drilling’s cash position will be significantly enhanced, and the Company will be in a much stronger financial position to take advantage of its dedicated, high-specification deepwater drillship fleet in anticipation of an improving market for offshore drilling services. The agreement reached between QP and the Ad Hoc Group should allow the Plan to move forward efficiently and expeditiously through the implementation and confirmation process.

The information contained in this Form 6-K are for informational purposes only and do not constitute an offer to buy, nor a solicitation of an offer to sell, any securities of the Company, nor do they constitute a solicitation of consent from any persons with respect to the transactions contemplated hereby and thereby. While we expect the restructuring will take place in accordance with the Plan, there can be no assurance that the Company will be successful in completing any restructuring. You are urged to read the disclosure materials, including the Plan and the Disclosure Statement, for additional important information regarding the restructuring.

The foregoing description of the settlement is only a summary, does not purport to be complete, and is qualified in its entirety by reference to the settlement term sheet attached as an Exhibit to this report on Form 6-K and incorporated herein by reference.

On August 20, 2018, the Company issued a press release announcing the settlement. A copy of the press release is attached to this report on Form 6-K as Exhibit 99.2.

The information contained in this Form 6-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and regardless of any general incorporation language in such filings, except to the extent expressly set forth by specific reference in such a filing. The filing of this report on Form 6-K shall not be deemed an admission as to the materiality of any information herein.

Disclosure Regarding Forward-Looking Statements

Certain statements and information contained herein constitute “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and are generally identifiable by the use of words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “our ability to,” “may,” “plan,” “predict,” “project,” “potential,” “projected,” “should,” “will,” “would,” or other similar words, which are generally not historical in nature. The forward-looking statements speak only as of the date hereof, and we undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise.

Our forward-looking statements express our current expectations or forecasts of possible future results or events, including our future financial and operational performance and cash balances; revenue efficiency levels; market outlook; forecasts of trends; future client contract opportunities; contract dayrates; our business strategies and plans and objectives of management; estimated duration of client contracts; backlog; expected capital expenditures; projected costs and savings; the potential impact of our Chapter 11 proceedings on our future operations and ability to finance our business; our ability to complete the restructuring transactions contemplated by our plan of reorganization; projected costs and expenses in connection with our plan of reorganization; and our ability to emerge from our Chapter 11 proceedings and continue as a going concern.

Although we believe that the assumptions and expectations reflected in our forward-looking statements are reasonable and made in good faith, these statements are not guarantees, and actual future results may differ materially due to a variety of factors. These statements are subject to a number of risks and uncertainties and are based on a number of judgments and assumptions as of the date such statements are made about future events, many of which are beyond our control. Actual events and results may differ materially from those anticipated, estimated, projected or implied by us in such statements due to a variety of factors, including if one or more of these risks or uncertainties materialize, or if our underlying assumptions prove incorrect.

Important factors that could cause actual results to differ materially from our expectations include: the global oil and gas market and its impact on demand for our services; the offshore drilling market, including reduced capital expenditures by our clients; changes in worldwide oil and gas supply and demand; rig availability and supply and demand for high specification drillships and other drilling rigs competing with our fleet; costs related to stacking of rigs; our ability to enter into and negotiate favorable terms for new drilling contracts or extensions; our ability to successfully negotiate and consummate definitive contracts and satisfy other customary conditions with respect to letters of intent and letters of award that we receive for our drillships; our substantial level of indebtedness; possible cancellation, renegotiation, termination or suspension of drilling contracts as a result of mechanical difficulties, performance, market changes or other reasons; our ability to

execute our business plan and continue as a going concern in the long term; our ability to obtain Bankruptcy Court approval with respect to motions or other requests made to the Bankruptcy Court in our Chapter 11 proceedings, including maintaining strategic control as debtor in-possession; our ability to confirm and consummate our plan of reorganization in accordance with the terms of the Plan and the settlement; risks attendant to the bankruptcy process including the effects of our Chapter 11 proceedings on our operations and agreements, including our relationships with employees, regulatory authorities, clients, suppliers, banks and other financing sources, insurance companies and other third parties; the effects of our Chapter 11 proceedings on our Company and on the interests of various constituents, including holders of our common shares and debt instruments; the potential adverse effects of our Chapter 11 proceedings on our liquidity, results of operations, or business prospects; the outcome of Bankruptcy Court rulings in our Chapter 11 proceedings as well as all other pending litigation and arbitration matters; the length of time that we will operate under Chapter 11 protection and the continued availability of operating capital during the pendency of the proceedings; our ability to access adequate debtor-in-possession financing or use cash collateral; risks associated with third-party motions in our Chapter 11 proceedings, which may interfere with our ability to timely confirm and consummate our plan of reorganization and restructuring generally; increased advisory costs including administrative and legal costs to complete our plan of reorganization and other litigation; the risk that our plan of reorganization may not be accepted or confirmed, in which case there can be no assurance that our Chapter 11 proceedings will continue rather than be converted to Chapter 7 liquidation cases or that any alternative plan of reorganization would be on terms as favorable to holders of claims and interests as the terms of our Plan; the cost, availability and access to capital and financial markets, including the ability to secure new financing after emerging from our Chapter 11 proceedings; and the other risk factors described in our 2017 Annual Report on Form 20-F and our Current Reports on Form 6-K. These documents are available through our website at www.pacificdrilling.com or through the SEC’s website at www.sec.gov.

The following exhibits are filed as part of this Form 6-K, each of which is incorporated herein by reference:



Exhibit		Description

99.1	Global Settlement Term Sheet as of August 15, 2018
99.2	Press Release announcing settlement between QP and an Ad Hoc Group of Creditors, dated August 20, 2018

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	Pacific Drilling S.A.
	(Registrant)

Dated: August 20, 2018	By	/s/ Lisa Manget Buchanan
		Lisa Manget Buchanan
		SVP, General Counsel & Secretary