By Gwladys Fouche and also Ole Petter Skonnord

OSLO, Feb 28 (Reuters)– Rig company Seadrill, coping $14 billion in the red and also obligations, stated on Tuesday it might need to apply for Chapter 11 insolvency security if it stops working to get to a restructuring arrangement with its lending institutions, sending its shares down 14 percent.

Once the crown gem in the realm of delivery mogul John Fredriksen, Oslo- detailed Seadrill’s shares have actually dropped 92 percent in the previous 3 years as diving unrefined rates and also extreme costs cuts by oil firms hammered gear prices.

Seadrill’s issues mirror those of an additional Fredriksen company, vessel company Frontline, which needed to be saved in 2012 after an extended depression in prices by Hemen Holding, which handles his holdings in the detailed firms he regulates.

The Norwegian- birthed billionaire revealed intend on Tuesday to intensify the vessel company and also upgrade its fleet while rates for vessels are reduced to place it for an anticipated healing in prices from 2018.

But the range of Seadrill’s obligations tower over those of Frontline, and also the gear firm stated it would certainly be testing to discover a “fully consensual agreement” prior to an April 30 target date. More than 40 financial institutions are entailed, along with shareholders.

“Feedback from certain stakeholders and potential new money providers … indicate that a comprehensive and consensual agreement will likely require conversion of our bonds to equity,” it stated in a declaration.

In a strategy revealed in January, Seadrill had actually stated it intended to elevate $1 billion in brand-new funding, prolong financial institution maturations, decrease taken care of amortisation and also prolong maturations of unprotected cases.

But the firm has actually thus far fallen short to get to a bargain on these terms, and also Fredriksen, that holds a 23.6 percent risk in Frontline, currently takes the chance of weakening his shareholding.

“It is a bitter pill to swallow but they need to do it,” stated one financier in Fredriksen firms, that decreased to be called.

If it can not get to an arrangement, Seadrill was preparing different backup strategies, consisting of prospective plans of plan or Chapter 11 procedures, the firm stated.

At 1203 GMT Seadrill shares were down 14 percent at 14.47 Norwegian crowns, while Frontline’s supply was up 5.7 percent at 59.50 crowns.

Frontline stated it had actually made a greater and also last deal for competing DHT Holdings, in which it holds a 16 percent risk, including that the proposal was declined. It likewise stated it prepares to acquire 2 huge unrefined providers (VLCCs) for $77.5 each from South Korea’s DSME.

Brokerage Pareto Securities stated the bargain showed Frontline’s capability to benefit from reduced property rates throughout a market slump.

According to a quote by company publication Kapital, which tracks the riches of abundant Norwegians, John Fredriksen, aged 72, had a total assets of some 92 billion Norwegian crowns ($ 11 billion) in 2016.

His 2 little girls have actually significantly ended up being associated with the operating of his services in recent times.

(Additional coverage by Terje Solsvik; Editing by Louise Heavens)

( c) Copyright Thomson Reuters 2017.