Pacific Drilling announced that its subsidiaries, Pacific Drilling VIII Limited (“PDVIII”) and Pacific Drilling Services, Inc. (“PDSI”), have filed an application with the High Court in London for leave to appeal the award that has been issued in the arbitration proceedings between PDVIII and PDSI and Samsung Heavy Industries Co. Ltd. (“SHI”) related to the contract for the construction and sale of the Pacific Zonda.
As previously disclosed, on January 15, 2020 an arbitration tribunal in London, England (the “Tribunal”) awarded SHI approximately $320 million with respect to its claims against PDVIII and PDSI.
Under the rules governing the arbitration proceedings, PDVIII and PDSI have no automatic right to appeal and the grounds on which the High Court in London may grant permission to appeal are limited. There can be no assurance that permission to appeal will be granted, or if granted, that the appeal will be successful.
As previously disclosed, in connection with the Company’s now concluded Chapter 11 proceedings, PDVIII and PDSI (the “Zonda Debtors”) filed a separate plan of reorganization (the “Zonda Plan”) under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York, which was confirmed on January 30, 2019. If the Zonda Debtors are successful in the appeal, they will emerge from their separate bankruptcy proceedings. If the Zonda Debtors are unsuccessful in the appeal, the Company expects the Zonda Debtors, which have approximately $4.5 million in cash and no other material assets, will be liquidated in accordance with the terms of the Zonda Plan. The Company does not expect the Tribunal’s decision to have any material adverse effect on its operations or to cause any default under any of its material contracts including under the indentures for its outstanding notes.