Mexico’s Latina Offshore proposes restructuring of 8 7/8% bonds

By Wendy Van Sickle

Columbus, Ohio, Jan. 17 – Latina Offshore Holding Ltd. is seeking bondholder approval of a restructuring proposal related to its 8 7/8% senior secured callable bond issue 2013/2022 via a written resolution, according to a notice.

The issuer is proposing giving bondholders a choice from three options:

• Tendering their bonds for repurchase for cash in an amount ranging from $25 million to $60 million at 67% of par and exchanging their remaining holding of existing bonds for 7% five-year takeout bonds at 85% of the par value of the existing bonds (the “repurchase option”). The maximum amount of bonds repurchased under this option would be $89.6 million;

• Subscribing for 10% five-year super senior bonds for cash at least for the minimum amount of 10% of their existing bonds and exchange their holding of existing bonds for 7% five-year ordinary bonds that may be merged back for the ISIN for the existing bonds at par (the “subscription option”); and

• Exchanging their existing bonds for ordinary bonds at 85% of par. This option is considered the “no action option” that would be the default election if a holder does not elect either of the other two options.

Bondholders would have until Feb. 3 to make an election.

The up to $35 million of 10% super senior bonds will be secured on a first priority first out basis with security over the Santa Maria and La Covadonga jack-up rigs.

The amount of super senior bonds issued will depend on the amounts required to repurchase existing bonds tendered for repurchase under the repurchase option in addition to $25 million available from other sources. In addition to the cash interest rate, the super senior bonds would accrue interest in kind at a rate of 0.25% multiplied with the net cash flow pre-amortization.

On Nov. 29, the company extended the maturity date of the existing bonds from Oct. 15, 2022 to Jan. 31, 2023 to give the company time to seek a solution to its financial challenges and talk with the existing bondholders. The bonds have been subject to several limited extensions.

The company said the proposed restructuring creates a more stable, simple and cost-efficient platform for its business.

The key target of the restructuring is creating a path to deleveraging and providing liquidity for holders of the existing bonds who want to exit the structure, the company said.

The restructuring generally involves using cash already available to the company and being made available through the new super senior bond issue to offer existing bondholders to tender their bonds for repurchase at a fixed price and receipt of different bonds and equity instruments issued by Latina Offshore, the company added.

The allow time to finalize the restructuring, the company is asking to postpone the maturity date of the existing bonds to April 15, 2023 or to July 15, 2023 if approved by a simple majority of voting bonds represented at a bondholders’ meeting.

The deadline to submit voting instructions on the written resolution to the bond trustee is 4 a.m. ET on Jan. 27.

For approval, the written resolution requires affirmative votes from two-thirds of the voting bonds.

Nordic Trustee AS (+47 22 87 94 00 or mail@nordictrustee.com) is the bond trustee.

Latina Offshore is the offshore division of Mexico-based Constructora y Perforadora Latina SA.

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