Vantage Drilling unit in bankruptcy to implement deal with creditors

By Caroline Salls

Pittsburgh, Dec. 3 – Vantage Drilling Co. wholly owned subsidiary Offshore Group Investment Ltd. (OGIL) filed Chapter 11 bankruptcy Thursday in the U.S. Bankruptcy Court for the District of Delaware to implement an agreement on a plan to substantially deleverage OGIL’s capital structure.

As previously reported, the agreement was reached with holders of $1.45 billion, or 59%, of OGIL’s secured notes and term loans and holders of 90% of its senior secured asset-backed loan facility.

Existing term loan lenders and secured noteholders will have the opportunity to participate in a rights offering for $75 million of new second-lien secured financing. This new capital commitment will be backstopped under an agreement to be entered into by some of Vantage’s existing creditors.

Plan terms

The company said the proposed plan calls for a debt-for-equity swap that will result in existing term loan lenders and secured noteholders converting their loans and notes into equity and a share of $750 million of senior subordinated notes due 2030.

The new notes will pay interest through the issuance of additional notes and will have no cash interest rate.

According to the release, Vantage’s and OGIL’s asset-backed revolving credit facility lenders have agreed to extend the maturity of that facility through March 2020, convert revolving loans into term loans and offer the company access to a $35 million letter-of-credit facility.

All customer, vendor and employee obligations associated with the ongoing business will remain unaffected.

Reorganized OGIL will issue new common shares, and the existing shares of OGIL held by Vantage will be cancelled.

The company said it will receive new common shares in exchange for the promissory note it received for the Vantage parent assets, and those shares are expected to be distributed to the Vantage’s creditors following the effective date of the under its Cayman Islands liquidation.

Vantage said Wednesday that it would file separate proceedings in the Cayman Islands to wind down the parent holding company. OGIL’s pre-packaged Chapter 11 case will proceed to conclusion separate from Vantage’s Cayman Islands proceedings.

Any parties holding claims against Vantage directly, including its shareholders, are expected to have their claims addressed as part of the Cayman Islands proceedings.

OGIL intends to request bankruptcy court confirmation of its plan in mid-January.

Cash collateral use

In connection with the bankruptcy filing, OGIL requested court approval to use the cash collateral of its pre-bankruptcy secured parties to fund its operations while in Chapter 11.

The company’s access to cash collateral under an interim order will terminate on the earliest of 11:59 p.m. ET on the 60th day after the bankruptcy filing date if a final order has not been entered, dismissal of the Chapter 11 cases or conversion of the cases to Chapter 7.

Debt details

According to court documents, OGIL has $1 billion to $10 billion in both assets and debt.

The company’s largest unsecured creditors are:

• Administrative agent Cortland Capital Market Services, LLC of Chicago, with a 2017 secured loan deficiency claim in an undetermined amount and a 2019 secured term loan deficiency claim in an undetermined amount;

• Indenture trustee Wells Fargo Bank, NA of Dallas, with a 7 1/8% secured notes deficiency claim in an undetermined amount and a 7˝% secured notes deficiency claim in an undetermined amount; and

• 3C Metal Middle East FZE of Dubai, with a $1.93 million trade payable claim.

Weil, Gotshal & Manges LLP is serving as legal counsel and Lazard Freres & Co. LLC is serving as financial adviser to Vantage and OGIL. Alvarez and Marsal is providing financial advisory services to OGIL.

Vantage is an offshore drilling contractor based in Houston. OGIL’s Chapter 11 case number is 15-12422.

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