Ocean Rig UDW: Highland Capital to drop objections to case recognition

By Caroline Salls

Pittsburgh, June 19 – Ocean Rig UDW Inc. announced June 19 that Highland Capital Management LP will not object to the recognition by the U.S. bankruptcy court of the provisional liquidation and scheme of arrangement proceedings before the Grand Court of the Cayman Islands as foreign main or foreign non-main proceedings.

According to a news release, Highland advised the U.S. court that it terminated all discovery efforts and that it will not object to the recognition of the Cayman proceedings of the company and its subsidiaries, Drill Rigs Holdings Inc. (DRH), Drillships Financing Holding Inc. (DFH) and Drillships Ocean Ventures Inc., (DOV) at the recognition hearing scheduled for Aug. 16.

As previously reported, Ocean Rig UDW settled with an informal group of creditors of DRH who acceded to a March 23 restructuring agreement and fully support the proposed schemes of arrangement.

As a result, the company said no discovery is being undertaken in connection with the recognition hearing, and the scheme companies are not aware of any party that intends to object to the recognition of the Cayman proceedings.

However, Ocean Rig UDW said Highland reserved the right to challenge the schemes in the Cayman proceedings, to continue to appeal aspects of the U.S. court order granting provisional relief in favor of the scheme companies and to object to any subsequent request in the Chapter 15 proceedings for an order giving full force and effect in the U.S. to the schemes if sanctioned by the Cayman court.

Creditor support

In addition, the company said creditors holding in excess of 90% of the affected claims of each scheme company signed or acceded to the restructuring support agreement.

Of the $3.7 billion of affected debt under the Ocean Rig UDW scheme, as of June 19, the company said creditors holding no less than 94.42% of that debt signed or acceded to the restructuring, as did holders of at least 98.87% of the $1.9 billion of affected debt under the DFH scheme, holders of at least 97.07% of the $1.3 billion of affected debt under the DOV scheme and holders of at least 92.43% of the $460 million of affected debt under the DRH scheme.

If the schemes are sanctioned, Ocean Rig UDW said the companies will be substantially deleveraged through an exchange of $3.7 billion principal amount of debt for new equity, $288 million of cash and $450 million of new secured debt.

Case timeline

According to the release, a hearing for approval to hold creditor meetings to vote on the schemes was scheduled by the Cayman court for July 11, July 12 and July 13.

The creditors’ meetings are expected to be held about four weeks after the conclusion of the hearing. If the schemes are approved by the requisite vote of the affected creditors, a hearing to request final approval of the schemes will be held before the Cayman court on Sept. 4, Sept. 5 and Sept. 6.

“The high level of support from creditors of each of the scheme companies and Highland’s decision to drop its objections to recognition is a testament to the fairness and robustness of our proposed restructuring plan,” Ocean Rig chairman and chief executive officer George Economou said in the release.

“We are looking forward to completing the process and meeting the challenges of our competitive market with top-tier operations, attractive assets and a healthy balance sheet.”

Ocean Rig is a deepwater driller based in Nicosia, Cyprus. The company filed for bankruptcy on March 27 in the U.S. Bankruptcy Court for the Southern District of New York under Chapter 15 case number 17-10736.

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