Offshore Drilling’s LaForta bankrupt with over $1 billion in debt

By Sarah Lizee

Olympia, Wash., June 16 – LaForta Gestao e Investimentos Sociedade Unipessoal LDA, a wholly owned subsidiary of non-debtor Offshore Drilling Holding SA, filed Chapter 11 bankruptcy on Thursday in the U.S. Bankruptcy Court for the Southern District of Texas.

David Weinhoffer, chief restructuring officer, said the company filed the case because it has “no money, no revenue stream, likely over $1 billion in secured debt, and an uncertain path to realizing value from its sole asset,” which is an ultra-deepwater semi-submersible drilling rig sitting in the Gulf of Mexico, known as La Muralla IV.

Following a reduction in charter fees for the rig in 2017, its Pemex charter agreement was terminated in November 2019. Shell chartered the rig for about five months, ending in August of last year. The rig has otherwise not been generating revenue.

Weinhoffer said La Muralla IV is not currently chartered, is running low on fuel, has no liquidity with which to acquire more fuel and doesn’t have a functioning anchor. It’s also under-crewed and uninsured, the CRO added.

“At this point, there is no alternative to Chapter 11,” Weinhoffer said.

LaForta is one of three rig-owning subsidiary guarantors of the $947 million of 8 3/8% senior secured notes due 2020 issued by Offshore Drilling in 2013. The rigs are collateral for the notes, which have been in default since mid-2020.

Offshore Drilling, LaForta, the other subsidiary guarantors and an informal group of secured noteholders have been engaged in discussions for several years regarding the best way forward.

Currently, the debtor and noteholders are seeking to sell the rig in fall, absent finding a new charter.

Some of the noteholders have agreed to provide and backstop $33 million of new-money post-petition financing to fund operational expenses as well as Chapter 11 and sale process expenditures.

The proposed DIP financing will provide funds to purchase fuel, reinstate insurance and undertake functions necessary for the preservation of the noteholders’ collateral before the hurricane season begins, the CRO said.

The company listed $50 million to $100 million in assets and $1 billion to $10 billion in liabilities.

The Funchal, Portugal-based company filed bankruptcy under Chapter 11 case number 22-90126.

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