Brazil’s QGOG adds yet another day to exchange for 6¼% notes

New York, July 24 – Brazil’s QGOG Constellation SA made a further extension to its exchange offer for its 6¼% senior notes due 2019 by a single day.

The exchange will now continue until 5 p.m. ET on July 24, extended from 5 p.m. ET on July 21, according to a company announcement.

As of the previous expiration, holders had tendered $604.6 million, or 86.4%, of the notes, up $0.4 million from the earlier deadline of 5 p.m. ET on July 20.

The offer was recently extended from 5 p.m. ET on July 19, 11:59 p.m. ET on July 17 and 5 p.m. ET on July 12.

QGOG is offering to exchange the notes for 9% cash/0½% pay-in-kind senior secured notes due 2024, according to the amended terms announced June 28 after the company’s discussions with bondholders.

The new notes will mature Nov. 9, 2024 with an amortization schedule beginning Nov. 9, 2019.

In addition to the par-for-par exchange, QGOG is also offering a consent fee in cash of 2% and accrued interest, also in cash.

As announced April 3, the company was originally offering to issue 8½% senior notes due 2024 in exchange for tendered 6¼% notes.

The offer has been extended several times since April 28. The exchange was also extended from 11:59 p.m. ET on June 30 and, before that, June 23, June 16 and June 9.

Under the amended terms of the offer, holders will receive $1,000 of new notes plus $20 in cash for each $1,000 of 6¼% notes tendered for exchange by the early tender deadline.

The company gave more details on July 3 of the new notes to be issued in the exchange, which will initially be secured by some assets of the company, including but not limited to each of the company's current unencumbered offshore rigs and drilling vessels and the insurance receivables and charter receivables related to those vessels.

The new notes will amortize semiannually at the following rates: 1¼% of par from November 2019 up to but not including November 2020, 2½% of par from November 2020 up to but not including November 2022 and 3¾% of par after that.

The new notes will also have a springing collateral package that could consist of additional offshore rigs and drilling vessels as well as their related insurance receivables and charter receivables.

The new notes will be guaranteed on a senior secured basis by some subsidiaries of the company, including but not limited to the guarantor of the existing notes, Constellation Overseas Ltd., and the entities that own the unencumbered rigs. The new notes will also be guaranteed on a subordinated basis by Star International Drilling Ltd.

Also, the new notes will have a more restrictive covenant package, including a restriction on dividend payments and additional limitations on the incurrence of debt.

Holders who tender after the early deadline will receive $1,000 of new notes per $1,000 principal amount.

QGOG will pay accrued interest in cash.

Concurrently with the exchange, the issuer is soliciting consents to amend the note indenture in order to eliminate substantially all of the restrictive covenants and certain events of default and related provisions.

Holders who tender must deliver consents.

Completion of the offer is subject to the tender of at least 90% of the existing notes.

Ipreo LLC (212 849-3880 or 888 593-9546) is information agent and exchange agent.

QGOG is a Rio de Janeiro-based provider of off- and on-shore drilling in Brazil through subsidiary Queiroz Galvao Oleo e Gas SA.

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