Former QGOG reaches restructuring agreement with 2024 noteholders

Chicago, Dec. 7 – Constellation Oil Services Holding SA, formerly known as QGOG Constellation SA, announced Friday that it has reached an agreement with the holders of a majority of its 9% cash/0.5% PIK senior secured notes due 2024 on a consensual restructuring.

Under the agreed terms, the noteholders will provide the company with $27 million of new money, which will be added to the existing notes on the same terms.

The 2024 notes will be amended to pay 9½% interest in kind through 2021 and 8¼% in cash after that until maturity.

Treatment of noteholders not providing new money is to be determined.

All interest rate changes will be effective as of Sept. 1.

Constellation has also entered into a plan support agreement with its A/L/B lenders, Bradesco and its shareholders.

The A/L/B lenders will re-lend the August and September principal payments on the same terms and will receive a $9 million fee, paid in kind.

Constellation expects to be able to use cash collateral.

Bradesco has agreed to maintain the letter-of-credit facilities provided to the company and will provide a $15 million stand-by facility, available for two years if liquidity falls below $100 million.

For providing the stand-by facility, Bradesco will receive a 100 basis points up-front fee and an 80 bps maintenance fee. Borrowings will be at Libor plus 550 bps.

The company’s shareholders will provide a cash contribution of $27 million at the closing of the restructuring.

In a cleansing presentation released as required under confidentiality agreements entered into on Oct. 18, the company said its contracted fleet has been “performing well,” its Brava Star was awarded a contract with Shell for a campaign of four firm wells plus options for up to an additional 810 days, a contract was signed for its Laguna Star with QGEP, Constellation is “is in advanced stage” of securing a short-term contract with a major oil company and its Atlantic Star is still working for Petrobras under a well-in-progress clause.

QGOG has missed coupon payments on the notes starting in June.

Constellation Oil 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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