Songa Offshore bondholders consent to increased leverage ratio cap

By Angela McDaniels

Tacoma, Wash., June 3 - Songa Offshore SE received bondholder consent to amend its leverage ratio covenant, according to a notice from bond trustee Norsk Tillitsmann ASA.

The company held meetings for the holders of its senior callable bonds due 2016 and its senior bonds due 2015 on June 3. There were enough bondholders present at each meeting to form a quorum, and 100% of the votes were cast in favor of the amendment.

On June 10, the company will pay a consent fee of 1.375% to bondholders of record as of June 4.

According to the trustee, the company has had ongoing discussions with its auditors about revenue recognition on its Songa Trym and Songa Delta rigs about contribution from client-specific portions of the rig upgrade and life enhancement, and these discussions have so far resulted in lower-than-expected revenues, implying a breach of the leverage ratio covenants.

The amendment increased the maximum leverage ratio for financial year 2013 to 5 times from 4 times as long as the financing condition has been met by Sept. 30. If the financing condition has not been met by Sept. 30, then the maximum ratio will revert back to 4 times.

The financing condition will be satisfied if the bond trustee is satisfied that there is high degree of certainty that the company has obtained enough financing for the Songa Equinox and Songa Endurance rigs.

Beginning Dec. 31, 2013, the maximum leverage ratio will be 4 times.

Songa is an offshore drilling company based in Limassol, Cyprus, and Olso.

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