Constellation Oil offers to exchange existing cash/PIK notes due 2024

By Caroline Salls

Pittsburgh, July 17 – Constellation Oil Services Holding SA will distribute to eligible holders of its 9% cash/½% PIK senior secured notes due 2024 non-transferable subscription rights to purchase their share of up to $27 million of the company’s 10% PIK/cash senior secured first-lien tranche due 2024 and the right to receive the corresponding principal amount of second-lien and third-lien tranches, according to a news release.

Constellation said the rights offering and the issuance of the first-lien tranche are being conducted as part of its judicial reorganization proceedings before the 1st Business Court of Judicial District of the Capital of the State of Rio de Janeiro.

Specifically, each eligible holder of existing 2024 notes will receive one subscription right to subscribe for the first-lien tranche at par based on the principal amount of existing notes held.

The deadline for eligible holders to elect to participate in the rights offering is 5 p.m. ET on July 24. Eligible holders, other than backstop investors, must also submit a complete subscription form and fund the purchase of its share of the first-lien tranche by 5 p.m. ET on July 26.

On June 28, creditors of the debtors subject to the judicial reorganization approved Constellation’s judicial reorganization plan at a general creditors’ meeting.

Under the plan, the existing 2024 notes will be cancelled in consideration for either participating notes or non-participating notes.

To the extent an eligible holder does not validly subscribe for and purchase its share of the first-lien tranche in accordance with the terms of the rights offering, that holder will be entitled to receive fourth-lien non-participating notes.

As of Wednesday, the company said holders of 52.98% of the outstanding principal amount of the existing 2024 notes had agreed to exercise their subscription rights to purchase the first-lien tranche. To the extent subscription rights to purchase the maximum principal amount of the first-lien tranche have not been validly exercised as of the expiration date, these backstop investors have agreed to purchase the unsubscribed portion of the first-lien tranche.

Houlihan Lokey and Alvarez & Marsal are serving as Constellation’s U.S. and Brazilian financial advisers, respectively, in connection with the restructuring but are not acting as a dealer manager or other agent of the company in connection with the rights offering.

D.F. King & Co., Inc. has been appointed as the information agent for the rights offering, and Wilmington Trust, NA has been appointed as the subscription agent for the rights offering.

Constellation is a market leading provider of offshore and onshore oil and gas contract drilling and FPSO services in Brazil through its Rio de Janeiro-based subsidiary Servicos de Petroleo Constellation SA, which made a Chapter 15 bankruptcy filing on Dec. 6, 2018 to gain U.S. court recognition of its Brazilian judicial reorganization proceedings. The Chapter 15 case number is 18-13952.

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