Singapore’s Deep Drilling 1 asks to amend 12% bonds, extend to 2020

By Susanna Moon

Chicago, Dec. 2 – Deep Drilling 1 Pte. Ltd. is again asking for consents to amend its $23,525,066 of outstanding 12% senior secured callable bonds due 2015.

Specifically, the issuer is asking to further postpone the maturity until Dec. 21, 2020.

The company has scheduled a bondholders meeting for Dec. 16 in Oslo.

The proposed changes also include

• Redemption of all of the outstanding bonds at maturity with no amortization, “except for monthly cash sweep if excess cash above the next interest payment on the bonds”;

• Interest paid semiannually;

• Call extended to new final maturity date;

• Changes to application of earnings, including allowing servicing of permitted debt and setting aside operating/capital expenditure incurred on the rig before depositing earnings into the earnings account;

• Release of the guarantee and security provided by the recent bareboat charterer and deletion of some covenants from a bareboat charterer; and

• Deletion of financial covenants on the issuer and guarantor.

The proposed amendments require votes by holders of more than two-thirds of those represented at the meeting. To form a quorum, there must be at least one-half of voting bonds represented.

The company is asking for more bond amendments “in light of the challenging market conditions and the fact that jack-up rig Deep Driller 1 is currently not under deployment,” according to a notice from bond trustee Nordic Trustee ASA.

“The issuer requests bondholders to take into consideration that it is likely to take some more time before the rig secures any deployment opportunity. Further, nine out of the 18 assets owned by Aban Group are under deployment. This has negatively impacted the ability to set aside funds to redeem the bonds as per the present schedule.”

The issuer will hold a conference call on Dec. 7 to provide more information.

As announced Dec. 15, 2015, Deep Drilling received consents from holders to amend the 12% bonds, to push back the maturity to Dec. 21, 2017.

The amendments also included the following:

• Repay $22.5 million principal plus accrued interest on Dec. 21, the original maturity date, with $65 million remaining;

• Make quarterly principal payments of $8,125,000 each and introduce a cash sweep;

• Increase the interest rate to 15% per year from Dec. 21 onward; and

• Extend the call provision and call premium to the new maturity date.

Background

Deep Drilling 1 issued $125 million of the bonds in Dec. 21, 2011 and had redeemed $37.5 million of the bonds according to the repayment schedule. There were $87.5 million of remaining notes at the time that were set to mature Dec. 21, 2015.

The issuer said at the time that it had made all reasonable efforts to raise additional funds to redeem the bonds on schedule but without any success.

The company brought up challenging market conditions and other circumstances in an investor presentation and proposed the bond amendments in response to those issues.

The company asked bondholders to consider that payments from Pemex, the end user of the company’s rig, were increasingly delayed. The last payment for the rig was made in October of 2015 for July drilling, and no further payments are expected this year.

The delay in payments, combined with the early termination of Deep Driller 7 and a lack of new drilling contracts for other rigs, had hurt the company’s ability to set aside funds to redeem the 12% bonds.

Singapore-based Deep Drilling 1 is part of the Chennai, India-based Aban Offshore Ltd. group, which owns, operates and charters jack-up rigs.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.