Singapore’s Deep Drilling holders agree to extend 12% bonds to 2020

By Susanna Moon

Chicago, Dec. 16 – Deep Drilling 1 Pte. Ltd. obtained the needed consents to again amend its $23,525,066 of outstanding 12% senior secured callable bonds, which were originally due 2015.

The bondholder meeting was held Friday in Oslo.

There were enough holders to form a quorum, and the proposed changes garnered votes from 98.6% of those cast, according to a notice from bond trustee Nordic Trustee ASA.

As announced Dec. 2, the issuer was asking to further push out the maturity until Dec. 21, 2020.

The proposed amendments also included

• 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 required votes by holders of more than two-thirds of those represented at the meeting. To form a quorum, at least one-half of voting bonds needed to be 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 previous trustee notice.

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:

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

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

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

• Extending 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.

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

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