Paragon Offshore filed with the U.S. Bankruptcy Court a motion for authority to (i) assume a plan support agreement (PSA) and (ii) modify automatic stay.
The motion explains, “Pursuant to the Plan Support Agreement, to be amended by the anticipated PSA Amendment, the Debtors and the Consenting Creditors will have agreed to consummate the restructuring contemplated in the Modified Plan, which reduces the Debtors’ debt by approximately $1.1 billion and annual cash interest payments by approximately $60 million, resolves covenant issues and extends the maturity of their revolving loan facility, shifts the burden of over nearly $200 million in tax bonding obligations onto their former parent, and provides all of their creditors a 100% or consensually negotiated recovery, all while preserving their rights in non-debtor Prospector assets and providing public shareholders an appropriate level of participation in the restructured enterprise. 11.”
The motion continues, “The key elements of the Modified Plan and the Debtors’ restructuring include (i) the satisfaction of $985 million of unsecured notes in exchange for $285 million in cash, senior unsecured notes in the aggregate amount of $60 million, and 47% of the outstanding Parent Ordinary Shares (as defined in the Modified Plan), (ii) a $165 million principal payment of the Secured Revolving Credit Agreement and additional collateral and increased interest rates in consideration for revised covenants, conversion of the remaining revolving loans to term loans, provision of an ongoing letter of credit facility to support the Debtors’ business operations, and a maturity extension to 2021, (iii) reinstatement of the Debtors’ Term Loan Agreement, dated as of July 18, 2014 (the ‘Term Loan Agreement’), which has a below-market interest rate, an extended maturity, and no financial covenants; and (iv) a settlement with Noble, without which the Debtors could not effectuate this restructuring. Confirmation of the Modified Plan will pave the way for the Debtors to emerge from chapter 11 with improved leverage, a more sustainable capital structure, and its relations with customers, vendors, and employees intact.”
The Court scheduled a September 8, 2016 hearing on the motion. Read more Paragon bankruptcy news.
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