According to a corporate release, Paragon Offshore has reached an agreement in principle with an ad hoc committee holding secured debt under the Company’s senior secured term loan maturing in July 2021 and a steering committee holding a majority of the secured debt under its senior secured revolving credit agreement maturing in July 2019 and such lenders on a term sheet to support a new plan of reorganization. Holders of Paragon Offshore’s 6 3/4% Senior Unsecured Notes maturing in July 2022 and 7 1/4% Senior Unsecured Notes maturing in August 2024 are not party to the term sheet. However, the Company has been and remains in discussions with the bondholders regarding the terms of a new Chapter 11 plan.
Dean E. Taylor, Company president and chief executive officer, states, “After confirmation of our previous plan of reorganization was denied, the company regrouped, developing a revised business plan which focuses our future activity on Paragon’s core regions in the North Sea, Middle East, and India….Under our new business plan, our operations will be focused on markets where we have an installed base, strong customer relationships, and that we believe are ripe for a recovery. We expect to be well positioned to capitalize on that recovery through a strong balance sheet, sufficient liquidity, and a more efficient cost structure.”
Under the new Plan, approximately$2.4 billion of previously existing debt will be eliminated in exchange for some combination of cash, debt and to-be-issued new equity. If confirmed, term lenders and revolver lenders are projected to each receive their pro rata share of approximately$421 million in cash. The bondholders are projected to receive approximately $50 million in cash, while existing shareholders are not expected to receive a recovery under the new plan. In addition, secured lenders shall be allocated new senior secured first lien debt in the original aggregate principal amount of $85 million maturing in 2022. The term sheet also contemplates adopting a settlement agreement between Paragon Offshore and Noble Corporation, subject to agreement by Noble.
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