Cleary Gottlieb represented an ad hoc group of bondholders holding approximately 61% of bonds issued by subsidiaries of Ocyan S.A. (f/k/a Odebrecht Óleo e Gas S.A.; Ocyan), a Brazilian oil and gas company providing drilling services and maintenance of offshore drilling rigs, in the restructuring of approximately $2.7 billion of indebtedness.
The closing of the restructuring was consummated on June 7, 2023 and follows confirmation of an extrajudicial reorganization (EJ) plan and proceeding in the Bankruptcy and Reorganization Court in Rio de Janeiro and the Chapter 15 recognition and enforcement in the United States.
As a result of the restructuring, Ocyan’s existing bonds are being exchanged for a combination of consideration consisting of cash, voting and non-voting equity in a new Luxembourg-domiciled holding company (DrillCo), to which Ocyan’s existing drilling business is being transferred to, and approximately $300 million of 7.5% new senior secured notes due 2030 issued by DrillCo and secured by a first priority lien on substantially all assets of DrillCo and its subsidiaries. Bondholders elected among various options of consideration under the EJ plan, including electing to contribute approximately $197 million of new money to DrillCo in exchange for the new notes and DrillCo equity in the form of voting shares and non-voting shares. Bondholders who elected not to receive non-voting equity directly are receiving approximately $410 million principal amount of new unsecured convertible notes issued by a new Luxembourg-domiciled holding company, which purpose is to provide the same economic return of holding DrillCo non-voting equity. The convertible notes are exchangeable for non-voting equity of the new drilling company, at the option of a holder or mandatorily upon certain conditions.
DrillCo shares are being allocated at closing: 45% to bondholders who elected to contribute the new money, 42.5% to bondholders who did not elect the cash-out option under the EJ plan, 6.5% to Ocyan, 1.5% to DrillCo management, and 4.5% to bondholders who committed to backstop the new money, who are receiving a premium in the form of $28 million of additional new notes.
The financial and organizational restructuring leaves the drilling business well positioned for future growth, with enhanced liquidity and operational flexibility to capture new opportunities and to participate in a potential consolidation of the industry. The new drilling company will be led by a new board of directors, and management will be comprised by former officers of Ocyan.