OSX 3 Leasing inks deal on restructuring terms, seeks bondholder OK

By Caroline Salls

Pittsburgh, March 14 - OSX Brasil SA subsidiary OSX 3 Leasing BV reached an agreement on the key terms of a restructuring of its bonds and other finance and project documents, according to a news release.

OSX 3 said the bondholders will meet in the near future to approve the proposed terms before it moves forward with restructuring documentation.

According to the release, OGX Petroleo e Gas SA and Oleo e Gas Participacoes SA's judicial reorganization filings triggered an event of default on OSX 3's 9¼% senior secured callable bond issue due 2015.

As a result, the company entered into restructuring talks with the bondholders. The talks recently also included the holders of OGX Austria GmbH's 8½% senior notes due 2018 and 8 3/8% senior notes due 2022.

Under the proposed restructuring terms, the coupon on the bonds will be increased to 13% from 9¼%, to be paid in cash and to accrue from Oct. 30, and a 2.5% consent fee will be paid to all bondholders in the form of additional bonds.

Mandatory prepayment events will occur in the event of a sale of OSX 1 or OSX 2, with a mechanism for excess proceeds to be applied toward prepayment of the bond principal.

In addition, independent director rights will be introduced in favor of the bondholders at the OSX 3 level and related board observer rights at the OSX Leasing Group BV level.

The company said a buyout right will be included in favor of OGX in specified circumstanced where the bonds have not been refinanced at maturity.

Under amendments to a charter contract between OSX 3 and OGX, the charter rate will be fixed at $250,000 per day, effective Nov. 19.

The bond trustee can terminate the charter contract upon 24 months' notice if the bonds are not fully repaid or bought out by March 20, 2015 or upon 45 days' notice if a non-payment event of default occurs solely as a result of OGX's failure to pay the charter rate.

OGX's rights to terminate the charter contract will also be amended, the release said.

The company said OGX will provide a demand letter of credit for $25 million in favor of OSX 3 and the bond trustee to secure its obligations under the charter contract, which will be callable if OGX fails to pay the charter rate.

OSX 3 Leasing is a subsidiary of OSX Brasil SA, a Rio de Janeiro-based oil and gas holding company.

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