OSX 3 Leasing bondholders OK revised restructuring terms at meeting

By Susanna Moon

Chicago, Sept. 11 – OSX 3 Leasing BV holders voted to amend the company’s 9¼% senior secured callable bonds due 2015 at a meeting held Thursday.

There were enough holders to form a quorum, and the measure received unanimous support, according to a notice by bond trustee Nordic Trustee ASA.

As announced Aug. 26, bondholders were asked to vote on amendments to the company’s restructuring term sheet at the meeting.

OSX 3’s original restructuring proposal was approved by the bondholders at a meeting held in March. But it has taken longer than expected to complete definitive documentation, and some of the original terms could not be implemented.

The principal terms of the restructuring remain unchanged, as noted before.

Since the March vote, a creditor of the OSX Group had taken a bilateral creditor action against OSX Leasing Group BV, and another creditor that had a conditional pledge over the shares in OSX Leasing refused to provide confirmations needed to enter into corporate governance terms.

As a result, amendments to the articles of association of OSX Leasing, equitization of some intercompany loans, subordination of intercompany loans to the claims of bondholders and assignment of intercompany loans to bondholders could not be implemented.

Amendment details

Proposed amendments included the following:

• The company has until Oct. 1 to prove that it has sufficient funds in an escrow account to pay specified insurance premiums for the period of Sept. 1 through the bond maturity date before an event of default occurs, extended from Sept. 1;

• An invoicing start date that triggers the flow of funds to OSX 3 under a charter agreement will not occur until definitive documentation is entered;

• OSX 3 is not obligated to make a Dec. 20, 2013 coupon payment to bondholders until OGX has paid the first invoice under the charter agreement amendment;

• If the first charter agreement invoice is not paid within three business days of the invoicing start date, the charter amendment agreement will terminate automatically, and subordination and charter rate waiver provisions will not survive;

• The deadline by which OGX must provide an OSX 3 letter of credit would be extended to Feb. 28, 2015 from Aug. 31;

• The charter amendment’s full effectiveness date would occur once the first invoice is paid in full, rather than once the letter of credit has been provided.

If the letter of credit is not provided by Jan. 31, the daily fixed rate of charter hire will increase to $265,000 from $250,000 from Jan. 31 through the earlier of the date the letter of credit is provided and the date the bonds are redeemed, repaid in full or acquired by OGX; and

• The bondholders will have a new termination right if the letter of credit is not provided by Feb. 28, 2015 and the breach is not cured within 30 days. If this happens, OSX 3 will be entitled to redelivery obligations, charter rates due through the redelivery date and a termination amount.

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

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