OSX Brasil unit bondholders vote to approve terms of restructuring

By Jennifer Chiou

New York, April 1 - OSX Brasil SA subsidiary OSX 3 Leasing BV's bondholders elected to approve the terms of a restructuring of its bonds and other finance and project documents, according to a notice from bond trustee Norsk Tillitsmann ASA.

At the meeting, 99.41% of the votes cast were in favor of the proposal.

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

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

Under the restructuring terms, the coupon on the bonds will be increased to 13% from 9¼%, to be paid in cash and to accrue interest 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 circumstances where the bonds have not been refinanced at maturity.

No later than six months before the maturity date of the OSX 3 bonds, OSX will be obligated to launch a multi-track process to refinance the OSX 3 bonds in full, sell a specified vessel and/or sell 100% of the OSX 3 equity, in each case to the highest and best bidder, and use the proceeds to repay the OSX 3 bonds in full.

The process must be completed and the transactions effective on or before the maturity date.

Absent a refinancing, OSX will be obligated to sell the vessel or OSX 3 equity to the highest and best bidder whose bid enables the prompt repayment of all amounts due and payable under the OSX 3 bonds.

If OSX 3 has not notified the bond trustee and OGX of its intent to complete a refinancing or sale by 10 business days before the bond maturity date, OGX will have the right to purchase all of the OSX 3 bonds for an amount equal to the amounts due and payable at that time.

Under amendments to a charter contract between OSX 3 and OGX, the charter rate will be fixed at $250,000 per day, effective from Nov. 19 to and including Dec. 31, 2026.

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 company previously said that 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, a Rio de Janeiro-based oil and gas holding company.

© 2015 Prospect News.
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