Songa Offshore bondholders grant more time to meet financing condition

By Angela McDaniels

Tacoma, Wash., Oct. 15 - Songa Offshore SE's bondholders have given it more time to meet a condition to its June consent solicitation, according to a notice from bond trustee Norsk Tillitsmann ASA.

The holders of the company's floating-rate senior callable bonds due 2015 and floating-rate senior callable bonds due 2016 voted on the postponement at a meeting at 6 a.m. ET on Oct. 15 in Oslo.

Because the postponement was approved by a sufficient majority of the bondholders, the company will pay a 0.25% consent fee on Oct. 22 to bondholders of record as of Oct. 16.

As previously reported, the company has had ongoing discussions with its auditors about revenue recognition on its Songa Trym and Songa Delta rigs about contribution from client-specific portions of the rig upgrade and life enhancement, and these discussions have so far resulted in lower-than-expected revenues, implying a breach of the leverage ratio covenants.

The company received bondholder consent in June to increase its maximum leverage ratio for financial year 2013 to 5 times from 4 times as long as the financing condition has been met by the deadline. The maximum leverage ratio will be 4 times beginning Dec. 31.

The financing condition will be satisfied if the bond trustee is satisfied that there is a high degree of certainty that the company has obtained enough financing for its Songa Equinox and Songa Endurance rigs.

The company asked to extend the deadline for the financing condition to Oct. 20 from Sept. 30.

If the financing condition has not been met by the deadline, then the maximum ratio will revert back to 4 times.

Songa is an offshore drilling company based in Limassol, Cyprus, and Oslo.

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