PetroMena bondholders to vote on plan of reorganization on Oct. 19

By Angela McDaniels

Tacoma, Wash., Oct. 12 - PetroMena ASA will ask the holders of its 10.85% senior secured bonds due Nov. 19, 2010 and PetroRig III's floating-rate notes due Feb. 20, 2014 to vote on a plan of reorganization, according to a bondholder notice from trustee Norsk Tillitsmann ASA.

The holders of PetroMena's 9¾% bonds due May 24, 2012 will be asked to allow the trustee to pay $5 million out of the 9¾% bond recoveries for the benefit of the 10.85% bondholders.

Bondholders will vote at a meeting in Oslo at 7 a.m. ET on Oct. 19.

At least two-thirds of the bonds must be represented at the meeting, and at least half of the bonds represented at the meeting must be voted in favor of the resolutions in order for them to pass.

PetroRig I Pte. Ltd., PetroRig II Pte. Ltd. and PetroRig III were organized to finance and take delivery of ultra-deepwater drilling oil rigs. They filed for Chapter 11 bankruptcy on May 17, 2009 after the 10.85% bondholders instructed the trustee to exercise enforcement rights to replace the board of directors at each of the PetroRig entities.

The reorganization plan and disclosure statement have been approved by the U.S. Bankruptcy Court for the Southern District of New York. A confirmation hearing is scheduled for Nov. 2.

The trustee filed claims against the debtors on behalf of the 9¾% bondholders and the floating-rate bondholders of $692.42 million and $274.18 million, respectively.

On Aug. 6, 2009, the bankruptcy court approved a $130 million payment for the 9¾% bonds out of available cash on hand.

On April 1, 2010, the bankruptcy court ordered PetroRig I and PetroRig II to collectively pay $210.16 million to the loan trustee to satisfy the principal of and non-default interest on the 9¾% notes. PetroRig III was ordered to pay $243.6 million to satisfy the floating-rate notes.

Plan treatment

Under the plan, the property of the debtors will be liquidated and the proceeds placed in a trust. The treatment of the bonds under the plan will be as follows:

• The 9¾% bonds will be paid in full in cash. As of Aug. 15, $42.98 million of these bonds remained outstanding;

• The floating-rate bondholders will be paid from the proceeds of the liquidation of PetroRig III. The total amount of the accepted floating-rate bond claim is $40 million. About $15 million to $20 million will be paid by PetroRig III in cash. The remainder of the claim will be paid, to the extent of available funds, from the liquidation trust; and

• The 10.85% bondholders do not have a direct claim against the debtors, but they will receive interests in the liquidation trust due to their equity interest in PetroRig II.

According to the bondholder notice, if the 10.85% bondholders had not ordered the replacement of the boards, it is unlikely that the Chapter 11 petition would have been filed and this may have resulted in lower recoveries for the 9¾% bondholders. As a result, AMA Capital Partners, the adviser to the bondholders, has proposed that the 9¾% bondholders make a $5 million payment to the 10.85% bondholders.

PetroMena is a rig holding company and a subsidiary of Petrolia ASA, an oilfield services company based in Oslo.

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