Tuscany International files bankruptcy, lenders amend credit agreement

By Caroline Salls

Pittsburgh, Feb. 3 - Tuscany International Drilling Inc. and subsidiary Tuscany International Holdings (USA) Ltd. filed Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware to implement a restructuring of the company's debt obligations and capital structure, according to a news release.

Tuscany International Drilling and Tuscany USA also plan to file ancillary proceedings in the Court of Queen's Bench of Alberta under the Companies' Creditors Arrangement Act to seek recognition of the Chapter 11 proceedings and related relief.

None of the company's other subsidiaries are parties to the Chapter 11 or CCAA proceedings.

Financing agreements

In conjunction with the bankruptcy filing, Tuscany obtained a commitment for $35 million in debtor-in-possession financing, which is expected to provide enough working capital to allow subsidiaries to continue to operate in the normal course and meet their ongoing obligations during the restructuring process.

The company said it will enter into a fourth amended and restated senior secured guaranteed credit agreement with administrative agent Credit Suisse AG, Cayman Islands Branch and its various lenders.

Tuscany said it also entered into a restructuring support agreement with the agent and lenders. Both agreements are designed to facilitate the company's restructuring.

DIP facility terms

Under the amended credit agreement, some of the lenders will provide a new $35 million DIP credit facility and roll up $35 million in pre-petition debt.

Upon satisfaction or waiver of the conditions contained in the amended credit agreement, the company will be indebted to the lenders in the principal amount of $237 million.

Interest on the DIP loan will either Libor plus 800 basis points, with a 2% Libor floor, or the alternative Base rate plus 700 bps. Cash collateralized amounts will accrue interest at 5%.

The facility will mature on the earliest of 105 days after the amendment effective date, 30 days after entry of the interim order if the final order has not yet been entered, the effective date of a plan of reorganization and acceleration of the loans.

Lender forbearance

Tuscany and the lenders also entered into a forbearance agreement under which the lenders agreed not to exercise their rights against the company's subsidiaries in order to allow those subsidiaries to carry on business during the restructuring process.

Under the support agreement, the company and lenders will complete a balance sheet restructuring. The support agreement also calls for a bidding and marketing process to seek strategic alternatives intended to maximize value for stakeholders.

According to court documents, Tuscany has $100 million to $500 million in both assets and debt.

The company did not list any unsecured creditors with claims of $1 million or more.

Stock trading halted

Tuscany said trading of its common stock on the Toronto Stock Exchange and the Colombian Stock Exchange has been halted, and the company expects the trading halt to remain in effect pending delisting of the common stock.

The restructuring is expected to be completed in the second quarter.

The company is represented by Young Conaway Stargatt & Taylor LLP. Tuscany's chief restructuring officer is Deryck Helkaa of FTI Consulting Canada, Inc.

Tuscany is a Calgary, Alta.-based oilfield services provider. The Chapter 11 case number is 14-10193.

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