Mexico’s Oro Negro bondholders approve changes needed to avoid default

By Angela McDaniels

Tacoma, Wash., June 3 – Oro Negro Impetus Pte. Ltd. received bondholder approval to make more amendments to the terms of its $175 million of senior secured bonds due 2015, according to a notice from bond trustee Nordic Trustee ASA.

The bondholders met on June 3. There were enough bondholders present to form a quorum, and the proposed resolution received 83.48% of the votes.

Among other changes, the amendments will require the ultimate parent company to maintain a minimum equity ratio of 35% at all times after Aug. 31 and add a cross-default clause concerning the company’s 7˝% senior secured bonds due 2019 through Aug. 31.

The company said the amendments will ensure that there is no event of default caused by breach of the minimum equity ratio clause.

At least half of the voting bonds had to be represented at the meeting in order to have a quorum, and the holders of at least two-thirds of the voting bonds represented at the meeting had to vote in favor of the amendments in order for them to be made.

Prior amendments

As previously reported, the company held a bondholder meeting on May 19, at which it received approval to amend the bond agreement to delay the valuation of the company’s rig until Aug. 31 and to amend and restate clause 13.7(d) to require the company to maintain a minimum asset coverage ratio of 120% at all times after Aug. 31.

As reported on May 4, the company is negotiating a lease contract between the rig’s charterer and Pemex Exploracion y Produccion. Although the determination of the rig’s value will be made “free of any existing charters or other contracts of employment,” the general value of the rig would be influenced by the increase and stabilization of the price of oil, as well as by its prospects for generating revenue in the current market, and thus the issuer wants to obtain the best possible day rate under the lease prior to obtaining a valuation for the rig.

The rig is Oro Negro’s principal asset, and its value is the basis for the secured financing obtained under the bond agreement.

The company said the implementation of the proposal will ensure that there will be no event of default between May 4 and Aug. 31 caused by delaying the rig valuation or the breach of the minimum asset coverage clause.

On May 18, the company agreed to call the June 3 meeting as part of a side letter entered into with an ad hoc group of bondholders.

The oil and gas services company is based in Alvaro Obregon, Mexico.

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