Mexico’s Oro Negro postpones bondholders meeting to Aug. 31

By Wendy Van Sickle

Columbus, Ohio, Aug. 25 – Oro Negro Impetus Pte. Ltd. has postponed its bondholders meeting to Aug. 31 from Thursday, according to a notice from Nordic Trust ASA.

As previously reported, Oro Negro is seeking an extension of waiver and further amendments to its $175 million senior secured bonds, issue 2014/2015.

Also as previously reported, on Monday an ad hoc group of bondholders said it would vote down the company’s proposal to change the bond terms unless the company makes changes to the proposal.

The amendments relate to the company’s negotiation of a lease contract between the charterer for its Impetus rig and Pemex Exploracion y Produccion.

The ad hoc group said that it has been in discussions with the issuer to amend the proposal “in a manner acceptable to us” and that the discussions were expected to be finalized on or about Aug. 24. According to the group, the issuer’s advisers have said the proposed changes will likely be accepted by the issuer.

The amended proposal is subject to threshold conditions proposed by the ad hoc group that must be satisfied by the issuer by the meeting as a condition to the group agreeing to the amended proposal.

The ad hoc group holds more than one-third of the bonds, according to a letter from group advisers Paul Weiss and Houlihan Lokey.

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

As of Aug. 13, the discussions with Pemex were ongoing, and the issuer had not yet agreed on terms of a contract with Pemex. As a result, the company wants bondholder approval of further amendments and extensions to previously obtained waivers.

Oro Negro had expected to enter into a contract with Pemex by Aug. 31. A prior amendment to the bond terms requires the ultimate parent company to maintain a minimum equity ratio of 35% and a minimum asset coverage ratio of 120% at all times after Aug. 31 and added a cross-default clause concerning the company’s 7½% senior secured bonds due 2019 through Aug. 31.

The issuer now wants to extend the minimum equity ratio and minimum asset coverage ratio clauses to apply after Oct. 31.

The company is also seeking, among other things, to amend the terms to allow for interest to be paid in kind, to be permitted to use funds deposited in the liquidity account to fund expenses and a waiver of the requirement to obtain a valuation of the rig until Nov. 2.

The company said that adopting the proposals by no later than Aug. 28 will ensure that there will be no event of default caused by breach of the bonds’ clauses relating to equity ratio, asset coverage ratio and required valuation of the rig.

To approve the proposal, holders representing more than two-thirds of the bonds represented at the meeting must vote in favor of it. In order to have a quorum, half of the voting bonds must be represented at the meeting.

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

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