Mexico’s Oro Negro asks 7˝% noteholders to push interim budget period

By Wendy Van Sickle

Columbus, Ohio, Oct. 28 – Oro Negro Drilling Pte. Ltd. is asking holders of its $939,100,570 of 7˝% senior secured notes due 2019 to extend some provisions under its bond agreement to allow interim access to restricted cash accounts in order to continue operations as it develops a long-term capitalization plan, according to a notice from bond trustee Nordic Trustee ASA.

The issuer said it is currently negotiating with Petroleos Mexicanos (Pemex) over some drilling contract adjustments that it expects will result in lower revenues and “significantly depressed cash flows in the near- to medium-term.”

Oro Negro is seeking an extension of its interim budget period until Oct. 1, 2017 and to suspend its obligations to make payments of its scheduled amortizations until that date.

The scheduled amortization amounts originally due between July 2016 and Oct. 1, 2017 would remain outstanding and be paid at maturity under the proposal.

Some of the other changes under the proposal include:

• On the later of five business days after receipt from Pemex of payment for services rendered from March through June 2016 and five days after the effective date of the amendment, Oro Negro would pay accrued interest and outstanding fees and costs of its legal and financial advisers;

• Oro Negro would engage a financial consultant within 15 days of the effective date;

• A requirement that the issuer transfer certain amounts from earnings account to its debt service account would be waived until Oct. 1, 2017, as would a requirement that it transfer certain funds into its dry dock reserve account;

• Oro Negro would be permitted monthly access to its earnings and debt service account, currently blocked by the bond trustee, in order to make payments set forth in its monthly budget;

• The issuer would be permitted to use up to $30 million to repurchase bonds via a discounted repurchase or discounted tender offer, subject to some minimum balance requirements relating to its debt service and dry dock reserve accounts.

The company is also proposing to waive all events of default that have occurred under the notes to date.

Oro Negro has set a bondholder meeting for votes to be cast on the matter for 7 a.m. ET on Nov. 7 in Oslo.

Two-thirds of the voting bonds represented at the meeting must approve the measure in order for it to pass.

The company said questions may be directed to its financial adviser, Millstein & Co., LP (Attn: Elizabeth Abrams, 212-416-5802 or eabrams@millsteinandco.com).

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

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.