Mexico’s Oro Negro OK’d to suspend amortizations payments on 7˝% notes

By Angela McDaniels

Tacoma, Wash., Nov. 7 – Oro Negro Drilling Pte. Ltd. received enough consents to suspend scheduled amortizations payments on its $939,100,570 of 7˝% senior secured notes due 2019, according to a notice from bond trustee Nordic Trustee ASA.

As previously reported, the company sought consents to extend some provisions in the bond agreement to allow interim access to restricted cash accounts in order to continue operations as it develops a long-term capitalization plan.

On Oct. 28, the issuer said it was negotiating with Petroleos Mexicanos over some drilling contract adjustments that it expected to result in lower revenues and “significantly depressed cash flows in the near- to medium-term.”

The amendments to the bond agreement will extend the company’s interim budget period until Oct. 1, 2017 and 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 will remain outstanding and be paid at maturity.

Some of the other changes include the following:

• On the later of five business days after receipt from Pemex of payment for services rendered from March 2016 through June 2016 and five days after the effective date of the amendment, Oro Negro will pay accrued interest;

• On the effective date, the issuer will apply 50% of the initial payment redemption amount to the redemption, at a price equal to par plus accrued interest, of bonds with a principal amount equal to such amount. The balance of the initial payment redemption amount will be deferred until Oct. 1, 2017;

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

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

• Oro Negro will 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; and

• The issuer will 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 issuer will apply an amount equal to that used to tender for or repurchase outstanding bonds at a price equal to par plus accrued interest of bonds with a principal amount equal to such balance pursuant to the initial payment redemption amount. Any remaining balance of the initial payment redemption amount that is unpaid by Oct. 1, 2017 will be applied by Oct. 1, 2017 to the redemption, at a price equal to par plus accrued interest, of bonds with a principal amount equal to such balance.

The bondholders also waived all events of default that have occurred under the notes to date.

Bondholders voted at a meeting at 7 a.m. ET on Nov. 7 in Oslo.

There were enough bondholders present at the meeting to form a quorum, and the resolution obtained 100% of the votes.

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

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