Corporate advisors consult on near $4 billion restructure of Ocean Rig

31 October 2017 Consultancy.uk

Corporate and restructuring advisors from AlixPartners and Kalo Advisors, as well as legal experts from Orrick and Sidley, among others, were part of a team that successfully managed to restructure the finances of Ocean Rig after it initially filed for bankruptcy in March.

Ocean Rig UDW is an operator of semi-submersible oil rigs and UDW drill-ships based in the Cayman Islands. The company also maintains offices in Greece, Luanda, Angola, Jersey, Rio de Janeiro, Brazil and Stavanger, Norway. Severely affected by the deep and prolonged oil and gas industry downturn, in March 2017, Ocean Rig filed for bankruptcy, promising their Management 9.5% of new equity, and common shareholders next to nothing for their assets in the company. Since then, a number of restructuring advisors have been drafted in for an extensive $3.8 billion restructuring, which has now been completed, as all restructuring documents, including a New Credit Facility, the Management Services Agreement, and the Governance Agreements have become effective.

The complex operation saw the group’s restructuring implemented through four separate and interconnected Cayman Islands-law governed schemes of arrangement, along with Chapter 15 recognition of the schemes in the United States. Due to the listing of the group in four holding companies across multiple national fronts, a complex and cutting-edge cross-border restructuring was required, making it the largest ever by value in the Cayman Islands to use schemes of arrangement in the process. The international effort subsequently involved coordinating with several legal and financial advisers in the UK, the US, Cayman Islands, Marshall Islands and Greece.

Corporate advisors advise on near $4 billion restructure of Ocean Rig

The restructuring of the approximately $3.8 billion in financial indebtedness was implemented through the appointment of multiple professional services firms, including joint provisional liquidators Eleanor Fisher of Cayman Islands-based Kalo Advisors, and Simon Appell of AlixPartners, over the four holding companies in the Ocean Rig group. While Kalo officially only came into existence as of March 2017, the team has been serving clients for companies predominantly domiciled in the Cayman Islands and the British Virgin Islands, before its rebranding from its former identity of AlixPartners Caribbean. AlixPartners themselves are currently involved in the restructuring of embattled US retailer BonTon, having already been enlisted by the Croatian government to similarly rescue Agrokor, the Baltic nation’s largest employer.

Among others, the administrators were represented legally by Sidley, whose team was led by Corporate Reorganisation and Bankruptcy Partner Patrick Corr. Fellow legal practice Orrick, meanwhile, were among the firms who advised Ocean Rig in its comprehensive deleveraging and recapitalisation. The Orrick team advising Ocean Rig was led by Bill Haft.

Moving forward

After a hearing held before the U.S. Bankruptcy Court on September 20, 2017, the US Bankruptcy Court issued an order granting comity and giving full force and effect to the Schemes in the United States. The restructuring provides the Ocean Rig group with a vastly deleveraged capital structure, and allows the group to face the ongoing challenging market conditions – which has even seen the likes of oil giant Shell diversify – in a more agile manner.

Bill Haft, of Orrick, commented, “This significant debt restructuring will help our client to emerge as one of the financially strongest companies in this sector, well positioned to weather adverse market conditions for several years and seize on new market opportunities.”

George Economou, Ocean Rig’s Chairman and Chief Executive Officer, meanwhile said in a statement, “Our entire team at Ocean Rig is wholly committed to the success of the company and looks forward to our emergence from this financial restructuring that will ultimately enable us to better service our customers in the long term.”

News