Struggling US drilling contractor Paragon Offshore announced on Friday that it has decided not to make a due interest payment of $15.4m on its 6.75% unsecured notes maturing in 2022.
The company hopes to use a 30-day grace period to continue negotiations with secured and unsecured bondholders. If Paragon can’t come to an arrangement with its creditors by the end of that period and it still fails to pay this interest instalment, it could go into default.
According to its most recent filing, Paragon has $2.5bn in assets and $2.6bn in debts.
Houston, Texas-based Paragon has a fleet of 40-plus jack-up drilling rigs and floaters with which it provides drilling services in major hydrocarbon basins around the world.
It contracts out its rigs, equipment and crews to conduct oil and gas drilling for its exploration and production customers.
There was already a market oversupply of rigs and lately the plunging price of oil has seen that business tighten with some clients, such as Mexico’s Pemex, cancelling their contracts with Paragon.