Paragon Offshore has announced that it has reached an agreement with an ad hoc committee holding secured debt under its senior secured term loan maturing July 2021 and a steering committee holding a majority of the secured debt under its senior secured revolving credit agreement maturing July 2019, on a term sheet to support a new plan of reorganization under the United States Bankruptcy Code.
Under the new plan, approximately $2.4bn of previously existing debt will be eliminated in exchange for a combination of cash, debt and new equity.
“After confirmation of our previous plan of reorganization was denied, the company regrouped, developing a revised business plan which focuses our future activity on Paragon’s core regions in the North Sea, Middle East, and India. We incorporated feedback from the court’s ruling by adopting more conservative dayrate and utilization projections in our model and had these assumptions validated by outside parties. Under our new business plan, our operations will be focused on markets where we have an installed base, strong customer relationships, and that we believe are ripe for a recovery. We expect to be well positioned to capitalize on that recovery through a strong balance sheet, sufficient liquidity, and a more efficient cost structure,” said Dean E. Taylor, president and chief executive officer of Paragon Offshore.
Holders of Paragon’s 6.75% senior unsecured notes maturing July 2022 and 7.25% senior unsecured notes maturing August 2024 are not party to the term sheet. However, the company said it has been and remains in discussions with the bondholders regarding the terms of a new plan of reorganization.
“Although our new plan is not consensual among all of the creditor groups, we will continue to remain in discussions with the term lenders, revolver lenders, and bondholders in hopes of reaching a fully consensual agreement,” Taylor said.
“However, even if we are unable to reach a consensual deal, we will diligently seek approval of the new plan as outlined in the term sheet. In the interim, Paragon will continue to operate our business in the safe, reliable, and efficient manner for which we are known throughout the industry,” he added.