Vantage Says Reaches Deal with Lenders, Unit to File for Bankruptcy
Dec 2 (Reuters) - Offshore driller Vantage Drilling Co said it reached a support agreement with lenders and noteholders holding more than $1.6 billion in debt to reduce interest expense but one of its units will file for U.S. bankruptcy on Dec. 3.
The agreement and bankruptcy will help its subsidiary Offshore Group Investment Ltd to ride out a downturn in the energy sector.
The company said the deal with lenders calls for deleveraging the unit, which holds the contracts for some of its rigs.
"The agreement we've reached with our lenders and note holders will eliminate more than $152 million of annual cash interest expense and position us with a strong, deleveraged balance sheet expected to have more than $242 million of cash on hand," said Paul Bragg, chief executive officer of Vantage.
Separate proceedings in connection with winding down Vantage will be commenced in the Cayman Islands, where the company is based.
Many oil producers have cut back on drilling due to a steep drop in oil prices since June last year leading to contract driller Hercules Offshore filing for bankruptcy in August. The company emerged from bankruptcy in November.
Vantage has also been dogged by legal problems and is being investigated by the U.S. Department of Justice related to its connection in the biggest corruption scandal in Brazil's history.
Vantage said on Wednesday the deal reached with lenders and note holders would provide $75 million in new capital to support worldwide operations.
The agreement also provides for a debt-for-equity swap that will enable existing term loan lenders and secured note holders to convert their loans and notes into equity and a pro rata share of $750 million of senior subordinated notes.
Vantage Drilling operates four drillships and three jackup rigs that it has contracted out to major energy companies such as Total and Petronas in Asia, Africa and the Gulf of Mexico.
(Reporting by Shubhankar Chakravorty in Bengaluru; Editing by Lisa Shumaker)
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