Constellation Announces Updates Regarding RJ Plan

(Constellation, 2.Jul.2019) — Constellation Oil Services Holding S.A., filed an amended plan (the “Plan”) in its recuperação judicial (“RJ”) proceeding in Brazil on July 1, 2019.  The Plan was approved by approximately 90% of its creditors in amount at the general meeting of creditors (the Assembleia Geral de Credores or “General Meeting”) held on June 28, 2019, and was approved by the judge presiding over the RJ on July 1, 2019.

In connection with the Plan, Constellation entered into a second amended and restated plan support agreement (the “Second A&R PSA”) with (i) 100% of the lenders under its project financings consisting of the syndicated secured credit facility with Amaralina Star Ltd. and Laguna Star Ltd. as borrowers and the syndicated secured credit facility with Brava Star Ltd. as borrower, (ii) Banco Bradesco S.A., Grand Cayman Branch, as lender under its working capital facility, (iii) holders of a majority in amount of the 9.00% Cash / 0.50% PIK Senior Secured Notes due 2024 (the “2024 Notes,” and the holders of the 2024 Notes, the “Noteholders”) issued by the Company pursuant to that indenture dated as of July 27, 2017 by and among the Company, the subsidiary guarantors party thereto and Wilmington Trust, National Association, as trustee, paying agent, transfer agent and registrar, and (iv) its shareholders.  The Company also entered into an Amended and Restated Backstop Commitment Agreement (the “A&R Backstop Agreement”) with the Noteholders that are party to the Second A&R PSA, through which such Noteholders have committed to backstop a rights offering to raise U.S. $27 million of new capital. 

“Having the plan approved with overwhelming support of its creditors is a significant step ahead in the Company’s path to completing its restructuring. The offshore drilling industry is showing new signs of recovery each day and achieving this important milestone, combined with Constellation’s continuous commitment to its fundamental values of safety, work, quality and reliability, will definitely boost the Company’s commercial possibilities,” declared Mr. Guilherme Lima, CEO of the Company.

Discussions with Members of the Ad Hoc Committee of Noteholders

Following the execution of confidentiality agreements (such agreements, including the extensions thereof, the “Confidentiality Agreements”), representatives of the Company and the Company’s financial and legal advisors (the “Company Representatives”) met in person and by telephone at various times with, among other creditors, representatives of an ad hoc committee of Noteholders (the “Ad Hoc Committee”) and the Ad Hoc Committee’s financial and legal advisors (the “Ad Hoc Committee Representatives”) to discuss the terms of a possible consensual restructuring of the 2024 Notes and related matters (a “Potential Transaction”), and exchanged proposals representing the terms of a Potential Transaction (the “Proposals”). Subsequent to these discussions, the Company reached an agreement regarding its restructuring proposal with the Ad Hoc Committee, which was memorialized in the Second A&R PSA and A&R Backstop Agreement.  The Company also reached an agreement regarding the Indenture governing the 10.00% PIK / Cash Senior Secured Notes due 2024 (the “Primary Participating Notes Indenture”), which is consistent with the terms of the Second A&R PSA.  Under the Confidentiality Agreements, the Company is required to publicly disclose these agreements (the “Cleansing Materials”).

The Cleansing Materials consist of (i) the Second A&R PSA, which attaches, inter alia, a term sheet containing the terms of the restructuring (the “Term Sheet”), as well as the A&R Backstop Agreement and a presentation on the Company’s business plan that was shared with the Ad Hoc Committee in May 2019, and (ii) a draft of the Primary Participating Notes Indenture.  All information contained in the Cleansing Materials is accurate as of the date of when delivered to such stakeholders, and has not been updated since such date of delivery. The Second A&R PSA and A&R Backstop Agreement were executed on June 28, 2019, and were attached to the Plan.  In accordance with its obligations under the Confidentiality Agreements, on June 28, 2019, the Company posted the Cleansing Materials on a section of its website  that is readily accessible to the public.  

Certain Other Important Information

In addition to the disclaimers and qualifiers set forth in the Cleansing Materials, all statements made in the Cleansing Materials are in the nature of settlement discussions and compromise, are not intended to be and do not constitute representations of any fact or admissions of any liability and are for the purpose of attempting to reach a consensual compromise and settlement. Nothing contained in the Cleansing Materials is intended to or shall be construed to be an admission or a waiver of any rights, remedies, claims, causes of action or defenses.

Furthermore, the contents of the Cleansing Materials shall not be construed as guidance by the Company in relation to its future results, and the Company does not assume and expressly disclaims any responsibility to update such contents or information at any time.

This press release is neither an offer to sell nor the solicitation of an offer to buy any security. This press release is also not an offer to purchase or a solicitation of an offer to purchase with respect to any security, nor is this press release a solicitation of any consent to any amendments with respect to the 2024 Notes or any other security.

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