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Paragon Offshore says debtholders support restructuring plan

February 16, 2016

Paragon Offshore Plc said on Monday the vast majority of its debtholders have agreed to sign its Plan Support Agreement (PSA), as part of its “first day” motions with a U.S. bankruptcy court to facilitate normal operations during its bankruptcy process.

The offshore rig contractor on Sunday filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court in the District of Delaware, becoming the first U.S. energy-related company to seek court protection from creditors this year amid a plunge in oil prices.

As of Monday, the company’s PSA has been signed by an ad hoc committee representing about 77 percent of holders of its senior unsecured notes and a group of about 96 percent of its revolver lenders.

Paragon said it expects to maintain sufficient liquidity throughout the restructuring process.

“We are confident that Paragon will emerge as an even stronger company, better positioned for long-term growth and success,” Paragon’s Chief Executive Randall Stilley said in a statement.

Paragon, spun off from Noble Corp Plc in 2014, said it reached an agreement with its former parent releasing it from any claims related to the spinoff.

The company had long-term debt of about $2.57 billion and cash of $732 million at Sept. 30, according to public filings.

Paragon had hired Lazard Ltd and Weil, Gotshal & Manges LLP to explore strategic alternatives.

The Houston-based driller, which has rigs around the world, said on Friday it would file for a pre-negotiated Chapter 11 bankruptcy and that it had reached an agreement with its debtholders to reduce debt by more than $1.1 billion.

Paragon, which has been struggling with a heavy debt load, decided not to make a $15.4 million bond interest payment due Jan. 15, triggering a 30-day grace period before default.

(Reporting by Radhika Rukmangadhan and Parikshit Mishra in Bengaluru; Editing by Gopakumar Warrier)

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