QGOG Constellation in talks to extend project finance debt facilities - Debtwire

QGOG Constellation in talks to extend project finance debt facilities

08 November 2017 - 12:00 am

QGOG Constellation has started negotiations with certain banks to extend the maturities of its project finance debt facilities, following the settlement of the Alpha Star project finance loan USD 135m balloon payment, according to a source close to and a source familiar with the matter.


The conversations involve around 10 international banks, and some are now at a due diligence stage, “looking at the recent bond exchange transaction in detail,” the source close said, referring to the exchange QGOG Constellation’s 6.25% 2019 notes for senior secured notes due 2024.


The trustees of the syndicates related to the project finance of the drilling rigs Amaralina, Laguna and Brava have hired the Brazilian law firm Stocche Forbes and Cleary Gottlieb Steen & Hamilton as legal advisors, the source familiar said. White & Case is serving as the Brazilian oil and gas services company’s counsel, according to the same source.


The Amaralina rig had outstanding debt of USD 242m as of December 2016, maturing in September 2018, according to a QGOG presentation. The Laguna rig had outstanding debt of USD 250m as of December 2016, maturing in November 2018. Brava had outstanding debt of USD 237m, maturing in September 2020.


“Apparently, the banks are willing to collaborate in the restructuring – they have not offered resistance,” the source close said, noting that the talks are still in an early phase.


The conclusion of the QGOG bond exchange offer in July has provided the company with some room to renegotiate other debts, but the risk of QGOG failing to renew its Petrobras contracts that expire in the next two years remains, as reported.


At first, QGOG focused on the extension of the Alpha Star project finance loan, with no success. The contract for the Alpha Star ultra-deepwater drilling rig expired in July and the vessel is now stacked and under maintenance, according to the source close.


“QGOG is monitoring the market and mapping potential clients in order to have the vessel [Alpha Star] re-contracted,” the source close said. “The company sees an increased interest in the oil and gas sector and it has been attending some bids in the domestic market and also abroad.”


QGOG’s potential clients include Queiroz Galvao Exploracao e Producao (QGEP), the energy company of Queiroz Galvao group. The Queiroz Galvao family owns 74.14% of QGOG Constellation.


In addition to the project finance debt facilities, a USD 175m Bradesco working capital credit is included in QGOG’s bank debt renegotiation process, as reported.


Representatives for QGOG Constellation, Stocche Forbes, Cleary Gottlieb and White & Case did not respond to requests for comment or declined to comment.


The QGOG Constellation 2024 bonds last traded at 76 today including small trades, according to MarketAxess. The 2019 bonds last traded at 85 also today including small trades. The USD 144.5m QGOG Atlantic/Alaskan 5.25% senior secured bonds due 2018 last traded in size at 98.5 today including small trades.


by Aline Lima