Odfjell Drilling cuts rates to support GCMC restructuring

Golden Close Maritime Corp., the owner of the Deep Sea Metro I drillship, is working to restructure debt, as it looks at a long term financing solution amid the challenging offshore oil and gas market.

The company has suffered from the reduction in business activity and rates as there is a reduced demand for drilling capacity from oil and gas companies.

GCMC expects the deep- and ultra-deep-water market to be oversupplied for a period going forward. As a result, securing new contracts has become increasingly difficult, and there is a continued downward pressure on day rates.

GCMC’s, owned 40% by Odfjell Drilling through Deep Sea Metro Ltd, has said it needs improved liquidity to secure and fulfil new contracts for the drillship.

Thus, has entered into negotiations with the Drillship Manager and majority Bondholders about a restructuring proposal that would increase its liquidity (Read in full here: https://bit.ly/2lM92kQ)

The Deep Sea Metro I drillship, GCMC’s main asset is currently in without a contract and in lay-up.

Odfjell Drilling AS, a subsidiary of Odfjell , and the manager of the drillship Deepsea Metro I has agreed to contribute to a solution for GCMC, by entering into a four year management contract with a reduced fee, in return of receiving $40 million in bonds issued by GCMC.

After the restructuring has been completed, Odfjell Drilling AS will hold approximately 9 per cent of the senior secured bonds and the convertible bonds issued by GCMC.

Odfjell Drilling AS has negotiated a short charter contract for the drillship with drilling expected to start in early April. GCMC is dependent on this and future contracts to secure operational cash flow or capital contribution to fulfil its operational and future obligations under the Bond Agreement, the company said.

GCMC and Odfjell Drilling have been focusing on on securing employment for the drillship and thereby avoid cold-stacking.

The rig owner said that keeping the unit warm and occupied on short- to medium term contracts in today’s challenging drilling market is the best way of maintaining the value of the Drillship, even if prevailing market day rates may not fully cover operational costs, nor allow the GCMC to properly service its debt obligations in the short term.

According to the companz the Restructuring is supported by (i) the company’s parent company Deep Sea Metro Ltd, (ii) representatives of  holders of bonds in the Senior Secured Bond Issue holding in excess of 2/3 of the total issued bonds and (iii) Odfjell Drilling AS,  the manager of the Company’s drillship.

The Restructuring Term Sheet is subject to approval from the bondholders in the Senior Secured Bond Issue.

Subject to approval by the bondholders in the bondholders’ meeting expected to take place March 17 2017, an extraordinary general meeting will be held in the company to approve the necessary corporate resolutions required to implement the restructuring, including conversions of debt to shares, issue of
additional bonds, and other corporate resolutions required to implement the restructuring.

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