Ocyan completes its $2.7 billion cross-border restructuring

PwC Legal advised certain subsidiaries of Ocyan S.A., a Brazilian offshore oil and gas industry services provider with over 45 years of experience in the oil and gas industry in the restructuring of approximately $2.7 billion of indebtedness.

The restructuring which closed on 7 June 2023 was implemented through an extrajudicial proceeding approved in Brazil and recognized in the United States under Chapter 15 of the US Bankruptcy Code.

Foresea, a new Brazilian drilling contractor, has emerged out of this major restructuring process that saw local oilfield services provider Ocyan spun off its rig business.

Bondholders including AIG Asset Management, Contrarian Capital Management, Moneda and Allianz agreed to convert $2.7 billion of Ocyan debt into capital, giving birth to a new entity responsible for owning and operating five rigs.

With a backlog order of $2.4 billion thanks to long-term charters for the semi-submersible rig Norbe VI and the drillships Norbe VIII, Norbe IX, ODN I and ODN II, Foresea replaces Ocyan in the drilling arena and is looking for opportunities to win contracts abroad.

The main outcomes of the restructuring include:

• reducing the drilling business’s debt by approximately $2.4 billion to approximately $300 million
• extending debt maturities and providing an approximately $197 million new money investment
• enhancing liquidity and operating flexibility for continued growth and monetization of the project companies’ well-invested oil and gas assets
• an organizational restructuring of the drilling business, which will continue to be led by former officers of Ocyan.

As consideration in the restructuring, the project companies’ existing debt was exchanged for a combination of consideration consisting of cash, equity in a new Luxembourg company (Foresea Holding S.A.) to which the reorganized drilling business (including the equity in the project companies) was transferred, new unsecured notes in a new Luxembourg-domiciled company (ConvertCo) and $300 million of new senior secured notes due 2030 issued by Foresea.

Ocyan will now focus on the continued development of its operations in floating production storage and offloading units, and subsea and offshore maintenance services and is also looking into new energies and services to integrate into its portfolio.

Our banking & capital markets team led by Cédric Raffoul (Partner), together with Sixtine Auguet (Senior Associate), Maureen Bayart (Associate) and Elsa Becker (Paralegal) as well as our corporate team led by Jean-Yves Lhommel (Partner) together with Mathieu Feldmann (Senior Counsel), Maxime Gilot (Counsel), Jean-Baptiste Joannard-Lardant (Senior Associate), Jean Valat (Senior Associate) and Amaury Bellac (Junior Associate) advised Ocyan S.A. as to Luxembourg law aspects.

Other key players involved in the restructuring were Eduardo Munhoz Advogados, Pinheiro Neto Advogados, Cleary Gottlieb and Davis Polk & Wardwell LLP.