Odfjell Drilling
Odfjell Drilling Hunts for Investors for Deep Sea Metro II Auction
Wed 08/26/2015 09:18 AM
Relevant Documents:
Chloe Marine Q2 2015
Chloe Marine Key Specifications
Chloe Marine Q115
Chloe Marine FY14
Odfjell Drilling Q2 2015 Presentation
Odfjell Drilling Q2 2015 Report
The upcoming auction for the distressed offshore rig Deep Sea Metro II continues to take shape. Odfjell Drilling, the partial owner of the Deep Sea’s parent company, is the latest to emerge as a potential bidder - looking to form a consortium of investors in a deal that would also allow Odfjell to repurchase the asset from those investors in the future, according to sources who spoke to Reorg Research. Odfjell has tapped advisors from Swedbank to assist in the formation of its plan, according to the sources.
Deep Sea Metro II is controlled by holding company Chloe Marine, the issuer of $278 million of bank debt and a $150 million bond maturing in December 2016. Odfjell Drilling, manager of the vessel, owns 40% of equity and 50% of voting rights in Deep Sea Metro, Chloe’s parent. The remainder is controlled by Metro Exploration Holding, which was taken over by its bondholder after a debt-for-equity swap earlier this year.
The attention on the Deep Sea Metro II is heightened, as it marks the first opportunity for a distressed sale in the offshore sector and will therefore, provide the market an important data point for future asset sales. The precipitous fall of oil prices from last summer combined with an excessive number of rigs has left the industry reeling with an oversupply of rigs and rock-bottom day rates - making more auctions likely in the near future.
As that scenario unfolds, market participants continue to game-theory other potential bidders, with some pointing to Seadrill president and shipping magnate John Fredriksen as a likely player in the auction, particularly considering that he owns a considerable amount of Golden Close bonds, an affiliated company that owns Deep Sea Metro I.
Meanwhile, sources say large private-equity funds, or hedge fund investors carving out a new fund, are organizing ahead of the auction.
Despite its current stake in it, Odfjell’s plan does not give the company a significant inside track while vying for the Metro II, according to the sources familiar with the process. If successful in finding investors, its proposal will be included with those from other bidders. All bids will be reviewed and approved by the company’s current bondholders. Chloe Marine is currently in default of its bank facilities.
The motive behind Odfjell’s plan is clear: to recoup whatever investment that company has already made in the asset, the sources said. Still, its creation of a partnership with investors could prove difficult, particularly if the company is unwilling to put up equity as part of the bid, one of the sources said.
As of the end of the first quarter 2015, Deepsea Metro II’s book value fell to $688 million, from a year-end balance of $695 million and $845 million in December 2013, according to the company’s earnings. Creditors expect that the ship could be valued between $350 million and $500 million in a sale, as reported by Reorg.
Chloe’s creditors are not the only investors looking at the recovery deriving from the sale of Deepsea Metro II. Majority shareholder Metro Exploration Holding - or Metro Ex - is also vying for recovery, as reported. Chloe’s creditors include among others DVB Bank America NV and ABN Amro who provided the company with $400 million in November 2011 to part-finance the purchase Deepsea Metro II.
On Aug. 14, Chloe Marine said it formally started the sale of ultra-deepwater drillship Deepsea Metro II. The company appointed Pareto Offshore AS as exclusive broker for the disposal of the vessel.
As reported by Reorg Research, Diamond Offshore offered $300 million for the Deepsea Metro II drillship. The company’s creditors declined the offer, which they considered too low. The drillship has been warm-stacked off the coast of Brazil since May, when a contract with Petrobras expired and was not renewed.
Creditors and owners, advised by Akin Gump and AMA Capital, have been examining their options for some time in expectation of a liquidity crisis at Chloe.
The group’s structure is provided below:
Odfjell Drilling, Golden Close and Chloe Marine all reported results today.
A summary of Chloe Marine’s, Golden Close’s and Metro Exploration’s capital structures, based on the latest available accounts, is provided below:
Chloe Marine:
Golden Close:
Metro Exploration:
Chloe Marine Q2 2015
Chloe Marine Key Specifications
Chloe Marine Q115
Chloe Marine FY14
Odfjell Drilling Q2 2015 Presentation
Odfjell Drilling Q2 2015 Report
The upcoming auction for the distressed offshore rig Deep Sea Metro II continues to take shape. Odfjell Drilling, the partial owner of the Deep Sea’s parent company, is the latest to emerge as a potential bidder - looking to form a consortium of investors in a deal that would also allow Odfjell to repurchase the asset from those investors in the future, according to sources who spoke to Reorg Research. Odfjell has tapped advisors from Swedbank to assist in the formation of its plan, according to the sources.
Deep Sea Metro II is controlled by holding company Chloe Marine, the issuer of $278 million of bank debt and a $150 million bond maturing in December 2016. Odfjell Drilling, manager of the vessel, owns 40% of equity and 50% of voting rights in Deep Sea Metro, Chloe’s parent. The remainder is controlled by Metro Exploration Holding, which was taken over by its bondholder after a debt-for-equity swap earlier this year.
The attention on the Deep Sea Metro II is heightened, as it marks the first opportunity for a distressed sale in the offshore sector and will therefore, provide the market an important data point for future asset sales. The precipitous fall of oil prices from last summer combined with an excessive number of rigs has left the industry reeling with an oversupply of rigs and rock-bottom day rates - making more auctions likely in the near future.
As that scenario unfolds, market participants continue to game-theory other potential bidders, with some pointing to Seadrill president and shipping magnate John Fredriksen as a likely player in the auction, particularly considering that he owns a considerable amount of Golden Close bonds, an affiliated company that owns Deep Sea Metro I.
Meanwhile, sources say large private-equity funds, or hedge fund investors carving out a new fund, are organizing ahead of the auction.
Despite its current stake in it, Odfjell’s plan does not give the company a significant inside track while vying for the Metro II, according to the sources familiar with the process. If successful in finding investors, its proposal will be included with those from other bidders. All bids will be reviewed and approved by the company’s current bondholders. Chloe Marine is currently in default of its bank facilities.
The motive behind Odfjell’s plan is clear: to recoup whatever investment that company has already made in the asset, the sources said. Still, its creation of a partnership with investors could prove difficult, particularly if the company is unwilling to put up equity as part of the bid, one of the sources said.
As of the end of the first quarter 2015, Deepsea Metro II’s book value fell to $688 million, from a year-end balance of $695 million and $845 million in December 2013, according to the company’s earnings. Creditors expect that the ship could be valued between $350 million and $500 million in a sale, as reported by Reorg.
Chloe’s creditors are not the only investors looking at the recovery deriving from the sale of Deepsea Metro II. Majority shareholder Metro Exploration Holding - or Metro Ex - is also vying for recovery, as reported. Chloe’s creditors include among others DVB Bank America NV and ABN Amro who provided the company with $400 million in November 2011 to part-finance the purchase Deepsea Metro II.
On Aug. 14, Chloe Marine said it formally started the sale of ultra-deepwater drillship Deepsea Metro II. The company appointed Pareto Offshore AS as exclusive broker for the disposal of the vessel.
As reported by Reorg Research, Diamond Offshore offered $300 million for the Deepsea Metro II drillship. The company’s creditors declined the offer, which they considered too low. The drillship has been warm-stacked off the coast of Brazil since May, when a contract with Petrobras expired and was not renewed.
Creditors and owners, advised by Akin Gump and AMA Capital, have been examining their options for some time in expectation of a liquidity crisis at Chloe.
The group’s structure is provided below:
Odfjell Drilling, Golden Close and Chloe Marine all reported results today.
A summary of Chloe Marine’s, Golden Close’s and Metro Exploration’s capital structures, based on the latest available accounts, is provided below:
Chloe Marine:
Golden Close:
Metro Exploration:
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