GRAND CAYMAN, Cayman Islands--(BUSINESS WIRE)--Sep 6, 2018--Schahin II Finance Company (SPV) Limited (the “ Company ”) announced today that a Practice Statement Letter has been issued by Deutsche Bank Trust Company Americas (solely in its capacity as Indenture Trustee (the “ Indenture Trustee ”) for the 5.875% notes due 2022 (the “ Existing Notes ”) issued by the Company) with respect to a Cayman scheme of arrangement (the “ Cayman Scheme ”) of the Company. The purpose of the Cayman Scheme is to raise an additional $15 million of new capital through the issuance of a new series of notes (the “ New Notes ”). The New Notes will be available, subject to certain conditions, to holders of the Existing Notes on a pro rata basis. The New Notes will have a senior position above the Existing Notes in the payment waterfall. The rights of the Existing Notes will generally remain unchanged; however, voting under the indenture will require a majority of holders of each series of notes.

Holders of Existing Notes that wish to obtain further information about the Scheme should contact Epiq, the SPV’s Information Agent or FFS, the SPV’s Cayman Islands agent, as detailed below.

The material terms of the New Notes are:

$15 million cash proceeds 18 month maturity First priority in payment waterfall 7% OID PIK interest of 8% If the vessel is sold before the repayment of the New Notes, holder will receive the greater of the PIK interest and 22% of the net proceeds from the sale of the drillship Sertão (the “ Vessel ”) after payment of the New Notes and costs . Secured pari passu over the Vessel and transaction cash accounts

The full offering amount of the New Notes is being backstopped by certain members of a steering committee of holders of the Existing Notes (the “ Steering Committee ”). Such backstop parties will be paid a backstop fee of 3% of the $15 million investment, payable in New Notes.

The investment in the New Notes will provide the Company with additional liquidity to continue to maintain the Vessel and weather the industry downturn, covering the ‘warm stacking’ of the vessel, insurance costs and other advisor fees, and is estimated to provide liquidity through the maturity date of the New Notes. Earlier in 2018, the Indenture Trustee, acting at the direction of a majority of holders of the Existing Notes, obtained an order for the appraisement and sale of the Vessel in the English Admiralty Court. A sealed tender auction was held, with bids due by June 12, 2018. The bids received were well below the auction reserve price and thus the auction did not result in a sale. The liquidity provided by the New Notes will allow the owner of the Vessel, Dleif Drilling, LLC (“ Dleif ”) (which is a party to the Indenture) to, in consultation with the Steering Committee, market the Sertão for sale in an improved industry environment. Pareto Securities remains engaged as broker to Dleif and continues to actively market the rig to interested parties.

The Scheme is conditional on the requisite creditor approval, sanction by the Cayman Court, and being given effect by the U.S. Bankruptcy Court pursuant to a Chapter 15 proceeding to recognize the Cayman Scheme in the U.S. If the Scheme is not approved and the New Notes are not issued, there may not be sufficient liquidity to maintain the Vessel going forward, which would likely result in a loss of value to holders of the Existing Notes.

For information on this press release, please contact Ben Hobden of Conyers Dill & Pearman, Cayman Islands legal counsel to the Issuer.

View source version on businesswire.com:https://www.businesswire.com/news/home/20180906005980/en/

CONTACT: Conyers Dill & Pearman

Ben Hobden

ben.hobden@conyersdill.com

KEYWORD: UNITED STATES NORTH AMERICA CARIBBEAN CAYMAN ISLANDS

INDUSTRY KEYWORD: ENERGY OIL/GAS PROFESSIONAL SERVICES BANKING FINANCE

SOURCE: Schahin II Finance Company (SPV) Limited

Copyright Business Wire 2018.

PUB: 09/06/2018 06:48 PM/DISC: 09/06/2018 06:48 PM

http://www.businesswire.com/news/home/20180906005980/en