Constellation Oil Services Holding S.A. Announces Rights Offering for Eligible Holders of its 9.000% Cash / 0.500% PIK Senior Secured Notes due 2024 to Purchase up to U.S.$27.0 million of 10.00% PIK / Cash Senior Secured First Lien Tranche due 2024
LUXEMBOURG, July 17, 2019 /PRNewswire/ -- Constellation Oil Services Holding S.A. (the "Company") announced today that it will distribute to Eligible Holders (as defined below) of its 9.000% Cash / 0.500% PIK Senior Secured Notes due 2024 (the "Existing 2024 Notes"), on a pro rata basis, non-transferable subscription rights (the "Subscription Rights") to purchase their pro rata share of up to U.S.$27,000,000 in aggregate principal amount (the "Maximum Principal Amount") of the Company's 10.00% PIK / Cash Senior Secured First Lien Tranche due 2024 (the "First Lien Tranche"), together with the right to receive the corresponding principal amount of the Second Lien Tranche and the Third Lien Tranche (each as defined below). The offering (the "Rights Offering") of the First Lien Tranche through the Subscription Rights is being made solely in accordance with the rights offering memorandum, dated July 17, 2019 (as amended or supplemented from time to time, the "Offering Memorandum").
Each Eligible Holder that holds Existing 2024 Notes upon presentation thereof (the "Record Date") will receive one Subscription Right to subscribe for up to its pro rata share (based on the principal amount of Existing 2024 Notes held by such Eligible Holder) of a principal amount of the First Lien Tranche at a purchase price of 100% of the principal amount thereof. To validly exercise the Subscription Rights, Eligible Holders must elect to participate in the Rights Offering on or prior to 5:00 p.m., New York City time, on July 24, 2019, unless extended by us (such time and date, as the same may be extended by the Company, the "Expiration Date"), and Eligible Holders (other than the Backstop Investors (as defined below)) must also submit a complete Subscription Form and fund the purchase of such subscribed for First Lien Tranche such that they are received by the Subscription Agent on or prior to 5:00 p.m., New York City time, on July 26, 2019, unless extended by us (such time and date, as the same may be extended by us, the "Subscription Date").
The Rights Offering and the issuance of the First Lien Tranche are being conducted as part of the Company's judicial reorganization (the "Restructuring"), which was commenced on December 6, 2018 when the Company and certain of the Company's subsidiaries (collectively with the Company, the "RJ Debtors") jointly filed for judicial reorganization (recuperação judicial) (the "RJ Proceeding") based on Brazilian Bankruptcy Law No. 11,101/2005 before the 1(st) Business Court of Judicial District of the Capital of the State of Rio de Janeiro. On June 28, 2019, creditors of the RJ Debtors approved the Company's judicial reorganization plan (the "RJ Plan") at the general creditors' meeting.
Pursuant to the RJ Plan and in accordance with Title 11 of the United States Code (the "Bankruptcy Code"), the Existing 2024 Notes of each holder shall be cancelled in consideration for either Participating Notes (as defined below) or Non-Participating Notes (as defined below). To the extent a holder validly subscribes for and purchases its pro rata share of the First Lien Tranche in accordance with the terms of the Rights Offering, (i) such holder shall receive its purchased amount of the First Lien Tranche; and (ii) in accordance with the RJ Plan and the Bankruptcy Code, the right to receive (a) a principal amount of 10.00% PIK / Cash Second Lien Tranche due 2024 (the "Second Lien Tranche") equal to the lesser of (1) 15 times the principal amount of the First Lien Tranche purchased by such holder in the Rights Offering and (2) the principal amount of Existing 2024 Notes held by such holder on the Record Date and (b) a principal amount of 10.00% PIK / Cash Third Lien Tranche due 2024 (the "Third Lien Tranche" and, together with the First Lien Tranche and the Second Lien Tranche, the "Underlying Tranches") equal to the principal amount of Existing 2024 Notes held by such holder on the Record Date minus the principal amount of the Second Lien Tranche. The First Lien Tranche will have a first-priority lien on the collateral securing the Underlying Tranches, and the Second Lien Tranche and Third Lien Tranche will have a second-priority and third-priority lien, respectively, on such collateral. To the extent an Eligible Holder does not validly subscribe for and purchase its pro rata share of the First Lien Tranche in accordance with the terms of the Rights Offering, such holder shall have the right to receive fourth-lien notes to be issued by the Company (such notes, the "Non-Participating Notes").
As of the date hereof, holders of 52.98% of the outstanding principal amount of the Existing 2024 Notes (the "Backstop Investors") have agreed, under that certain Amended and Restated Backstop Commitment Agreement entered into by the Backstop Investors and the Company on June 28, 2019 (the "Backstop Agreement") to exercise their Subscription Rights in this Rights Offering to purchase the First Lien Tranche. To the extent Subscription Rights to purchase the Maximum Principal Amount of the First Lien Tranche have not been validly exercised as of the Expiration Date, the Backstop Investors have agreed to purchase the unsubscribed portion of the First Lien Tranche, subject to certain conditions.
The Company's obligation to consummate the Rights Offering and issue Participating Notes is conditioned upon the satisfaction or waiver of certain conditions, as described in the Offering Memorandum.
The Rights Offering is being made, and the First Lien Tranche is being offered and will be issued, only (a) in the United States to holders of Existing 2024 Notes who are "qualified institutional buyers" (as defined in Rule 144A under the Securities Act of 1933, as amended (the "Securities Act")) and (b) outside the United States to holders of Existing 2024 Notes who are persons other than U.S. persons in reliance upon Regulation S under the Securities Act. The holders of Existing 2024 Notes who have certified to the Company that they are eligible to participate in the Rights Offering pursuant to at least one of the foregoing conditions are referred to as "Eligible Holders."
Neither the Participating Notes nor the Subscription Rights have been registered under the Securities Act or any state securities laws. Accordingly, the Participating Notes and the Subscription Rights will be subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the Securities Act and other applicable securities laws, pursuant to registration or exemption therefrom.
Neither the Participating Notes nor the Subscription Rights have been approved or recommended by any U.S. federal, state or foreign jurisdiction or regulatory authority. Furthermore, those authorities have not been requested to confirm the accuracy or adequacy of the Offering Memorandum. Any representation to the contrary is a criminal offense. Neither the Participating Notes nor the Subscription Rights have been registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws. Accordingly, the Participating Notes and the Subscription Rights will be subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under the Securities Act and other applicable securities laws, pursuant to registration or exemption therefrom, as described in the Offering Memorandum.
This press release is neither an offer to sell nor the solicitation of an offer to buy any security. The Rights Offering is being made solely pursuant to the Offering Memorandum. No recommendation is made as to whether Eligible Holders should elect to participate in the Rights Offering.
Houlihan Lokey and Alvarez & Marsal are serving as the Company's U.S. and Brazilian financial advisor, respectively, in connection with the Restructuring but is not acting as a dealer manager or other agent of the Company in connection with the Rights Offering. D.F. King & Co., Inc. has been appointed as the information agent for the Rights Offering. Holders of Existing 2024 Notes may contact the information agent to request the eligibility letter in order to become an Eligible Holder at (212) 269-5550 or toll free at (800) 859-8511, or via email at constellationoil@dfking.com. Wilmington Trust, National Association, has been appointed as the subscription agent for the Rights Offering (the "Subscription Agent"). To the extent you have any questions regarding the subscription, please contact Wilmington Trust National Association, as Subscription Agent, at JHClark@wilmingtontrust.com. Suite 2 R, 166 Mercer Street, New York, NY 10012 or contact the Subscription Agent at (212) 941-4439.
NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbor created by such sections and other applicable laws. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, such statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by the "forward-looking statements." The Company undertakes no obligation to release publicly revisions to any "forward-looking statement," including, without limitation, outlook, to reflect events or circumstances after the date of this news release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. Investors should not assume that any lack of update to a previously issued "forward-looking statement" constitutes a reaffirmation of that statement. Continued reliance on "forward-looking statements" is at investors' own risk.
SOURCE Constellation Oil Services Holding S.A.
