HOUSTON – Vantage Drilling Co. filed for bankruptcy protection late Wednesday night after reaching a deal with its lenders and bondholders to swap $1.15 billion in debt for control of the business, according to a report in the Wall Street Journal.
Under the terms of a proposed plan filed in US Bankruptcy Court in Wilmington, Delaware, Vantage Drilling said the debt-for-equity swap will slash more than $1.6 billion in debt off its books. The restructuring proposal would leave Vantage’s Offshore Group Investment Ltd. (OGIL) subsidiary intact while the Vantage parent company is wound down in the Cayman Islands.
Like others in the industry, Houston-based Vantage has been hamstrung by low oil prices. Over the past year and a half, the price for US crude oil has dropped from more than $100/bbl to the low $40s. In the past year, other contractors such as Hercules Offshore Inc. and Cal Dive International Inc. have also filed for bankruptcy protection.
Although a depression in oil and gas prices this year compounded troubles for these contractors, the report notes that offshore drilling sector has been faced with an oversupply of rigs since late 2013.
Vantage’s deal with its lenders and bondholders slashes $152 million in annual interest expense and will leave the company with $242 million of cash on hand. It lost $6 million on revenue of $638.4 million in the first nine months of the year.
Vantage, which listed total assets of $3.5 billion and debt of $3 billion in bankruptcy court papers, employs 190 people. It says it intends to stay open during the bankruptcy case and business operations will be unaffected.
The company is hoping for a quick trip through bankruptcy court. It is asking the court to schedule a hearing for Jan. 14 to approve its restructuring plan.