Kroll’s client Keppel Offshore & Marine, Ltd. (“Keppel”) had invested in an offshore oil and gas services provider, Floatel International, Ltd. (“Floatel”), which had accumulated USD 825.5 million (mn) of debt.
Keppel was a 49.9% shareholder of Floatel and had advanced a shareholder loan of USD 241.5 mn to Floatel. Floatel had also entered into a USD 150 mn syndicated facility agreement and a USD 100 mn revolving credit facility with four European banks (“lenders”) in 2018; raised USD 400 mn first-lien bonds in 2019; and raised USD 75 mn second-lien bonds in 2019.
With languishing oil prices, the deferral of client contracts and the onset of the COVID-19 pandemic, Floatel’s liquidity was under pressure as bond and bank payments were due. Floatel called a standstill with its lenders and holders of the first-lien bonds.
Through extensive negotiations with all stakeholders, a fully consensual restructuring was agreed upon in early 2021.
Kroll successfully led a fully consensual USD 825 mn restructuring of Floatel. The restructuring involved multiple diverse stakeholders located in different jurisdictions, each having varying security positions, negotiating strategies and desired outcomes. Our client had zero security and was at the bottom of the capital structure but had the financial capability to provide credit support and facilitate new funding for Floatel—funding that was absolutely necessary for any restructuring to succeed.
We helped preserve maximum value and achieved a sustainable, long-term restructuring plan to allow Floatel to survive and take advantage of expected future improvements in the oil and gas industry (which is not the case today globally for oil and gas). As an unsecured creditor and shareholder, Keppel was facing a zero return on its investment if a restructuring was not agreed to. When Floatel commenced its restructuring efforts, Keppel was forced to recognize an SGD 311 mn impairment of its investments in Floatel. Through Kroll’s successful restructuring negotiation, Keppel recognized a gain of SGD 269 mn on its investments in Floatel.