Ocean Rig UDW Inc., the Nasdaq-listed international contractor of offshore deepwater drilling services, completed one of the largest cross-border restructurings in the Cayman Islands and emerged from bankruptcy last week.

The restructuring substantially deleveraged the group’s companies by exchanging US$3.7 billion in debt for new equity, $288 million in cash and $450 million of secured debt.

The restructuring reduced net debt by approximately $3.25 billion and involved the provision of a new US$450 million credit facility. Creditors received ordinary shares, cash and new loan notes in consideration of the release of debt. In addition, potential claims against the group were transferred into a preserved claims trust to allow creditors to share on a ratable basis in any recoveries from such claims, law firm Appleby noted in a press statement.

Appleby Cayman acted as Cayman Islands counsel to the Ad Hoc Group of Creditors on the financial restructuring of Ocean Rig UDW Inc. and three of its subsidiaries through four interconnected Cayman Schemes of Arrangement and Chapter 15 recognition.

David Bulley, who led the Appleby team on restructuring and corporate matters, said, “This was a highly complex deal involving the re-domiciliation of Ocean Rig UDW Inc. and a COMI (center of main interest) shift for three subsidiaries from the Marshall Islands to Cayman.

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“More importantly, this is a deal which almost certainly wouldn’t have been possible in a U.S. Chapter 11 and highlighted the flexibility of the Cayman scheme of arrangement which may be utilized going forward by other entities incorporated in jurisdictions with limited restructuring toolkits,” he added.

The debt restructuring was implemented through the appointment of joint provisional liquidators, Simon Appell of AlixPartners and Eleanor Fisher of Kalo Advisers, over four holding companies in the Ocean Rig group.

“The restructuring provides the Ocean Rig group with a vastly deleveraged capital structure and allows the group to face the ongoing challenging market conditions with renewed optimism,” AlixPartners said in a press statement.

The company reported it now has projected assets of about $2.9 billion, debt of about $567 million and total cash of $690 million.

Companies that operate deepwater drilling rigs have faced tumultuous market conditions in recent years, following a sharp decline in the price of oil.

The share prices of most major offshore rig companies have dropped to decade lows, and daily rental rates for deepwater rigs have plummeted in line with their usage. However, data from HIS RigPoint shows that the use of rigs halted its decline last year and is now flat.

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