We advised Ocyan in connection with the restructuring

Davis Polk advised Ocyan S.A and certain of its subsidiary project companies in connection with the consensual cross-border restructuring of approximately $2.7 billion of indebtedness, which closed on June 7, 2023. The restructuring, which was implemented through a recuperação extrajudicial (EJ) proceeding, was previously approved by the 4th Business Court of the Judicial District of Rio de Janeiro, Brazil, on March 20, 2023, and subsequently recognized in the United States under chapter 15 of the U.S. Bankruptcy Code on May 4, 2023, in a proceeding before the United States Bankruptcy Court for the Southern District of New York.

The effectiveness of the EJ restructuring plan marks the final step in the project companies’ comprehensive cross-border debt and organizational restructuring of Ocyan’s drilling business. The key outcomes of the restructuring include: (a) reducing the drilling business’s debt by approximately $2.4 billion to approximately $300 million; (b) extending debt maturities and providing an approximately $197 million new money investment; (c) enhancing liquidity and operating flexibility for continued growth and monetization of the project companies’ well-invested oil and gas assets; and (d) effectuating an organizational restructuring of the drilling business, which will continue to be led by former officers of Ocyan.

Similarly, the restructuring will result in significant deleveraging of Ocyan’s balance sheet through the elimination of approximately $2.7 billion in indebtedness. The restructuring is intended to allow each of Ocyan and the project companies to enhance its liquidity, strengthen its short- and long-term financial position and take advantage of opportunities available in the oil and gas industry. In addition, Ocyan will focus on the continued development of its operations in floating production storage and offloading units (“FPSOs”), and subsea and offshore maintenance services. Ocyan will retain a 6.5% equity stake in DrillCo (as defined below) on account of its pre-EJ interests, and a seat on DrillCo’s board of directors.

As consideration in the restructuring, the project companies’ old notes were exchanged for a combination of consideration consisting of cash, equity in a new Luxembourg-domiciled holding company (“DrillCo”) to which the reorganized drilling business (including the equity in the project companies) was transferred, new unsecured notes in a new Luxembourg-domiciled holding company (“ConvertCo”) and $300 million of new senior secured notes due 2030 issued by DrillCo.

Ocyan is a Brazilian company with over 45 years of experience in the oil and gas industry. Ocyan acts in the key offshore segments, from production to offshore maintenance and subsea services.

The Davis Polk corporate team includes partner Manuel Garciadiaz, counsel Drew Glover and James Vickers and associates Matt Weaver and Luis Felipe Sousa. The restructuring team includes partner Eli J. Vonnegut, counsel Joanna McDonald and Robert (Bodie) Stewart and associate Matthew B. Masaro. The tax team includes counsel Tracy L. Matlock and associate Tyler Scheiner. Members of the Davis Polk team are based in the New York, Northern California and São Paulo offices.