New Chapter 11 Filing - Pacific Drilling S.A.

Pacific Drilling S.A.

  • 11/12/17 Recap: Another offshore driller finds its way into bankruptcy and, boy!, does its filing attempt to paint one rosy optimistic picture of its particular "competitive strength[]" in the offshore drilling space. But, first, let's take a step back: here, Pacific Drilling ($PACDF), an offshore drilling company formed in 2011 under Luxembourg law, filed bankruptcy in the Southern District of New York after over a year - and we mean YEAR - of speculation that this would end up where it now is. After all, when oil prices are where they are and you provide global ultra-deepwater drilling and complex well construction services to the oil and natural gas industry with high-specification drillships generally stationed in the Gulf of Mexico, the Federal Republic of Nigeria and the Islamic Republic of Mauritania, well, we'd venture an educated guess that the math simply ain't gonna add up. Certainly not at "day rates" averaging an estimated $155k. And so the company has three drillships contracted currently: two on short term agreements and, luckily, one at a well-above market contractual dayrate through September 2019. The others sit "smart-stacked." Choice quote, "My view in light of over 20 years in the industry is that recovery in the market for drilling contracts is a question of “when” not “if”. Pacific Drilling continues to have advantages over competitors with older fleets, as high-specification drilling units are generally better suited to meet the requirements of customers for drilling in deepwater, complex geological formations with challenging well profiles or remote locations. Furthermore, the uniformity and mobility of the Company’s fleet allow a Smart Stacking strategy that will continue to yield cost savings and flexibility if the downturn is prolonged." Clearly those advantages weren't so clear as to form consensus around the negotiating table with the various parties in interest as there is no restructuring support agreement in place here. Nothing like a good old-fashioned free fall into bankruptcy court, an increasingly-rare occurrence these days. 
  • Jurisdiction: S.D. of New York
  • Capital Structure: $3.188b total debt. Ship Group A Debt: $475mm RCF (Citibank NA), $750mm '20 5.375% Notes (Deutsche Bank Trust Company Americas), $718mm Term Loan B Credit Facility (Citibank NA). Ship Group B Debt (SSCF): $492.5mm 3.75% commercial tranche and $492.5mm (Wilmington Trust NA), combined post-amort equaliing $661.5mm outstanding. Ship Group C Debt: $438.4mm '17 7.25% senior secured notes (Deutsche Bank Trust Company Americas)
  • Company Professionals:
    • Legal: Sullivan & Cromwell LLP (Andrew Dietderich, Brian Glueckstein, John Hardiman, Noam Weiss) & Togut Segal & Segal LLP (Albert Togut, Frank Oswald, Scott Ratner)
    • Financial Advisor: Evercore Partners International LLP 
    • Investment Banker: AlixPartners LLP (James Mesterharm)
    • Claims Agent: Prime Clerk LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • RCF Agent: Citibank NA
      • Legal: Shearman & Sterling LLP (Fredric Sosnick)
      • Financial Advisor: PJT Partners LP
    • Ad Hoc Group of RCF Lenders
      • Legal: White & Case LLP
    • SSCF Agent: Wilmington Trust NA
      • Legal: Milbank Tweed Hadley & McCloy LLP (Dennis Dunne, Tyson Lomazow, Matthew Brod)
      • Financial Advisor: Moelis & Company LLC
    • Ad Hoc Group of Ship Group C Debt, 2020 Notes and Term Loan B
      • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Andrew Rosenberg, Elizabeth McColm, Christopher Hopkins)
      • Financial Advisor: Houlihan Lokey
    • 2017 and 2020 Notes Indenture Trustee(s): Deutsche Bank Trust Company Americas
      • Legal: Moses & Singer LLP
    • Large Equityholder: Quantum Pacific (Gibraltar) Limited
      • egal: Skadden Arps Slate Meagher & Flom LLP (Jay Goffman, George Howard)

Updated 11/15/17 at 5:09 pm CT

New Chapter 11 Filing - GST AutoLeather Inc.

GST AutoLeather Inc.

  • 10/3/17 Recap: Disruption, illustrated. The automobile industry is at the beginning of a downturn marked by auto price reductions and a drop in new vehicle production. Automobile output is down 4% over the past year as automobile dealers are placing fewer manufacturing orders and dealing with excess supply. Moreover, auto OEMs are decreasing the leather content in certain new vehicles. Finally, automobiles are lasting longer and "the climbing popularity of ride-sharing services, such as Uber and Lyft...diminish consumers' needs for their own cars." Put simply, there is a demand side decline. Consequently, here, the Southfield Michigan-based supplier of leather interiors filed a freefall bankruptcy with the hope of consummating an expedited (approximately 2-month timeframe) 363 asset sale. The company has secured a $40mm DIP credit facility to fund its bankruptcy; it continues talks with its senior lenders about a stalking horse bid to purchase the company. In addition to the aforementioned macro factors, the company blames its deteriorated financial performance on (i) issues associated with certain new customer launches in Europe, (ii) supply chain issues with a critical Chinese supplier who is using leverage to extract out-of-contract economics from the company and (iii) constraints imposed by significant working capital investments to mitigate supply chain disruption to its customers (which include the likes of major auto OEMs, e.g., Audi, BMW/Mini, Daimler, Fiat Chrysler, Ford, General Motors, Hyundai, Honda, Porsche, PSA, Nissan, Kia, Toyota and Volkswagen).
  • Jurisdiction: D. of Delaware (Judge Silverstein)
  • Capital Structure: $24mm '19 RCF, $140mm '20 TL-B (Royal Bank of Canada), $32mm mezz debt (Triangle Capital Corp./Alcentra Capital Corp.)
  • Company Professionals:
    • Legal: Kirkland & Ellis LLP (James Sprayragen, Ryan Blaine Bennett, Michael Slade, Alexandra Schwarzman, Timothy Bow, Benjamin Rhode, Luke Ruse) & (local) Pachulski Stang Ziehl & Jones LLP (Laura Davis Jones, Timothy Cairns, Joseph Mulvihill)
    • Financial Advisor/CRO: Alvarez & Marsal North America LLC (Jonathan Hickman, Jay Herriman)
    • Investment Banker: Lazard Middle Market (Jason A. Cohen)
    • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name above for free docket access)
  • Other Parties in Interest:
    • Sponsor: Advantage Partners
    • Lender Group (Royal Bank of Canada, as DIP Admin Agent)
      • Legal: Paul Hastings LLP (Andrew Tenzer, Michael Comerford, Shlomo Maza) & Young Conaway Stargatt & Taylor LLP (Pauline Morgan, M. Blake Cleary, Justin Rucki)
      • Financial Advisors: FTI Consulting
    • Mezzanine Lenders:
      • Legal: McGuireWoods LLP (Anne Croteau, Douglas Foley) & (local) Benesch Friedlander Coplan & Aronoff LLP (Jennifer Hoover, William Alleman Jr.)
    • Official Committee of Unsecured Creditors
      • Legal: Foley & Lardner LLP (Erika Morabito, Brittany Nelson, John Simon, Richard Bernard, Leah Eisenberg) & (local) Whiteford Taylor & Preston LLC (Christopher Samis, L. Katherine Good, Kevin Shaw, Christopher Jones, David Gaffey)
      • Financial Advisor: Berkeley Research Group LLC (Christopher Kearns, Peter Chadwick, Michelle Tran, Kevin Beard, Jay Wu)
      • Investment Banker: Configure Partners LLC (Jay Jacquin)

Updated 11/15/17 7:55 am CT