CDVIQ Cal Dive International Inc (CE)

Vantage Drilling Co. filed for bankruptcy protection late Wednesday night after reaching a deal on a debt-for-equity swap with its lenders and bondholders.

The company filed for chapter 11 protection In U.S. Bankruptcy Court in Wilmington, Del., along with affiliate Offshore Group Investment Ltd., with a restructuring pact that would convert $1.6 billion in debt into equity in the reorganized business plus $750 million in new senior subordinated bonds.

Houston-based Vantage is a contract rig operator. It had earlier hired financial advisers Lazard Freres & Co. to implement a review of the company's financial and strategic options.

"Vantage and OGIL have been working on a path forward to deleverage its capital structure and take advantage of market opportunities with a strong balance sheet in light of market conditions," said Paul Bragg, Vantage and OGIL's chief executive officer.

Like others in the oil-and-gas industry, Vantage has been hamstrung by stubbornly low oil prices. Over the past year and a half, the price for U.S. crude oil has dropped from more than $100 a barrel to the low $40s. In the past year, rig operators Hercules Offshore Inc. and Cal Dive International Inc. have also filed for bankruptcy.

Although a depression in oil and gas prices this year compounded troubles for these rig contractors, the offshore drilling sector has been facing an oversupply of drilling rigs since late 2013. With customers turning their focus to onshore shale gas drilling, offshore operations have seen customers reduce their expenditures.

Vantage's deal with its lenders and bondholders slashes $152 million in annual interest expense and will leave the company, which listed total debt of $2.6 billion earlier this year, with $242 million of cash on hand.

Mr. Bragg said Vantage and OGIL will stay open during the bankruptcy case and business operations will be unaffected. F3 Capital, an entity 100% owned and controlled by Hsin-Chi Su, who is also known as Nobu Su, a former director of Vantage Drilling, owns 32.9% of the company, according to court papers.

The law firm of Weil, Gotshal & Manges is handling the chapter 11 case and Lazard is serving as financial adviser to Vantage and OGIL.

Stephanie Gleason contributed to this article.

Write to Patrick Fitzgerald at patrick.fitzgerald@wsj.com

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(END) Dow Jones Newswires

December 03, 2015 09:25 ET (14:25 GMT)

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