Aban Offshore hires Deloitte to draw up a debt resolution plan
Deloitte, while formulating the debt resolution plan, will take into consideration the one-time settlement that Aban Offshore has offered to its lenders
Mumbai: Lenders to Aban Offshore Ltd, India’s largest offshore oil drilling company, have appointed Deloitte Touche Tohmatsu India LLP as their adviser to assist them in hammering out a resolution plan for the debt-laden company. The company, which owes about $2 billion to its creditors, has also offered a one-time settlement (OTS) to the lenders which will also be taken up for discussion, two people close to the development told Mint, on condition of anonymity.
“Majority of Aban’s loans are foreign loans and most of its assets are overseas. The lenders including ICICI Bank, State Bank of India, Axis Bank and Punjab National Bank among others have therefore appointed Deloitte to assist them in figuring out a debt resolution plan for Aban Offshore,” said the first person cited above.
Besides other restructuring plans, Deloitte will also be discussing with lenders the OTS proposal offered by Aban Offshore, he added.
The second person mentioned said that it will be difficult to get any value if the company is admitted to NCLT as there is a backlog of newer and cheaper rigs.
“Rigs are mere steel structures and are unlikely to fetch lenders anything. Moreover, expenses will have to be incurred to service the rigs till the time they are sold. Aban has been a victim of rig rage where it aggressively bought rigs at high valuations,” he said.
Aban Offshore, SBI, ICICI Bank, PNB and Deloitte did not respond to emails seeking comment.
“As a matter of policy, Axis Bank does not comment on client specific information,” an Axis Bank spokesperson said in an email response.
Aban Offshore featured in a list of 28 non-performing accounts released by the Reserve Bank of India in August 2017 directing banks to resolve their bad loans under the Insolvency and Bankruptcy Code. The lenders were to arrive at a resolution plan by last week of December or admit the companies to National Company Law Tribunal for resolution.
“In case the assets of a company are largely situated overseas, then it becomes challenging for the lenders to take the NCLT route for resolution. For a resolution professional with a mandate to keep the company as a going concern, it becomes difficult to keep a track of overseas operations. Thus, lenders are more likely to prefer out of the court restructuring or settlement,” said Ashish K. Singh, founder partner at law firm Capstone Legal.
Aban Offshore was jointly incorporated in 1986 by Aban Constructions Pvt. Ltd and iChiles Offshore Inc. (COI), a US-based offshore drilling company. The company and its wholly owned subsidiaries had a total of 18 assets by the end of March 2016 including 15 jack-up rigs, two drill ships and one offshore production unit, as per Registrar of Company filings.
Mint had reported on 8 January 2018 that promoters of Aban Offshore had offered to pay up $600 million as OTS to 17 of its lenders. The company has tied up with external investors to raise funds for one-time settlement. The banks, however, are not willing to take a haircut of more than 50% which means that Aban will have to repay at least $1 billion to the lenders.
Aban is the flagship company of Aban Group offering offshore drilling services to companies engaged in exploration and production of oil and gas. For the quarter ended 31 March 2018, the company’s consolidated net loss stood at ₹ 1,780 crore as against a net loss of ₹ 297 crore in the previous year. Its total income also dipped to ₹ 337 crore from ₹ 398 crore during the reporting period.
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