Shareholders of Sete Brasil, top client of Keppel and SembMarine, approve plan to file for bankruptcy

SAO PAULO (BLOOMBERG)
– Shareholders of oil-rig supplier Sete Brasil Participacoes agreed to a plan
to file for bankruptcy protection after its single client, Brazil state oil
giant Petrobras, failed to present a viable book order.
A Sete Brasil official
confirmed on Wednesday (April 20) that investors are backing the plan and
declined to elaborate. Shareholders had set that day as a deadline for Petroleo
Brasileiro or Petrobras to propose a book order that could pay back the capital
they had injected into the company, according to sources. Petrobras, which is a
shareholder and Sete’s only client, didn’t vote, they said.
The company may list
about 18 billion reais (S$6.86 billion) in liabilities, one of the people said.
Law firm Sergio Bermudes Advogados in Rio de Janeiro will work on the
bankruptcy plans, according to the people.
Keppel Corp, the
world’s largest builder of oil rigs, this week posted a 41 per cent fall in
quarterly profit, its fourth straight decline, after the deferment of some
projects and suspension of contracts related to its biggest single client Sete
Brasil.
Sete stopped paying Keppel last year on some US$4.9
billion worth of rig orders. Keppel announced a S$230 million charge in January
on the delinquent projects.
Sembcorp Marine
meanwhile has seven drillships worth US$7 billion in total on its order books
from Sete and has set aside S$329 million.
A spokesman for the
law firm declined to
comment, and a representative of Petrobras didn’t
immediately respond to a message seeking comment.
The oil-rig operator
was created in 2011 to build the world’s biggest deep-water drilling fleet for
Petrobras, which later cut the number of rigs it planned to lease from
Sete to 10 from 28 amid plunging oil prices and the nation’s biggest-ever
corruption probe. The probe saw several of Petrobras’s former executives
jailed.

The smaller order
wouldn’t be enough to repay 8.25 billion reais that shareholders invested in
Sete Brasil, forcing them to inject more money into the business, the people
said.

The shareholders,
which include Grupo BTG Pactual and Banco Santander, among others, have been
discussing the bankruptcy filing for at least three months, according to people
involved in the talks. Creditors, which loaned about US$3.6 billion and include
Banco Bradesco SA and Itau Unibanco Holding SA, had repeatedly renewed a
standstill loan as Brazil’s BNDES development bank froze a 10 billion-real
loan to Sete Brasil last year. The current standstill will mature next month.

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