Magni Partners Beats Brasfels’ Proposal for Sete Brasil’s Rigs

Magni Partners’ Proposal Outshines That of Estaleiro Brasfels in Angra dos Reis, but Is 54% Below Minimum Floor and Will Need Creditor Approval

Magni Partners has taken the lead over Brasfels in the bidding for the acquisition of the rigs, it is worth noting that the shipyard only submitted a proposal to acquire the two rigs under construction (semi-submersibles Urca and Frade) while Magni Partners submitted proposals for all four (including the drillships Arpoador and Guarapari).

Although the proposals to acquire the four rigs from Sete Brasil with construction halted at the Brasfels shipyards in Angra dos Reis (RJ) and Jurong in Aracruz (ES) were submitted on April 4, only now has the office responsible for the judicial recovery process of Sete Brasil, Licks Contadores Associado, released the results of the submitted proposals.
The delay, according to the office, was due to the need for a thorough analysis of the proposals and the values presented.

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The considered proposal from Magni Partners, which will have Etesco as the operator, was for US$ 250 million, with US$ 62.5 million for each rig, well below the established minimum floor, which was S$ 554 million, a fact that, as stipulated in the notice, will require it to be approved in a creditors’ assembly, on a date yet to be set.
The proposal from Brasfels was for US$ 50 million, with US$ 35 million for the Urca and US$ 15 million for the Frade.

The Creditors

Although there was an expectation that the proposals would come in below the established floor, Sete Brasil, Alvarez & Marsal, and the Licks Contadores Associados office expressed support for the approval of the proposal by the creditors, as they see it as the last opportunity to recover some of the losses incurred by Sete Brasil.

The meeting with the creditors is expected to be scheduled before the end of this April, but first, the creditors must present the proposals for analysis by their boards, and only after obtaining approval will the assembly be scheduled, meaning that it may take place in the first week of May.

The creditors’ assembly can make several decisions, such as approving Magni Partners’ proposal, requesting improvements, rejecting and opening a new bidding process, or simply rejecting and calling for Sete Brasil’s bankruptcy.
One last option could be requesting the shipyards to revise their budgets to finish the rigs, as it is estimated that high values may have impacted the submitted offers.

Sete Brasil’s total debt is US$ 5 billion, and the plan is for only 10% of that amount to be settled with the bidding for the sale of the four rigs.
If the creditors approve Magni Partners’ proposal, Petrobras (the contractor for the rigs for ten years) will still need to approve the presence of Etesco as the operator of the rigs.

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