Sete Brasil gets debt relief as talks continue, sources say

miércoles 1 de julio de 2015 23:09 GYT

By Guillermo Parra-Bernal

SAO PAULO, July 2 (Reuters) - A group of five Brazilian banks will refinance about 11.5 billion reais ($3.6 billion) in loans for ailing Sete Brasil Participações SA for a further 45 days, in a bid to keep the oil rig maker afloat, two sources with direct knowledge of the matter said on Thursday.

State banks Banco do Brasil SA and Caixa Econômica Federal, as well as private-sector lenders Itaú Unibanco Holding SA, Banco Santander Brasil SA and Banco Bradesco SA waived immediate repayment to allow Sete to continue with a reorganization program, said the sources, who requested anonymity due to legal restrictions on discussing the issue publicly.

Sete's restructuring plan involves trying to reduce the company's obligations by slimming down its operations, the first source said, adding that the plan should make debt-servicing sustainable by as early as September. The banks had previously agreed to forego repayment of the loans in April, when they extended them for an initial 90 days.

When Sete Brasil was founded in 2011, it pledged to spend more than $25 billion to build as many as 28 deepwater drilling platforms that would be leased to state-controlled Petróleo Brasileiro SA. But the latter, known as Petrobras, has been engulfed in a corruption scandal involving key contractors and engineering firms, which stalled rig and equipment purchases.

Rio de Janeiro-based Sete Brasil, founded by Petrobras and banks including Grupo BTG Pactual SA, faces a chronic cash-flow shortage after Petrobras delayed payments and borrowing costs spiked. The second source said the debt relief hinged on Sete Brasil's ability to effectively reduce the scope of its business plan.

Under those terms, Sete Brasil will obtain the necessary financing to produce 14 rigs, with the ownership of another five being shared with Japanese and Singaporean creditors, sources told Reuters in May.

Sete Brasil declined to comment, as did the five banks.

On another front, Sete Brasil and a number of Asian, European and North American investors are in preliminary talks about a potential capital injection, the first source said. Any proposals may only be considered around October, by which time the main aspects of Sete Brasil's operational restructuring will have been agreed upon, the source added.

Both sources denied a report by O Estado de S. Paulo newspaper on Wednesday, which said that Norway's Seadrill Ltd planned to inject about $1.2 billion into Sete Brasil, joining Petrobras, BTG Pactual and creditors as a shareholder.

($1 = 3.1496 Brazilian reais) (Editing by Ed Davies)