Odebrecht Oil & Gas Signs Reorganization Plans

Odebrecht Oleo e Gas S.A. (OOG) and certain subsidiaries have entered into an agreement with a group of creditors to restructure their financial debt. This process will occur by means of an extrajudicial reorganization pursuant to reorganization plans filed before the Court of the State of Rio de Janeiro. The plans are available at the court website and OOG’s website.

The terms of the restructuring were consensually agreed with a group of creditors representing more than 60% of the total amount of the restructured claims.

Pursuant to the plans, the debt securities (Notes) due 2021 and 2022 (2021 Notes and 2022 Notes, respectively), and secured by the drilling units owned by OOG’s subsidiaries, will be exchanged for new notes, with revised terms based on the present cash flow of the assets. Under the terms of the new notes, amortizations will occur quarterly, in two tranches. The first tranche has a fixed amortization schedule, and bears the same interest rate (6.35% pa for the 2021 Notes and 6.72% pa for the 2022 Notes) and the maturity (2021 and 2022) as the current Notes. The second tranche is subordinated to the first tranche and has a 100% variable amortization, based on the cash surplus of the projects. The second tranche Notes will bear interest at a rate 1% pa higher than the first tranche Notes and mature in 2026.

Corporate creditors of OOG will receive, in exchange for their existing debt, new perpetual participatory bonds that ensure the right to receive a share of any dividend distributions of OOG.

Cancellation of Tay IV Charter

OOG has been engaged in constructive discussions with the holders of both the 2021 Notes and 2022 Notes since the end of 2015. The negotiations commenced following the cancellation by Petrobras, in September 2015, of the charter and services agreements of the ODN Tay IV drilling rig which had been scheduled to expire on its terms in 2020. ODN Tay IV is one of the assets securing the 2022 Notes together with three other drillships.

Pursuant to the indenture governing the issuance of the 2022 Notes, upon the cancellation of the charter or services agreement of one of the assets securing the Notes, failure to obtain a new charter or services agreement within a 90-day period results in an event of default. The company was unable to obtain new charter and services agreements due to the challenging market environment in the upstream oil and gas sector worldwide.

Since 2016, the negotiations also included the company's main corporate creditors, which include some of the largest Brazilian banks and large international fixed-income investment funds.

Outlook

We highlight that there are no overdue outstanding debt between OOG and its suppliers and employees. The assets of the company currently in operation remain in regular operation with favorable performance indices. OOG has sufficient resources to continue operating these assets, and the restructuring is not expected to impair or affect OOG’s ability to continue performing its obligations under the existing charter and services agreements.

The restructuring of OOG's debt is intended to enhance the company’s liquidity and strengthen its short and long-term financial position, adjusting its capital structure to allow for growth and to take advantage of any opportunities available once the level of investment in the oil and gas industry recovers. Once the extrajudicial reorganization is approved by the Court of the State of Rio de Janeiro, the terms of the restructuring will be binding on all holders of the 2021 notes, the 2022 notes and creditors of the restructured claims at OOG level.

Disclosed Information

Pursuant to separate confidentiality agreements with certain holders of the Notes, OOG agreed to publicly disclose certain information (the Disclosed Information) after the expiration of a period set forth in the Confidentiality Agreements.

The Disclosed Information is being furnished on the OOG’s website at www.odebrechtoilgas.com to comply with OOG's obligations under the confidentiality agreements.

The disclosure of these materials should not be regarded as an indication that OOG or any other person considered, or now considers, this information to be predictive of actual future results, and does not constitute an admission or representation by any person that such information is material, or that the expectations, beliefs, opinions and assumptions that underlie these materials remain the same as of the date of this disclosure and the information contained in these materials may have been superseded by subsequent developments. Readers are cautioned not to place undue reliance on these materials and are referred to OOG's current public disclosure.

The financial information reflected in the Disclosed Information does not purport to present the OOG's financial condition in accordance with accounting principles generally accepted in the United States or any other country. The OOG's or its affiliates' independent accountants have not audited or performed any review procedures on the Disclosed Information (except insofar as certain historical financial information may have been derived in part from the OOG's or its affiliates historical annual financial statements).