CALGARY — Tuscany International Drilling Inc. has appointed an outside consultant as chief restructuring officer as a condition of reworking its credit lines, it announced Thursday.
The cash-strapped Calgary driller with assets in South America and Africa announced it had struck a deal with Credit Suisse AG, Cayman Islands branch, to amend its $255-million US senior secured guaranteed credit agreement.
“In order to satisfy the conditions associated with the amending agreement, the company has engaged Mr. Deryck Helkaa of FTI Consulting Canada Inc. as chief restructuring officer,” it said, adding it would provide no further comment.
Helkaa is to help Tuscany with its review of strategic alternatives launched in April to restructure its balance sheet.
Two weeks ago, Tuscany unveiled a survival plan under which it will sell all of its African assets — nine drilling and workover rigs — plus two rigs in Colombia to French company Etablissements Maurel et Prom S.A., or M&P, the same company from whom it bought subsidiary Caroil SAS in a $202-million cash-and-shares deal two years ago.
Tuscany would get $23 million in cash and M&P would assume $50 million in long-term debt and return the 109 million shares of Tuscany paid out for Caroil in 2011. The 2011 deal also included $120 million in cash.
The sale isn’t expected to close, however, until year-end, necessitating Thursday’s deal which allows Tuscany to make withdrawals from its debt service reserve account until Jan. 2 to pay operating and capital costs.
Because it has 29 per cent of Tuscany’s shares, M&P is considered an insider and the deal would normally have to be approved by shareholders. However, Tuscany said it has applied for a “financial hardship exemption” from the Toronto Stock Exchange rule.
Also two weeks ago, the exchange announced it would give Tuscany 120 days to bring its shares in compliance with requirements or it would face being delisted. The shares have been trading at less than 10 cents and closed Thursday at 8.5 cents.
The M&P transaction would leave the Calgary company with 12 rigs in Colombia, nine rigs in Brazil and five rigs in Ecuador.
It warned in a news release it has a scheduled principal and interest payment in December that it will not be able to pay.
dhealing@calgaryherald.com