Offshore Drilling Contractor Schahin Seeking Bankruptcy Protection

(c) Grupo Schahin

(Bloomberg) — Grupo Schahin filed for Brazil’s equivalent of Chapter 11, becoming the latest Petroleo Brasileiro SA contractor to seek protection from creditors as a corruption probe and a rout in oil prices limit access to funding.

Schahin, which owns building and oil rig companies, has about 6.5 billion reais ($2.12 billion) in debt, it said in an e-mailed statement Friday. The so-called judicial recovery request involves 28 of its companies and the group intends to abandon engineering and construction activities to focus in oil. Newspaper Valor Economico reported Friday that the oil and gas unit wasn’t included in a bankruptcy protection filing.

The company said its situation is “mainly due to the closure of national and international credit markets, making it impossible to finance the activities of the companies.”

Schahin’s engineering unit is among more than 20 companies that have been temporarily banned from bidding on new projects by Petrobras amid allegations that suppliers and builders paid bribes to inflate the value of contracts. Schahin declined to comment on the allegations when contacted by e-mail.

The companies cited in Brazil’s biggest corruption scandal have seen access to credit dry up at a time Petrobras is scaling back some operations and delaying payments to contractors. Last month, construction and engineering groups OAS SA and Galvao Engenharia SA filed for bankruptcy protection.

Banks including HSBC Holdings Plc, Deutsche Bank AG and Banco IBM SA, the local financial division of International Business Machines Corp., have filed suits against Schahin for late payments this year.

The company’s Schahin II Finance Co. notes due in 2022 fell 2.13 cents to 42.5 cents on the dollar at 2:30 p.m. in New York from about 60 cents at the beginning of the month. It’s the biggest decline since April 7.

The $651.5 million in notes are backed by flows related to a long-term charter and services agreement signed with Petrobras for a drill ship called Sertao. The company has halted operations at five rigs leased to Petrobras.

The unit that owns Sertao, Schahin Petroleo & Gas, wasn’t included in the court filing, Valor Economico reported, citing a copy of the petititon.

(c) 2015 Bloomberg.

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