Idan Ofer’s Quantum Pacific has assembled a $1bn plus package to restructure Pacific Drilling, which filed for Chapter 11 protection last year.

The shipowner is working alongside three well-known financial partners on a proposal that will rival a plan put forward by an ad hoc group of creditors this week, TradeWinds understands.

It follows months of negotiations between Quantum and its bondholders over the future of the company, which like many peers was hit by a downturn in the offshore drilling sector.

Financial sources say it is unusual to have two competing plans in place in such cases.

The situation has arisen as Quantum and the bondholders were unable to bridge their differences over the future direction of the company.

Pacific Drilling this week announced the ad hoc group plans to raise $1bn through a mix of first- and second-lien secured notes, plus $500m in equity. It would wipe out the equity interests of Ofer and other shareholders in the company.

Quantum’s counter proposal would see it inject $550m into Pacific Drilling, with strategic investors bringing a further $500m, sources say.

The other investors are believed to be hedge funds King Street and Canyon Capital and HAL Investments, the largest shareholder in FPSO specialist SBM Offshore.

It marks a slight evolution of a “Toggle Plan” outlined in an SEC filing a few weeks ago.

That was presented alongside what was at the time called the “consensual plan”, which would have been put into place had Quantum and the ad hoc group managed to bridge their differences.

Chapter 22 avoided

With two proposals now in place for investors and the court to consider, the potential for a Chapter 22 filing for Pacific Drilling, that would have wound up the company, looks to have been eliminated, observers say.

Pacific Drilling filed for Chapter 11 late last year. At that time Ofer had been willing to provide an extra $100m to support a restructuring of the company.

Discussions with creditors on the package, however, failed to gain the required support in a final round of talks, according to court documents from the time.

Belief in the market is that the bondholders have been looking to take control of Pacific Drilling with a view to flipping the company into a profitable merger with a peer.

However, Quantum’s efforts have been directed at providing a structure that offers Pacific Drilling sufficient liquidity to continue and withstand what is still expected to be a difficult drilling market over the next few years, sources explain.

Ofer and his co-investors are still viewed as underdogs in the battle for control of Pacific Drilling, which is ongoing despite months of tense negotiations.

The tycoon has invested $1.6bn in equity to assist the growth of the company since 2006. This was backed by $650m from its 2013 initial public offering.

Now having “done the right thing” in securing the future of Pacific Drilling, he is not willing to overpay for control of rigs for which there is a clear value in the market place, source say.