Sete Brasil to seek up to $5 bln funding

Sete Brasil Participações SA presented a draft reorganization plan on Friday that includes seeking up to $5 billion in funding and downsizing business, three months after the Brazilian rig leaser sought court protection against 18 billion reais ($5.7 billion) in looming debt payments.

Rio de Janeiro-based Sete Brasil is asking creditors, which include some of the world's leading shipbuilders and Brazil's largest lenders, to endorse a plan to help build between eight and 12 rigs, down from an original target of 28, Chief Executive Officer Luiz Eduardo Carneiro said in an interview.

The plan was submitted to a court in Rio de Janeiro, where Sete Brasil's reorganization is being handled, said the firm.

Fundraising could vary along with the number of rigs to be built and delivered to state-controlled Petróleo Brasileiro SA, Sete Brasil's sole client, Carneiro said. While looking for clients other than Petrobras is a possibility, Sete Brasil's priority is convincing the state firm to rent the rigs, said Eduardo Sampaio of Alvarez & Marsal Holdings LLC, Sete Brasil's main advisor.

Founded in 2008 to fill the world's biggest deep-water drilling fleet order, Sete Brasil had to file for bankruptcy protection in late April after efforts to secure a long-term contract with Petrobras failed. Petrobras owns 5 percent of the rig leaser.

The $90 billion project began to fall apart in 2014 when Petrobras and Sete Brasil became engulfed in Brazil's worst corruption scandal, leading the Brazilian government - the main sponsor of the project - to delay promised financing and the signature of the long-term rig supplying contract.

The tussle between Petrobras and Sete Brasil's management and shareholders has forced the rig leaser's creditors to write off some of the 15 billion reais in loans they extended to Sete Brasil.

Sources have told Reuters that a collapse of Sete Brasil would be devastating not only for the banks, pension funds and investment firms that backed the project, but also for dozens of shipbuilders and manufacturers supplying the company.

($1 = 3.1793 Brazilian reais)

(Editing by Frances Kerry and Grant McCool