New York-listed Tidewater said that in accordance to the RSA, the company and certain of its subsidiaries will file for Chapter 11 in Delaware by this Wednesday so as to implement a prepackaged plan.
The plan is aimed at substantially deleveraging the company’s balance sheet and better positioning the company to weather the extended downturn in the offshore energy industry while maintaining the company’s operations in the OSV segment.
The prepackaged plan has the support Tidewater’s lenders holding 60% of its outstanding principal amount of loans under a credit agreement and holders of 99% of the aggregate outstanding principal amount of senior notes due between 2017 to 2025.
Parts of the prepackaged plan include lenders under the credit agreement, holders of senior notes and certain lessor parties under certain sale and leaseback agreements receiving their pro rate share of $225m in cash, and new 8% fixed rate secured notes due in 2022 in the amount of $350m, among others.
“As we continue to navigate this unprecedented industry downturn, we are pleased that we have reached an agreement which should allow Tidewater to significantly reduce its debt burden and provide sound financial footing for the company's future,” said Jeffrey Platt, president and ceo of Tidewater.
“We believe that successful completion of our restructuring will provide the necessary liquidity and operational flexibility for Tidewater to continue to operate at lower levels of activity until offshore drilling activity recovers and more reasonable levels of vessel utilization and day rates are restored,” he said.
During the Chapter 11 cases, Tidewater plans to reject certain sale-leaseback agreements for leased vessels currently in the company's fleet, and to limit the resulting rejection damages claims to approximately $131m.
The effectuation of the prepackaged plan will be expected to eliminate approximately $1.6bn in principal of outstanding debt. In addition, considering the rejection of certain sale-leaseback agreements discussed above, the company estimates that interest and operating lease expenses will be reduced by approximately $73m annually.
Upon completion of the restructuring, it is expected that Tidewater will remain a publicly-traded company on the New York Stock Exchange.