New Orleans-based Tidewater Inc. (NYSE: TDW), one of the leading providers of Offshore Service Vessels (OSVs) to the global energy industry, announced Thursday that it and certain of its subsidiaries have filed for Chapter 11 bankruptcy in Delaware as part of a previously announced restructuring support agreement with certain creditors.
Tidewater intends to stay in business throughout the bankruptcy and restructuring and says it has sufficient liquidity to maintain uninterrupted operations.
Tidewater expects the prepackaged plan of reorganization, known as the Prepacked Plan, to eliminate approximately $1.6 billion in principal of outstanding debt, which will substantially deleverage the companies balance sheet and better position it to weather the extended downturn in the offshore energy industry.
“After much thought and successful negotiations with certain of our economic stakeholders, we decided that commencing the chapter 11 cases was necessary to create financial stability which would allow Tidewater to remain a formidable competitor given this unprecedented industry downturn,” Jeffrey M. Platt, Tidewater’s President and Chief Executive Officer said. “Throughout the chapter 11 process, we anticipate meeting ongoing obligations to our employees, customers, vendors, suppliers, and others. We will continue to provide our customers with dependable, high-quality services.”
Under the Prepackaged Plan, announced May 12, Tidewater plans to reject certain sale-leaseback agreements for leased vessels currently in Tidewater’s fleet, and to limit the resulting rejection damages claims to approximately $131 million. However, Tidewater has noted that the Sale Leaseback Parties dispute the amount of the rejection damages claims and a final resolution of the amount of such claims will be subject to litigation. “As a result, there is no certainty as to the final amount of sale-leaseback rejection damages claims that will be treated pursuant to the Prepackaged Plan,” Tidewater says.
The Prepackaged Plan is supported by Lenders holding approximately 60% of the outstanding principal amount of loans under the Credit Agreement and Noteholders holding 99% of the aggregate outstanding principal amount of the Senior Notes.
Subject to the approval of the Bankruptcy Court, the Prepackaged Plan is expected to be consummated in approximately 45 days, Tidewater said.
Tidewater’s troubles began last year when it failed to maintain the minimum interest coverage ratio covenant required by its principal lenders and noteholders. On multiple occasions, the company received limited waivers which waived compliance with the covenants but warned throughout that reorganization under Chapter 11 was a possibility.
With more than 300 vessels, Tidewater has one of the biggest OSV fleets in the offshore oil and gas industry.