Hornbeck Offshore Services has announced it has entered into a pre-packaged restructuring agreement that involves it filing for voluntary Chapter 11 bankruptcy.
The announcement comes as the COVID-19 pandemic has taken its toll on global oil demand, combined with the Saudi-Russia oil price war which have sent oil prices plummeting since January.
Covington, Louisiana-based Hornbeck Offshore Services is a leading provider of new generation offshore service vessels to the oil and gas industry primarily in the Gulf of Mexico and Latin America.
The company said the Restructuring Support Agreement was agreed to by secured lenders holding approximately 83% of the company’s aggregate secured indebtedness and unsecured noteholders holding approximately 79% of its aggregate unsecured notes outstanding. The agreement will be implemented through a voluntary pre-packaged Chapter 11 case in the United States Bankruptcy Court for the Southern District of Texas in the coming weeks with a targeted completion date prior to the end of the second quarter of 2020.
HOS said the deal will significantly delever the company’s balance sheet, provide $75 million in debtor-in-possession financing, allow use of cash on-hand to continue normal business operations, and provide $100 million of new equity capital upon emergence. It also provides for payment in full of all vendors and employees.
“The COVID-19 pandemic and the recent drop in oil prices due to an acute global supply-demand imbalance have significantly impacted the industries we serve, making an already challenging environment for the Company even more difficult,” said Todd M. Hornbeck, Chairman, President and CEO. “The shared objectives of the Company and our creditors are to meaningfully reduce the Company’s financial leverage on a consensual basis and source new capital to position the Company for future growth. I want to thank our secured lenders and unsecured noteholders for joining together with us on a game plan for an expedited court-supervised financial restructuring process. This consensual approach to reorganization and recapitalization is in the best long-term interest of our Company, as it will enable us to take advantage of new opportunities while continuing to support our customers, retain our employees and pay our vendors.”
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