Introduction
On May 17, 2017, (the “Petition Date”), Tidewater Inc., Tidewater Marine Western, Inc., Tidewater Corporate Services, L.L.C., Tidewater Marine, L.L.C., Cajun Acquisitions, LLC, Gulf Fleet Supply Vessels, L.L.C., Hilliard Oil & Gas, Inc., Java Boat Corporation, Pan Marine International Dutch Holdings, L.L.C., Point Marine, L.L.C., Quality Shipyards, L.L.C., S.O.P., Inc., Tidewater Marine Alaska, Inc., Tidewater Marine International Dutch Holdings, L.L.C., Tidewater Marine Sakhalin, L.L.C., Tidewater Mexico Holding, L.L.C., Tidewater Venture, Inc., Twenty Grand (Brazil), L.L.C., Twenty Grand Marine Service, L.L.C., Zapata Gulf Marine, L.L.C., Tidewater GOM, Inc., Tidewater Subsea, L.L.C., Tidewater Subsea ROV, L.L.C., Tidewater Marine Fleet, L.L.C., Tidewater Marine Hulls, L.L.C., Tidewater Marine Ships, L.L.C., and Tidewater Marine Vessels, L.L.C. (the “Debtors”) filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.
The Debtors are represented by Richards, Layton & Finger, P.A. The cases have been assigned to the Honorable Brendan Linehan Shannon. A hearing on the Debtors’ first day motions was held on May 19, 2017.
Background
Headquartered in New Orleans, Louisiana, the Debtors are a provider of offshore service vessels and marine support services to the global offshore energy industry through the operation of a diversified fleet of marine service vessels. The Debtors provide all phases of offshore exploration, field development and production, including towing of, and anchor handling for, mobile offshore drilling units; transporting supplies and personnel necessary to sustain drilling, workover, and production activities, offshore construction, remotely operated vehicle (“ROV”) operations, and seismic and subsea support; and a variety of specialized services such as pipe and cable laying.
As of the Petition Date, the Debtors own or charter, under sale-leaseback agreements, 262 vessels and 8 ROVs available to serve the global energy industry.
Through various court filings, the Debtors indicate that they have encountered financial difficulty due to the downturn in oil and natural gas prices.
The Debtors have approximately $2.04 billion outstanding in unsecured prepetition funded debt obligations.
Bank of America, N.A. is owed approximately $900 million under a credit agreement with a maturity date of June 21, 2019.
The Tidewater parent, Tidewater Inc., issued $500 million in principal amount of 2013 Notes; $165 million in aggregate principal amount of senior unsecured notes in August 2011; and $382.5 million in principal amount of 2010 Notes.
Prepackaged Plan
The Debtors intend to implement a prepackaged chapter 11 plan, under which the Debtors entered into a restructuring support agreement with Bank of America, N.A. 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. These supporting lenders and noteholders also constitute a majority in number of the holders of general unsecured claims.
Certain general unsecured creditors, those with a credit agreement claim, notes claim, or sale leaseback claim, will receive a recovery between 57% and 73% and are the only class (Class 3) allowed to vote on the prepackaged plan. All other general unsecured creditors (Class 4) will receive a full recovery under the prepackaged plan.
Sale Lease-Back Motion
The Debtors are parties to 16 bareboat charter agreements (collectively, the “Leases”) for certain of their supply vessels (“Leased Vessels”). The Leases were entered into through a series of sale-leaseback transactions whereby the Debtor or a nondebtor affiliate sold the vessel to a counterparty and leased back the vessel at a monthly charter rate.
Pursuant to the terms of the Leases, the Debtors pay monthly charter hire payments in the aggregate of approximately $2.6 million, as well as additional maintenance and other related costs (collectively, the “Lease Obligations”). The Leases were executed between 2013 through early 2015 and generally range from seven to ten years in original lease term. All Lease Obligations are guaranteed by the parent, Tidewater Inc.
The owner-lessors of the Leased Vessels are BBVA Compass Financial Corporation, Bank of America, N.A., Regions Commercial Equipment Finance, LLC, PNC Equipment Finance, LLC, MassMutual Asset Finance LLC, and Fifth Third Equipment Finance Company (collectively, the “Lessors”).
The Debtors anticipate that the Lessors will claim entitlement to significant unsecured rejection damages claims, which, if applied, would generate unreasonable damage claims. The Debtors are seeking to temporarily allow reserve damages claims solely for purposes of voting on the plan.
If we can be of service, please contact me.
Rafael X. Zahralddin-Aravena
Commercial Bankruptcy and Commercial Restructuring Chair
Elliott Greenleaf
The I.M. Pei Building
Wilmington, Delaware 19899
Direct: 302-384-9401
Cell: 302-545-2888