On Tuesday, Tidewater Inc. reported a wider second-quarter (fiscal first quarter) loss than expected, a 45% drop in revenue compared to a year earlier, and warned of a potential Chapter 11 filing.
The New Orleans-based offshore service vessel operator lost $89.1 million for the quarter ended June 30, or $1.89 per common share, on revenues of $167.9 million. For the same quarter last year, the net loss was $15.1 million, or 32 cents per common share, on revenues of $304.8 million. For the quarter ended March 31, 2016, Tidewater had a net loss of $81.8 million, or $1.74 per common share, on revenues of $184.2 million.
Tidewater said that the drop in oil and gas prices that began last year and has continued throughout 2016 has led to lower levels of spending for offshore exploration and development by the company’s customers globally. In addition, new vessels have been delivered over the last several years, exacerbating weak vessel utilization. With reduced demand for OSVs along with increased supply, the company has experienced a significant decline in vessel utilization, average day rates and vessel revenue. The company has implemented a number of significant cost reduction measures to mitigate the effects of the weak market.
On June 30, the company said it did not meet the three times minimum interest coverage ratio covenant contained in its revolving credit and term loan agreement. Failure to meet the minimum interest coverage ratio requirement would have resulted in covenant noncompliance. However, Tidewater received limited waivers from lenders and noteholders until Sept. 18.
The company said it continues to meet with its principal lenders and noteholders to amend its various debt arrangements in advance of the expiration of the waivers. If Tidewater is unable to reach an agreement, the company would likely seek reorganization under Chapter 11 bankruptcy.