On Tuesday, GulfMark Offshore Inc. announced that it had signed an agreement on a financial restructuring that will be implemented through a voluntary Chapter 11 bankruptcy filing.

The Houston-based offshore service vessel operator said the restructuring will strengthen the company’s competitive and financial position. Holders of approximately 47% of GulfMark’s unsecured 6.375% senior notes due 2022 have signed a restructuring support agreement (RSA).

Under the terms of the RSA, GulfMark will convert its outstanding senior notes to 35.65% of the equity in a reorganized GulfMark, resulting in the elimination of approximately $430 million in outstanding debt and approximately $27 million in annual interest payments. The company will also launch a $125 million rights offering to holders of its senior notes for an additional 60% of the equity in a reorganized GulfMark, providing liquidity to fund its operations. The $125 million rights offering will be backstopped by certain holders of the senior notes. Existing shareholders will receive 0.75% of the equity as well as warrants for an additional 7.5% of the equity in the reorganized GulfMark. The warrants will have a seven-year term and an exercise price based on a reorganized overall equity value of $1 billion.

The restructuring will be implemented through the bankruptcy filing on or before May 21, 2017. GulfMark will continue its operations throughout the process. The company has entered into a commitment letter, subject to certain conditions including execution of definitive documentation, for financing to support its operations during the process.

“The restructuring will enhance our competitive position when contracting with customers and vendors, and it will substantially strengthen our capital structure and liquidity,” Quintin Kneen, president and CEO, said in a statement. “While the industry conditions remain challenging, this debt reduction and rights offering will significantly enhance GulfMark’s financial position.”

Kneen stated that the restructuring enables the company to continue to meet its ongoing obligations to all customers, employees, and vendors. "We are confident that this step will position GulfMark to seize opportunities as the downturn continues and in the eventual market recovery,” he said.

GulfMark has retained Weil, Gotshal & Manges LLP as legal counsel and Alvarez & Marsal North America LLC and Evercore Group LLC as financial advisors.


David Krapf has been editor of WorkBoat, the nation’s leading trade magazine for the inland and coastal waterways industry, since 1999. He is responsible for overseeing the editorial direction of the publication. Krapf has been in the publishing industry since 1987, beginning as a reporter and editor with daily and weekly newspapers in the Houston area. He also was the editor of a transportation industry daily in New Orleans before joining WorkBoat as a contributing editor in 1992. He has been covering the transportation industry since 1989, and has a degree in business administration from the State University of New York at Oswego, and also studied journalism at the University of Houston.