Tidewater Inc. has signed a restructuring support agreement (RSA) with certain lenders and the company expects to file Chapter 11 bankruptcy by May 17. The prepackaged is supported by the company's lenders that hold 60% of the outstanding principal amount of loans under the credit agreement and holders of 99% of the aggregate outstanding principal amount of Tidewater's senior notes.
Tidewater management has been in discussions with the New York Stock Exchange (NYSE) to keep its current listing through the restructuring process. Although the company was recently notified by the NYSE that it has fallen below the continued listing standard that requires listed companies to maintain an average closing price per share of at least $1 over a consecutive 30 trading-day period, Tidewater has notified the NYSE of its intent to cure and has until Oct. 18 to regain compliance. Upon completion of the restructuring, it is expected that Tidewater will remain a publicly-traded company and will continue to have its common stock listed for trading on the NYSE both during and after the restructuring process.
Under the deal, existing shares of common stock will be cancelled, and existing shareholders will receive common stock in the reorganized Tidewater representing 5% of the company, along with two sets of warrants.
In a prepared statement, Jeffrey Platt, president and CEO of Tidewater, said, "As we continue to navigate this unprecedented industry downturn, we are pleased that we have reached an agreement which should allow Tidewater to significantly reduce its debt burden and provide sound financial footing for the company's future. We believe that successful completion of our restructuring will provide the necessary liquidity and operational flexibility for Tidewater to continue to operate at lower levels of activity until offshore drilling activity recovers and more reasonable levels of vessel utilization and day rates are restored. I want to thank our employees and other stakeholders for their continued hard work and dedication as we complete the restructuring process."
Under the prepackaged plan:
- The lenders under the credit agreement, holders of the senior notes and certain lessor parties under certain sale/leaseback agreements (the "general unsecured creditors") will receive their pro rata share of:
$225 million of cash;
- Common stock and, if applicable, warrants, to purchase common stock, representing 95% of the pro forma common equity in reorganized Tidewater (subject to dilution by a management incentive plan and the exercise of warrants issued to existing stockholders under the prepackaged plan); and
New 8% fixed rate secured notes due in 2022 in the aggregate principal amount of $350 million.
- Existing shares of Tidewater common stock will be cancelled and existing common stockholders of the company will receive: common stock representing 5% of the pro forma common equity in reorganized Tidewater (subject to dilution by a management incentive plan and the exercise of warrants issued to existing stockholders under the prepackaged plan); Series A Warrants to purchase 7.5% of the pro forma equity in reorganized Tidewater (six-year term, exercise price based on an equity value of the company of approximately $1.71 billion); and
Series B Warrants to purchase 7.5% of the pro forma equity (six-year term, exercise price based on an equity value of the company of $2.02 billion).
- The undisputed claims of other unsecured creditors such as customers, employees, and vendors, will be paid in full in the ordinary course of business (except as otherwise agreed among the parties).
- The company's Norwegian term loan facility, which is guaranteed by the company and other contemplated debtors, will remain in place during the chapter 11 cases.
Under the plan, Tidewater expects that it will eliminate approximately $1.6 billion in principal of outstanding debt. All aspects of the prepackaged plan remain subject to bankruptcy court approval and satisfaction of conditions set forth in the prepackaged plan.