NEW ORLEANS, May 12, 2017 /PRNewswire/ -- Tidewater Inc.
(NYSE: TDW) ("Tidewater" or the "Company") has entered into a
Restructuring Support Agreement ("RSA") with certain of its lenders
under Tidewater's Fourth Amended and Restated Revolving Credit
Agreement, dated as of June 21, 2013
(the "Credit Agreement") and holders of Tidewater Senior Notes due
in 2017, 2018, 2019, 2020, 2021, 2022, 2023 and 2025 (the "Senior
Notes"), as applicable (collectively, the "Consenting Creditors")
to effectuate a proposed prepackaged plan of reorganization (the
"Prepackaged Plan") that will substantially deleverage the
Company's balance sheet and better position the Company to weather
the extended downturn in the offshore energy industry while
maintaining the Company's position as a worldwide market leader in
offshore vessel services.
As contemplated by the RSA, the Company and certain of its
subsidiaries expect to file chapter 11 cases in Delaware by May 17,
2017 to implement the Prepackaged Plan. The
Prepackaged Plan, described in greater detail below, has the
support of the Company's lenders holding 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.
The Company's management has been in discussions with the New
York Stock Exchange ("NYSE") regarding maintaining its current
listing through this restructuring process. Although, as
previously disclosed, 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 $1.00 over a
consecutive 30 trading-day period, the Company has notified the
NYSE of its intent to cure and has until October 18, 2017 to regain compliance with that
particular standard. Upon completion of the restructuring, it
is expected that Tidewater will remain a publicly-traded company
and, subject to the Company's compliance with all other NYSE
listing standards, will continue to have its common stock listed
for trading on the NYSE both during and after the restructuring
process.
Jeffrey Platt, President and
Chief Executive Officer 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 (the "Jones Act
Warrants", see endnote of the same name for more information) 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 (6 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 (6
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. Pursuant to a forbearance
agreement, the lenders under this term loan facility have agreed
that they will not enforce, or take action to enforce, any of the
rights and remedies otherwise available to them under their term
loan facility, subject to certain termination rights.
During the chapter 11 cases, Tidewater plans to reject certain
sale-leaseback agreements for leased vessels currently in the
company's fleet, and to limit the resulting rejection damages
claims to approximately $131
million. However, counterparties to the sale-leaseback
agreements dispute the amount of the rejection damages claims and a
final resolution of the amount of such claims will be subject to
litigation. As a result, there is no certainty as to the
final amount of sale-leaseback rejection damages claims that will
be treated pursuant to the Prepackaged Plan.
Equity issued by reorganized Tidewater under the management
incentive plan and upon exercise of the warrants issued to existing
shareholders will further dilute the equity recovery for the
holders of funded debt and sale/leaseback claims, as well as the
existing shareholders described above.
Upon the effectuation of the Prepackaged Plan, Tidewater expects
that it will eliminate approximately $1.6
billion in principal of outstanding debt. In addition,
considering the rejection of certain sale-leaseback agreements
discussed above, the Company estimates that interest and operating
lease expenses will be reduced by approximately $73 million annually.
All aspects of the Prepackaged Plan remain subject to Bankruptcy
Court approval and satisfaction of conditions set forth in the
Prepackaged Plan.
The Company expects that it has sufficient liquidity to operate
its business while the chapter 11 cases are pending, and does not
expect that its ability to serve its customers will be impaired in
any way during such time. In addition, the Company
anticipates paying its employees and vendors in the ordinary course
of business during the chapter 11 cases.
Pursuant to the RSA, the Consenting Creditors have agreed to
vote in favor of the Prepackaged Plan. The RSA is subject to
customary termination rights upon the occurrence of certain events,
including, without limitation, the failure of the Company to
commence solicitation or file the Prepackaged Plan with the
Bankruptcy Court by specified dates.
Jones Act Warrants
To assure the continuing ability of
certain vessels owned by the Company's subsidiaries to engage in
U.S. coastwise trade, the number of shares of the Company's common
stock otherwise issuable to the allowed General Unsecured Creditors
may be adjusted to assure that the foreign ownership limitations of
the United States Jones Act are not exceeded. The Jones Act
requires any corporation that engages in coastwise trade be a U.S.
citizen within the meaning of that law, which requires, among other
things, that the aggregate ownership of common stock by non-U.S.
citizens within the meaning of the Jones Act be not more than 25%
of its outstanding common stock. The Prepackaged Plan
requires that, at the time Tidewater emerges from bankruptcy, not
more than 22% of its common stock be held by non-U.S.
citizens. In support thereof, the Prepackaged Plan provides
for the issuance of a combination of common stock and the Jones Act
Warrants on a pro rata basis to any non-U.S. citizen among the
allowed General Unsecured Creditors whose ownership of common
stock, when combined with the shares to be issued to current
Tidewater stockholders that are non-U.S. citizens, would otherwise
cause the 22% threshold to be exceeded. The Jones Act
Warrants will not grant the holder thereof any voting or control
rights or dividend rights, or contain any negative covenants
restricting the operation of Tidewater's business. Generally, the
Jones Act warrants will be exercisable immediately at a nominal
exercise price, subject to Jones Act restrictions that prohibit the
exercise of such warrants where such exercise would cause the total
number of shares held by non-U.S. citizens to exceed 24%, a limit
that will be established in the amended and restated certificate of
incorporation of Tidewater. Tidewater will establish, under
its charter and through DTC, appropriate measures to assure
compliance with these ownership limitations.
Advisors
Weil, Gotshal & Manges LLP is acting as
restructuring counsel, Jones Walker LLP is acting as corporate
counsel, Lazard Frères & Co. is acting as investment banker,
and AlixPartners, LLP is acting as restructuring advisor to the
Company in connection with its restructuring efforts. Morgan,
Lewis & Bockius LLP is acting as legal counsel and FTI
Consulting, Inc., LLC is acting as financial advisor to the Credit
Agreement agent. Paul, Weiss, Rifkind, Wharton & Garrison
LLP and Blank Rome LLP are acting as legal counsel and Houlihan
Lokey Capital, Inc. is acting as financial advisor to the holders
of Senior Notes.
Forward-Looking Statements
In accordance with the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995, the Company notes that certain statements set forth in
this press release provide other than historical information and
are forward looking. The actual achievement of any forecasted
results, or the unfolding of future economic or business
developments in a way anticipated or projected by the Company,
involve numerous risks and uncertainties that may cause the
Company's actual performance to be materially different from that
stated or implied in the forward-looking statement. Among those
risks and uncertainties, many of which are beyond the control of
the Company, including, without limitation, if the Company files
the Prepackaged Plan with the Court, the ability to confirm and
consummate a plan of reorganization in accordance with the terms of
the Prepackaged Plan; risks attendant to the bankruptcy process,
including the effects thereof on the Company's business and on the
interests of various constituents and the length of time that the
Company might be required to operate in bankruptcy; risks
associated with third party motions in the bankruptcy cases, which
may interfere with the ability to confirm and consummate a plan of
reorganization in accordance with the terms of the Prepackaged
Plan; potential adverse effects on the Company's liquidity or
results of operations; increased costs to execute the
reorganization in accordance with the terms of the Prepackaged
Plan; effects on the market price of the Company's common stock and
on the Company's ability to access the capital markets; volatility
in worldwide energy demand and oil and gas prices, and continuing
depressed levels of oil and gas prices, without a clear indication
of if, or when, prices will recover to a level to support renewed
offshore exploration activities; consolidation of our customer
base; fleet additions by competitors and industry overcapacity; our
views with respect to the need for and timing of the replenishment
of our asset base, including through acquisitions or vessel
construction; changes in capital spending by customers in the
energy industry for offshore exploration, field development and
production; loss of a major customer; changing customer demands for
vessel specifications, which may make some of our older vessels
technologically obsolete for certain customer projects or in
certain markets; delays and other problems associated with vessel
construction and maintenance; uncertainty of global financial
market conditions and difficulty in accessing credit or capital;
potential difficulty in meeting financial covenants in material
debt or other obligations of the Company or in obtaining covenant
relief from lenders or other contract parties; acts of terrorism
and piracy; integration of acquired businesses and entry into new
lines of business; disagreements with our joint venture partners;
significant weather conditions; unsettled political conditions,
war, civil unrest and governmental actions, such as expropriation
or enforcement of customs or other laws that are not well developed
or consistently enforced, or requirements that services provided
locally be paid in local currency, in each case especially in
higher political risk countries where we operate; foreign currency
fluctuations; labor changes proposed by international conventions;
increased regulatory burdens and oversight; changes in laws
governing the taxation of foreign source income; retention of
skilled workers; enforcement of laws related to the environment,
labor and foreign corrupt practices; and the resolution of pending
legal proceedings. Readers should consider all of these risk
factors as well as other information contained in this press
release.
For a more complete description of the terms and conditions of
the RSA, we refer you to the Form 8-K that Tidewater expects to
file with the SEC today, a copy of which will be both posted on the
Company's website and available at http://dm.epiq11.com/tidewater,
and to the Company's restructuring information line 844-843-0204
(toll-free) or 503-597-5543 (international calls).
Tidewater is the leading provider of Offshore Service Vessels
(OSVs) to the global energy industry.
Logo -
http://photos.prnewswire.com/prnh/20140829/141662
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/tidewater-announces-entry-into-restructuring-support-agreement-with-certain-lenders-and-noteholders-300456720.html
SOURCE Tidewater Inc.