GulfMark reaches agreement on debt restructureCompany News // May 17, 2017
GulfMark Offshore has reached an agreement with certain noteholders on a comprehensive financial restructuring that, when implemented, will strengthen the company’s competitive and financial position.
Holders of approximately 47 per cent of the company’s unsecured 6.375% senior notes due 2022 have signed a Restructuring Support Agreement (RSA).
Under the terms of the RSA, the company will convert its outstanding Senior Notes to 35.65% of the equity in a reorganized GulfMark, resulting in the elimination of approximately US$430 million in outstanding debt and approximately US$27 million in annual interest payments.
The company will also launch a US$125 million rights offering to holders of its Senior Notes for an additional 60 per cent of the equity in a reorganized GulfMark, providing liquidity to fund its operations.
The US$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 US$1 billion.
The restructuring will be implemented through a voluntary chapter 11 bankruptcy filing of the company on or before 21 May 2017.
The company will continue its operations throughout the process and 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,” said Quintin Kneen, President and Chief Executive Officer.
“While the industry conditions remain challenging, this debt reduction and rights offering will significantly enhance GulfMark’s financial position.”
Mr Kneen continued, “We will continue to focus on being the provider and employer of choice in the industry. Our employees’ dedication to providing safe and reliable services to our customers enables us to be the first call in the offshore vessel industry, and I want to thank them for their service to GulfMark.
"This restructuring enables us to continue meeting our 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.”
GulfMark retained Weil, Gotshal & Manges LLP as legal counsel and Alvarez & Marsal North America, LLC and Evercore Group LLC as financial advisors.