May 15 - Hampered by a global slowdown in oil-drilling activity and a prolonged slump in oil prices, New Orleans, USA-based Tidewater Inc announced that it will file a prepackaged bankruptcy plan aimed at removing USD1.6 billion in debt.
The plan gives the offshore service vessel company's lenders and senior note holders 95 percent of the stock in the reorganised company, while existing shareholders will get 5 percent of the stock, as well as warrants - or rights to buy - company-issued shares based on the restructured firm's value, the company said.
The company plans to file a Chapter 11 petition in federal bankruptcy court in Delaware by Wednesday.
Tidewater, a major provider of larger offshore service vessels to the global energy industry and over 50 years of experience providing marine support services worldwide has been badly hit by plummeting oil prices, which have seen its share price plummet from almost USD55 per share in 2014 to 88 cents last Friday (May 12).
As drilling activity has slowed, so too has the demand for offshore supply vessels like Tidewater's.
Tidewater, which has been negotiating with lenders since early 2016, warned since October 2016 that it could file for bankruptcy unless it could restructure its debt.
After the restructuring, Tidewater expects to remain a publicly traded company listed on the New York Stock Exchange.
President and chief executive officer Jeffrey Platt said the agreement allows Tidewater to reduce debt and provide sound financial footing for the company's future.
According to a recent investor presentation, Tidewater has reduced its workforce by one-third and laid-up 40 percent of its fleet, since the downturn began.
"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 utilisation and day rates are restored," Platt said.