GulfMark emerges from Chapter 11

January 2018 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

January 2018 Issue

US offshore marine services provider GulfMark Offshore Inc has emerged from Chapter 11 bankruptcy protection after the company’s reorganisation plan was approved by a US bankruptcy court in October. GulfMark’s plan went into effect on 14 November after a short delay. The company had expected the plan to come into effect on 9 November; however, a number of GulfMark’s noteholders made additional demands which held up the process.

Under the terms of the plan, GulfMark has converted $429.6m of outstanding bonds into equity and raised around $125m of new equity capital. It cancelled all common stock issued prior to the company’s reorganisation and will issue about seven million shares of new common stock and about 3.81 million warrants to buy shares. Holders of legacy common stock as of the effective date of the plan will receive 0.00271233 shares of new common stock and 0.02931672 existing equity warrants, GulfMark confirmed in a statement. Bondholders who are US citizens will receive 8.29764454 shares of new common stock for every $1000 of bonds owned. Subject to certain exceptions, non-US citizen bondholders will receive 8.29764454 of Jones Act Warrants for every $1000 of bonds owned.

The company also said that its previously outstanding credit facilities have been repaid and terminated. GulfMark’s subsidiary, GulfMark Rederi AS had entered into an agreement for two credit facilities: a senior secured revolving credit facility and a senior secured term loan facility. The revolving credit facility will provide loans of up to $25m, including a $12.5m swingline loan subfacility and a $5m letter of credit subfacility. The term loan facility provides a $100m term loan.

The company also announced a number of additional appointments to its board of directors. Quintin V. Kneen, GulfMark’s president and chief executive, will continue to serve as a director.

Gulfmark, which filed for bankruptcy protection in May 2017 in the United States Bankruptcy Court for the District of Delaware, said in its Chapter 11 filing that its restructuring would include converting $448m in unsecured debt to equity. At the time of filing, GulfMark said that the plan had been approved by 47 percent of its senior noteholders.

“GulfMark is now positioned as one of the best capitalised companies in the global offshore industry,” said Mr Kneen. "With significantly improved financial strength, we are poised to build upon the world-class service we provide to our customers while capitalising on value enhancing opportunities for our shareholders. Throughout the restructuring process, our priority has been to deliver world class safety and customer service. We have worked to ensure that GulfMark has the right talent, systems and equipment to meet the tough demands of the current market. Moving forward, our focus on operational excellence and scalability will continue. We would like to take this opportunity to thank our 1070 employees and all of our stakeholders for their tremendous effort and support during the reorganisation process. GulfMark’s employees remained focused on delivering safe, reliable service to our customers as we transformed our capital structure and repositioned the company.”

2017 was a difficult year for GulfMark financially. Company results for the nine months to 30 September 2017 saw a net loss of $190m on revenues of $74.8m, a $22.3m, or 23 percent year-on-year decline from 2016. In 2016 the company reported a net loss over the same period of $163.5m on revenues of $97.1m. GulfMark’s average day rates also fell, from $10,360 during the nine months ended 30 September 2016 to $8347 during the nine months ended 30 September 2017. This decline resulted in a $21m decline in revenue. GulfMark also noted that the strong US dollar was responsible for a further $3.1m decrease in revenue.

Richard Summerfield