Troubled offshore vessel owner GulfMark Offshore has outlined plans it has in place to file for voluntary relief under Chapter 11 of the US Bankruptcy Code. It could do so later this month.
In a quarterly report submitted to the Securities Exchange Commission the company said that, although it has not entered into any written or binding restructuring agreement it has reached an agreement in principle with holders of approximately 47 per cent of the aggregate outstanding principal amount of its senior notes to support a restructuring agreement (RSA).
The RSA foresees that, if required, the company will file for voluntary relief under Chapter 11 of the US Bankruptcy Code in the US Bankruptcy Court in the District of Delaware on or before 21 May 2017. The RSA also contemplates that, among other things, the company will commence a US$125 million rights offering.
“We have also reached an agreement in principle with the noteholders on a backstop commitment agreement, pursuant to which certain of the noteholders will agree to backstop the rights offering,” the company said.
The terms, which are subject to the negotiation, execution and delivery of definitive documents and the approval of the bankruptcy court, anticipate the company will commence the rights offering, pursuant to which, subject to limitations regarding the Jones Act, eligible noteholders will have the right to purchase their pro rata share of 60 per cent of GulfMark Offshore’s common stock or reorganised GulfMark equity.
Under the plan, all outstanding common stock of GulfMark Offshore will be cancelled and each holder of outstanding common stock will receive its pro rata share of common stock in the reorganised GulfMark Equity, and warrants for 7.5 per cent of the equity in the reorganised unit.
GulfMark said it continues to incur significant losses from operations and had negative cashflow from operating activities for the quarter ended 31 March 2017. It expects to continue to incur losses from operations and generate negative cash flows from operating activities. These expectations and other liquidity risks raise a substantial doubt about whether GulfMark will be able to meet obligations as they become due.