Posted on April 15, 2020
U.S. offshore vessel operator Hornbeck Offshore has entered into a restructuring support agreement for comprehensive balance sheet restructuring. Hornbeck’s deal with lenders and noteholders will provide it $100 million of new equity capital upon emergence from Chapter 11 bankruptcy.
Hornbeck Offshore said on Tuesday that the company and certain of its subsidiaries had entered into a restructuring support agreement with secured lenders holding approximately 83% of the company’s aggregate secured indebtedness and unsecured noteholders holding approximately 79% of the company’s aggregate unsecured notes outstanding.
The agreement is related to a balance sheet restructuring of the company expected to be implemented through a voluntary pre-packaged Chapter 11 case in the U.S. Bankruptcy Court for the Southern District of Texas in the coming weeks.
Targeted completion date is prior to the end of the second quarter of 2020.
The restructuring support agreement contemplates a $75 million debtor-in-possession term loan facility provided by existing creditors and permitted use of existing cash on hand and cash generated from operations to support the business during the financial restructuring process, which will enable the company to operate in the ordinary course of business without disruption to its customers, vendors and workforce. The agreement provides for payment in full of all vendors and employees.
In addition, the company will achieve long term enterprise benefits including a significant de-levering of its capital structure; post-emergence access to $100 million of new equity capital through a common stock rights offering, fully-backstopped by existing creditors and the ability to arrange additional post-emergence financings for certain purposes, including strategic initiatives.
‘Quick completion’
The company expects the pre-packaged Chapter 11 reorganization to be completed very quickly with the support of its creditors.
Hornbeck emphasized that, both prior to and subsequent to the expected Chapter 11 filing, the company would have sufficient liquidity to continue operations, meet all operational payment obligations and support its business, and will continue to operate in the ordinary course of business without disruption to its customers, vendors, and workforce.
Commenting on the company’s plans, Todd M. Hornbeck, Chairman, President and CEO stated, “The COVID-19 pandemic and the recent drop in oil prices due to an acute global supply-demand imbalance have significantly impacted the industries we serve, making an already challenging environment for the company even more difficult.
“The shared objectives of the company and our creditors are to meaningfully reduce the company’s financial leverage on a consensual basis and source new capital to position the company for future growth”.
Source: offshore-energy.biz
