GulfMark reaches restructuring deal to be implemented in Chapter 11

By Caroline Salls

Pittsburgh, May 16 – GulfMark Offshore, Inc. reached an agreement with noteholders on a comprehensive financial restructuring that will strengthen the company’s competitive and financial position, according to a news release.

The restructuring will be implemented through a Chapter 11 bankruptcy filing to be made by May 21.

GulfMark said holders of about 47% of the company’s unsecured 6 3/8% senior notes due 2022 signed a restructuring support agreement under which the company will convert its outstanding senior notes to 35.65% of the equity in a reorganized GulfMark.

The conversion will result in the elimination of roughly $430 million in outstanding debt and $27 million in annual interest payments.

The company said it will also launch a $125 million rights offering to holders of its senior notes for an additional 60% of the equity in a reorganized GulfMark, providing liquidity to fund its operations. The rights offering will be backstopped by some of the senior noteholders.

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 $1 billion.

GulfMark said it will continue its operations throughout the restructuring process, and the company entered into a commitment letter, subject to execution of definitive documentation, for financing to support its operations during the process.

Financing commitment

According to an 8-K filed with the Securities and Exchange Commission, DNB Bank ASA committed to provide a $35 million senior secured term loan facility in the form of an amendment to GulfMark Rederi AS’ existing NOK 600 million secured revolving credit facility.

The new DNB facility will be available to Rederi in multiple draws and will mature three months after closing, subject to extension for an additional three months.

Proceeds of the facility will be used by Rederi for working capital and general corporate purposes upon GulfMark’s Chapter 11 filing, and the new facility will be available to GulfMark through an intercompany loan to pay Chapter 11 fees, costs and expenses and for working capital and general corporate purposes.

“The restructuring will enhance our competitive position when contracting with customers and vendors, and it will substantially strengthen our capital structure and liquidity,” president and chief executive officer Quintin Kneen said in the release.

“While the industry conditions remain challenging, this debt reduction and rights offering will significantly enhance GulfMark’s financial position.

“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 has retained Weil, Gotshal & Manges LLP as legal counsel and Alvarez & Marsal North America, LLC and Evercore Group LLC as financial advisers.

Houston-based GulfMark Offshore provides marine transportation services to the energy industry.

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