Hornbeck Offshore hires firm with view to paying down long-term debt

By Devika Patel

Knoxville, Tenn., Nov. 3 – Hornbeck Offshore Services Inc. has engaged an adviser to help it address the challenges of paying down long-term debt maturities that are expected to occur in fiscal years 2019, 2020 and 2021, the company’s top executives said Thursday.

“While our first long-term debt maturity does not occur for another 33 months, given the state of the market, we continue to focus on our overall capital structure,” chairman of the board, president, chief executive officer Todd M. Hornbeck said on the company’s conference call announcing third quarter earnings Thursday.

“Although last several quarters we have concentrated on doing what was needed to cut costs and preserve the company’s available liquidity, the next logical step is to proactively consider how to address our unsecured long-term debt if this downturn continues through the period of their planned maturities, which we cannot rule out.

“We announced yesterday that we have engaged independent advisers to assist us in this regard,” Hornbeck said.

Executive vice president and chief financial officer James O. Harp, Jr. said that the company must have free cash flows of $50 million or less in order to access its undrawn revolver, which limits its ability to pay off the three tranches of notes. Harp said that it has engaged PWC Corporate Finance as an adviser to help the company navigate the challenging market conditions.

“We have three tranches of funded unsecured debt outstanding that mature in FY 2019, 2020 and 2021, and certain existing covenants in our revolving credit agreement constrain our ability to access that undrawn facility.

“We are fully aware of the challenges the current market conditions are presenting to all offshore oil and gas participants, which is why we proactively engaged PWC Corporate Finance to assist us in our endeavor to protect and ensure the long-term viability of Hornbeck Offshore,” Harp said.

Highlights

The company’s total cash and cash equivalents at quarter end was about $225 million, which put its net debt position as of Sept. 30 at $855 million, up slightly from $852 million sequentially.

Hornbeck currently has a blended average fixed cash coupon of about 4.4% on roughly $1.1 billion of total outstanding long-term unsecured debt.

Hornbeck is a Covington, La.-based provider of offshore supply vessels.

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