EMAS Chiyoda files bankruptcy, gets $90 million financing commitment

By Caroline Salls

Pittsburgh, Feb. 28 – EMAS Chiyoda Subsea Ltd. filed Chapter 11 bankruptcy on Feb. 27 in the U.S. Bankruptcy Court for the Southern District of Texas.

According to a statement filed with the court by general counsel Stephen H. McGuire, “the company’s revenue and cash flows have come under significant strain.”

McGuire said that strain resulted from failing demand for EMAS’ services stemming from the depressed market conditions in the offshore and subsea construction market it serves; significant vessel operating costs; and a tightening of credit conditions, which ultimately led to the company’s banks freezing various credit lines.

In conjunction with the bankruptcy filing, the company obtained a commitment for $90 million in debtor-in-possession financing from Subsea 7 Finance (UK) plc and shareholder Chiyoda Corp.

Interest on tranche A loans will accrue at a rate of 8%, and interest on tranche B loans will accrue at 12%.

The facility will mature 150 days from the bankruptcy filing date.

“The DIP facility will provide the debtors with an opportunity to formulate and implement a reorganization plan to right-size their obligations and continue portions of their international operations as part of a global restructuring,” McGuire said in the statement.

A total of $55 million of the financing will be available on an interim basis.

In addition, the DIP credit agreement requires the company to sell its Ingleside Spool vessel within 120 days of the bankruptcy filing.

According to court documents, EMAS has $500 million to $1 billion in assets and $100 million to $500 million in debt.

The company’s largest unsecured creditors are:

• DBS Bank of Singapore with a $40 million working capital loan claim, a $30 million working capital loan claim and a $14.64 million bank guarantee claim;

• DNB Bank ASA, Singapore Branch with a $14.64 million bank guarantee claim;

• Overseas-Chinese Banking Corp. Ltd. of Singapore with a $13.12 million bank guarantee claim;

• Internal Revenue Service Center, based in Washington, D.C., with an $8.59 million tax claim;

• London Marine Consultants Ltd. of London with an $8.32 million trade claim;

• Coastal Trade Ltd. of London with a $7.61 million trade/non-trade claim;

• Bibby Offshore Ltd. of Aberdeen, Scotland, with a $6.07 million trade claim; and

• Standard Chartered Bank of Singapore with a $5.63 million bank guarantee claim.

The company is represented by Porter Hedges LLP.

EMAS is a Houston-based global offshore marine company. The Chapter 11 case number is 17-31146.

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