Portage Point Partners is serving as restructuring advisor and Guggenheim Securities is serving as financial advisor to Hornbeck Offshore Services, which entered into a restructuring support agreement that will be implemented through a voluntary prepackaged Chapter 11 bankruptcy case in the United States Bankruptcy Court for the Southern District of Texas, with a targeted completion date prior to the end of Q2/20.
In addition, Kirkland & Ellis, Winstead and Jackson Walker are serving as legal counsel to Hornbeck and Stretto is serving as claims and noticing agent.
The restructuring support agreement was made with secured lenders holding approximately 83% of Hornbeck’s aggregate secured indebtedness and unsecured noteholders holding approximately 79% of the company’s aggregate unsecured notes outstanding related to a balance sheet restructuring of the company.
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 Hornbeck’s 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 restructuring support agreement provides for payment in full of all vendors and employees.
In addition, pursuant to the reorganization contemplated by the restructuring support agreement, Hornbeck will achieve long term enterprise benefits including (i) a de-levering of its capital structure, (ii) post-emergence access to $100 million of new equity capital through a common stock rights offering, fully-backstopped by existing creditors, and (iii) the ability to arrange additional post-emergence financings for certain purposes, including strategic initiatives.
“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,” Todd M. Hornbeck, chairman, president and CEO of Hornbeck Offshore Services, said. “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. I want to thank our secured lenders and unsecured noteholders for joining together with us on a game plan for an expedited court-supervised financial restructuring process. This consensual approach to reorganization and recapitalization is in the best long-term interest of our company, as it will enable us to take advantage of new opportunities while continuing to support our customers, retain our employees and pay our vendors.”
Hornbeck Offshore Services is a provider of offshore service vessels primarily in the Gulf of Mexico and Latin America.