Offshore oil and gas contractor Cal Dive International, Inc. has, together with its U.S. subsidiaries, filed simultaneous voluntary petitions in the United States Bankruptcy Court for the District of Delaware seeking relief under the provisions of Chapter 11 of the U.S. Bankruptcy Code.
The company’s foreign subsidiaries have not sought bankruptcy protection and will continue to operate outside of any reorganization proceedings.
Through the Chapter 11 process, Cal Dive will sell non-core assets and intends to reorganize or sell as a going concern its core subsea contracting business.
According to a statement by Cal Dive, during the reorganization process, the Company and its subsidiaries will continue to operate in the ordinary course, including completing the existing construction projects in Mexico for Pemex, and other ongoing diving and offshore construction projects for its customers worldwide. The company has said it doesn’t expect any disruption in its services.
Our business has experienced several adverse events that were beyond our control, and with our current capital structure, we are no longer able to financially withstand the industry downturn.
The Company has received a commitment for up to $120.0 million in debtor-in-possession (DIP) financing from its current first lien lenders led by Bank of America, which will immediately provide additional liquidity to continue its operations during the Chapter 11 process. The DIP financing, which is subject to Court approval, will provide adequate funds for post-petition supplier and employee obligations, as well as the Company’s ongoing operations needs during the Chapter 11 process.
Commenting on the filing, Cal Dive’s Chairman, President and Chief Executive Officer, Quinn Hebert, stated, “Our business has experienced several adverse events that were beyond our control, and with our current capital structure, we are no longer able to financially withstand the industry downturn. In 2014, our financial performance suffered primarily as a result of delays caused by the suspension of two large projects, weather disruptions and delays caused by other contractors.
“Because these contracts contain milestone billing provisions, these delays and suspensions impeded our ability to invoice and collect payment for work performed, significantly impairing our liquidity which had already been reduced by declining industry conditions over the past several years.
“Our efforts to negotiate additional financing to fund business activities and pursue identified strategic alternatives were further impeded when oil prices plummeted, creating an additional, unexpected obstacle to our restructuring efforts. After considering several alternatives, we felt the Chapter 11 process was the most effective way to maximize value for our stakeholders.”
Hebert continued, “We are committed to meeting the challenges of our industry head on. By availing ourselves of the Chapter 11 process, we can achieve an orderly restructuring for our business that has consistently produced competitive results under a more favorable capital structure.”