U.S. offshore vessel owner Seacor Marine is set to launch a stalking horse bid to form a joint venture company with Montco Offshore, a liftboat specialist that has earlier filed for Chapter 11 bankruptcy protection.
Here is a definition of a stalking horse bid, as shared by Investopedia: “A stalking-horse bid is an initial bid on a bankrupt company’s assets from an interested buyer chosen by the bankrupt company. From a pool of bidders, the bankrupt company chooses the stalking horse to make the first bid.
This method allows the distressed company to avoid low bids on its assets. Once the stalking horse has made its bid, other potential buyers may submit competing bids for the bankrupt company’s assets.“
In a statement on Thursday, Seacor said that one of its subsidiaries and Montco had applied for the United States Bankruptcy Court for the Southern District of Texas to approve Montco’s entry into a term sheet with a subsidiary of SEACOR Marine that sets forth a summary of the principal non-binding terms of SEACOR Marine’s bid to form a new joint venture with Montco Offshore.
The Joint Venture would consolidate thirteen liftboat vessels currently operated by a subsidiary of SEACOR Marine, six liftboat vessels currently operated by Montco and two liftboat vessels currently operated by an existing joint venture between an affiliate of Montco and an affiliate of SEACOR Marine.
The Joint Venture would assume approximately $130 million of indebtedness from Montco’s credit facilities which, apart from a guarantee of interest payments for two years after the closing of the contemplated transactions, would be non-recourse to SEACOR Marine. In addition, the Joint Venture would assume approximately $76.0 million of indebtedness currently reflected on SEACOR Marine’s financial statements. It is expected that SEACOR Marine will be the majority owner of the equity interests in the Joint Venture.
If the court approves the application for the term sheet, Seacor said its ultimate bid would set the minimum acceptable bid for a potential auction under the supervision of the Bankruptcy Court for Montco’s assets.
Montco is expected to carry out a competitive process, following bidding procedures to be approved by the Bankruptcy Court, seeking higher and better qualified bids for a sale at auction of its assets. Upon approval of the Bankruptcy Court, the bidding procedures will provide that SEACOR Marine is the “stalking horse” bidder for the sale and the company would be entitled to receive a break-up fee and the reimbursement of certain of its expenses if the assets are sold to a company other than Seacor.