Houston-based Cal Dive International Inc., which provides marine contracting services in the Gulf of Mexico (GOM) and northeastern United States, filed for U.S. bankruptcy protection Tuesday.
The company and its U.S. subsidiaries filed simultaneous voluntary petitions in U.S. Bankruptcy Court for the District of Delaware seeking Chapter 11 relief. The company's foreign subsidiaries have not sought bankruptcy protection and plan to continue to operate outside of the reorganization proceedings.
"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," CEO Quinn Hebert said. "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."
The contracts contained "milestone billing provisions," and "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," the CEO said.
"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."
Cal Dive plans to sell noncore assets and then reorganize or sell the core subsea contracting business. Existing construction projects, including one for Petroleos Mexicanos, or Pemex, would be completed. The company anticipates no disruption in its services.
"We are committed to meeting the challenges of our industry head on," said Herbert. "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."
Cal Dive has received a commitment for up to $120 million in debtor-in-possession (DIP) financing from its current first lien lenders, led by Bank of America, which plans to provide additional liquidity to continue its operations during the Chapter 11 process. The DIP financing, subject to court approval, would provide "adequate funds for post-petition supplier and employee obligations, as well as the company's ongoing operations needs during the Chapter 11 process."