A $200 debt-swap plan by US OSV owner Hornbeck Offshore Services (HOS) is a "first step" in addressing maturity issues, according to Clarksons Platou Securities.
The company announced an offer on Tuesday to exchange some of its 2020 notes for new loans maturing in 2025 at higher interest rates.
Turner Holm, Clarksons Platou Securities' managing director of equity and credit research, said that, for shareholders, the deal would modestly extend optionality, though a hurdle would still remain in April 2020.
For 2020 bondholders the picture is more muddled, he added.
"On a stand-alone basis, the exchange offers an arguably attractive sticker price, but it would prime the non-exchanged bonds, remove many covenants from the remaining 2020s and almost certainly result in the 'stub' trading lower," he said.
Clarksons Platou is not changing its rating or share price target for HOS until greater clarity around the balance sheet can be ascertained.
Assuming 50% acceptance at the minimum price, the net increase in interest cost would be only a few million per year, Holm calculated.
More work to do
At least $167m of the 2020 maturity will remain, the analyst added.
"However, the deal would strongly position Hornbeck to negotiate for the remaining 2020s using the unused second lien capacity (at least $103m), presumably for a lower exchange price, or some other consideration," Holm said.
"That would leave the $100m September 2019 maturity, which the company has the option to pay with its $242m of liquidity, as well as the $450m unsecured notes due in March 2021.
"The next step would be negotiating with the 2021s, who would find themselves in a materially weaker position as a result of priming by the 2020s and possibly less liquidity after the 2019s are settled."
But he warned: "Non-completion would be perceived negatively and increase the likelihood of an in-court management of liabilities."
