Harvey Gulf International Marine is the latest offshore company looking at how to fix its balance sheet as it takes a pause on servicing $1.3bn in outstanding debt.

Harvey Gulf, the fourth largest US-based offshore vessel owner by fleet size, asked its primary lender — Bank of America — to forebear interest and principal payments on the outstanding debt, according to two people familiar with the issue.

Chief executive Shane Guidry says the company remains in compliance with the terms of the debt. He adds that the forbearance, which lasts until the end of this quarter, was so it could “get ahead of the continued downturn".

“We are working very closely with our lender group,” he said.

Debt restructurings in the offshore industry ramped up this year. Harvey Gulf's publicly listed peers, Tidewater and GulfMark Offshore, filed for bankruptcy protection to grapple with $2bn and $400m in debt, respectively.

Harvey Gulf remains profitable on an operating basis, and has not said it plans to follow the path of Tidewater and GulfMark. But restructuring experts say a debt-for-equity swap — as done by the other companies — is one likely scenario to deal with its debt.

Standard & Poor’s estimates the company has $137m outstanding under a term loan A from Bank of America. Harvey Gulf also drew on a revolving credit facility with the bank, with the amount on that facility said to be $250m. Both pieces mature next June.

The biggest piece of debt is the $875m done through a term loan B, which Bank of America syndicated to outside investors. That debt comes due in 2020.

Guidry declines to comment on the amounts outstanding. Outside of financing costs, he says the company is operating profitably. He expects Harvey Gulf to have Ebitda of between $120m and $130m this year.

Guidry says he and his team “are the only offshore company in the US capable of delivering this type of Ebitda”.

But fixed-income markets still see challenges for the company. Both term loans are trading at about $0.35 on the dollar in secondary markets, according to high-yield debt pricing firm Advantage Data.

The term loan A and B had been trading at around $0.92 and $0.78 on the dollar, respectively, as of last April.

New investors in the distressed debt may push the company into some type of restructuring, which may include a debt-for-equity swap as seen in other offshore restructurings.

Private-equity firm Jordan Group owns three-quarters of the company through a $500m investment, with Guidry owning the remainder.

The distressed debt may provide a “loan to own” situation for old and new investors to take some of the equity in the business, says one source familiar with the offshore industry. Depending on when they bought into the debt, those new equity holders may exact tougher terms on the company to recoup their investment.

“I don’t see how the equity manages to survive with dilution,” the source said.

Another fixed-income analyst says distressed investors likely see value in the company’s multipurpose vessels.

Those three ships account for two-thirds of the $1.6bn estimated market value of the portion of its fleet listed on VesselsValue. But the risk Harvey Gulf faces is rolling over contracts for those vessels at lower rates.

The analyst says those vessels “were on legacy contracts”.

“There are concerns that the vessels are not earning the same amount as they did previously,” the analyst said.

Yet Guidry says the company is not seeing margins weaken, with operating margins still above 60% year to date, thanks in part to having lower overhead expenses than its public peers.

“In a depressed market, the best CEOs cut costs early,” Guidry said.