Shares in Hornbeck Offshore Services fell as much of 24% today on news that the company plans to restructure its debt.
The company, which reported a $16.5m loss for the third quarter, said that its $225m cash balance and cash from operations should be enough liquidity to keep the company running through the end of 2017.
But the company faces three unsecured debt tranches totalling $1.07bn maturing between 2019 and 2021. The debt is currently trading at distressed levels.
Hornbeck does have a $200m revolving credit agreement with a consortium of eight banks, but Hornbeck says it cannot draw on the facility due to the facility’s current covenants.
Hornbeck says it has hired PricewaterhouseCoopers Corporate Finance to being the process of independently reviewing its capital structure and assessing its strategic options.
In a statement, Hornbeck said it “remains fully cognisant of the challenges currently facing the offshore oil and gas industry and is proactively taking steps to protect the business enterprise.”
One analyst who was not authorised to speak on the record said the company faces $50m in annual interest payments on its debt. It may have to pursue bankruptcy filing or it may seek to launch an exchange offer to extend its debt maturities.
