GulfMark and Tidewater chiefs to exit bankruptcy with equity

Dilution blow for shareholders as US offshore vessel owners strike Chapter 11 deals with management incentives

The plans pre-packaged bankruptcies of Tidewater and GulfMark Offshore could put new equity in the pockets of key executives even as they deliver a dilution blow to existing shareholders.

The two US offshore vessel owners struck deals to begin Chapter 11 restructurings that will leave current shareholders just a tiny fraction of total equity.

GulfMark filed for bankruptcy protection in Delaware on Wednesday and Tidewater was expected to do so on the same day, although it had not done so by TradeWinds press time.

Incentives for management are a common feature in US bankruptcies, although courts sometimes scrutinise such plans to ensure they are not purely aimed at retaining key employees rather than incentivising performance.

Tidewater’s restructuring deal with creditors will reserve 8% of its equity for management incentives, with key executives receiving a combined 3% stake in restricted shares on emergence from bankruptcy.

The remaining 5% will be granted at the discretion of the compensation committee of a new board of directors, according to securities filings.

Tidewater chief executive Jeffrey Platt, however, has chosen not to receive the so-called emergence grant, so his ultimate share award will be determined by the new board.

Chief investor relations officer Joe Bennett is also foregoing the grant because he plans to retire before the restricted shares vest. Bennett has spent 27 years at the New Orleans offshore vessel owner.

Filings with the US Securities and Exchange Commission show that GulfMark Offshore’s restructuring agreement with bondholders will hand up to 7.5% of the Houston company’s equity to management — but this is not guaranteed.

The management-incentive plan gives discretion to the new board of directors that will be formed by the time the company exits from Chapter 11 protection.

As TradeWinds reported in its web edition, GulfMark Offshore’s restructuring plan will give current shareholders just 0.75% of the restructured company, while bondholders will get 36.7% and investors in a new rights offering will get 60%.