Trico Marine: Arrowgrass objects to Tennenbaum Capital DIP financing

By Lisa Kerner

Charlotte, N.C., Oct. 19 - Trico Marine Services, Inc. 3% senior convertible debentures holders Arrowgrass Master Fund Ltd. and Arrowgrass Distressed Opportunities Ltd. filed an objection to the company's request for approval of its $35 million of debtor-in-possession financing from affiliates of funds managed by Tennenbaum Capital Partners, LLC and Obsidian Agency Services, Inc., according to a Tuesday filing with the U.S. Bankruptcy Court for the District of Delaware.

A hearing is set for Oct. 20.

Arrowgrass believes the purpose of the Chapter 11 cases is "to allow Tennenbaum to 'clean up' any pre-petition 'issues'" and "to allow Tennenbaum to assert absolute control over the debtors and its non-debtor subsidiaries."

"The proposed DIP financing's roll-up terms are nothing more than a poorly disguised cross-collateralization in which Tennenbaum seeks to obtain "a security interest in assets of the debtor not only for a post-petition loan, but also as collateral for prepetition debt," the filing said.

According to Arrowgrass, Tennenbaum orchestrated the Chapter 11 cases and the proposed financing "to preserve and ultimately take over the non-debtor subsidiaries comprising the Trico Supply Group." The subsidiary group is in Norway and "presumably beyond the reach of this court," said the filing.

Interim access granted

As previously reported, in August the court granted interim access to $10 million of the financing.

The facility includes $10 million in new money loans and $25 million to be used to refinance Trico's pre-bankruptcy first-lien debt.

The DIP financing will mature on the earliest of March 11, 2011, the effective date of a plan of reorganization or liquidation, the closing of a sale of substantially all of the company's assets and the conversion or dismissal of the bankruptcy case.

Interest will be Libor plus 1,150 basis points, with a 2.5% Libor floor.

Obsidian is the DIP facility agent.

Trico, a marine services company based in The Woodlands, Texas, filed for bankruptcy on Aug. 25 in the U.S. Bankruptcy Court for the District of Delaware. The Chapter 11 case number is 10-12653.

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