Trico can use cash collateral through May 17, must repay debt or sell remaining assets

By Caroline Salls

Pittsburgh, Feb. 18 - Trico Marine Services, Inc. can use the cash collateral of its secured lenders and holders of its 8 1/8% second-lien convertible debentures through May 17, according to a Friday filing with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, lenders Tennenbaum DIP Opportunity Fund, LLC, Tennenbaum Opportunities Partners V, LP and Special Value Continuation Partners, LP and debtor-in-possession facility agent Obsidian Agency Services, Inc. asked the court on Jan. 27 to terminate Trico's cash collateral use and schedule an auction for its remaining assets.

The lenders said the company had not closed asset sales or paid secured lenders in full as promised.

Under a separate order, the court said Trico must turn over at least $6.52 million in net proceeds from the sale of its Hondo River, Spirit River, James River and Pearl River vessels to the secured lenders.

In addition, the court ordered Trico to use additional funds to repay its pre-bankruptcy credit agreement obligations by Feb. 18.

According to the filing, $100,000 of the principal amount of the pre-bankruptcy obligations will remain outstanding until they are paid under a confirmed plan of reorganization or liquidation or until the lenders' claims are paid in full or assigned.

The company and secured lenders must determine the exact amount of interest charges on the pre-bankruptcy obligations, with any disputes to be settled by the bankruptcy court.

The court also ordered the company to pay a percentage of specified vessel sale, joint venture distribution proceeds and holdback returns first to the secured lenders to repay debtor-in-possession financing obligations, then to repay pre-bankruptcy obligations and then to repay the second-lien noteholders.

If the secured lender obligations are not paid in full by April 29, Trico must schedule an auction for all of its remaining assets, which would be sold outside of a plan of reorganization or liquidation.

The bid procedures motion must be filed by March 31.

If the debt is not repaid, the auction must be held by May 16, and the secured lenders can place a credit bid for the assets.

The lenders can only exercise its rights related to the secured debt if Trico does not make one of the required payments or if the debt is not paid in full by May 17, the filing said.

If the secured debt is paid in full, the secured lenders' claims can be refinanced or assigned. If this happens before May 16, the auction will be cancelled.

Trico, a marine services company based in the Woodlands, Texas, filed for bankruptcy on Aug. 25. The Chapter 11 case number is 10-12653.

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