Cal Dive files bankruptcy to sell or reorganize core subsea business

By Caroline Salls

Pittsburgh, March 3 – Cal Dive International, Inc. and its U.S. subsidiaries filed Chapter 11 bankruptcy on Tuesday in the U.S. Bankruptcy Court for the District of Delaware to sell non-core assets and reorganize or sell as a going concern its core subsea contracting business, according to a company news release.

“Our business has experienced several adverse events that were beyond our control, and with our current capital structure, we are no longer able to financially withstand the industry downturn,” chairman, president and chief executive officer Quinn Hebert said in the release.

“In 2014, our financial performance suffered primarily as a result of delays caused by the suspension of two large projects, weather disruptions and delays caused by other contractors.

“Because these contracts contain milestone billing provisions, these delays and suspensions impeded our ability to invoice and collect payment for work performed, significantly impairing our liquidity which had already been reduced by declining industry conditions over the past several years.

“Our efforts to negotiate additional financing to fund business activities and pursue identified strategic alternatives were further impeded when oil prices plummeted, creating an additional, unexpected obstacle to our restructuring efforts.”

Cal Dive said its foreign subsidiaries have not sought bankruptcy protection and will continue to operate outside of any reorganization proceedings.

During the reorganization process, the company and its subsidiaries will continue operations, including completing existing construction projects in Mexico for Pemex and other ongoing diving and offshore construction projects for its customers worldwide.

DIP financing

In conjunction with the bankruptcy filing, Cal Dive received a commitment for up to $120 million in debtor-in-possession financing from current first-lien lenders led by Bank of America.

The company said the DIP financing will immediately provide additional liquidity to continue its operations during the Chapter 11 process. The DIP financing will provide adequate funds for post-bankruptcy supplier and employee obligations, as well as the company’s ongoing operations during the Chapter 11 process, the release said.

The terms of the DIP financing had not been filed as of Tuesday evening.

“By availing ourselves of the Chapter 11 process, we can achieve an orderly restructuring for our business that has consistently produced competitive results under a more favorable capital structure,” Hebert said in the release.

Debt details

According to court documents, Cal Dive had $570.99 million in total assets and $411.44 million of total debt as of Sept. 30.

The company’s largest unsecured creditors are:

• Bank of New York Mellon Trust Co., NA, with an $86.25 million claim for the company’s 5% convertible senior notes due 2017;

• Cashman Equipment Corp. of Henderson, Nev., with a $1.53 million trade debt claim;

• Bollinger Shipyards Lockport LLC of Lockport, La., with a $1.32 million trade debt claim; and

• Smith Marine Towing Corp. of Amelia, La., with a $1.08 million trade debt claim.

Huber Capital Management, LLC, Cashman Equipment Corp., Rutabaga Capital Management, LLC, FMR LLC, Fidelity Investments and Towle & Co. all own 5% or more of the company’s voting securities.

The company is represented by Richards, Layton & Finger, PA.

Cal Dive is a Houston-based marine contractor providing services to the offshore oil and natural gas industry. The Chapter 11 case number is 15-10458.

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