(

) Bankruptcy and Related Matters

As described in Note

May 17, 2017,

the Debtor filed for protection under Chapter

of the Bankruptcy Code in the Bankruptcy Court to pursue the Plan.

The commencement of the Bankruptcy Case constituted an event of default that accelerated the Debtor’s obligations under the Indenture, dated as of

March 12, 2012,

by and between the Debtor, as issuer, and U.S. Bank National Association, as trustee, with respect to the Senior Notes referred to below. In addition, the commencement of the Bankruptcy Case constituted an event of default under the Multicurrency Facility Agreement and the Norwegian Facility Agreement referred to below.

Restructuring Support Agreement

May 15, 2017,

the Debtor entered into a restructuring support agreement, or the RSA, with holders, or the Noteholders, of approximately

50%

of the aggregate outstanding principal amount of the Debtor’s

unsecured

6.375%

senior notes due

2022,

or the Senior Notes, to support a restructuring on the terms of the Plan. The RSA provides that, among other things, we will commence a

$125

million rights offering, or the Rights Offering, and that:

●

The Debtor will commence the

$125

million Rights Offering, pursuant to which (subject to limitations regarding the Jones Act described below), eligible Noteholders will have the right to purchase on the effective date of the Plan, or the Effective Date, their pro rata share of

60%

of the Debtor’s common stock, or as applicable, the Jones Act Warrants (as defined below), or the Reorganized GulfMark Equity, subject to dilution by the Reorganized GulfMark Equity issued or issuable under the proposed management incentive plan, or the MIP, and upon exercise of the Reorganization Warrants (as defined below). The Rights Offering will be backstopped by certain of the Noteholders for a

6.0%

commitment premium paid in the form of

3.6%

of the Reorganized GulfMark Equity, subject to dilution by the Reorganized GulfMark Equity issued or issuable under the MIP and upon exercise of the Reorganization Warrants.

●

Each holder of the Senior Notes will receive (subject to limitations regarding the Jones Act described below) its pro rata share of the Reorganized GulfMark Equity representing in the aggregate

35.65%

of Reorganized GulfMark Equity, subject to dilution by the Reorganized GulfMark Equity issuable under the MIP and the exercise of the Reorganization Warrants.

●

The Jones Act, which applies to companies that engage in coastwise trade, requires that, among other things, with respect to a publicly traded company, the aggregate ownership of common stock by non-U.S. citizens be

not

more than

25%

of its outstanding common stock. Accordingly, the creditors who are recipients of common stock pursuant to the Plan or the Rights Offering who are non-U.S. holders

may

receive warrants to acquire common stock at an exercise price in a minimal amount in lieu of common stock, or the Jones Act Warrants.

●

All outstanding common stock of the Debtor will be cancelled and each holder of outstanding common stock of the Debtor will receive its pro rata share of (a) common stock representing in the aggregate

0.75%

of the Reorganized GulfMark Equity, subject to dilution by the Reorganized GulfMark Equity issuable under the MIP and the exercise of the Reorganization Warrants, and (b) warrants for

7.5%

of the equity in the reorganized Debtor, subject to dilution by the Reorganized GulfMark Equity issuable under the MIP, with a

-year term and with an exercise price based on an equity value of

billion, or the Reorganization Warrants.

●

The Debtor will seek to obtain debtor-in-possession financing pursuant to terms and conditions that are reasonably acceptable to the Debtor and Requisite Noteholders (as defined in the RSA).

●

Holders of allowed claims arising under the Debtor’s proposed debtor-in-possession financing facility, administrative expense claims, priority tax claims, other priority claims, and other secured claims of the Debtor will receive in exchange for their claims payment in full in cash or otherwise have their rights unimpaired under title

of the Bankruptcy Code. The Debtor will continue to pay any general unsecured claims in the ordinary course of business.

The RSA includes covenants on the part of the Debtor and the Noteholders, including that the Noteholders vote in favor of the Plan and otherwise facilitate the restructuring contemplated by the RSA. The RSA also includes rights of termination by each party upon the occurrence of certain events, including without limitation our failure to achieve certain milestones.

The Plan provides that the guaranty claims of

the lender under our Secured Revolving Credit Facility Agreement, dated

December 27, 2012,

in the original aggregate principal amount of NOK

600,000,000,

as amended, supplemented and/or restated from time to time, or the Norwegian Facility Agreement, among the Debtor, as guarantor,

one

of our indirect wholly-owned subsidiaries, GulfMark Rederi AS, or Rederi, as the borrower, our other subsidiaries party thereto and DNB Bank ASA, or the Norwegian Lender, will receive, on the Effective Date of the Plan, payment in cash in an amount equal to the allowed amount of guaranty claims, except to the extent that the lender agrees to a less favorable treatment. See “

DNB Second Amendment and Restatement Agreement

” below.

In addition, the Plan provides that, on the Effective Date of the Plan, or as soon as reasonably practicable thereafter, the Debtor (or its designee) or the reorganized Debtor (or its designee), as applicable, will pay in full in cash the allowed guaranty claims of the lenders

under our secured Multicurrency Facility Agreement, dated as of

September 26, 2014,

as amended, supplemented and/or restated from time to time, or the Multicurrency Facility Agreement, among the Debtor, as guarantor,

one

of our indirect wholly-owned subsidiaries, GulfMark Americas, Inc., or GulfMark Americas, as the borrower, a group of financial institutions as the lenders and The Royal Bank of Scotland plc, as agent for the lenders, or the Agent, less any amounts that

may

have been paid to satisfy obligations under the Multicurrency Facility Agreement by any of the obligors under the Multicurrency Facility Agreement prior to the Effective Date, except as otherwise agreed by the Agent and the Debtor (with consent of the Required Consenting Noteholders (as defined in the Plan)).

Backstop Commitment Agreement

May 15, 2017,

the Debtor entered into a backstop commitment agreement, or the Backstop Commitment Agreement, pursuant to which certain of the Noteholders agreed to backstop the Rights Offering contemplated in the RSA, or the Backstop Commitments. Pursuant to the Backstop Commitment Agreement, each of the holders of a Backstop Commitment party to the Backstop Commitment Agreement, or the Commitment Parties, severally and

not

jointly, agree to fully participate in the Rights Offering and purchase the Reorganized GulfMark Equity in accordance with the percentages set forth in the Backstop Commitment Agreement to the extent unsubscribed under the Rights Offering. In addition, to compensate the Commitment Parties for the risk of their undertakings and as consideration for the Backstop Commitments, the Debtor will pay the Commitment Parties, subject to approval by the Bankruptcy Court, in the aggregate, on the Effective Date, a backstop commitment premium in an amount equal to

$7,500,000

in the form of Reorganized GulfMark Equity.

The Backstop Commitment Agreement is terminable by the Debtor and/or the Requisite Commitment Parties (as defined in the Backstop Commitment Agreement) under several conditions, including failure to achieve certain milestones or the termination of the RSA. The Debtor is also required to pay a termination fee in the amount of

$7,500,000

in cash to the Commitment Parties if the Backstop Commitment Agreement is terminated for certain events.

Intercompany DIP Credit Agreement

May 18, 2017,

the Debtor entered into the Senior Secured Super-Priority Debtor In Possession Credit Agreement, or the Intercompany DIP Agreement, among the Debtor, as the borrower, Rederi, a wholly-owned subsidiary of the Debtor, as the lender, and the Norwegian Lender, as issuing bank. Pursuant to the Intercompany DIP Agreement, Rederi has made available to the Debtor a senior secured super-priority term loan facility of up to

$35

million to allow the Debtor to continue to operate its business and manage its properties as a debtor and a debtor-in-possession pursuant to the Debtor’s filing of the Petition. The Debtor has requested that the Norwegian Lender issue letters of credit from time to time, to be cash collateralized using the proceeds of the term loans under the Intercompany DIP Agreement. As security for the loans under the Intercompany DIP Agreement, the Debtor has pledged

65%

of its equity interests in GulfMark Capital, LLC, GulfMark Foreign Investments LLC and GM Offshore, Inc., each a wholly-owned domestic subsidiary of the Debtor.

DNB Second Amendment and Restatement Agreement

In order to provide funds to Rederi for purposes of making loans to the Debtor under the Intercompany DIP Agreement, on

May 18, 2017,

Rederi entered into the Second Amendment and Restatement Agreement, or the DNB Second Amendment and Restatement Agreement, among Rederi, as borrower, the other loan parties party thereto, the financial institutions listed therein as lenders, and the Norwegian Lender, as arranger and agent. Pursuant to the DNB Second Amendment and Restatement Agreement, the parties amended and restated the Norwegian Facility Agreement. We refer to the Norwegian Facility Agreement, as amended and restated by the DNB Second Amendment and Restatement Agreement, as the Amended and Restated Norwegian Facility. Pursuant to the Amended and Restated Norwegian Facility, the Norwegian Lender agreed to make available to Rederi an additional

$35

million senior secured term loan facility, or the Term Loan Facility. To secure the Term Loan Facility, Rederi, a wholly-owned subsidiary of GulfMark Norge AS, or the Norwegian Parent, and GulfMark UK Ltd., or the UK Guarantor, a wholly-owned subsidiary of GulfMark North Sea Limited, or the UK Parent, agreed to place mortgages in favor of the Norwegian Lender on certain additional previously unencumbered vessels owned by Rederi and certain other subsidiaries of the Debtor. In addition, the UK Parent and the Norwegian Parent pledged their shares in the UK Guarantor and Rederi, respectively, to the Norwegian Lender

Multicurrency Facility Agreement Forbearance Agreement

June 26, 2017,

GulfMark Americas and GulfMark Management, Inc., or GulfMark Management, each a subsidiary of the Debtor, entered into a forbearance agreement, or the RBS Forbearance Agreement, with The Royal Bank of Scotland plc, as Agent, relating to the Multicurrency Facility Agreement. Pursuant to the RBS Forbearance Agreement, the Agent agreed to waive the defaults and events of default specified in the RBS Forbearance Agreement and to forbear from exercising any rights or remedies under the Multicurrency Facility Agreement as a result of any such defaults and events of default specified in the RBS Forbearance Agreement until the earlier of (

) the occurrence of any of the early termination events specified in the RBS Forbearance Agreement, (y) the effectiveness of the Plan (including all exhibits and schedules thereto, and as amended, modified or supplemented solely in accordance with the RBS Forbearance Agreement) and (z)

September 4, 2017.

In addition, the Agent agreed in the RBS Forbearance Agreement that during such period the provision in the Multicurrency Facility Agreement that would result in an automatic acceleration of the outstanding obligations, termination of the lending commitments and a requirement to cash-collateralize letters of credit as specified in the RBS Forbearance Agreement shall

not

apply.

Liabilities Subject to Compromise

As a result of the filing of the Petition, the payment of pre-petition indebtedness is subject to compromise or other treatment under the Plan. Generally, actions to enforce or otherwise effect payment of pre-bankruptcy filing liabilities are stayed. Although payment of pre-petition claims is generally

not

permitted, the Bankruptcy Court granted the Debtor authority to pay certain pre-petition claims in designated categories and subject to certain terms and conditions. This relief generally was designed to preserve the value of the Debtor’s businesses and assets. Among other things, the Bankruptcy Court authorized the Debtor to pay certain pre-petition claims relating to employee wages and benefits, customers, vendors, and suppliers in the ordinary course of business.

The Debtor has been paying and intends to continue to pay undisputed post-petition claims in the ordinary course of business. With respect to pre-petition claims, the Debtor has notified all known claimants of the deadline to file a proof of claim with the Bankruptcy Court, which deadline has passed. The Debtor’s liabilities subject to compromise represent the Debtor’s current estimate of claims expected to be allowed under the Plan. Pre-petition liabilities that are subject to compromise are required to be reported at the amounts expected to be allowed, even if they

may

be settled for lesser amounts.

Liabilities subject to compromise are included in our unaudited condensed consolidated balance sheet in the amount of

$448.1

million, consisting of the Senior Notes in the aggregate principal amount of

$429.6

million and accrued interest through the date of the Petition on the Senior Notes in the amount of

$18.5

million. See Note

for a description of the Senior Notes.

Reorganization Items

Reorganization items represent amounts incurred subsequent to the Bankruptcy Case filing directly resulting from such filing and consist primarily of professional fees for bankers, attorneys and accountants totaling

$5.1

million during the

three

months ended

June 30, 2017.

Financial Statements of the Debtor

In accordance with the requirements of ASC

852,

the following are condensed financial statements of the Debtor:

GULFMARK OFFSHORE, INC. (DEBTOR IN POSSESSION)

UNAUDITED CONDENSED BALANCE SHEET

	June 30,
	2017
	(In thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	4,007
Prepaid expenses		1,641
Total current assets		5,648

Intercompany notes and other receivables		418,665
Investments in subsidiaries		286,164

Total assets	$	710,477
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Debtor in possession financing	$	10,000
Accounts payable		369
Accrued personnel costs		5,004
Other accrued liabilities		588
Total current liabilities		15,961
Deferred income tax liabilities		111,330
Liabilities subject to compromise		448,124
Stockholders' equity		135,062
Total liabilities and stockholders' equity	$	710,477

GULFMARK OFFSHORE, INC. (DEBTOR IN POSSESSION)

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

	Three Months Ended			Six Months Ended
	June 30,			June 30,
	2017			2017
	(In thousands)
Revenue	$	-		$	-
Costs and expenses:
General and administrative expenses		1,486			3,389
Pre-petition restructuring charges		11,716			17,569
Total costs and expenses		13,202			20,958
Operating loss		(13,202	)		(20,958	)
Other income (expense):
Interest expense		(3,910	)		(17,219	)
Interest income		2,507			5,183
Reorganization items		(1,902	)		(1,902	)
Foreign currency transaction loss and other		(8	)		(9	)
Total other income (expense)		(3,313	)		(13,947	)
Loss before income taxes		(16,515	)		(34,905	)
Income tax expense		(6,319	)		(84,091	)
Net loss	$	(22,834	)	$	(118,996	)

GULFMARK OFFSHORE, INC. (DEBTOR IN POSSESSION)

UNAUDITED CONDENSED STATEMENT OF CASH FLOWS

	Six Months Ended
	June 30,
	2017
	(In thousands)
Cash flows from operating activities:
Net loss	$	(118,996	)
Adjustments to reconcile net loss to net cash provided by operations:
Amortization of stock-based compensation		1,464
Amortization of deferred financing costs		6,471
Deferred income tax expense		84,091

Change in operating assets and liabilities:
Accounts receivable		25
Prepaids and other		(1,144	)
Accounts payable		(26	)
Other accrued liabilities and other, including intercompany activity		22,120
Net cash used in operating activities		(5,995	)
Cash flows from financing activities:
Proceeds from intercompany DIP financing		10,000
Net cash provided by financing activities		10,000

Net increase in cash and cash equivalents		4,005
Cash and cash equivalents at beginning of period		2
Cash and cash equivalents at end of period	$	4,007