EX-99.T3E.1 57 d359183dex99t3e1.htm EX-99.T3E.1 EX-99.T3E.1

Exhibit T3E.1

UNITED STATES BANKRUPTCY COURT

DISTRICT OF DELAWARE

 

 

 

   x     
In re:    :     
   :      Chapter 11
TIDEWATER INC., et al.,    :     
   :      Case No. 17–              (    )
   :     
Debtors.1    :      (Joint Administration Requested)

 

 

   x     

DISCLOSURE STATEMENT FOR JOINT PREPACKAGED CHAPTER 11 PLAN

OF REORGANIZATION OF TIDEWATER INC. AND ITS AFFILIATED DEBTORS

 

Ray C. Schrock, P.C.    Daniel J. DeFranceschi (No. 2732)
Jill Frizzley    Zachary I. Shapiro (No. 5103)
WEIL, GOTSHAL & MANGES LLP    RICHARDS, LAYTON & FINGER, P.A.
767 Fifth Avenue    One Rodney Square
New York, New York 10153    920 North King Street
Telephone: (212) 310-8000    Wilmington, Delaware 19801
Facsimile: (212) 310-8007    Telephone: (302) 651-7700
Email: ray.schrock@weil.com    Facsimile: (302) 651-7701
Email: jill.frizzley@weil.com    Email: defranceschi@rlf.com
   Email: shapiro@rlf.com
-and-   
Alfredo R. Pérez    Attorneys for the Debtors and
Chris López    Debtors in Possession
WEIL, GOTSHAL & MANGES LLP   
700 Louisiana Street, Suite 1700   
Houston, Texas 77002   
Telephone: (713) 546-5000   
Facsimile: (713) 224-9511   
Email: alfredo.perez@weil.com   
Email: chris.lopez@weil.com   
Attorneys for the Debtors and   
Debtors in Possession   

 

 

1  The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, if any, are: Tidewater Inc. (7776), Tidewater Marine Western, Inc. (1064), Tidewater Corporate Services, L.L.C. (7776), Tidewater Marine, L.L.C. (7779), Cajun Acquisitions, LLC (2365), Gulf Fleet Supply Vessels, L.L.C. (2194), Hilliard Oil & Gas, Inc. (4727), Java Boat Corporation (0278), Pan Marine International Dutch Holdings, L.L.C., Point Marine, L.L.C. (9586), Quality Shipyards, L.L.C. (2335), S.O.P., Inc. (3464), Tidewater Marine Alaska, Inc. (7549), Tidewater Marine International Dutch Holdings, L.L.C. (2289), Tidewater Marine Sakhalin, L.L.C. (7779), Tidewater Mexico Holding, L.L.C. (8248), Tidewater Venture, Inc. (7694), Twenty Grand (Brazil), L.L.C. (7730), Twenty Grand Marine Service, L.L.C. (7730), Zapata Gulf Marine, L.L.C. (5513), Tidewater GOM, Inc. (2799), Tidewater Subsea, L.L.C. (2022), Tidewater Subsea ROV, L.L.C. (3832), Tidewater Marine Fleet, L.L.C., Tidewater Marine Hulls, L.L.C., Tidewater Marine Ships, L.L.C., and Tidewater Marine Vessels, L.L.C. The Debtors’ principal offices are located at 601 Poydras Street, Suite 1500, New Orleans, Louisiana 70130.


THIS SOLICITATION OF VOTES (THE “SOLICITATION”) IS BEING CONDUCTED TO OBTAIN SUFFICIENT VOTES TO ACCEPT THE PREPACKAGED PLAN (AS DEFINED HEREIN) BEFORE THE FILING OF VOLUNTARY REORGANIZATION CASES UNDER CHAPTER 11 OF TITLE 11 OF THE UNITED STATES CODE (THE “BANKRUPTCY CODE”). BECAUSE THE CHAPTER 11 CASES HAVE NOT YET BEEN COMMENCED, THIS DISCLOSURE STATEMENT HAS NOT BEEN APPROVED BY THE BANKRUPTCY COURT AS CONTAINING ADEQUATE INFORMATION WITHIN THE MEANING OF SECTION 1125(a) OF THE BANKRUPTCY CODE. FOLLOWING THE COMMENCEMENT OF THE CHAPTER 11 CASES, THE DEBTORS EXPECT TO PROMPTLY SEEK ORDERS OF THE BANKRUPTCY COURT (i) APPROVING THIS DISCLOSURE STATEMENT AS CONTAINING ADEQUATE INFORMATION, (ii) APPROVING THE SOLICITATION OF VOTES AS BEING IN COMPLIANCE WITH SECTIONS 1125 AND 1126(b) OF THE BANKRUPTCY CODE, AND (iii) CONFIRMING THE PREPACKAGED PLAN.

DISCLOSURE STATEMENT, DATED MAY 11, 2017

Solicitation of Votes on the

Prepackaged Plan of Reorganization of

TIDEWATER INC., et al.

from the holders of outstanding

CREDIT AGREEMENT CLAIMS

NOTES CLAIMS

SALE LEASEBACK CLAIMS

 

THE VOTING DEADLINE TO ACCEPT OR REJECT THE PREPACKAGED PLAN IS 5:00 P.M. (PREVAILING EASTERN TIME) ON JUNE 12, 2017 UNLESS EXTENDED BY THE DEBTORS. THE RECORD DATE FOR DETERMINING WHICH HOLDERS OF CLAIMS MAY VOTE ON THE PREPACKAGED PLAN IS MAY 8, 2017 (THE “RECORD DATE”).

 

RECOMMENDATION BY THE DEBTORS

 

The Board of Directors of Tidewater Inc. (“Tidewater Parent”) and the board of directors, managers, or members, as applicable, of each of its affiliated Debtors (as of the date hereof) have unanimously approved the transactions contemplated by the Solicitation and the Prepackaged Plan and recommend that all creditors whose votes are being solicited submit ballots to accept the Prepackaged Plan. Holders of approximately sixty percent (60%) in outstanding principal amount of the Credit Agreement Claims entitled to vote on the Prepackaged Plan (the “Consenting Tidewater Lenders”) and holders of more than ninety-nine percent (99%) in outstanding principal amount of the Notes Claims entitled to vote on the Prepackaged Plan (the “Consenting Noteholders”) have already agreed, subject to the terms and conditions of the Restructuring Support Agreement (as defined herein), to vote in favor of the Prepackaged Plan.

 

ii


HOLDERS OF CLAIMS SHOULD NOT CONSTRUE THE CONTENTS OF THIS DISCLOSURE STATEMENT AS PROVIDING ANY LEGAL, BUSINESS, FINANCIAL, OR TAX ADVICE AND SHOULD CONSULT WITH THEIR OWN ADVISORS BEFORE CASTING A VOTE WITH RESPECT TO THE PREPACKAGED PLAN.

THE ISSUANCE OF, AND THE DISTRIBUTION UNDER, THE PREPACKAGED PLAN OF THE NEW COMMON STOCK, THE NEW SECURED NOTES, AND THE NEW WARRANTS (AND THE NEW COMMON STOCK ISSUABLE UPON EXERCISE THEREOF) WILL BE EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933 (AS AMENDED, THE “SECURITIES ACT”), AND ANY OTHER APPLICABLE SECURITIES LAWS PURSUANT TO SECTION 1145 OF THE BANKRUPTCY CODE. THESE SECURITIES MAY BE RESOLD WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR OTHER FEDERAL SECURITIES LAWS PURSUANT TO THE EXEMPTION PROVIDED BY SECTION 4(A)(1) OF THE SECURITIES ACT, UNLESS THE HOLDER IS AN “UNDERWRITER” WITH RESPECT TO SUCH SECURITIES, AS THAT TERM IS DEFINED IN SECTION 1145(b)(1) OF THE BANKRUPTCY CODE. IN ADDITION, SUCH SECTION 1145 EXEMPT SECURITIES GENERALLY MAY BE RESOLD WITHOUT REGISTRATION UNDER STATE SECURITIES LAWS PURSUANT TO VARIOUS EXEMPTIONS PROVIDED BY THE RESPECTIVE LAWS OF THE SEVERAL STATES.

THE NEW COMMON STOCK, THE NEW SECURED NOTES, AND THE NEW WARRANTS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) OR BY ANY STATE SECURITIES COMMISSION OR SIMILAR PUBLIC, GOVERNMENTAL, OR REGULATORY AUTHORITY, AND NEITHER THE SEC NOR ANY SUCH AUTHORITY HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT OR UPON THE MERITS OF THE PREPACKAGED PLAN. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

CERTAIN STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT, INCLUDING STATEMENTS INCORPORATED BY REFERENCE, PROJECTED FINANCIAL INFORMATION, AND OTHER FORWARD-LOOKING STATEMENTS, ARE BASED ON ESTIMATES AND ASSUMPTIONS. THERE CAN BE NO ASSURANCE THAT SUCH STATEMENTS WILL BE REFLECTIVE OF ACTUAL OUTCOMES. FORWARD-LOOKING STATEMENTS ARE PROVIDED IN THIS DISCLOSURE STATEMENT PURSUANT TO THE SAFE HARBOR ESTABLISHED UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND SHOULD BE EVALUATED IN THE CONTEXT OF THE ESTIMATES, ASSUMPTIONS, UNCERTAINTIES, AND RISKS DESCRIBED HEREIN.

FURTHER, READERS ARE CAUTIONED THAT ANY FORWARD-LOOKING STATEMENTS HEREIN ARE BASED ON ASSUMPTIONS THAT ARE BELIEVED TO BE REASONABLE, BUT ARE SUBJECT TO A WIDE RANGE OF RISKS IDENTIFIED IN THIS DISCLOSURE STATEMENT. DUE TO THESE UNCERTAINTIES, READERS CANNOT BE ASSURED THAT ANY FORWARD-LOOKING STATEMENTS WILL PROVE TO BE CORRECT. THE DEBTORS ARE UNDER NO OBLIGATION TO (AND EXPRESSLY DISCLAIM ANY OBLIGATION TO) UPDATE OR ALTER ANY FORWARD-LOOKING STATEMENTS WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS, OR OTHERWISE, UNLESS INSTRUCTED TO DO SO BY THE BANKRUPTCY COURT.

 

iii


HOLDERS OF ALLOWED OTHER GENERAL UNSECURED CLAIMS WILL NOT BE IMPAIRED BY THE PREPACKAGED PLAN AND, AS A RESULT, THE RIGHT TO RECEIVE PAYMENT IN FULL ON ACCOUNT OF EXISTING OBLIGATIONS IS NOT ALTERED BY THE PREPACKAGED PLAN. DURING THE CHAPTER 11 CASES, THE DEBTORS INTEND TO OPERATE THEIR BUSINESSES IN THE ORDINARY COURSE AND WILL SEEK AUTHORIZATION FROM THE BANKRUPTCY COURT TO MAKE PAYMENT IN FULL ON A TIMELY BASIS TO ALL TRADE CREDITORS, CUSTOMERS, EMPLOYEES, AND INSURANCE PROVIDERS OF ALL AMOUNTS DUE PRIOR TO AND DURING THE CHAPTER 11 CASES.

NO INDEPENDENT AUDITOR OR ACCOUNTANT HAS REVIEWED OR APPROVED THE FINANCIAL PROJECTIONS OR THE LIQUIDATION ANALYSIS PROVIDED HEREIN.

THE DEBTORS HAVE NOT AUTHORIZED ANY PERSON TO GIVE ANY INFORMATION OR ADVICE, OR TO MAKE ANY REPRESENTATION, IN CONNECTION WITH THE PREPACKAGED PLAN OR THIS DISCLOSURE STATEMENT.

THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE MADE AS OF THE DATE HEREOF UNLESS OTHERWISE SPECIFIED. THE TERMS OF THE PREPACKAGED PLAN GOVERN IN THE EVENT OF ANY INCONSISTENCY WITH THE SUMMARIES IN THIS DISCLOSURE STATEMENT.

THE INFORMATION IN THIS DISCLOSURE STATEMENT IS BEING PROVIDED SOLELY FOR PURPOSES OF VOTING TO ACCEPT OR REJECT THE PREPACKAGED PLAN OR OBJECTING TO CONFIRMATION. NOTHING IN THIS DISCLOSURE STATEMENT MAY BE USED BY ANY PARTY FOR ANY OTHER PURPOSE.

ALL EXHIBITS TO THIS DISCLOSURE STATEMENT ARE INCORPORATED INTO AND ARE A PART OF THIS DISCLOSURE STATEMENT AS IF SET FORTH IN FULL HEREIN.

 

iv


I. INTRODUCTION

     1  

II. OVERVIEW OF THE DEBTORS’ OPERATIONS

     7  
  A.   Overview of the Debtors’ Businesses      7  
  B.   Operating Segments      7  
    1.  

Deepwater Vessels

     8  
    2.  

Towing Supply Vessels

     9  
    3.  

Other Vessels

     9  
    4.  

Additional Vessels Under Construction

     9  
  C.   The Debtors’ Organizational Structure      10  
  D.   Directors and Officers      10  
  E.   Regulation of the Debtors’ Businesses      10  
  F.   The Debtors’ Capital Structure      11  
    1.  

Equity Ownership

     11  
    2.  

Cash and Cash Equivalents

     11  
    3.  

Prepetition Indebtedness

     11  
  G.   Legal Proceedings      14  
    1.   Gulf Island Arbitration      14  
    2.  

Other Legal Proceedings

     15  
III. KEY EVENTS LEADING TO THE COMMENCEMENT OF CHAPTER 11 CASES      15  
  A.   Collapse in Commodity Prices      15  
  B.   Prepetition Negotiations with Creditors      16  
IV. ANTICIPATED EVENTS DURING THE CHAPTER 11 CASES      17  
  A.   Commencement of the Chapter 11 Cases and First Day Motions      18  
    1.  

Cash Management System

     18  
    2.  

Trade Creditors

     18  
    3.  

Taxes

     18  
    4.  

Utilities

     18  
    5.  

Insurance and Surety Bonds

     19  
    6.  

Employee Wages and Benefits

     19  
    7.  

Rejection of Sale Leaseback Agreements and Objection to Sale Leaseback Claims

     19  
    8.  

Protection of Tax Benefits and Net Operating Losses

     20  
  B.   Other Procedural Motions and Retention of Professionals      20  
  C.   Confirmation Hearing      20  
  D.   Timetable for the Chapter 11 Cases      20  
V. MATTERS INVOLVING NON-DEBTOR AFFILIATES      21  
  A.   Non-Debtor Affiliate Operations      21  


TABLE OF CONTENTS

 

 

B.

 

Reinstatement of the Troms Credit Agreement

     21  
 

C.

 

Legal Proceedings

     22  
   

1.

 

Arbitral Award for the Taking of the Company’s Venezuelan Operations

     22  
   

2.

 

Nigeria Marketing Agent Litigation

     22  
VI. SUMMARY OF THE PREPACKAGED PLAN      23  
 

A.

 

Administrative Expenses and Priority Claims

     23  
   

1.

 

Administrative Expense Claims

     23  
   

2.

 

Fee Claims

     23  
   

3.

 

Priority Tax Claims

     24  
 

B.

 

Classifications of Claims and Interests

     24  
   

1.

 

Classification in General

     24  
   

2.

 

Formation of Debtor Groups for Convenience Only

     25  
   

3.

 

Summary of Classification

     25  
   

4.

 

Special Provision Governing Unimpaired Claims

     25  
   

5.

 

Elimination of Vacant Classes

     26  
 

C.

 

Treatment of Claims and Interests

     26  
   

1.

 

Class 1: Priority Non-Tax Claims

     26  
   

2.

 

Class 2: Secured Claims

     26  
   

3.

 

Class 3: General Unsecured Claims

     26  
   

4.

 

Class 4: Other General Unsecured Claims

     28  
   

5.

 

Class 5: Intercompany Claims

     28  
   

6.

 

Class 6: Intercompany Interests

     28  
   

7.

 

Class 7: Tidewater Parent Interests

     28  
   

8.

 

Class 8: Subordinated Securities Claims

     29  
 

D.

 

Means for Implementation

     29  
   

1.

 

Compromise and Settlement of Claims, Interests, and Controversies

     29  
   

2.

 

Continued Corporate Existence

     29  
   

3.

 

Prepackaged Plan Funding

     30  
   

4.

 

Cancellation of Existing Securities and Agreements

     30  
   

5.

 

Authorization and Issuance of New Common Stock and New Warrants

     30  
   

6.

 

Section 1145 Exemption

     32  
   

7.

 

Officers and Boards of Directors

     32  
   

8.

 

Restructuring Transactions

     33  
   

9.

 

Cancellation of Liens

     34  
   

10.

 

New Indenture and New Secured Notes

     34  
   

11.

 

Registration Rights Agreement

     36  
   

12.

 

Employee Matters

     36  
   

13.

 

Nonconsensual Confirmation

     37  
   

14.

 

Closing of Chapter 11 Cases

     37  

 

ii


TABLE OF CONTENTS

 

   

15.

 

Notice of Effective Date

     37  
   

16.

 

Separability

     37  
 

E.

 

Distributions

     37  
   

1.

 

Distributions Generally

     37  
   

2.

 

Distribution Record Date

     37  
   

3.

 

Date of Distributions

     38  
   

4.

 

Disbursing Agent

     38  
   

5.

 

Rights and Powers of Disbursing Agent

     38  
   

6.

 

Expenses of Disbursing Agent

     38  
   

7.

 

No Postpetition Interest on Claims

     39  
   

8.

 

Delivery of Distributions

     39  
   

9.

 

Distributions to Class 3 General Unsecured Claims

     39  
   

10.

 

Distributions After Effective Date

     40  
   

11.

 

Unclaimed Property

     40  
   

12.

 

Time Bar to Cash Payments

     40  
   

13.

 

Manner of Payment under Prepackaged Plan

     41  
   

14.

 

Satisfaction of Claims

     41  
   

15.

 

Fractional Stock

     41  
   

16.

 

Minimum Cash Distributions

     41  
   

17.

 

Setoffs and Recoupments

     41  
   

18.

 

Allocation of Distributions Between Principal and Interest

     42  
   

19.

 

No Distribution in Excess of Amount of Allowed Claim

     42  
   

20.

 

Withholding and Reporting Requirements

     42  
   

21.

 

Hart-Scott-Rodino Antitrust Improvements Act

     43  
 

F.

 

Procedures for Resolving Claims

     43  
   

1.

 

Disputed Claims Process

     43  
   

2.

 

Estimation of Claims

     43  
   

3.

 

No Distributions Pending Allowance

     44  
   

4.

 

Distributions After Allowance

     44  
   

5.

 

Disputed Claims Reserve

     44  
   

6.

 

Claim Resolution Procedures Cumulative

     45  
 

G.

 

Executory Contracts and Unexpired Leases

     45  
   

1.

 

General Treatment

     45  
   

2.

 

Determination of Assumption Disputes and Deemed Consent

     46  
   

3.

 

Effect of Assumption of Contracts and Leases

     46  
   

4.

 

Rejection Claims of Sale Leaseback Parties

     47  
   

5.

 

Survival of Debtors’ Indemnification Obligations

     47  
   

6.

 

Insurance Policies

     47  
   

7.

 

Intellectual Property Licenses and Agreements

     48  
   

8.

 

Modifications, Amendments, Supplements, Restatements, or Other Agreements

     48  
   

9.

 

Reservation of Rights

     48  

 

iii


TABLE OF CONTENTS

 

 

H.

 

Conditions Precedent to Confirmation of Prepackaged Plan and Effective Date

     48  
   

1.

 

Conditions Precedent to Confirmation of Prepackaged Plan

     48  
   

2.

 

Conditions Precedent to Effective Date

     49  
   

3.

 

Waiver of Conditions Precedent

     50  
   

4.

 

Effect of Failure of a Condition

     50  
 

I.

 

Effect of Confirmation

     50  
   

1.

 

Vesting of Assets

     50  
   

2.

 

Binding Effect

     51  
   

3.

 

Discharge of Claims and Termination of Interests

     51  
   

4.

 

Term of Injunctions or Stays

     51  
   

5.

 

Injunction

     51  
   

6.

 

Releases

     52  
   

7.

 

Exculpation

     54  
   

8.

 

Subordinated Claims

     54  
   

9.

 

Retention of Causes of Action/Reservation of Rights

     55  
   

10.

 

Solicitation of Prepackaged Plan

     55  
   

11.

 

Corporate and Limited Liability Company Action

     55  
 

J.

 

Retention of Jurisdiction

     56  
   

1.

 

Retention of Jurisdiction

     56  
   

2.

 

Courts of Competent Jurisdiction

     58  
 

K.

 

Miscellaneous Provisions

     58  
   

1.

 

Payment of Statutory Fees

     58  
   

2.

 

Substantial Consummation of the Prepackaged Plan

     58  
   

3.

 

Plan Supplement

     58  
   

4.

 

Request for Expedited Determination of Taxes

     58  
   

5.

 

Exemption from Certain Transfer Taxes

     59  
   

6.

 

Amendments

     59  
   

7.

 

Effectuating Documents and Further Transactions

     59  
   

8.

 

Revocation or Withdrawal of Prepackaged Plan

     60  
   

9.

 

Severability of Prepackaged Plan Provisions

     60  
   

10.

 

Governing Law

     60  
   

11.

 

Time

     61  
   

12.

 

Dates of Actions to Implement the Prepackaged Plan

     61  
   

13.

 

Immediate Binding Effect

     61  
   

14.

 

Deemed Acts

     61  
   

15.

 

Successors and Assigns

     61  
   

16.

 

Entire Agreement

     61  
   

17.

 

Exhibits to Prepackaged Plan

     61  
   

18.

 

Notices

     62  

 

iv


TABLE OF CONTENTS

 

VII. FINANCIAL INFORMATION AND PROJECTIONS      64  
 

A.

 

Consolidated Condensed Projected Financial Information

     64  
 

B.

 

Assumptions to the Projections

     67  
   

1.

 

General Assumptions

     67  
   

2.

 

Assumptions With Respect to the Projected Income Statement

     67  
   

3.

 

Assumptions with Respect to the Projected Balance Sheet and Projected Statement of Cash Flows

     68  
VIII. VALUATION ANALYSIS      68  
 

A.

 

Estimated Reorganization Valuation of the Debtor

     68  
IX. TRANSFER RESTRICTIONS AND CONSEQUENCES UNDER FEDERAL SECURITIES LAWS      70  
X. CERTAIN TAX CONSEQUENCES OF THE PREPACKAGED PLAN      71  
 

A.

 

Consequences to Debtors

     72  
   

1.

 

Cancellation of Debt Income

     73  
   

2.

 

Potential Limitations on NOL Carryforwards and Other Tax Attributes

     73  
   

3.

 

Alternative Minimum Tax

     75  
 

B.

 

Consequences to U.S. Holders of General Unsecured Claims

     75  
   

1.

 

Exchanges of General Unsecured Claims under the Prepackaged Plan

     76  
   

2.

 

Ownership and Disposition of the New Secured Notes

     80  
   

3.

 

Exercise of New Creditor Warrants

     82  
   

4.

 

Dispositions of New Common Stock and New Creditor Warrants

     82  
   

5.

 

Information Reporting, Backup Withholding, and Disclosure Requirements

     83  
XI. CERTAIN RISK FACTORS TO BE CONSIDERED      83  
 

A.

 

Certain Bankruptcy Law Considerations

     83  
   

1.

 

General

     83  
   

2.

 

Risk of Non-Confirmation of the Prepackaged Plan

     84  
   

3.

 

Non-Consensual Confirmation

     84  
   

4.

 

Risk of Non-Occurrence of the Effective Date

     84  
   

5.

 

Risk of Termination of the Restructuring Support Agreement

     84  
   

6.

 

Conversion into Chapter 7 Cases

     85  
 

B.

 

Additional Risk Factors Affecting the Value of the Reorganized Debtors

     85  
   

1.

 

Claims Could Be More than Projected

     85  
   

2.

 

Projections and Other Forward-Looking Statements Are Not Assured, and Actual Results May Vary

     85  
 

C.

 

Risks Relating to the Debtors’ Businesses and Financial Condition

     85  
   

1.

 

Risks Associated with the Debtors’ Business and Industry

     85  
   

2.

 

High Level of Competition in the Offshore Marine Service Industry

     86  

 

v


TABLE OF CONTENTS

 

   

3.

 

Challenging Macroeconomic Conditions

     86  
   

4.

 

Post-Effective Date Indebtedness

     86  
   

5.

 

Adverse Effect of Failure to Comply with the Jones Act

     86  
 

D.

 

Risk Factors Relating to Securities to Be Issued Under the Prepackaged Plan

     87  
   

1.

 

Market for Securities

     87  
   

2.

 

Potential Dilution

     88  
   

3.

 

Significant Holders

     88  
   

4.

 

Equity Interests Subordinated to the Reorganized Debtors’ Indebtedness

     88  
   

5.

 

Implied Equity Value Not Intended to Represent the Trading Value of the New Common Stock or New Warrants

     88  
   

6.

 

No Intention to Pay Dividends

     89  
 

E.

 

Additional Risk Factors

     89  
   

1.

 

Debtors Could Withdraw Prepackaged Plan

     89  
   

2.

 

Debtors Have No Duty to Update

     89  
   

3.

 

No Representations Outside this Disclosure Statement Are Authorized

     89  
   

4.

 

No Legal or Tax Advice Is Provided by this Disclosure Statement

     89  
   

5.

 

No Admission Made

     89  
   

6.

 

Certain Tax Consequences

     90  
XII. VOTING PROCEDURES AND REQUIREMENTS      90  
 

A.

 

Voting Deadline

     90  
 

B.

 

Voting Procedures

     90  
 

C.

 

Parties Entitled to Vote

     91  
   

1.

 

Miscellaneous

     91  
   

2.

 

Fiduciaries and Other Representatives

     92  
   

3.

 

Agreements Upon Furnishing Ballots

     92  
   

4.

 

Change of Vote

     93  
 

D.

 

Waivers of Defects, Irregularities, etc.

     93  
 

E.

 

Further Information, Additional Copies

     93  
XIII. CONFIRMATION OF THE PREPACKAGED PLAN      93  
 

A.

 

Confirmation Hearing

     93  
 

B.

 

Objections to Confirmation

     94  
 

C.

 

Requirements for Confirmation of the Prepackaged Plan

     95  
   

1.

 

Requirements of Section 1129(a) of the Bankruptcy Code

     95  
   

2.

 

Additional Requirements for Non-Consensual Confirmation

     98  
XIV. ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PREPACKAGED PLAN      99  
 

A.

 

Alternative Prepackaged Plan of Reorganization

     100  
 

B.

 

Sale Under Section 363 of the Bankruptcy Code

     100  

 

vi


TABLE OF CONTENTS

 

 

C.

 

Liquidation Under Chapter 7 of the Bankruptcy Code

     100  
XV. CONCLUSION AND RECOMMENDATION      101  

EXHIBITS

 

EXHIBIT A    Prepackaged Plan
EXHIBIT B    Organizational Chart
EXHIBIT C    Liquidation Analysis

 

vii


I.

INTRODUCTION

The Debtors submit this Disclosure Statement in connection with the Solicitation of votes on the Joint Prepackaged Chapter 11 Plan of Tidewater Parent and its Affiliated Debtors, dated May 11, 2017 (the “Prepackaged Plan”) attached hereto as Exhibit A.1 The Debtors under the Prepackaged Plan are Tidewater Parent and its affiliates that are guarantors under the Credit Agreement, the 2013 Notes, the 2011 Notes, the 2010 Notes, and/or the Troms Credit Agreement (each as defined below). Subject to the approval of the Board of Directors of Tidewater Parent (the “Board”), the Debtors anticipate filing voluntary petitions for relief under chapter 11 in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) on or about May 15, 2017, which is during the solicitation period.

The Debtors are commencing this Solicitation after extensive discussions over the past several months among the Debtors and certain key creditor constituencies. As a result of these negotiations, the Consenting Tidewater Lenders and the Consenting Noteholders entered into a restructuring support agreement (the “Restructuring Support Agreement”) with the Debtors, a copy of which is annexed to the Prepackaged Plan as Schedule 1. Under the terms of the Restructuring Support Agreement, the Consenting Tidewater Lenders and the Consenting Noteholders party thereto, and the Sale Leaseback Parties who ultimately execute a joinder to the Restructuring Support Agreement, if any (the “Consenting Sale Leaseback Parties”), agree, subject to the terms and conditions of the Restructuring Support Agreement, to support a financial restructuring of the Debtors (the “Restructuring”), which is anticipated to be effected through the Prepackaged Plan.

Class 3 (General Unsecured Claims) is comprised of three (3) creditor groups whose votes for acceptance of the Prepackaged Plan are being solicited, including holders of:

 

    Credit Agreement Claims;

 

    Notes Claims; and

 

    Sale Leaseback Claims.

Further below is a short summary of the treatment of various creditor groups under the Prepackaged Plan. Greater detail on such treatment is provided later on in this Disclosure Statement.

THE PREPACKAGED PLAN PROVIDES THAT HOLDERS OF IMPAIRED CLAIMS ENTITLED TO VOTE WHO DO NOT SUBMIT A BALLOT VOTING TO ACCEPT OR REJECT THE PREPACKAGED PLAN, WHO VOTE TO ACCEPT THE PREPACKAGED PLAN, OR WHO VOTE TO REJECT THE PREPACKAGED PLAN BUT DO NOT OPT OUT OF THE RELEASE PROVISIONS OF THE PREPACKAGED PLAN ARE DEEMED TO HAVE GRANTED THE RELEASES THEREIN.

The Restructuring will leave the Debtors’ businesses and existing corporate structure intact under Tidewater Parent, and it will substantially deleverage the Debtors’ capital structure. The Debtors’ balance sheet liabilities will be reduced from greater than approximately $2.04 billion in unsecured debt to approximately $444 million of secured debt. This deleveraging will enhance the Debtors’ long-term growth prospects and competitive position and allow the Debtors to emerge from the Chapter 11 Cases as a stronger, reorganized group of entities better able to withstand a challenging market environment facing providers of offshore support vessels and marine support services to the offshore energy industry.

 

1  Capitalized terms used but not otherwise defined in this Disclosure Statement will have the meaning ascribed to such terms in the Prepackaged Plan. The summary of the Prepackaged Plan provided herein is qualified in its entirety by reference to the Prepackaged Plan. In the case of any inconsistency between this Disclosure Statement and the Prepackaged Plan, the Prepackaged Plan will govern.


WHO IS ENTITLED TO VOTE: Under the Bankruptcy Code, only holders of claims or interests in “impaired” classes are entitled to vote on a plan of reorganization (unless, for reasons discussed in more detail below, such holders are deemed to reject the plan pursuant to section 1126(g) of the Bankruptcy Code). Under section 1124 of the Bankruptcy Code, a class of claims or interests is deemed to be “impaired” under a plan unless: (i) the plan leaves unaltered the legal, equitable, and contractual rights of the holder of such claim or interest; or (ii) notwithstanding any legal right to an accelerated payment of such claim or interest, the plan, among other things, cures all existing defaults (other than defaults resulting from the occurrence of events of bankruptcy) and reinstates the maturity of such claim or interest as it existed before the default.

The following table summarizes: (i) the treatment of Claims and Interests under the Prepackaged Plan; (ii) which Classes are impaired by the Prepackaged Plan; (iii) which Classes are entitled to vote on the Prepackaged Plan; and (iv) the estimated recoveries for holders of Claims and Interests.2 The table is qualified in its entirety by reference to the full text of the Prepackaged Plan. A more detailed summary of the terms and provisions of the Prepackaged Plan is provided in the Summary of the Prepackaged Plan set forth in Article VI of this Disclosure Statement. A detailed discussion of the analysis underlying the estimated recoveries, including the assumptions underlying such analysis, is provided in the Valuation Analysis set forth in Article VIII hereof.

 

Class

  

Claim or

Interest

  

Treatment

  

Impaired or

Unimpaired

  

Entitlement

to Vote

  

Approx.

Percentage

Recovery

1    Priority Non-Tax Claims    Except to the extent that a holder of an Allowed Priority Non-Tax Claim against any of the Debtors agrees to a less favorable treatment of such Claim, in full and final satisfaction of such Allowed Priority Non-Tax Claim, at the option of the Debtors or the Reorganized Debtors, as applicable, and solely if such option is selected on or prior to the Effective Date, with the consent of the Tidewater Lender and Noteholder Group, such consent not to be unreasonably withheld, (i) each such holder shall receive payment in Cash in an amount equal to such Claim, payable on the later of the Effective Date and the date that is ten (10) Business Days after the date on which such Priority Non-Tax Claim becomes an Allowed Priority Non-Tax Claim, in each case, or as soon as reasonably practicable thereafter, (ii) such holder’s Allowed Priority Non-Tax Claim shall be Reinstated, or (iii) such holder shall receive such other treatment so as to render such holder’s Allowed Priority Non-Tax Claim Unimpaired pursuant to section 1124 of the Bankruptcy Code.    Unimpaired   

No

(Presumed to accept)

   100%

 

2  Any Class of Claims against or Interests in a Debtor that is considered vacant under Section 3.5 of the Prepackaged Plan shall be deemed eliminated from the Prepackaged Plan of such Debtor for purposes of voting to accept or reject the Prepackaged Plan. Further, any holder of a Claim or Interest in a Class that is considered vacant under Section 3.5 of the Prepackaged Plan will receive no distribution under the Prepackaged Plan.

 

2


Class

  

Claim or

Interest

  

Treatment

  

Impaired or

Unimpaired

  

Entitlement

to Vote

  

Approx.

Percentage

Recovery

2    Secured Claims    Except to the extent that a holder of an Allowed Secured Claim against any of the Debtors agrees to a less favorable treatment of such Claim, in full and final satisfaction of such Allowed Secured Claim, at the option of the Debtors or the Reorganized Debtors, as applicable, and solely if such option is selected on or prior to the Effective Date, with the consent of the Tidewater Lender and Noteholder Group, such consent not to be unreasonably withheld, (i) each such holder shall receive payment in Cash in an amount equal to such Claim, payable on the later of the Effective Date and the date that is ten (10) Business Days after the date on which such Secured Claim becomes an Allowed Secured Claim, in each case, or as soon as reasonably practicable thereafter, (ii) such holder’s Allowed Secured Claim shall be Reinstated, or (iii) such holder shall receive such other treatment so as to render such holder’s Allowed Secured Claim Unimpaired pursuant to section 1124 of the Bankruptcy Code.    Unimpaired    No (Presumed to accept)    100%
3    General Unsecured Claims    In full and final satisfaction of each Allowed General Unsecured Claim, on a Class 3 Distribution Date, each holder of an Allowed General Unsecured Claim shall be entitled to receive its Pro Rata share of (i) Cash in the amount of $225,000,000, (ii) the New Secured Notes, and (iii) pursuant to the procedure set forth below and in Section 4.3(c) of the Prepackaged Plan, a combination of (v) New Common Stock to the extent permitted under the restriction on aggregate ownership of outstanding New Common Stock by Non-U.S. Citizens as described in Section 5.5(a) of the Prepackaged Plan and (w) New Creditor Warrants to the extent that shares of New Common Stock cannot be issued to such holder because it is a Non-U.S. Citizen and its ownership of its Pro Rata share of New Common Stock, when added to the Pro Rata shares of New Common Stock being issued to other holders that are Non-U.S. Citizens as of the Effective Date, would exceed the restriction on aggregate ownership of outstanding New Common Stock by Non-U.S. Citizens as described in Section 5.5(a) of the Prepackaged Plan, which shall represent, in the aggregate, ninety-five percent (95%) of the sum of the total shares of New Common Stock to be outstanding on the Effective Date under clause (v) of Section 4.3(c)(iii) of the Prepackaged Plan and clause (i) of Section 4.7(b) of the Prepackaged Plan (excluding shares of New Common Stock issuable pursuant to the Management Incentive Plan and shares of New Common Stock issuable upon exercise of the New Existing Equity Warrants) plus shares of New Common Stock issuable upon exercise of the New Creditor Warrants issued under clause (w) of Section 4.3(c)(iii) of the Prepackaged Plan as of the Effective Date plus any shares of New Common Stock issuable upon exercise of the New Creditor Warrants reserved for issuance but not issued as of the Effective Date with respect to Claims which are Disputed Claims on the Effective Date by virtue of the operation of Section 6.9 of the Prepackaged Plan, subject to dilution by shares of New Common Stock issuable pursuant to the Management Incentive Plan and by shares of New Common Stock issuable upon exercise of the New Existing Equity Warrants; provided, however, that such holders of Allowed General Unsecured Claims are entitled to direct any distribution with respect to clause (iii) of Section 4.3(c) of the Prepackaged Plan to one or more    Impaired    Yes    57% to 73%

 

3


Class

  

Claim or

Interest

  

Treatment

  

Impaired or

Unimpaired

  

Entitlement

to Vote

  

Approx.

Percentage

Recovery

      Permitted Designees. In the case of holders of Allowed General Unsecured Claims that are Non-U.S. Citizens, the percentage ratio of the number of shares of New Common Stock to the number of New Creditor Warrants to be issued to each such Non-U.S. Citizen pursuant to clauses (v) and (w) of Section 4.3(c)(iii) of the Prepackaged Plan, respectively, as of the Effective Date shall be the same for each such Non-U.S. Citizen holder of an Allowed General Unsecured Claim. If such a holder (or the holder’s Permitted Designee(s)) of an Allowed General Unsecured Claim furnishes a U.S. Citizen Certification to Tidewater Parent on or before the Distribution Record Date and, after review, Tidewater Parent, in its reasonable discretion, accepts such U.S. Citizen Certification as reasonable proof in establishing that such holder or its Permitted Designee(s), if applicable, is a U.S. Citizen, such holder (or its Permitted Designee(s)) shall receive New Common Stock representing all of such holder’s (or its Permitted Designee’s(s’)) Pro Rata share as of the Effective Date of such New Common Stock on the Class 3 Initial Distribution Date; provided, however, that if such holder (or the holder’s Permitted Designee(s)) does not furnish a U.S. Citizen Certification to Tidewater Parent on or before the Distribution Record Date, or if the U.S. Citizen Certification of such holder (or the holder’s Permitted Designee(s)) has not been accepted or has been rejected by Tidewater Parent, in its reasonable discretion, on or before the date that is five (5) Business Days after the Distribution Record Date after review by Tidewater Parent pursuant to Section 4.3(c) of the Prepackaged Plan, such holder (or the holder’s Permitted Designee (s)) shall receive a combination of (x) New Common Stock representing such holder’s Pro Rata share as of the Effective Date of New Common Stock, to the extent permitted by Section 5.5(a) of the Prepackaged Plan, and (y) New Creditor Warrants equal to the balance of such holder’s (or the holder’s Permitted Designee’s(s’)) Pro Rata share as of the Effective Date of the New Common Stock that such holder would have received but for the restriction in Section 5.5(a) of the Prepackaged Plan as of the Effective Date. In connection with Tidewater Parent’s review of any U.S. Citizen Certification under Section 4.3(c) of the Prepackaged Plan, Tidewater Parent shall have the right to require the holder (or the holder’s Permitted Designee(s)) furnishing the U.S. Citizen Certification to provide Tidewater Parent with such documents and other information as it may reasonably request as reasonable proof confirming that the holder (or such holder’s Permitted Designee(s)) is a U.S. Citizen under the Jones Act. Tidewater Parent shall treat all such documents and information provided by any holder (or the holder’s Permitted Designee(s)) as confidential and shall limit the distribution of such documents and information to the Debtors’ personnel and counsel that have a need to know the contents thereof and to the U.S. Coast Guard as may be necessary. Notwithstanding the foregoing, holders of Sale Leaseback Claims which are Disputed Claims on the Effective Date and thereafter become Allowed Claims shall be entitled to receive their Pro Rata share, calculated as of the Effective Date, of the foregoing consideration described in clauses (i), (ii), and (iii) of the first sentence of Section 4.3(c) of the Prepackaged Plan; provided, however, that the consideration delivered in respect of clause (iii) of Section 4.3(c) of the Prepackaged Plan shall consist of solely New Creditor Warrants on the next Interim Distribution Date after they become Allowed Claims. In any distribution made to the holder of an Allowed General Unsecured Claim, there shall be deducted therefrom the amount of Cash, New Secured Notes, New Common Stock, and New Creditor Warrants previously distributed to such holder on account of such Allowed General Unsecured Claim in any distribution made prior thereto.         

 

4


Class

  

Claim or

Interest

  

Treatment

  

Impaired or

Unimpaired

  

Entitlement

to Vote

  

Approx.

Percentage

Recovery

4    Other General Unsecured Claims    Except to the extent that a holder of an Allowed Other General Unsecured Claim against any of the Debtors agrees to a less favorable treatment of such Claim or has been paid before the Effective Date, at the option of the Debtors or the Reorganized Debtors, as applicable, and solely if such option is selected on or prior to the Effective Date, with the consent of the Tidewater Lender and Noteholder Group, such consent not to be unreasonably withheld, (i) the Reorganized Debtors shall continue to pay or treat each Allowed Other General Unsecured Claim in the ordinary course of business, or (ii) such holder shall receive such other treatment so as to render such holder’s Allowed Other General Unsecured Claim Unimpaired pursuant to section 1124 of the Bankruptcy Code, in each case, subject to all defenses or disputes the Debtors and Reorganized Debtors may assert as to the validity or amount of such Claims, including as provided in Section 10.9 of the Prepackaged Plan.    Unimpaired    No (Presumed to accept)    100%
5    Intercompany Claims    On the Effective Date all Intercompany Claims shall be adjusted, Reinstated, or discharged to the extent determined to be appropriate by the Debtors or the Reorganized Debtors, as applicable.    Unimpaired    No (Presumed to accept)    N/A
6    Intercompany Interests    On the Effective Date, and without the need for any further corporate or limited liability company action or approval of any board of directors, management, or shareholders of any Debtor or Reorganized Debtor, as applicable, all Intercompany Interests shall be unaffected by the Prepackaged Plan and continue in place following the Effective Date, solely for the administrative convenience of maintaining the existing corporate structure of the Debtors.    Unimpaired    No (Presumed to accept)    N/A
7    Tidewater Parent Interests    On the Effective Date, all Tidewater Parent Interests shall be cancelled and discharged and shall be of no further force and effect, whether surrendered for cancellation or otherwise, and each holder of an Allowed Existing Interest shall be entitled to receive its Pro Rata share of (i) shares of New Common Stock, representing, in the aggregate, five percent (5%) of the sum of the total shares of New Common Stock to be outstanding as of the Effective Date under clause (i) of Section 4.7(b) and clause (v) of Section 4.3(c)(iii) of the Prepackaged Plan (excluding shares of New Common Stock issuable pursuant to the Management Incentive Plan and shares of New Common Stock issuable upon exercise of the New Existing Equity Warrants) plus shares of New Common Stock issuable upon exercise of the New Creditor Warrants issued under clause (w) of Section 4.3(c)(iii) of the Prepackaged Plan as of the Effective Date plus any shares of New Common Stock issuable upon exercise of the    Impaired    No (Deemed to reject)   

 

5


Class

  

Claim or

Interest

  

Treatment

  

Impaired or

Unimpaired

  

Entitlement

to Vote

  

Approx.

Percentage

Recovery

      New Creditor Warrants reserved for issuance but not issued as of the Effective Date with respect to Claims which are Disputed Claims on the Effective Date by virtue of the operation of Section 6.9(a) of the Prepackaged Plan, subject to dilution by shares of New Common Stock issuable pursuant to the Management Incentive Plan and by shares of New Common Stock issuable upon exercise of the New Existing Equity Warrants, (ii) the Series A New Existing Equity Warrants, and (iii) the Series B New Existing Equity Warrants. Notwithstanding anything herein to the contrary, any Tidewater Parent Interests issued and outstanding as of immediately prior to the Petition Date pursuant to a Benefit Plan that have not been subsequently forfeited (or agreed to be forfeited) by the holder thereof (either voluntarily or by operation of the terms of such Benefit Plan, with effect as of any time on or prior to the Effective Date) shall be deemed to vest immediately prior to the Distribution Record Date. For the avoidance of doubt, as of the Effective Date, all Tidewater Parent Interests consisting of stock options granted under any Benefit Plan shall be cancelled and discharged and shall be of no further force and effect.         
8    Subordinated Securities Claims    The holders of Subordinated Securities Claims shall not receive or retain any property under the Prepackaged Plan on account of such Claims and the obligations of the Debtors and the Reorganized Debtors, as applicable, on account of such Subordinated Securities Claims shall be discharged.    Impaired    No (Deemed to reject)    0%

 

6


WHERE TO FIND ADDITIONAL INFORMATION: Tidewater Parent currently files annual reports with, and furnishes other information to, the SEC. Copies of any document filed with the SEC may be obtained by visiting the SEC website at http://www.sec.gov and performing a search under the “Company Filings” link. Each of the following filings is incorporated as if fully set forth herein and is a part of this Disclosure Statement. Later information filed with the SEC that updates information in the filings incorporated by reference will update and supersede that information:

 

    Form 10-K for the fiscal year ended March 31, 2016, filed with the SEC on May 26, 2016.

 

    Form 10-Q for the quarterly period ended December 31, 2016, filed with the SEC on February 8, 2017.

 

    Forms 8-K filed with the SEC on February 1, 2017, February 13, 2017, February 14, 2017, March 6, 2017, March 15, 2017, March 30, 2017, April 11, 2017, and April 20, 2017.

II.

OVERVIEW OF THE DEBTORS’ OPERATIONS

 

  A. Overview of the Debtors Businesses

Tidewater Parent, the affiliated Debtors, and the affiliated non-Debtor entities (collectively, the “Non-Debtor Affiliates”) that are direct or indirect subsidiaries of Tidewater Parent (collectively, “Tidewater Group”) operate together to provide offshore service vessels and marine support services to the global offshore energy industry through the operation of a diversified fleet of marine service vessels. The Debtors’ vessels and related vessel services support all phases of offshore exploration, field development, and production, including: towing of, and anchor handling for, mobile offshore drilling units; transporting supplies and personnel necessary to sustain drilling, workover, and production activities; offshore construction, remotely operated vehicle (“ROV”) operations, and seismic and subsea support; and a variety of specialized services such as pipe and cable laying. As of the Petition Date, the Debtors own (or charter under sale-leaseback agreements) 262 vessels and 8 ROVs available to serve the global energy industry.

The Debtors’ principal executive offices are located at 601 Poydras Street, Suite 1500, New Orleans, Louisiana 70130.

The Debtors balance sheet reflects approximately $4.3 billion in total assets as of December 31, 2016, which substantial asset base is necessary to support the Debtors’ operations.

 

  B. Operating Segments

The Debtors have one of the broadest geographic operating footprints in the offshore energy industry with operations in most of the world’s significant offshore crude oil and natural gas exploration and production (“E&P”) offshore regions. The Debtors’ fleet is deployed in the major global offshore oil and gas areas of the world. The principal areas of operations include the U.S. Gulf of Mexico, the Arabian Gulf, the Mediterranean Sea, and areas offshore Brazil, Canada, India, Malaysia, Myanmar, Mexico, Norway, the United Kingdom, Thailand, Trinidad, and West Africa.

 

7


The Debtors’ principal customers are large, international oil and natural gas exploration, field development, and production companies; select independent E&P companies; foreign government-owned or government-controlled organizations, and other companies that explore for, develop, and produce oil and natural gas; drilling contractors; and other companies that provide various services to the offshore energy industry, including, but not limited to, offshore construction companies, diving companies, and well stimulation companies.

The Debtors classify their vessels in three groups: “deepwater vessels,” “towing supply vessels,” and “other vessels.”

 

  1. Deepwater Vessels

Deepwater vessels, in the aggregate, have been the Debtors’ largest contributor to consolidated vessel revenue and vessel operating margin in recent years. Included in this vessel class are large platform supply vessels (“PSVs”), which are typically greater than 230 feet and/or with greater than 2,800 tons in deadweight cargo-carrying capacity; large, higher-horsepower anchor handling towing supply (“AHTS”) vessels, which generally have greater than 10,000 horsepower; and one specialty vessel that is capable of supporting light construction as well as inspection, maintenance, and repair work.

 

PSV    AHTS

 

LOGO

  

 

LOGO

Deepwater vessels are generally chartered to customers for use in transporting supplies and equipment from shore bases to deepwater and intermediate water depth offshore drilling rigs and production platforms and for otherwise supporting intermediate water depth and deepwater drilling, production, construction, and maintenance operations.

Deepwater PSVs generally have large cargo-carrying capacities, both below deck (liquid mud tanks and dry bulk tanks) and above deck. Deepwater AHTS vessels are equipped to tow drilling rigs and other marine equipment, as well as to set anchors for the positioning and mooring of drilling rigs that generally do not have dynamic positioning capabilities. Deepwater vessels also include specialty vessels that can support offshore well stimulation, construction work, subsea services, and/or serve as remote accommodation facilities.

 

Specialty Vessel

 

LOGO

 

8


  2. Towing Supply Vessels

Towing supply vessels are currently the Debtors’ largest fleet class by number of vessels. Included in this class are non-deepwater AHTS vessels with horsepower below 10,000 BHP,3 and non-deepwater PSVs that are generally less than 230 feet. The vessels in this class perform the same respective functions and services as deepwater AHTS vessels and deepwater PSVs, except that towing-supply vessels are generally chartered to customers for use in intermediate depth and shallow waters.

 

  3. Other Vessels

Other vessels include crew boats, utility vessels, and offshore tugs. Crew boats and utility vessels are chartered to customers for use in transporting personnel and supplies from shore bases to offshore drilling rigs, platforms, and other installations. These vessels are also often equipped for oil field security missions in markets where piracy, kidnapping, or other potential violence presents a concern. Offshore tugs are used to tow floating drilling rigs and barges; to assist in the docking of tankers; and to assist pipe laying, cable laying, and construction barges.

 

Offshore Tug    Utility Vessel

 

LOGO

  

 

LOGO

 

  4. Additional Vessels Under Construction

In addition to the Debtors’ current fleet, as of the Petition Date, the Debtors also have approximately $10 million in unfunded capital commitments for two deepwater PSVs under construction, which range between 4,700 and 5,400 deadweight tons of cargo capacity. A discussion of certain disputes and legal proceedings relating to these two vessels under construction is provided in Article II.G.1 hereof. In October 2016, the Debtors cancelled options on four additional PSVs under construction, which resulted in a refund of approximately $14 million of prior installment payments. In April 2017, the Debtors entered into a novation agreement with a new purchaser to take their place in a shipbuilding contract and accept one PSV under construction, which resulted in a net payment of $5.27 million. The new purchaser assumed the contract obligations of the Debtors to pay the remaining balance of $27.15 million upon delivery of the PSV.

Revenues for services rendered from the Debtors’ vessels are derived primarily from vessel time charter or similar contracts that are generally three months to four years in duration as determined by customer requirements, and, to a lesser extent, from vessel time charter contracts on a “spot” basis, which is a short-term (one day to three months) hire to provide offshore marine services to a customer for a specific short-term job. The base rate of hire for a term contract is generally a fixed rate, though some charter arrangements allow Tidewater Parent to recover specific additional costs.

 

3  BHP is the measure of an engine’s horsepower before the loss in power caused by the gearbox, alternator, differential, water pump, and other auxiliary components such as the power steering pump, muffled exhaust system, etc.

 

9


  C. The Debtors’ Organizational Structure

The Debtors are entities organized in Texas, Delaware, Louisiana, Nevada, and Alaska. Tidewater Parent is a Delaware corporation and the direct or indirect parent of each of the other Debtors in these Chapter 11 Cases.

A chart illustrating the Debtors’ organizational structure is attached to this Disclosure Statement as Exhibit B.

 

  D. Directors and Officers

Tidewater Parent’s current board of directors is comprised of the following individuals:

 

Name

  

Position

R.A. (Rich) Pattarozzi    Chairman
M. Jay Allison    Director
James C. Day    Director
Richard du Moulin    Director
Morris E. Foster    Director
J. Wayne Leonard    Director
Richard D. Paterson    Director
Jeffrey M. Platt    Director
Robert L. Potter    Director
Cindy B. Taylor    Director
Jack Thompson    Director

Tidewater Parent’s current senior management team is comprised of the following individuals:

 

Name

  

Position

Jeffrey M. Platt    President and Chief Executive Officer
Jeffrey A. Gorski    Executive Vice President and Chief Operating Officer
Quinn P. Fanning    Executive Vice President and Chief Financial Officer
Bruce D. Lundstrom    Executive Vice President, Secretary, and General Counsel
Joseph M. Bennett    Executive Vice President and Chief Investor Relations Officer

In accordance with 11 U.S.C. § 1129(a)(5), prior to the entry of the order confirming the Prepackaged Plan, the Debtors will disclose the identity and affiliations of any individual proposed to serve, after confirmation of the Prepackaged Plan, as a director or officer of each of the Reorganized Debtors.

 

  E. Regulation of the Debtors Businesses

The Debtors’ business operations are subject to various U.S. federal, state, and local statutes and regulations governing the operation and maintenance of vessels. The Debtors’ U.S.-flag vessels are subject to the jurisdiction of the United States Coast Guard, the United States Customs and Border Protection, and the United States Maritime Administration. The Debtors are also subject to international laws and conventions and the laws of international jurisdictions where Tidewater Parent and its offshore vessels operate.

 

10


Additional discussion of the regulatory environment of the Debtors’ businesses can be found in the Form 10-K of Tidewater Parent for the fiscal year ended March 31, 2016, filed with the SEC on May 26, 2016.

 

  F. The Debtors’ Capital Structure

 

  1. Equity Ownership

Tidewater Parent is a public company that files annual reports with, and furnishes other information to, the Securities & Exchange Commission. Tidewater Parent’s common stock is currently traded on the New York Stock Exchange (the “NYSE”) under the symbol “TDW.” As of April 30, 2017, 125 million shares of TDW $0.10 par value common stock had been authorized with 47,121,304 shares of common stock issued and outstanding.

 

  2. Cash and Cash Equivalents

On March 15, 2016, Tidewater Parent borrowed the full $600 million available under the Credit Agreement to ensure adequate liquidity and financial flexibility during the current industry downturn. As of the Petition Date, the Debtors hold approximately $700 million in cash and cash equivalents.

 

  3. Prepetition Indebtedness

As of the Petition Date, the Debtors have outstanding, unsecured prepetition funded debt obligations totaling approximately $2.04 billion, consisting of (i) $900 million in borrowings under the Credit Agreement; (ii) $500 million in principal amount of 2013 Notes; (iii) $165 million in principal amount of 2011 Notes; (iv) $382.5 million in principal amount of 2010 Notes; and (v) approximately $92 million of U.S. dollar-equivalent (“USD”) debt under the Troms Credit Agreement (each as defined below).

 

  (a) Credit Agreement

Tidewater Parent and each of the other Debtors, as co-borrowers, are parties to that certain Fourth Amended and Restated Revolving Credit Agreement, dated as of June 21, 2013 (as amended, modified, or supplemented from time to time, the “Credit Agreement”), with the lenders and issuing banks party thereto from time to time (the “Tidewater Lenders”), Bank of America, N.A., as administrative agent, and certain other parties thereto. The Credit Agreement provides for a $900 million facility consisting of (i) a $600 million revolving credit facility and (ii) a $300 million term loan facility. The Credit Agreement matures on June 21, 2019.

As of the Petition Date, the aggregate principal amount outstanding under the Credit Agreement is approximately $900 million, plus any applicable interest, fees, and other amounts.

 

  (b) Senior Unsecured Notes

 

  (i) The 2013 Notes

Tidewater Parent issued $300 million of senior unsecured notes in September 2013, and an additional $200 million of senior unsecured notes in November 2013, to certain institutional investors, with each of the other Debtors as named issuers or guarantors (collectively, the “2013 Notes”), pursuant to that certain Note Purchase Agreement dated as of September 30, 2013 (the “2013 Note Purchase Agreement”). Interest on the 2013 Notes is payable semi-annually on May 15 and November 15. Below is a list of the 2013 Notes with the applicable interest rate and maturity date.

 

11


    Series 2013-A, $123 million 4.26% Senior Notes, due November 16, 2020

 

    Series 2013-B, $250 million 5.01% Senior Notes, due November 15, 2023

 

    Series 2013-C, $127 million 5.16% Senior Notes, due November 17, 2025

As of the Petition Date, the aggregate principal amount outstanding under the 2013 Notes is approximately $500 million, plus any applicable interest, premiums, fees, and other amounts.

 

  (ii) The 2011 Notes

Tidewater Parent issued approximately $165 million in aggregate principal amount of senior unsecured notes in August 2011 to certain institutional investors, with each of the other Debtors as named issuers or guarantors (collectively, the “2011 Notes”), pursuant to (i) a certain Note Purchase Agreement dated as of August 15, 2011, for $100 million in aggregate principal senior notes and (ii) a certain Note Purchase Agreement dated as of August 15, 2011, for $65 million in aggregate principal senior notes (together, the “2011 Note Purchase Agreements”).

Interest on the 2011 Notes is payable quarterly on March 31, June 30, September 30, and December 31. Below is a list of the 2011 Notes with the applicable interest rate and maturity date.

 

    Series 2011-A, $50 million 4.06% Senior Notes, due March 31, 2019

 

    Series 2011-B, $50 million 4.64% Senior Notes, due June 30, 2021

 

    Series 2011-C, $65 million 4.54% Senior Notes, due June 30, 2021

As of the Petition Date, the aggregate principal amount outstanding under the 2011 Notes is approximately $165 million, plus any applicable interest, premiums, fees, and other amounts.

 

  (iii) The 2010 Notes

Tidewater Parent issued approximately $425 million in aggregate principal amount of senior unsecured notes in September 2010 to certain institutional investors, with each of the other Debtors as named issuers or guarantors (collectively, the “2010 Notes” and, together with the 2013 Notes and the 2011 Notes, the “Notes”), pursuant to a certain Note Purchase Agreement dated as of September 9, 2010 (the “2010 Note Purchase Agreement” and, collectively with the 2013 Note Purchase Agreement and the 2011 Note Purchase Agreements, the “Note Purchase Agreements”).

Interest on the 2010 Notes is payable semi-annually on June 30 and December 30. Below is a list of the 2010 Notes with the applicable interest rate and maturity date.

 

    Series B, $44.5 million 3.90% Senior Notes, due December 30, 2017

 

    Series C, $25 million 3.95% Senior Notes, due December 30, 2017

 

    Series D, $25 million 4.12% Senior Notes, due December 30, 2018

 

    Series E, $25 million 4.17% Senior Notes, due December 30, 2018

 

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    Series F, $50 million 4.33% Senior Notes, due December 30, 2019

 

    Series G, $100 million 4.51% Senior Notes, due December 30, 2020

 

    Series H, $65 million 4.56% Senior Notes, due December 30, 2020

 

    Series I, $48 million 4.61% Senior Notes, due December 30, 2022

As of the Petition Date, the aggregate principal amount outstanding under the 2010 Notes is approximately $382.5 million, plus any applicable interest, premiums, fees, and other amounts.

 

  (c) Troms Offshore Debt

Non-Debtor Affiliate Troms Offshore Supply AS (“Troms Offshore”), as borrower, and Tidewater Parent and each of the other Debtors, as guarantors (collectively, the “Corporate Guarantors”), are parties to that certain Amended and Restated Term Loan Facility Agreement, dated as of May 25, 2012 (as amended, modified, or supplemented from time to time, the “Troms Credit Agreement”), with Eksportkreditt Norge AS (“EKN”) and Kommunal Landspensjonskasse Gjensidig Forsikringsselskap (“KLP”) as lenders (collectively, the “Troms Lenders”), DNB Bank ASA, New York Branch, as Agent, DNB Bank ASA, Grand Cayman Branch, as Bank Guarantor (the “Bank Guarantor”), the Norwegian Guarantee Institute for Export Credits, as guarantor (“GIEK”),4 and DNB Markets, Inc., and arranger and bookrunner (collectively, the “Troms Finance Parties”). The Troms Credit Agreement provides for the following four tranches of unsecured debt.

 

    The “Troms Hera Tranche:” a $31.3 million USD-denominated, 12-year unsecured borrowing that matures in April 2027, guaranteed by, among others, Tidewater Parent and the other Corporate Guarantors.5 The Troms Hera Tranche requires semi-annual principal payments of $1.3 million (plus accrued interest) and bears interest at a fixed rate of 2.92% plus a premium based on Tidewater Parent’s consolidated funded indebtedness to total capitalization ratio (currently equal to 1.5% for a total all-in rate of 4.42%).

As of the Petition Date, the aggregate principal amount outstanding under the Troms Hera Tranche is approximately $26.1 million, plus any applicable interest, fees, and other amounts.

 

    The “Troms Mira Tranche:” a $29.5 million, USD-denominated, 12-year unsecured borrowing that matures in January 2027, guaranteed by, among others, Tidewater Parent and the other Corporate Guarantors.6 The Troms Mira Tranche requires semi-annual principal payments of $1.2 million (plus accrued interest) and bears interest at a fixed rate of 2.91% plus a premium based on Tidewater Parent’s consolidated funded indebtedness to total capitalization ratio (currently equal to 1.5% for a total all-in rate of 4.41%).

 

4  GIEK is a public-sector enterprise that reports to the Royal Norwegian Ministry of Trade, Industry and Fisheries. GIEK promotes Norwegian exports by issuing guarantees on behalf of the Norwegian state.
5  Troms Offshore’s obligations and liabilities under the Troms Hera Tranche are also guaranteed by unconditional, irrevocable, on demand guarantees in the amount of $2,908,127 (securing 10% of the Troms Hera Tranche) and $26,173,143 (securing 90% of the Troms Hera Tranche) executed by Bank Guarantor and GIEK, respectively, in favor of KLP.
6  Troms Offshore’s obligations and liabilities under the Troms Mira Tranche are also guaranteed by unconditional, irrevocable, on demand guarantees in the amount of $2,948,830 (securing 10% of the Troms Mira Tranche) and $26,539,202 (securing 90% of the Troms Mira Tranche) executed by Bank Guarantor and GIEK, respectively, in favor of EKN.

 

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As of the Petition Date, the aggregate principal amount outstanding under the Troms Mira Tranche is approximately $24.6 million, plus any applicable interest, fees, and other amounts.

 

    The “Troms Arcturus Tranche:” a 300 million Norwegian Kroner (“NOK”) denominated, 12-year unsecured borrowing that matures in January 2026, guaranteed by, among others, Tidewater Parent and the other Corporate Guarantors.7 The Troms Arcturus Tranche requires semi-annual principal payments of 12.5 million NOK (plus accrued interest) and bears interest at a fixed rate of 2.31% plus a premium based on Tidewater Parent’s consolidated funded indebtedness to total capitalization ratio (currently equal to 2.0% for a total all-in rate of 4.31%).

As of the Petition Date, the aggregate principal amount outstanding under the Troms Arcturus Tranche is approximately 225 million NOK (approximately $26.5 million USD-equivalent), plus any applicable interest, fees, and other amounts.

 

    The “Troms Sirius Tranche:” a 204.4 million NOK-denominated borrowing agreement that matures in May 2024, guaranteed by, among others, Tidewater Parent and the other Corporate Guarantors.8 The Troms Sirius Tranche requires semi-annual principal payments of 8.5 million NOK (plus accrued interest), and bears interest at a fixed rate of 3.88% plus a premium based on Tidewater Parent’s consolidated funded indebtedness to total capitalization ratio (currently equal to 2.0% for a total all-in rate of 5.88%).

As of the Petition Date, the aggregate principal amount outstanding under the Troms Sirius Tranche is approximately 127.8 million NOK (approximately $15 million USD-equivalent), plus any applicable interest, fees, and other amounts.

 

  G. Legal Proceedings

 

  1. Gulf Island Arbitration

As referenced in Article II.B.4 above, the Debtors have unfunded commitments relating to two deepwater PSVs under construction, both of which are being constructed pursuant to a contract between Debtor Tidewater Marine, L.L.C. (“Tidewater Marine”), an operating subsidiary of Tidewater Parent, and LEEVAC Shipyards Jennings, L.L.C. (“LEEVAC”). The contract was subsequently assigned by LEEVAC to Gulf Island Shipyards, L.L.C. (“Gulf Island”) in January 2016. Prior to its scheduled delivery in January 2017, Tidewater Marine rejected for the first of the two PSVs and withheld a final contractual milestone payment for failure of the vessel to meet certain significant contract specifications. Thereafter, Tidewater Marine delivered a formal notice of default to Gulf Island demanding a cure of the

 

7  Troms Offshore’s obligations and liabilities under the Troms Arcturus Tranche are also guaranteed by unconditional, irrevocable, on demand guarantees in the amount of 150,000,000 NOK (securing 50% of the Troms Arcturus Tranche) and 150,000,000 NOK (securing 50% of the Arcturus Tranche) executed by Bank Guarantor and GIEK, respectively, in favor of EKN.
8 

Troms Offshore’s obligations and liabilities under the Troms Sirius Tranche are also guaranteed by unconditional, irrevocable, on demand guarantees in the amount of 89,460,000 NOK (securing 50% of the Troms Sirius Tranche) and 89,460,000 NOK (securing 50% of the Troms Sirius Tranche) executed by Bank Guarantor and GIEK, respectively, in favor of EKN.

 

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deficiencies, following which Gulf Island declared Tidewater Marine in contractual default for refusing to accept delivery and filed a notice of claim of lien with the U.S. Coast Guard. Subsequently, Tidewater Marine submitted a demand to Gulf Island seeking a refund of all amounts paid by Tidewater Marine to date, totaling approximately $43 million plus accrued contractual interest.

On March 10, 2017, Gulf Island filed a notice of arbitration before the Houston Maritime Arbitrator’s Association alleging breach of contract with respect to Tidewater Marine’s rejection of the first PSV and anticipatory breach of contract based on Tidewater Marine’s anticipated rejection of the second PSV. Through this arbitration, Gulf Island is seeking an order requiring Tidewater Marine to take delivery of both vessels and to reimburse Gulf Island for costs incurred by Gulf Island. Tidewater Marine is evaluating its next steps in the arbitration. A date for arbitration has not yet been set.

 

  2. Other Legal Proceedings

The Debtors are named as defendants from time to time in routine litigation proceedings. In the opinion of management, the outcome of these proceedings will not have a material adverse effect on Tidewater Parent’s financial position, results of operations, or cash flows. The Debtors, however, cannot predict with certainty the outcome or effect of pending or threatened litigation or legal proceedings, and the eventual outcome could materially differ from their current estimates.

III.

KEY EVENTS LEADING TO

THE COMMENCEMENT OF CHAPTER 11 CASES

 

  A. Collapse in Commodity Prices

As a result of decisions of members of the Organization of the Petroleum Exporting Countries not to curtail supply, growth of unconventional production in the United States, and weakening demand in emerging markets, the prices of crude oil and natural gas have declined dramatically since mid-year 2014. In early 2016, crude oil and natural gas spot prices reached multi-year lows of approximately $26 per Bbl9 and $1.50 per MMBtu,10 respectively. During the last nine months of 2016, prices were volatile but generally increasing. In March 2017, crude oil was trading between approximately $50 and $52 per Bbl. While those prices represent significant improvement over the record lows of 2016, oil prices remain approximately 50% lower than the mid-year 2014 high of more than $105 per Bbl.

The recent trend in crude oil prices and the current pricing outlook could lead to increased exploration, development, and production activity as current prices for crude oil are approaching the range which some surveys have indicated that, if sustainable, E&P companies would begin to increase spending. However, a recovery in onshore exploration, development, and production activity and spending, particularly in North America, is expected to precede a recovery in offshore activity and spending, much of which takes place in the international markets. Thus, a further decrease in offshore spending is likely during calendar year 2017 and any improvements in offshore E&P activity likely will not occur until late calendar year 2017 or in 2018, the timing of which is generally consistent with the projected trend for global working offshore rigs.

 

9  Bbl” refers to one stock tank barrel, or 42 U.S. gallons liquid volume, used herein to reference to crude oil or other liquid hydrocarbons.
10  MMBtu” refers to one million BTU or British thermal units, which is the heat required to raise the temperature of a one-pound mass of water from 58.5 to 59.5 degrees Fahrenheit.

 

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In addition, the production of unconventional gas resources in North America and the commissioning of a number of new, large, liquefied natural gas export facilities around the world have also contributed to an oversupplied natural gas market. Generally high levels of onshore gas production and the prolonged downturn in natural gas prices experienced over the previous several years, however, have had a negative impact on the offshore exploration and development plans of energy companies and the demand for offshore support vessel services.

Notwithstanding recent increases in pricing, the significant decline in crude oil and natural gas prices that began in 2014 caused many of the Debtors’ customers to significantly reduce drilling, completion, and other production activities and related spending on the Debtors’ products and services. Primarily as a result of the decline in oil and gas prices, the Debtors’ revenue for the fiscal year ended March 31, 2016 was approximately $979 million, which is approximately 35% less than the approximately $1.5 billion revenue for the fiscal year ended March 31, 2015. Further, the Debtors’ revenue for the nine (9) months ending on December 31, 2016, declined to approximately $440.8 million, or a reduction of approximately 45%, as compared to $794.9 million for the same period ending on December 31, 2015.

 

  B. Prepetition Negotiations with Creditors

With reduced demand for offshore support vessels, along with increased supply resulting from vessels built by the Debtors and other operators of offshore support vessels, the Debtors experienced a significant decline in the utilization of its vessels, average day rates received, and vessel revenue. As a result, the Debtors implemented a number of significant cost reduction measures to mitigate the effects of significantly lower vessel revenue and, given the currently challenging offshore support vessel market and business outlook, other steps to improve its financial position and liquidity, including the January 2016 suspension of Tidewater Parent’s common stock dividend, the March 2016 $600 million draw on the Tidewater Credit Facility, and the renegotiation or termination of vessel construction contracts in order to reduce capital expenditures.

Despite efforts to undertake transactions to reduce long-term debt and reduce spending, the Debtors determined that, with their current capital structure, they were unable to withstand the ongoing and precipitous decline in oil and gas prices and the corresponding decline in the Debtors’ revenues and cash flows. Based on current market conditions, the Debtors determined that a reduction in their long-term debt and cash interest obligations was required to improve their financial position and flexibility. As such, the Debtors retained Weil, Gotshal & Manges LLP (“Weil”), as counsel, and Lazard (“Lazard”), as investment banker and financial advisor, to assist them in developing and implementing a comprehensive restructuring plan.

On June 30, 2016, the Debtors failed to meet a 3.0x minimum interest coverage ratio covenant contained in the Credit Agreement, the Troms Credit Agreement, and the 2013 Notes Purchase Agreement (collectively, the “Funded Debt Agreements”). Failure to meet the minimum interest coverage ratio requirement would have resulted in covenant noncompliance that would have allowed the respective lenders and/or the noteholders to declare the Debtors to be in default under each of the Funded Debt Agreements, and accelerate the indebtedness thereunder. Because the Debtors were expected not to meet the minimum interest coverage ratio requirement, a report provided by the Debtors’ independent registered public accounting firm that accompanied the company’s audited consolidated financial statements for the fiscal year ended March 31, 2016 (the “Audit Opinion”) contained an explanatory paragraph regarding the Debtors’ ability to continue as a going concern. The failure to receive an unqualified Audit Opinion, in and of itself, is an event of default under the Credit Agreement that would allow the lenders to accelerate the indebtedness thereunder.

 

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To avoid an acceleration of indebtedness under the Funded Debt Agreements (and potentially the other Senior Unsecured Notes) the Debtors negotiated and obtained limited waivers from the necessary lenders and noteholders to extend the waiver of the unqualified audit opinion requirement and/or waive the minimum interest coverage ratio requirement until August 14, 2016 and subsequent, further extensions until September 18, 2016, October 21, 2016, November 11, 2016, January 27, 2017, March 3, 2017, March 27, 2017, and April 7, 2017. When the final waiver expired in accordance with its terms on April 7, 2017, negotiations with the Bank Lender Steering Committee and the Unofficial Noteholder Committee (each defined below) regarding the terms of the Restructuring were substantially complete, and, therefore, the Debtors did not seek a further extension of the waiver.

As early as January 2016, the Debtors, with assistance from Weil and Lazard, have been actively engaged in discussions and negotiations regarding restructuring alternatives with (i) a steering committee comprised of certain Tidewater Lenders (the “Bank Lender Steering Committee”), (ii) the Troms Lenders, (iii) an unofficial committee of certain unaffiliated holders of the 2013 Notes (the “Unofficial 2013 Noteholder Committee”). For several months, the Debtors, the Bank Lender Steering Committee, the Troms Lenders and the Unofficial 2013 Noteholder Committee engaged in negotiations regarding the terms of a potential out-of-court restructuring. During the course of those discussions, however, it became clear to the Debtors, the Bank Lender Steering Committee, the Troms Lenders, and the Unofficial 2013 Noteholder Committee that the substantial deleveraging desired by all parties would most effectively be accomplished through an in-court transaction. Accordingly, in November 2016, the Debtors and the Bank Lender Steering Committee, the Troms Lenders, and an unofficial committee of certain unaffiliated holders of the Notes (the “Unofficial Noteholder Committee”) began negotiations regarding the terms of a chapter 11 restructuring to be achieved through a consensual prepackaged plan.

In the months leading up to the signing of the Restructuring Support Agreement, the Debtors, the Bank Lender Steering Committee, the Troms Lenders, and the Unofficial Noteholder Committee exchanged proposals and counterproposals regarding the terms of a comprehensive restructuring of Tidewater’s existing debt. During the same period, the Board met periodically to consider proposals to be provided to, and counterproposals received from the Bank Lender Steering Committee, the Troms Lenders, and the Unofficial Noteholder Committee to discuss updates and general restructuring strategy and considerations, and to approve and/or authorize actions related thereto.

Following several rounds of negotiations, the Debtors, the Bank Lender Steering Committee and the Unofficial Noteholder Committee were able to reach an agreement in principle regarding the terms, and processes to document, the Restructuring embodied in the Prepackaged Plan. The Debtors were also able to reach an agreement in principle with the Troms Lenders regarding an amendment of the Troms Credit Agreement to be executed in conjunction with the Prepackaged Plan.

IV.

ANTICIPATED EVENTS

DURING THE CHAPTER 11 CASES

In accordance with the Restructuring Support Agreement, the Debtors anticipate filing voluntary petitions for relief under chapter 11 of the Bankruptcy Code on or about [●], 2017. The filing of the petitions will commence the Chapter 11 Cases, at which time the Debtors will be afforded the benefits and become subject to the limitations of the Bankruptcy Code.

The Debtors intend to continue to operate their businesses in the ordinary course during the pendency of the Chapter 11 Cases as they have been doing before the Petition Date. To facilitate the efficient and expeditious implementation of the Prepackaged Plan through the Chapter 11 Cases, and to minimize disruptions to the Debtors’ operations on the Petition Date, the Debtors intend to seek to have the Chapter

 

17


11 Cases assigned to the same bankruptcy judge and administered jointly and to file various motions seeking important and urgent relief from the Bankruptcy Court. Such relief, if granted, will assist in the administration of the Chapter 11 Cases; however, there can be no assurance that the requested relief will be granted by the Bankruptcy Court.

 

  A. Commencement of the Chapter 11 Cases and First Day Motions

On the Petition Date, the Debtors intend to file multiple motions seeking various relief from the Bankruptcy Court and authorizing the Debtors to maintain their operations in the ordinary course. Such relief is designed to ensure a seamless transition between the Debtors’ prepetition and postpetition business operations, facilitate a smooth reorganization through the Chapter 11 Cases, and minimize any disruptions to the Debtors’ operations. The following is a brief overview of the relief the Debtors intend to seek on the Petition Date to maintain their operations in the ordinary course.

 

  1. Cash Management System

The Debtors maintain a centralized cash management system designed to receive, monitor, aggregate, and distribute cash among the various Debtors (and Non-Debtor Affiliates). On the Petition Date, the Debtors intend to seek authority from the Bankruptcy Court to, among other things, continue the use of their existing cash management system, bank accounts, and related business forms, as well as to continue their intercompany arrangements to avoid disruption in the Debtors’ operations and facilitate the efficient administration of the Chapter 11 Cases.

 

  2. Trade Creditors

In the ordinary course of business, the Debtors rely upon a variety of vendors and service providers. Pursuant to the Prepackaged Plan, the Debtors intend to pay all of their obligations to such vendors and service providers in full. However, certain vendors or service providers may seek to terminate or alter the terms of their agreements with the Debtors if the Debtors fail to honor their obligations as they become due. To avoid the detrimental effects of potential actions taken by the Debtors’ vendors and service providers, and to minimize any disruption to the Debtors’ operations, on the Petition Date, the Debtors intend to seek authority from the Bankruptcy Court to satisfy their obligations to vendors and service providers in the ordinary course of the Debtors’ businesses.

 

  3. Taxes

Pursuant to the Prepackaged Plan, the Debtors intend to pay all taxes and fees in full. To minimize any disruption to the Debtors’ operations and ensure the efficient administration of the Chapter 11 Cases, on the Petition Date, the Debtors intend to seek authority from the Bankruptcy Court to pay all taxes, fees, and similar charges and assessments, whether arising pre- or postpetition, to the appropriate taxing, regulatory, or other governmental authority in the ordinary course of the Debtors’ businesses.

 

  4. Utilities

In the ordinary course of business, the Debtors incur certain expenses related to essential utility services including, among others, water, electricity, natural gas, waste management, and telecommunication services. On the Petition Date, the Debtors intend to seek (i) authority from the Bankruptcy Court to continue payments to such utility providers in the ordinary course and (ii) approval of procedures to provide such utility providers with adequate assurance that the Debtors will continue to honor their obligations in the ordinary course of the Debtors’ businesses.

 

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  5. Insurance and Surety Bonds

In connection with the operation of the Debtors’ businesses, the Debtors maintain various insurance programs concerning, among other things, directors’ and officers’ liability, transportation, travel and commercial automotive claims, commercial property damage, maritime-related damage, umbrella and excess liability claims and various other liabilities. The Debtors also maintain surety and performance bond programs related to among other things, performance of contracts in Mexico, customs duties, environmental obligations, taxes and regulations, and contract bids. Maintaining the insurance and surety bond programs is essential to the Debtors’ operations and is required by laws, various regulations, and/or certain contracts. Accordingly, on the Petition Date, the Debtors intend to seek authority from the Bankruptcy Court to continue to honor their obligations under the insurance and surety bond programs in the ordinary course of the Debtors’ businesses.

 

  6. Employee Wages and Benefits

The Debtors’ businesses are labor intensive and rely upon employees in various locations within the United States and around the world. Generally, members of the Debtors’ workforce rely upon their compensation to meet their daily living expenses. To minimize the uncertainty and potential distractions associated with the Chapter 11 Cases and the potential disruption of the Debtors’ operations resulting therefrom, on the Petition Date, the Debtors intend to seek authority from the Bankruptcy Court to continue to honor their obligations to their workforce in the ordinary course of business, including (i) the payment of pre- and postpetition wages, salaries, payroll taxes, and reimbursable employee expenses, (ii) the payment of pre- and postpetition accrued and unpaid employee benefits and related costs and expenses, including amounts owed to third-party administrators, and (iii) the continuation of certain of the Debtors’ business practices, programs, and policies as such were in effect prior to the commencement of the Chapter 11 Cases.

 

  7. Rejection of Sale Leaseback Agreements and Objection to Sale Leaseback Claims

In connection with the Restructuring, the Debtors have identified certain cost savings opportunities, including the elimination of burdensome obligations arising under the Sale Leaseback Agreements, pursuant to which the Debtors charter certain vessels owned by third parties. On the Petition Date, the Debtors shall file the Rejection Motion, which shall seek entry of interim and final orders (a) authorizing the rejection of the Sale Leaseback Agreements, (b) temporarily allowing the Disputed Sale Leaseback Claims only for (i) voting purposes and (ii) purposes of establishing the Disputed Claims Reserve under Section 7.5 of the Prepackaged Plan, (c) setting a briefing schedule related thereto, (d) objecting to the final allowance of the Disputed Sale Leaseback Claims, and (e) granting related relief.

On April 7, 2017, Banc of America Leasing & Capital, L.L.C. (“BALC”), a Sale Leaseback Party, provided the Debtors with written notice (i) purporting to terminate the Sale Leaseback Agreements pertaining to three U.S.-flag vessels (the “BALC Sale Leaseback Agreements”) and (ii) demanding payment of the Stipulated Loss Value and the unpaid Charter Hire (each as defined and determined in the relevant Sale Leaseback Agreements). On May 3, 2017, BALC provided the Debtors will a letter demanding, among other things, return of the vessels. The Debtors dispute BALC’s position that an event of default has occurred under the terms of any of the BALC Sale Leaseback Agreements that would otherwise entitle BALC to terminate the agreements or be entitled to demand return of the vessels. The Debtors engaged in discussions with BALC and negotiated the terms of the proposed interim order and exhibit annexed to the Rejection Motion, which temporarily allows Disputed Sale Leaseback Claims only for (i) voting purposes and (ii) purposes of establishing the Disputed Claims Reserve under Section 7.5 of the Prepackaged Plan, and sets a briefing schedule for final allowance of the Disputed Sale Leaseback Claims under the Prepackaged Plan.

 

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  8. Protection of Tax Benefits and Net Operating Losses

The Debtors’ net operating losses (“NOLs”) and certain other tax attributes are valuable assets of the Debtors’ estates. The Debtors estimate that, as of March 31, 2017, the Tidewater US Tax Group (as defined below) will have incurred, for U.S. federal income tax purposes, approximately $63 million of NOLs in addition to certain other tax attributes. These tax attributes are valuable because, for U.S. federal income tax purposes, a corporation can generally carry forward its losses to offset future income or tax, thereby reducing its tax liability in future periods. The Debtors believe that, even after taking account of any cancellation of debt impact of the Prepackaged Plan on the Debtors, the Debtors’ NOLs and other tax attributes may result in future tax savings. These savings could enhance the Debtors’ cash position and contribute to the successful reorganization of the Debtors.

Section 382 of the U.S. Internal Revenue Code (the “Tax Code”) limits a corporation’s ability to use its NOLs and certain other tax attributes after the corporation undergoes a proscribed change of ownership. Although an ownership change of the Debtors is expected to occur upon implementation of the Prepackaged Plan, the limitations imposed by section 382 of the Tax Code upon a change in ownership under a confirmed plan are significantly more relaxed than those otherwise applicable.

Accordingly, on the Petition Date, to protect the value of their NOL carryforwards and other tax attributes, the Debtors intend to seek authority from the Bankruptcy Court to restrict the trading of Interests that could result in an ownership change prior to the Effective Date of the Prepackaged Plan.

FOR A DISCUSSION OF CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PREPACKAGED PLAN TO THE DEBTORS AND THE POTENTIAL IMPACT ON THE DEBTORS’ TAX ATTRIBUTES, SEE ARTICLE X HEREOF.

 

  B. Other Procedural Motions and Retention of Professionals

The Debtors intend to file various motions that are common to chapter 11 proceedings of similar size and complexity as the Chapter 11 Cases, including applications to retain various professionals to assist the Debtors in the Chapter 11 Cases.

 

  C. Confirmation Hearing

Contemporaneously with the filing of the Petitions, the Debtors will seek an order of the Bankruptcy Court scheduling the Confirmation Hearing to consider (i) the adequacy of this Disclosure Statement and the Solicitation in connection herewith and (ii) confirmation of the Prepackaged Plan. The Debtors anticipate that notice of these hearings will be published and mailed to all known holders of Claims and Interests at least 28 days before the date by which objections must be filed with the Bankruptcy Court.

 

  D. Timetable for the Chapter 11 Cases

In accordance with the Restructuring Support Agreement, the Debtors have agreed to proceed with the implementation of the Prepackaged Plan through the Chapter 11 Cases. Among other things, the Restructuring Support Agreement requires that the Bankruptcy Court enter the order approving this Disclosure Statement and the solicitation procedures and confirming the Prepackaged Plan within 75 days after the Petition Date. The Restructuring Support Agreement also requires that the Effective Date occur within 30 days after entry of the Confirmation Order. Although the Debtors will request that the Bankruptcy Court approve the timetable set forth in the Restructuring Support Agreement, there can be no assurance that the Bankruptcy Court will grant such relief or that the Effective Date will occur on such timetable. Satisfying the requirements of the Restructuring Support Agreement is crucial to Debtors’ successful reorganization.

 

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V.

MATTERS INVOLVING NON-DEBTOR AFFILIATES

 

  A. Non-Debtor Affiliate Operations

Tidewater Group is comprised of 142 entities; of those, 27 will be Debtors in the Chapter 11 Cases. As previously discussed, Tidewater Group provides offshore service vessels and marine support services to the offshore energy industry all around the world through the operation of a diversified fleet of marine service vessels. The vessels comprising Tidewater Group’s fleet are owned and operated by both Debtors and Non-Debtor Affiliates.

The Prepackaged Packaged Plan contemplates a restructuring of the obligations arising under the Credit Agreement and the Note Purchase Agreements. Accordingly, only Tidewater Parent and twenty-six (26) affiliated entities that are guarantors under the Credit Agreement and the Notes will commence Chapter 11 Cases.

 

  B. Reinstatement of the Troms Credit Agreement11

Pursuant to the Restructuring Support Agreement and the Prepackaged Plan, the Troms Credit Agreement shall be amended and reinstated as of the Effective Date and provide for, among other things:

(a) as security for the obligations owed under the Troms Credit Agreement, each owner of a Security Vessel shall (to the extent not prohibited by the Charter Contracts) grant, pledge, assign, and/or execute, as applicable, a first priority, perfected Mortgage for each Security Vessel, an Assignment of Earnings, Assignment of Insurances, and an Assignment of Monetary Claims in favor of the Agent (on behalf of the Finance Parties);

(b) as additional security, the owner of the equity interests or membership interests, as applicable, of each owner of the Security Vessels (the “Ownership Interests”), shall grant a first priority, perfected Share Charge over the Ownership Interests in favor of the Agent (on behalf of the Finance Parties);

(c) fifty percent (50%) of the amortization payments that would otherwise be payable under the Troms Credit Agreement during fiscal years 2018 and 2019 shall be deferred until the applicable Final Maturity Date; and

(d) the interest rates that would otherwise be applicable under the Troms Credit Agreement shall be increased by 100 basis points in regards to the amounts deferred pursuant to (c) above.

As of the Petition Date, with the exception of Troms Offshore, the borrower under the Troms Credit Agreement, none of the Non-Debtor Affiliates are direct obligors or guarantors of the Debtors’ obligations under the Troms Credit Agreement. Any Claim on account of a guarantee of the obligations owed under the Troms Credit Agreement shall be treated as a Claim in Class 4 (Other General Unsecured Claims) for which the holder thereof has agreed to less favorable treatment. Accordingly, like the rest of

 

11 

Capitalized terms used but not otherwise defined in this Article V.B shall have the meaning ascribed to such terms in the Troms Credit Agreement.

 

21


the holders of Claims in Class 4 Claims, the holders of such guarantee Claims shall be deemed to accept the Prepackaged Plan. Pursuant to the Prepackaged Plan, after the Effective Date, the obligations owed under the Troms Credit Agreement shall be guaranteed by Troms Offshore, the Corporate Guarantors, and certain Non-Debtor Affiliates.

 

  C. Legal Proceedings

 

  1. Arbitral Award for the Taking of the Company’s Venezuelan Operations

On December 27, 2016, the annulment committee formed under the rules of the World Bank’s International Centre for Settlement of Investment Disputes (“ICSID”) issued a decision on the Bolivarian Republic of Venezuela’s (“Venezuela”) application to annul the award rendered by an ICSID tribunal on March 13, 2015. The award granted two subsidiaries of Tidewater Parent (the “Claimants”) compensation for Venezuela’s expropriation of their investments in that country. The nature of the investments expropriated and the progress of the ICSID proceeding were previously reported by Tidewater Parent in prior filings with the SEC. The annulment committee’s decision reduced the total compensation awarded to the Claimants to $36.4 million. That compensation is accruing interest at an annual rate of 4.5% compounded quarterly from May 8, 2009 to the date of payment of that amount ($14.8 million as of December 31, 2016). The annulment committee also left undisturbed the portion of the award that granted the Claimants $2.5 million in legal fees and other costs related to the arbitration. The reduction of $10 million in compensation from the earlier award of $46.4 million represents that portion of the tribunal’s award that the annulment committee determined had not been properly explained by the tribunal’s analysis. The final aggregate award is therefore $53.7 million as of December 31, 2016. The award for that amount is immediately enforceable and not subject to any further stay of enforcement. The annulment committee’s decision is not subject to any further ICSID review, appeal, or other substantive proceeding, unless Tidewater Parent decides to pursue additional compensation through ICSID related to the portion of the award reduced by the annulment committee. Tidewater Parent has not made any decision whether to pursue any such additional relief.

Tidewater Parent is committed to taking appropriate steps to enforce and collect the award, which is enforceable in any of the 150 member states that are party to the ICSID Convention. As an initial step, Tidewater Parent was successful in having the award recognized and entered in March 2015 as a final judgment by the United States District Court for the Southern District of New York. In addition, Tidewater Parent was successful in having the award recognized and entered in November 2016 as a final judgment of the High Court of Justice of England and Wales. Even with the recognition of the award in the United States and United Kingdom courts, Tidewater Parent recognizes that collection of the award may present significant practical challenges. The company is accounting for this matter as a gain contingency, and will record any such gain in future periods if and when the contingency is resolved, in accordance with ASC 450 Contingencies.

 

  2. Nigeria Marketing Agent Litigation

In October 2012, Tidewater Parent notified its Nigerian marketing agent, Phoenix Tide Offshore Nigeria Limited (“Phoenix Tide”), that it was discontinuing its relationship with the marketing agent and two of its principals (H.H. The Otunba Ayora Dr. Bola Kuforiji-Olubi, OON and Olutokunbo Afolabi Kuforiji). The company subsequently entered into a new strategic relationship with a different Nigerian marketing agent that it believes will better serve Tidewater Parent’s long term interests in Nigeria. This strategic relationship is currently functioning as Tidewater Parent intended.

The company is currently engaged in a number of legal disputes with Phoenix Tide and its two principals both in Nigeria and in the United Kingdom.

 

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In the United Kingdom, Tidewater Parent has been successful in obtaining favorable court orders against Phoenix Tide on a variety of issues, including the fact that Phoenix Tide wrongly interfered in stopping the approximate $12 million payment from TOTAL S.A. (“TOTAL”) to Tidewater Parent. In April 2016, a United Kingdom court ruled that Phoenix Tide’s two principals were personally responsible for interfering with Tidewater Parent’s business relationship with TOTAL. In June 2016, a United Kingdom court assessed damages and legal costs against Phoenix Tide’s two principals for their tortious interference.

Subsequent to the close of quarter ending December 31, 2016, on January 26, 2017, Tidewater Parent, Phoenix Tide, and its surviving principal, Olutokunbo Afolabi Kuforiji, filed a signed settlement agreement with the Nigerian Appeals Court that is intended to resolve all legal disputes and provides for payment by various affiliates of TOTAL to Tidewater Parent of approximately $12 million (inclusive of U.S. dollar and Naira denominations). The Nigerian Appeals Court has approved the settlement agreement and the TOTAL affiliates have made the payment referenced above.

VI.

SUMMARY OF THE PREPACKAGED PLAN

This section of this Disclosure Statement summarizes the Prepackaged Plan, a copy of which is attached hereto as Exhibit A. This summary is qualified in its entirety by reference to the Prepackaged Plan.

 

  A. Administrative Expenses and Priority Claims

 

  1. Administrative Expense Claims

Except to the extent that a holder of an Allowed Administrative Expense Claim agrees to less favorable treatment, each holder of an Allowed Administrative Expense Claim (other than a Fee Claim) shall receive, in full and final satisfaction of such Claim, Cash in an amount equal to such Allowed Administrative Expense Claim on, or as soon thereafter as is reasonably practicable, the later of (a) the Effective Date and (b) the first Business Day after the date that is thirty (30) calendar days after the date such Administrative Expense Claim becomes an Allowed Administrative Expense Claim; provided, however, Allowed Administrative Expense Claims representing liabilities incurred in the ordinary course of business by the Debtors, as Debtors in Possession, shall be paid by the Debtors or the Reorganized Debtors, as applicable, in the ordinary course of business, consistent with past practice and in accordance with the terms and subject to the conditions of any course of dealing or agreements governing, instruments evidencing, or other documents relating to such transactions.

 

  2. Fee Claims

All Entities seeking an award by the Bankruptcy Court of Fee Claims shall file and serve on counsel to the Reorganized Debtors, the U.S. Trustee, and such other entities who are designated by the Bankruptcy Rules, the Confirmation Order, or other order of the Court, on or before the date that is forty-five (45) days after the Effective Date, their respective final applications for allowance of compensation for services rendered and reimbursement of expenses incurred from the Petition Date through the Effective Date. Objections to any Fee Claims must be filed and served on counsel to the Reorganized Debtors, the U.S. Trustee, and the requesting party no later than twenty-one (21) calendar days after the filing of the final applications for compensation or reimbursement (unless otherwise agreed by the Debtors or the Reorganized Debtors, as applicable, and the party requesting compensation of a Fee Claim).

Allowed Fee Claims shall be paid in full, in Cash, in such amounts as are Allowed by the Bankruptcy Court (i) upon the later of (1) the Effective Date and (2) the date upon which a Final Order relating to any

 

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such Allowed Fee Claim is entered, in each case, as soon as reasonably practicable thereafter, or (ii) upon such other terms as may be mutually agreed upon between the holder of such an Allowed Fee Claim and the Debtors or the Reorganized Debtors, as applicable, and solely with respect to agreements entered into on or prior to the Effective Date, with the consent of the Tidewater Lender and Noteholder Group, which consent shall not be unreasonably withheld. Notwithstanding the foregoing, any Fee Claims that are authorized to be paid pursuant to any administrative orders entered by the Bankruptcy Court may be paid at the times and in the amounts authorized pursuant to such orders.

The Reorganized Debtors are authorized to pay compensation for services rendered or reimbursement of expenses incurred after the Effective Date in the ordinary course and without the need for Bankruptcy Court approval. On or about the Effective Date, holders of Fee Claims shall provide a reasonable estimate of such Fee Claims to (i) the Debtors or the Reorganized Debtors, as applicable, and, in addition, (ii) solely with respect to estimates provided on or prior to the Effective Date, to (1) counsel to the Consenting Noteholders, and (2) counsel to the Consenting Tidewater Lenders, and the Debtors or Reorganized Debtors, as applicable, shall separately reserve for such estimated amounts for the benefit of the holders of the Fee Claims until the fee applications related thereto are resolved by Final Order or agreement of the parties. If a holder of a Fee Claim does not provide an estimate, the Debtors or Reorganized Debtors, as applicable, may estimate the unpaid and unbilled fees and expenses of such holder of a Fee Claim. When all such Allowed Fee Claims have been paid in full, any remaining amount in such escrow shall promptly be released from such reserve and revert to, and ownership thereof shall vest in, the Reorganized Debtors without any further action or order of the Bankruptcy Court.

 

  3. Priority Tax Claims

Except to the extent that a holder of an Allowed Priority Tax Claim agrees to less favorable treatment, each holder of an Allowed Priority Tax Claim shall receive, in full and final satisfaction of such Allowed Priority Tax Claim, at the option of the Debtors or the Reorganized Debtors, as applicable, and solely if such option is selected on or prior to the Effective Date, with the consent of the Tidewater Lender and Noteholder Group, such consent not to be unreasonably withheld, (a) Cash in an amount equal to such Allowed Priority Tax Claim on, or as soon thereafter as is reasonably practicable, the later of (i) the Effective Date, to the extent such Claim is an Allowed Priority Tax Claim on the Effective Date, (ii) the first Business Day after the date that is thirty (30) calendar days after the date such Priority Tax Claim becomes an Allowed Priority Tax Claim, and (iii) the date such Allowed Priority Tax Claim is due and payable in the ordinary course as such obligation becomes due, or (b) equal annual Cash payments in an aggregate amount equal to such Allowed Priority Tax Claim, together with interest at the applicable rate under section 511 of the Bankruptcy Code, over a period not exceeding five (5) years from and after the Petition Date; provided, that the Debtors reserve the right to prepay all or a portion of any such amounts at any time under this option at their discretion, and solely with respect to prepayments made before the Effective Date, with the consent of the Tidewater Lender and Noteholder Group, such consent not to be unreasonably withheld. To the extent that any Priority Tax Claim is secured by a lien on any property of the Debtors, such lien shall continue in full force and effect until such time as the Priority Tax Claim is paid in full. All Allowed Priority Tax Claims that are not due and payable on or before the Effective Date shall be paid in the ordinary course of business or under applicable non-bankruptcy law as such obligations become due.

 

  B. Classifications of Claims and Interests

 

  1. Classification in General

A Claim or Interest is placed in a particular Class for all purposes, including voting, confirmation, and distribution under the Prepackaged Plan and under sections 1122 and 1123(a)(1) of the Bankruptcy Code;

 

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provided, that a Claim or Interest is placed in a particular Class for the purpose of receiving distributions pursuant to the Prepackaged Plan only to the extent that such Claim or Interest is an Allowed Claim or Allowed Interest in that Class and such Allowed Claim or Allowed Interest has not been satisfied, released, or otherwise settled prior to the Effective Date.

 

  2. Formation of Debtor Groups for Convenience Only

The Prepackaged Plan groups the Debtors together solely for the purpose of describing treatment under the Prepackaged Plan, confirmation of the Prepackaged Plan, and making distributions in accordance with the Prepackaged Plan in respect of Claims against and Interests in the Debtors under the Prepackaged Plan. Such groupings shall not affect any Debtor’s status as a separate legal Entity, result in substantive consolidation of any Estates, change the organizational structure of the Debtors’ business enterprise, constitute a change of control of any Debtor for any purpose, cause a merger or consolidation of any legal Entities, or cause the transfer of any assets; and, except as otherwise provided by or permitted under the Prepackaged Plan, all Debtors shall continue to exist as separate legal Entities after the Effective Date.

 

  3. Summary of Classification

The following table designates the Classes of Claims against and Interests in each of the Debtors and specifies which of those Classes are (a) Impaired or Unimpaired by the Prepackaged Plan, (b) entitled to vote to accept or reject the Prepackaged Plan in accordance with section 1126 of the Bankruptcy Code, and (c) deemed to accept or reject the Prepackaged Plan. In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Expense Claims, including Priority Tax Claims, have not been classified. The classification of Claims and Interests set forth herein and in the Prepackaged Plan shall apply separately to each of the Debtors. All of the potential Classes for the Debtors are set forth herein and in the Prepackaged Plan. Certain of the Debtors may not have holders of Claims or Interests in a particular Class or Classes, and such Classes shall be treated as set forth in Section 3.5 of the Prepackaged Plan.

 

Class

      

Type of Claim or Interest

  

Impairment

       

Entitled to Vote

1

     Priority Non-Tax Claims    Unimpaired       No (Presumed to accept)

2

     Secured Claims    Unimpaired       No (Presumed to accept)

3

     General Unsecured Claims    Impaired       Yes

4

     Other General Unsecured Claims    Unimpaired       No (Presumed to accept)

5

     Intercompany Claims    Unimpaired       No (Presumed to accept)

6

     Intercompany Interests    Unimpaired       No (Presumed to accept)

7

     Tidewater Parent Interests    Impaired       No (Deemed to reject)

8

     Subordinated Securities Claims    Impaired       No (Deemed to reject)

 

  4. Special Provision Governing Unimpaired Claims

Except as otherwise provided in the Prepackaged Plan, nothing under the Prepackaged Plan shall affect the rights of the Debtors or the Reorganized Debtors, as applicable, in respect of any Unimpaired Claims, including all rights in respect of legal and equitable defenses to, or setoffs or recoupments against, any such Unimpaired Claims.

 

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  5. Elimination of Vacant Classes

Any Class of Claims against or Interests in a Debtor that, as of the commencement of the Confirmation Hearing, does not have at least one (1) holder of a Claim or Interest that is Allowed in an amount greater than zero for voting purposes shall be considered vacant, deemed eliminated from the Prepackaged Plan of such Debtor for purposes of voting to accept or reject such Debtor’s Prepackaged Plan, and disregarded for purposes of determining whether such Debtor’s Prepackaged Plan satisfies section 1129(a)(8) of the Bankruptcy Code with respect to that Class.

 

  C. Treatment of Claims and Interests

 

  1. Class 1: Priority Non-Tax Claims

Except to the extent that a holder of an Allowed Priority Non-Tax Claim against any of the Debtors agrees to a less favorable treatment of such Claim, in full and final satisfaction of such Allowed Priority Non-Tax Claim, at the option of the Debtors or the Reorganized Debtors, as applicable, and solely if such option is selected on or prior to the Effective Date, with the consent of the Tidewater Lender and Noteholder Group, such consent not to be unreasonably withheld, (i) each such holder shall receive payment in Cash in an amount equal to such Claim, payable on the later of the Effective Date and the date that is ten (10) Business Days after the date on which such Priority Non-Tax Claim becomes an Allowed Priority Non-Tax Claim, in each case, or as soon as reasonably practicable thereafter, (ii) such holder’s Allowed Priority Non-Tax Claim shall be Reinstated, or (iii) such holder shall receive such other treatment so as to render such holder’s Allowed Priority Non-Tax Claim Unimpaired pursuant to section 1124 of the Bankruptcy Code.

 

  2. Class 2: Secured Claims

Except to the extent that a holder of an Allowed Secured Claim against any of the Debtors agrees to a less favorable treatment of such Claim, in full and final satisfaction of such Allowed Secured Claim, at the option of the Debtors or the Reorganized Debtors, as applicable, and solely if such option is selected on or prior to the Effective Date, with the consent of the Tidewater Lender and Noteholder Group, such consent not to be unreasonably withheld, (i) each such holder shall receive payment in Cash in an amount equal to such Claim, payable on the later of the Effective Date and the date that is ten (10) Business Days after the date on which such Secured Claim becomes an Allowed Secured Claim, in each case, or as soon as reasonably practicable thereafter, (ii) such holder’s Allowed Secured Claim shall be Reinstated, or (iii) such holder shall receive such other treatment so as to render such holder’s Allowed Secured Claim Unimpaired pursuant to section 1124 of the Bankruptcy Code.

 

  3. Class 3: General Unsecured Claims

The following Claims are Allowed pursuant to section 506(a) of the Bankruptcy Code against each of the Debtors: (i) the Credit Agreement Claims in the aggregate principal amount of $900,000,000, plus accrued but unpaid interest (including default interest), plus any other unpaid premiums, fees, costs, or other amounts due under the Credit Agreement, in each case, up to but not including the Petition Date, and (ii) the Notes Claims in the aggregate amount of $1,158,397,471, plus any other unpaid premiums, interest, fees, costs, or other amounts due under the Note Purchase Agreements, as applicable, in each case, up to but not including the Petition Date. The Tidewater Lenders and the Noteholders shall not be required to file proofs of Claim on account of their Credit Agreement Claims and/or Notes Claims, as applicable. On the Petition Date, the Debtors shall file with the Bankruptcy Court the Rejection Motion.

 

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In full and final satisfaction of each Allowed General Unsecured Claim, on a Class 3 Distribution Date, each holder of an Allowed General Unsecured Claim shall be entitled to receive its Pro Rata share of (i) Cash in the amount of $225,000,000, (ii) the New Secured Notes, and (iii) pursuant to the procedure set forth below, a combination of (v) New Common Stock to the extent permitted under the restriction on aggregate ownership of outstanding New Common Stock by Non-U.S. Citizens as described in Section 5.5(a) of the Prepackaged Plan and (w) New Creditor Warrants to the extent that shares of New Common Stock cannot be issued to such holder because it is a Non-U.S. Citizen and its ownership of its Pro Rata share of New Common Stock, when added to the Pro Rata shares of New Common Stock being issued to other holders that are Non-U.S. Citizens as of the Effective Date, would exceed the restriction on aggregate ownership of outstanding New Common Stock by Non-U.S. Citizens as described in Section 5.5(a) of the Prepackaged Plan, which shall represent, in the aggregate, ninety-five percent (95%) of the sum of the total shares of New Common Stock to be outstanding on the Effective Date under clause (v) of Section 4.3(c)(iii) and clause (i) of Section 4.7(b) of the Prepackaged Plan (excluding shares of New Common Stock issuable pursuant to the Management Incentive Plan and shares of New Common Stock issuable upon exercise of the New Existing Equity Warrants) plus shares of New Common Stock issuable upon exercise of the New Creditor Warrants issued under clause (w) of Section 4.3(c)(iii) of the Prepackaged Plan as of the Effective Date plus any shares of New Common Stock issuable upon exercise of the New Creditor Warrants reserved for issuance but not issued as of the Effective Date with respect to Claims which are Disputed Claims on the Effective Date by virtue of the operation of Section 6.9 of the Prepackaged Plan, subject to dilution by shares of New Common Stock issuable pursuant to the Management Incentive Plan and by shares of New Common Stock issuable upon exercise of the New Existing Equity Warrants; provided, however, that such holders of Allowed General Unsecured Claims are entitled to direct any distribution with respect to clause (iii) of this Article VI.C.3 to one or more Permitted Designees. In the case of holders of Allowed General Unsecured Claims that are Non-U.S. Citizens, the percentage ratio of the number of shares of New Common Stock to the number of New Creditor Warrants to be issued to each such Non-U.S. Citizen pursuant to clauses (v) and (w) of Section 4.3(c)(iii) of the Prepackaged Plan, respectively, as of the Effective Date shall be the same for each such Non-U.S. Citizen holder of an Allowed General Unsecured Claim. If such a holder (or the holder’s Permitted Designee(s)) of an Allowed General Unsecured Claim furnishes a U.S. Citizen Certification to Tidewater Parent on or before the Distribution Record Date and, after review, Tidewater Parent, in its reasonable discretion, accepts such U.S. Citizen Certification as reasonable proof in establishing that such holder or its Permitted Designee(s), if applicable, is a U.S. Citizen, such holder (or its Permitted Designee(s)) shall receive New Common Stock representing all of such holder’s (or its Permitted Designee’s(s’)) Pro Rata share as of the Effective Date of such New Common Stock on the Class 3 Initial Distribution Date; provided, however, that if such holder (or the holder’s Permitted Designee(s)) does not furnish a U.S. Citizen Certification to Tidewater Parent on or before the Distribution Record Date, or if the U.S. Citizen Certification of such holder (or the holder’s Permitted Designee(s)) has not been accepted or has been rejected by Tidewater Parent, in its reasonable discretion, on or before the date that is five (5) Business Days after the Distribution Record Date after review by Tidewater Parent pursuant to Section 4.3(c) of the Prepackaged Plan, such holder (or the holder’s Permitted Designee(s)) shall receive a combination of (x) New Common Stock representing such holder’s Pro Rata share as of the Effective Date of New Common Stock, to the extent permitted by Section 5.5(a) of the Prepackaged Plan, and (y) New Creditor Warrants equal to the balance of such holder’s (or the holder’s Permitted Designee’s(s’)) Pro Rata share as of the Effective Date of the New Common Stock that such holder would have received but for the restriction in Section 5.5(a) of the Prepackaged Plan as of the Effective Date. In connection with Tidewater Parent’s review of any U.S. Citizen Certification under Section 4.3(c) of the Prepackaged Plan, Tidewater Parent shall have the right to require the holder (or the holder’s Permitted Designee(s)) furnishing the U.S. Citizen Certification to provide Tidewater Parent with such documents and other information as it may reasonably request as reasonable proof confirming that the holder (or such holder’s Permitted Designee(s)) is a U.S. Citizen under the Jones Act. Tidewater Parent shall treat all such documents and information provided by any holder (or the holder’s Permitted Designee(s)) as

 

27


confidential and shall limit the distribution of such documents and information to the Debtors’ personnel and counsel that have a need to know the contents thereof and to the U.S. Coast Guard as may be necessary. Notwithstanding the foregoing, holders of Sale Leaseback Claims which are Disputed Claims on the Effective Date and thereafter become Allowed Claims shall be entitled to receive their Pro Rata share, calculated as of the Effective Date, of the foregoing consideration described in clauses (i), (ii), and (iii) of the first sentence of this Article VI.C.3; provided, however, that the consideration delivered in respect of clause (iii) of this Article VI.C.3 shall consist of solely New Creditor Warrants on the next Interim Distribution Date after they become Allowed Claims. In any distribution made to the holder of an Allowed General Unsecured Claim, there shall be deducted therefrom the amount of Cash, New Secured Notes, New Common Stock, and New Creditor Warrants previously distributed to such holder on account of such Allowed General Unsecured Claim in any distribution made prior thereto.

 

  4. Class 4: Other General Unsecured Claims

Except to the extent that a holder of an Allowed Other General Unsecured Claim against any of the Debtors agrees to a less favorable treatment of such Claim or has been paid before the Effective Date, at the option of the Debtors or the Reorganized Debtors, as applicable, and solely if such option is selected on or prior to the Effective Date, with the consent of the Tidewater Lender and Noteholder Group, such consent not to be unreasonably withheld, on and after the Effective Date, (i) the Reorganized Debtors shall continue to pay or treat each Allowed Other General Unsecured Claim in the ordinary course of business, or (ii) such holder shall receive such other treatment so as to render such holder’s Allowed Other General Unsecured Claim Unimpaired pursuant to section 1124 of the Bankruptcy Code, in each case, subject to all defenses or disputes the Debtors and Reorganized Debtors may assert as to the validity or amount of such Claims, including as provided in Section 10.9 of the Prepackaged Plan.

 

  5. Class 5: Intercompany Claims

On the Effective Date, all Intercompany Claims shall be adjusted, Reinstated, or discharged to the extent determined to be appropriate by the Debtors or the Reorganized Debtors, as applicable, and solely if such treatment is determined on or prior to the Effective Date, with the consent of the Tidewater Lender and Noteholder Group, such consent not to be unreasonably withheld.

 

  6. Class 6: Intercompany Interests

On the Effective Date, and without the need for any further corporate or limited liability company action or approval of any board of directors, management, or shareholders of any Debtor or Reorganized Debtor, as applicable, all Intercompany Interests shall be unaffected by the Prepackaged Plan and continue in place following the Effective Date, solely for the administrative convenience of maintaining the existing corporate structure of the Debtors.

 

  7. Class 7: Tidewater Parent Interests

On the Effective Date, all Tidewater Parent Interests shall be cancelled and discharged and shall be of no further force and effect, whether surrendered for cancellation or otherwise, and each holder of an Allowed Existing Interest shall be entitled to receive its Pro Rata share of (i) shares of New Common Stock, representing, in the aggregate, five percent (5%) of the sum of the total shares of New Common Stock to be outstanding as of the Effective Date under clause (i) of Section 4.7(b) and clause (v) of Section 4.3(c)(iii) of the Prepackaged Plan (excluding shares of New Common Stock issuable pursuant to the Management Incentive Plan and shares of New Common Stock issuable upon exercise of the New Existing Equity Warrants) plus shares of New Common Stock issuable upon exercise of the New Creditor Warrants issued under clause (w) of Section 4.3(c)(iii) of the Prepackaged Plan as of the Effective Date

 

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plus any shares of New Common Stock issuable upon exercise of the New Creditor Warrants reserved for issuance but not issued as of the Effective Date with respect to Claims which are Disputed Claims on the Effective Date by virtue of the operation of Section 6.9(a) of the Prepackaged Plan, subject to dilution by shares of New Common Stock issuable pursuant to the Management Incentive Plan and by shares of New Common Stock issuable upon exercise of the New Existing Equity Warrants, (ii) the Series A New Existing Equity Warrants, and (iii) the Series B New Existing Equity Warrants. Notwithstanding anything herein to the contrary, any Tidewater Parent Interests issued and outstanding as of immediately prior to the Petition Date pursuant to a Benefit Plan that have not been subsequently forfeited (or agreed to be forfeited) by the holder thereof (either voluntarily or by operation of the terms of such Benefit Plan, with effect as of any time on or prior to the Effective Date) shall be deemed to vest immediately prior to the Distribution Record Date. For the avoidance of doubt, as of the Effective Date, all Tidewater Parent Interests consisting of stock options granted under any Benefit Plan shall be cancelled and discharged and shall be of no further force and effect.

 

  8. Class 8: Subordinated Securities Claims

The holders of Subordinated Securities Claims shall not receive or retain any property under the Prepackaged Plan on account of such Claims and the obligations of the Debtors and the Reorganized Debtors, as applicable, on account of such Subordinated Securities Claims shall be discharged.

 

  D. Means for Implementation

 

  1. Compromise and Settlement of Claims, Interests, and Controversies

Pursuant to sections 363 and 1123(b)(3) of the Bankruptcy Code and Bankruptcy Rule 9019 and in consideration for the distributions and other benefits provided pursuant to the Prepackaged Plan, the provisions of the Prepackaged Plan shall, upon the Effective Date, constitute a good faith compromise and settlement among the Debtors and the Consenting Creditors of numerous disputes from or related to (i) the Notes Claims, (ii) the Credit Agreement Claims, (iii) the Sale Leaseback Claims, and (iv) the treatment of, and distribution to, holders of Tidewater Parent Interests. In the event that, for any reason, the Confirmation Order is not entered or the Effective Date does not occur, the Debtors, the Noteholders, and the Tidewater Lenders reserve all of their respective rights with respect to any and all disputes resolved and settled under the Prepackaged Plan. The entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval of the compromises and settlements of all such Claims, Interests, and controversies, and the Bankruptcy Court’s findings shall constitute its determination that such compromises and settlements are in the best interests of the Debtors, their Estates, holders of such Claims and Interests, and other parties-in-interest, and are fair, equitable, and within the range of reasonableness. The provisions of the Prepackaged Plan, including, without limitation, its release, injunction, exculpation, and compromise provisions, are mutually dependent and non-severable.

 

  2. Continued Corporate Existence

Except as otherwise provided in the Prepackaged Plan, the Debtors shall continue to exist after the Effective Date as Reorganized Debtors in accordance with the applicable laws of the respective jurisdictions in which they are incorporated or organized and pursuant to the Amended Organizational Documents. On or after the Effective Date, each Reorganized Debtor may in its sole discretion, take such action that may be necessary or appropriate as permitted by applicable law, instruments and agreements, and such Reorganized Debtor’s organizational documents, as such Reorganized Debtor may determine is reasonable and appropriate.

 

29


  3. Prepackaged Plan Funding

Prepackaged Plan distributions of Cash shall be funded from the Debtors’ Cash on hand as of the applicable date of such Prepackaged Plan distribution.

 

  4. Cancellation of Existing Securities and Agreements

Except for the purpose of evidencing a right to a distribution under the Prepackaged Plan and except as otherwise set forth in the Prepackaged Plan, including with respect to executory contracts or unexpired leases that shall be assumed by the Reorganized Debtors, on the Effective Date, all agreements, instruments, and other documents evidencing any Claim or Interest (other than Intercompany Interests that are not modified by the Prepackaged Plan) and any rights of any holder in respect thereof shall be deemed cancelled, discharged, and of no force or effect and the obligations of the Debtors thereunder shall be deemed fully satisfied, released, and discharged. For the avoidance of doubt, notwithstanding such cancellation and discharge, (a) the Troms Credit Agreement shall continue in effect and (b) the Credit Agreement and the Note Purchase Agreements shall continue in effect solely to (i) the extent necessary to allow the holders of Allowed Credit Agreement Claims and Allowed Notes Claims to receive distributions under the Prepackaged Plan, (ii) the extent necessary to allow the Debtors, the Reorganized Debtors, and/or the Disbursing Agent to make post-Effective Date distributions or take such other action pursuant to the Prepackaged Plan on account of the Allowed Credit Agreement Claims and the Allowed Notes Claims and to otherwise exercise their rights and discharge their obligations relating to the interests of the holders of such Claims, and (iii) appear in the Chapter 11 Cases; provided that all expense reimbursement obligations of the Debtors arising under (x) the Note Purchase Agreements in favor of the Noteholders or (y) the Credit Agreement in favor of the Credit Agreement Agent and/or the Tidewater Lenders, or in each case, their respective directors, officers, employees, agents, affiliates, controlling persons, and legal and financial advisors, shall survive, remain in full force and effect, and be enforceable against the Reorganized Debtors on and after the Effective Date; provided, however, that except to the extent provided in clauses (a) and (b) above, nothing in Section 5.4 of the Prepackaged Plan shall affect the discharge of Claims pursuant to the Bankruptcy Code, the Confirmation Order, or the Prepackaged Plan, or result in any liability or expense to the Reorganized Debtors. Notwithstanding the foregoing, any provision in any document, instrument, lease, or other agreement that causes or effectuates, or purports to cause or effectuate, a default, termination, waiver, or other forfeiture of, or by, the Debtors or their interests, as a result of the cancellations, terminations, satisfaction, releases, or discharges provided for in Section 5.4 of the Prepackaged Plan shall be deemed null and void and shall be of no force and effect. Nothing contained therein shall be deemed to cancel, terminate, release, or discharge the obligation of the Debtors or any of their counterparties under any executory contract or lease to the extent such executory contract or lease has been assumed by the Debtors pursuant to a Final Order of the Bankruptcy Court or under the Prepackaged Plan.

 

  5. Authorization and Issuance of New Common Stock and New Warrants

On the Effective Date, (i) Reorganized Tidewater Parent is authorized to issue or cause to be issued and shall issue the New Common Stock and the New Warrants, and (ii) the Debtors or the Reorganized Debtors are authorized to issue or cause to be issued and shall issue the New Secured Notes, each in accordance with the terms of the Prepackaged Plan without the need for any further corporate or limited liability company action. All of the New Common Stock, the New Warrants, and the New Secured Notes issuable under the Prepackaged Plan, when so issued, shall be duly authorized, validly issued, and, in the case of the New Common Stock, fully paid, and non-assessable. In no event shall Non-U.S. Citizens in the aggregate own more than twenty-two percent (22%) of the total number of shares of New Common Stock to be outstanding on the Effective Date. All of the New Common Stock underlying the New Warrants (upon payment of the exercise price in accordance with the terms of such New Warrants) issued pursuant to the Prepackaged Plan shall be duly authorized, validly issued, fully paid, and non-assessable.

 

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Upon the Effective Date, Reorganized Tidewater Parent anticipates that it will continue to be a reporting company under the Exchange Act, 15 U.S.C. §§ 78(a)–78(pp). Reorganized Tidewater Parent shall use its commercially reasonable efforts to have the New Common Stock and the New Existing Equity Warrants listed on the same nationally recognized exchange as soon as practicable, in each case, subject to meeting applicable listing requirements following the Effective Date. Following the Effective Date, Reorganized Tidewater Parent will explore listing the New Creditor Warrants on an exchange to be determined, subject to approval by the New Board and applicable listing requirements.

 

  (a) New Creditor Warrants

The New Creditor Warrants will be issued pursuant to the terms of the New Creditor Warrant Agreement. Each New Creditor Warrant will, subject to the terms of the New Creditor Warrant Agreement, be exercisable for one (1) share of New Common Stock with an exercise price per warrant equal to $.001 per share. The New Creditor Warrants will be subject to restrictions contained in Reorganized Tidewater Parent’s new certificate of incorporation that prohibits the exercise of such warrants where such exercise would cause the total number of shares held by Non-U.S. Citizens to exceed 24%.

 

  (b) New Existing Equity Warrants

Series A New Existing Equity Warrants and Series B New Existing Equity Warrants will be issued to existing equity holders of Tidewater Parent pursuant to the terms of the New Existing Equity Warrant Agreement. Each New Existing Equity Warrant will, subject to the terms of the New Existing Equity Warrant Agreement, be exercisable for one (1) share of New Common Stock.

The Series A New Existing Equity Warrants include warrants to purchase a number of shares of New Common Stock equal to seven and a half percent (7.5%) of the sum of the total number of (a) shares of New Common Stock to be outstanding as of the Effective Date under clause (v) of Section 4.3(c)(iii) and clause (i) of Section 4.7(b) of the Prepackaged Plan plus (b) shares of New Common Stock issuable upon exercise of the New Creditor Warrants issued under clause (w) of Section 4.3(c)(iii) of the Prepackaged Plan as of the Effective Date plus (c) any shares of New Common Stock issuable upon exercise of the New Creditor Warrants reserved for issuance but not issued as of the Effective Date with respect to Claims which are Disputed Claims on the Effective Date by virtue of the operation of Section 6.9(a) of the Prepackaged Plan plus (d) shares of New Common Stock issuable upon exercise of the Series A New Existing Equity Warrants, but excluding any shares of New Common Stock issued or issuable pursuant to the Management Incentive Plan, such Series A New Existing Equity Warrants to be exercisable for a six (6) year period commencing on the Effective Date with an exercise price per warrant equal to $1,708,313,831, divided by the sum of the total number of (1) shares of New Common Stock to be outstanding as of the Effective Date under clause (v) of Section 4.3(c)(iii) and clause (i) of Section 4.7(b) of the Prepackaged Plan plus (2) shares of New Common Stock issuable upon exercise of the New Creditor Warrants issued under clause (w) of Section 4.3(c)(iii) of the Prepackaged Plan as of the Effective Date plus (3) any shares of New Common Stock issuable upon exercise of the New Creditor Warrants reserved for issuance but not issued as of the Effective Date with respect to Claims which are Disputed Claims on the Effective Date by virtue of the operation of Section 6.9(a) of the Prepackaged Plan, but excluding any shares of New Common Stock issued or issuable pursuant to the Management Incentive Plan, all as more fully set forth in the New Existing Equity Warrant Agreement.

The Series B New Existing Equity Warrants include warrants to purchase a number of shares of New Common Stock equal to seven and a half percent (7.5%) of the sum of the total number of (a) shares of

 

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New Common Stock to be outstanding as of the Effective Date under clause (v) of Section 4.3(c)(iii) and clause (i) of Section 4.7(b) of the Prepackaged Plan plus (b) shares of New Common Stock issuable upon exercise of the New Creditor Warrants issued under clause (w) of Section 4.3(c)(iii) of the Prepackaged Plan as of the Effective Date plus (c) any shares of New Common Stock issuable upon exercise of the New Creditor Warrants reserved for issuance but not issued as of the Effective Date with respect to Claims which are Disputed Claims on the Effective Date by virtue of the operation of Section 6.9(a) of the Prepackaged Plan plus (d) shares of New Common Stock issuable upon exercise of the Series A New Existing Equity Warrants and the Series B New Existing Equity Warrants, but excluding any shares of New Common Stock issued or issuable pursuant to the Management Incentive Plan, such Series B New Existing Equity Warrants to be exercisable for a six (6) year period commencing on the Effective Date with an exercise price per warrant equal to $2,020,000,000, divided by the sum of the total number of (1) shares of New Common Stock to be outstanding as of the Effective Date under clause (v) of Section 4.3(c)(iii) and Section 4.7(b) of the Prepackaged Plan plus (2) shares of New Common Stock issuable upon exercise of the New Creditor Warrants issued under clause (w) of Section 4.3(c)(iii) of the Prepackaged Plan as of the Effective Date plus (3) any shares of New Common Stock issuable upon exercise of the New Creditor Warrants reserved for issuance but not issued as of the Effective Date with respect to Claims which are Disputed Claims on the Effective Date by virtue of the operation of Section 6.9(a) of the Prepackaged Plan plus (4) shares of New Common Stock issuable upon exercise of the Series A New Existing Equity Warrants, but excluding any shares of New Common Stock issued or issuable pursuant to the Management Incentive Plan, all as more fully set forth in the New Existing Equity Warrant Agreement.

The New Series A Existing Equity Warrants and the Series B New Existing Equity Warrants will be subject to restrictions contained in Reorganized Tidewater Parent’s new certificate of incorporation that prohibits the exercise of such warrants where such exercise would cause the total number of shares held by Non-U.S. Citizens to exceed 24%.

 

  6. Section 1145 Exemption

The offer, issuance, and distribution of the New Creditor Warrants (and the New Common Stock issuable upon exercise thereof), the New Existing Equity Warrants (and the New Common Stock issuable upon exercise thereof), the New Common Stock, and the New Secured Notes to holders of Allowed General Unsecured Claims and holders of Allowed Existing Interests, as applicable, under Article IV of the Prepackaged Plan shall be exempt, pursuant to section 1145 of the Bankruptcy Code, without further act or action by any Entity, from registration under (i) the Securities Act of 1933, as amended, and all rules and regulations promulgated thereunder and (ii) any state or local law requiring registration for the offer, issuance, or distribution of securities.

The New Common Stock, the New Secured Notes, and the New Warrants (and the New Common Stock issuable upon exercise thereof) shall be freely tradable by the recipients thereof, subject to (i) the provisions of section 1145(b)(1) of the Bankruptcy Code relating to the definition of an underwriter in section 2(a)(11) of the Securities Act of 1933, as amended, (ii) compliance with any rules and regulations of the SEC, if any, applicable at the time of any future transfer of such securities or instruments, (iii) the restrictions, if any, on the transferability of such securities and instruments, including, without limitation, any restrictions on the transferability under the terms of the Amended Organizational Documents and the New Warrants, and (iv) applicable regulatory approval.

 

  7. Officers and Boards of Directors

On the Effective Date, the initial directors of the New Board shall consist of seven (7) directors composed of (i) the Chief Executive Officer and (ii) six (6) directors designated by the Requisite Consenting

 

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Noteholders and the Requisite Consenting Tidewater Lenders subject to compliance with the Jones Act (such that Reorganized Tidewater Parent shall at all times be eligible and qualified to own and operate U.S.-flag vessels in the U.S. coastwise trade). Each such director shall serve from and after the Effective Date pursuant to the terms of the Amended Organizational Documents and the other constituent documents of the Reorganized Debtors. After the Effective Date, the board of directors for Reorganized Tidewater Parent will be elected by its stockholders in accordance with Delaware law and Reorganized Tidewater Parent’s Amended Organizational Documents. Pursuant to section 1129(a)(5) of the Bankruptcy Code, the Debtors will disclose in the Plan Supplement the identity and affiliations of any person proposed to serve on the initial board of directors of the Reorganized Debtors. Without any further action by either the stockholders of Reorganized Tidewater Parent or the members of the New Board, and pursuant to the Bankruptcy Court’s authority under Section 303 of the DGCL and other applicable Delaware and federal law, the appointment of directors provided by Section 5.7(a) of the Prepackaged Plan shall have the effect of unanimous stockholder action by written consent to elect directors in lieu of an annual meeting.

Except as otherwise provided in the Plan Supplement, the officers of the respective Reorganized Debtors immediately before the Effective Date, as applicable, shall serve as the initial officers of each of the respective Reorganized Debtors on and after the Effective Date and in accordance with Section 5.12 of the Prepackaged Plan and applicable non-bankruptcy law. After the Effective Date, officers of the Reorganized Debtors shall serve at the pleasure of their respective boards and the selection of officers of the Reorganized Debtors shall be as provided by their respective organizational documents.

Except to the extent that a member of the board of directors or a manager, as applicable, of a Debtor continues to serve as a director or manager of such Debtor on and after the Effective Date, the members of the board of directors or managers of each Debtor prior to the Effective Date, in their capacities as such, shall have no continuing obligations to the Reorganized Debtors on or after the Effective Date and each such director or manager shall be deemed to have resigned or shall otherwise cease to be a director or manager of the applicable Debtor on the Effective Date. Commencing on the Effective Date, each of the directors and managers of each of the Reorganized Debtors shall be elected and serve pursuant to the terms of the applicable organizational documents of such Reorganized Debtor and may be replaced or removed in accordance with such organizational documents.

 

  8. Restructuring Transactions

On or as soon as practicable after the Effective Date, but to the extent taken on or prior to the Effective Date, with the consent of the Tidewater Lender and Noteholder Group, such consent not to be unreasonably withheld, the Reorganized Debtors shall take such actions as may be or become necessary or appropriate to effect any transaction described in, approved by, contemplated by, or necessary to effectuate the Prepackaged Plan, including, without limitation, (i) the execution and delivery of appropriate agreements or other documents of merger, consolidation, restructuring, financing, conversion, disposition, transfer, dissolution, or liquidation containing terms that are consistent with the terms of the Prepackaged Plan and the Definitive Documents that satisfy the applicable requirements of applicable law and any other terms to which the applicable Entities may agree, (ii) the execution and delivery of appropriate instruments of transfer, assignment, assumption, or delegation of any asset, property, right, liability, debt, or obligation on terms consistent with the terms of the Prepackaged Plan and the Definitive Documents having other terms to which the applicable parties agree, (iii) the filing of appropriate certificates or articles of incorporation, reincorporation, merger, consolidation, conversion, or dissolution and the Amended Organizational Documents pursuant to applicable state law, (iv) the execution and delivery of the applicable documents included in the Restructuring Support Agreement or the Plan Supplement, as applicable, including but not limited to, the New Indenture, the New Creditor Warrant Agreement, the New Existing Warrant Agreement, and the Registration Rights Agreement; (v) the

 

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issuance of securities, all of which shall be authorized and approved in all respects in each case without further action being required under applicable law, regulation, order, or rule, and (vi) all other actions that the applicable Entities determine to be necessary or appropriate, including making filings or recordings that may be required by applicable law, subject, in each case, to the Amended Organizational Documents. For purposes of effectuating the Prepackaged Plan, none of the transactions contemplated in Section 5.8 of the Prepackaged Plan shall constitute a change of control under any agreement, contract, or document of the Debtors (other than with respect to the CIC Agreements, in which case the terms of the applicable CIC Waiver Letters shall govern).

Each officer, member of the board of directors, or manager of the Debtors is (and each officer, member of the board of directors, or manager of the Reorganized Debtors shall be) authorized and directed to issue, execute, deliver, file, or record such contracts, securities, instruments, releases, indentures, and other agreements or documents and take such actions as may be necessary or appropriate to effectuate, implement, and further evidence the terms and conditions of the Prepackaged Plan and the securities issued pursuant to the Prepackaged Plan in the name of and on behalf of the Reorganized Debtors, all of which shall be authorized and approved in all respects, in each case, without the need for any approvals, authorization, consents, or any further action required under applicable law, regulation, order, or rule (including, without limitation, any action by the stockholders or directors or managers of the Debtors or the Reorganized Debtors) except for those expressly required pursuant to the Prepackaged Plan.

All matters provided for in the Prepackaged Plan involving the corporate structure of the Debtors or Reorganized Debtors, or any corporate, limited liability company, or related action required by the Debtors or Reorganized Debtors in connection herewith shall be deemed to have occurred and shall be in effect, without any requirement of further action by the stockholders, members, directors, or managers of the Debtors or Reorganized Debtors, and with like effect as though such action had been taken unanimously by the stockholders, members, directors, or managers, as applicable, of the Debtors or Reorganized Debtors.

To the extent that any New Common Stock, New Creditor Warrants, or New Secured Notes are distributed pursuant to the Prepackaged Plan to a holder of an Allowed Claim against a Debtor other than Tidewater Parent, such New Common Stock, New Creditor Warrant, or New Secured Notes shall be treated as contributed by Reorganized Tidewater Parent directly or indirectly to such Debtor and then distributed on behalf of such Debtor in accordance with the Prepackaged Plan.

 

  9. Cancellation of Liens

Upon the payment or other satisfaction of an Allowed Secured Claim, the holder of such Allowed Secured Claim shall deliver to the Debtors or Reorganized Debtors (as applicable) any collateral or other property of the Debtors held by such holder, and any termination statements, instruments of satisfactions, or releases of all security interests with respect to its Allowed Secured Claim that may be required in order to terminate any related financing statements, mortgages, mechanic’s liens, or lis pendens, or other similar interests or documents.

 

  10. New Indenture and New Secured Notes

 

  (a) New Indenture

On the Effective Date, Reorganized Tidewater Parent, the other Reorganized Debtors that are guarantors, Mare Alta do Brasil Navegacao Ltda. and Tidewater Investment Cooperatief U.A. (the “Additional Guarantors”), and the New Indenture Trustee shall enter into the New Indenture substantially in the form included in the Plan Supplement. The Debtors, the Reorganized Debtors, and the Additional Guarantors

 

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shall be authorized to execute, deliver, and enter into and perform under the New Indenture without the need for any further corporate or limited liability company action and without further action by the holders of Claims or Interests.

The Confirmation Order shall include approval of the New Indenture (including the transactions contemplated thereby, including all actions to be taken, all undertakings to be made, and obligations to be incurred by the Reorganized Debtors in connection therewith, including the payment of all fees, indemnities, and expenses provided for therein), the granting of any Liens and security interests in favor of the lenders under the New Indenture securing such obligations, and authorization for the Reorganized Debtors to enter into and execute the New Indenture and such other documents as may be required to effectuate the treatment afforded to the lenders under the New Indenture, including any and all documents that serve to evidence and secure the Reorganized Debtors’ respective obligations under the New Indenture and any Liens and security interests in favor of the lenders under the New Indenture which Liens or security interests secure such obligations.

On the Effective Date, (i) the Reorganized Debtors and the Additional Guarantors are authorized to execute and deliver the New Indenture and any and all security agreements, guarantees, mortgages, or extensions of mortgages, certificates, control agreements, insurance documents, opinions, and other instruments, agreements, assignments, and documents contemplated or required by the New Indenture, including any and all such documents that serve to evidence and secure the Reorganized Debtors’ respective obligations under the New Indenture and any Liens and security interests in favor of the lenders under the New Indenture securing such obligations, and perform their obligations thereunder including the payment or reimbursement of any fees, expenses, losses, damages, or indemnities, and (ii) subject to the occurrence of the Effective Date, the New Indenture as and when executed and delivered in accordance with the terms of the New Indenture, any and all security agreements, guarantees, mortgages or extensions of mortgages, certificates, control agreements, insurance documents, opinions, and other instruments, agreements, assignments, and documents contemplated or required by the New Indenture, including any and all such documents that serve to evidence and secure the Reorganized Debtors’ and the Additional Guarantors’ respective obligations under the New Indenture and any Liens and security interests in favor of the lenders under the New Indenture securing such obligations, shall constitute the legal, valid, and binding obligations of the Reorganized Debtors and the Additional Guarantors and be enforceable in accordance with their respective terms.

 

  (b) New Secured Notes12

On the Effective Date, each holder of a Credit Agreement Claim, Notes Claim, or Sale Leaseback Claim shall receive its Pro Rata share of the New Secured Notes. The New Secured Notes shall be issued pursuant to the terms of the New Indenture, and shall bear interest at a rate of eight percent (8%) with no fixed amortization. Interest on the New Secured Notes shall be payable on a quarterly basis. The New Secured Notes shall mature five (5) years after the issuance thereof.

The New Secured Notes shall be issued by Tidewater Parent and guaranteed by all existing and future direct and indirect wholly-owned domestic subsidiaries of Reorganized Tidewater Parent. As security for the Reorganized Debtors’ obligations under the New Secured Notes, the New Indenture shall provide for, among other things, a grant, pledge, or assignment, as applicable, of:

(a) all assets of domestic subsidiaries (other than real estate and leasehold interests), including cash;

 

12  Capitalized terms used but not otherwise defined in this Article VI.D.10(b) shall have the meaning ascribed to such terms in the New Indenture.

 

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(b) one hundred percent (100%) of the stock of the Additional Guarantors;

(c) sixty-six percent (66%) of stock of certain first-tier foreign subsidiaries;

(d) liens on all intercompany indebtedness and accounts receivable owed to the Issuer or any Guarantor under the New Indenture;

(e) with certain exceptions, first preferred ship mortgages on vessels (the “Mortgaged Vessels”) owned by the Issuer or any Guarantor under the New Indenture;

(f) Insurance Assignments with respect to the Mortgaged Vessels; and

(g) Earnings Assignments with respect to the Mortgaged Vessels and any vessel owned by a third party and operated by the Issuer or any Guarantor under the New Indenture.

 

  11. Registration Rights Agreement

No later than the Effective Date, the Debtor or the Reorganized Debtor, as applicable, and the Registration Rights Parties will enter into the Registration Rights Agreement. The Registration Rights Agreement shall provide the Registration Rights Parties with commercially reasonable demand and piggyback registration rights.

 

  12. Employee Matters

On the Effective Date, the Employment Arrangements shall be deemed to be, and shall be treated as executory contracts and the Reorganized Debtors shall be deemed to have assumed all such Employment Arrangements unless rejected pursuant to Article VIII of the Prepackaged Plan or by agreement of the Debtors and each affected employee. The consummation of the Prepackaged Plan shall not be treated as a change in control or change of control or other similar transaction under any Employment Arrangements (other than with respect to the CIC Agreements, in which case the terms of the applicable CIC Waiver Letters shall govern).

Under the Management Incentive Plan, under which eight percent (8%) of the sum of the total number of (a) shares of New Common Stock to be outstanding as of the Effective Date under clause (v) of Section 4.3(c)(iii) of the Prepackaged Plan and clause (i) of Section 4.7(b) of the Prepackaged Plan plus shares of New Common Stock issuable upon exercise of the New Creditor Warrants issued under clause (w) of Section 4.3(c)(iii) of the Prepackaged Plan as of the Effective Date plus any shares of New Common Stock issuable upon exercise of the New Creditor Warrants reserved for issuance but not issued as of the Effective Date with respect to Claims which are Disputed Claims on the Effective Date by virtue of the operation of Section 6.9(a) of the Prepackaged Plan plus (b) shares of New Common Stock issuable upon exercise of the New Existing Equity Warrants and pursuant to the Management Incentive Plan, shall be reserved for issuance as awards thereunder.

Notwithstanding anything herein to the contrary, any Tidewater Parent Interests issued and outstanding as of immediately prior to the Petition Date pursuant to a Benefit Plan that have not been subsequently forfeited (or agreed to be forfeited) by the holder thereof (either voluntarily or by operation of the terms of such Benefit Plan, with effect as of any time on or prior to the Effective Date) shall be deemed to vest immediately prior to the Distribution Record Date.

 

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  13. Nonconsensual Confirmation

The Debtors intend to undertake to have the Bankruptcy Court confirm the Prepackaged Plan under section 1129(b) of the Bankruptcy Code as to any Classes that reject or are deemed to reject the Prepackaged Plan.

 

  14. Closing of Chapter 11 Cases

After an Estate has been fully administered, the Reorganized Debtors shall promptly seek authority from the Bankruptcy Court to close the applicable Chapter 11 Case(s) in accordance with the Bankruptcy Code and Bankruptcy Rules.

 

  15. Notice of Effective Date

On the Effective Date, the Debtors shall file a notice of the occurrence of the Effective Date with the Bankruptcy Court.

 

  16. Separability

Notwithstanding the combination of separate plans of reorganization for the Debtors set forth in the Prepackaged Plan for purposes of economy and efficiency, the Prepackaged Plan constitutes a separate chapter 11 plan for each Debtor. Accordingly, if the Bankruptcy Court does not confirm the Prepackaged Plan with respect to one or more Debtors, it may still confirm the Prepackaged Plan with respect to any other Debtor that satisfies the confirmation requirements of section 1129 of the Bankruptcy Code with the consent of the Requisite Consenting Tidewater Lenders and the Requisite Consenting Noteholders, which consent shall not be unreasonably withheld.

 

  E. Distributions

 

  1. Distributions Generally

One or more Disbursing Agents shall make all distributions under the Prepackaged Plan to the holders or the Permitted Designees, as applicable, of Allowed Claims in accordance with the terms of the Prepackaged Plan. Such distributions shall be made to holders or Permitted Designees, as applicable, of Allowed Claims on behalf of the respective Debtors to which such Allowed Claims relate.

 

  2. Distribution Record Date

As of the close of business on the Distribution Record Date, the various transfer registers for each of the Classes of Claims or Interests as maintained by the Debtors or their respective agents, shall be deemed closed, and there shall be no further changes in the record holders or the Permitted Designees of any of the Claims or Interests. The Debtors or the Reorganized Debtors shall have no obligation to recognize any transfer or designation of the Claims or Interests occurring after the close of business on the Distribution Record Date. In addition, with respect to payment of any Cure amounts or Assumption Disputes, neither the Debtors nor the Disbursing Agent shall have any obligation to recognize or deal with any party other than the non-Debtor party to the applicable executory contract or unexpired lease as of the close of business on the Distribution Record Date, even if such non-Debtor party has sold, assigned, or otherwise transferred its Claim for a Cure amount.

 

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  3. Date of Distributions

Except as otherwise provided in the Prepackaged Plan, any distributions and deliveries to be made under the Prepackaged Plan shall be made on the Effective Date or as otherwise determined in accordance with the Prepackaged Plan, including, without limitation, the treatment provisions of Article IV of the Prepackaged Plan, or as soon as practicable thereafter; provided, that the Reorganized Debtors may implement periodic distribution dates to the extent they reasonably determine them to be appropriate, and if on or prior to the Effective Date, in consultation with the Tidewater Lender and Noteholder Group.

 

  4. Disbursing Agent

All distributions under the Prepackaged Plan shall be made by Reorganized Tidewater Parent (or such other Entity designated by Reorganized Tidewater Parent), as Disbursing Agent, on or after the Effective Date or as otherwise provided in the Prepackaged Plan solely to Permitted Designees as provided in Section 4.3(c) of the Prepackaged Plan or to the record holders of Claims and Interests as of the Distribution Record Date who are entitled to receive distributions under the Prepackaged Plan. A Disbursing Agent shall not be required to give any bond or surety or other security for the performance of its duties. The Reorganized Debtors shall use commercially reasonable efforts to provide the Disbursing Agent (if other than the Reorganized Debtors) with the amounts of Claims and the identities and addresses of holders of Claims and Interests as of the Distribution Record Date, in each case, as set forth in the Debtors’ or Reorganized Debtors’ books and records. The Reorganized Debtors shall cooperate in good faith with the applicable Disbursing Agent (if other than the Reorganized Debtors) to comply with the reporting and withholding requirements outlined in Section 6.20 of the Prepackaged Plan.

 

  5. Rights and Powers of Disbursing Agent

From and after the Effective Date, the Disbursing Agent, solely in its capacity as Disbursing Agent, shall be exculpated by all Entities, including, without limitation, holders of Claims against and Interests in the Debtors and other parties in interest, from any and all Claims, Causes of Action, and other assertions of liability arising out of the discharge of the powers and duties conferred upon such Disbursing Agent by the Prepackaged Plan or any order of the Bankruptcy Court entered pursuant to or in furtherance of the Prepackaged Plan, or applicable law, except for actions or omissions to act arising out of the gross negligence or willful misconduct, fraud, malpractice, criminal conduct, or ultra vires acts of such Disbursing Agent. No holder of a Claim or Interest or other party in interest shall have or pursue any claim or Cause of Action against the Disbursing Agent, solely in its capacity as Disbursing Agent, for making payments in accordance with the Prepackaged Plan or for implementing provisions of the Prepackaged Plan, except for actions or omissions to act arising out of the gross negligence or willful misconduct, fraud, malpractice, criminal conduct, or ultra vires acts of such Disbursing Agent.

A Disbursing Agent shall be empowered to (i) effect all actions and execute all agreements, instruments, and other documents necessary to perform its duties under the Prepackaged Plan, (ii) make all distributions contemplated hereby, (iii) employ professionals to represent it with respect to its responsibilities, and (iv) exercise such other powers as may be vested in the Disbursing Agent by order of the Bankruptcy Court, pursuant to the Prepackaged Plan, or as deemed by the Disbursing Agent to be necessary and proper to implement the provisions of the Prepackaged Plan.

 

  6. Expenses of Disbursing Agent

To the extent the Disbursing Agent is an Entity other than a Debtor or Reorganized Debtor, except as otherwise ordered by the Bankruptcy Court and subject to the written agreement of the Reorganized Debtors, the amount of any reasonable fees and expenses incurred by the Disbursing Agent on or after the

 

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Effective Date (including taxes) and any reasonable compensation and expense reimbursement Claims (including for reasonable attorneys’ and other professional fees and expenses) made by the Disbursing Agent shall be paid in Cash by the Reorganized Debtors in the ordinary course of business.

 

  7. No Postpetition Interest on Claims

Except to the extent that payments to Allowed Other General Unsecured Claims are not paid pursuant to Section 4.4 of the Prepackaged Plan in the ordinary course or as otherwise provided in the Prepackaged Plan, the Confirmation Order, or another order of the Bankruptcy Court or required by the Bankruptcy Code, interest shall not accrue or be paid on any Claims on or after the Petition Date; provided, however, if interest is payable pursuant to the preceding sentence, interest shall accrue at the federal judgment rate pursuant to 28 U.S.C. § 1961 on a non-compounded basis from the date the obligation underlying the Claim becomes due and is not timely paid through the date of payment.

 

  8. Delivery of Distributions

Subject to Bankruptcy Rule 9010, all distributions to any holder or Permitted Designee, as applicable, of an Allowed Claim or Interest shall be made to a Disbursing Agent, who shall transmit such distribution to the applicable holders or Permitted Designees of Allowed Claims or Interests on behalf of the respective Debtor. In the event that any distribution to any holder or Permitted Designee is returned as undeliverable, no further distributions shall be made to such holder or such Permitted Designee unless and until such Disbursing Agent is notified in writing of such holder’s or Permitted Designee’s, as applicable, then-current address, at which time all currently-due, missed distributions shall be made to such holder as soon as reasonably practicable thereafter without interest. Nothing herein shall require the Disbursing Agent to attempt to locate holders or Permitted Designees, as applicable, of undeliverable distributions and, if located, assist such holders or Permitted Designees, as applicable, in complying with Section 6.20 of the Prepackaged Plan.

Distributions of the New Common Stock, the New Warrants, and the New Secured Notes on account of Allowed General Unsecured Claims shall be made through the facilities of DTC in accordance with DTC’s customary practices. All New Common Stock, New Warrants, and New Secured Notes to be distributed pursuant to the Prepackaged Plan shall be issued in the names of such holders, their nominees of record, or their Permitted Designees as of the Distribution Record Date in accordance with DTC’s book-entry exchange procedures; provided, that such New Common Stock, New Warrants, and New Secured Notes are permitted to be held through DTC’s book-entry system; provided, further, that to the extent that the New Common Stock, New Warrants, or New Secured Notes are not eligible for distribution in accordance with DTC’s customary practices, Reorganized Tidewater Parent will, and if on or prior to the Effective Date, in consultation with the Tidewater Lender and Noteholder Group, take such reasonable actions as may be required to cause distributions of the New Common Stock, the New Warrants, and the New Secured Notes under the Prepackaged Plan. No distributions will be made other than through DTC if the New Common Stock, the New Warrants, and the New Secured Notes are permitted to be held through DTC’s book entry system. Any distribution that otherwise would be made to any holder eligible to receive a distribution who does not own or hold an account eligible to receive a distribution through DTC on a relevant distribution date shall be forfeited.

 

  9. Distributions to Class 3 General Unsecured Claims

In addition to the Disputed Claims Reserve provided for in Section 7.5 of the Prepackaged Plan, there shall be withheld from the Cash and the New Creditor Warrants (which withheld New Creditor Warrants shall not be issued by Reorganized Tidewater Parent and distributed on behalf of the respective Reorganized Debtor until such time as such New Creditor Warrants are to be distributed pursuant to

 

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Section 6.9 of the Prepackaged Plan) to be distributed to holders of Allowed General Unsecured Claims on the Class 3 Initial Distribution Date, an amount of Cash and New Creditor Warrants that would be distributable to Disputed Sale Leaseback Claims pursuant to Section 4.3 of the Prepackaged Plan had such Claims been Allowed in the amount to be reserved on account of such Claims, as set forth in the Rejection Order, on the Effective Date.

At such time as all Disputed Sale Leaseback Claims have been Allowed or Disallowed, any remaining withheld New Creditor Warrants shall be distributed as soon as reasonably practicable to all holders or Permitted Designee(s), as applicable, of Allowed General Unsecured Claims in accordance with Section 4.3 of the Prepackaged Plan based on their Pro Rata share as of the Class 3 Final Distribution Date. Distributions of the New Secured Notes from the Disputed Claims Reserve and any remaining withheld Cash retained by the Reorganized Debtors with respect to the Sale Leaseback Claims, as described in Section 6.9(a) of the Prepackaged Plan, shall be governed by Section 7.5 of the Prepackaged Plan.

If at any time or from time to time after the Effective Date and prior to the date that all Sale Leaseback Claims have been Allowed or Disallowed, the number of outstanding shares of New Common Stock is (i) increased by a share dividend or share distribution to all holders of New Common Stock, in each case payable in shares of New Common Stock, or by a subdivision, (ii) reduced by a combination of shares, or (iii) otherwise increased or decreased by a reclassification of shares of New Common Stock (or any event similar in effect to any of the foregoing), then Tidewater Parent shall make such adjustment in the determination of the amount of New Creditor Warrants to be distributed pursuant to Section 6.9 of the Prepackaged Plan as it determines in good faith to be equitable in the circumstance (such adjustment to be equitably made with reference to adjustments made to outstanding New Creditor Warrants under the terms of the New Creditor Warrant Agreement.)

 

  10. Distributions After Effective Date

Distributions made after the Effective Date to holders of Disputed Claims that are not Allowed Claims as of the Effective Date but which later become Allowed Claims shall be deemed to have been made on the Effective Date.

 

  11. Unclaimed Property

Undeliverable distributions or unclaimed distributions shall remain in the possession of the Debtors until such time as a distribution becomes deliverable or holder or Permitted Designee, as applicable, accepts distribution, or such distribution reverts back to the Debtors or Reorganized Debtors, as applicable, and shall not be supplemented with any interest, dividends, or other accruals of any kind. Such distributions shall be deemed unclaimed property under section 347(b) of the Bankruptcy Code at the expiration of one hundred and eighty (180) days from the date of distribution. After such date all unclaimed property or interest in property shall revert to the Reorganized Debtors, and the Claim of any other holder to such property or interest in property shall be discharged and forever barred.

 

  12. Time Bar to Cash Payments

Checks issued by the Disbursing Agent in respect of Allowed Claims shall be null and void if not negotiated within one hundred and eighty (180) days after the date of issuance thereof. Thereafter, the amount represented by such voided check shall irrevocably revert to the Reorganized Debtors, and any Claim in respect of such voided check shall be discharged and forever barred, notwithstanding any federal or state escheat laws to the contrary. Requests for re-issuance of any check shall be made to the Disbursing Agent by the holder or the Permitted Designee(s), as applicable, of the Allowed Claim to whom such check was originally issued.

 

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  13. Manner of Payment under Prepackaged Plan

Except as otherwise specifically provided in the Prepackaged Plan, at the option of the Debtors or the Reorganized Debtors, as applicable, any Cash payment to be made under the Prepackaged Plan may be made by a check or wire transfer or as otherwise required or provided in applicable agreements or customary practices of the Debtors; provided, however, that any Cash payments made by check to a holder of an Allowed General Unsecured Claim must be consented to by the applicable holder, such consent not to be unreasonably withheld.

 

  14. Satisfaction of Claims

Except as otherwise specifically provided in the Prepackaged Plan, any distributions and deliveries to be made on account of Allowed Claims under the Prepackaged Plan shall be in complete and final satisfaction, settlement, and discharge of and exchange for such Allowed Claims.

 

  15. Fractional Stock

If any distributions of New Common Stock or New Warrants pursuant to the Prepackaged Plan would result in the issuance of a fractional share of New Common Stock, then the number of shares of New Common Stock or New Warrants to be issued in respect of such distribution shall be calculated to one decimal place and rounded up or down to the closest whole share (with a half share or greater rounded up and less than a half share rounded down). The total number of shares of New Common Stock or New Warrants to be distributed in connection with the Prepackaged Plan shall be adjusted as necessary to account for the rounding provided for in Section 6.15 of the Prepackaged Plan. The New Secured Notes shall be issued in denominations of One Dollar ($1) or any integral multiples thereof and any other amounts shall be rounded down. No consideration shall be provided in lieu of fractional shares or notes that are rounded down. Neither the Reorganized Debtors nor the Disbursing Agent shall have any obligation to make a distribution that is less than one (1) share of New Common Stock or one (1) New Warrant. New Common Stock and New Warrants that are not distributed in accordance with Section 6.15 of the Prepackaged Plan shall be returned to, and ownership thereof shall vest in, Reorganized Tidewater Parent.

 

  16. Minimum Cash Distributions

The Disbursing Agent shall not be required to make any distribution of Cash less than One Hundred Dollars ($100) to any holder or Permitted Designee(s), as applicable, of an Allowed Claim; provided, however, that if any distribution is not made pursuant to Section 6.16 of the Prepackaged Plan, such distribution shall be added to any subsequent distribution to be made on behalf of the holder’s Allowed Claim.

 

  17. Setoffs and Recoupments

The Debtors and the Reorganized Debtors, as applicable, or such entity’s designee (including, without limitation, the Disbursing Agent), may, but shall not be required to, set off or recoup against any Claim, and any distribution to be made on account of such Claim, any and all claims, rights, and Causes of Action of any nature whatsoever that the Debtors or the Reorganized Debtors may have against the holder of such Claim pursuant to the Bankruptcy Code or applicable nonbankruptcy law; provided, however, that neither the failure to do so nor the allowance of any Claim under the Prepackaged Plan shall constitute a waiver or release by a Debtor or Reorganized Debtor or its successor of any claims, rights, or Causes of Action that a Debtor or Reorganized Debtor or its successor or assign may possess against the holder of such Claim.

 

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  18. Allocation of Distributions Between Principal and Interest

Except as otherwise required by law (as reasonably determined by the Reorganized Debtors), distributions with respect to an Allowed Claim shall be allocated first to the principal portion of such Allowed Claim (as determined for U.S. federal income tax purposes) and, thereafter, to the remaining portion of such Allowed Claim, if any.

 

  19. No Distribution in Excess of Amount of Allowed Claim

Notwithstanding anything herein or in the Prepackaged Plan to the contrary, no holder or Permitted Designee, as applicable, of an Allowed Claim shall receive, on account of such Allowed Claim, distributions in excess of the Allowed amount of such Claim plus any postpetition interest on such Claim, to the extent such interest is permitted by Section 6.7 of the Prepackaged Plan.

 

  20. Withholding and Reporting Requirements

 

  (a) Withholding Rights

In connection with the Prepackaged Plan, any party issuing any instrument or making any distribution described in the Prepackaged Plan shall comply with all applicable withholding and reporting requirements imposed by any federal, state, or local taxing authority, and all distributions pursuant to the Prepackaged Plan and all related agreements shall be subject to any such withholding or reporting requirements. In the case of a non-Cash distribution that is subject to withholding, the distributing party may withhold an appropriate portion of such distributed property and either (i) sell such withheld property to generate Cash necessary to pay over the withholding tax (or reimburse the distributing party for any advance payment of the withholding tax), or (ii) pay the withholding tax using its own funds and retain such withheld property. Any amounts withheld pursuant to the preceding sentence shall be deemed to have been distributed to and received by the applicable recipient for all purposes of the Prepackaged Plan. Notwithstanding the foregoing, each holder or Permitted Designee, as applicable, of an Allowed Claim or any other Entity that receives a distribution pursuant to the Prepackaged Plan shall have responsibility for any taxes imposed by any governmental unit, including, without limitation, income, withholding, and other taxes, on account of such distribution. In the event any party issues any instrument or makes any non-Cash distribution pursuant to the Prepackaged Plan that is subject to withholding tax and such issuing or distributing party has not sold such withheld property to generate Cash to pay the withholding tax or paid the withholding tax using its own funds and retains such withheld property as described above, such issuing or distributing party has the right, but not the obligation, to not make a distribution until such holder or Permitted Designee, as applicable, has made arrangements reasonably satisfactory to such issuing or disbursing party for payment to such issuing or disbursing party to satisfy any such tax obligations.

 

  (b) Forms

Any party entitled to receive any property as an issuance or distribution under the Prepackaged Plan shall, upon request, deliver to the Disbursing Agent or such other Entity designated by the Reorganized Debtors or the Disbursing Agent (which Entity shall subsequently deliver to the Disbursing Agent any applicable Internal Revenue Service (“IRS”) Form W-8 or Form W-9 received) an appropriate Form W-9 or (if the payee is a foreign Entity) Form W-8 and any other forms or documents reasonably requested by any Reorganized Debtor to reduce or eliminate any withholding required by any federal, state, or local taxing authority. If such request is made by the Reorganized Debtors, the Disbursing Agent, or such other Entity designated by the Reorganized Debtors or Disbursing Agent and the holder or Permitted Designee, as applicable, fails to comply before the date that is three hundred sixty-five (365) days after the request is made, the amount of such distribution shall irrevocably revert to the applicable Reorganized Debtor and any Claim in respect of such distribution shall be discharged and forever barred from assertion against such Reorganized Debtor or its respective property.

 

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  21. Hart-Scott-Rodino Antitrust Improvements Act

Any New Common Stock to be distributed under the Prepackaged Plan to an Entity required to file a premerger notification and report form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, to the extent applicable, shall not be distributed until the notification and waiting periods applicable under such Act to such Entity have expired or been terminated.

 

  F. Procedures for Resolving Claims

 

  1. Disputed Claims Process

Notwithstanding section 502(a) of the Bankruptcy Code, holders of Other General Unsecured Claims need not file proofs of Claim with the Bankruptcy Court, and the Reorganized Debtors and the holders of Claims shall determine, adjudicate, and resolve any disputes over the validity and amounts of such Claims in the ordinary course of business; provided, that (unless expressly waived pursuant to the Prepackaged Plan) the Allowed amount of such Claims shall be subject to and shall not exceed the limitations under or maximum amounts permitted by the Bankruptcy Code, including sections 502 or 503 of the Bankruptcy Code, to the extent applicable. If a holder of a Claim elects to file a proof of claim with the Bankruptcy Court, such holder shall be deemed to have consented to the jurisdiction of the Bankruptcy Court for all purposes with respect to the Claim, and the Bankruptcy Court shall retain nonexclusive jurisdiction over all such Claims, which shall be resolved on a case-by-case basis through settlements, Claim objections (or, if necessary, through adversary proceedings), adjudication in a forum other than the Bankruptcy Court, or by withdrawal of the Claims by the holders of such Claims. Except for proofs of Claim that have been objected to by the Debtors before the Effective Date, upon the Effective Date, any filed Claim, regardless of the time of filing, and including Claims filed after the Effective Date, shall be deemed withdrawn without further notice to, action, order, or approval of the Bankruptcy Court or any other Entity. To the extent not otherwise provided in the Prepackaged Plan, the deemed withdrawal of a proof of claim is without prejudice to such claimant’s rights under Section 7.1 of the Prepackaged Plan to assert its Claims in any forum as though the Debtors’ Chapter 11 Cases had not been commenced. From and after the Effective Date, the Reorganized Debtors may satisfy, dispute, settle, or otherwise compromise any Claim, including a Claim in connection with or related to the assumption or rejection of an executory contract or unexpired lease, without approval of the Bankruptcy Court.

 

  2. Estimation of Claims

The Debtors or the Reorganized Debtors, as applicable, may at any time request that the Bankruptcy Court estimate any contingent, unliquidated, or Disputed Claim pursuant to section 502(c) of the Bankruptcy Code regardless of whether the Debtors previously objected to such Claim or whether the Bankruptcy Court has ruled on any such objection, and the Bankruptcy Court shall retain jurisdiction to estimate any Claim at any time during litigation concerning any objection to any Claim, including, without limitation, during the pendency of any appeal relating to any such objection. In the event that the Bankruptcy Court estimates any contingent, unliquidated, or Disputed Claim, the amount so estimated shall constitute either the Allowed amount of such Claim or a maximum limitation on such Claim, as determined by the Bankruptcy Court. If the estimated amount constitutes a maximum limitation on the amount of such Claim, the Debtors or the Reorganized Debtors may pursue supplementary proceedings to object to the allowance of such Claim.

 

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  3. No Distributions Pending Allowance

If an objection, motion to estimate, or other challenge to a Claim is filed, no payment or distribution provided under the Prepackaged Plan shall be made on account of such Claim unless and until (and only to the extent that) such Claim becomes an Allowed Claim.

 

  4. Distributions After Allowance

To the extent that a Disputed Claim ultimately becomes an Allowed Claim, distributions (if any) shall be made to the holder of such Allowed Claim in accordance with Section 7.5 and other provisions of the Prepackaged Plan, including the treatment provisions provided in Article IV of the Prepackaged Plan and Section 6.3 of the Prepackaged Plan. Holders of Disputed Claims that ultimately become Allowed Claims shall not be entitled to payment of interest (except as provided in Section 7.5 of the Prepackaged Plan with respect to interest accruing in connection with the New Secured Notes held in the Disputed Claims Reserve) unless otherwise provided in the Prepackaged Plan, in a Final Order, or required under applicable bankruptcy law.

 

  5. Disputed Claims Reserve

There shall be withheld from the New Secured Notes to be distributed to holders of Allowed General Unsecured Claims an amount of New Secured Notes that would be distributable to holders of Disputed Sale Leaseback Claims had such Claims been Allowed in the amount to be reserved on account of such Claims, as set forth in the Rejection Order, on the Effective Date, together with all earnings thereon (net of any expenses relating thereto, including any taxes imposed thereon or otherwise payable by the Disputed Claims Reserve). The Disbursing Agent shall hold in the Disputed Claims Reserve such New Secured Notes and all payments and other distributions made on account of, as well as any obligations arising from, property held in the Disputed Claims Reserve, to the extent that such property continues to be so held at the time such distributions are made or such obligations arise, and such payments or other distributions shall be held for the benefit of (a) holders of Disputed Sale Leaseback Claims, and (b) other parties entitled thereto hereunder.

On the Petition Date, the Debtors will file the Rejection Motion, seeking entry of interim and final orders (a) authorizing the rejection of the Sale Leaseback Agreements, (b) temporarily allowing the Disputed Sale Leaseback Claims only for (i) voting purposes and (ii) purposes of establishing the Disputed Claims Reserve under Section 7.5 of the Prepackaged Plan, (c) setting a briefing schedule related thereto, (d) objecting to the final allowance of the Disputed Sale Leaseback Claims, and (e) granting related relief. The amount of the Disputed Claims Reserve shall be established by the Bankruptcy Court pursuant to the Rejection Order.

Subject to definitive guidance from the IRS or a court of competent jurisdiction to the contrary, or the receipt of a determination by the IRS, the Disbursing Agent shall (i) treat any assets held in the Disputed Claims Reserve allocable (including retained on account of) Disputed Sale Leaseback Claims as a “disputed ownership fund” governed by Treasury Regulation section 1.468B-9, and (ii) to the extent permitted by applicable law, report consistently with the foregoing for state and local income tax purposes. All parties (including, without limitation, the Debtors, Reorganized Tidewater Parent, the Disbursing Agent, and the holders of General Unsecured Claims) shall report for tax purposes consistently with such treatment. The Disbursing Agent shall be responsible for payment, out of the assets of the Disputed Claims Reserve with respect to each Disputed Sale Leaseback Claim, of any taxes imposed on the Disputed Claims Reserve or its assets attributable to each Disputed Sale Leaseback Claim. In the event, and to the extent, any Cash in the Disputed Claims Reserve allocable to a particular Disputed Sale Leaseback Claim is insufficient to pay taxes attributable to any taxable income arising from the

 

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assets of the Disputed Claims Reserve allocable to such Claim (including any income that may arise upon the distribution of such assets from the Disputed Claims Reserve), the Disbursing Agent may satisfy such taxes (x) out of the Cash retained by the Reorganized Debtors with respect to such Claim, or (y) from the sale of a portion of the assets of the Disputed Claims Reserve allocable to such Claim.

To the extent that a Sale Leaseback Claim is Disputed on the Effective Date and later becomes an Allowed Claim, the Disbursing Agent shall distribute to the holder thereof on the next Interim Distribution Date, the distribution, if any, of (i) the New Secured Notes out of the Disputed Claims Reserve to which such holder is entitled under the Prepackaged Plan, together with an amount in Cash equal to the interest actually paid prior to such Interim Distribution Date on the principal amount of New Secured Notes so distributed (net of any expenses relating thereto, including any taxes imposed thereon or otherwise payable by the Disputed Claims Reserve), based on such holder’s Pro Rata share, as of the Effective Date, and (ii) such holder’s Pro Rata share, as of the Effective Date, of Cash (net of any allocable expenses relating thereto, including any allocable expenses of the Disputed Claims Reserve paid out of such Cash) and New Creditor Warrants withheld in accordance with Section 4.3 and Section 6.9 of the Prepackaged Plan.

At such time as all Disputed Sale Leaseback Claims have been resolved, any remaining withheld New Secured Notes and Cash in the Disputed Claims Reserve and any remaining Cash retained by the Reorganized Debtor with respect to Disputed Sale Leaseback Claims shall be distributed as soon as practicable: (i) first, to all holders of Sale Leaseback Claims that became Allowed Claims after the Effective Date to the extent of any reduction in the amount of Cash and/or New Secured Notes distributed to such holders on account of any expenses of the Disputed Claims Reserve (including any taxes imposed upon or payable by the reserve), and as among such holders, in proportion to each such holder’s relative portion of the total of reductions, and (ii) thereafter, together with any remaining New Creditor Warrants retained by the Reorganized Debtor with respect to the Disputed Sale Leaseback Claims, to all holders of Allowed General Unsecured Claims in accordance with Section 4.3 of the Prepackaged Plan.

 

  6. Claim Resolution Procedures Cumulative

All of the objection, estimation, and resolution procedures in the Prepackaged Plan are intended to be cumulative and not exclusive of one another. Claims may be estimated and subsequently settled, compromised, withdrawn, or resolved in accordance with the Prepackaged Plan without further notice or Bankruptcy Court approval.

 

  G. Executory Contracts and Unexpired Leases

 

  1. General Treatment

As of and subject to the occurrence of the Effective Date and the payment of any applicable Cure amounts, all executory contracts and unexpired leases to which any of the Debtors are a party, and which have not expired by their own terms on or prior to the Confirmation Date, including the Employment Arrangements, shall be deemed assumed except for any executory contract or unexpired lease that (a) previously has been assumed or rejected pursuant to a Final Order of the Bankruptcy Court, (b) is the subject of a separate motion filed by the Debtors under section 365 of the Bankruptcy Code before the Confirmation Date for assumption or rejection, or (c) is the subject of a pending Assumption Dispute. Subject to the occurrence of the Effective Date, entry of the Confirmation Order by the Bankruptcy Court shall constitute approval of the assumptions provided for in the Prepackaged Plan pursuant to sections 365(a) and 1123 of the Bankruptcy Code. Each executory contract and unexpired lease assumed pursuant to the Prepackaged Plan shall vest in and be fully enforceable by the applicable Reorganized Debtor in accordance with its terms, except as modified by the provisions of the Prepackaged Plan, and any order of the Bankruptcy Court authorizing and providing for its assumption or applicable law.

 

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  2. Determination of Assumption Disputes and Deemed Consent

Following the Petition Date, the Debtors shall serve a notice on parties to executory contracts and unexpired leases to be assumed reflecting the Debtors’ intention to assume the contract or unexpired lease in connection with the Prepackaged Plan and setting forth the proposed Cure amount (if any). If the counterparty believes any Cure amount is due by the Debtors in connection with the assumption, it shall assert such Cure amount against the Debtors in the ordinary course of business.

Cure amounts shall be paid by the Debtors or Reorganized Debtors in the ordinary course, subject to all defenses and disputes the Debtors or the Reorganized Debtors may have with respect to such executory contracts or unexpired leases, which the Debtors or Reorganized Debtors may assert in the ordinary course. If there is an Assumption Dispute pertaining to assumption of an executory contract or unexpired lease, such dispute shall be heard by the Bankruptcy Court prior to such assumption being effective; provided, however, the Debtors or the Reorganized Debtors, as applicable, may settle any dispute regarding the Cure amount or the nature thereof without any further notice to any party or any action, order, or approval of the Bankruptcy Court. To the extent the Assumption Dispute is resolved or determined by a Final Order unfavorably to the applicable Debtor or Reorganized Debtor, as applicable, such Debtor or Reorganized Debtor, as applicable, shall have thirty (30) days following entry of such Final Order to file a motion to reject such contract or lease.

Any counterparty to an executory contract or unexpired lease that fails to object timely to the notice of the proposed assumption of such contract or lease within ten (10) days of the service thereof shall be deemed to have assented to the assumption of the applicable contract or lease notwithstanding any provision thereof that purports to (i) prohibit, restrict, or condition the transfer or assignment of such contract or lease, (ii) terminate or modify, or permit the termination or modification of, a contract or lease as a result of any direct or indirect transfer or assignment of the rights of the Debtors under such contract or lease or a change, if any, in the ownership or control to the extent contemplated by the Prepackaged Plan, (iii) increase, accelerate, or otherwise alter any obligations or liabilities of the Debtors or the Reorganized Debtors under such executory contract or unexpired lease, or (iv) create or impose a Lien upon any property or asset of the Debtors or the Reorganized Debtors, as applicable. Each such provision shall be deemed to not apply to the assumption of such executory contract or unexpired lease pursuant to the Prepackaged Plan and counterparties to assumed executory contracts or unexpired leases that fail to object to the proposed assumption in accordance with the terms set forth in Section 8.2(c) of the Prepackaged Plan shall forever be barred and enjoined from objecting to the proposed assumption or to the validity of such assumption, or taking actions prohibited by the foregoing on account of transactions contemplated by the Prepackaged Plan.

 

  3. Effect of Assumption of Contracts and Leases

Subject to resolution of any Assumption Dispute, all Cure amounts shall be satisfied by the Debtors or Reorganized Debtors, as the case may be, upon assumption of the underlying contracts and unexpired leases in the ordinary course. Assumption of any executory contract or unexpired lease pursuant to the Prepackaged Plan, or otherwise, shall result in the full release and satisfaction of any Claims or defaults, subject to satisfaction of the Cure amount, whether monetary or nonmonetary, including defaults of provisions restricting the change in control or ownership interest composition or other bankruptcy-related defaults, arising under any assumed executory contract or unexpired lease at any time before the effective date of the assumption. As provided in Section 7.1 of the Prepackaged Plan, on the Effective Date, any proofs of Claim filed with respect to an executory contract or unexpired lease that has been assumed shall be deemed withdrawn without further notice to, action, order, or approval of the Bankruptcy Court or any other Entity.

 

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  4. Rejection Claims of Sale Leaseback Parties

On the Petition Date, the Debtors shall file with the Bankruptcy Court the Rejection Motion. Before the earlier of the entry of the Final Order determining such motion or the Confirmation Hearing, the Debtors may (if on, or prior to, the Effective Date), in consultation with the Requisite Consenting Tidewater Lenders and the Requisite Consenting Noteholders alter the treatment of such Sale Leaseback Agreements by filing a notice indicating such altered treatment. Upon the filing of such notice of altered treatment, Sections 8.2 and 8.3 of the Prepackaged Plan shall apply. Notwithstanding anything herein to the contrary, on or prior to the Effective Date, (i) the Debtors and the Reorganized Debtors may not alter, in any way, the treatment or settle any Disputed Sale Leaseback Claim without the prior written consent of the Requisite Consenting Tidewater Lenders and the Requisite Consenting Noteholders, such consent not to be unreasonably withheld; and (ii) the Debtors must consult with the Requisite Consenting Tidewater Lenders and the Requisite Consenting Noteholders in connection with any litigation related to or arising from the Sale Leaseback Claims.

 

  5. Survival of Debtors’ Indemnification Obligations

Any obligations of the Debtors pursuant to their corporate charters, bylaws, limited liability company agreements, other organizational documents, or indemnification agreements to indemnify current and former officers, directors, managers, agents, and/or employees with respect to all present and future actions, suits, and proceedings against the Debtors or such directors, officers, managers, agents, and/or employees, based upon any act or omission for or on behalf of the Debtors, shall not be discharged or impaired by confirmation of the Prepackaged Plan; provided, however, that the Reorganized Debtors shall not indemnify directors of the Debtors for any Claims or Causes of Action arising out of or relating to any act or omission that constitutes intentional fraud, gross negligence, or willful misconduct. All such obligations shall be deemed and treated as executory contracts to be assumed by the Debtors under the Prepackaged Plan and shall continue as obligations of the Reorganized Debtors. Any Claim based on the Debtors’ obligations under Section 8.5 of the Prepackaged Plan shall not be a Disputed Claim or subject to any objection in either case by reason of section 502(e)(1)(B) of the Bankruptcy Code.

In addition, after the Effective Date, the Reorganized Debtors shall not terminate or otherwise reduce the coverage under any directors’ and officers’ insurance policies (including any “tail policy”) in effect or purchased as of the Petition Date, and all members, managers, directors, and officers who served in such capacity at any time before the Effective Date shall be entitled to the full benefits of any such policy for the full term of such policy regardless of whether such members, managers, directors, and/or officers remain in such positions after the Effective Date, in each case, to the extent set forth in such policies.

 

  6. Insurance Policies

All insurance policies pursuant to which any Debtor has any obligations in effect as of the date of the Confirmation Order shall be deemed and treated as executory contracts pursuant to the Prepackaged Plan and shall be assumed by the respective Debtors and Reorganized Debtors and shall continue in full force and effect thereafter in accordance with their respective terms. All other insurance policies shall vest in the Reorganized Debtors.

 

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  7. Intellectual Property Licenses and Agreements

All intellectual property contracts, licenses, royalties, or other similar agreements to which the Debtors have any rights or obligations in effect as of the date of the Confirmation Order shall be deemed and treated as executory contracts pursuant to the Prepackaged Plan and shall be assumed by the respective Debtors and Reorganized Debtors and shall continue in full force and effect unless any such intellectual property contract, license, royalty, or other similar agreement otherwise is specifically rejected pursuant to a separate order of the Bankruptcy Court or is the subject of a separate rejection motion filed by the Debtors in accordance with Section 8.1 of the Prepackaged Plan. Unless otherwise noted under Section 8.7 of the Prepackaged Plan, all other intellectual property contracts, licenses, royalties, or other similar agreements shall vest in the Reorganized Debtors and the Reorganized Debtors may take all actions as may be necessary or appropriate to ensure such vesting as contemplated therein.

 

  8. Modifications, Amendments, Supplements, Restatements, or Other Agreements

Unless otherwise provided under Section 8.8 of the Prepackaged Plan or by separate order of the Bankruptcy Court, each executory contract and unexpired lease that is assumed shall include any and all modifications, amendments, supplements, restatements, or other agreements made directly or indirectly by any agreement, instrument, or other document that in any manner affects such executory contract or unexpired lease, without regard to whether such agreement, instrument, or other document is listed in the notice of assumed contracts.

 

  9. Reservation of Rights

Neither the exclusion nor inclusion of any contract or lease by the Debtors on any exhibit, schedule, or other annex to the Prepackaged Plan or in the Plan Supplement, nor anything contained in the Prepackaged Plan, shall constitute an admission by the Debtors that any such contract or lease is or is not in fact an executory contract or unexpired lease or that the Debtors or the Reorganized Debtors or their respective affiliates have any liability thereunder.

Except as otherwise provided in the Prepackaged Plan, nothing in the Prepackaged Plan shall waive, excuse, limit, diminish, or otherwise alter any of the defenses, Claims, Causes of Action, or other rights of the Debtors and the Reorganized Debtors under any executory or non-executory contract or any unexpired or expired lease.

Nothing in the Prepackaged Plan shall increase, augment, or add to any of the duties, obligations, responsibilities, or liabilities of the Debtors or the Reorganized Debtors under any executory or non-executory contract or any unexpired or expired lease.

 

  H. Conditions Precedent to Confirmation of Prepackaged Plan and Effective Date

 

  1. Conditions Precedent to Confirmation of Prepackaged Plan

The following are conditions precedent to confirmation of the Prepackaged Plan:

(a) this Disclosure Statement shall have been in form and substance reasonably satisfactory to the Debtors, the Requisite Consenting Noteholders, and the Requisite Consenting Tidewater Lenders, and an order finding that this Disclosure Statement contains adequate information pursuant to section 1125 of the Bankruptcy Code shall have been entered by the Bankruptcy Court, which shall, in form and substance, be reasonably satisfactory to the Debtors, the Requisite Consenting Tidewater Lenders and the Requisite Consenting Noteholders;

 

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(b) the Prepackaged Plan and the Plan Supplement and all of the schedules, documents, and exhibits contained therein shall have been filed, and shall be in form and substance reasonably acceptable to the Debtors, the Requisite Consenting Noteholders, and the Requisite Consenting Tidewater Lenders;

(c) the Restructuring Support Agreement shall not have been terminated and shall be in full force and effect;

(d) the entry of the Rejection Order; and

(e) the Bankruptcy Court shall have entered the Confirmation Order in form and substance reasonably satisfactory to the Debtors, the Requisite Consenting Tidewater Lenders and the Requisite Consenting Noteholders.

 

  2. Conditions Precedent to Effective Date

The following are conditions precedent to the Effective Date of the Prepackaged Plan:

(a) the Bankruptcy Court shall have entered the Confirmation Order and such order shall not have been stayed, modified, vacated, or reversed on appeal;

(b) the New Indenture shall have been executed and delivered by all of the Entities that are parties thereto, and all conditions precedent to the consummation of the New Indenture shall have been waived or satisfied in accordance with the terms thereof and the closing of the New Indenture shall have occurred;

(c) the Definitive Documents shall contain terms and conditions consistent in all material respects with the Prepackaged Plan and the Restructuring Support Agreement and shall otherwise be reasonably satisfactory in all respects to the Debtors, the Requisite Consenting Noteholders, and the Requisite Consenting Tidewater Lenders;

(d) all actions, documents, and agreements necessary to implement and consummate the Prepackaged Plan, including, without limitation, entry into the Definitive Documents, and the Amended Organizational Documents and the transactions and other matters contemplated thereby, shall have been effected or executed;

(e) subject to Section 12.6 of the Prepackaged Plan, any amendments, modifications, or supplements to the Prepackaged Plan (including the Plan Supplement), if any, shall be reasonably acceptable to the Debtors, the Requisite Consenting Noteholders, and the Requisite Consenting Tidewater Lenders;

(f) the Amended Organizational Documents shall have been filed with the appropriate governmental authority, as applicable;

(g) all governmental, regulatory, and third-party approvals and consents, including Bankruptcy Court approval, necessary in connection with the transactions contemplated by the Prepackaged Plan shall have been obtained, not be subject to unfulfilled conditions, and be in full force and effect, and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority that would restrain, prevent, or otherwise impose materially adverse conditions on such transactions;

 

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(h) the Troms Credit Agreement shall be in effect and unamended;

(i) the Restructuring Support Agreement shall not have been terminated and shall be in full force and effect;

(j) Tidewater Marine International Inc. shall have caused $500,000,000 in Cash to be repatriated to Tidewater Parent;

(k) Tidewater Parent shall deliver the Certificate, dated as of the Effective Date, to the New Indenture Trustee; and

(l) all conditions precedent listed in clauses (a)-(k) of this Article VI.H.2 shall have occurred on or prior to the date that is thirty (30) calendar days after the Confirmation Date.

 

  3. Waiver of Conditions Precedent

Except as otherwise provided in the Prepackaged Plan, all actions required to be taken on the Effective Date shall take place and shall be deemed to have occurred simultaneously and no such action shall be deemed to have occurred prior to the taking of any other such action. Each of the conditions precedent in Section 9.1 and Section 9.2 of the Prepackaged Plan may be waived in writing by the Debtors with the prior written consent of the Requisite Consenting Tidewater Lenders and the Requisite Consenting Noteholders, such consent not to be unreasonably withheld, without leave of or order of the Bankruptcy Court. Subject to the consent of both the Requisite Consenting Tidewater Lenders and the Requisite Consenting Noteholders, such consent not to be unreasonably withheld, if the Prepackaged Plan is confirmed for fewer than all of the Debtors as provided for in Section 5.16 of the Prepackaged Plan, only the conditions applicable to the Debtor or Debtors for which the Prepackaged Plan is confirmed must be satisfied or waived for the Effective Date to occur.

The stay of the Confirmation Order pursuant to Bankruptcy Rule 3020(e) shall be deemed waived by and upon the entry of the Confirmation Order, and the Confirmation Order shall take effect immediately upon its entry.

 

  4. Effect of Failure of a Condition

If the conditions listed in Section 9.2 of the Prepackaged Plan are not satisfied or waived in accordance with Section 9.3 of the Prepackaged Plan on or before the first Business Day that is more than thirty (30) days after the date on which the Confirmation Order is entered or by such later date as set forth by the Debtors, with the consent of the Requisite Consenting Noteholders and the Requisite Consenting Tidewater Lenders, such consent not to be unreasonably withheld, in a notice filed with the Bankruptcy Court prior to the expiration of such period, the Prepackaged Plan shall be null and void in all respects and nothing contained in the Prepackaged Plan or this Disclosure Statement shall (a) constitute a waiver or release of any Claims by or against or any Interests in the Debtors, (b) prejudice in any manner the rights of any Entity, or (c) constitute an admission, acknowledgement, offer, or undertaking by the Debtors, any of the Consenting Creditors, or any other Entity.

 

  I. Effect of Confirmation

 

  1. Vesting of Assets

On the Effective Date, pursuant to sections 1141(b) and (c) of the Bankruptcy Code, all property of the Debtors’ Estates shall vest in the Reorganized Debtors free and clear of all Claims, Liens, encumbrances,

 

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charges, and other interests, except as provided pursuant to the Prepackaged Plan, the Confirmation Order, or the New Indenture and documents securing the obligations under the New Indenture. On and after the Effective Date, the Reorganized Debtors may take any action, including, without limitation, the operation of their businesses; the use, acquisition, sale, lease, and disposition of property; and the entry into transactions, agreements, understandings, or arrangements, whether in or other than in the ordinary course of business, and execute, deliver, implement, and fully perform any and all obligations, instruments, documents, and papers or otherwise in connection with any of the foregoing, free of any restrictions of the Bankruptcy Code or Bankruptcy Rules and in all respects as if there were no pending cases under any chapter or provision of the Bankruptcy Code, except as expressly provided in Section 10.1 of the Prepackaged Plan. Without limiting the foregoing, the Reorganized Debtors may pay the charges that they incur on or after the Effective Date for professional fees, disbursements, expenses, or related support services without application to the Bankruptcy Court.

 

  2. Binding Effect

As of the Effective Date, the Prepackaged Plan shall bind all holders of Claims against and Interests in the Debtors and their respective successors and assigns, notwithstanding whether any such holders (a) were Impaired or Unimpaired under the Prepackaged Plan, (b) were deemed to accept or reject the Prepackaged Plan, (c) failed to vote to accept or reject the Prepackaged Plan, (d) voted to reject the Prepackaged Plan, or (e) received any distribution or not under the Prepackaged Plan.

 

  3. Discharge of Claims and Termination of Interests

Upon the Effective Date and in consideration of the distributions to be made under the Prepackaged Plan, except as otherwise expressly provided in Section 10.3 of the Prepackaged Plan, each holder (as well as any representatives, trustees, or agents on behalf of each holder) of a Claim or Interest and any affiliate of such holder shall be deemed to have forever waived, released, and discharged the Debtors, to the fullest extent permitted by section 1141 of the Bankruptcy Code, of and from any and all Claims, Interests, rights, and liabilities that arose prior to the Effective Date. Upon the Effective Date, all such Entities shall be forever precluded and enjoined, pursuant to section 524 of the Bankruptcy Code, from prosecuting or asserting any such discharged Claim against or terminated Interest in the Debtors against the Debtors, the Reorganized Debtors, or any of its or their assets or property, whether or not such holder has filed a proof of claim and whether or not the facts or legal bases therefor were known or existed prior to the Effective Date.

 

  4. Term of Injunctions or Stays

Unless otherwise provided in the Prepackaged Plan or in a Final Order of the Bankruptcy Court, all injunctions or stays arising under or entered during the Chapter 11 Cases under section 105 or 362 of the Bankruptcy Code, or otherwise, and in existence on the Confirmation Date, shall remain in full force and effect until the later of the Effective Date and the date indicated in the order providing for such injunction or stay.

 

  5. Injunction

Upon entry of the Confirmation Order, all holders of Claims and Interests and other parties in interest, along with their respective present or former employees, agents, officers, directors, principals, and affiliates, shall be enjoined from taking any actions to interfere with the implementation or consummation of the Prepackaged Plan and the Definitive Documents.

 

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Except as expressly provided in the Prepackaged Plan, the Confirmation Order, or a separate order of the Bankruptcy Court or as agreed to by the Debtors and a holder of a Claim against or Interest in the Debtors, all Entities who have held, hold, or may hold Claims against or Interests in any or all of the Debtors (whether proof of such Claims or Interests has been filed or not and whether or not such Entities vote in favor of, against, or abstain from voting on the Prepackaged Plan or are presumed to have accepted or deemed to have rejected the Prepackaged Plan) and other parties in interest, along with their respective present or former employees, agents, officers, directors, principals, and affiliates are permanently enjoined, on and after the Effective Date, solely with respect to any Claims, Interests, and Causes of Action that will be or are extinguished, discharged, or released pursuant to the Prepackaged Plan from (i) commencing, conducting, or continuing in any manner, directly or indirectly, any suit, action, or other proceeding of any kind (including, without limitation, any proceeding in a judicial, arbitral, administrative, or other forum) against or affecting the Released Parties or the property of any of the Released Parties, (ii) enforcing, levying, attaching (including, without limitation, any prejudgment attachment), collecting, or otherwise recovering by any manner or means, whether directly or indirectly, any judgment, award, decree, or order against the Released Parties or the property of any of the Released Parties, (iii) creating, perfecting, or otherwise enforcing in any manner, directly or indirectly, any encumbrance of any kind against the Released Parties or the property of any of the Released Parties, (iv) asserting any right of setoff, directly or indirectly, against any obligation due the Released Parties or the property of any of the Released Parties, except as contemplated or allowed by the Prepackaged Plan, and (v) acting or proceeding in any manner, in any place whatsoever, that does not conform to or comply with the provisions of the Prepackaged Plan and the Definitive Documents.

By accepting distributions pursuant to the Prepackaged Plan, each holder of an Allowed Claim or Interest shall be deemed to have affirmatively and specifically consented to be bound by the Prepackaged Plan, including, without limitation, the injunctions set forth in Section 10.5 of the Prepackaged Plan.

The injunctions in Section 10.5 of the Prepackaged Plan shall extend to any successors of the Debtors and the Reorganized Debtors and their respective property and interests in property.

 

  6. Releases

 

  (a) Releases by Debtors

As of the Effective Date, except (i) for the right to enforce the Prepackaged Plan or any right or obligation arising under the Definitive Documents that remain in effect or become effective after the Effective Date, or (ii) as otherwise expressly provided in the Prepackaged Plan or in the Confirmation Order, in exchange for good and valuable consideration, including the obligations of the Debtors under the Prepackaged Plan and the Definitive Documents and the contributions of the Released Parties to facilitate and implement the Prepackaged Plan and the Definitive Documents to the fullest extent permissible under applicable law, on and after the Effective Date, the Released Parties shall be deemed conclusively, absolutely, unconditionally, irrevocably, and forever released and discharged by the Debtors, the Reorganized Debtors, and the Estates from any and all Claims and Causes of Action, including any derivative claims, asserted or assertable on behalf of the Debtors, whether liquidated or unliquidated, fixed or contingent, matured or unmatured, known or unknown, foreseen or unforeseen, existing or thereinafter arising, in law, equity, or otherwise, that the Debtors, the Reorganized Debtors, the Estates, or their affiliates would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the holder of any Claim or Interest or other Entity, based on or relating to, or in any manner arising from, in

 

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whole or in part, the Debtors, the Chapter 11 Cases, the purchase, sale, or rescission of the purchase or sale of any security of the Debtors or the Reorganized Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Prepackaged Plan, the business or contractual arrangements between any Debtor and any Released Party, the restructuring of Claims and Interests before or during the Chapter 11 Cases, the negotiation, formulation, preparation, proposal, confirmation, or consummation of the Prepackaged Plan (including the Plan Supplement), the Restructuring Support Agreement, the Definitive Documents, or related agreements, instruments, or other documents, or the solicitation of votes with respect to the Prepackaged Plan, in all cases based upon any act or omission, transaction, agreement, event, or other occurrence taking place on or before the Effective Date; provided, that nothing in Section 10.6(a) of the Prepackaged Plan shall be construed to release any Released Party or Entity from any claims or Causes of Action arising out of or related to any act or omission that is a criminal act or constitutes gross negligence, willful misconduct, or intentional fraud as determined by Final Order.

 

  (b) Releases by Holders of Claims or Interests

As of the Effective Date, except (i) for the right to enforce the Prepackaged Plan or any right or obligation arising under the Definitive Documents that remain in effect or become effective after the Effective Date, or (ii) as otherwise expressly provided in the Prepackaged Plan or in the Confirmation Order, in exchange for good and valuable consideration, including the obligations of the Debtors under the Prepackaged Plan and the Definitive Documents and the contributions of the Released Parties to facilitate and implement the Prepackaged Plan and the Definitive Documents, to the fullest extent permissible under applicable law, as such law may be extended or integrated after the Effective Date, the Released Parties shall be deemed conclusively, absolutely, unconditionally, irrevocably and forever released and discharged by:

(i) the holders of Impaired Claims or Interests except those (A) deemed to reject the Prepackaged Plan or (B) who are entitled to vote on the Prepackaged Plan and vote to reject, or abstain from voting on, the Prepackaged Plan and also check the box on the applicable ballot indicating that they opt out of granting the releases provided in the Prepackaged Plan; provided, that the Consenting Creditors may not opt out of granting the releases provided in the Prepackaged Plan in accordance with and subject to the terms and conditions of the Restructuring Support Agreement;

(ii) the holders of Unimpaired Claims or Interests who do not timely object to the releases provided in the Prepackaged Plan; and

(iii) with respect to any Entity in the foregoing clauses (1) and (2), except to the extent deemed to reject the Prepackaged Plan, such Entitys predecessors, successors and assigns, subsidiaries, affiliates, managed accounts or funds, current or former officers, directors, principals, shareholders, members, partners, employees, agents, advisory board members, financial advisors, attorneys, accountants, investment bankers, consultants, representatives, management companies, fund advisors and other professionals, and such Entitys respective heirs, executors, estates, servants, and nominees;

in each case, from any and all Claims, interests or Causes of Action whatsoever, including any derivative Claims asserted on behalf of a Debtor, whether liquidated or unliquidated, fixed or contingent, matured or unmatured, known or unknown, foreseen or unforeseen, existing or hereafter arising, in law, equity, or otherwise, that such Entity would have been legally entitled to assert (whether individually or collectively), based on, relating to, or arising from, in whole or in

 

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part, the Debtors, the Debtors’ restructuring, the Chapter 11 Cases, the purchase, sale, or rescission of the purchase or sale of any security of the Debtors or the Reorganized Debtors, the subject matter of, or the transactions or events giving rise to, any Claim or Interest that is treated in the Prepackaged Plan, the business or contractual arrangements between any Debtor and any Released Party, the restructuring of Claims and Interests before or during the Chapter 11 Cases, the negotiation, formulation, preparation, proposal, confirmation, or consummation of the Prepackaged Plan (including the Plan Supplement), the Restructuring Support Agreement, the Definitive Documents, or any related agreements, instruments, or other documents, the solicitation of votes with respect to the Prepackaged Plan, in all cases based upon any act or omission, transaction, agreement, event or other occurrence taking place on or before the Effective Date; provided, that nothing in Section 10.6(b) of the Prepackaged Plan shall be construed to release any Released Party or Entity from any claims or Causes of Action arising out of or related to any act or omission that is a criminal act or constitutes gross negligence, willful misconduct, or intentional fraud as determined by Final Order.

 

  7. Exculpation

Notwithstanding anything in the Prepackaged Plan to the contrary, and to the maximum extent permitted by applicable law, the Exculpated Parties shall neither have nor incur any liability to any holder of a Claim or Interest or any other party in interest, or any of their respective predecessors, successors, and assigns, subsidiaries, affiliates, managed accounts, or funds, current or former officers, directors, principals, shareholders, members, partners, employees, agents, advisory board members, financial advisors, attorneys, accountants, investment bankers, consultants, representatives, management companies, fund advisors, and other professionals, and such Entity’s respective heirs, executors, estates, servants, or nominees for any act or omission (both prior to and subsequent to the Petition Date) in connection with, related to, or arising out of, in whole or in part, the Debtors, the Debtors’ restructuring, the Chapter 11 Cases, the purchase, sale, or rescission of the purchase or sale of any security of the Debtors or the Reorganized Debtors, the business or contractual arrangements between any Debtor and any Released Party relating to the Chapter 11 Cases, the Prepackaged Plan, or this Disclosure Statement, the restructuring of Claims and Interests before or during the Chapter 11 Cases, the negotiation, formulation, preparation, proposal, confirmation, or consummation of the Prepackaged Plan (including the Plan Supplement), the Restructuring Support Agreement, the Definitive Documents, or any related agreements, instruments, or other documents, the solicitation of votes with respect to the Prepackaged Plan, any settlement or agreement in the Chapter 11 Cases, the offer, issuance, and distribution of any securities issued or to be issued pursuant to the Prepackaged Plan, whether or not such distribution occurs following the Effective Date, negotiations regarding or concerning any of the foregoing, or the administration of the Prepackaged Plan or property to be distributed under the Prepackaged Plan, except for any act or omission that is a criminal act or constitutes gross negligence, willful misconduct, or intentional fraud as determined by Final Order. This exculpation shall be in addition to, and not in limitation of, all other releases, indemnities, exculpations, and any other applicable law or rules protecting such Exculpated Parties from liability.

 

  8. Subordinated Claims

The allowance, classification, and treatment of all Allowed Claims and Interests and the respective distributions and treatments under the Prepackaged Plan take into account and conform to the relative priority and rights of the Claims and Interests in each Class in connection with any contractual, legal, and equitable subordination rights relating thereto, whether arising under general principles of equitable subordination, section 510(b) of the Bankruptcy Code, or otherwise. Pursuant to section 510 of the Bankruptcy Code, the Debtors reserve the right to re-classify any Allowed Claim or Interest in accordance with any contractual, legal, or equitable subordination relating thereto.

 

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  9. Retention of Causes of Action/Reservation of Rights

Except as otherwise provided in the Prepackaged Plan, including in Sections 10.5, 10.6, and 10.7 of the Prepackaged Plan, nothing contained in the Prepackaged Plan or the Confirmation Order shall be deemed to be a waiver or relinquishment of any rights, claims, Causes of Action, rights of setoff or recoupment, or other legal or equitable defenses that the Debtors had immediately prior to the Effective Date on behalf of the Estates or of themselves in accordance with any provision of the Bankruptcy Code or any applicable nonbankruptcy law or any affirmative Causes of Action against parties with a relationship with the Debtors. The Reorganized Debtors shall have, retain, reserve, and be entitled to assert all such claims, Causes of Action, rights of setoff or recoupment, and other legal or equitable defenses as fully as if the Chapter 11 Cases had not been commenced, and all of the Debtors’ legal and equitable rights in respect of any Unimpaired Claim may be asserted after the Confirmation Date and Effective Date to the same extent as if the Chapter 11 Cases had not been commenced; provided, however, that notwithstanding the foregoing, the Debtors and the Reorganized Debtors shall not retain any claims or Causes of Action released pursuant to Sections 10.5, 10.6, and 10.7 of the Prepackaged Plan against the Released Parties or arising under chapter 5 of the Bankruptcy Code (except that such claims or Causes of Action may be asserted as a defense to a claim in connection with the claims reconciliation and objection procedures pursuant to section 502(d) of the Bankruptcy Code or otherwise).

 

  10. Solicitation of Prepackaged Plan

As of and subject to the occurrence of the Confirmation Date: (a) the Debtors shall be deemed to have solicited acceptances of the Prepackaged Plan in good faith and in compliance with the applicable provisions of the Bankruptcy Code, including without limitation, sections 1125(a) and (e) of the Bankruptcy Code, and any applicable non-bankruptcy law, rule, or regulation governing the adequacy of disclosure in connection with such solicitation, and (b) the Debtors and each of their respective directors, officers, employees, affiliates, agents, financial advisors, investment bankers, professionals, accountants, and attorneys shall be deemed to have participated in good faith and in compliance with the applicable provisions of the Bankruptcy Code in the offer and issuance of any securities under the Prepackaged Plan, and therefore are not, and on account of such offer, issuance, and solicitation shall not be, liable at any time for any violation of any applicable law, rule, or regulation governing the solicitation of acceptances or rejections of the Prepackaged Plan or the offer and issuance of any securities under the Prepackaged Plan.

 

  11. Corporate and Limited Liability Company Action

Upon the Effective Date, all actions contemplated by the Prepackaged Plan shall be deemed authorized and approved in all respects, including (a) those set forth in Section 5.12 of the Prepackaged Plan, (b) the selection of the managers, directors, and officers for the Reorganized Debtors, (c) the distribution or issuance of the New Common Stock and the New Warrants, (d) the issuance of the New Secured Notes and entry into the New Indenture, (e) the entry into the New Creditor Warrant Agreement, (f) the entry into the New Existing Equity Warrant Agreement, (g) the approval of the Restructuring Support Agreement, and (h) all other actions contemplated by the Prepackaged Plan (whether to occur before, on, or after the Effective Date), in each case, in accordance with and subject to the terms of the Prepackaged Plan. All matters provided for in the Prepackaged Plan involving the corporate or limited liability company structure of the Debtors or the Reorganized Debtors, and any corporate or limited liability company action required by the Debtors or the Reorganized Debtors in connection with the Prepackaged Plan shall be deemed to have occurred and shall be in effect, without any requirement of further action by

 

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the security holders, directors, managers, or officers of the Debtors or the Reorganized Debtors. On or (as applicable) before the Effective Date, the appropriate officers of the Debtors or the Reorganized Debtors, as applicable, shall be authorized and directed to issue, execute, and deliver the agreements, documents, securities, and instruments, certificates of merger, certificates of conversion, certificates of incorporation, or comparable documents, or franchise tax reports contemplated by the Prepackaged Plan (or necessary or desirable to effect the transactions contemplated by the Prepackaged Plan) in the name of and on behalf of the Reorganized Debtors, including, but not limited to, (i) the Amended Organizational Documents, (ii) the New Indenture, (iii) the New Creditor Warrant Agreement, (iv) the New Existing Equity Warrant Agreement, and (v) any and all other agreements, documents, securities, and instruments relating to the foregoing. The authorizations and approvals contemplated by Section 10.11 of the Prepackaged Plan shall be effective notwithstanding any requirements under non-bankruptcy law.

 

  J. Retention of Jurisdiction

 

  1. Retention of Jurisdiction

On and after the Effective Date, the Bankruptcy Court shall retain jurisdiction over all matters arising in, arising under, and related to the Chapter 11 Cases for, among other things, the following purposes:

(a) to hear and determine motions and/or applications for the assumption or rejection of executory contracts or unexpired leases, including Assumption Disputes, and the allowance, classification, priority, compromise, estimation, or payment of Claims resulting therefrom;

(b) to determine any motion, adversary proceeding, application, contested matter, and other litigated matter pending on or commenced after the Confirmation Date;

(c) to ensure that distributions to holders of Allowed Claims are accomplished as provided for in the Prepackaged Plan and Confirmation Order and to adjudicate any and all disputes arising from or relating to distributions under the Prepackaged Plan, including but not limited to, cases, controversies, suits, disputes, or Causes of Action with respect to the repayment or return of distributions and the recovery of additional amounts owed by the holder of a Claim or Interest for amounts not timely paid;

(d) to hear and determine all disputes arising from or related to any determination by Tidewater Parent in its reasonable discretion with respect to the acceptance, non-acceptance or rejection of any U.S. Citizen Certification as reasonable proof in establishing that any holder (or its Permitted Designee(s)) of an Allowed Class 3 Claim is a U.S. Citizen under the Jones Act;

(e) to consider the allowance, classification, priority, compromise, estimation, or payment of any Claim;

(f) to enter, implement, or enforce such orders as may be appropriate in the event the Confirmation Order is for any reason stayed, reversed, revoked, modified, or vacated;

(g) to issue injunctions, enter and implement other orders, and take such other actions as may be necessary or appropriate to restrain interference by any Entity with the consummation, implementation, or enforcement of the Prepackaged Plan, the Confirmation Order, or any other order of the Bankruptcy Court;

(h) to hear and determine any application to modify the Prepackaged Plan in accordance with section 1127 of the Bankruptcy Code, to remedy any defect or omission or reconcile any inconsistency in the Prepackaged Plan, or any order of the Bankruptcy Court, including the Confirmation Order, in such a manner as may be necessary to carry out the purposes and effects thereof;

 

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(i) to hear and determine all Fee Claims;

(j) to adjudicate, decide, or resolve any and all matters related to section 1141 of the Bankruptcy Code;

(k) to hear and determine disputes arising in connection with the interpretation, implementation, or enforcement of the Prepackaged Plan, the Plan Supplement, or the Confirmation Order, or any agreement, instrument, or other document governing or relating to any of the foregoing;

(l) to take any action and issue such orders as may be necessary to construe, interpret, enforce, implement, execute, and consummate the Prepackaged Plan;

(m) to determine such other matters and for such other purposes as may be provided in the Confirmation Order;

(n) to hear and determine matters concerning state, local, and federal taxes in accordance with sections 346, 505, and 1146 of the Bankruptcy Code (including any requests for expedited determinations under section 505(b) of the Bankruptcy Code);

(o) to hear, adjudicate, decide, or resolve any and all matters related to Article X of the Prepackaged Plan, including, without limitation, the releases, discharge, exculpations, and injunctions issued thereunder;

(p) to resolve disputes concerning Disputed Claims or the administration thereof;

(q) to hear and determine any other matters related to the Prepackaged Plan and not inconsistent with the Bankruptcy Code and title 28 of the United States Code;

(r) to enter a final decree closing the Chapter 11 Cases;

(s) to adjudicate any and all disputes arising from or relating to distributions under the Prepackaged Plan;

(t) to resolve disputes as to the ownership of any Claim or Interest;

(u) to recover all assets of the Debtors and property of the Debtors’ Estates, wherever located;

(v) to resolve any disputes concerning whether an Entity had sufficient notice of the Chapter 11 Cases, this Disclosure Statement, any solicitation conducted in connection with the Chapter 11 Cases, any bar date established in the Chapter 11 Cases, or any deadline for responding or objecting to the amount of a Cure, in each case, for the purpose of determining whether a Claim or Interest is discharged under the Prepackaged Plan or for any other purpose;

 

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(w) to hear and determine any rights, Claims, or Causes of Action held by or accruing to the Debtors pursuant to the Bankruptcy Code or pursuant to any federal statute or legal theory; and

(x) to hear and resolve any dispute over the application to any Claim of any limit on the allowance of such Claim set forth in sections 502 or 503 of the Bankruptcy Code, other than defenses or limits that are asserted under non-bankruptcy law pursuant to section 502(b)(1) of the Bankruptcy Code.

For the avoidance of doubt, the Bankruptcy Court shall not retain jurisdiction with respect to the following documents entered into by a Reorganized Debtor on or after the Effective Date: (i) the New Indenture, (ii) the New Creditor Warrant Agreements, (iii) the New Existing Equity Warrant Agreement, and (iv) the Registration Rights Agreement.

 

  2. Courts of Competent Jurisdiction

If the Bankruptcy Court abstains from exercising, or declines to exercise, jurisdiction or is otherwise without jurisdiction over any matter arising out of the Prepackaged Plan, such abstention, refusal, or failure of jurisdiction shall have no effect upon and shall not control, prohibit, or limit the exercise of jurisdiction by any other court having competent jurisdiction with respect to such matter.

 

  K. Miscellaneous Provisions

 

  1. Payment of Statutory Fees

On the Effective Date and thereafter as may be required, the Reorganized Debtors shall pay all fees due and payable pursuant to section 1930(a) of title 28 of the United States Code for each Debtor’s case, or until such time as a final decree is entered closing a particular Debtor’s case, a Final Order converting such Debtor’s case to a case under chapter 7 of the Bankruptcy Code is entered, or a Final Order dismissing such Debtor’s case is entered.

 

  2. Substantial Consummation of the Prepackaged Plan

On the Effective Date, the Prepackaged Plan shall be deemed to be substantially consummated under sections 1101 and 1127(b) of the Bankruptcy Code.

 

  3. Plan Supplement

The Plan Supplement shall be filed with the Bankruptcy Court not later than seven (7) calendar days prior to the Voting Deadline. Documents included in the Plan Supplement shall be posted at the website of the Debtors’ notice, claims, and solicitation agent.

 

  4. Request for Expedited Determination of Taxes

The Debtors shall have the right to request an expedited determination under section 505(b) of the Bankruptcy Code with respect to tax returns filed, or to be filed, for any and all taxable periods ending after the Petition Date through the Effective Date.

 

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  5. Exemption from Certain Transfer Taxes

Pursuant to section 1146 of the Bankruptcy Code, (a) the issuance, transfer or exchange of any securities, instruments or documents, (b) the creation of any Lien, mortgage, deed of trust, or other security interest, (c) the making or assignment of any lease or sublease or the making or delivery of any deed or other instrument of transfer under, pursuant to, in furtherance of, or in connection with the Prepackaged Plan, including, without limitation, any deeds, bills of sale, or assignments executed in connection with any of the transactions contemplated under the Prepackaged Plan or the revesting, transfer, or sale of any real or personal property of the Debtors pursuant to, in implementation of, or as contemplated in, the Prepackaged Plan (whether to one or more of the Reorganized Debtors or otherwise), (d) the grant of collateral under the New Indenture, and (e) the issuance, renewal, modification, or securing of indebtedness by such means, and the making, delivery, or recording of any deed or other instrument of transfer under, in furtherance of, or in connection with, the Prepackaged Plan, including, without limitation, the Confirmation Order, shall not be subject to any document recording tax, stamp tax, conveyance fee, or other similar tax, mortgage tax, real estate transfer tax, mortgage recording tax, Uniform Commercial Code filing or recording fee, regulatory filing or recording fee, sales tax, use tax, or other similar tax or governmental assessment. Consistent with the foregoing, each recorder of deeds or similar official for any county, city, or governmental unit in which any instrument hereunder is to be recorded shall, pursuant to the Confirmation Order, accept such instrument without requiring the payment of any filing fees, documentary stamp tax, deed stamps, stamp tax, transfer tax, intangible tax, or similar tax.

 

  6. Amendments

 

  (a) Prepackaged Plan Modifications

Subject to the terms of the Restructuring Support Agreement, (i) the Debtors reserve the right, in accordance with the Bankruptcy Code and the Bankruptcy Rules, to amend or modify the Prepackaged Plan prior to the entry of the Confirmation Order, including amendments or modifications to satisfy section 1129(b) of the Bankruptcy Code, and (ii) after entry of the Confirmation Order, the Debtors may, upon order of the Bankruptcy Court, amend, modify, or supplement the Prepackaged Plan in the manner provided for by section 1127 of the Bankruptcy Code or as otherwise permitted by law, in each case without additional disclosure pursuant to section 1125 of the Bankruptcy Code.

 

  (b) Other Amendments

Subject to the Restructuring Support Agreement, before the Effective Date, the Debtors may make appropriate technical adjustments and modifications to the Prepackaged Plan and the documents contained in the Plan Supplement to cure any non-substantive ambiguity, defect (including any technical defect), or inconsistency without further order or approval of the Bankruptcy Court.

 

  7. Effectuating Documents and Further Transactions

Each of the officers of the Reorganized Debtors is authorized, in accordance with his or her authority under the resolutions of the applicable board of directors or managers (on terms materially consistent with the Prepackaged Plan), to execute, deliver, file, or record such contracts, instruments, releases, indentures, and other agreements or documents and take such actions as may be necessary or appropriate to effectuate and further evidence the terms and conditions of the Prepackaged Plan; which shall be in form and substance reasonably satisfactory to the Debtors, the Requisite Consenting Noteholders, and the Requisite Consenting Tidewater Lenders.

 

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  8. Revocation or Withdrawal of Prepackaged Plan

Subject to the terms of the Restructuring Support Agreement, the Debtors reserve the right to revoke or withdraw the Prepackaged Plan prior to the Effective Date as to any or all of the Debtors; provided, however, that the Debtors may revoke or withdraw the Prepackaged Plan without such consent in the exercise of the Debtors’ fiduciary duty to the extent permitted under the Restructuring Support Agreement. If, with respect to a Debtor, the Prepackaged Plan has been revoked or withdrawn prior to the Effective Date, or if confirmation or the occurrence of the Effective Date as to such Debtor does not occur on the Effective Date, then, with respect to such Debtor: (a) the Prepackaged Plan shall be null and void in all respects; (b) any settlement or compromise embodied in the Prepackaged Plan (including the fixing of or limiting to an amount of any Claim or Interest or Class of Claims or Interests), assumption of executory contracts or unexpired leases affected by the Prepackaged Plan, and any document or agreement executed pursuant to the Prepackaged Plan shall be deemed null and void; and (c) nothing contained in the Prepackaged Plan shall (i) constitute a waiver or release of any Claim by or against, or any Interest in, such Debtor or any other Entity, (ii) prejudice in any manner the rights of such Debtor or any other Entity, or (iii) constitute an admission of any sort by any Debtor, any of the Consenting Creditors, or any other Entity. This provision shall not modify or otherwise alter the rights of the Consenting Creditors or the Debtors, as set forth in the Restructuring Support Agreement, in respect of any such revocation or withdrawal.

 

  9. Severability of Prepackaged Plan Provisions

If, before the entry of the Confirmation Order, any term or provision of the Prepackaged Plan is held by the Bankruptcy Court to be invalid, void, or unenforceable, the Bankruptcy Court, at the request of the Debtors (to be made only with the consent of the Tidewater Lender and Noteholder Group, such consent not to be unreasonably withheld), shall have the power to alter and interpret such term or provision to make it valid or enforceable to the maximum extent practicable, consistent with the original purpose of the term or provision held to be invalid, void, or unenforceable, and such term or provision shall then be applicable as altered or interpreted; provided that any such alteration or interpretation shall be acceptable to the Debtors, the Requisite Consenting Tidewater Lenders and the Requisite Consenting Noteholders. Notwithstanding any such holding, alteration, or interpretation, the remainder of the terms and provisions of the Prepackaged Plan shall remain in full force and effect and shall in no way be affected, impaired or invalidated by such holding, alteration, or interpretation. The Confirmation Order shall constitute a judicial determination and shall provide that each term and provision of the Prepackaged Plan, as it may have been altered or interpreted in accordance with the foregoing, is (a) valid and enforceable pursuant to its terms, (b) integral to the Prepackaged Plan and may not be deleted or modified without the consent of (x) the Debtors or the Reorganized Debtors (as the case may be), and (y) the Requisite Consenting Tidewater Lenders and the Requisite Consenting Noteholders; provided, that if such deletion or modification adversely affects the recovery or treatment of any of the Consenting Sale Leaseback Parties, if any, then such deletion or modification may not be made without the written consent of such Consenting Sale Leaseback Party, and (c) nonseverable and mutually dependent.

 

  10. Governing Law

Except to the extent that the Bankruptcy Code or other federal law is applicable, or to the extent an exhibit hereto or a schedule in the Plan Supplement or a Definitive Document provides otherwise, the rights, duties, and obligations arising under the Prepackaged Plan shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without giving effect to the principles of conflict of laws thereof.

 

60


  11. Time

In computing any period of time prescribed or allowed by the Prepackaged Plan, unless otherwise set forth in the Prepackaged Plan or determined by the Bankruptcy Court, the provisions of Bankruptcy Rule 9006 shall apply.

 

  12. Dates of Actions to Implement the Prepackaged Plan

In the event that any payment or act under the Prepackaged Plan is required to be made or performed on a date that is on a Business Day, then the making of such payment or the performance of such act may be completed on or as soon as reasonably practicable after the next succeeding Business Day, but shall be deemed to have been completed as of the required date.

 

  13. Immediate Binding Effect

Notwithstanding Bankruptcy Rules 3020(e), 6004(h), 7062, or otherwise, upon the occurrence of the Effective Date, the terms of the Prepackaged Plan and Plan Supplement shall be immediately effective and enforceable and deemed binding upon and inure to the benefit of the Debtors, the holders of Claims and Interests (irrespective of whether such Claims or Interests are deemed to have accepted the Prepackaged Plan), the Released Parties, the Exculpated Parties, and each of their respective successors and assigns, including, without limitation, the Reorganized Debtors.

 

  14. Deemed Acts

Subject to and conditioned on the occurrence of the Effective Date, whenever an act or event is expressed under the Prepackaged Plan to have been deemed done or to have occurred, it shall be deemed to have been done or to have occurred without any further act by any party, by virtue of the Prepackaged Plan and the Confirmation Order.

 

  15. Successors and Assigns

The rights, benefits, and obligations of any Entity named or referred to in the Prepackaged Plan shall be binding on, and shall inure to the benefit of any heir, executor, administrator, successor, or permitted assign, if any, of each Entity.

 

  16. Entire Agreement

On the Effective Date, the Prepackaged Plan, the Plan Supplement, and the Confirmation Order shall supersede all previous and contemporaneous negotiations, promises, covenants, agreements, understandings, and representations on such subjects, all of which have become merged and integrated into the Prepackaged Plan.

 

  17. Exhibits to Prepackaged Plan

All exhibits, schedules, supplements, and appendices to the Prepackaged Plan (including the Plan Supplement) are incorporated into and are a part of the Prepackaged Plan as if set forth in full in the Prepackaged Plan.

 

61


  18. Notices

All notices, requests, and demands to or upon the Debtors to be effective shall be in writing (including by electronic or facsimile transmission) and, unless otherwise expressly provided in the Prepackaged Plan, shall be deemed to have been duly given or made when actually delivered or, in the case of notice by facsimile transmission, when received and telephonically confirmed, addressed as follows:

 

  (a) if to the Debtors or the Reorganized Debtors:

Tidewater Inc.

Pan American Life Center

601 Poydras, Suite 1500

New Orleans, Louisiana 70130

Attn:    Bruce D. Lundstrom
Email:    blundstrom@tdw.com

Facsimile: (888) 909-0946

-and-

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, New York 10153

Attn:    Ray C. Schrock, P.C. and Alfredo R. Pérez, Esq.
Email:    ray.schrock@weil.com and alfredo.perez@weil.com

Facsimile: (212) 310-8007

-and-

Jones Walker LLP

201 St. Charles Avenue, Floor 50

New Orleans, Louisiana 70170

Attn:    Amy G. Scafidel, Esq. and Curt Hearn, Esq.
E-mail:    ascafidel@joneswalker.com and chearn@joneswalker.com

Facsimile: (504) 582-8583

-and-

Richards, Layton & Finger, P.A.

One Rodney Square

920 North King Street

Wilmington, Delaware 19801

Attn:    Daniel J. DeFranceschi, Esq. and Zachary I. Shapiro, Esq.
Email:    defranceschi@rlf.com and shapiro@rlf.com

Facsimile: (302) 651-7701

 

62


  (b) If to the Credit Agreement Agent, to:

Morgan, Lewis & Bockius LLP

One Federal Street,

Boston, Massachusetts 02110

Attn:    Amy L. Kyle, Esq. and Edwin E. Smith, Esq.
E-mail:    amy.kyle@morganlewis.com and

edwin.smith@morganlewis.com

Facsimile: (617) 341-7701

-and-

Morris, Nichols, Arsht & Tunnell LLP

1201 North Market Street, 16th Floor

P.O. Box 1347

Wilmington, Delaware 19899

Attn:    Derek C. Abbott, Esq.
E-mail:    dabbott@mnat.com

Facsimile: (302) 425-4664

 

  (c) If to the Unofficial Noteholder Committee, to:

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019

Attn:    Alan W. Kornberg, Esq. and Brian S. Hermann, Esq.
E-mail:    akornberg@paulweiss.com and bhermann@paulweiss.com

Facsimile: (212) 757-3990

-and-

Blank Rome LLP

1201 North Market Street, Suite 800

Wilmington, Delaware 19801

Attn:    Stanley B. Tarr, Esq. and Rick Antonoff, Esq.
E-mail:    tarr@blankrome.com and rantonoff@blankrome.com

Facsimile: (302) 428-5104 and (212) 885-5001

After the Effective Date, the Debtors have authority to send a notice to Entities providing that, to continue to receive documents pursuant to Bankruptcy Rule 2002, they must file a renewed request to receive documents pursuant to Bankruptcy Rule 2002. After the Effective Date, the Debtors and the Reorganized Debtors, as applicable, are authorized to limit the list of Entities receiving documents pursuant to Bankruptcy Rule 2002 to those Entities who have filed such renewed requests.

 

63


VII.

FINANCIAL INFORMATION AND PROJECTIONS

 

  A. Consolidated Condensed Projected Financial Information

The Debtors believe that the Prepackaged Plan meets the feasibility requirements set forth in section 1129(a)(11) of the Bankruptcy Code, as confirmation is not likely to be followed by liquidation or the need for further financial reorganization of the Debtors or any successor under the Prepackaged Plan. In connection with the development of the Prepackaged Plan and for the purposes of determining whether the Prepackaged Plan satisfies the feasibility standard, the Debtors analyzed their ability to satisfy their financial obligations while maintaining sufficient liquidity and capital resources. The Debtors prepared financial projections (the “Projections”) for the balance of the 2017 fiscal year, and for fiscal years 2018 through 2022 (the “Projection Period”), as set forth below.

The Debtors do not, as a matter of course, publish their business plans or strategies, projections or anticipated financial position. Accordingly, the Debtors do not anticipate that they will, and disclaim any obligation to, furnish updated business plans or Projections to holders of Claim or other parties in interest after the Confirmation Date, or to include such information in documents required to be filed with the SEC or otherwise make such information public, unless required to do so by the SEC or other regulatory bodies pursuant to the provisions of the Prepackaged Plan. In connection with the planning and the development of the Prepackaged Plan, the Projections were prepared by the Debtors, with the assistance of their professionals, to present the anticipated impact of the Prepackaged Plan. The Projections assume that the Prepackaged Plan will be implemented in accordance with its stated terms. The Projections are based on forecasts and variables and may be significantly impacted by, among other factors, oil and natural gas prices, expectations regarding future commodity prices, the level of activity of oil and natural gas exploration, development and production, demand for vessel services, competition within the industry, changes in the political environment, regulatory changes, and/or a variety of other factors. Consequently, the estimates and assumptions underlying the Projections are inherently uncertain and are subject to material business, economic, and other uncertainties. Therefore, the Projections, estimates, and assumptions are not necessarily indicative of current values or future performance, which may be significantly less or more favorable than set forth herein. The Projections included herein were last updated on May 10, 2017.

THE DEBTORS PREPARED THE PROJECTIONS WITH THE ASSISTANCE OF THEIR ADVISORS. THE DEBTORS DID NOT PREPARE SUCH PROJECTIONS TO COMPLY WITH THE GUIDELINES FOR PROSPECTIVE FINANCIAL STATEMENTS PUBLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS AND THE RULES AND REGULATIONS OF THE SEC. EXCEPT FOR PURPOSES OF THIS DISCLOSURE STATEMENT, THE DEBTORS DO NOT PUBLISH PROJECTIONS OF THEIR ANTICIPATED FINANCIAL POSITION OR RESULTS OF OPERATIONS.

MOREOVER, THE PROJECTIONS CONTAIN CERTAIN STATEMENTS THAT ARE “FORWARD-LOOKING STATEMENTS” WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATIONS REFORM ACT OF 1995. THESE STATEMENTS ARE SUBJECT TO A NUMBER OF ASSUMPTIONS, RISKS, AND UNCERTAINTIES, MANY OF WHICH ARE BEYOND THE CONTROL OF THE DEBTORS, INCLUDING THE IMPLEMENTATION OF THE PREPACKAGED PLAN, THE CONTINUING AVAILABILITY OF SUFFICIENT BORROWING CAPACITY OR

 

64


OTHER FINANCING TO FUND OPERATIONS, ACHIEVING OPERATING EFFICIENCIES, EXISTING AND FUTURE GOVERNMENTAL REGULATIONS AND ACTIONS OF GOVERNMENTAL BODIES, INDUSTRY-SPECIFIC RISK FACTORS, AND OTHER MARKET AND COMPETITIVE CONDITIONS. HOLDERS OF CLAIMS AND INTERESTS ARE CAUTIONED THAT THE FORWARD-LOOKING STATEMENTS SPEAK AS OF THE DATE MADE AND ARE NOT GUARANTEES OF FUTURE PERFORMANCE. ACTUAL RESULTS OR DEVELOPMENTS MAY DIFFER MATERIALLY FROM THE EXPECTATIONS EXPRESSED OR IMPLIED IN THE FORWARD-LOOKING STATEMENTS, AND THE DEBTORS UNDERTAKE NO OBLIGATION TO UPDATE ANY SUCH STATEMENTS.

THE PROJECTIONS, WHILE PRESENTED WITH NUMERICAL SPECIFICITY, ARE NECESSARILY BASED ON A VARIETY OF ESTIMATES AND ASSUMPTION WHICH THOUGH CONSIDERED REASONABLE BY THE DEBTORS, MAY NOT BE REALIZED AND ARE INHERENTLY SUBJECT TO SIGNIFICANT BUSINESS, ECONOMIC, INDUSTRY, REGULATORY, LEGAL, MARKET, AND FINANCIAL UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND THE REORGANIZED DEBTORS’ CONTROL. THE DEBTORS CAUTION THAT NO REPRESENTATIONS CAN BE MADE OR ARE MADE AS TO THE ACCURACY OF THE PROJECTIONS OR TO THE REORGANIZED DEBTORS’ ABILITY TO ACHIEVE THE PROJECTED RESULTS. SOME ASSUMPTIONS INEVITABLY WILL BE INCORRECT. MOREOVER, EVENTS AND CIRCUMSTANCES OCCURRING SUBSEQUENT TO THE DATE ON WHICH THE DEBTORS PREPARED THESE PROJECTIONS MAY BE DIFFERENT FROM THOSE ASSUMED, OR, ALTERNATIVELY, MAY HAVE BEEN UNANTICIPATED, AND THUS THE OCCURRENCE OF THESE EVENTS MAY AFFECT FINANCIAL RESULTS IN A MATERIALLY ADVERSE OR MATERIALLY BENEFICIAL MANNER. EXCEPT AS OTHERWISE PROVIDED IN THE PREPACKAGED PLAN OR THIS DISCLOSURE STATEMENT, THE DEBTORS AND REORGANIZED DEBTORS, AS APPLICABLE, DO NOT INTEND AND UNDERTAKE NO OBLIGATION TO UPDATE OR OTHERWISE REVISE THE PROJECTIONS TO REFLECT EVENTS OR CIRCUMSTANCES EXISTING OR ARISING AFTER THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS. THEREFORE, THE PROJECTIONS MAY NOT BE RELIED UPON AS A GUARANTEE OR OTHER ASSURANCE OF THE ACTUAL RESULTS THAT WILL OCCUR. IN DECIDING WHETHER TO VOTE TO ACCEPT OR REJECT THE PREPACKAGED PLAN, HOLDERS OF CLAIMS OR INTERESTS MUST MAKE THEIR OWN DETERMINATIONS AS TO THE REASONABLENESS OF SUCH ASSUMPTIONS AND THE RELIABILITY OF THE PROJECTIONS AND SHOULD CONSULT WITH THEIR OWN ADVISORS.

The Projections should be read in conjunction with the significant assumptions, qualifications, and notes set forth in this Disclosure Statement, the Prepackaged Plan, the Prepackaged Plan Supplement, in their entirety, and the historical consolidated financial statements (including the notes and schedules thereto).

 

65


Summary Financial Projections

(in US$ millions)

 

     2016A     2017P     2018P     2019P     2020P     2021P     2022P  
     FY     FY     FY     FY     FY     FY     FY  

Revenue

              

Vessel Revenue

     955       582       420       480       747       990       1,041  

ROV Revenue

     6       4       4       10       15       15       15  

Other Marine Revenues

     17       15       14       14       14       14       14  

Total Revenue

   $ 979     $ 601     $ 438     $ 504     $ 776     $ 1,019     $ 1,070  

Expenses

              

Vessel Operating Costs

     (561     (363     (301     (363     (456     (588     (626

ROV Operating Costs

     (7     (4     (2     (5     (8     (8     (8

Costs of Other Marine Revenues

     (12     (10     (9     (9     (9     (9     (9

Total Expenses

   ($ 580   ($ 376   ($ 311   ($ 377   ($ 472   ($ 604   ($ 642

Vessel Operating Lease Costs

     (34     (34     (3     —         —         —         —    

G&A

     (154     (139     (135     (121     (135     (147     (157

Depreciation & Amortization

     (182     (168     (64     (33     (32     (31     (30

Gain (loss) on sale of assets

     3       (3     7       15       22       6       7  

Operating income (loss)-excluding gains

   $ 29     ($ 115   ($ 75   ($ 27   $ 137     $ 238     $ 240  

Net Interest Expense

     (51     (69     (42     (30     (28     (27     (26

Gain / (Loss) on Asset Dispositions

     3       (3     7       15       22       6       7  

Amortized of Deferred Gains on Leased Vessels

     23       23       109       —         —         —         —    

Asset Impairments

     (117     (430     (2,444     —         —         —         —    

Equity in Net Earnings of Unconsol Co’s

     (13     (7     2       5       8       11       12  

Foreign exchange Gain (Loss)

     (5     (2     (0     —         —         —         —    

Other Income/(Expense)

     (8     —         10       —         —         —         40  

Income (loss) from operations

   ($ 139   ($ 603   ($ 2,433   ($ 36   $ 139     $ 228     $ 273  

Income tax (provision) benefit

     (21     (14     (26     (28     (45     (62     (74
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net Income (loss)

   ($ 160   ($ 616   ($ 2,459   ($ 64   $ 94     $ 166     $ 199  

Reconciliation of GAAP Net Income (Loss) to EBITDA

              

Income tax (provision) benefit

     21       14       26       28       45       62       74  

Venezuela Arbitration Award (incl. in Other Inc/Exp)

     —         —         —         —         —         —         (40

Asset Impairments

     117       430       2,444       —         —         —         —    

Interest and Other Debt Costs

     64       89       44       31       29       27       26  

Interest to be Capitalized

     (11     (16     (1     —         —         —         —    

Total Depreciation and Amortization

     182       168       64       33       32       31       30  

Release of Deferred Lease Liability

         (10        
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

   $ 214     $ 68     $ 107     $ 27     $ 199     $ 286     $ 290  

Income tax (provision) benefit

     (21     (14     (26     (28     (45     (62     (74

Venezuela Arbitration Award (in Other Inc/Exp)

     —         —         —         —         —         —         40  

Interest and Other Debt Costs

     (64     (89     (44     (31     (29     (27     (26

Interest to be Capitalized

     11       16       1       —         —         —         —    

Release of Deferred Lease Liability

     —         —         10       —         —         —         —    

(Gain) / Loss on Asset Dispositions

     (3     3       (7     (15     (22     (6     (7

Amortized of Deferred Gains on Leased Vessels

     (23     (23     (109     —         —         —         —    

Change in Net Working Capital

     91       53       16       25       (13     (9     8  

Total Capital Expenditures

     (195     (30     (47     (14     (24     (99     (99

Other Investing Activity

     49       26       —         —         —         —         —    

Other Operating Activity

     60       (25     23       (4     (6     (8     (8

Other Financing Activity

     (1     (0     —         —         —         —         —    

Proceeds from Debt Issuance

     517         350          

Payments/Restructuring of Debt and Capital Leases

       (12     594       (20     (31     (16     (16

Common Stock Dividends

     (35     —         —         —         —         —         —    
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Levered Free Cash Flow

     600     ($ 28   ($ 319   ($ 61   $ 30     $ 59     $ 106  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

66


  B. Assumptions to the Projections

 

  1. General Assumptions

Presentation. The Projections are presented on a consolidated basis, including estimates of operating results for Debtor and non-Debtor entities, combined.

Methodology. In developing the Projections, the Debtors considered expected customer activity levels based on working rig count outlook and historical trends. Projected cash flows are based on the assumption that activity levels in offshore exploration and development will begin to recover in 2018 in response to improved oil and natural gas prices and increasing E&P capital expenditure budgets.

Plan Consummation. The Projections assume that the Prepackaged Plan will be consummated on or about June 30, 2017.

 

  2. Assumptions With Respect to the Projected Income Statement

Revenues. In the Projections, revenues are forecasted by individual operating vessels. The Debtors developed activity and pricing assumptions based on historical levels and expected future commodity pricing. Vessel level revenues projections are based upon activity and pricing levels which are influenced by utilization of the “Active” vessel fleet. With reduced demand for offshore support vessels along with a higher number of newer generation vessels, the company has experienced a significant decline in the utilization of its vessels, average day rates received and vessel revenue.

Operating Costs. The direct cost forecast is based on the Debtors’ review of historical operating results, discussions with field personnel regarding planned utilization levels and associated cost impact and an evaluation of opportunities to reduce costs. Direct costs consist primarily of labor costs, materials and supplies necessary to complete forecasted jobs, major repairs, routine scheduled maintenance costs and other direct costs incurred in the normal course of completing a job. The Debtors continue their efforts to reduce its operating costs, including by stacking under-utilized equipment.

General and Administrative. General and administrative costs (“G&A”) are comprised primarily of indirect labor costs and other expenses associated with corporate overhead. The amount of G&A is based on historical G&A cost trends, adjusted for cost reduction efforts. The forecast models G&A cost structures to support diminishing projected revenues.

Depreciation and Amortization. Depreciation and amortization reflects the anticipated depreciation and amortization of the Debtors’ net property, plant & equipment and intangible assets based on book values.

Estimations have been made for asset value adjustments resulting from the application of “fresh start” reporting as required by Topic 852, Reorganizations, of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification.

Interest Expense. Interest expense is forecasted based on the Amended and Restated Credit Agreement and Secured Term Loan, as more fully described in the Prepackaged Plan and the exhibits thereto.

Income Tax (Expense) Benefit. Income tax is estimated based on the anticipated effective corporate tax rate.

 

67


Restructuring Expenses. Restructuring Expenses include costs related to the recapitalization process, including but not limited to professional fees, claims administration and other items. Estimated amounts are based on the terms of contracts and historical precedent.

 

  3. Assumptions with Respect to the Projected Balance Sheet and Projected Statement of Cash Flows

Working Capital. Working capital assumptions are based on historical days’ sales outstanding and historical days payable as well as historical levels of prepaid and other current assets and current liabilities. Large receivable balances not resulting from recent revenues are modeled independently.

Capital Expenditures. Capital expenditures primarily relate to maintenance-oriented capital necessary to maintain the service capability of the Debtors’ existing assets in the normal course of the Debtors’ businesses. In addition, the Projections include capital associated with ongoing major refurbishment and overhaul work that may be needed based on historical precedent.

VIII.

VALUATION ANALYSIS

 

  A. Estimated Reorganization Valuation of the Debtor

The Debtors have been advised by Lazard Frères & Co. LLC (“Lazard”) with respect to the reorganization value of the Reorganized Debtors on a going concern basis. Solely for purposes of the Prepackaged Plan, the estimated range of a reorganization value of the Reorganized Debtors (the “Enterprise Value”) was assumed to be approximately $850 million to $1,250 million (with a midpoint estimate of approximately $1,050 million) as of an assumed Effective Date of June 30, 2017. The valuation analysis herein is based on information as of the date of the Disclosure Statement and is based on the Projections for the Projection Period. For purposes of this valuation, it has been assumed that no material changes that would affect value occur between the date of the Disclosure Statement and the assumed Effective Date. Lazard’s estimate of a range of Enterprise Values does not constitute an opinion as to fairness from a financial point of view of the consideration to be received under the Prepackaged Plan or of the terms and provisions of the Prepackaged Plan.

THE ASSUMED RANGE OF THE ENTERPRISE VALUE, AS OF AN ASSUMED EFFECTIVE DATE OF JUNE 30, 2017, REFLECTS WORK PERFORMED BY LAZARD ON THE BASIS OF INFORMATION IN RESPECT OF THE BUSINESS AND ASSETS OF THE DEBTORS AVAILABLE TO LAZARD AS OF MARCH 8, 2017. IT SHOULD BE UNDERSTOOD THAT, ALTHOUGH SUBSEQUENT DEVELOPMENTS MAY AFFECT LAZARD’S CONCLUSIONS, LAZARD DOES NOT HAVE ANY OBLIGATION TO UPDATE, REVISE OR REAFFIRM ITS ESTIMATE.

Based upon the assumed range of the Enterprise Value of the Reorganized Debtors of between $850 million and $1,250 million and assumed adjusted net debt of $74 million (assuming a pro forma debt balance of $442 million less cash balance of $368 million), Lazard has employed an imputed estimate of the range of equity value for the Reorganized Debtors (the “Equity Value”) between approximately $776 million and $1,176 million, with a midpoint estimate of $976 million.

The assumed range of reorganization value was based on the Projections for the Projection Period, as set forth previously.

 

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LAZARD DID NOT INDEPENDENTLY VERIFY THE PROJECTIONS IN CONNECTION WITH LAZARD’S ESTIMATES OF THE ENTERPRISE VALUE AND EQUITY VALUE, AND NO INDEPENDENT VALUATIONS OR APPRAISALS OF THE DEBTORS WERE SOUGHT OR OBTAINED IN CONNECTION HEREWITH. ESTIMATES OF THE ENTERPRISE VALUE AND EQUITY VALUE DO NOT PURPORT TO BE APPRAISALS OR NECESSARILY REFLECT THE VALUES THAT MAY BE REALIZED IF ASSETS ARE SOLD AS A GOING CONCERN, IN LIQUIDATION, OR OTHERWISE. IN THE CASE OF THE REORGANIZED DEBTORS, THE ESTIMATES OF THE ENTERPRISE VALUE PREPARED BY LAZARD REPRESENT THE HYPOTHETICAL ENTERPRISE VALUE OF THE REORGANIZED DEBTORS. SUCH ESTIMATES WERE DEVELOPED SOLELY FOR PURPOSES OF THE FORMULATION OF THE PREPACKAGED PLAN AND THE ANALYSIS OF IMPLIED RELATIVE RECOVERIES TO CREDITORS THEREUNDER. SUCH ESTIMATES REFLECT COMPUTATIONS OF THE RANGE OF THE ESTIMATED ENTERPRISE VALUE OF THE REORGANIZED DEBTORS THROUGH THE APPLICATION OF VARIOUS VALUATION TECHNIQUES AND DO NOT PURPORT TO REFLECT OR CONSTITUTE APPRAISALS, LIQUIDATION VALUES, OR ESTIMATES OF THE ACTUAL MARKET VALUE THAT MAY BE REALIZED THROUGH THE SALE OF ANY SECURITIES TO BE ISSUED PURSUANT TO THE PREPACKAGED PLAN, WHICH MAY BE SIGNIFICANTLY DIFFERENT THAN THE AMOUNTS SET FORTH HEREIN.

THE VALUE OF AN OPERATING BUSINESS IS SUBJECT TO NUMEROUS UNCERTAINTIES AND CONTINGENCIES WHICH ARE DIFFICULT TO PREDICT AND WILL FLUCTUATE WITH CHANGES IN FACTORS AFFECTING THE FINANCIAL CONDITION AND PROSPECTS OF SUCH A BUSINESS. AS A RESULT, THE ESTIMATE OF THE RANGE OF THE REORGANIZATION ENTERPRISE VALUE OF THE REORGANIZED DEBTORS SET FORTH HEREIN IS NOT NECESSARILY INDICATIVE OF ACTUAL OUTCOMES, WHICH MAY BE SIGNIFICANTLY MORE OR LESS FAVORABLE THAN THOSE SET FORTH HEREIN. BECAUSE SUCH ESTIMATES ARE INHERENTLY SUBJECT TO UNCERTAINTIES, NEITHER THE DEBTORS, LAZARD, NOR ANY OTHER PERSON ASSUMES RESPONSIBILITY FOR THEIR ACCURACY. IN ADDITION, THE VALUATION OF NEWLY ISSUED SECURITIES IS SUBJECT TO ADDITIONAL UNCERTAINTIES AND CONTINGENCIES, ALL OF WHICH ARE DIFFICULT TO PREDICT. ACTUAL MARKET PRICES OF SUCH SECURITIES AT ISSUANCE WILL DEPEND UPON, AMONG OTHER THINGS, PREVAILING INTEREST RATES, CONDITIONS IN THE FINANCIAL MARKETS, THE ANTICIPATED INITIAL SECURITIES HOLDINGS OF PREPETITION CREDITORS, SOME OF WHICH MAY PREFER TO LIQUIDATE THEIR INVESTMENT RATHER THAN HOLD IT ON A LONG-TERM BASIS, AND OTHER FACTORS WHICH GENERALLY INFLUENCE THE PRICES OF SECURITIES.

Lazard assumed that the Projections were reasonably prepared in good faith and on a basis reflecting the Debtors’ most accurate currently available estimates and judgments as to the future operating and financial performance of the Reorganized Debtors. The estimated Enterprise Value and Equity Value ranges assume the Reorganized Debtors will achieve their Projections in all material respects, including revenue growth, EBITDA margins, and cash flows as projected. If the business performs at levels below or above those set forth in the Projections, such performance may have a materially negative or positive impact, respectively, on Enterprise Value and Equity Value. In estimating the Enterprise Value, Lazard: (a) reviewed certain current and historical operations and financial performance of the Debtors; (b) reviewed certain financial projections, including various supporting schedules and other related financial information of the Debtors; (c) discussed the Debtors’ operations and future prospects with the senior management team and professionals; (d) reviewed certain publicly available financial data for, and considered the market value of, public companies that Lazard deemed generally relevant in analyzing the value of the Reorganized Debtors; (e) considered certain economic and industry information relevant to the operating businesses; and (f) conducted such other studies, analyses, inquiries and investigations as it deemed appropriate. Lazard assumed and relied on the accuracy and completeness of all financial and other information furnished to it by the Debtors’ management as well as publicly available information.

 

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The estimated Enterprise Value and Equity Value do not constitute a recommendation to any holder of Allowed Claims as to how such person should vote or otherwise act with respect to the Prepackaged Plan. Lazard has not been asked to and does not express any view as to what the trading value of the Reorganized Debtors’ securities would be on issuance at any time. The estimated Enterprise Value and Equity Value of the Reorganized Debtors set forth herein does not constitute an opinion as to fairness from a financial point of view to any person of the consideration to be received by such person under the Prepackaged Plan or of the terms and provisions of the Prepackaged Plan.

Based on the Debtors’ and their tax professionals’ tax analysis, the Reorganized Debtors do not expect to have significant tax attributes following the reorganization. Lazard did not estimate the value of any tax attributes nor did it estimate the impact of any cancellation of indebtedness income on the Reorganized Debtors’ projections. Any changes to the assumptions on the availability of tax attributes or the impact of cancellation of indebtedness income on the Reorganized Debtors’ projections could materially impact Lazard’s valuation analysis.

THE ESTIMATES OF THE ENTERPRISE VALUE AND EQUITY VALUE DETERMINED BY LAZARD REPRESENT ESTIMATED VALUES AND DO NOT REFLECT VALUES THAT COULD BE ATTAINABLE IN PUBLIC OR PRIVATE MARKETS. THE IMPUTED ESTIMATE OF THE RANGE OF THE EQUITY VALUE OF REORGANIZED DEBTORS ASCRIBED IN THE ANALYSIS DOES NOT PURPORT TO BE AN ESTIMATE OF THE POST-REORGANIZATION MARKET TRADING VALUE. ANY SUCH TRADING VALUE MAY BE MATERIALLY DIFFERENT FROM THE IMPUTED ESTIMATE OF THE EQUITY VALUE RANGE FOR THE REORGANIZED DEBTORS ASSOCIATED WITH LAZARD’S VALUATION ANALYSIS.

LAZARD IS ACTING AS INVESTMENT BANKER TO THE COMPANY, AND WILL NOT BE RESPONSIBLE FOR AND WILL NOT PROVIDE ANY TAX, ACCOUNTING, ACTUARIAL, LEGAL OR OTHER SPECIALIST ADVICE.

IX.

TRANSFER RESTRICTIONS AND CONSEQUENCES UNDER FEDERAL SECURITIES LAWS

The Solicitation is being made before the Petition Date only to holders of Credit Agreement Claims and Unsecured Notes Claims who are “accredited investors” within the meaning of Rule 501(a) of Regulation D of the Securities Act.

The issuance of, and the distribution under, the Prepackaged Plan of the New Common Stock, the New Warrants (and the New Common Stock issuable upon exercise thereof), and the New Secured Notes will be exempt from registration under the Securities Act and any other applicable securities laws pursuant to section 1145 of the Bankruptcy Code. Based on the legislative history of section 1145 of the Bankruptcy Code, a creditor who owns ten percent (10%) or more of the voting securities of a reorganized debtor may be presumed to be a control person and, therefore, an underwriter.

Section 1145 of the Bankruptcy Code generally exempts from registration under the Securities Act the offer or sale pursuant to a chapter 11 plan of a security of the debtor, of an affiliate participating in a joint plan with the debtor, or of a successor to the debtor under a plan, if such securities are offered or sold in exchange for a claim against, or interest in, the debtor or such affiliate, or principally in such exchange and partly for cash. Section 1145 of the Bankruptcy Code also exempts from registration the offer of a security through any right to subscribe sold in the manner provided in the prior sentence, and the sale of a

 

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security upon the exercise of such right. In reliance upon this exemption, the New Common Stock, the New Warrants (and the New Common Stock issuable upon exercise thereof), and the New Secured Notes will be exempt from the registration requirements of the Securities Act, and state and local securities laws. These securities may be resold without registration under the Securities Act or other federal or state securities laws pursuant to the exemption provided by section 4(a)(1) of the Securities Act, unless the holder is an “underwriter” with respect to such securities, as that term is defined in section 1145(b) of the Bankruptcy Code. In addition, such section 1145 exempt securities generally may be resold without registration under state securities laws pursuant to various exemptions provided by the respective laws of the several states.

Section 1145(b) of the Bankruptcy Code defines “underwriter” for purposes of the Securities Act as one who, except with respect to ordinary trading transactions, (a) purchases a claim with a view to distribution of any security to be received in exchange for the claim, (b) offers to sell securities issued under a plan for the holders of such securities, (c) offers to buy securities issued under a plan from persons receiving such securities, if the offer to buy is made with a view to distribution or (d) is an issuer, as used in Section 2(a)(11) of the Securities Act, with respect to such securities, which includes control persons of the issuer.

Notwithstanding the foregoing, control person underwriters may be able to sell securities without registration pursuant to the resale limitations of Rule 144 under the Securities Act which permits the resale of securities received by such underwriters pursuant to a chapter 11 plan, subject to applicable volume limitations, notice and manner of sale requirements, and certain other conditions. Parties who believe they may be statutory underwriters as defined in section 1145 of the Bankruptcy Code are advised to consult with their own legal advisors as to the availability of the exemption provided by Rule 144.

Recipients of New Common Stock, the New Warrants (and the New Common Stock issuable upon exercise thereof), and/or the New Secured Notes issued under the Prepackaged Plan are advised to consult with their own legal advisors as to the availability of any such an exemption from registration requirements under state law in any given instance and as to any applicable requirements or conditions to such availability.

Upon the Effective Date of the Prepackaged Plan, Reorganized Tidewater Parent will use commercially reasonable efforts to have the New Common Stock and New Existing Equity Warrants listed on a nationally recognized exchange as soon as practicable subject to meeting applicable listing requirements following the Effective Date. No assurance can be given that a holder of such securities will be able to sell such securities in the future or as to the price at which any sale may occur.

X.

CERTAIN TAX CONSEQUENCES OF THE PREPACKAGED PLAN

The following discussion summarizes certain U.S. federal income tax consequences of the implementation of the Prepackaged Plan to the Debtors and to U.S. holders (as defined below) of General Unsecured Claims. This discussion does not address the U.S. federal income tax consequences to holders of Claims or Interests who are unimpaired or deemed to reject the Prepackaged Plan or to holders that are foreign taxpayers.

The discussion of U.S. federal income tax consequences below is based on the Tax Code, Treasury regulations, judicial authorities, published positions of IRS, and other applicable authorities, all as in effect on the date of this Disclosure Statement and all of which are subject to change or differing interpretations (possibly with retroactive effect). The U.S. federal income tax consequences of the contemplated transactions are complex and subject to significant uncertainties. The Debtors have not requested an opinion of counsel or a ruling from the IRS with respect to any of the tax aspects of the

 

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contemplated transactions. This discussion does not address any aspect of state, local or non-U.S. taxation, or any U.S. federal taxes other than income taxes. In addition, this discussion does not apply to any person that acquires any of the New Secured Notes, New Common Stock, or New Creditor Warrants (collectively, the “New Securities”) from the original holder.

This discussion does not describe all of the tax consequences that may be relevant to a U.S. holder in light of its particular circumstances, including the alternative minimum tax, the Medicare tax on certain investment income, and the different tax consequences that may apply if the holder is subject to special rules that apply to certain types of taxpayers (such as, financial institutions, insurance companies, regulated investment companies, dealers or traders subject to a mark-to-market method of tax accounting with respect to the Claims or New Securities, persons holding Claims or New Securities as part of a “straddle,” hedge, integrated transaction or similar transaction, holders whose functional currency is not the U.S. dollar, and holders that are partnerships or other pass-through entities for U.S. federal income tax purposes).

This discussion assumes that the General Unsecured Claims and the New Securities are held as “capital assets” (generally, property held for investment) within the meaning of section 1221 of the Tax Code and that the various debt and other arrangements to which the Debtors are parties, except for the New Creditor Warrants, will be respected for U.S. federal income tax purposes in accordance with their form. Tidewater Parent intends to treat the New Creditor Warrants as stock for U.S. federal income tax purposes. If the IRS successfully asserted that the New Creditor Warrants are not stock or that any other intended treatment of other arrangements is incorrect, the U.S. federal income tax consequences could differ materially from those described below.

The following summary of certain U.S. federal income tax consequences is for informational purposes only and is not a substitute for careful tax planning and advice based upon a U.S. holder’s individual circumstances. U.S. holders are urged to consult their own tax advisor with respect to the correctness of our position with respect to the New Creditor Warrants and for the U.S. federal, state, local, and other tax consequences applicable under the Prepackaged Plan.

 

  A. Consequences to Debtors

For U.S. federal income tax purposes, the Debtors are members of an affiliated group of corporations (or are disregarded entities all of whose income, losses and deductions are taken into account by a member of the group) of which Tidewater Parent is the common parent, which files a single consolidated U.S. federal income tax return (the “Tidewater US Tax Group”). The Tidewater US Tax Group has estimated that it will have consolidated NOLs and NOLs carryforwards for U.S. federal income tax purposes of approximately $63 million as of March 31, 2017, and expects to incur additional NOLs for the period through the Effective Date. In addition, the Debtors estimate that the Tidewater Group has an aggregate adjusted tax basis in its assets of approximately $2 billion for U.S. federal income tax purposes as of March 31, 2017. The amount of any such NOL carryforwards, any other tax attributes, and the extent to which any limitations apply, remain subject to audit and adjustment by the IRS.

Although the Debtors do not believe that its NOL carryforwards are currently subject to limitation under section 382 of the Tax Code, subsequent trading activity and certain other actions prior to the Effective Date could result in an ownership change of the Debtors independent of the Prepackaged Plan which could adversely affect the ability to fully utilize the Debtors’ NOLs. Accordingly, in an attempt to minimize the likelihood of such an ownership change occurring, the Debtors will be seeking a protective trading order at the inception of the Chapter 11 Cases. See discussion at Section IV.A.8 Protection of Tax Benefits and Net Operating Losses hereof.

 

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In addition, as discussed below, the amount of the Tidewater US Tax Group’s NOLs (including those incurred through the Effective Date) and other attributes are expected to be significantly reduced in connection with the implementation of the Prepackaged Plan.

 

  1. Cancellation of Debt Income

In general, the Tax Code provides that a debtor in a bankruptcy case must reduce certain of its tax attributes—such as NOL carryforwards and current year NOLs, capital loss carryforwards, tax credits, and tax basis in assets—by the amount of any cancellation of debt income (“CODI”) incurred pursuant to a confirmed chapter 11 plan. The amount of CODI incurred is generally the amount by which the indebtedness discharged exceeds the value of any consideration given in exchange therefor. Certain statutory or judicial exceptions may apply to limit the amount of CODI incurred for U.S. federal income tax purposes. If advantageous, the debtor can elect to reduce the basis of depreciable property prior to any reduction in its NOL carryforwards or other tax attributes. Where the debtor joins in the filing of a consolidated U.S. federal income tax return, applicable Treasury regulations require, in certain circumstances, that the tax attributes of the consolidated subsidiaries of the debtor and other members of the group must also be reduced. Any reduction in tax attributes in respect of CODI income generally does not occur until after the determination of the debtor’s net income or loss for the taxable year in which the CODI is incurred.

The Debtors expect to incur significant CODI as a result of the implementation of the Prepackaged Plan, with the result that the Tidewater US Tax Group would have a corresponding reduction in its consolidated NOLs and its other tax attributes. The amount of CODI actually incurred will depend primarily on the issue price of the New Secured Notes (determined as described below in “Consequences to U.S. Holders of General Unsecured Claims—Ownership and Disposition of the New Secured Notes—Issue Price of the New Secured Notes”) and the fair market value of the New Common Stock and New Creditor Warrants distributed to holders of Claims. Nevertheless, the Debtors expect that their existing NOL carryforwards and any NOLs incurred through the end of the taxable year in which the Prepackaged Plan goes effective and their other tax attributes (including tax basis in their assets) will be significantly reduced as a result of the attendant attribute reduction.

 

  2. Potential Limitations on NOL Carryforwards and Other Tax Attributes

Following the Effective Date, any remaining NOL carryforwards and other tax attributes allocable to periods prior to the Effective Date including certain built-in losses (collectively, “Pre-Change Losses”) will be subject to limitation under section 382 of the Tax Code. Any such limitation applies in addition to, and not in lieu of, the use of attributes or the attribute reduction that results from the COD arising in connection with the Prepackaged Plan. Under section 382 of the Tax Code, if a corporation (or consolidated group) undergoes an “ownership change” and the corporation does not qualify for (or elects out of) the special bankruptcy exception in section 382(l)(5) of the Tax Code discussed below, the amount of its Pre-Change Losses that may be utilized to offset future taxable income or tax liability is subject to an annual limitation. The issuance of the New Common Stock pursuant to the Prepackaged Plan will result in an “ownership change” of the Tidewater US Tax Group for these purposes.

In general, the amount of the annual limitation to which a corporation that undergoes an ownership change will be subject is equal to the product of (1) the fair market value of the stock of the corporation immediately before the ownership change (with certain adjustments) multiplied by (2) the “long term tax exempt rate” in effect for the month in which the ownership change occurs (e.g., 2.09% for ownership changes occurring in April 2017). As discussed below, this annual limitation potentially may be impacted in the event the corporation (or consolidated group) has an overall “built-in” gain or loss in its assets at the time of the ownership change. For a corporation (or consolidated group) in bankruptcy that undergoes

 

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an ownership change pursuant to a confirmed bankruptcy plan, the fair market value of the stock of the corporation (or the parent of the consolidated group) is generally determined immediately after (rather than before) the ownership change, but subject to certain adjustments; in no event, however, can the stock value for this purpose exceed the pre-change gross value of the corporation’s assets.

Any portion of the annual limitation that is not used in a given year may be carried forward, thereby adding to the annual limitation for the subsequent taxable year. However, if the corporation (or consolidated group) does not continue its historic business or use a significant portion of its historic assets in a new business for at least two years after the ownership change, the annual limitation resulting from the ownership change is reduced to zero, thereby precluding any utilization of the corporation’s Pre-Change Losses, absent any increases due to recognized built-in gains discussed below.

Accordingly, the impact of an ownership change of the Tidewater US Tax Group pursuant to the Prepackaged Plan depends upon, among other things, the amount of Pre-Change Losses remaining after the reduction of attributes due to the COD, the value of both the stock and assets of the Tidewater US Tax Group as of the Effective Date, the continuation of its respective business, and the amount and timing of future taxable income.

In addition, the Tidewater US Tax Group’s use of any Pre-Change Losses after the Effective Date may be adversely affected if a subsequent ownership change were to occur, since at such later time a more severe annual limitation could apply (depending, in part, on the then equity value and applicable long term tax exempt rate and whether the special bankruptcy exception in section 382(l)(5) of the Tax Code is applied to the implementation of the Prepackaged Plan) or, for example, the Tidewater US Tax Group could be in a net unrealized built-in loss position (see discussion below).

 

  (a) Built-in Gains and Losses

Section 382 of the Tax Code can operate to limit the deduction of certain “built-in” losses recognized subsequent to the date of the ownership change. If a loss corporation (or consolidated group) has a net unrealized built-in loss at the time of an ownership change (taking into account most assets and items of “built-in” income, gain, loss and deduction), then any built-in losses recognized during the following five years (up to the amount of the original net unrealized built-in loss) generally will be treated as Pre-Change Losses and similarly will be subject to the annual limitation. Conversely, if the loss corporation (or consolidated group) has a net unrealized built-in gain at the time of an ownership change, any built-in gains recognized (or, under an IRS notice, treated as recognized) during the following five years (up to the amount of the original net unrealized built-in gain) generally will increase the annual limitation in the year recognized, such that the loss corporation (or consolidated group) would be permitted to use its Pre-Change Losses against such built-in gain income in addition to its regular annual allowance. In general, a loss corporation’s (or consolidated group’s) net unrealized built-in gain or loss will be deemed to be zero unless the actual amount of such gain or loss is greater than the lesser of (1) $10,000,000.00 or (2) fifteen percent (15%) of the fair market value of its assets (with certain adjustments) before the ownership change. After taking into consideration the above-mentioned IRS notice and certain non-binding IRS authorities, the Debtors have not yet determined whether Debtors would have a net unrealized built-in gain or loss as of the Effective Date. In either event, the Debtors anticipate the size of the net unrealized build-in gain or loss to be small.

 

  (b) Section 382(l)(5) Bankruptcy Exception

Under section 382(l)(5) of the Tax Code, an exception to the foregoing annual limitation rules generally applies where “qualified creditors” and existing shareholders of a debtor corporation receive, in respect of their claims or equity interests, at least fifty percent (50%) of the vote and value of the stock of the

 

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reorganized debtor (or a controlling corporation if also in bankruptcy) pursuant to a confirmed chapter 11 plan. The IRS has in private letter rulings applied section 382(l)(5) of the Tax Code on a consolidated basis where the parent corporation is in bankruptcy. Generally, qualified creditors are creditors who (1) held their claims continuously for at least eighteen months at the time the bankruptcy petition is filed and thereafter, (2) hold claims incurred in the ordinary course of the debtor’s business and held those claims continuously since they were incurred, or (3) in certain cases, do not become five percent (5%) shareholders of the reorganized corporation.

Under this exception, a debtor’s Pre-Change Losses are not limited on an annual basis, but, instead, are required to be reduced by the amount of any interest deductions claimed during the three taxable years preceding the effective date of the plan of reorganization, and during the part of the taxable year prior to and including the effective date of the plan of reorganization, in respect of all debt converted into stock in the reorganization. In the present case, this interest chargeback could result in a significant reduction in the amount of the Debtors’ otherwise remaining NOL carryforwards. Moreover, if this exception applies, any further ownership change of the Debtors within a two-year period after the Effective Date would preclude the Debtor’s utilization of any Pre-Change Losses at the time of the subsequent ownership change against future income. A debtor that qualifies for this exception may, if it so desires, elect not to have the exception apply and instead remain subject to the annual limitation described above. The Debtors have not yet determined whether section 382(l)(5) would apply in the present case and, if applicable, whether to elect not to have it apply.

 

  3. Alternative Minimum Tax

In general, a U.S. federal alternative minimum tax (“AMT”) is imposed on a corporation’s alternative minimum taxable income at a twenty percent rate to the extent that such tax exceeds the corporation’s regular U.S. federal income tax. For purposes of computing taxable income for AMT purposes, certain tax deductions and other beneficial allowances are modified or eliminated. In particular, even though a corporation otherwise might be able to offset all of its taxable income for regular tax purposes by available NOL carryforwards, only ninety percent of a corporation’s (or consolidated group’s) taxable income for AMT purposes may be offset by available NOL carryforwards (as computed for AMT purposes). Accordingly, usage of the Debtors’ NOLs by the Debtors may be subject to limitations for AMT purposes in addition to any other limitations that may apply.

In addition, if a corporation undergoes an ownership change and is in a net unrealized built-in loss position (as determined for AMT purposes) on the date of the ownership change, the corporation’s aggregate tax basis in its assets is reduced for certain AMT purposes to reflect the fair market value of such assets as of the change date. Accordingly, if the Debtors are in a net unrealized loss position on the Effective Date, the tax benefits attributable to its basis in assets may be reduced for AMT purposes.

Any AMT that a corporation pays generally will be allowed as a nonrefundable credit against its regular U.S. federal income tax liability in future taxable years when the corporation is no longer subject to the AMT.

 

  B. Consequences to U.S. Holders of General Unsecured Claims

As used in this section of the Disclosure Statement, the term “U.S. holder” means a beneficial owner of General Unsecured Claims or New Securities that is for U.S. federal income tax purposes:

an individual who is a citizen or resident of the United States;

 

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a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States, any state thereof, or the District of Columbia; or

an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.

If a partnership or other entity taxable as a partnership for U.S. federal income tax purposes holds General Unsecured Claims or New Securities, the tax treatment of a partner generally will depend upon the status of the partner and the activities of the partnership. U.S. holders, who are partners in a partnership holding any of such instruments, should consult their own tax advisors.

 

  1. Exchanges of General Unsecured Claims under the Prepackaged Plan

Pursuant to the Prepackaged Plan, and in complete and final satisfaction of their Claims, holders of General Unsecured Claims will receive New Common Stock (or, in the case of holders that are treated as Non-U.S. Citizens, New Creditor Warrants and/or New Common Stock), the New Secured Notes, and Cash.

The U.S. federal income tax consequences of the Prepackaged Plan to a U.S. holder of General Unsecured Claims will depend on whether the General Unsecured Claims (in whole or in part) and the New Secured Notes constitute “securities” of Tidewater Parent for U.S. federal income tax purposes. This determination is made separately for each type of loan underlying a General Unsecured Claim. If any loan underlying a U.S. holder’s General Unsecured Claim constitutes a security of Tidewater Parent, then the receipt of New Common Stock and the remaining consideration pursuant to the Prepackaged Plan in respect of such portion of the General Unsecured Claims should be treated as part of a “reorganization” for U.S. federal income tax purposes, with the consequences described below in “Reorganization Treatment.” If, on the other hand, any loan underlying a U.S. holder’s General Unsecured Claim does not constitute a security of Tidewater Parent, then the receipt of New Common Stock and other consideration in respect of such portion of the General Unsecured Claim will be treated as a fully taxable transaction, with the consequences described below in “Fully Taxable Exchange.”

The term “security” is not defined in the Tax Code or in the Treasury regulations issued thereunder and has not been clearly defined by judicial decisions. The determination of whether a particular debt obligation constitutes a “security” depends on an overall evaluation of the nature of the debt, including whether the holder of such debt obligation is subject to a material level of entrepreneurial risk and whether a continuing proprietary interest is intended or not. One of the most significant factors considered in determining whether a particular debt obligation is a security is its original term. In general, debt obligations issued with a weighted-average maturity at issuance of less than five years do not constitute securities, whereas debt obligations with a weighted-average maturity at issuance of ten years or more constitute securities.

Based on these authorities it would be reasonable to treat the Notes Claims, any Credit Agreement Claim in respect of the $300 million term loan facility under the Credit Agreement, and the New Secured Notes as securities. Therefore, it would be reasonable to treat the exchange of such Claims for the New Securities as a recapitalization. To the extent Reorganized Tidewater Parent is required to take a position regarding the status of the exchange of General Unsecured Claims as a recapitalization, it presently intends to treat the exchange of Notes Claims and any Credit Agreement Claim in respect of the $300 million term loan credit facility under the Credit Agreement as a recapitalization and to treat the exchange of any other General Unsecured Claims, including any Credit Agreement Claim in respect of the $600 million revolving credit facility, as a fully taxable exchange. Because the law is not clear, however, the IRS may not agree, and U.S. holders of General Unsecured Claims are urged to consult their own tax advisors regarding the appropriate status for U.S. federal income tax purposes of each of the loans underlying the General Unsecured Claims and the New Secured Notes to be received.

 

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  (a) Reorganization Treatment

If any loan underlying a U.S. holder’s General Unsecured Claim constitutes a security of Tidewater Parent for U.S. federal income tax purposes, the receipt of New Common Stock or New Creditor Warrants in exchange for such portion of the General Unsecured Claim should qualify for tax treatment as a “recapitalization reorganization.” The classification as a reorganization exchange generally serves to defer loss and to limit gain recognized to the amount of any property received by a U.S. holder that is not treated as stock or securities. However, a holder of a General Unsecured Claim generally would still have to recognize gain (computed as described in the following section), if any, to the extent of the amount of any Cash and, if the New Secured Notes do not constitute a security for this purpose, the issue price of the New Secured Notes received.

In addition, even within an otherwise tax-free exchange, a U.S. holder will have interest income to the extent of any exchange consideration allocable to accrued but unpaid interest not previously included in income (see “Distributions in Respect of Accrued But Unpaid Interest or OID” below).

In a reorganization exchange, the U.S. holder’s aggregate tax basis in the New Common Stock or New Creditor Warrants and, if they constitute securities, the New Secured Notes received will equal such U.S. holder’s aggregate adjusted tax basis in the General Unsecured Claim exchanged therefor, increased by any gain or interest income recognized in the exchange, and decreased by any deductions claimed in respect of any previously accrued but unpaid interest and the amount of any Cash received. If the New Secured Notes do not constitute securities, the U.S. holder’s aggregate tax basis of the New Common Stock or New Creditor Warrants received would equal such U.S. holder’s aggregate adjusted tax basis in the General Unsecured Claim exchanged therefor, increased by any gain or interest income recognized in the exchange, and decreased by any deductions claimed in respect of any previously accrued but unpaid interest, the amount of any Cash received and the issue price of the New Secured Notes. A U.S. holder’s holding period in New Common Stock or New Creditor Warrants and, if they constitute securities, the New Secured Notes received will include its holding period in the loan underlying the General Unsecured Claim exchanged therefor, except to the extent of any exchange consideration received in respect of accrued but unpaid interest and possibly accrued original issue discount (“OID”).

If the New Secured Notes do not constitute securities, a U.S. holder’s tax basis in the New Secured Notes received should be the issue price of the New Secured Notes, and the U.S. holder’s holding period in the New Secured Notes should begin on the day following the exchange date.

In the event of the subsequent disallowance of any Disputed Sale Leaseback Claim after the Effective Date, a U.S. holder of a previously Allowed General Unsecured Claim may receive additional distributions in respect of its Claim. In such instance, the imputed interest provisions of the Tax Code may apply to treat a portion of such additional distributions as imputed interest. In addition, a U.S. holder may recognize additional gain or otherwise be subject to the possible application of the “installment method” of reporting with respect to any gain realized. U.S. holders are urged to consult their own tax advisors regarding the possibility for deferral, and the potential application (and ability to elect out) of the “installment method” of reporting any gain realized in respect of their General Unsecured Claim.

 

  (b) Fully Taxable Exchange

In general, to the extent that the exchange of a General Unsecured Claim pursuant to the Prepackaged Plan is a fully taxable exchange, the exchanging U.S. holder should recognize gain or loss in an amount

 

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equal to the difference, if any, between (i) the sum of the fair market value of the New Common Stock or New Creditor Warrants, the issue price of the New Secured Notes and the amount of Cash received in respect of such General Unsecured Claim on the Effective Date (other than any exchange consideration received in respect of a General Unsecured Claim for accrued but unpaid interest and possibly accrued OID), and (ii) the U.S. holder’s adjusted tax basis in the portion of the General Unsecured Claim exchanged therefor (other than any tax basis attributable to accrued but unpaid interest and possibly accrued OID). See “Character of Gain or Loss” below. In addition, a U.S. holder of a General Unsecured Claim will have interest income to the extent of any exchange consideration allocable to accrued but unpaid interest not previously included in income. See “Distributions in Respect of Accrued But Unpaid Interest or OID” below.

Generally, a U.S. holder’s adjusted tax basis in a General Unsecured Claim will be equal to the cost of the General Unsecured Claim to such U.S. holder, increased by any OID previously included in income. If applicable, a U.S. holder’s tax basis in a General Unsecured Claim also will be (i) increased by any market discount previously included in income by such U.S. holder pursuant to an election to include market discount in gross income currently as it accrues, and (ii) reduced by any Cash payments received on the General Unsecured Claim other than payments of qualified stated interest, and by any amortizable bond premium that the U.S. holder has previously deducted.

In the case of a taxable exchange, a U.S. holder’s tax basis in the New Secured Notes and New Common Stock or New Creditor Warrants received in respect of its General Unsecured Claim on the Effective Date should equal the issue price of the New Secured Notes and the fair market value of the New Common Stock or New Creditor Warrants on the Effective Date. The U.S. holder’s holding period in such instruments received should begin on the day following the Effective Date.

In the event of the subsequent disallowance of any Disputed Sale Leaseback Claim after the Effective Date, a U.S. holder of a previously Allowed General Unsecured Claim may receive additional distributions in respect of its General Unsecured Claim. In such instance, the imputed interest provisions of the Tax Code may apply to treat a portion of such additional distributions as imputed interest. In addition, it is possible that any loss realized by a U.S. holder in respect of its General Unsecured Claim may be deferred until all Disputed Sale Leaseback Claims are resolved (i.e., until the U.S. holder has received its final distribution). Alternatively, a U.S. holder may recognize additional gain or otherwise be subject to the possible application of the “installment method” of reporting with respect to any gain realized. U.S. holders are urged to consult their own tax advisors regarding the possibility for deferral, and the potential application (and ability to elect out) of the “installment method” of reporting any gain realized in respect of their General Unsecured Claims.

 

  (c) Character of Gain or Loss

Where gain or loss is recognized by a U.S. holder, the character of such gain or loss as long-term or short-term capital gain or loss or as ordinary income or loss will be determined by a number of factors, including the tax status of the holder, whether the General Unsecured Claim constitutes a capital asset in the hands of the holder and how long it has been held, whether the General Unsecured Claim was acquired at a market discount, and whether and to what extent the holder previously claimed a bad debt deduction.

A U.S. holder that purchased any loan underlying its General Unsecured Claims from a prior holder at a “market discount” may be subject to the market discount rules of the Tax Code. In general, a debt instrument is considered to have been acquired with “market discount” if its holder’s adjusted tax basis in the debt instrument is less than (i) its stated principal amount or (ii) in the case of a debt instrument issued with OID, its adjusted issue price, in each case, by at least a de minimis amount. Under these rules, any

 

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gain recognized on the exchange of such General Unsecured Claim (other than in respect of a General Unsecured Claim for accrued but unpaid interest) generally will be treated as ordinary income to the extent of the market discount accrued (on a straight line basis or, at the election of the U.S. holder, on a constant yield basis) during the U.S. holder’s period of ownership, unless the U.S. holder elected to include the market discount in income as it accrued. If a U.S. holder of General Unsecured Claims did not elect to include market discount in income as it accrued and, thus, under the market discount rules, was required to defer all or a portion of any deductions for interest on debt incurred or maintained to purchase or carry its General Unsecured Claims, such deferred amounts would become deductible at the time of the exchange but, if the exchange is a reorganization exchange, only up to the amount of gain that the U.S. holder recognizes in the exchange.

In the case of an exchange of General Unsecured Claims that qualifies as a reorganization exchange, the Tax Code indicates that any accrued market discount in respect of the General Unsecured Claims should only be currently includable in income to the extent of any gain recognized in the reorganization exchange under Treasury regulations to be issued. Any accrued market discount that is not included in income should be applied to any nonrecognition property received in the exchange (i.e., the New Common Stock or New Creditor Warrants and, if they constitute securities, the New Secured Notes received in the exchange), such that any gain recognized by a U.S. holder upon a subsequent disposition of such New Common Stock, New Creditor Warrants, or New Secured Notes would be treated as ordinary income to the extent of any accrued market discount not previously included in income. To date, specific Treasury regulations implementing this rule have not been issued.

 

  (d) Distributions in Respect of Accrued But Unpaid Interest or OID

In general, to the extent that any consideration received pursuant to the Prepackaged Plan by a U.S. holder of a General Unsecured Claim is received in satisfaction of accrued interest during its holding period, such amount will be taxable to the U.S. holder as interest income (if not previously included in the U.S. holder’s gross income). Conversely, a U.S. holder generally recognizes a deductible loss to the extent any accrued interest or accrued OID was previously included in its gross income and is not paid in full. However, the IRS has privately ruled that a holder of a “security” of a corporate issuer, in an otherwise tax-free exchange, could not claim a current loss with respect to any accrued but unpaid OID. Accordingly, it is unclear whether a U.S. holder of a loan underlying its General Unsecured Claim would be required to recognize a capital loss, rather than an ordinary loss, with respect to previously included OID with respect to such loan that is not paid in full.

Section 6.18 of the Prepackaged Plan provides that consideration received in respect of an Allowed General Unsecured Claim is allocable first to the principal amount of the General Unsecured Claim (as determined for U.S. federal income tax purposes) and then, to the extent of any excess, to the remainder of the General Unsecured Claim, including any General Unsecured Claim for accrued but unpaid interest (in contrast, for example, to a pro rata allocation of a portion of the exchange consideration received between principal and interest, or an allocation first to accrued but unpaid interest). There is no assurance that the IRS will respect such allocation for U.S. federal income tax purposes. U.S. holders are urged to consult their own tax advisor regarding the allocation of consideration and the inclusion and deductibility of accrued but unpaid interest for U.S. federal income tax purposes.

 

  (e) Tax Treatment of Disputed Claims Reserve

Subject to definitive guidance from the IRS or a court of competent jurisdiction to the contrary, or the receipt of a determination by the IRS, the Disbursing Agent will (i) treat any assets held in the Disputed Claims Reserve allocable to, (including retained on account of) Disputed Sale Leaseback Claims (i.e., the Disputed Claims Reserve) as a “disputed ownership fund” governed by section 1.468B-9 of the Treasury

 

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regulations, and (ii) to the extent permitted by applicable law, report consistently with the foregoing for state and local income tax purposes. All parties (including, without limitation, the Debtors, Reorganized Tidewater Parent, the Disbursing Agent, and the holders of General Unsecured Claims) shall report for tax purposes consistently with such treatment. Accordingly, the Disputed Claims Reserve will be a separate taxable entity for U.S. federal income tax purposes, and all interest and earnings of the Disputed Claims Reserve will be taxable to such entity. Any distributions from the Disputed Claims Reserve to holders of General Unsecured Claims will be treated for U.S. federal income tax purposes as if received directly from the Debtors in respect of their General Unsecured Claims. The Disbursing Agent shall be responsible for payment, out of the assets of the Disputed Claims Reserve with respect to each Disputed Sale Leaseback Claim, of any taxes imposed on the Disputed Claims Reserve or its assets attributable to that Disputed Sale Leaseback Claim. In the event, and to the extent, any Cash in the Disputed Claims Reserve allocable to a particular Disputed Sale Leaseback Claim is insufficient to pay taxes attributable to any taxable income arising from the assets of the Disputed Claims Reserve allocable to such Claim (including any income that may arise upon the distribution of such assets from the Disputed Claims Reserve), the Disbursing Agent may satisfy such taxes (i) out of the Cash retained by the Reorganized Debt with respect to such Claim or (ii) from the sale of a portion of the assets of the Disputed Claims Reserve allocable to such Claim.

 

  2. Ownership and Disposition of the New Secured Notes

 

  (a) Issue Price of the New Secured Notes

Tidewater Parent expects that the New Secured Notes will be considered to be “publicly traded” for U.S. federal income tax purposes and that, accordingly, the issue price of the New Secured Notes will equal their fair market value on the Effective Date. If the New Secured Notes are not considered to be publicly traded, but a substantial portion of General Unsecured Claims are considered publicly traded, the issue price of the New Secured Notes will be determined by reference to the fair market value of such publicly traded General Unsecured Claims on the Effective Date. If neither the New Secured Notes nor the General Unsecured Claims are considered publicly traded, the issue price of the New Secured Notes will equal their stated principal amount. Under the applicable Treasury regulations, Reorganized Tidewater Parent is required to determine whether the New Secured Notes are publicly traded (or whether the General Unsecured Claims were publicly traded if the New Secured Notes are not) and, if so, the fair market value of the New Secured Notes, and make these determinations available to holders in a commercially reasonable fashion, including by electronic publication, within 90 days of the issue date of the New Secured Notes. We intend to make this information available on our website. Our determination is binding on a U.S. holder unless a U.S. holder explicitly discloses on its tax return that its determination is different and the reasons for its determination (including how it determined the fair market value of its New Secured Notes or General Unsecured Claims, if applicable).

 

  (b) Payment of Interest and OID on the New Secured Notes

Stated interest paid on a New Secured Note will be taxable to a U.S. holder as ordinary interest income at the time it accrues or is received, in accordance with its method of accounting for U.S. federal income tax purposes.

If the principal amount of the New Secured Notes exceeds their issue price by more than a de minimis amount, then the New Secured Notes will be considered to have been issued with OID for U.S. federal income tax purposes in an amount equal to the difference between the principal amount and issue price of the New Secured Notes. In such event, a U.S. holder will be required to include OID in income for U.S. federal income tax purposes as it accrues, regardless of its regular method of accounting, in accordance with a constant-yield method, before the receipt of Cash payments attributable to this income. Under this method, a U.S. holder generally will be required to include in income increasingly greater amounts of OID in successive accrual periods.

 

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  (c) Market Discount on the New Secured Notes

A U.S. holder will have market discount with respect to a New Secured Note if its initial basis in any portion of the New Secured Note is less than the issue price of such portion of the New Secured Note, unless the difference is less than a specified de minimis amount. If a U.S. holder’s New Secured Note has market discount with respect to any portion of such New Secured Note and, if such holder so elects or has so elected, it will be required to include the market discount as ordinary income as it accrues, either on a ratable basis or on the basis of a constant-yield method. Any such election applies to all debt instruments with market discount that the U.S. holder acquires on or after the first day of the first taxable year to which the election applies. In addition, the U.S. holder may be required to defer, until the maturity of the New Secured Note or its earlier disposition (including in one of certain nontaxable transactions), the deduction of all or a portion of the interest expense on any indebtedness incurred or maintained to purchase or carry any portion of such New Secured Note with respect of which the U.S. holder has market discount.

 

  (d) Acquisition and Bond Premium on the New Secured Notes

A U.S. holder will have acquisition premium with respect to a New Secured Note if its initial basis in any portion of the New Secured Note exceeds the issue price of such portion of the New Secured Note but does not exceed the principal amount of such portion of the New Secured Note. If a U.S. holder has acquisition premium with respect to a portion of the New Secured Note, it may reduce the amount of any OID accruing on such portion of the New Secured Note for any taxable year by a portion of the acquisition premium properly allocable to that year.

If a U.S. holder’s initial basis in any portion of the New Secured Note exceeds the principal amount of such portion of the New Secured Note, the excess generally will constitute amortizable bond premium and the U.S. holder will not be required to include any OID attributable to its income with respect to such portion of the New Secured Note. Generally a U.S. holder may elect to amortize this bond premium over the remaining term of such portion of the New Secured Note using a constant yield method and apply the amortization to offset stated interest otherwise required to be included in income with respect to such portion of the New Secured Note. Because of the optional redemption features of the New Secured Notes, special rules may apply to defer some or all of the amount of amortizable bond premium that a U.S. holder could otherwise amortize in one or more years.

 

  (e) Disposition of New Secured Notes

Upon the sale or other taxable disposition of a New Secured Note, a U.S. holder will recognize taxable gain or loss equal to the difference between the amount realized on the sale or other taxable disposition and its adjusted tax basis in the New Secured Note. A U.S. holder’s adjusted tax basis in a New Secured Note generally will equal its initial tax basis in the New Secured Note, increased by any OID or market discount previously included in income with respect to the New Secured Note and decreased by any previously amortized bond premium. For these purposes, the amount realized does not include any amount attributable to accrued interest, which will be taxable as interest if not previously included in income. Except to the extent attributable to any accrued market discount not previously included in income, gain or loss recognized on the sale or other taxable disposition of a New Secured Note will generally be capital gain or loss and will be long-term capital gain or loss if, at the time of sale or other taxable disposition, the New Secured Note is treated as held for more than one year. Any gain attributable to accrued market discount not previously included in income will be recharacterized as ordinary income. Long-term capital gains recognized by non-corporate taxpayers are subject to reduced tax rates. The deductibility of capital losses is subject to significant limitations.

 

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As discussed above (see “Exchanges of General Unsecured Claims Under the Prepackaged Plan—Character of Gain or Loss”), in the case of any loan underlying a General Unsecured Claim that was acquired at a “market discount” and subject to “reorganization” exchange treatment, the Tax Code indicates that any accrued market discount in respect of such portion of the General Unsecured Claim that is not currently includible in income should carry over to any nonrecognition property received in exchange therefor (e.g., the New Common Stock or New Creditor Warrants and, if they constitute securities, the New Secured Notes). Accordingly, any gain recognized by a holder upon a subsequent disposition of such New Secured Notes would be treated as ordinary income to the extent of such New Secured Notes’ allocable portion of any accrued market discount not previously included in income. To date, specific Treasury Regulations implementing this rule have not been issued.

 

  3. Exercise of New Creditor Warrants

If the New Creditor Warrants are treated as stock for U.S. federal income tax purposes, U.S. holders of the New Creditor Warrants would not recognize gain or loss as a result of the exercise of the New Creditor Warrants for New Common Stock. The aggregate tax basis in the New Common Stock of a U.S. holder received upon exercise will be the same as its aggregate tax basis in its New Creditor Warrants immediately prior thereto. Additionally, the holding period of the New Common Stock received upon exercise will include the holding period of the New Creditor Warrants held by such holder immediately prior thereto.

 

  4. Dispositions of New Common Stock and New Creditor Warrants

Subject to the discussion below, U.S. holders generally will recognize capital gain or loss upon a subsequent sale or other taxable disposition of the New Common Stock or New Creditor Warrants in an amount equal to the difference between the U.S. holder’s adjusted tax basis in the New Common Stock or New Creditor Warrants and the sum of the Cash plus the fair market value of any property received from such sale or other disposition. Any such gain or loss generally should be long-term capital gain or loss if the U.S. holder’s holding period for its New Common Stock or New Creditor Warrants is more than one year at the time of sale or other disposition. A reduced tax rate on long-term capital gain may apply to non-corporate U.S. holders. The deductibility of capital loss is subject to significant limitations.

As discussed above (see “Exchanges of General Unsecured Claims Under the Prepackaged Plan—Character of Gain or Loss”), in the case of any loan underlying a General Unsecured Claim that was acquired at a “market discount” and subject to “reorganization” exchange treatment, the Tax Code indicates that any accrued market discount in respect of such portion of the General Unsecured Claim that is not currently includible in income should carry over to any nonrecognition property received in exchange therefor (e.g., the New Common Stock or New Creditor Warrants and, if they constitute securities, the New Secured Notes). Accordingly, any gain recognized by a holder upon a subsequent disposition of such New Common Stock or New Creditor Warrants would be treated as ordinary income to the extent of such New Common Stock’s or New Creditor Warrants’ allocable portion of any accrued market discount not previously included in income. To date, specific Treasury Regulations implementing this rule have not been issued.

In addition, any gain recognized by a U.S. holder upon a subsequent disposition of the New Common Stock or New Creditor Warrants (or any stock or property received for it in a later tax-free exchange) received in exchange for a General Unsecured Claim will be treated as ordinary income for U.S. federal income tax purposes to the extent of (i) any ordinary loss deductions incurred upon exchange or

 

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previously as a result of the write-down of the General Unsecured Claim, decreased by any income (other than interest income) recognized by the U.S. holder upon exchange of the General Unsecured Claim, and (ii) with respect to a cash-basis U.S. holder and in addition to clause (i) above, any amounts which would have been included in its gross income if the U.S. holder’s General Unsecured Claim had been satisfied in full but which was not included by reason of the cash method of accounting.

 

  5. Information Reporting, Backup Withholding, and Disclosure Requirements

In general, information reporting requirements will apply to payments of interest (and accruals of OID) and dividends on the General Unsecured Claims and the New Securities, the Cash received in partial satisfaction of General Unsecured Claims under the Prepackaged Plan, and Cash proceeds of a sale or other taxable disposition of New Securities (unless the recipient is an exempt recipient such as a corporation).

Backup withholding may apply to any payments described in the preceding sentence if the U.S. holder fails to provide a taxpayer identification number or a certification that it is not subject to backup withholding. Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against the U.S. holder’s U.S. federal income tax liability provided the required information is timely furnished to the IRS.

Treasury regulations generally require disclosure by a taxpayer on its U.S. federal income tax return of certain types of transactions in which the taxpayer participated, including, among other types of transactions, certain transactions that result in the taxpayer’s claiming a loss in excess of certain thresholds. U.S. holders are urged to consult their own tax advisors regarding these regulations and whether the contemplated transactions under the Prepackaged Plan would be subject to these regulations and require disclosure on their tax returns.

The foregoing summary has been provided for informational purposes only. All holders of Claims are urged to consult their own tax advisors concerning the federal, state, local, and other tax consequences applicable under the Prepackaged Plan.

XI.

CERTAIN RISK FACTORS TO BE CONSIDERED

Prior to voting to accept or reject the Prepackaged Plan, holders of Claims and Interests should read and carefully consider the risk factors set forth below, in addition to the information set forth in this Disclosure Statement together with any attachments, exhibits, or documents incorporated by reference hereto. The factors below should not be regarded as the only risks associated with the Prepackaged Plan or its implementation. Documents filed with the SEC may contain important risk factors that differ from those discussed below, and such risk factors are incorporated as if fully set forth herein and are a part of this Disclosure Statement. Copies of any document filed with the SEC may be obtained by visiting the SEC website at http://www.sec.gov.

 

  A. Certain Bankruptcy Law Considerations

 

  1. General

While the Debtors believe that the Chapter 11 Cases will be of short duration and will not be materially disruptive to their businesses, the Debtors cannot be certain that this will be the case. Although the Prepackaged Plan is designed to minimize the length of the Chapter 11 Cases, it is impossible to predict with certainty the amount of time that one or more of the Debtors may spend in bankruptcy or to assure

 

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parties in interest that the Prepackaged Plan will be confirmed. Even if confirmed on a timely basis, bankruptcy proceedings to confirm the Prepackaged Plan could have an adverse effect on the Debtors’ businesses. Among other things, it is possible that bankruptcy proceedings could adversely affect the Debtors’ relationships with their key customers and employees. The proceedings will also involve additional expense and may divert some of the attention of the Debtors’ management away from business operations.

 

  2. Risk of Non-Confirmation of the Prepackaged Plan

Although the Debtors believe that the Prepackaged Plan will satisfy all requirements necessary for confirmation by the Bankruptcy Court, there can be no assurance that the Bankruptcy Court will reach the same conclusion or that modifications to the Prepackaged Plan will not be required for confirmation or that such modifications would not necessitate re-solicitation of votes. Moreover, the Debtors can make no assurances that they will receive the requisite votes for acceptance to confirm the Prepackaged Plan. Even if Class 3 votes in favor of the Prepackaged Plan a the requirements for “cramdown” are met with respect to any Class that rejected the Prepackaged Plan, the Bankruptcy Court could decline to confirm the Prepackaged Plan if it finds that any of the statutory requirements for Confirmation are not met. If the Prepackaged Plan is not confirmed, it is unclear what distributions holders of Claims or Interests ultimately would receive with respect to their Claims or Interests under any alternative plan of reorganization.

 

  3. Non-Consensual Confirmation

In the event that any impaired class of claims or equity interests does not accept or is deemed not to accept a plan of reorganization, a bankruptcy court may nevertheless confirm such plan at the proponent’s request if at least one impaired class has voted to accept the plan (with such acceptance being determined without including the vote of any “insider” in such class), and as to each impaired class that has not accepted the plan, the bankruptcy court determines that the plan “does not discriminate unfairly” and is “fair and equitable” with respect to the dissenting impaired classes. Pursuant to the Prepackaged Plan, holders of Interests in Class 7 and Class 8 are deemed to reject the Prepackaged Plan. Accordingly, the requirements for non-consensual confirmation must be satisfied with respect to such rejecting Classes. The Debtors believe that the Prepackaged Plan satisfies those requirements.

 

  4. Risk of Non-Occurrence of the Effective Date

Although the Debtors believe that the Effective Date will occur soon after the Confirmation Date, there can be no assurance as to the timing of the Effective Date. If the conditions precedent to the Effective Date set forth in the Prepackaged Plan have not occurred or have not been waived as set forth in Article IX of the Prepackaged Plan, then the Confirmation Order may be vacated, in which event no distributions would be made under the Prepackaged Plan, the Debtors and all holders of Claims and Interests would be restored to the status quo as of the day immediately preceding the Confirmation Date, and the Debtors’ obligations with respect to Claims and Interests would remain unchanged.

 

  5. Risk of Termination of the Restructuring Support Agreement

The Restructuring Support Agreement contains certain provisions that give the Requisite Creditors (as defined in the Restructuring Support Agreement) the ability to terminate the Restructuring Support Agreement if various conditions are not satisfied. As noted above, termination of the Restructuring Support Agreement could result in protracted Chapter 11 Cases, which could significantly and detrimentally impact the Debtors’ relationships with, among others, vendors, suppliers, employees, and major customers.

 

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  6. Conversion into Chapter 7 Cases

If no plan of reorganization can be confirmed, or if the Bankruptcy Court otherwise finds that it would be in the best interest of holders of Claims and Interests, the Chapter 11 Cases may be converted to cases under chapter 7 of the Bankruptcy Code, pursuant to which a trustee would be appointed or elected to liquidate the Debtors’ assets for distribution in accordance with the priorities established by the Bankruptcy Code. See Article XIV.C hereof, as well as the Liquidation Analysis attached hereto as Exhibit C, for a discussion of the effects that a chapter 7 liquidation would have on the recoveries of holders of Claims and Interests.

 

  B. Additional Risk Factors Affecting the Value of the Reorganized Debtors

 

  1. Claims Could Be More than Projected

There can be no assurance that the estimated Allowed amount of Claims in certain Classes will not be significantly more than projected, which in turn, could cause the value of distributions to be reduced substantially. Inevitably, some assumptions will not materialize, and unanticipated events and circumstances may affect the ultimate results. Therefore, the actual amount of Allowed Claims may vary from estimates included in the Projections set forth in Article VII hereof and the Liquidation Analysis attached hereto at Exhibit C, and the variation may be material.

 

  2. Projections and Other Forward-Looking Statements Are Not Assured, and Actual Results May Vary

Certain information contained in this Disclosure Statement is, by nature, forward-looking, and contains estimates and assumptions, which might ultimately prove to be incorrect, and projections, which may be materially different from actual future experiences. There are uncertainties associated with any projections and estimates, and they should not be considered assurances or guarantees of the amount of funds or the amount of Claims in the various Classes that are ultimately Allowed.

 

  C. Risks Relating to the Debtors Businesses and Financial Condition

 

  1. Risks Associated with the Debtors’ Business and Industry

The risks associated with the Debtors’ businesses and industry are more fully described in the Debtors’ SEC filings, including Form 10-K for the fiscal year ended March 31, 2016, filed with the SEC on May 26, 2016. The risks associated with the Debtors’ businesses and industry described in the Debtors’ SEC filings include, but are not limited to, the following:

Delay in the recovery of energy based commodity prices, resulting in a continuing suppression of demand for offshore marine services;

Oversupply of vessels available to service customer base;

Significant amount of Debtors’ revenue is derived from relatively small number of customers;

Risk of incurring losses or impairments related to vessels;

Risks relating to vessel construction and maintenance programs; and

Risks relating to operating in international locations.

 

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  2. High Level of Competition in the Offshore Marine Service Industry

The Debtors operate and the Reorganized Debtors will operate in a highly competitive industry, which could depress charter and utilization rates and adversely affect their financial performance. The Debtors compete for business with their competitors on the basis of: price; reputation for quality service; quality, suitability, and technical capabilities of vessels and ROVs; availability of vessels and ROVs; safety and efficiency; cost of mobilizing vessels and ROVs from one market to a different market; and national flag preference. In addition, competition in international markets may be adversely affected by regulations requiring, among other things, local construction, flagging, ownership or control of vessels, the awarding of contracts to local contractors, the employment of local citizens, and/or the purchase of supplies from local vendors.

 

  3. Challenging Macroeconomic Conditions

Uncertainty about future global economic market conditions makes it challenging to forecast operating results and to make decisions about future investments. The success of the Reorganized Debtors’ businesses is both directly and indirectly dependent upon conditions in the global financial and credit markets that are outside of the Reorganized Debtors’ control and difficult to predict. Uncertain economic conditions may lead the Reorganized Debtors’ customers to postpone capital spending in response to tighter credit and reductions in customers’ income or asset values. Similarly, when lenders and institutional investors reduce, and in some cases, cease to provide funding to corporate and other industrial borrowers, the liquidity and financial condition of the Reorganized Debtors and their customers can be adversely impacted. Factors such as interest rates, availability of credit, inflation rates, economic uncertainty, changes in laws (including laws relating to taxation), trade barriers, commodity prices, currency exchange rates and controls, and national and international political circumstances (including wars, terrorist acts, security operations, and seaborne refugee issues) can have a material negative effect on the Reorganized Debtors’ business, revenues, and profitability.

 

  4. Post-Effective Date Indebtedness

Following the Effective Date, the Reorganized Debtors will have outstanding secured indebtedness of approximately $350 million under the Secured Notes and approximately $92 million under the Troms Credit Agreement. The Reorganized Debtors’ ability to service their debt obligations will depend on, among other things, their future operating performance, which depends partly on economic, financial, competitive, and other factors beyond the Reorganized Debtors’ control. The Reorganized Debtors may not be able to generate sufficient cash from operations to meet their debt service obligations as well as fund necessary capital expenditures and investments in sales and marketing. In addition, if the Reorganized Debtors need to refinance their debt, obtain additional financing, or sell assets or equity, they may not be able to do so on commercially reasonable terms, if at all.

 

  5. Adverse Effect of Failure to Comply with the Jones Act

Because the Debtors own and operate U.S.-flag vessels in the U.S. coastwise trade, they are subject to the Jones Act, which, subject to limited exceptions, restricts maritime transportation between points in the United States (known as marine cabotage services or coastwise trade) to vessels built in the United States, registered under the U.S. flag, manned by predominantly U.S. crews, and owned and operated by U.S. Citizens within the meaning of the Jones Act. Under the Jones Act, at least 75% of the outstanding shares of each class or series of the capital stock of Tidewater Parent must be owned and controlled by U.S. Citizens. Tidewater Parent will be responsible for monitoring the ownership by Non-U.S. Citizens of its capital stock and the equity interests in its subsidiaries that own U.S.-flag vessels to ensure compliance with the citizenship requirements of the Jones Act. After the Effective Date, if the Reorganized Debtors

 

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do not continue to comply with such requirements, they would be prohibited from operating their U.S.-flag vessels in U.S. coastwise trade, may incur severe penalties, such as fines and/or forfeiture of such vessels, and, under certain circumstances, would be deemed to have made an unapproved foreign transfer of such vessels, resulting in the permanent loss of U.S. coastwise trading privileges for such vessels.

In order to ensure compliance with the Jones Act coastwise citizenship requirement that at least 75% of the New Common Stock in Reorganized Tidewater Parent will be owned by U.S. Citizens, at least 78% of the shares of New Common Stock issued on the Effective Date will be issued to U.S. citizens. The remaining 22% of the shares of New Common Stock issued on the Effective Date will be issued to Non-U.S. Citizens. Non-U.S. Citizens who would have otherwise received additional shares of New Common Stock will receive New Creditor Warrants.

New Creditor Warrants may only be exercised by (i) U.S. Citizens, and (ii) Non-U.S. Citizens to the extent permitted under the Amended Organizational Documents of Reorganized Tidewater Parent. The forms of the New Creditor Warrants will not grant the holder of a New Creditor Warrant any voting or control rights or dividend rights, or contain any negative covenants restricting the operation of the Reorganized Debtor’s business. The New Creditor Warrants are being submitted to the U.S. Coast Guard for approval prior to the Effective Date.

The Amended Organizational Documents of Reorganized Tidewater Parent will restrict ownership of the shares of New Common Stock by Non-U.S. Citizens in the aggregate to not more than 24% and to not more than 4.9% by individual Non-U.S. Citizens and will contain certain other provisions to enable Reorganized Tidewater Parent to comply with the citizenship requirements of the Jones Act, including without limitation provisions that provide for the redemption of shares through the issuance of warrants in the event that the applicable permitted percentage of ownership by Non-U.S. Citizens is exceeded. Such warrants will have the same risks and restrictions as New Creditor Warrants, which risks and restrictions are discussed herein.

 

  D. Risk Factors Relating to Securities to Be Issued Under the Prepackaged Plan

 

  1. Market for Securities

Upon filing the Prepackaged Plan, the NYSE will have broad discretion to suspend trading in Tidewater Parent’s shares and commence de-listing proceedings. There can be no assurance that the common stock of Tidewater Parent will continue to be listed for trading on the NYSE upon or after filing of the Prepackaged Plan or whether the New Common Stock of Reorganized Tidewater Parent or the New Existing Equity Warrants (or the New Common Stock issuable upon exercise thereof) will be listed upon or after the Effective Date of the Prepackaged Plan. Tidewater Parent has agreed to use commercially reasonable efforts to list the New Common Stock and New Existing Equity Warrants on a nationally recognized exchange as soon as practicable, subject to meeting the applicable listing requirements following the Effective Date. However, there can be no assurance as to when or whether any such listing will occur or as to the liquidity of any market for the New Common Stock or New Creditor Warrants. If a trading market does not develop or is not maintained, holders of the New Common Stock and New Creditor Warrants may experience difficulty in reselling such securities or may be unable to sell them at all. Even if such a market were to exist, such securities could trade at prices higher or lower than the estimated value set forth in this Disclosure Statement depending upon many factors, including, without limitation, prevailing interest rates, markets for similar securities, industry conditions and the performance of, and investor expectations for, the Reorganized Debtors.

Furthermore, Persons to whom the New Common Stock or New Creditor Warrants are issued pursuant to the Prepackaged Plan may prefer to liquidate their investments rather than hold such securities on a long-term

 

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basis. Accordingly, any market that does develop for such securities may be volatile. Non-U.S. Citizens who receive New Creditor Warrants may also be unable to exercise their New Creditor Warrants, or have their requested exercise of their New Creditor Warrants significantly delayed, because of the restrictions on aggregate and individual ownership of the New Common Stock by Non-U.S. citizens.

 

  2. Potential Dilution

The ownership percentage represented by the New Common Stock distributed on the Effective Date under the Prepackaged Plan will be subject to dilution from the equity issued in connection with the Management Incentive Program, the New Warrants, any other shares that may be issued post-emergence, and the conversion of any options, warrants, convertible securities, exercisable securities, or other securities that may be issued post-emergence.

 

  3. Significant Holders

Certain holders of Credit Agreement Claims, Notes Claims, and Sale Leaseback Claims are expected to acquire a significant ownership interest in the New Common Stock pursuant to the Prepackaged Plan. If such holders were to act as a group, such holders would be in a position to control the outcome of all actions requiring stockholder approval, including the election of directors, without the approval of other stockholders. This concentration of ownership could also facilitate or hinder a negotiated change of control of the Reorganized Debtors and, consequently, have an impact upon the value of the New Common Stock.

 

  4. Equity Interests Subordinated to the Reorganized Debtors’ Indebtedness

In any subsequent liquidation, dissolution, or winding up of the Reorganized Debtors, the New Common Stock and the New Warrants (and the New Common Stock issuable upon exercise thereof) would rank below all debt claims against the Reorganized Debtors. As a result, holders of the New Common Stock will not be entitled to receive any payment or other distribution of assets upon the liquidation, dissolution, or winding up of the Reorganized Debtors until after all the Reorganized Debtors’ obligations to their debt holders have been satisfied.

 

  5. Implied Equity Value Not Intended to Represent the Trading Value of the New Common Stock or New Warrants

The valuation of the Reorganized Debtors is not intended to represent the trading value of New Common Stock or the New Warrants (or the New Common Stock issuable upon exercise thereof) in public or private markets and is subject to additional uncertainties and contingencies, all of which are difficult to predict. Actual market prices of such securities at issuance will depend upon, among other things: (i) prevailing interest rates; (ii) conditions in the financial markets; (iii) the anticipated initial securities holdings of prepetition creditors, some of whom may prefer to liquidate their investment rather than hold it on a long-term basis; and (iv) other factors that generally influence the prices of securities. The actual market price of the New Common Stock and the New Warrants (and the New Common Stock issuable upon exercise thereof) is likely to be volatile. Many factors, including factors unrelated to the Reorganized Debtors’ actual operating performance and other factors not possible to predict, could cause the market price of the New Common Stock and the New Warrants to rise and fall. Accordingly, the implied value, stated herein and in the Prepackaged Plan, of the securities to be issued does not necessarily reflect, and should not be construed as reflecting, values that will be attained for the New Common Stock or the New Warrants in the public or private markets.

 

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  6. No Intention to Pay Dividends

Reorganized Tidewater does not anticipate paying any dividends on the New Common Stock as it expects to retain any future cash flows for debt reduction and to support its operations. As a result, the success of an investment in the New Common Stock (including the New Common Stock issuable upon exercise of the New Warrants) will depend entirely upon any future appreciation in the value of the New Common Stock. There is, however, no guarantee that the New Common Stock will appreciate in value or even maintain its initial value.

 

  E. Additional Risk Factors

 

  1. Debtors Could Withdraw Prepackaged Plan

Subject to the terms of, and without prejudice to, the rights of any party to the Restructuring Support Agreement, the Prepackaged Plan may be revoked or withdrawn prior to the Effective Date by the Debtors.

 

  2. Debtors Have No Duty to Update

The statements contained in this Disclosure Statement are made by the Debtors as of the date hereof, unless otherwise specified in the Prepackaged Plan, and the delivery of this Disclosure Statement after that date does not imply that there has been no change in the information set forth herein since that date. The Debtors have no duty to update this Disclosure Statement unless otherwise ordered to do so by the Bankruptcy Court.

 

  3. No Representations Outside this Disclosure Statement Are Authorized

No representations concerning or related to the Debtors, the Chapter 11 Cases, or the Prepackaged Plan are authorized by the Bankruptcy Court or the Bankruptcy Code, other than as set forth in this Disclosure Statement.

Any representations or inducements made to secure your vote for acceptance or rejection of the Prepackaged Plan that are other than those contained in, or included with, this Disclosure Statement should not be relied upon in making the decision to vote to accept or reject the Prepackaged Plan.

 

  4. No Legal or Tax Advice Is Provided by this Disclosure Statement

The contents of this Disclosure Statement should not be construed as legal, business, or tax advice. Each holder of Claims or Interests should consult their own legal counsel and accountant as to legal, tax, and other matters concerning their Claim or Interest.

This Disclosure Statement is not legal advice to you. This Disclosure Statement may not be relied upon for any purpose other than to determine how to vote on the Prepackaged Plan or object to confirmation of the Prepackaged Plan.

 

  5. No Admission Made

Nothing contained herein or in the Prepackaged Plan will constitute an admission of, or will be deemed evidence of, the tax or other legal effects of the Prepackaged Plan on the Debtors or holders of Claims or Interests.

 

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  6. Certain Tax Consequences

A discussion of certain tax considerations to the Debtors and certain holders of Claims in connection with the implementation of the Prepackaged Plan is provided in Article X hereof.

XII.

VOTING PROCEDURES AND REQUIREMENTS

Before voting to accept or reject the Prepackaged Plan, each holder of a Credit Agreement Claim, Notes Claim, or a Sale Leaseback Claim as of the Record Date (an “Eligible Holder”) should carefully review the Prepackaged Plan attached hereto as Exhibit A. All descriptions of the Prepackaged Plan set forth in this Disclosure Statement are subject to the terms and conditions of the Prepackaged Plan.

 

  A. Voting Deadline

All Eligible Holders have been sent a Ballot together with this Disclosure Statement. Such holders should read the Ballot carefully and follow the instructions contained therein. Please use only the Ballot that accompanies this Disclosure Statement to cast your vote.

The Debtors have engaged Epiq Bankruptcy Solutions, LLC as their voting agent (the “Voting Agent” or “Epiq”) to assist in the transmission of voting materials and in the tabulation of votes with respect to the Prepackaged Plan. IN ORDER FOR YOUR VOTE TO BE COUNTED, YOUR VOTE MUST BE RECEIVED BY THE VOTING AGENT AT THE ADDRESS SET FORTH BELOW ON OR BEFORE THE VOTING DEADLINE OF 5:00 P.M., EASTERN TIME, ON JUNE 12, 2017, UNLESS EXTENDED BY THE DEBTORS.

IF A BALLOT IS DAMAGED OR LOST, YOU MAY CONTACT THE VOTING AGENT AT THE NUMBER SET FORTH BELOW TO RECEIVE A REPLACEMENT BALLOT. ANY BALLOT THAT IS EXECUTED AND RETURNED BUT WHICH DOES NOT INDICATE A VOTE FOR ACCEPTANCE OR REJECTION OF THE PREPACKAGED PLAN WILL NOT BE COUNTED.

IF YOU HAVE ANY QUESTIONS CONCERNING VOTING PROCEDURES, YOU MAY CONTACT THE VOTING AGENT AT:

Epiq Corporate Restructuring

777 Third Avenue, 12th Floor

New York, New York 10017

Attention: Tidewater Processing

Tel: (866) 734-9393 or (646) 282-2500

Questions (but not documents) may be directed to tabulation@epiqsystems.com (please reference “Tidewater” in the subject line).

Additional copies of this Disclosure Statement are available upon request made to the Voting Agent at the telephone numbers or e-mail address set forth immediately above.

 

  B. Voting Procedures

The Debtors are providing copies of this Disclosure Statement (including all exhibits thereto), related materials, and a Ballot (collectively, a “Solicitation Package”) to record holders of the Credit Agreement Claims, the Notes Claims, and the Sale Leaseback Claims. Any Eligible Holder of Credit Agreement Claims, Notes Claims, and/or Sale Leaseback Claims who has not received a Ballot should contact the Voting Agent.

 

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Holders of Credit Agreement Claims, Notes Claims, and/or Sale Leaseback Claims should provide all of the information requested by the Ballot and return all Ballots received in the enclosed, self-addressed, postage-paid envelope provided with each such Ballot to the Voting Agent.

The Record Date for determining which holders are entitled to vote on the Prepackaged Plan is May 8, 2017.

 

  C. Parties Entitled to Vote

Under the Bankruptcy Code, only holders of claims or interests in “impaired” classes are entitled to vote on a plan. Under section 1124 of the Bankruptcy Code, a class of claims or interests is deemed to be “impaired” under a plan unless: (i) the plan leaves unaltered the legal, equitable, and contractual rights to which such claim or interest entitles the holder thereof; or (ii) notwithstanding any legal right to an accelerated payment of such claim or interest, the plan cures all existing defaults (other than defaults resulting from the occurrence of events of bankruptcy) and reinstates the maturity of such claim or interest as it existed before the default.

If, however, the holder of an impaired claim or interest will not receive or retain any distribution under the plan on account of such claim or interest, the Bankruptcy Code deems such holder to have rejected the plan, and, accordingly, holders of such claims and interests do not actually vote on the plan. If a claim or interest is not impaired by the plan, the Bankruptcy Code deems the holder of such claim or interest to have accepted the plan and, accordingly, holders of such claims and interests are not entitled to vote on the plan.

A vote may be disregarded if the Bankruptcy Court determines, pursuant to section 1126(e) of the Bankruptcy Code, that it was not solicited or procured in good faith or in accordance with the provisions of the Bankruptcy Code.

The Bankruptcy Code defines “acceptance” of a plan by a class of claims as acceptance by creditors in that class that hold at least two-thirds (2/3) in dollar amount and more than one-half (1/2) in number of the claims that cast ballots for acceptance or rejection of the plan.

The Claims in Class 3 (General Unsecured Claims) are impaired under the Prepackaged Plan and entitled to vote to accept or reject the Prepackaged Plan. Class 3 includes the following Claims:

 

    Credit Agreement Claims;

 

    Notes Claims; and

 

    Sale Leaseback Claims.

 

  1. Miscellaneous

All Ballots must be signed by the holder of record of the Credit Agreement Claims, Notes Claims, or Sale Leaseback Claims, as applicable, or any person who has obtained a properly completed Ballot proxy from the record holder of the Credit Agreement Claims, Notes Claims, or Sale Leaseback Claims, as applicable, on such date. For purposes of voting to accept or reject the Prepackaged Plan, the Eligible Holders of the Credit Agreement Claims, Notes Claims, or Sale Leaseback Claims will be deemed to be the “holders” of such Claims. Unless otherwise ordered by the Bankruptcy Court, Ballots that are signed,

 

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dated, and timely received, but on which a vote to accept or reject the Prepackaged Plan has not been indicated, will not be counted. The Debtors, in their sole discretion, may request that the Voting Agent attempt to contact such voters to cure any such defects in the Ballots. Any Ballot marked to both accept and reject the Prepackaged Plan will not be counted. If you return more than one Ballot voting different Credit Agreement Claims, the Ballots are not voted in the same manner, and you do not correct this before the Voting Deadline, those Ballots will not be counted. If you return more than one Ballot voting different Notes Claims, the Ballots are not voted in the same manner, and you do not correct this before the Voting Deadline, those Ballots will not be counted. If you return more than one Ballot voting different Sale Leaseback Claims, the Ballots are not voted in the same manner, and you do not correct this before the Voting Deadline, those Ballots will not be counted. An otherwise properly executed Ballot that attempts to partially accept and partially reject the Prepackaged Plan will likewise not be counted.

The Ballots provided to Eligible Holders will reflect the principal amount of such Eligible Holder’s Claim; however, when tabulating votes, the Voting Agent may adjust the amount of such Eligible Holder’s Claim by multiplying the principal amount by a factor that reflects all amounts accrued between the Record Date and the Petition Date including, without limitation, interest.

Under the Bankruptcy Code, for purposes of determining whether the requisite votes for acceptance have been received, only holders of the Credit Agreement Claims, Notes Claims, and Sale Leaseback Claims, as applicable, who actually vote will be counted. The failure of a holder to deliver a duly executed Ballot to the Voting Agent will be deemed to constitute an abstention by such holder with respect to voting on the Prepackaged Plan and such abstentions will not be counted as votes for or against the Prepackaged Plan.

Except as provided below, unless the Ballot is timely submitted to the Voting Agent before the Voting Deadline together with any other documents required by such Ballot, the Debtors may, in their sole discretion, reject such Ballot as invalid, and therefore decline to utilize it in connection with seeking confirmation of the Prepackaged Plan.

 

  2. Fiduciaries and Other Representatives

If a Ballot is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation, or another, acting in a fiduciary or representative capacity, such person should indicate such capacity when signing and, if requested, must submit proper evidence satisfactory to the Debtors of authority to so act. Authorized signatories should submit the separate Ballot of each Eligible Holder for whom they are voting.

UNLESS THE BALLOT IS SUBMITTED TO THE VOTING AGENT ON OR PRIOR TO THE VOTING DEADLINE, SUCH BALLOT WILL BE REJECTED AS INVALID AND WILL NOT BE COUNTED AS AN ACCEPTANCE OR REJECTION OF THE PREPACKAGED PLAN; PROVIDED, HOWEVER, THAT THE DEBTORS RESERVE THE RIGHT, IN THEIR SOLE DISCRETION, TO REQUEST THE BANKRUPTCY COURT TO ALLOW ANY SUCH BALLOT(S) TO BE COUNTED.

 

  3. Agreements Upon Furnishing Ballots

The delivery of an accepting Ballot pursuant to the procedures set forth above will constitute the agreement of the creditor with respect to such Ballot to accept: (i) all of the terms of, and conditions to, this Solicitation; and (ii) the terms of the Prepackaged Plan including the injunction, releases, and exculpations set forth in Sections 10.5, 10.6, and 10.7 therein. All parties in interest retain their right to object to confirmation of the Prepackaged Plan pursuant to section 1128 of the Bankruptcy Code, subject to any applicable terms of the Restructuring Support Agreement.

 

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  4. Change of Vote

Any party who has previously submitted to the Voting Agent, prior to the Voting Deadline, a properly completed Ballot may revoke such Ballot and change its vote by submitting to the Voting Agent, prior to the Voting Deadline, a subsequent, properly completed Ballot voting for acceptance or rejection of the Prepackaged Plan.

 

  D. Waivers of Defects, Irregularities, etc.

Unless otherwise directed by the Bankruptcy Court, all questions as to the validity, form, eligibility (including time of receipt), acceptance, and revocation or withdrawals of Ballots will be determined by the Voting Agent and/or the Debtors, as applicable, in their sole discretion, which determination will be final and binding. The Debtors reserve the right to reject any and all Ballots submitted by any of their respective creditors not in proper form, the acceptance of which would, in the opinion of the Debtors or their counsel, as applicable, be unlawful. The Debtors further reserve their respective rights to waive any defects or irregularities or conditions of delivery as to any particular Ballot by any of their creditors. The interpretation (including the Ballot and the respective instructions thereto) by the applicable Debtor, unless otherwise directed by the Bankruptcy Court, will be final and binding on all parties. Unless waived, any defects or irregularities in connection with deliveries of Ballots must be cured within such time as the Debtors (or the Bankruptcy Court) determines. Neither the Debtors nor any other person will be under any duty to provide notification of defects or irregularities with respect to deliveries of Ballots, nor will any of them incur any liabilities for failure to provide such notification. Unless otherwise directed by the Bankruptcy Court, delivery of such Ballots will not be deemed to have been made until such irregularities have been cured or waived. Ballots previously furnished (and as to which any irregularities have not theretofore been cured or waived) will be invalidated.

 

  E. Further Information, Additional Copies

If you have any questions or require further information about the voting procedures for voting your Credit Agreement Claims, Notes Claims, or Sale Leaseback Claims, as applicable, or about the packet of material you received, or if you wish to obtain an additional copy of the Prepackaged Plan, this Disclosure Statement, or any exhibits, schedules, or appendices to such documents, please contact the Voting Agent.

XIII.

CONFIRMATION OF THE PREPACKAGED PLAN

 

  A. Confirmation Hearing

Section 1128(a) of the Bankruptcy Code requires the Bankruptcy Court to hold a confirmation hearing upon appropriate notice to all required parties. On, or as promptly as practicable after, the Petition Date, the Debtors will request that the Bankruptcy Court schedule the Confirmation Hearing. Notice of the Confirmation Hearing will be provided to all known holders of Claims or Interests or their representatives. The Confirmation Hearing may be adjourned from time to time by the Bankruptcy Court without further notice except for the announcement of the continuation date made at the Confirmation Hearing, at any subsequent continued Confirmation Hearing, or pursuant to a notice filed on the docket for the Chapter 11 Cases.

 

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  B. Objections to Confirmation

Section 1128(b) of the Bankruptcy Code provides that any party in interest may object to the confirmation of a plan. Any objection to confirmation of the Prepackaged Plan must be in writing, must conform to the Bankruptcy Rules and the Local Rules, must set forth the name of the objector, the nature and amount of the Claims or Interests held, or asserted by, the objector against the Debtors’ estates or properties, the basis for the objection and the specific grounds therefore, and must be filed with the Bankruptcy Court, with a copy to the chambers of the United States Bankruptcy Judge appointed to the Chapter 11 Cases, together with proof of service thereof, and served upon the following parties, including such other parties as the Bankruptcy Court may order:

 

  a) The Debtors at

Tidewater Inc.

Pan American Life Center

601 Poydras Street, Suite 1500

New Orleans, Louisiana 70130

Attn:   Bruce Lundstrom
E-mail:   blundstrom@tdw.com
Facsimile:   (888) 909-0946

 

  b) Office of the U.S. Trustee at

Office of the U.S. Trustee for the District of Delaware

844 King Street, Suite 2207

Lockbox 35

Wilmington, Delaware 19899-0035

 

  c) Counsel to the Debtors at

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, New York 10153

Attn:  

Ray C. Schrock, P.C. and Alfredo R. Pérez, Esq.

Email:  

ray.schrock@weil.com and alfredo.perez@weil.com

Facsimile:   (212) 310-8007

-and-

Jones Walker LLP

201 St. Charles Avenue, Floor 50

New Orleans, Louisiana 70170

Attn:  

Amy G. Scafidel, Esq. and Curt Hearn, Esq.

E-mail:  

ascafidel@joneswalker.com and chearn@joneswalker.com

Facsimile:  

(504) 582-8583

-and-

Richards, Layton & Finger, P.A.

One Rodney Square

920 North King Street

Wilmington, Delaware 19801

Attn:  

Daniel J. DeFranceschi, Esq. and Zachary I. Shapiro, Esq.

Email:  

defranceschi@rlf.com and shapiro@rlf.com

Facsimile:  

(302) 651-7701

 

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  d) Credit Agreement Agent at

Morgan, Lewis & Bockius LLP

One Federal Street,

Boston, Massachusetts 02110

Attn:  

Amy L. Kyle, Esq. and Edwin E. Smith, Esq.

E-mail:  

amy.kyle@morganlewis.com and edwin.smith@morganlewis.com

Facsimile:  

(617) 341-7701

-and-

Morris, Nichols, Arsht & Tunnell LLP

1201 North Market Street, 16th Floor

P.O. Box 1347

Wilmington, Delaware 19899

Attn:  

Derek C. Abbott, Esq.

E-mail:  

dabbott@mnat.com

Facsimile:  

(302) 425-4664

 

  e) The Unofficial Noteholder Committee at

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019

Attn:  

Alan W. Kornberg, Esq. and Brian S. Hermann, Esq.

E-mail:  

akornberg@paulweiss.com and bhermann@paulweiss.com

Facsimile:  

(212) 757-3990

-and-

Blank Rome LLP

1201 North Market Street, Suite 800

Wilmington, Delaware 19801

Attn:  

Stanley B. Tarr, Esq. and Rick Antonoff, Esq.

E-mail:  

tarr@blankrome.com and rantonoff@blankrome.com

Facsimile:  

(302) 428-5104 and (212) 885-5001

 

UNLESS AN OBJECTION TO CONFIRMATION IS TIMELY SERVED AND FILED, IT MAY NOT BE CONSIDERED BY THE BANKRUPTCY COURT.

 

  C. Requirements for Confirmation of the Prepackaged Plan

 

  1. Requirements of Section 1129(a) of the Bankruptcy Code

 

  (a) General Requirements

At the Confirmation Hearing, the Bankruptcy Court will determine whether the confirmation requirements specified in section 1129(a) of the Bankruptcy Code have been satisfied including, without limitation, whether:

 

  (i) the Prepackaged Plan complies with the applicable provisions of the Bankruptcy Code;

 

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  (ii) the Debtors have complied with the applicable provisions of the Bankruptcy Code;

 

  (iii) the Prepackaged Plan has been proposed in good faith and not by any means forbidden by law;

 

  (iv) any payment made or promised by the Debtors or by a person issuing securities or acquiring property under the Prepackaged Plan, for services, costs, and expenses in, or in connection with, the Chapter 11 Cases, or in connection with the Prepackaged Plan and incident to the Chapter 11 Cases, has been disclosed to the Bankruptcy Court, and any such payment made before confirmation of the Prepackaged Plan is reasonable, or if such payment is to be fixed after confirmation of the Prepackaged Plan, such payment is subject to the approval of the Bankruptcy Court as reasonable;

 

  (v) the Debtors have disclosed the identity and affiliations of any individual proposed to serve, after confirmation of the Prepackaged Plan, as a director or officer of the Reorganized Debtors, an affiliate of the Debtors participating in a Prepackaged Plan with the Debtors, or a successor to the Debtors under the Prepackaged Plan, and the appointment to, or continuance in, such office of such individual is consistent with the interests of holders of Claims and Interests and with public policy, and the Debtors have disclosed the identity of any insider who will be employed or retained by the Reorganized Debtors, and the nature of any compensation for such insider;

 

  (vi) with respect to each Class of Claims or Interests, each holder of an impaired Claim or impaired Interest has either accepted the Prepackaged Plan or will receive or retain under the Prepackaged Plan, on account of such holder’s Claim or Interest, property of a value, as of the Effective Date of the Prepackaged Plan, that is not less than the amount such holder would receive or retain if the Debtors were liquidated on the Effective Date of the Prepackaged Plan under chapter 7 of the Bankruptcy Code;

 

  (vii) except to the extent the Prepackaged Plan meets the requirements of section 1129(b) of the Bankruptcy Code (as discussed further below), each Class of Claims either accepted the Prepackaged Plan or is not impaired under the Prepackaged Plan;

 

  (viii)

except to the extent that the holder of a particular Claim has agreed to a different treatment of such Claim, the Prepackaged Plan provides that: (A) Administrative Expense Claims will be paid in full on the later of the Effective Date and the date that is thirty (30) Business Days after such Administrative Expense Claim becomes Allowed; (B) Priority Non-Tax Claims will be paid in full on the later of the Effective Date and the date that is ten (10) Business Days after such Priority Non-Tax Claim becomes Allowed; and (C) Priority Tax Claims will receive either payment in full on the later of the Effective Date, the date such Priority Tax Claim becomes

 

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  Allowed, and the date such Priority Tax Claim becomes due and payable in the ordinary course, or deferred cash payments over a period not exceeding five (5) years after the Petition Date, of a value, as of the Effective Date, equal to the allowed amount of such Claims;

 

  (ix) at least one Class of impaired Claims has accepted the Prepackaged Plan, determined without including any vote for acceptance of the Prepackaged Plan by any insider holding a Claim in such Class;

 

  (x) confirmation of the Prepackaged Plan is not likely to be followed by the liquidation, or the need for further financial reorganization, of the Debtors or any successor to the Debtors under the Prepackaged Plan; and

 

  (xi) all fees payable under section 1930 of title 28, as determined by the Bankruptcy Court at the Confirmation Hearing, have been paid or the Prepackaged Plan provides for the payment of all such fees on the Effective Date of the Prepackaged Plan.

 

  (b) Best Interests Test

As noted above, with respect to each impaired class of claims and equity interests, confirmation of a plan requires that each such holder either: (i) accept the plan; or (ii) receive or retain under the plan property of a value, as of the effective date of the plan, that is not less than the value such holder would receive or retain if the debtors were liquidated under chapter 7 of the Bankruptcy Code. This requirement is referred to as the “best interests test.”

This test requires a bankruptcy court to determine what the holders of allowed claims and allowed equity interests in each impaired class would receive from a liquidation of the debtor’s assets and properties in the context of a liquidation under chapter 7 of the Bankruptcy Code. To determine if a plan is in the best interests of each impaired class, the value of the distributions from the proceeds of the liquidation of the debtor’s assets and properties (after subtracting the amounts attributable to the aforesaid claims) is then compared with the value offered to such classes of claims and equity interests under the plan.

The Debtors believe that, under the Prepackaged Plan, all holders of impaired Claims and Interests will receive property with a value not less than the value such holder would receive in a liquidation under chapter 7 of the Bankruptcy Code. The Debtors’ belief is based primarily on: (i) consideration of the effects that a chapter 7 liquidation would have on the ultimate proceeds available for distribution to holders of impaired Claims and Interests; and (ii) the Liquidation Analysis attached hereto as Exhibit C.

The Debtors believe that any liquidation analysis is speculative, as it is necessarily premised on assumptions and estimates which are inherently subject to significant uncertainties and contingencies, many of which would be beyond the control of the Debtors. The Liquidation Analysis provided in Exhibit C is solely for the purpose of disclosing to holders of Claims and Interests the effects of a hypothetical chapter 7 liquidation of the Debtors, subject to the assumptions set forth therein. There can be no assurance as to values that would actually be realized in a chapter 7 liquidation, nor can there be any assurance that the Bankruptcy Court will accept the Debtors’ conclusions or concur with such assumptions in making its determinations under section 1129(a)(7) of the Bankruptcy Code.

 

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  (c) Feasibility

Also as noted above, section 1129(a)(11) of the Bankruptcy Code requires that a debtor demonstrate that confirmation of a plan is not likely to be followed by liquidation or the need for further financial reorganization. For purposes of determining whether the Prepackaged Plan meets this requirement, the Debtors have analyzed their ability to meet their obligations under the Prepackaged Plan. As part of this analysis, the Debtors have prepared the Projections provided in Article VII hereof. Based upon such Financial Projections, the Debtors believe they will have sufficient resources to make all payments required pursuant to the Prepackaged Plan and that confirmation of the Prepackaged Plan is not likely to be followed by liquidation or the need for further reorganization. Moreover, Article XI hereof sets forth certain risk factors that could impact the feasibility of the Prepackaged Plan

 

  (d) Equitable Distribution of Voting Power

On or before the Effective Date, pursuant to, and only to, the extent required by section 1123(a)(6) of the Bankruptcy Code, the organizational documents of the Debtors will be amended as necessary to satisfy the provisions of the Bankruptcy Code and will include, among other things, pursuant to section 1123(a)(6) of the Bankruptcy Code: (i) a provision prohibiting the issuance of non-voting equity securities; and (ii) a provision setting forth an appropriate distribution of voting power among classes of equity securities possessing voting power.

 

  2. Additional Requirements for Non-Consensual Confirmation

In the event that any impaired Class of Claims or Interests does not accept (or is deemed to reject) the Prepackaged Plan, the Bankruptcy Court may still confirm the Prepackaged Plan at the request of the Debtors if, as to each impaired Class of Claims or Interests that has not accepted the Prepackaged Plan, the Prepackaged Plan “does not discriminate unfairly” and is “fair and equitable” with respect to such Classes of Claims or Interests, pursuant to section 1129(b) of the Bankruptcy Code. Both of these requirements are in addition to other requirements established by case law interpreting the statutory requirements.

Pursuant to the Prepackaged Plan, holders of Interests in Class 7 and Class 8 will not receive a distribution and are thereby deemed to reject the Prepackaged Plan. However, the Debtors submit that they satisfy the “unfair discrimination” and “fair and equitable” tests, as discussed in further detail below.

 

  (a) Unfair Discrimination Test

The “no unfair discrimination” test applies to Classes of Claims or Interests that are of equal priority and are receiving different treatment under the Prepackaged Plan. A chapter 11 plan does not discriminate unfairly, within the meaning of the Bankruptcy Code, if the legal rights of a dissenting Class are treated in a manner consistent with the treatment of other Classes whose legal rights are substantially similar to those of the dissenting Class and if no Class of Claims or Interests receives more than it legally is entitled to receive for its Claims or Interests. This test does not require that the treatment be the same or equivalent, but that such treatment is “fair.”

The Debtors believe the Prepackaged Plan satisfies the “unfair discrimination” test. Claims of equal priority are receiving comparable treatment and such treatment is fair under the circumstances.

 

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  (b) Fair and Equitable Test

The “fair and equitable” test applies to classes of different priority and status (e.g., secured versus unsecured) and includes the general requirement that no class of claims receive more than one hundred percent (100%) of the allowed amount of the claims in such class. As to dissenting classes, the test sets different standards depending on the type of claims in such class. The Debtors believe that the Prepackaged Plan satisfies the “fair and equitable” test as further explained below.

 

  (i) Secured Creditors

The Bankruptcy Code provides that each holder of an impaired secured claim either: (i) retains its liens on the property to the extent of the allowed amount of its secured claim and receives deferred cash payments having a value, as of the effective date, of at least the allowed amount of such claim; or (ii) has the right to credit bid the amount of its claim if its property is sold and retains its liens on the proceeds of the sale; or (iii) receives the “indubitable equivalent” of its allowed secured claim.

 

  (ii) Unsecured Creditors

The Bankruptcy Code provides that either: (i) each holder of an impaired unsecured claim receives or retains under the plan of reorganization, property of a value equal to the amount of its allowed claim; or (ii) the holders of claims and equity interests that are junior to the claims of the dissenting class will not receive any property under the plan of reorganization.

 

  (iii) Equity Interests

With respect to a class of equity interests, either: (i) each holder of an equity interest will receive or retain under the plan of reorganization property of a value equal to the greater of: (a) the fixed liquidation preference or redemption price, if any, of such stock; and (b) the value of the stock; or (ii) the holders of equity interests that are junior to any dissenting class of equity interests will not receive any property under the plan of reorganization.

Based on the foregoing, the Prepackaged Plan meets the “fair and equitable” test, notwithstanding that Class 7 (Tidewater Parent Interests) and Class 8 (Subordinated Securities Claims) are deemed to reject the Prepackaged Plan, because there is no class junior to Class 7 or Class 8, as applicable, that will receive or retain any property under the Prepackaged Plan.

XIV.

ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PREPACKAGED PLAN

The Debtors have evaluated several alternatives to the Prepackaged Plan. After studying these alternatives, the Debtors have concluded that the Prepackaged Plan is the best alternative and will maximize recoveries to parties in interest, assuming confirmation and consummation of the Prepackaged Plan. If the Prepackaged Plan is not confirmed and consummated, the alternatives to the Prepackaged Plan are: (i) the preparation and presentation of an alternative plan of reorganization; (ii) the a sale of some or all of the Debtors’ assets pursuant to section 363 of the Bankruptcy Code; or (iii) a liquidation under chapter 7 of the Bankruptcy Code.

 

99


  A. Alternative Prepackaged Plan of Reorganization

If the Prepackaged Plan is not confirmed, the Debtors (or if the Debtors’ exclusive period in which to file a plan of reorganization has expired, any other party in interest) could attempt to formulate a different plan. Such a plan might involve either: (a) a reorganization and continuation of the Debtors’ businesses; or (b) an orderly liquidation of their assets. The Debtors, however, submit that the Prepackaged Plan, as described therein, enables their creditors to realize the most value under the circumstances.

 

  B. Sale Under Section 363 of the Bankruptcy Code

If the Prepackaged Plan is not confirmed, the Debtors could seek from the Bankruptcy Court, after notice and hearing, authorization to sell their assets under section 363 of the Bankruptcy Code. Upon analysis and consideration of this alternative, the Debtors do not believe a sale of their assets under section 363 of the Bankruptcy Code would yield a higher recovery for the holders of Claims and Interests than such holders will receive under the Prepackaged Plan.

 

  C. Liquidation Under Chapter 7 of the Bankruptcy Code

If no plan of reorganization can be confirmed, the Chapter 11 Cases may be converted to cases under chapter 7 of the Bankruptcy Code in which a trustee would be elected or appointed to liquidate the assets of the Debtors for distribution to their creditors in accordance with the priorities established by the Bankruptcy Code. The effect that a chapter 7 liquidation would have on the recovery of holders of Allowed Claims and Interests is set forth in the Liquidation Analysis attached hereto as Exhibit C.

The Debtors believe that liquidation under chapter 7 would result in smaller distributions to creditors than those provided for in the Prepackaged Plan because of the delay resulting from the conversion of the Chapter 11 Cases and the additional administrative expenses associated with the appointment of a trustee and the trustee’s retention of professionals who would be required to become familiar with the many legal and factual issues in the Debtors’ Chapter 11 Cases.

 

100


XV.

CONCLUSION AND RECOMMENDATION

The Debtors believe the Prepackaged Plan is in the best interests of all stakeholders and urge the holders of Claims in Class 3 to vote in favor thereof.

Dated: May 11, 2017

 

TIDEWATER PARTIES
TIDEWATER INC.
CAJUN ACQUISITIONS, LLC
GULF FLEET SUPPLY VESSELS, L.L.C.
HILLIARD OIL & GAS, INC.
JAVA BOAT CORPORATION
PAN MARINE INTERNATIONAL DUTCH HOLDINGS, L.L.C.
POINT MARINE, L.L.C.
QUALITY SHIPYARDS, L.L.C.
S.O.P., INC.
TIDEWATER CORPORATE SERVICES, L.L.C.
TIDEWATER GOM, INC.
TDEWATER MARINE ALASKA, INC.
TIDEWATER MARINE FLEET, L.L.C.
TIDEWATER MARINE HULLS, L.L.C.
TIDEWATER MARINE INTERNATIONAL DUTCH HOLDINGS, L.L.C.
TIDEWATER MARINE SAKHALIN, L.L.C.
TIDEWATER MARINE SHIPS, L.L.C.
TIDEWATER MARINE VESSELS, L.L.C.
TIDEWATER MARINE WESTERN, INC.
TIDEWATER MARINE, L.L.C.
TIDEWATER MEXICO HOLDING, L.L.C.
TIDEWATER SUBSEA ROV, L.L.C.
TIDEWATER SUBSEA, L.L.C.
TIDEWATER VENTURE, INC.
TWENTY GRAND (BRAZIL), L.L.C.
TWENTY GRAND MARINE SERVICE, L.L.C.
ZAPATA GULF MARINE, L.L.C.
By:  

/s/ Jeffrey M. Platt

Name:   Jeffrey M. Platt
Title:   President and Chief Executive Officer and Authorized Representative


EXHIBIT A

Prepackaged Plan


Exhibit A

UNITED STATES BANKRUPTCY COURT

DISTRICT OF DELAWARE

 

 

  x   
  :   
In re:   :    Chapter 11
  :   
TIDEWATER INC., et al.,                                            :    Case No. 17-[] ([])
  :    (Jointly Administered)
                           Debtors. 1   :   

 

  x   

JOINT PREPACKAGED CHAPTER 11 PLAN OF REORGANIZATION

OF TIDEWATER INC. AND ITS AFFILIATED DEBTORS

 

WEIL, GOTSHAL & MANGES LLP

Ray C. Schrock, P.C.

Jill Frizzley

Andriana Georgallas

767 Fifth Avenue

New York, New York 10153

Telephone: (212) 310-8000

Facsimile: (212) 310-8007

 

RICHARDS, LAYTON & FINGER, P.A.

Daniel J. DeFranceschi (No. 2732)

Zachary I. Shapiro (No. 5103)

One Rodney Square

920 North King Street

Wilmington, Delaware 19801

Telephone: (302) 651-7700

Facsimile: (302) 651-7701

 

Alfredo R. Pérez

Chris López

700 Louisiana, Suite 1700

Houston, Texas 77002

Telephone: (713) 546-5000

Facsimile: (713) 224-9511

 
Counsel for Debtors and Debtors in Possession   Counsel for Debtors and Debtors in Possession
Dated: May 11, 2017  
            Wilmington, Delaware  

 

1  The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, if any, are: Tidewater Inc. (7776), Tidewater Marine Western, Inc. (1064), Tidewater Corporate Services, L.L.C. (7776), Tidewater Marine, L.L.C. (7779), Cajun Acquisitions, LLC (2365), Gulf Fleet Supply Vessels, L.L.C. (2194), Hilliard Oil & Gas, Inc. (4727), Java Boat Corporation (0278), Pan Marine International Dutch Holdings, L.L.C., Point Marine, L.L.C. (9586), Quality Shipyards, L.L.C. (2335), S.O.P., Inc. (3464), Tidewater Marine Alaska, Inc. (7549), Tidewater Marine International Dutch Holdings, L.L.C. (2289), Tidewater Marine Sakhalin, L.L.C. (7779), Tidewater Mexico Holding, L.L.C. (8248), Tidewater Venture, Inc. (7694), Twenty Grand (Brazil), L.L.C. (7730), Twenty Grand Marine Service, L.L.C. (7730), Zapata Gulf Marine, L.L.C. (5513), Tidewater GOM, Inc. (2799), Tidewater Subsea, L.L.C. (2022), Tidewater Subsea ROV, L.L.C. (3832), Tidewater Marine Fleet, L.L.C., Tidewater Marine Hulls, L.L.C., Tidewater Marine Ships, L.L.C., and Tidewater Marine Vessels, L.L.C. The Debtors’ principal offices are located at 601 Poydras Street, Suite 1500, New Orleans, Louisiana 70130.


Table of Contents

 

          Page  

ARTICLE I

  

DEFINITIONS AND INTERPRETATION.

     1  

A.         Definitions.

     1  

B.         Interpretation; Application of Definitions and Rules of Construction.

     15  

C.         Reference to Monetary Figures.

     15  

D.         Controlling Document.

     16  

ARTICLE II

  

ADMINISTRATIVE EXPENSE AND PRIORITY CLAIMS.

     16  

2.1.

   Administrative Expense Claims.      16  

2.2.

   Fee Claims.      16  

2.3.

   Priority Tax Claims.      17  

ARTICLE III

  

CLASSIFICATION OF CLAIMS AND INTERESTS.

     17  

3.1.

   Classification in General.      17  

3.2.

   Formation of Debtor Groups for Convenience Only.      18  

3.3.

   Summary of Classification.      18  

3.4.

   Special Provision Governing Unimpaired Claims.      18  

3.5.

   Elimination of Vacant Classes.      18  

ARTICLE IV

  

TREATMENT OF CLAIMS AND INTERESTS.

     19  

4.1.

   Priority Non-Tax Claims (Class 1).      19  

4.2.

   Secured Claims (Class 2).      19  

4.3.

   General Unsecured Claims (Class 3).      19  

4.4.

   Other General Unsecured Claims (Class 4).      21  

4.5.

   Intercompany Claims (Class 5).      22  

4.6.

   Intercompany Interests (Class 6).      22  

4.7.

   Tidewater Parent Interests (Class 7).      22  

4.8.

   Subordinated Securities Claims (Class 8).      23  

ARTICLE V

  

MEANS FOR IMPLEMENTATION.

     23  

5.1.

   Compromise and Settlement of Claims, Interests, and Controversies.      23  

5.2.

   Continued Corporate Existence.      24  

5.3.

   Plan Funding.      24  

5.4.

   Cancellation of Existing Securities and Agreements.      24  

5.5.

   Authorization and Issuance of New Common Stock and New Warrants.      25  

 

i


Table of Contents

(continued)

 

          Page  

5.6.

   Section 1145 Exemption.      25  

5.7.

   Officers and Boards of Directors.      26  

5.8.

   Restructuring Transactions.      26  

5.9.

   Cancellation of Liens.      27  

5.10.

   New Indenture.      27  

5.11.

   Registration Rights Agreement.      28  

5.12.

   Employee Matters.      28  

5.13.

   Nonconsensual Confirmation.      29  

5.14.

   Closing of Chapter 11 Cases.      29  

5.15.

   Notice of Effective Date.      29  

5.16.

   Separability.      29  

ARTICLE VI

  

DISTRIBUTIONS.

     29  

6.1.

   Distributions Generally.      29  

6.2.

   Distribution Record Date.      29  

6.3.

   Date of Distributions.      30  

6.4.

   Disbursing Agent.      30  

6.5.

   Rights and Powers of Disbursing Agent.      30  

6.6.

   Expenses of Disbursing Agent.      31  

6.7.

   No Postpetition Interest on Claims.      31  

6.8.

   Delivery of Distributions.      31  

6.9.

   Distributions to Class 3 General Unsecured Claims.      32  

6.10.

   Distributions after Effective Date.      32  

6.11.

   Unclaimed Property.      32  

6.12.

   Time Bar to Cash Payments.      33  

6.13.

   Manner of Payment under Plan.      33  

6.14.

   Satisfaction of Claims.      33  

6.15.

   Fractional Stock.      33  

6.16.

   Minimum Cash Distributions.      33  

6.17.

   Setoffs and Recoupments.      34  

6.18.

   Allocation of Distributions between Principal and Interest.      34  

 

ii


Table of Contents

(continued)

 

          Page  

6.19.

   No Distribution in Excess of Amount of Allowed Claim.      34  

6.20.

   Withholding and Reporting Requirements.      34  

6.21.

   Hart-Scott-Rodino Antitrust Improvements Act.      35  

ARTICLE VII

  

PROCEDURES FOR DISPUTED CLAIMS.

     35  

7.1.

   Disputed Claims Process.      35  

7.2.

   Estimation of Claims.      35  

7.3.

   No Distributions Pending Allowance.      36  

7.4.

   Distributions after Allowance.      36  

7.5.

   Disputed Claims Reserve.      36  

7.6.

   Claim Resolution Procedures Cumulative.      37  

ARTICLE VIII

  

EXECUTORY CONTRACTS AND UNEXPIRED LEASES.

     37  

8.1.

   General Treatment.      37  

8.2.

   Determination of Assumption Disputes and Deemed Consent.      38  

8.3.

   Effect of Assumption of Contracts and Leases.      38  

8.4.

   Rejection Claims of Sale Leaseback Parties.      39  

8.5.

   Survival of Debtors’ Indemnification Obligations.      39  

8.6.

   Insurance Policies.      39  

8.7.

   Intellectual Property Licenses and Agreements.      40  

8.8.

   Modifications, Amendments, Supplements, Restatements, or Other Agreements.      40  

8.9.

   Reservation of Rights.      40  

ARTICLE IX

  

CONDITIONS PRECEDENT TO CONFIRMATION OF PLAN AND EFFECTIVE DATE.

     40  

9.1.

   Conditions Precedent to Confirmation of Plan.      40  

9.2.

   Conditions Precedent to Effective Date.      41  

9.3.

   Waiver of Conditions Precedent.      42  

9.4.

   Effect of Failure of a Condition.      42  

ARTICLE X

  

EFFECT OF CONFIRMATION OF PLAN.

     42  

10.1.

   Vesting of Assets.      42  

 

iii


Table of Contents

(continued)

 

 

          Page  

10.2.

   Binding Effect.      43  

10.3.

   Discharge of Claims and Termination of Interests.      43  

10.4.

   Term of Injunctions or Stays.      43  

10.5.

   Injunction.      43  

10.6.

   Releases.      44  

10.7.

   Exculpation.      46  

10.8.

   Subordinated Claims.      46  

10.9.

   Retention of Causes of Action/Reservation of Rights.      46  

10.10.

   Solicitation of Plan.      47  

10.11.

   Corporate and Limited Liability Company Action.      47  

ARTICLE XI

  

RETENTION OF JURISDICTION.

     48  

11.1.

   Retention of Jurisdiction.      48  

11.2.

   Courts of Competent Jurisdiction.      50  

ARTICLE XII

  

MISCELLANEOUS PROVISIONS.

     50  

12.1.

   Payment of Statutory Fees.      50  

12.2.

   Substantial Consummation of the Plan.      50  

12.3.

   Plan Supplement.      50  

12.4.

   Request for Expedited Determination of Taxes.      50  

12.5.

   Exemption from Certain Transfer Taxes.      50  

12.6.

   Amendments.      51  

12.7.

   Effectuating Documents and Further Transactions.      51  

12.8.

   Revocation or Withdrawal of Plan.      51  

12.9.

   Severability of Plan Provisions.      52  

12.10.

   Governing Law.      52  

12.11.

   Time.      52  

12.12.

   Dates of Actions to Implement the Plan.      52  

12.13.

   Immediate Binding Effect.      52  

12.14.

   Deemed Acts.      53  

12.15.

   Successor and Assigns.      53  

 

iv


Table of Contents

(continued)

 

 

          Page  

12.16.

   Entire Agreement.      53  

12.17.

   Exhibits to Plan.      53  

12.18.

   Notices.      53  

Schedule 1

  

Restructuring Support Agreement

  

Schedule 2

  

Sale Leaseback Agreements

  

 

v


Tidewater Inc., Tidewater Marine Western, Inc., Tidewater Corporate Services, L.L.C., Tidewater Marine, L.L.C., Cajun Acquisitions, LLC, Gulf Fleet Supply Vessels, L.L.C., Hilliard Oil & Gas, Inc., Java Boat Corporation, Pan Marine International Dutch Holdings, L.L.C., Point Marine, L.L.C., Quality Shipyards, L.L.C., S.O.P., Inc., Tidewater Marine Alaska, Inc., Tidewater Marine International Dutch Holdings, L.L.C., Tidewater Marine Sakhalin, L.L.C., Tidewater Mexico Holding, L.L.C., Tidewater Venture, Inc., Twenty Grand (Brazil), L.L.C., Twenty Grand Marine Service, L.L.C., Zapata Gulf Marine, L.L.C., Tidewater GOM, Inc., Tidewater Subsea, L.L.C., Tidewater Subsea ROV, L.L.C., Tidewater Marine Fleet, L.L.C., Tidewater Marine Hulls, L.L.C., Tidewater Marine Ships, L.L.C., and Tidewater Marine Vessels, L.L.C. (each, a “Debtor” and, collectively, the “Debtors”) propose the following joint chapter 11 plan of reorganization pursuant to section 1121(a) of the Bankruptcy Code. Capitalized terms used herein shall have the meanings set forth in Article I.A.

ARTICLE I     DEFINITIONS AND INTERPRETATION.

A. Definitions. The following terms shall have the respective meanings specified below:

1.1 2010 Noteholder means a holder of 2010 Notes.

1.2 2010 Note Purchase Agreement means that certain Note Purchase Agreement, dated as of September 9, 2010, by and among Tidewater Parent and certain other Debtors, as issuers and obligors, the guarantors party thereto, and the note purchasers party thereto, as amended, modified, or otherwise supplemented from time to time.

1.3 2010 Notes means, collectively, (a) the 3.90% senior notes due December 30, 2017 issued pursuant to the 2010 Note Purchase Agreement in the aggregate principal outstanding amount of $44,500,000, (b) the 3.95% senior notes due December 30, 2017 issued pursuant to the 2010 Note Purchase Agreement in the aggregate principal outstanding amount of $25,000,000, (c) the 4.12% senior notes due December 30, 2018 issued pursuant to the 2010 Note Purchase Agreement in the aggregate principal outstanding amount of $25,000,000, (d) the 4.17% senior notes due December 30, 2018 issued pursuant to the 2010 Note Purchase Agreement in the aggregate principal outstanding amount of $25,000,000, (e) the 4.33% senior notes due December 30, 2019 issued pursuant to the 2010 Note Purchase Agreement in the aggregate principal outstanding amount of $50,000,000, (f) the 4.51% senior notes due December 30, 2020 issued pursuant to the 2010 Note Purchase Agreement in the aggregate principal outstanding amount of $100,000,000, (g) the 4.56% senior notes due December 30, 2020 issued pursuant to the 2010 Note Purchase Agreement in the aggregate principal outstanding amount of $65,000,000, and (h) the 4.61% senior notes due December 30, 2022 issued pursuant to the 2010 Note Purchase Agreement in the aggregate principal outstanding amount of $48,000,000, plus all accrued unpaid prepetition interest, costs, fees, premiums as Allowed, and other amounts due under the 2010 Notes.

1.4 2010 Notes Claim means any Claim arising from, or related to, the 2010 Notes.

1.5 2011 Noteholder means a holder of 2011 Notes.

1.6 2011 Note Purchase Agreements means those two certain Note Purchase Agreements, each dated as of August 15, 2011, by and among Tidewater Parent and certain other Debtors, as issuers and obligors, the guarantors party thereto, and the note purchasers party thereto, as amended, modified, or otherwise supplemented from time to time.

1.7 2011 Notes means the 2011 Series A and B Notes and the 2011 Series C Notes.


1.8 2011 Notes Claim means any Claim arising from, or related to, the 2011 Notes.

1.9 2011 Series A Notes means the 4.06% senior notes due March 31, 2019 issued pursuant to the 2011 Note Purchase Agreements in the aggregate principal outstanding amount of $50,000,000, plus all accrued unpaid prepetition interest, costs, fees, premiums as Allowed, and other amounts due under the 2011 Series A Notes.

1.10 2011 Series A and B Notes means the 2011 Series A Notes and the 2011 Series B Notes.

1.11 2011 Series B Notes means the 4.64% senior notes due June 30, 2021 issued pursuant to the 2011 Note Purchase Agreements in the aggregate principal outstanding amount of $50,000,000, plus all accrued unpaid prepetition interest, costs, fees, premiums as Allowed, and other amounts due under the 2011 Series B Notes.

1.12 2011 Series C Notes means the 4.54% senior notes due June 30, 2021 issued pursuant to the 2011 Note Purchase Agreements in the aggregate principal outstanding amount of $65,000,000, plus all accrued unpaid prepetition interest, costs, fees, premiums as Allowed, and other amounts due under the 2011 Series C Notes.

1.13 2013 Noteholder means a holder of 2013 Notes.

1.14 2013 Note Purchase Agreement means that certain Note Purchase Agreement, dated as of September 30, 2013, by and among Tidewater Parent and certain other Debtors, as issuers and obligors, the guarantors party thereto, and the note purchasers party thereto, as amended, modified, or otherwise supplemented from time to time.

1.15 2013 Notes means collectively, (a) the 4.26% senior notes due November 16, 2020 issued pursuant to the 2013 Note Purchase Agreement in the aggregate principal outstanding amount of $123,000,000, (b) the 5.01% senior notes due November 15, 2023 issued pursuant to the 2013 Note Purchase Agreement in the aggregate principal outstanding amount of $250,000,000, and (c) the 5.16% senior notes due November 17, 2025 issued pursuant to the 2013 Note Purchase Agreement in the aggregate principal outstanding amount of $127,000,000, plus all accrued unpaid prepetition interest, costs, fees, premiums as Allowed, and other amounts due under the 2013 Notes.

1.16 2013 Notes Claim means any Claim arising from, or related to, the 2013 Notes.

1.17 Administrative Expense Claim means a Claim for costs and expenses of administration incurred during the Chapter 11 Cases of a kind specified under section 503(b) of the Bankruptcy Code and entitled to priority under sections 507(a)(2) or 507(b) of the Bankruptcy Code, including, without limitation, (a) the actual and necessary costs and expenses incurred after the Petition Date and through the Effective Date of preserving the Estates and operating the businesses of the Debtors (such as wages, salaries, or commissions for services and payments for goods and other services and leased premises), (b) Fee Claims, and (c) all fees and charges assessed against the Estates pursuant to section 1911 through 1930 of chapter 123 of title 28 of the United States Code, 28 U.S.C. §§ 1-1401.

1.18 Affiliates has the meaning set forth in section 101(2) of the Bankruptcy Code.

1.19 Allowed means, with reference to any Claim or Interest, a Claim or Interest (a) arising on or before the Effective Date as to which (i) no objection to allowance or priority, and no request for estimation or other challenge, including, without limitation, pursuant to section 502(d) of the Bankruptcy Code or otherwise, has been interposed and not withdrawn within the applicable period fixed by the Plan

 

2


or applicable law, or (ii) any objection has been determined in favor of the holder of the Claim or Interest by a Final Order, (b) that is compromised, settled, or otherwise resolved pursuant to the authority of the Debtors or Reorganized Debtors, (c) as to which the liability of the Debtors or Reorganized Debtors, as applicable, and the amount thereof are determined by a Final Order of a court of competent jurisdiction, or (d) expressly allowed hereunder; provided, however, that notwithstanding the foregoing, (x) unless expressly waived by the Plan, the Allowed amount of Claims or Interests shall be subject to and shall not exceed the limitations or maximum amounts permitted by the Bankruptcy Code, including sections 502 or 503 of the Bankruptcy Code, to the extent applicable, and (y) the Reorganized Debtors shall retain all claims and defenses with respect to Allowed Claims that are Reinstated or otherwise Unimpaired pursuant to the Plan.

1.20 Amended Organizational Documents means (a) the Amended Tidewater Parent Organizational Documents and (b) the forms of certificates of incorporation, certificates of formation, limited liability company agreements, or other forms of organizational documents and bylaws, as applicable, of the Reorganized Debtors (other than Tidewater Parent) to the extent such documents reflect material changes to each such Reorganized Debtor’s existing forms of organizational documents and bylaws, substantially final forms of such Amended Organizational Documents, which shall be in form and substance reasonably satisfactory to the Debtors or Reorganized Debtors, as applicable, the Requisite Consenting Noteholders, and the Requisite Consenting Tidewater Lenders and consistent with section 1123(a)(6) of the Bankruptcy Code, if applicable, the forms of which shall be included in the Plan Supplement.

1.21 Amended Tidewater Parent Organizational Documents means the form of certificate of incorporation and bylaws for Reorganized Tidewater Parent, which are annexed to the Restructuring Support Agreement.

1.22 Assumption Dispute means a pending objection relating to assumption of an executory contract or unexpired lease pursuant to section 365 of the Bankruptcy Code.

1.23 Bankruptcy Code means title 11 of the United States Code, 11 U.S.C. § 101, et seq., as amended from time to time, as applicable to the Chapter 11 Cases.

1.24 Bankruptcy Court means the United States Bankruptcy Court for the District of Delaware having jurisdiction over the Chapter 11 Cases.

1.25 Bankruptcy Rules means the Federal Rules of Bankruptcy Procedure as promulgated by the United States Supreme Court under section 2075 of title 28 of the United States Code and any Local Bankruptcy Rules of the Bankruptcy Court, in each case, as amended from time to time and applicable to the Chapter 11 Cases.

1.26 Benefit Plans means (i) each “employee benefit plan,” as defined in section 3(3) of ERISA and (ii) each other pension, retirement, supplemental retirement, bonus, incentive, equity or equity-based, health, life, disability, group insurance, vacation, holiday, and fringe benefit plan, program, contract, or arrangement, in each case whether written or unwritten, maintained, contributed to, or required to be contributed to, by the Debtors for the benefit of any of their current or former employees or independent contractors and existing as of the Petition Date.

1.27 Business Day means any day other than a Saturday, a Sunday, or any other day on which banking institutions in New York, New York are required or authorized to close by law or executive order.

 

3


1.28 Cash means legal tender of the United States of America.

1.29 Causes of Action means any action, claim, cross-claim, third-party claim, cause of action, controversy, demand, right, lien, indemnity, guaranty, suit, obligation, liability, loss, debt, damage, judgment, account, defense, remedies, offset, power, privilege, license and franchise of any kind or character whatsoever, known, unknown, foreseen or unforeseen, existing or hereafter arising, contingent or non-contingent, matured or unmatured, suspected or unsuspected, liquidated or unliquidated, disputed or undisputed, secured or unsecured, assertable directly or derivatively, whether arising before, on, or after the Petition Date, in contract or in tort, in law or in equity or pursuant to any other theory of law (including, without limitation, under any state or federal securities laws). Causes of Action also includes: (a) any right of setoff, counterclaim or recoupment and any claim for breach of contract or for breach of duties imposed by law or in equity, (b) the right to object to Claims or Interests, (c) any claim pursuant to section 362 or chapter 5 of the Bankruptcy Code, (d) any claim or defense including fraud, mistake, duress, and usury and any other defenses set forth in section 558 of the Bankruptcy Code, and (e) any state law fraudulent transfer claim.

1.30 Certificate means that certain officer’s certificate to be addressed to the holders of the New Secured Notes and delivered by the Debtors to the New Indenture Trustee on the Effective Date, which is annexed to the Restructuring Support Agreement.

1.31 Chapter 11 Cases means the jointly administered cases under chapter 11 of the Bankruptcy Code commenced by the Debtors on the Petition Date in the Bankruptcy Court.

1.32 CIC Agreements means those certain change of control agreements designated with an asterisk on Schedule 5(c) of the Restructuring Support Agreement.

1.33 CIC Waiver Letters means those certain executed written agreements, in form and substance approved by the Requisite Consenting Tidewater Lenders and the Requisite Consenting Noteholders, by and between Tidewater Parent and the employees party to the CIC Agreements, pursuant to which such parties agreed that, subject to the terms of the CIC Waiver Letters, neither the occurrence of the Effective Date nor the consummation of the Plan or any transaction contemplated thereby as of the date hereof shall constitute a “Change of Control” for purposes of any such CIC Agreements.

1.34 Claim has the meaning set forth in section 101(5) of the Bankruptcy Code as against any Debtor.

1.35 Class means any group of Claims or Interests classified as set forth in Article III of the Plan pursuant to sections 1122 and 1123(a)(1) of the Bankruptcy Code.

1.36 Class 3 Distribution Date means (a) the Class 3 Initial Distribution Date or (b) the Class 3 Final Distribution Date, as applicable.

1.37 Class 3 Final Distribution Date means, with respect to the Class of General Unsecured Claims (Class 3), a date after the Class 3 Initial Distribution Date and after all Disputed Claims in the Class of General Unsecured Claims have become either Allowed Claims or Disallowed Claims that is selected by the Reorganized Debtors in their reasonable discretion and in consultation with the Requisite Consenting Tidewater Lenders and the Requisite Consenting Noteholders, but in any event, is no more than thirty (30) days after all such Disputed Claims have become either Allowed Claims or Disallowed Claims.

1.38 Class 3 Initial Distribution Date means the Effective Date.

 

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1.39 Confirmation Date means the date on which the Clerk of the Bankruptcy Court enters the Confirmation Order.

1.40 Confirmation Hearing means the hearing to be held by the Bankruptcy Court to consider confi