(18)	SUBSEQUENT EVENTS

On July 31, 2017, the Prepackaged Plan became effective in accordance with its terms and the company and its subsidiaries emerged from the Bankruptcy Cases. As stipulated by the Prepackaged Plan the lenders under the company’s Credit Agreement, the holders of Senior Notes, and the Sale Leaseback Parties received their pro rata share of (a) $225 million of cash, (b) common stock and, if applicable, New Creditor Warrants to purchase common stock, representing 95% of the pro forma common equity in the reorganized company and (c) new 8% fixed rate secured notes due in 2022 in the aggregate principal amount of $350 million (the “New Secured Notes”).

Sale Leaseback Terminations

The company and the Sale Leaseback Parties have not reached agreement with respect to the amount of the Sale Leaseback Claims. Accordingly, on the Effective Date, a portion of the above consideration in cash, New Creditor Warrants, and New Secured Notes in an amount that the company believes represents the maximum possible distributions owing on account of the Sale Leaseback Claims has been withheld from the cash, New Creditor Warrants, and New Secured Notes distributed to allowed General Unsecured Claims on account of such disputed Sale Leaseback Claims until they are resolved. To the extent the Sale Leaseback Claims are resolved for less than the amount withheld, the remainder will be distributed to holders of allowed General Unsecured Claims pro rata.

New Secured Notes

On July 31, 2017, pursuant to the terms of the Prepackaged Plan, the company entered into an indenture (the “Indenture”) by and among the Company, the wholly-owned subsidiaries named as guarantors therein (the “Guarantors”), and Wilmington Trust, National Association, as trustee and collateral agent (the “Trustee”), and issued $350 million aggregate principal amount of the Company’s new 8.00% Senior Secured Notes due 2022 (the “New Secured Notes”).

The New Secured Notes will mature on August 1, 2022. Interest on the New Secured Notes will accrue at a rate of 8.00% per annum payable quarterly in arrears on February 1, May 1, August 1, and November 1 of each year in cash, beginning November 1, 2017. The New Secured Notes are secured by substantially all of the assets of the company and its Guarantors.

The New Secured Notes have minimum interest coverage requirements, minimum liquidity requirements, and other covenants as set forth in the Indenture. The Indenture contains certain customary events of default, including, among other things: (1) default in the payment of any interest when it becomes due and payable; (2) default in the payment of principal at maturity; (3) default in the performance or breach of any other covenant in the Indenture, which default continues uncured for a period of 30 days after (i) the Company’s receipt of written notice from the Trustee or (ii) the receipt by the Company and the Trustee of written notice from the holders of not less than 25% in principal amount of the New Secured Notes as provided in the Indenture; and (4) certain voluntary or involuntary events of bankruptcy, insolvency or reorganization of the Company. The New Secured Notes also prohibit the payment of cash dividends.

Until terminated under the circumstances described below, the New Secured Notes and the guarantees by the Guarantors will be secured by the Collateral (as defined in the Indenture) pursuant to the terms of the Indenture and the related security documents. The Trustee’s liens upon the Collateral and the right of the holders of the New Secured Notes to the benefits and proceeds of the Trustee’s liens on the Collateral will terminate and be discharged: (i) upon satisfaction and discharge of the Indenture in accordance with the terms thereof; (ii) upon payment in full and discharge of all of the New Secured Notes outstanding under the Indenture and all other obligations under the Indenture that are outstanding, due and payable under the Indenture at the time the New Secured Notes are paid in full and discharged (other than contingent indemnity obligations for which no claim has been made); (iii) as to any Collateral of the company or the Guarantors that is sold, transferred or otherwise disposed of by the company or the Guarantors in a transaction or other circumstance that complies with the terms of the Indenture, at the time of such sale, transfer or other disposition; (iv) in whole or in part, with the consent of the holders of the New Secured Notes of the requisite aggregate principal amount of New Secured Notes in accordance with the Indenture; or (v) with respect to the assets of the Guarantors, at the time that the Guarantors are released from their guarantees in accordance with the terms of the Indenture.

Modifications to Troms Offshore Borrowings

Concurrent with the July 31, 2017 effective date of the Prepackaged Plan, the Troms Offshore borrowing agreements were amended and restated to (i) reduce by 50% the required principal payments due from the effective date to March 31, 2019, (ii) modestly increase the interest rates on amounts outstanding through the April 2023, and (iii) provide for additional security, including mortgages on six vessels and related share pledges.

The Troms Offshore borrowings continue to require semi-annual principal payments and bear interest at fixed rates based on Tidewater Inc.’s consolidated funded indebtedness to total capitalization ratio.

Creditor Warrant Agreement

On July 31, 2017, pursuant to the terms of the Prepackaged Plan, the company entered into a warrant agreement (the “Creditor Warrant Agreement”) with Computershare Inc. and Computershare Trust Company, N.A. (together, the “Warrant Agent”), pursuant to which the company issued, or caused to be reserved for issuance, warrants (the “New Creditor Warrants” and the holders thereof, the “New Creditor Warrant Holders”) to Non-U.S. Citizens who were holders of the Company’s unsecured notes, the lenders under the existing credit agreement, and the lessor parties to certain sale leaseback agreements.

Each New Creditor Warrant is immediately exercisable for one share of the company’s common stock, par value $0.001 (the “New Common Stock”) upon payment of an exercise price equal to the par value of the Company’s New Common Stock.

A total of 7,684,453 New Creditor Warrants were issued on the Effective Date to certain holders of allowed General Unsecured Claims who are Non-U.S. Citizens in lieu of an equal number of shares of New Common Stock, in order to ensure that, as required by the Plan, the aggregate percentage of the outstanding New Common Stock owned by Non-U.S. Citizens on the Effective Date was no more than 22%.

The New Creditor Warrants have a 25-year term and are immediately exercisable at a nominal exercise price (par value of $0.001 per share) for shares of New Common Stock on a one-for-one basis, subject to restrictions contained in the Creditor Warrant Agreement and the Certificate of Incorporation limiting ownership by Non-U.S. Citizens to 24%. The company will establish, as permitted under its Certificate of Incorporation and through the Depository Trust Company, appropriate measures to ensure compliance with these ownership limitations.

The New Creditor Warrants will not grant New Creditor Warrant Holders any voting or control rights or dividend rights, or contain any negative covenants restricting the operation of the company’s business.

Series A and Series B Warrant Agreement

On July 31, 2017, pursuant to the terms of the Prepackaged Plan, the company entered into a warrant agreement (the “Equity Warrant Agreement”) with the Warrant Agent, pursuant to which the company issued two series of warrants (the “Series A Warrants” and the “Series B Warrants” and together, the “Equity Warrants,” and the holders thereof, the “Equity Warrant Holders”), on a pro rata basis to all pre-emergence holders of the company’s common stock (the “Old Common Stock”).

Each Equity Warrant represents the right to purchase one share of New Common Stock at the applicable exercise price, subject to adjustment as provided in the Equity Warrant Agreement. On the Effective Date, the company issued (i) Series A Warrants to purchase an aggregate of 2,432,432 shares of New Common Stock, with an exercise price of $57.06 per share and (ii) Series B Warrants to purchase an aggregate of 2,629,657 shares of New Common Stock, with an exercise price of $62.28 per share. Each series of warrants issued under the Equity Warrant Agreement has a six-year term.

Similar to the New Creditor Warrants, the Equity Warrants do not grant the Equity Warrant Holder any voting or control rights or dividend rights, or contain any negative covenants restricting the operation of the Company’s business. In addition, exercise of the Equity Warrants will be subject to restrictions which limit the exercise of such warrants where such exercise would cause the total number of shares held by Non-U.S. Citizens to exceed 24% of the company’s outstanding New Common Stock.

Fresh Start Accounting

The company will adopt fresh start accounting provisions ("Fresh Start") on the Plan Effective Date in connection with the company's emergence from bankruptcy. The adoption of Fresh Start accounting will result in a new reporting entity, the Successor, for financial reporting purposes. The presentation is analogous to that of a new business entity such that on the Plan’s Effective Date the Successor's consolidated financial statements reflect a new capital structure with no beginning retained earnings or deficit and a new basis in the identifiable assets and liabilities assumed. In order to adopt Fresh Start accounting, the company had to meet the following conditions: (i) holders of existing shares of the Predecessor immediately before the Plan Effective Date received less than 50 percent of the voting shares of the Successor entity and (ii) the reorganization value of the Successor was less that its postpetition liabilities and estimated allowed claims immediately before the Plan Effective Date. These conditions were met.

As part of Fresh Start accounting, the company is required to determine the reorganization value of the Successor upon emergence from the Chapter 11 Proceeding. Reorganization value approximates the fair value of the entity, before considering liabilities, and approximates the amount a willing buyer would pay for the assets of the entity immediately after the restructuring. The fair value of the Successor's assets will be determined with the assistance of a third party valuation expert. The reorganization value will be allocated to the company's individual assets and liabilities based on their estimated fair values.

Enterprise value, which is the basis for deriving reorganization value, represents the estimated fair value of an entity’s capital structure which generally consists of long term debt and shareholders’ equity. The Successor’s enterprise value was estimated to be $1,050 million which represented the mid-point of a range included in the disclosure statement of the prepackaged plan of $850 million to $1,250 million. This enterprise value was the basis for deriving equity value estimated to be $943 million which represented the mid-point of a range of $743 million to $1,143 million also included in the disclosure statement of the Prepackaged Plan. Fair values are inherently subject to significant uncertainties and contingencies beyond the Company’s control. Accordingly, there can be no assurance that the estimates, assumptions, valuations, appraisals and financial projections will be realized, and actual results could vary materially. Moreover, the market value of the company’s common stock subsequent to its emergence from bankruptcy may differ materially from the equity valuation derived for accounting purposes.

The unaudited pro forma balance sheet below summarizes the impact of the reorganization and the Fresh Start accounting as if the effective date of the emergence from bankruptcy had occurred on June 30, 2017. The estimated reorganization value has been allocated to the assets and liabilities acquired based upon their estimated fair values, as shown below. The estimated fair values of certain assets and liabilities, including property, plant and equipment, investments in, at equity, and advances to unconsolidated companies, net pension obligations, equity warrants, deferred taxes (including uncertain tax positions), and contingencies require significant judgments and estimates and the pro forma successor balance sheet reflects only those estimates reasonably determined at the time of this filing. The company continues to assess the fair values of certain assets acquired and liabilities assumed, and these estimated fair values are preliminary and subject to material change:

(Unaudited, in thousands)									Successor
	Predecessor		Reorganization			Fresh Start			Pro forma
ASSETS	June 30, 2017		Adjustments (1)			Adjustments (2)			June 30, 2017
Current assets:
Cash and cash equivalents	$	683,778		(225,000	)		—			458,778
Other current assets		435,138		(12,400	)		—			422,738
Total current assets		1,118,916		(237,400	)		—			881,516
Investments in, at equity, and advances to unconsolidated companies		49,216		—			(26,754	)		22,462
Net properties and equipment		2,659,314		—			(1,962,940	)		696,374
Other assets		92,134		—			—			92,134
Total assets	$	3,919,580		(237,400	)		(1,989,694	)		1,692,486

LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	10,106		—			—			10,106
Other current liabilities		250,066		—			(423	)		249,643
Total current liabilities		260,172		—			(423	)		259,749
Long-term debt		80,863		350,000			(969	)		429,894
Accrued property and liability losses		2,776		—			—			2,776
Other liabilities and deferred credits		60,382		—			(3,315	)		57,067
Liabilities subject to compromise		2,389,557		(2,389,557	)		—			—

Commitments and Contingencies

Equity:
Total stockholders’ equity		1,110,865		1,802,157			(1,982,022	)		931,000
Noncontrolling interests		14,965		—			(2,965	)		12,000
Total equity		1,125,830		1,802,157			(1,984,987	)		943,000
Total liabilities and equity	$	3,919,580		(237,400	)		(1,989,694	)		1,692,486

(1)

Reorganization adjustments include restructuring transactions to recognize approximately $12.4 million of previously deposited success fees, replace debt claims with new debt, equity and cash, recognize a gain on debt extinguishment, and the cancellation of Predecessor equity.

(2)

Fresh start adjustments include revaluations of fixed assets, consisting primarily of the company’s vessel fleet, the company’s investment in unconsolidated subsidiaries and noncontrolling interests to their estimated fair values upon the date of emergence as well as the recognition of the predecessor’s other deferred gains and remaining debt issue costs associated with the remaining Troms borrowings as reorganization items. The estimated fair values require significant judgments and estimates and the proforma successor balance sheet reflects only those estimates reasonably determined at the time of this filing.