Bourbon Receives Takeover Offer

The Bourbon MPSV Surf Allamandra off Malaysia, August 2019 (Bourbon)

Published Oct 9, 2019 3:20 PM by The Maritime Executive

The court overseeing number-two offshore operator Bourbon's restructuring proceedings has received a takeover offer for the company's assets and activities, Bourbon announced Wednesday. 

With its finances battered by the long-running downturn in the offshore sector, Bourbon Corporation entered a court-administered restructuring process (redressement judiciaire) on August 7. Its court-appointed administrator has received an offer from a firm owned by a consortium of French banks. While the Marseilles Commercial Court contemplates the merits of the offer, Bourbon has asked Euronext to temporarily suspend trading in its stock. 

Bourbon has been edging towards reorganization since July 2018, when it asked a group of its creditors to allow it to suspend repayment and debt servicing. Prior to entering court administration, it was negotiating with its bankers on the possibility of two solutions - a writedown with the possibility of sharing in the financial benefits of a future market recovery, or a debt-for-equity swap.

In entering reorganization and contemplating the possibility of a merger, Bourbon is following a path set by its biggest competitors. American operator Tidewater eliminated $1.6 billion in loans under a prepackaged bankruptcy in 2017, then acquired competitor Gulfmark, which had recently shed about $430 million in debt through its own bankruptcy reorganization. The process has allowed these firms to clean up their balance sheets and compete in a tough market without the burden of legacy financing expenses. 

Shakeup at Tidewater

Tidewater, now the market leader by market cap and fleet size, has undertaken a major leadership shakeup over the past month, replacing CEO John T. Rynd with former Gulfmark CEO Quintin V. Kneen. It has also replaced its general counsel and dispensed with its COO position in a cost-saving measure. The firm's stock price has steadily declined over the past several months, shedding about 40 percent of its value since the end of July. 

Tidewater has predicted an improvement in market fundamentals over the next two years. Over this period, about 900 vessels will be up for their five-year survey, which may prompt more demoltion activity. The rising number of active offshore production units and more demand for offshore drilling is expected to complement this decline in total PSV tonnage, leading to the possibility of a long-awaited increase in day rates.