Hermitage Offshore’s Fleet Sold in Bankruptcy Proceeding
Hermitage Offshore Services, Scorpio Group’s financially troubled offshore operation, announced the sale of its fleet as part of the ongoing bankruptcy procedure at the US Bankruptcy Court for the Southern District of New York. Prior to the bankruptcy, the company owned 10 platform supply vessels, or PSVs, 11 crew boats, and two anchor handling boats.
According to a filing with the court, the 11 crew boats will be sold as a group to VTG Ships Limited, a wholly-owned subsidiary of Tidewater Inc. The winning bid was reportedly approximately $5.3 million in cash. The second bidder, who is identified as the backup bidder in case the first transaction is not completed, is Petro Craft 1605-3 Shipping Company Limited with a bid of $5.2 million also in cash.
Hermitage’s lenders submitted a bid of approximately $80 million for the ten PSVs. The lenders’ bid constitutes what is known as a “credit bid,” meaning that it is applied against the company’s outstanding debt and will not result in Hermitage receiving any cash from the transaction. The lenders were the only successful bidder for the PSVs, and they will likely sell the ships individually or seek a charter operator.
The sale of the vessels remains subject to final approval of the bankruptcy court and definitive documentation between the company and the prospective purchasers. The two anchor handling vessels had been sold in August to lenders to cancel the outstanding debt. That transaction took place just before the bankruptcy filing.
Incorporated in 2013, Emanuele Lauro had become CEO in 2018 of Hermitage. Faced with a prolonged downturn in the offshore market combined with the 2020 impact of COVID-19, Hermitage Offshore Services along with 28 of its subsidiaries filed for reorganizational bankruptcy in August 2020. At the time, the company said the step had become necessary when it was unable to reach a consensual agreement with its lenders.
Because a consensus could not be reached with the company’s lenders, Hermitage said that it would use the courts to provide a single forum for continuing conversations with the lenders. The goal had been to reorganize the operation.
The downturn in the market along with an overcapacity took its toll on many of the larger operators in the offshore sector. In addition to Hermitage, companies including Bourbon, Gulfmark, Tidewater, Harvey Gulf, Toisa, and Hornbeck Offshore have all sought bankruptcy protection as a means of financial restructuring. Hornbeck emerged a month ago from its bankruptcy proceedings.