Covington-based Hornbeck Offshore Services Inc. filed for Chapter 11 bankruptcy protection and plans to reorganize the business in the coming months.
Hornbeck Offshore, which provides marine transportation for the U.S. military and oil field operators in the Gulf of Mexico, filed a prepackaged bankruptcy in the Southern District of Texas on Tuesday. The filing follows through on an announcement it made more than a month ago.
Hornbeck Offshore has more than $1.2 billion in debt on its books that it wants to restructure. The largest unsecured creditor is Wilmington Trust National Association, which is owed $675 million plus interest.
Hornbeck Offshore owes more than $1 million collectively across seven businesses with headquarters in Louisiana. Those include Lafayette-based catering and staffing business Mako Unlimited; Houma-based supplier Coastal Distributors and Juneau Marine Refrigeration; welding company Marine Fab and Repair; and machine rental business Louisiana CAT. Hornbeck owes another $1.3 million to companies with Louisiana operations, such as manufacturer Schottel and navigation technology business Guidance Marine.
Hornbeck Offshore expects to emerge from bankruptcy with $75 million in bankruptcy financing.
Company executives had been negotiating with lenders for months trying to restructure debt without bankruptcy, but the bottom fell out after the coronavirus swept across the world and the price of crude oil dropped to $20 per barrel as demand dwindled. Since then oil prices have recovered to above $30, but there's also a glut of crude oil in storage. Many companies are shutting in wells and considering bankruptcy in the industry.
Hornbeck Offshore has about 1,200 employees, about 150 of them in Louisiana onshore and the remainder offshore.
The oil industry has been dealing with low oil prices since 2014, and companies have been reducing budgets for services. Hornbeck avoided bankruptcy during the 2014 downturn in part because it had $250 million in cash on hand. That same year, the company began stacking vessels, basically shutting down ships that aren't needed to save money in addition to pay cuts and layoffs. Hornbeck Offshore avoided signing long-term contracts and those which were atypical insurance risks as well.
"The company was able to weather industry headwinds for longer than many of the company's competitors," according to its bankruptcy filing.
Despite cost savings, the company had several financing deals fall through in recent years. The most recent restructuring proposal fell through despite a majority of lenders being on board.
"The exchange offer transaction was also viewed negatively by certain key secured lenders," according to the company.