Covington-based Hornbeck Offshore Services Inc. plans to file for Chapter 11 bankruptcy protection soon.
The marine transportation company told investors that it expects to file a prepackaged bankruptcy in the Southern District of Texas to reorganize the company.
It recently reached agreements with creditors for several different loans to go into forbearance, which were largely due in April.
"The company is in the process of negotiating and finalizing a restructuring support agreement with the forbearing creditors on the terms of a consensual balance sheet restructuring during this forbearance period," according to a U.S. Securities and Exchange Commission filing.
The face value of the company's total debt on its books was more than $1.2 billion as of September 2019, records show.
Hornbeck Offshore expects to file for bankruptcy protection and reorganization before April 20. Company executives had been negotiating with lenders for months trying to restructure debt without bankruptcy, but the bottom fell out after the coronavirus pandemic swept across the world and the price of crude oil dropped to $20 per barrel.
"We were working on a consensual plan that would have avoided bankruptcy, but COVID-19 and more importantly the OPEC war was a game changer," said James Harp, chief financial officer of Hornbeck Offshore.
The company has about 1,200 employees, about 150 of them in Louisiana onshore and the remainder offshore. It is considered an essential business, so many workers are still showing up to its Covington offices. Even during bankruptcy the company doesn't expect to furlough workers and wants to continue business as usual.
"We're very confident that we'll be able to emerge and get in and out of bankruptcy fairly quickly," Harp said. "Our creditors have been very supportive and when the market eventually recovers we are a viable essential company in our industry for the long term. All we need is liquidity."
Hornbeck Offshore has not filed its fourth-quarter or year-end financial reports yet and notified the SEC it has been unable to do so due to ongoing discussions with lenders about restructuring loans.
In the previous quarter, Hornbeck Offshore had a net loss of $41.4 million, up from a loss of $31.1 million during third-quarter 2018. Meanwhile its revenue was down to $52.8 million during the third quarter from $58.4 million a year earlier. The company had $136 million in cash and cash equivalents as of September 2019.
The company's issues stem from a struggling oil service sector because customers have been dealing with low oil prices since 2014 and have been reducing budgets for services.
"The COVID-19 pandemic and the recent oil price war initiated by Russia and Saudi Arabia have had significant negative impact on the offshore oil and gas industry and the company," according to securities filings.
Some of the company's administrative employees have been displaced due to stay-at-home orders as well because of the coronavirus.
The company was notified in recent months by the New York Stock Exchange that it faces being taken off the public market because its stock was trading under $1 per share for least 30 consecutive days. The company's stock was trading Thursday at 6 cents per share, down from its 52-week peak of $1.48 per share in April 2019.