Hornbeck Offshore Services LLC
March 17, 2021
A Perfect Storm of Operational Challenges
Hornbeck Offshore Services LLC (Hornbeck) is a leading supplier of marine transportation services, including supply vessels, tankers, and barges, primarily in the Gulf of Mexico and Latin America. Headquartered in Louisiana with 1,200 employees, the company provides innovative, technologically-advanced solutions to meet the increasingly more complex drilling and vessel needs of the deep-water and ultra-deep-water energy industry.
Operating in a sector that has been deeply affected by a soft, oversupplied market for the past five years, Hornbeck stayed afloat by reducing their fleet size and negotiating with lenders to restructure corporate debt. While the company endured industry headwinds for longer than many of its competitors who previously turned to bankruptcy for relief, when COVID-19 swept the world and crude oil prices plummeted, conditions worsened in an already weak market and Hornbeck’s recovery was at a critical stage.
Recognizing a corporate restructuring was necessary to maintain business operations without disruption to Hornbeck’s customers or workforce, the company prepared and submitted a Plan of Reorganization (POR) to expedite the process when they filed for Chapter 11 bankruptcy protection in the Southern District of Texas on May 19, 2020.
Swift Restructuring Leads to Financial Stability
Kirkland & Ellis, Hornbeck’s corporate-restructuring counsel, engaged Stretto to provide claims and noticing support, and effectuate a rights offering. Drawing on decades of energy-sector experience and deep subject-matter expertise, Stretto’s case-management team worked closely with Hornbeck’s stakeholders and its turnaround professionals. Our public-securities experts compiled company information, collected documents, and processed other important data in preparation for a rights offering.
Prior to the case filing, Stretto identified holders in multiple countries and initiated the solicitation process. Stretto took rigorous measures to identify the holders’ citizenship status to remain compliant with the Jones Act while issuing new common stock. While Stretto’s subject-matter experts served as subscription agent, supporting this complicated and highly technical process, our document-production specialists facilitated all aspects of the noticing process, including preparing USBs, voter ballots, statement of plan disclosures, and all other pertinent materials.
The POR was confirmed, and all general unsecured creditors, including the company’s trade creditors and vendors, were paid in full. Hornbeck’s pre-petition secured loans and unsecured senior notes were cancelled. In addition, the company closed on the common stock rights offering contemplated by the POR, which resulted in a $100 million cash infusion of new equity capital.
Stretto’s strong case-management support helped Hornbeck emerge from bankruptcy in 2020 with final distributions scheduled for 2021. Hornbeck’s swift debt resolution and restructuring resulted in a stronger financial foundation and positions the company for long-term success.