Investors high-tailed it out of the Tidewater Inc. (NYSE:TDW) stock on Monday after they got wind of a likely bankruptcy.
The stock crashed 44.15% to close at $1.32, with 28 million shares changing hands.
What triggered the slide was an admission by the company over the weekend that despite ongoing negotiations with its principal lenders and noteholders, it might still not be able to avoid bankruptcy.
Tidewater is a provider of offshore service vessels and marine support services. The severe downturn in the oil services industry has taken a huge toll on its revenues and cash flow.
The company warned in May of its “ability to continue as a going concern unless and until the company secures amendments and our waivers from our lenders and note-holders of the minimum three to one EBITDA to interest coverage covenant prior to any possible covenant breach.”
Tidewater Inc. (NYSE:TDW) on the ropes again
As at June 30, TDW carried a total debt of $2.04 billion.
The weekend release from the company said that it had achieved only limited success in its negotiations with lenders and noteholders to amend relief from certain strictures in its debt agreements.
Pending the conclusion of these negotiations, the company had been granted temporary waivers which have now been extended till November 11.
However, the company warned that “there is a possibility that the lenders, noteholders and the company will not be able to negotiate new debt terms that are acceptable to all parties, in which case the company will have to consider other options, including a possible reorganization under Chapter 11 of the federal bankruptcy laws.”
That was perhaps enough to panic investors. The stock opened Monday with a loss of 27% compared to its Friday close of $2.99, and closed at $1.67.
Bankruptcies in the oil services industry are escalating given the slide in oil prices over the past two years.
Also read our article today on Basic Energy Services, Inc (NYSE:BAS).