Trico Marine Services, Inc. (Nasdaq:TRMA) filed a form 10Q with the SEC on August 16 in which, essentially, it seems to say it is awash in red ink and preparing itself to file for bankruptcy.
For much of last year Trico Marine was in the news as it fought a bitter proxy battle to prevent its largest shareholder, Kistefos AS owned by Norwegian Christen Sveaas, from getting representation on its board. Trico argued that such representation would threaten the Jones Act eligibility of its U.S. operations. Mr. Sveaas said it would do no such thing and that the real issues were Trico's financial and operating performance and the significant loss of stockholder value it had experienced.
In its just filed 10Q, Trico notes that on July 23, 2010, it received notice from the NASDAQ Listing Qualifications Staff that it had not maintained a minimum bid price of $1.00 per share based upon the closing bid price for the last 30 consecutive business days for continued listing on the NASDAQ Stock Market and that it risks delisting. [Today's closing price was a fraction over 30 cents].
Our inability to meet our past and current commitments, and uncertainties associated with our ability to meet our other commitments as they come due, to comply with our debt covenants or to repay our outstanding debt raises substantial doubt about our ability to continue as a going concern. Our cash and credit capacity have not been sufficient to enable it to meet our obligations, and our forecasted cash and available credit capacity are not expected to be sufficient to meet our other commitments as they come due over the next twelve months.
We did not make the approximately $8 million interest payment due on May 15, 2010 for the 8.125% secured convertible debentures due 2013 (the "8.125% Debentures") prior to the expiration of the applicable 30-day grace period, the approximately $10.1 million principal payment due on August 1, 2010 for the 8.125% Debentures (for which there is no grace period) and the approximately $2.3 million interest payment due on July 15, 2010 for the 3% senior convertible debentures due 2027 (the "3% Debentures"). As a result, events of default have occurred under the 8.125% Debentures and the 3% Debentures. As described in the accompanying notes to our condensed consolidated financial statements and below, we have entered into a forbearance agreement with the holders of 51% of the outstanding principal amount of the 8.125% Debentures.
In addition, we believe it is highly unlikely that we will remain in compliance in future periods with covenants requiring us to achieve financial thresholds, including an EBITDA threshold in the $25 million U.S. credit facility agreement (the "U.S. Credit Facility"), the 11 7/8% senior secured notes due 2014 (the "Senior Secured Notes") issued by Trico Shipping AS ("Trico Shipping") and Trico Shipping's working capital facility (the "Trico Shipping Working Capital Facility") and a liquidity threshold in Senior Secured Notes and the Trico Shipping Working Capital Facility. In particular, we expect that we may not be in compliance with financial covenants requiring us to achieve EBITDA targets measured over the trailing twelve months as specified in the U.S. Credit Facility, Senior Secured Notes and Trico Shipping Working Capital Facility. If we fail to maintain compliance with these covenants under the various indentures and forbearance agreements, our creditors may take certain actions, including declaring the outstanding principal of the applicable debt to be due and payable immediately. In addition, our results of operations may limit Trico Shipping's ability to access additional funds under the Trico Shipping Working Capital Facility. In our current circumstances, if such indebtedness were accelerated, we would be unable to satisfy our obligations under the 8.125% Debentures, the 3% Debentures, the Senior Secured Notes, the 6.11% notes due 2014 (the "6.11% Notes"), the U.S. Credit Facility or the Trico Shipping Working Capital Facility. In an effort to avoid the acceleration of such indebtedness, we have entered into (i) a forbearance agreement with holders of the 8.125% Debentures, (ii) a First Supplemental Indenture with respect to the Senior Secured Notes, (iii) an amendment to the Trico Shipping Working Capital Facility and (iv) an amendment to the U.S. Credit Facility.
Our company, our financial advisor, Evercore Partners, and our restructuring advisor, AP Services, LLC ("AlixPartners"), are in discussions with some of our existing debt holders regarding restructuring certain of these obligations. While we have completed additional financing for both Trico Other and Trico Supply, our liquidity at both Trico Other (as defined in Note 2) and Trico Supply (as defined in Note 2) is limited and if unable to reach agreement within a limited time period with certain of our debt holders, we will need to commence a voluntary case in a United States Bankruptcy Court (the "Bankruptcy Court") concerning each of us, Trico Marine Assets, Inc. ("TMA"), Trico Marine Operators, Inc. ("TMO") Trico Marine Cayman, LP ("Trico Cayman"), Trico Marine International, Inc. ("TMI") and Trico Holdco, LLC ("Trico Holdco") prior to September 8, 2010 to avoid an event of default under the U.S. Credit Facility and cross-defaults under our other debt agreements. Additionally, even if agreements regarding debt restructuring are reached within the necessary time periods, we may need to undertake bankruptcy proceedings in order to implement the debt restructurings and/or achieve other changes to our cost structure. We may also be required to undertake bankruptcy proceedings as a result of our inability to meet our past,current and future commitments. The credit and business risk profiles of we could be adversely affected by a bankruptcy filing which may have a materially adverse effect on our business and results of operations.