Gulf Marine Services renegotiated its bank debt and returned to profit by 2021

Gulf Marine Services, the Abu Dhabi-founded owner of self-propelled support vessels, entered 2020 under a June 2020 bank agreement that loaded it with PIK interest and demanded $75m of equity by 31 December 2020. As that deadline slipped, the company faced an event of default and the vesting of warrants to its banks, on top of years of losses.

A new board, led from November 2020 by Executive Chairman Mansour Al Alami, reopened talks with all six banks. In March 2021 GMS signed a term sheet and on 1 April executed an amendment cutting its interest rate from LIBOR+5% to LIBOR+3%, saving about $53m over 2021-22, and replacing the warrant and PIK structure with an equity-raise path: at least $25m by 30 June 2021 and $75m in total by the end of 2022.

Shareholders Seafox International and Mazrui Investments agreed to take their pro rata share, and GMS raised $27.8m of equity in June 2021. By October 2021 the company reported net debt down to $376m, H1 EBITDA up 16% to $26.5m with a 52% margin, and a return to profitability — the first time since 2016 — with full-year EBITDA guidance of $63-67m.

Interest cut from LIBOR+5% to +3% (about $53m saved over 2021-22); net debt down to $376m after a $27.8m equity raise; first profit since 2016.

Cutting the interest rate from LIBOR+5% to +3% saved roughly $53m across 2021-22, a big swing for a company of this size.

Replacing the warrant and PIK terms with a staged equity requirement gave GMS time to raise $27.8m in June 2021 without handing warrants to the banks.

Anchor shareholders committing to their pro rata share made the bank agreement credible enough to execute.

The new board paired the capital fix with operations: 81% utilisation in 2020, cost cuts and vessel relocations.

An onerous lender deal is not final: a new board renegotiated rate, deadlines and warrants, backed by shareholders committing equity — and turned a near-default into growth capital.

With the balance sheet repaired, GMS kept deleveraging and winning contracts; secured backlog stood at $215.4m at the end of June 2021. The 2021 debt deal removed the going-concern doubt that had hung over the company since the onerous June 2020 arrangement.