Tuesday 17 July 2018

On 16th July, 2018, Tidewater Inc. and GulfMark Offshore, Inc. announced that the Boards of Directors of both companies have unanimously approved a definitive agreement to combine the two companies. This combination, if consummated, will create a global offshore support vessel leader positioned to capitalize on significant cost synergies and superior growth opportunities as the OSV sector recovery gains traction.

Transaction Summary

Under the terms of the all-stock agreement, GulfMark stockholders will receive 1.100 shares of Tidewater common stock for each share of GulfMark common stock held by them. Each GulfMark noteholder warrant will be automatically converted into the right to receive 1.100 Tidewater shares, subject to Jones Act restrictions on maximum ownership of shares by non-U.S. citizens. Collectively, these GulfMark securityholders will beneficially own 27% ownership of the combined company after completion of the combination, or 26% on a fully-diluted basis. Total value to these GulfMark securityholders is approximately $340 million and the equity market capitalization of the combined company is approximately $1.25 billion, both based on the Tidewater closing stock price of $30.62 on July 13, 2018.

Concurrent with the closing, $100 million of existing GulfMark debt is expected to be repaid. On a pro-forma basis, Tidewater will maintain its industry-leading position of financial strength, with pro forma net debt of approximately $100 million and pro forma available liquidity of more than $300 million. Tidewater will assume GulfMark's obligations under existing GulfMark equity warrants ($100 strike price).

The combined company will have the industry's largest fleet and the broadest global operating footprint in the OSV sector, with an unmatched ability to support customers across geo-markets and water depths. The financial strength and operating footprint of the combined company will also position it to sustain through-cycle market leadership.

The transaction is expected to be accretive to Tidewater's 2019 EBITDA and produce transaction-related cost synergies of approximately $30 million, which are expected to be realized no later than Q4 2019, and additional efficiencies associated with greater scale and scope of operations. The combined company also expects to realize revenue synergies through improved vessel utilization, with future pricing improvements largely driven by the timing and trajectory of a recovery in demand, and the availability of competitive vessels that are in compliance with classification requirements. The larger cash flows and greater diversification of the combined company may also provide access to capital on more attractive terms.

The combined company will be operated under the Tidewater brand and will be led by Tidewater CEO John Rynd. Upon the closing of the combination, the Tidewater Board of Directors will be expanded to ten seats by adding three directors selected by GulfMark. The transaction is expected to close in the fourth quarter of 2018, subject to customary closing conditions, including stockholder approval of the merger (by GulfMark's stockholders) and of the share issuance (by Tidewater's stockholders).

About Tidewater

Tidewater owns and operates one of the largest fleets of Offshore Support Vessels in the industry, with over 60 years of experience supporting offshore energy exploration and production activities worldwide.

About GulfMark

GulfMark provides marine transportation services to the energy industry through a fleet of offshore support vessels serving every major offshore energy industry market in the world.