Stressed Out: Tidewater Gets Relief From World Bank Judgement

 | Mar 04, 2016 | 3:25 PM EST
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This article is part of a Real Money series on 20 companies investors should consider adding to their distressed watch list.

A rising tide lifts all ships and the World Bank's decision to partially lift a stay on a compensation claim Tidewater (TDW) has against Venezuela caused the stock to spike over 72% this week.

The World Bank allowed Tidewater to recoup $27.4 million of the original $46.4 million judgement awarded by the International Centre for Settlement of Investment Disputes.

The award comes after 11 of the offshore service vessel provider's ships were seized in 2009 by Venezuelan officials as part of their push to nationalize the country's oil industry.

"Enforcement on the remaining balance of the award ($28.2 million after including interest from the date of expropriation and reimbursement of legal and other costs) will remain stayed until the conclusion of the annulment proceeding, which the company anticipates will occur this calendar year," the company said in a statement Tuesday. 

Read about other 'stressed out' companies feeling less stress this week

Tidewater has had a rough go of it this year. The shares had fallen more than 82% in the past year before this week's rally. The company has acknowledged that the drop in customers' exploration activity -- due to oil's price decline -- is directly responsible for its income troubles. It reported a debt load of $1.5 billion during a December presentation, and while the bulk of the notes come due in 2020, its ability to meet those obligations during a prolonged period of low oil prices could be tenuous.

While the company is happy with the judgement, it may have trouble collecting the fees from cash-strapped Venezuela.

"The company intends to take appropriate steps to vigorously enforce and collect the award, which is enforceable in any of the 150 member states that are party to the ICSID Convention. However, even with the partial lifting of the stay of enforcement, the company recognizes that the collection of the award may present significant practical challenges. Because the award has yet to be satisfied and the annulment proceeding is pending, the net impact of these matters on the company cannot be reasonably estimated at this time and the company has not recognized a gain related to these matters."

An infusion of cash couldn't have come at a better time for this stressed out company. While oil prices seem to have finally bottomed and are beginning to rally, oil companies are still cutting their capex budgets for the foreseeable future. It will likely be a while before Tidewater will be able to set sail.

For more on Real Money's 20 distressed companies to watch:

Stressed Out: Introducing Real Money's Distressed Index

Stressed Out: Office Depot's Earnings Miss, but Investors Are Down With ODP

Stressed Out: Can Tidewater Sustain Today's Spike?

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