This article is part of a Real Money series on 20 companies investors should consider adding to their distressed watch list.
Shares of Tidewater (TDW) jumped by 10% during in midday trading on Monday as it prepares to report fiscal second quarter results after the bell today, but the soaring stock price mirrors the movement in crude oil prices.
For the quarter, analysts are expecting a loss of $1.06 per share on revenue of $157.86 million. During the same period last year, the company reported a loss of $0.93 a share on revenue of $271.9 million. TDW shares have no Buy ratings, according to Bloomberg; the majority of analysts have a consensus Hold rating (near 64%), while roughly 36% have a Sell rating.
However, following two limited waiver extensions with the most recent warning of possible bankruptcy, investors and analysts will be looking to see if the leading provider of larger Offshore Service Vessels (OSV's) has made any progress with its debt arrangements.
In October, Tidewater had previously stated:
"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."
As of June 30, the company had total debt of $2.04 billion with only $668.7 million in cash and equivalents.
During the Johnson Rice Energy Conference at the end of September, Tidewater's Chief Investor Relations Officer Joe Bennett noted that the company has spent a lot of money, specifically, about $5 billion over the last 15 years to replacing its aging fleet. Bennett also noted that Tidewater's owes about a net $41 million that should take place over a year, "so very, very minimal CapEx numbers going forward."
Furthermore, Tidewater has about $70 million of maturities due in December of 2017, with another $50 million the following December.
"People want to hear that we are going to guarantee it," Bennett said. "We can't do that," he added.
But given that Tidewater was unable to meet its previous Oct. 21 waiver extension deadline -- which sent the stock down by at least 44% -- management would be wise to issue further clarity on its obligations during the quarterly results.