Bankrupt shipping firm GulfMark Offshore, Inc. and GulfMark Rederi AS, a wholly-owned subsidiary of the company, entered into a commitment letter with DNB Markets, Inc., DNB Capital LLC and Hayfin DLF II Luxco 2 S.à.r.l.  regarding the terms of the provision of certain credit facilities  in connection with the confirmation of the Company’s proposed plan of reorganization filed in connection with its chapter 11 case pending in the United States Bankruptcy Court for the District of Delaware.

Under terms of the commitment letter DNB would, subject to the terms and provisions thereof, provide a 5-year multi-currency senior secured revolving credit facility in an aggregate principal amount of $25,000,000 and Hayfin would provide a 5-year senior secured term loan facility in an aggregate principal amount of $100,000,000. The Commitment Letter has been approved by certain consenting noteholders party to the Restructuring Support Agreement with the Company, dated as of May 15, 2017, as amended, subject to final documentation.

Further, to the extent consummated, Rederi will be required to pay, on the effective date of such credit facilities, certain arrangement, upfront, ticking and other closing fees in an aggregate amount of approximately $5,000,000 to the terms of the fee arrangements agreed to between Rederi and the Exit Facility Lenders, in addition to certain previously paid work fees. In the event that the Commitment Letter is terminated without the Company borrowing thereunder, the Exit Facility Lenders will be entitled to an aggregate termination fee equal to $1,875,000 (plus accrued ticking fees), payable on the date that the Company emerges from bankruptcy (in accordance with the terms set forth in the Commitment Letter). The Exit Facility Lenders’ obligations under the Commitment Letter are subject to certain customary conditions. There can be no assurances that the exit financing will be completed to the terms of the Commitment Letter, that the Court will enter an order permitting the Company as a debtor to become a party to the exit facilities’ documentation as contemplated by the Commitment Letter, or that the final documentation in connection with the exit financing will be approved by the Consenting Noteholders.

As a condition to closing the exit financing, the Company obtained appraisals from two independent appraisal firms for 26 vessels that will serve as collateral vessels and 14 vessels that are approved additional collateral vessels as defined in the term sheet attached to the Commitment Letter. As of August 31, 2017, the 26 collateral vessels and 14 approved additional collateral vessels were appraised (based on the average of the two appraisals) at approximately $371.9 million and $109.0 million, respectively. The remaining 26 vessels in the fleet were not appraised at such time, but were previously appraised at approximately $153.3 million (based on the average of two appraisals) as of June 30, 2017. In connection with its emergence from bankruptcy protection, the Company will be required to adopt fresh-start accounting as of the date the Company emerges from bankruptcy. These appraisals of the vessels were based on a methodology using adjusted market values, in contrast to fresh-start valuation, which is based on enterprise value as of the date the Company emerges from bankruptcy and is heavily weighted to give effect to current depressed market conditions. When the reorganized Company adopts fresh-start accounting, its assets and liabilities will be recorded at their fair value as of the fresh-start reporting date. The fair value of the Company’s assets and liabilities as of that date is likely to differ materially from the appraised values of its vessels furnished in this report. Although the Company has not completed its fresh-start accounting procedures and is unable to confirm the impact that fresh-start accounting may have on its financial condition and results of operations, as of the date of this report the Company expects the fresh-start valuations of these vessels in the aggregate to be materially less than the appraised values furnished in this report. Consequently, the appraised values of the Company’s vessels furnished in this report may not be reliable indicators of its financial condition for any period after it adopts fresh-start accounting.