Cal Dive files for Chapter 11 Bankruptcy Protection | March 3, 2015

Cal Dive International, Inc. and 5 affiliates filed for protection under Chapter 11 of the United States Bankruptcy Code on March 3, 2015 in the United States Bankruptcy Court for the District of Delaware under Case No. 15-10458.

The Debtors in these cases, along with the last four digits of each Debtor’s federal tax identification number, are Cal Dive International, Inc. (0501), Cal Dive Offshore Contractors, Inc. (4878), Affiliated Marine Contractors, Inc. (8678), Fleet Pipeline Services, Inc. (2104), Gulf Offshore Construction, Inc. (2106), and CDI Renewables, LLC (4985). The Debtors’ corporate headquarters is at 2500 CityWest Boulevard, Suite 2200, Houston, TX 77042

Quinn J. Hébert  is the Chairman of the Board of Directors, President, Chief Executive Officer, and acting Chief Financial Officer of Cal Dive International, Inc. (“Cal Dive”), an offshore marine contracting corporation organized under the laws of Delaware, and Chairman, President, and Chief Executive Officer of each of Cal Dive’s affiliated debtors and debtors in possession.  Mr. Hébert discusses the filing:

“The Debtors and their non-debtor foreign affiliates (the “Non-Debtor Affiliates,” and together with the Debtors, the “Cal Dive Group”) constitute a global marine contractor that provides highly specialized manned diving, pipelay and pipe burial, platform installation and salvage, and well-intervention services to a diverse customer base in the offshore oil and gas industry. Headquartered in Houston, the Cal Dive Group operates in the Gulf of Mexico  Outer  Continental  Shelf,  the  United  States,  Latin  America,  Southeast  Asia,  China, Australia, West Africa, the Middle East, and Europe.  Its 2014 revenue was approximately $394 million.

“Only the Cal Dive Group’s U.S.-based entities are Debtors in these cases. The foreign members of the Cal Dive Group, including operating companies in Mexico, Australia, the United Kingdom, Indonesia, Malaysia, and Singapore, have not filed chapter 11 petitions or foreign insolvency proceedings and continue to conduct their businesses in the ordinary course.

“The Debtors’ decision to commence these cases was prompted by two principal factors—one developing over the past year, the other more recently. During 2014, the Cal Dive Group’s utilization levels and, in turn, liquidity suffered as a result of delays in projects outside the Cal Dive Group’s control. Above all, unusually adverse and sustained weather disruptions—a special concern for a business that operates in water depths of up to 1,000 feet— forced the postponement of anticipated construction projects, impeding the Cal Dive Group’s ability to invoice, collect for work performed, and recoup capital outlays.

“Meanwhile, other offshore contractors, whose tasks must be completed before the Cal Dive Group can complete its projects, fell behind schedule and deprived the Cal Dive Group of valuable workdays. The consequences of these delays are most evident in the Cal Dive Group’s construction operations in Mexico, where two major projects with Petróleos Mexicanos (“Pemex”), the Cal Dive Group’s largest customer, were repeatedly put on hold because of weather disruptions and performance issues with other contractors. Given that the Cal Dive Group has outlaid substantial capital for the Pemex projects, the delay—in both completing and receiving payment for them—has dramatically impacted liquidity, restricted the Debtors’ ability to fund their business activities, and ultimately led to a covenant default under their lending facilities in summer 2014.

“Determined not to allow these events to dictate the Cal Dive Group’s fate, the Debtors in summer 2014 initiated negotiations to obtain replacement financing to improve liquidity. Engaging with creditors across their capital structure and numerous potential third- party capital providers, the Debtors worked continuously to achieve a refinancing solution to their liquidity constraints, which were exacerbated by contractual step-downs in the availability under their Pre-Petition Senior Revolver (defined below) as well as over $100 million in working capital outlays tied up in four Pemex projects. In the midst of these exhaustive efforts, oil prices plummeted. The ensuing uncertainty about future oil prices introduced an additional, unexpected obstacle that impeded refinancing efforts. Unable to secure the financial flexibility they required, the Debtors commenced these chapter 11 cases.

“The Debtors intend in this bankruptcy to maximize value for their stakeholders through two main initiatives. First, the Debtors plan to sell certain underutilized vessels (the “Non-Core Assets”) under Bankruptcy Code section 363. Second, the Debtors aim to maintain their remaining subsea contracting business (the “Core Business”) as a going concern, either through a sale to a third party or a reorganization of the Debtors’ capital structure. The Core Business enjoys healthy margins, steady cash flow from its oil well inspection, maintenance, and repair activities, an exceptional talent pool, and an international market-leading reputation. The Debtors believe that, delevered through a plan of reorganization or sale, the Core Business will emerge from chapter 11 as a more stable enterprise, with a more profitable future.

DESCRIPTION OF THE DEBTORS

History of the Cal Dive Group

“Cal Dive traces its origins to California Divers, Inc., a company that pioneered the use of mixed-gas diving in the early 1960s when oilfield exploration off the Santa Barbara coast moved to water depths below 250 feet. Cal Dive commenced operations on the Gulf of Mexico Outer Continental Shelf in 1975, and since then, the Cal Dive Group’s principal business has been centered in that region. Over time, however, the Cal Dive Group’s business outside the Gulf of Mexico has steadily increased and now accounts for more than 50% of its revenues.

“During the 1990s, Cal Dive expanded and diversified, closing numerous strategic transactions and investing in new technology and assets. Most importantly, in the mid- 1990s, Cal Dive developed deep-water, or “saturation,” diving capabilities, acquiring many of the vessels that remain in its fleet today. Fueled by this growth, Cal Dive became a publicly traded company on Nasdaq in 1997.

“In December 2006, after a series of corporate transactions, Cal Dive was spun off as a standalone offshore marine contractor. Its common stock traded on the New York Stock Exchange, until shortly before this bankruptcy filing.

“In December 2007, Cal Dive acquired Horizon Offshore, Inc. (“Horizon”), a marine construction services company with operations in the Gulf of Mexico, Latin America and Southeast Asia. This acquisition significantly enhanced the Cal Dive Group’s offshore construction capabilities, while complementing the Cal Dive Group’s existing diving business.

The Debtors’ Current Corporate Structure

“Today, the Cal Dive Group comprises a publicly traded holding company, a domestic operating company, numerous foreign operating companies, and multiple other entities, which together provide diving and construction services to the international offshore oil and gas industry.

“In the United States, the Cal Dive Group operates primarily through Debtor Cal Dive Offshore Contractors, Inc. (“CDOCI”). CDOCI owns the vast majority of the Debtors’ vessels and other core assets and provides critical back-office and administrative support for the Cal Dive Group’s business operations. All of the Debtors’ U.S. employees are employed by CDOCI. CDOCI onshore employees are based at Cal Dive’s Houston headquarters, a shipyard in Port Arthur, Texas, or an office in Broussard, Louisiana; an offshore contingent is stationed on CDOCI’s vessels. In a few instances, CDOCI assigns employees to work for one of the Non-Debtor Affiliates.

“The Debtors other than CDOCI are domestic entities that are either dormant (CDI Renewables, LLC) or provide chartering services to support the Cal Dive Group’s operations (Affiliated Marine Contractors, Inc., Fleet Pipeline Services, Inc., and Gulf Offshore Construction, Inc.).

“The following chart depicts the Debtors’ organizational structure:

“The Cal Dive Group also has substantial offshore operations largely run through Non-Debtor Affiliate subsidiaries of CDOCI. The Non-Debtor Affiliates that are direct subsidiaries of CDOCI include Cal Dive International Pte Limited (the principal Singapore operating company and 100% owner of the Australian operating entity), HOC Offshore S de RL de CV (the principal Mexican operating company), and Cal Dive Offshore International, Ltd. (the primary international holding company for non-Mexican and non-Singapore/Australian operations). Cal Dive Offshore International, Ltd., in turn, directly and indirectly owns operating companies based in Nigeria, the United Kingdom, Malaysia, the Cayman Islands, Mauritius, and Indonesia. Collectively, these Non-Debtor Affiliates of the Cal Dive Group provide marine contracting services around the world.

The Cal Dive Group’s Business

“The Cal Dive Group’s services support every facet of the offshore oil and natural gas industry, from exploration and installation to production and salvage. Specifically, the Cal Dive Group provides three distinct phases of service:

Infrastructure installation. During the early phase of infrastructure installation, services include pipeline installation and trenching, shore approaches, tie-ins, and platform installations.

Production and well remediation. During the middle phase of production and well remediation, services include inspection, repairs, maintenance, and well intervention.

Decommissioning and salvage. During the late phase of decommissioning and salvage, services include pipeline plug, abandonment, and removal, platform removal, and well plug and abandonment.

“To perform these offshore services, the Cal Dive Group relies on a fleet of specialized vessels. The Cal Dive Group’s fleet comprises 18 vessels, 15 of which are owned by CDOCI and three of which are owned by Non-Debtor Affiliate Cal Dive International (Australia) Pty Ltd.  …

Diving Business

“The Cal Dive Group’s primary business is its manned diving operations. With a global workforce of approximately 400 divers, crew, and dive support staff, the Cal Dive Group provides saturation diving services in the United States, both saturation and surface diving services in Southeast Asia, Australia, and Mexico, and surface diving services in the United Kingdom. In surface diving, divers are tended—deployed and monitored via oxygen lines— from the surface down to a depth typically less than 300 feet. In saturation diving, divers live in pressurized saturation diving systems for several weeks at a time and are deployed via a diving bell to the worksite, typically in water depths up to 1,000 feet.

“Customers around the world engage the Cal Dive Group for dive projects at the beginning, middle, and end of a well’s lifecycle. Projects on new wells—mainly pipeline, platform, and other infrastructure installations—form the core of the diving business. These jobs offer high margins and growth opportunities, but achieving milestones required for payment often depends on offshore weather conditions and other contractors completing their jobs. Demand for these early-phase services is also highly dependent on commodity prices, whose fluctuations are beyond the Cal Dive Group’s control. Meanwhile, the middle phase of the well lifecycle—when a well is producing—generally affords the diving business more stability than other phases of the well lifecycle. During this phase, the Cal Dive Group inspects, repairs, and maintains existing wells, pipelines, and platforms. This work generally provides steady cash flow and serves as a buffer against the effects of commodity price fluctuations. During the late phase of decommissioning and salvage, the Cal Dive Group removes pipelines, platforms, and plugs and abandons pipelines and wells.   Due to the Bureau of Safety and Environmental

“Enforcement’s “idle iron” regulations  and similar directives, demand for these later services is less discretionary and, therefore, more stable than for early-phase services.

“To place divers where its customers need them, the Cal Dive Group maintains one of the world’s largest and most technically advanced fleets of dive support vessels. CDOCI owns eight of the fleet’s 11 dive support vessels and five of its eight portable saturation diving systems, while the Australian Non-Debtor Affiliate owns the fleet’s other three dive support vessels and one portable saturation diving system. The Singapore Non-Debtor Affiliate owns two portable saturation diving systems.   Domestically, CDOCI contracts directly with customers for manned diving projects in the U.S. Gulf of Mexico. Abroad, Non-Debtor Affiliates contract directly with their customers and largely perform their own projects, occasionally relying on the Debtors for administrative and operational support. To perform their international diving projects, the Non-Debtor Affiliates (other than the Australian Non-Debtor Affiliate, which often uses its own vessels) either charter dive vessels from CDOCI or a third- party vessel owner, or provide diving services as a subcontractor off another contractor’s vessel.

“Given the highly technical and skilled nature of diving services in all phases of the well lifecycle and the demands of working in unpredictable waters, employee retention and safety are of paramount importance. The Debtors have historically invested, and continue to invest, significant resources in their workforce. Moreover, to ensure the welfare of these offshore workers, the Debtors must maintain strong relationships with a host of vendors that supply critical equipment and services, without which the Debtors could not safely operate their business.

Construction Business

“The Cal Dive Group’s construction business is largely a function of the 2007 Horizon deal. The construction business operates in the U.S. Gulf of Mexico through CDOCI. It also operates in the Mexican Gulf of Mexico through Mexican Non-Debtor Affiliate HOC Offshore S de RL de CV and in Southeast Asia waters through Singapore and Mauritian Non-Debtor Affiliates. The construction business consists of a fleet of seven pipelay/pipebury and derrick barges, all of which CDOCI owns. “These barges install, bury, and repair pipelines with outside diameters up to three feet. In addition, the Cal Dive Group deploys jet sleds to bury pipelines, and where environmental concerns restrict the use of jet sleds, it buries pipelines with a pipeline plow. The construction business also provides platform installation and pipeline and platform decommissioning and

Prepetition Indebtedness and Capital Structure

“As of December 31, 2014, the Debtors had funded debt outstanding of approximately $286.05 million, consisting of the principal balance under the Pre-Petition Senior Revolver and the Pre-Petition Junior Facility and the principal amount of the Convertible Notes (each as defined below). The following table summarizes the Debtors’ prepetition indebtedness and capital structure:

“The Debtors other than Cal Dive guarantee this indebtedness. The Debtors also incur unsecured debt in the ordinary course of their operations. The primary components of the Debtors’ capital structure are described in greater detail below.

Pre-Petition  Senior  Revolver.          

“The  Debtors  are  party  to  a  Credit Agreement, dated April 26, 2011 (as amended, waived, modified, or supplemented, the “Pre- Petition Senior Loan Agreement”), among Cal Dive as borrower, the Debtors other than Cal Dive as guarantors, Bank of America, N.A., as administrative agent (the “Pre-Petition Senior Agent”), and the lenders party thereto (the “Pre-Petition Senior Lenders”). The Pre-Petition Senior Loan Agreement originally provided for a variable-interest $125.0 million revolving credit facility maturing on April 26, 2016 (the “Pre-Petition Senior Revolver”). Before May 9, 2014, the Pre-Petition Senior Loan Agreement also provided for a variable-interest term loan (the “Pre-Petition Senior Term Loan”), under which $29.7 million was outstanding. Cal Dive repaid the Pre-Petition Senior Term Loan in May 2014 from the proceeds of the Pre-Petition Junior Facility (defined and discussed below). The Pre-Petition Senior Revolver is secured by (i) vessel mortgages on all of the Debtors’ domestically owned vessels, (ii) a pledge of all the stock of every Cal Dive domestic subsidiary (i.e., the other Debtors), (iii) 66% of the stock of three of the Debtors’ foreign affiliates, and (iv) a security interest in, among other things, all of the Debtors’ equipment, inventory, accounts receivable, and general tangible assets.

“When the Debtors entered into the Pre-Petition Junior Facility on May 9, 2014, they also amended the Pre-Petition Senior Loan Agreement to, among other things, provide for the reduction of the Debtors’ commitment on the Pre-Petition Senior Revolver by $5 million a month for eight months (from May 31, 2014, to December 31, 2014), bringing it down to $85 million. As of September 30, 2014—five months into the amended agreement— availability under the Pre-Petition Senior Revolver was therefore $100 million.

“The following month’s scheduled $5 million reduction, however, would have deprived the Debtors of important liquidity at a critical juncture. Accordingly, the Pre- Petition Senior Lenders agreed to waive the financial covenant default and amend the facility to delay that reduction through December 2, 2014, when the Pre-Petition Senior Revolver commitment would step down to $90 million. With $99.8 million outstanding under the Pre- Petition Senior Revolver, the Debtors were thus obligated to pay $9.8 million in principal reduction (plus a waiver fee of $500,000) to the Pre-Petition Senior Agent on December 2, 2014. But to conserve liquidity, the Debtors elected not to make the payment, causing a payment default under the Pre-Petition Senior Loan Agreement. Although in default, the Debtors continued to make monthly interest payments due under the Pre-Petition Senior Loan Agreement, until the payment that was due on January 2, 2015. No further interest payments have been made since.

Pre-Petition Junior Facility.

“On May 9, 2014, the Debtors entered into an Amendment and Restatement to Credit Agreement among Cal Dive as borrower, the Debtors other than Cal Dive as guarantors, ABC Funding, LLC, as administrative agent (the “Pre- Petition Junior Agent”), and the lenders from time to time party thereto (as amended, waived, modified, or supplemented, the “Pre-Petition Junior Loan Agreement”). The Pre-Petition Junior Loan Agreement provides for a $100 million second lien term loan facility (the “Pre- Petition Junior Facility”).  The Pre-Petition Junior Facility consists of two tranches: a first-out$20 million term loan (converted from a preexisting unsecured term loan) and an $80 million term loan funded at the closing. Both tranches of the Pre-Petition Junior Facility mature on May 9, 2019, with no scheduled amortization prior to maturity. The net proceeds of the Pre-Petition Junior Facility were used to repay the Pre-Petition Senior Term Loan in full and approximately $45 million of outstanding borrowings under the Pre-Petition Senior Revolver. The Pre-Petition Junior Facility is secured on a junior basis by (i) vessel mortgages on all of the Debtors’ domestically owned vessels, (ii) a pledge of all the Debtors’ (other than Cal Dive’s) stock, (iii) 66% of the stock of three Non-Debtor Affiliates, and (iv) a security interest in, among other things, all of the Debtors’ equipment, inventory, accounts receivable, and general intangible assets.

“As of the Petition Date, the principal amount outstanding under the Pre- Petition Junior Facility is $100 million. Cal Dive has not paid interest due under the Pre-Petition Junior Facility since making the interest payment due on August 31, 2014, and certain events of default resulting from failure to comply with financial covenants have occurred and are continuing under the Pre-Petition Junior Facility.

Unsecured Convertible Notes.

“Cal Dive issued $86.25 million aggregateprincipal amount of 5% convertible senior notes due 2017 (the “Convertible Notes”) under an indenture dated July 18, 2012 (as amended from time to time, the “Indenture”), among Cal Dive as issuer, the other Debtors as guarantors, and The Bank of New York Mellon as trustee (the “Indenture Trustee”). Cal Dive used the net proceeds of the Convertible Notes to repay a substantial portion of the then-outstanding Pre-Petition Senior Term Loan. The Convertible Notes, which are unsecured obligations, mature on July 15, 2017, and bear interest at a rate of 5% per year, payable semiannually in arrears on January 15 and July 15 of each year.

“As of the Petition Date, Cal Dive had $86.25 million aggregate principal amount of Convertible Notes outstanding. On December 8, 2014, Cal Dive’s stock was delisted, causing a “Fundamental Change” default under the Indenture and, in turn, triggering a repurchase obligation that the Debtors did not satisfy. In addition, the Debtors decided not to make the approximately $2.2 million interest payment due on January 15, 2015.

Equity Interests.

“Cal Dive is a publicly traded company.  As of December 31, 2014, Cal Dive had 98,261,320 shares of common stock outstanding. Before being suspended from trading on October 29, 2014, and being delisted on December 8, 2014, Cal Dive’s stock was traded on the New York Stock Exchange under the symbol “DVR.” Cal Dive’s stock now trades on the OTC under the symbol “CDVI.”

EVENTS LEADING TO COMMENCEMENT OF THE CASES AND THE DEBTORS’ GOALS IN THESE CASES

The Debtors’ Business Performance Declines Amid an Industry Downturn

“The Debtors’ bankruptcy filings are principally driven by unseasonably adverse weather and third-party contractor delays, which together have impeded the Debtors’ ability to complete certain contracts and collect significant receivables.  These delays constrained the Debtors’ liquidity and significantly impaired the Debtors’ ability to pay their debt obligations, both of which were already negatively impacted by an industry-wide downturn. The recent drop in oil prices, and the surrounding uncertainty over future oil prices, have further hindered the Debtors’ ability to refinance their prepetition indebtedness.

Unseasonable weather and other contractor delays constrain the Debtors’ liquidity.

“Delays beyond the Debtors’ control—caused by disruptive weather in early 2014 and third-party contractors—are the principal factors behind the Debtors’ decision to file for bankruptcy. As a result of those unanticipated delays, the Debtors faced numerous obstacles completing contracts and earning significant milestone payments from the Cal Dive Group’s largest customer, Pemex, which accounted for approximately 37% of its revenue in 2013.

“The Debtors’ businesses are highly capital intensive and largely dependent on the condition of the oil and natural gas industry. In particular, the construction business depends on the willingness of oil and natural gas companies to make capital expenditures for offshore exploration, development, and production operations. Given the size and complexity of their construction projects, the Debtors are at the outset often required to incur substantial working capital outflows for payroll and material procurement. As a result, there is often a lag between when the Debtors must commit capital to perform a project and when the Debtors actually collect payment on that project.3

“At the same time, because of the nature of the Debtors’ contracts and the work the Debtors perform, much of the Debtors’ cash flow has historically been uneven, requiring the Debtors to rely on their Pre-Petition Senior Revolver and other indebtedness to fund working capital needs.  As a result, the weather and contractor delays described above had a direct and adverse impact on the Debtors’ liquidity, which was exacerbated by contractual step- downs in the availability under the Pre-Petition Senior Revolver.

“In recent years, the Debtors have faced additional strains on their working capital needs as they implemented a strategy to increase their international presence. That effort required the Debtors to make advance purchases of pipe and other project materials for the larger construction projects typical of the international markets, where customers require contractors to procure all materials. The contracts for those large projects also typically allow the Debtors to invoice and receive payment only when certain milestones are achieved. This creates a lag between the Debtors’ performance of the work, including procurement of materials, and the Debtors’ ability to invoice and collect payment.

“These issues came to a head last year, as the Cal Dive Group worked to complete four large projects in Mexico for Pemex. The Pemex contracts (a mix of diving and construction tasks) contain billing provisions under which the Debtors may invoice Pemex only when the overall project has met certain milestones, creating a lag between the period during which the Debtors’ performance of the work occurs and the date when the Debtors are contractually permitted to invoice for services and collect payment. Following the completion of the first of these projects in the second quarter 2014, significant and unanticipated weather patterns delayed work on the remaining projects. These weather patterns caused delays in two ways. First, given the hazards of providing offshore services, some of the Debtors’ work requires appropriate weather conditions to perform. When unanticipated weather disruptions occurred, the Debtors had no choice but to put these aspects of the Pemex projects on hold, and simply wait until the weather improved. Second, other contractors—whose work had to be completed before the Debtors could continue their own projects—faced similar delays as a result of these weather patterns and other factors.  Slowed by these obstacles, the Debtors were unable to complete the second of the four Pemex contracts until early November 2014.

“Pemex then suspended work on the remaining two projects due to problems with other contractors. These suspensions impeded the Debtors’ ability to meet the milestones on these two projects and, as a consequence, also impeded the Debtors’ ability to invoice and collect payment for the work the Debtors had already completed. This significantly constrained the Debtors’ liquidity. The Debtors have already commenced work on the remaining two projects and anticipate that once the other contractor completes the installation of the platform for the final project, the Debtors will be able to complete their remaining work. Based on current work schedules, the Debtors expect to complete the final two projects by May 2015, and finish collecting payment for the work by August 2015. Over the course of these cases, the Debtors expect to collect approximately $72.5 million for completion of the work (plus potentially additional amounts for change orders and extra work claims). After payments to vendors and other costs to complete the projects of about $30 million, the Debtors expect to net about $42.5 million from the Pemex projects over the next six months.

The  marine  contracting  industry  suffers  industry-wide  decline.

“The unanticipated weather patterns in 2014 occurred in the midst of a prolonged industry-wide dislocation in the marine contracting industry. This dislocation began in mid-2008, when the prolonged worldwide recession reduced demand for hydrocarbon-based products, causing many oil and gas companies to curtail capital spending for exploration and development. In 2009 and 2010, competition in Southeast Asia and other international markets increased significantly due to new vessel capacity coming into service. The catastrophic April 2010 Macondo well blowout in the U.S. Gulf of Mexico further hindered exploration and development in the region—and in the years that followed, continued to create uncertainty in the U.S. market and regulatory environment for the Debtors’ industry. Meanwhile, the recent increase in U.S. onshore drilling for shale gas has suppressed natural gas prices and thus the appetite for oil and gas companies to drill for natural gas offshore.

“In the face of these negative conditions, the Debtors, like some of their competitors, have been hard hit by declining revenues. Moreover, as discussed below, the recent plummet in oil prices, and the surrounding uncertainty about future oil prices, have impeded the Debtors’ refinancing efforts.

The  Debtors  Attempt  to  Address  Their  Immediate  Liquidity  Needs  by Consummating a Refinancing

“As a result of their decline in earnings, the Debtors have been unable to comply with the financial covenants contained in their Pre-Petition Senior Loan Agreement and Pre-Petition Junior Loan Agreement, and were also unable to comply with their contractual step- downs in the Pre-Petition Senior Loan Agreement. In a good-faith effort to honor those obligations, the Debtors attempted to refinance their Pre-Petition Senior Revolver in order to provide the liquidity necessary to continue their business operations until the Debtors could start work again on the remaining Pemex contracts and achieve the milestones necessary to receive payment. A combination of factors, however, including uncertainty about future oil prices, prevented the Debtors from achieving an out-of-court refinancing.

The  Debtors’  Goals  in  Chapter  11:  Divest  the  Non-Core  Assets  and Reorganize Around or Pursue Strategic Alternatives for the Core Business

“Faced with severe liquidity constraints and numerous defaults under their credit agreements, the Debtors have concluded in their business judgment that the course of action that will maximize recoveries to their creditors is to avail themselves of chapter 11’s protections.   Most immediately, the Debtors are seeking this Court’s approval of a $120 million postpetition financing facility (the “DIP Facility”). The DIP Facility will provide the Debtors with incremental liquidity necessary not only to operate in the ordinary course in chapter 11, but also to complete ongoing projects in Mexico and a recently awarded project in Peru that will bring millions of dollars into their estates.

“While the Cal Dive Group’s operations continue around the globe, the Debtors intend to engage in two concurrent initiatives. First, the Debtors will divest the Non- Core Assets through an orderly marketing and sale process. Second, the Debtors will pursue strategic alternatives to continue the Core Business as a going concern. The specific type of Core Business transaction the Debtors pursue will depend on numerous factors, including buyer interest, the willingness of a sponsor to fund a plan of reorganization, and the emergence of another value-maximizing transaction. The Debtors and their advisors are currently considering these alternatives.