A U.S. bankruptcy court has approved Seacor Marine's stalking horse bid to form a joint venture company with Montco Offshore, a liftboat specialist that has earlier filed for Chapter 11 bankruptcy protection.

Seacor, a U.S. offshore vessel owner, said on Friday, the United States Bankruptcy Court for the Southern District of Texas, Houston Division had approved the plan of reorganization for Montco Offshore, Inc.

As reported in June 2017, Seacor said it would launch a stalking horse bid to form a joint venture with Montco Offshore.

Here is a definition of a stalking horse bid, as shared by Investopedia: “A stalking-horse bid is an initial bid on a bankrupt company's assets from an interested buyer chosen by the bankrupt company. From a pool of bidders, the bankrupt company chooses the stalking horse to make the first bid.

This method allows the distressed company to avoid low bids on its assets. Once the stalking horse has made its bid, other potential buyers may submit competing bids for the bankrupt company's assets.“

Liftboat JV

Seacor last week said that the plan approved by the bankruptcy court provided that Seacor Marine and Montco would jointly form and capitalize a new joint venture company by contributing certain liftboat vessels and other related assets to the joint venture. The plan also requires the Joint Venture to assume certain operating liabilities and indebtedness associated with the liftboat vessels and related assets.

The Joint Venture would consolidate the ownership and operation of eleven liftboat vessels currently operated by a wholly-owned subsidiary of Seacor Marine, six liftboat vessels currently operated by Montco, and two liftboat vessels currently operated by an existing joint venture between an affiliate of Montco and an affiliate of SEACOR Marine.

John Gellert, Seacor Marine's Chief Executive Officer, said: “I am pleased that we have reached this important milestone. This is a strategic transaction that combines distinctive assets at compelling values, along with a solid financial and operational foundation. The transaction will allow us to provide our domestic and international customers with an expanded fleet and superior services in offshore oil and gas and wind energy markets.”

The Joint Venture would assume approximately $131 million of indebtedness from Montco's pre-petition facilities which, apart from a guarantee of interest payments for two years after the closing of the contemplated transactions, would be non-recourse to SEACOR Marine.

Seacor Marine is expected to hold at least 70% of all equity interests in the Joint Venture, and will be entitled to appoint a majority of the board of managers of the Joint Venture. The closing of the transactions remains subject to the satisfaction of certain conditions set forth in Montco's plan of reorganization and the JV contribution agreement, including, among others, the consummation of transactions under a settlement agreement among certain parties-in-interest in MOI's bankruptcy case. It is anticipated that the transactions will close in early February 2018.