SUBSEQUENT EVENTS |
12 Months Ended |
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Dec. 31, 2016 | |
| Subsequent Events [Abstract] | |
| SUBSEQUENT EVENTS |
SUBSEQUENT EVENTS
Dividends
On February 23, 2017, our Board of Directors declared a dividend of $0.01 per share on the shares of our common stock outstanding, payable March 24, 2017 to shareholders of record on March 10, 2017.
Our South Texas Properties
On February 23, 2017, our Board of Directors approved a recommendation of management to place our South Texas properties located in Aransas Pass and Ingleside, Texas, up for sale. Our Texas South Yard in Ingleside, Texas, is located on the northwest corner of the U.S. Intracoastal Waterway and the Corpus Christi Ship Channel. The 45-foot deep Corpus Christi Ship Channel provides direct and unrestricted access to the Gulf of Mexico. Our Texas North Yard in Aransas Pass, Texas, is located along the U.S. Intracoastal Waterway and is approximately three miles north of the Corpus Christi Ship Channel. These properties are currently underutilized and represent excess capacity within our Fabrication division. The net book value of property, plant and equipment for these assets was $107.6 million at December 31, 2016. We are working to wind down all fabrication activities at these locations and re-allocate remaining backlog and workforce to our Houma Fabrication Yard as necessary. As a result of the decision to place our South Texas properties for sale and the underutilization currently being experienced, we expect to incur costs associated with the maintaining of the facility through its sale that will not be recoverable. These costs include insurance, general maintenance of the property in its current state, property taxes, and retained employees.
We do not expect the sale of these properties to impact our ability to service our deepwater customers or operate our Fabrication division.
Customer Matter
On October 21, 2016, a customer of our Shipyards division announced it had received limited waivers from its lenders and noteholders through November 11, 2016, which was extended through March 3, 2017 with respect to noncompliance with certain financial covenants included in the customer’s debt agreements. The customer also announced its debt agreements will require further negotiation and amendment. In the event our customer is unsuccessful in these efforts, the customer has publicly stated that it will consider other options including a possible reorganization under Chapter 11 of the Federal bankruptcy laws. At December 31, 2016, we had two vessels under construction for this customer with no contracts receivable outstanding and deferred revenue exceeded our contracts in progress.
We completed and tendered to this customer for delivery the first vessel on February 6, 2017. Upon our tender of delivery, our customer alleged certain technical deficiencies associated with the vessel. We disagree with our customer concerning these alleged technical deficiencies and have put the customer in default under the terms of the contract. As of February 6, 2017, approximately $4.5 million remained due and outstanding from our customer under this contract. We continue to hold discussions with our customer in an effort to resolve this matter and intend to take all legal action as may be necessary to protect our rights under the contract and recover the remaining balance owed to us. The second offshore supply vessel for this customer is scheduled for delivery in May 2017. As of the date of this Report, the balance due to us for this second vessel is approximately $4.9 million and both we and our customer remain in compliance with the terms of this contract.
We continue to monitor our work performed in relation to our customer’s status and its ability to pay under the terms of these contracts. Because these vessels have been completed or are substantially complete, we believe that they have significant fair value, and that we would be able to fully recover any amounts due to us. Based on our evaluation to date, we do not believe that any loss on this contract is probable or estimatable at this time.
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