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Harvey Gulf and its lenders have entered into a forbearance agreement after the Louisiana-based marine company skipped interest and amortization payments on the company’s bank debt, according to sources familiar with the matter.

The offshore drilling service provider decided to reserve cash and skip about $14 million interest payment due Sept. 30 on all three tranches of its bank debt and about $16 million of amortization on two portions of the term loans, the sources said.

The company generated positive revenue and EBITDA in the second quarter, the sources added.

The parties’ aim is to come to a resolution by mid-October to address the company’s $1.2 billion of total debt while the forbearance agreement is scheduled to expire at the end of this month, according to the sources.

Harvey Gulf is “working very close[ly] with our lenders to wrap up a new capital structure” supported by all parties involved, CEO Shane Guidry said in an email statement. The offshore drilling service provider is “delivering 61% EBITDA margins with an SG&A” of less than $24 million annually and has “consistently done so year over year, since 2014 when the downturn started. This will continue for years to come.”

A group of lenders advised by PJT Partners and Davis Polk has been working on a counterproposal, sources said. In August, lenders received a plan of restructuring giving 46% of post-restructuring stock to sponsor Jordan Co., which played a primary role in drafting the plan.

Harvey Gulf’s $115 million in term loan A debt matures in June 2018, and about $840 million of term loan B debt is due June 2020. The company also has a $270 million fully drawn revolver that matures in 2018.

The company’s 2018 term loan A was quoted at 38/40 Wednesday and the 2020 term loan was quoted at 33/35, according to Advantage Data.

Harvey Gulf’s advisors, Vinson and Elkins and Blackhill Partners, did not immediately respond to requests for comment. The lender group’s advisor Davis Polk did not immediately respond to requests for comment, and advisor PJT Partners declined to comment.