A group of Harvey Gulf lenders earlier this month presented a restructuring proposal that would give creditors 97.5% of new equity and leave the reorganized marine company with $350 million of debt, according to sources familiar with the matter.

The lenders proposed distributing 2.5% of new equity to Harvey Gulf management, leaving no new primary shares for sponsor Jordan Co., the sources said. Under the lenders’ proposal, the New York-based private-equity firm would get warrants for 2.5% of reorganized equity at strike prices that would reflect par recoveries for holders of the bank debt, according to sources.

The company would not need additional liquidity during restructuring since the company is generating positive cash flow and EBITDA, according to sources. After cutting much of its debt, Harvey Gulf would be more competitive in bidding for contracts, the sources added.

The parties aim to negotiate a consensual deal that would address its $1.2 billion debt load and the two sides are working constructively despite the differences in the lenders’ proposal and a plan Jordan played a primary role in drafting, the sources said.

In August, the lenders received a restructuring proposal that would give 46% of post-restructuring stock to Jordan, which played a primary role in drafting the plan. The private-equity firm, together with CEO Shane Guidry, acquired the offshore services provider in 2008 from the Guidry family.

Jordan’s proposed plan contemplated swapping 42.5% of three tranches of bank debt into a first lien term loan, while 32.5% would become preferred equity. The remaining 25% of the bank borrowings would be exchanged into 40% of new equity, and Harvey’s management would own 14% plus warrants to increase its ownership to 20%.

The parties entered into a forbearance agreement earlier this month. The Louisiana-based company skipped about $30 million in interest and amortization payments due Sept. 30 on its bank debt, and the forbearance was set to expire at the end of this month.

Harvey Gulf’s $115 million of 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 fully drawn $270 million revolver that matures in 2018.

The company’s 2018 term loan A was quoted at 37.5/39.5 Monday and the 2020 term loan was quoted at 33/35, according to Advantage Data, down from 52.875/54.875 and 41.25/43.25, respectively, in August.

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