Hercules Offshore sets talk for $500 million five-, seven-year notes

By Paul A. Harris

Portland, Ore., March 26 - Hercules Offshore, Inc. set price talk for a $500 million two-part offering of notes on Monday, market sources said.

A $300 million tranche of five-year senior secured notes (B1/B+/), non-callable for two years, is talked with a yield in the 7¼% area.

A $200 million tranche of seven-year senior unsecured notes (Caa1/B-/), non-callable for three years, is talked with a yield in the 9¾% area.

The deal is set to price on Tuesday afternoon.

Deutsche Bank Securities Inc., Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. and UBS Investment Bank are leading the Rule 144A and Regulation S offering.

Proceeds will be used to repay all of the debt outstanding under the company's existing secured term loan.

As a result of the repayment of the term loan, the company's outstanding 10½% senior secured notes will become unsecured, according to a company press release.

Remaining net proceeds from the pending sale of notes will be used for general corporate purposes, including to fund a portion of the acquisition of the drilling rig Ocean Columbia as well as the costs associated with its repair, upgrade and mobilization.

Hercules Offshore is a Houston-based provider of offshore drilling equipment and services.

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