New Issue: Hercules Offshore prices $500 million of five-, seven-year notes

By Paul A. Harris

Portland, Ore., March 27 - Hercules Offshore, Inc. priced $500 million of high-yield notes in secured and unsecured tranches on Tuesday, according to an informed source.

The deal included a $300 million tranche of five-year senior secured notes (B1/B+/), which priced at par to yield 7 1/8%. The yield printed at the tight end of price talk, which was set in the 7¼% area.

In the unsecured tranche, Hercules Offshore priced a $200 million tranche of seven-year senior notes (Caa1/B-/) at par to yield 10¼%. The yield on the unsecured tranche printed 37.5 basis points beyond the wide end of price talk that was set in the 9¾% area.

Deutsche Bank Securities Inc., Credit Suisse Securities (USA) LLC, Goldman Sachs & Co. and UBS Securities LLC were the bookrunners.

The Houston-based provider of offshore drilling equipment and services plans to use the proceeds to repay all outstanding debt under the existing secured term loan and 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.

Issuer:	Hercules Offshore, Inc.
Amount:	$500 million
Bookrunners:	Deutsche Bank Securities Inc., Credit Suisse Securities (USA) LLC, Goldman Sachs & Co., UBS Securities LLC
Co-managers:	Capital One Southcoast, Inc., Comerica Securities, Inc., Natixis Securities Americas LLC, Pareto Securities AS
Trade date:	March 27
Settlement date:	April 3
Distribution:	Rule 144A and Regulation S for life
Marketing:	Roadshow
Secured tranche
Amount:	$300 million
Maturity:	April 1, 2017
Securities:	Senior secured notes
Coupon:	7 1/8%
Price:	Par
Yield:	7 1/8%
Call features:	Make-whole call until April 1, 2014, then callable at 105.344, 102.672, par on and after April 1, 2016
Equity clawback:	35% at 107.125 until April 1, 2014
Change-of-control put:	101%
Ratings:	Moody's: B1
	Standard & Poor's: B+
Price talk:	7¼% area
Unsecured tranche
Amount:	$200 million
Maturity:	April 1, 2019
Securities:	Senior unsecured notes
Coupon:	10¼%
Price:	Par
Yield:	10¼%
Call features:	Make-whole call until April 1, 2015, then callable at 107.688, 105.125, 102.563, par on and after April 1, 2018
Equity clawback:	35% at 110.25 until April 1, 2015
Change-of-control put:	101%
Ratings:	Moody's: Caa1
	Standard & Poor's: B-
Price talk:	9¾% area

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