Hercules Offshore emerges from bankruptcy with $450 million facility

By Caroline Salls

Pittsburgh, Nov. 6 – Hercules Offshore, Inc. completed its financial restructuring and emerged from Chapter 11 bankruptcy on Friday, according to a news release.

The company said the funding of its new $450 million senior secured credit facility has also been completed.

“Proactively restructuring our balance sheet early in the cycle generated significant benefits for Hercules, including substantial debt reduction and added liquidity that will allow us to meet our capital commitments and support operations,” chief executive officer and president John T. Rynd said in the release.

“With our new capital structure, we are much better positioned to compete successfully in the offshore drilling market.”

As previously reported, Hercules’ prepackaged plan of reorganization was confirmed Sept. 24 by the U.S. Bankruptcy Court for the District of Delaware.

Hercules said the prepackaged plan provides a substantial deleveraging transaction under which more than $1.2 billion of the company’s outstanding senior notes will be converted to 96.9% of new common equity, and $450 million in new debt financing will be provided by participating holders of the senior notes.

The full amount of financing, which will fully fund the remaining construction cost of the Hercules Highlander and provide additional liquidity to fund operations, will be backstopped by some members of a steering group of noteholders.

The debt will have a maturity of 4½ years and bear interest at Libor plus 950 basis points with a 1% Libor floor and be issued at a price equal to 97% of the principal amount.

The plan also allows current shareholders, despite being substantially out of the money by roughly $500 million, to have the opportunity to receive a portion of the remaining 3.1% of the new common equity, as well as warrants.

According to the disclosure statement, holders of general unsecured claims, including trade vendors, suppliers and customers, will not be affected by the bankruptcy filing and are expected to be paid in full in the ordinary course of business.

Intercompany claims and intercompany interests will be reinstated.

Administrative claims, fee, claims, priority tax claims, other priority claims and other secured claims will be paid in full in cash under the plan.

Hercules, a Houston-based provider of offshore drilling equipment and services, filed for bankruptcy on Aug. 13. The Chapter 11 case number is 15-11685.

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