Hercules Offshore revises Chapter 11 plan to add mediated settlement

New York, Sept. 16 – Hercules Offshore, Inc. filed a revised Chapter 11 plan with the U.S. Bankruptcy Court for the District of Delaware on Thursday that incorporates the settlement that came out of a mediation process.

Under the revisions, holders of Hercules Offshore’s common stock will receive a $15 million cash payment on the effective date of the plan or as soon as possible afterwards.

The payment is subject to the board supervising the wind down of the company determining that there is enough cash available to make the payment from asset sales or the claims reconciliation process.

Mediation of objections to the pre-packaged plan of reorganization was approved by the court on Aug. 17.

In addition to the company, the official committee of equity security holders and an informal committee participated in the mediation. The court order also allowed representatives of the company’s first-lien lender agent and the U.S. Trustee to attend.

Judge Christopher S. Sontchi was appointed as the mediator.

The mediation of the plan-related issues was non-binding.

Hercules Offshore filed for Chapter 11 on June 6 after receiving accepting votes from lenders holding 99.7% of its first-lien debt on a pre-packaged plan of reorganization.

Under the plan, all of the company’s assets will be marketed for sale, and those left unsold at the completion of the Chapter 11 process will be placed into a wind-down vehicle to ensure their continued operation until sales are finalized.

Unsecured creditors will be paid in full in the ordinary course of business or at the completion of the Chapter 11 process.

The original plan proposed that shareholders would receive cash recoveries and interests in the wind-down vehicle if they vote as a class to accept the plan or just interests in the wind-down vehicle if the class votes against the plan.

Specifically, the company said shareholders will have to wait until the lenders are paid in full before receiving any recovery on their interests if the class votes to reject the plan as opposed to receiving their share of $12.5 million on the effective date of the plan and incremental cash distributions thereafter based on the success of the sale process if the class votes to accept the plan.

Under the mediated settlement, shareholders will no longer have to wait until lenders are paid in full.

The lenders also will receive cash payments largely dependent on the success of the sale process but have agreed to compromise their own recoveries to pay unsecured claims in full and provide a recovery to the shareholders before being paid in full if the shareholder class votes to accept the plan.

Hercules said it plans to operate its rigs and vessels as usual throughout the sale process and to meet its commitments to employees, customers and suppliers worldwide.

The company said its international subsidiaries are not included as part of the Chapter 11 cases but will be part of the sale process.

Hercules is a Houston-based provider of offshore drilling equipment and services. The Chapter 11 case number is 16-11385.

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