Hercules Offshore, a struggling drilling contractor which recently emerged from bankruptcy, has reached a restructuring deal with lenders and said it would start the sale of its assets.
The company today said that it has entered into a Restructuring Support Agreement (“RSA”) with lenders holding approximately 99 percent of the indebtedness under its first lien credit agreement.
As part of the agreement reached with creditors, Hercules and certain of its U.S. subsidiaries will solicit acceptances and rejections of its pre-packaged Chapter 11 plan from first lien lenders and shareholders, file voluntary Chapter 11 petitions to compromise the company’s obligations to its first lien lenders and provide a recovery to its shareholders, and then place all of the company’s unsold assets into a wind-down vehicle to ensure their continued, safe operation until they can be sold.
The company’s international subsidiaries will not be included as part of the Chapter 11 cases but will be part of the sale process, Hercules Offshore said.
Hercules said it would undertake an orderly sale of its assets, “to maximize value for the Company’s stakeholders and provide a smooth transition for employees.”
Earlier today, it has been announced that Hercules would transfer the right to acquire the newbuild harsh environment jack-up rig Hercules Highlander, to Maersk Drilling.
The rig is ready for immediate delivery from Jurong Shipyard in Singapore, and Maersk will settle the final payment of approximately $196 million with Jurong. With the rig, Maersk Drilling will ‘inherit’ the rig’s long term contract at the Culzean field in the UK North Sea.
To remind, the driller completed its initial financial restructuring under Chapter 11 of the U.S. Bankruptcy Code with a new $450 million senior secured credit facility in place.
Since this time, the driller said on Friday, the ongoing decline in oil prices, the consolidation of its U.S. customer base and the addition of new capacity have negatively impacted dayrates and demand for Hercules’s services.
The company then in February formed a special committee to explore strategic alternatives, and the outcome is Friday’s announcement.
“Today’s RSA announcement is the outcome of that process and follows a thorough sale process, which did not yield results that would have been better for stakeholders than what is contemplated by the Plan,” Hercules concluded.
Offshore Energy Today Staff