Hercules Offshore Files For Chapter 11 Bankruptcy

(RTTNews) - Hercules Offshore, Inc. (HERO) said Thursday that has filed for Chapter 11 bankruptcy protection to continue financial restructuring of the company. The oil and gas drilling contractor expects the Chapter 11 reorganization to be completed in about 45 to 60 days.

Houston, Texas-based Hercules Offshore filed its voluntary Chapter 11 petitions and pre-packaged plan of reorganization in the U.S. Bankruptcy Court for the District of Delaware in Wilmington.

John Rynd, President and Chief Executive Officer of Hercules Offshore said, "Today's filing is the next step in our financial restructuring. We are working toward a new capital structure which will provide a better foundation for Hercules to meet the challenges in the global offshore drilling market due to the downcycle in crude oil prices and expected influx of newbuild jackup rigs over the coming years."

Hercules said it expects to receive court approval to pay employee wages and benefits without interruption and also continue to pay trade creditors and suppliers in the ordinary course of business. The company noted that it has sufficient resources and recurring revenue from operations to continue serving its customers.

Hercules had previously said on July 13 that the pre-packaged plan will provide a substantial deleveraging transaction, under which more than $1.2 billion of the company's outstanding senior notes would be converted to 96.9 percent of new common equity.

The company noted that more than 300 senior noteholders with aggregate holdings in excess of $1.2 billion of senior notes have voted to accept the pre-packaged plan, while only two holders with about $320,000 of the senior notes voted against the plan.

Hercules will pick up $450 million in new debt financing that would be provided by those holders of the senior notes who wish to participate on a pro rata basis. The new debt financing will be used to fully fund the remaining construction cost of the Hercules Highlander and provide additional liquidity to fund the company's operations.

Current shareholders of Hercules, despite being substantially "out of the money" by about $500 million, will have the opportunity to receive a pro rata portion of the remaining 3.1 percent of the new common equity, as well as certain warrants, subject to the requirements of the plan and court approval.

HERO is trading at $0.08, down $0.01 or 7.28 percent on a volume of 1.69 million shares.