Hercules Offshore Returns to Chapter 11 Bankruptcy -- Update
June 06 2016 - 8:24AM
Dow Jones News
By Peg Brickley
Hercules Offshore Inc. has returned to bankruptcy protection,
planning to sell off its assets and shut down just months after a
balance sheet reshaping that was supposed to save the business.
The long decline in oil prices pushed the Houston oil-and-gas
driller back into chapter 11 bankruptcy protection Sunday. The
bankruptcy filing followed an announcement in May that efforts to
find a buyer didn't pan out.
In the second bankruptcy, the company intends to monetize its
"assets in a controlled manner through an orderly disposition,"
according to a statement from chief financial officer Troy Carson,
filed in the U.S. Bankruptcy Court in Wilmington, Del.
Hercules began marketing itself not long after emerging from
chapter 11 late last year, under pressure in a shrinking market for
oil drilling and services.
The sale-and-shut-down plan has the support of almost all the
top lenders that helped it out of bankruptcy in November, according
to court papers. A voting report says Hercules received "yes" votes
from investors holding more than $249 million in first-lien
loans.
Hercules is courting the support of holders of its common stock,
promising a "meaningful recovery" if they agree to go along with
the new plan, The company's stock was created in the previous
bankruptcy, when bondholders agreed to take equity in lieu of
collecting their debts.
Shareholders are being offered between $12.5 million and $41
million, depending on how Hercules's sales go, if they vote to
support the bankruptcy wind-down plan, court papers say.
A "no" vote from shareholders will result in a recovery ranging
from nothing to $27 million, court papers say.
Hercules's marketing efforts this year failed to produce a deal
that would have been better for creditors than shutting down the
business and selling assets to cover the bills, the company said.
It was able to sign an agreement to sell its newest jack-up rig,
formerly named Hercules Highlander, to a subsidiary of Maersk
Drilling.
Hercules operates a fleet of 25 self-elevating, mobile offshore
drilling units, or "jackup rigs" and 19 self-elevating,
self-propelled "liftboat" vessels designed to get oil and gas out
of shallow waters.
Hercules said its international subsidiaries wouldn't be
included in the U.S. bankruptcy, but they would be part of the
final sale process.
The previous bankruptcy called for bondholders to swap $1.2
billion in debt for control of the company. It was a "prepackaged"
workout, one that had the support of most senior creditors at the
start of the chapter 11 proceeding.
Write to Peg Brickley at peg.brickley@wsj.com
(END) Dow Jones Newswires
June 06, 2016 08:09 ET (12:09 GMT)
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