Hercules Offshore Inc. plans to put itself into bankruptcy next month in a creditor-supported deal that would wipe out all of its $1.2 billion of debt.
The offshore drilling rig owner grappling with a cash crunch after oil prices plunged entered a pact with more than 67% of its junior-ranked bondholders that would transfer the company’s ownership to them in exchange for canceling its borrowings, according to a Wednesday regulatory filing. The restructuring support agreement requires Houston-based Hercules to file for bankruptcy by July 8.
Investors of six sets of unsecured and convertible notes would trade their holdings for 96.9 percent of new common stock in a reorganized Hercules, according to the filing. The company’s existing equity holders would see their stake reduced to 3.1%.
“The new capital structure will provide a better foundation for Hercules to meet the challenges in the global offshore drilling market,” John T. Rynd, chief executive officer, said in a statement Wednesday.
New Financing
The company plans to issue $450 million of new borrowings when it emerges from bankruptcy to fund the remaining cost of constructing a new drilling rig, the filing shows. The first- lien loan would pay 9.5 percentage points more than the London interbank offered rate and mature in 4.5 years. The debt would be issued at 97% of face value and receive backstop support from some noteholders who signed the restructuring agreement.
Craig Muirhead, a spokesman for Hercules, didn’t immediately respond to telephone and e-mail messages Wednesday seeking comment after normal business hours.
Two-thirds of the holders of the company’s 10.25% notes due 2019, 8.75% bonds maturing in 2021, 7.5% notes due 2021 and 6.75% notes due 2022 signed the pact, according to the filing.
Hercules’s 10.25% notes fell 1 cent June 17 to 32 cents on the dollar at 1:58 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
Shares fell 64.7% to 24 cents at 9:30 a.m. in New York.
Recommended Reading
Thanks to New Technologies Group, CNX Records 16th Consecutive Quarter of FCF
2024-01-26 - Despite exiting Adams Fork Project, CNX Resources expects 2024 to yield even greater cash flow.
Cheniere Energy Declares Quarterly Cash Dividend, Distribution
2024-01-26 - Cheniere’s quarterly cash dividend is payable on Feb. 23 to shareholders of record by Feb. 6.
Marathon Petroleum Sets 2024 Capex at $1.25 Billion
2024-01-30 - Marathon Petroleum Corp. eyes standalone capex at $1.25 billion in 2024, down 10% compared to $1.4 billion in 2023 as it focuses on cost reduction and margin enhancement projects.
Humble Midstream II, Quantum Capital Form Partnership for Infrastructure Projects
2024-01-30 - Humble Midstream II Partners and Quantum Capital Group’s partnership will promote a focus on energy transition infrastructure.
Hess Corp. Boosts Bakken Output, Drilling Ahead of Chevron Merger
2024-01-31 - Hess Corp. increased its drilling activity and output from the Bakken play of North Dakota during the fourth quarter, the E&P reported in its latest earnings.