Hercules Offshore, Inc., an offshore drilling contractor, announced Thursday that it has filed a pre-packaged plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code to continue its financial restructuring of the company.

According to its press release, the company anticipates that, among other things, it will receive court authority to pay employee wages and benefits without interruption and continue to pay trade creditors and suppliers in the ordinary course of business. The Chapter 11 reorganization is expected to conclude in approximately 45-60 days.

Hercules says that the pre-packaged plan provides a substantial deleveraging transaction pursuant to which more than $1.2 billion of the company’s outstanding senior notes would be converted to 96.9% of new common equity, and $450 million in new debt financing would be provided by those holders of the senior notes who wish to participate on a pro rata basis (with the full amount backstopped by certain members of the steering group of noteholders), which would fully fund the remaining construction cost of theHercules Highlander and provide additional liquidity to fund the company’s operations.

The filing follows the completion of the solicitation process of the company’s senior noteholders. The solicitation process resulted in overwhelming approval of the pre-packaged plan presented by the company. The company says that more than 300 senior noteholders with aggregate holdings in excess of $1.2 billion of senior notes have voted to accept the Plan while only two holders with approximately $320,000 of the senior notes voted against the Plan.

“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,” said President and Chief Executive Officer John T. Rynd.

“The overwhelming support by the noteholders of the plan will enable Hercules to expedite the restructuring process and emerge by mid-fall. We do not expect any interruption to our daily operations as a result of today’s filing.”

The company has sufficient resources and recurring revenue from operations to continue serving its customers.

Source: www.bloomberg.com

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