Offshore drilling services firm Hercules Offshore, which filed its second bankruptcy in less than a year, laid off 60 employees at its Houston headquarters.
The company is expected to undertake further measures whilst undergoing restructuring.
As part of the bankruptcy process, Hercules anticipates a complete shutdown of its facilities.
This has resulted in the permanent terminations of 60 employees at the company’s Houston headquarters, according to data sent to the Texas Workforce Commission (TWC).
Hercules Offshore Inc. filed for bankruptcy protection, its second in just under a year after it could not find itself a buyer in the last few months amid a depressed market for oil drilling services.
According to CEO Troy Carson, the company was planning to sell off its assets in a ‘controlled-manner’ as it had the support of almost all the top lenders that helped it out of bankruptcy in November 2015.
A voting report stated that Hercules received support from lenders holding more than $249m in first-lien loans.
Hercules was said to court its stockholders, promising a “meaningful recovery” if they agreed 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 of $1.2bn.
According to court documents, shareholders were being offered between $12.5m and $41m, depending on how Hercules’s asset sales go, if they supported the bankruptcy wind-down plan. Otherwise, a negative vote would result in a recovery ranging from nothing to $27m.
Hercules’ international subsidiaries wouldn’t be included in the U.S. bankruptcy, but they would be part of the final sale process.
Hercules Offshore entered into a restructuring support agreement (RSA) with its lenders through a pre-packaged Chapter-11 plan.
The plan provides for an orderly sale process, and ensures that its unsecured creditors would be repaid entirely on their obligations.
Further, the company’s international subsidiaries would not be included as part of Chapter-11 filing but would be a part of the sale process.
Separately, Hercules Offshore agreed to transfer the right to buy the Hercules Highlander jack-up rig to a subsidiary of Maersk Drilling.
Source: Market Watch
Offshore-drilling vessel-provider Hercules Offshore reported a net loss of $26.9m, or $1.35 per diluted share for the 1Q’16 period, vs. net loss of $57.1m a year ago.
Revenues declined to $50.9m for the same period vs. $122.6m a year ago.
Company CEO John T. Rynd attributed the loss to continued weakness in the offshore drilling markets as oil prices declined, making its customers reduce their drilling activities.
The company had filed for bankruptcy in August 2015 and had emerged from it in November 2016.
Separately, the company had entered into a forbearance agreement with lenders last month and continues to explore options such as a potential recapitalization, business combination or other alternative strategic transactions, including the potential sale of its vessel Hercules Highlander, and a restructuring of its term loan.
Post-bankruptcy, the company had raised a $450m term loan to utilize $200m of it to pay its remaining installment on the Hercules Highlander vessel. The forbearance agreement has led to the company to explore selling its yet-to-acquired vessel.
Source: PR Newswire
P.S. Kindly refer to the one-page credit report on Hercules Offshore highlighting the company’s progress through bankruptcy.
Please find attached a concise credit report on Hercules Offshore (NYSE:HERO). The report includes a comprehensive company timeline (highlighting key events) and the capital structure which highlights pre-restructuring and post-restructuring debt.
Attachment: Hercules Offshore
Headquartered in Houston, United States, Hercules Offshore, Inc. is engaged in the provision of shallow-water drilling and marine services to the oil and natural gas exploration and production industry through its fleet of vessels comprising of 27 jack-up rigs and 19 liftboats.
On 13 August 2015, the company filed for Chapter-11 bankruptcy to emerge out of restructuring on 6 November 2015.
For the period ended 31 December 2015, the company had a workforce of 1,000 employees.
Shallow-water driller Hercules Offshore could be forced to file for bankruptcy for the second time in less than a year as some creditors state that it may have breached its covenant on the $450m first lien sr. sec. credit facility. Previously, Hercules had filed for Ch-11 restructuring in August 2015 and emerged from bankruptcy in November 2015.
During the restructuring process, the company issued a debt-to-equity swap conversion for bondholders holding c.$1.2bn of debt for a 96.9% stake in the new equity shares and raised a $450m credit facility.
S&P downgraded the company’s $450m credit facility to CCC-. Further, the company had filed a forebearance agreement last week which has caused concern amongst creditors.
Creditors claimed that Hercules first violated the terms of the loan when its subsidiary, Hercules Offshore Nigeria Limited, failed to offer a vessel’s mortgage as collateral for the loan on 15 April 2016. The second violation occurred when Hercules didn’t meet a deadline to consolidate its Gibraltar-based affiliate into another unit of the company.
In the forebearance agreement filed with the SEC, Hercules stated that creditors had asserted that the company was in default, although they had not provided a formal notice on the same. Hercules also stated that it believed that default could be avoided before next week’s deadline.