Hercules Offshore Inc. has entered a restructuring agreement
with a noteholder group, and expects a prepackaged reorganization
plan or a chapter 11 filing will occur within a few weeks.
The Houston-based drilling-services company said the agreement
would convert about $1.2 billion of notes to new common equity.
Noteholders have agreed to backstop about $450 million of new debt
financing, the company said.
Hercules said the agreement with an "overwhelming majority" of
senior noteholders "will allow Hercules to substantially reduce its
debt burden and secure additional liquidity to help us navigate the
current downcycle."
Hercules expects all trade creditors, suppliers and contractors
will be paid in the ordinary course of business.
Energy companies have sharply reduced spending plans amid a
severe downturn in prices. Oil and gas producers and
oil-field-service companies have cut thousands of jobs.
Hercules said in February that Saudi Aramco—the world's largest
oil producer—terminated its drilling contract for its Hercules 261
rig, a casualty of the collapse in oil prices. On June 1, Hercules
said the contract was reinstated at a lower rate, and rates were
reduced for two other Saudi Aramco contracts.
Moody's Investors Service downgraded Hercules in March, saying
"the company's substantial cash balance may not be sufficient to
prevent financial distress in the next 12 to 18 months." The rating
firm cited factors including a declining jack-up rig market and a
leveraged balance sheet.
Write to Josh Beckerman at josh.beckerman@wsj.com
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