Offshore services provider Hercules Offshore Inc. (NASDAQ: HERO) announced Friday morning that the company has reached a restructuring support agreement with lenders holding about 99% of the company’s first-lien debt. The company has also reached an agreement related to a second Chapter 11 filing that would pay unsecured creditors in full.
Last August Hercules filed for Chapter 11 protection, and it emerged from bankruptcy in November.
Under the prepackaged Chapter 11 agreement announced Friday, Hercules will solicit acceptances and rejections of its new prepackaged Chapter 11 plan from first lien lenders and shareholders, file voluntary Chapter 11 petitions to compromise the company’s obligations to its first lien lenders, and provide a recovery to its shareholders. Hercules will then place all of its unsold assets into a wind-down vehicle to ensure their continued, safe operation until they can be sold.
If shareholders vote as a class to accept the plan, they will receive cash recoveries over time, including a payment of $12.5 million upon the completion of the Chapter 11 process and additional cash distributions thereafter, depending on the success of the sale of the company’s assets through interests in the post-Chapter 11 wind-down vehicle. The secured lenders likewise are projected to receive cash payments largely dependent on the success of the sale process.
Hercules also said that it has agreed to transfer the right to acquire a new jack-up rig to a subsidiary of Maersk Drilling. The rig is ready for immediate delivery, and Maersk will make the final payment of $196 million to the builder.
Hercules stock closed at $1.94 on Thursday and premarket trading was halted briefly Friday morning. Once trading resumed, shares traded down around 40% at $1.15 in a 52-week range of $0.53 to $14.50.