Hercules Offshore solicits votes for prepackaged reorganization plan

Hercules Offshore Inc. (Nasdaq: HERO) has begun a solicitation of votes for a prepackaged plan of reorganization from holders of its 10.25% senior notes due 2019, 8.75% senior notes due 2021, 7.5% senior notes due 2021, 6.75% senior notes due 2022, 7.375% senior notes due 2018, and 3.375% convertible senior notes due 2038.

Votes on the prepackaged plan must be received by Prime Clerk, the company's voting agent, by Aug. 12, unless the deadline is extended. The record date for voting was set for July 13. The prepackaged plan of reorganization provides that claims of trade creditors, suppliers, and employees will be paid in full.

On June 17, Hercules Offshore entered into a restructuring support agreement with Noteholders who held approximately 67% of the aggregate outstanding principal amount of the company's notes. The terms of the consensual financial restructuring would support a substantial deleveraging transaction pursuant to which approximately $1.2 billion of the company's outstanding notes would be converted to 96.9% of new common equity, and $450 million in new backstop debt financing would be provided, which would fully fund the remaining construction cost of the Hercules Highlander and provide additional liquidity to fund Hercules Offshore’s operations.

Hercules Offshore’s current shareholders, despite being substantially "out of the money" as described in the plan, would have the opportunity to receive their pro rata portion of the remaining 3.1% of the new common equity, as well as certain warrants described in the plan and the agreement, subject to the requirements of the plan. The company and the consenting noteholders agreed to complete the restructuring through a prepackaged plan of reorganization. Assuming that Hercules Offshore receives the required acceptances, the company intends to begin a prepackaged Chapter 11 case shortly after the conclusion of the solicitation period.

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