Hercules Offshore files for court approval of reorganization plan

Hercules Offshore Inc. (Nasdaq: HERO) filed a prepackaged plan of reorganization on Aug. 13 under Chapter 11 of the US Bankruptcy Code to continue its financial restructuring of the company. 

The company anticipates that, among other things, it will receive court authority to pay employee wages and benefits without interruption and to 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.

The prepackaged 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 the Hercules 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. 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 $320,000 of the senior notes voted against the plan.

Hercules Offshore has sufficient resources and recurring revenue from operations to continue serving its customers. The plan also provides for the company's current shareholders, despite being substantially "out of the money" by approximately $500 million, to have the opportunity to receive a pro rata portion of the remaining 3.1% of the new common equity, as well as certain warrants, subject to the requirements of the plan and court approval.

Hercules filed its voluntary Chapter 11 petitions and pre-packaged plan in the US Bankruptcy Court for the District of Delaware in Wilmington. 

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