Hercules Offshore has scrapped its old Chapter 11 plan and will file a new one as part of a restructuring support agreement (RSA) signed with its lenders, in which it will sell off all its unsold assets.
The NASDAQ-listed company said the new Chapter 11 plan is a response to the change in market conditions seen since it first filed for protection on November 6, 2015.
“Since this time, the ongoing decline in oil prices, the consolidation of its U.S. customer base and the addition of new capacity have negatively impacted day rates and demand for Hercules’s services,” the company said, adding that the new RSA plan would be better for stakeholders.
Hercules and certain US subsidiaries will file voluntary Chapter 11 petitions to compromise its obligations to its first lien lenders.
The company will also provide a recovery of over $12.5m to its shareholders, plus cash distributions from the asset sell-off, if they vote to accept the plan.
Hercules’ unsold assets will be placed into a wind-down vehicle through which they will continue to be operated until they are sold.
The company’s international subsidiaries will not be included as part of the Chapter 11 cases but will be part of the sale process, the company said.
Unsecured creditors will be paid in full under the new Chapter 11 plan. First day motions will also be put in place to pay the company’s suppliers and its employees’ wages, benefits and insurance.
Secured lenders will receive cash payments “largely dependent on the success of the sale process”, Hercules said.
The company’s newbuild ‘harsh-environment’ jack-up rig, formerly known as Hercules Highlander, is ready for immediate delivery from Jurong Shipyard in Singapore and will be transferred to Maersk Drilling.
The rig’s new registered owner, Maersk Highlander UK Ltd, will take delivery of the rig and will make the final $196m payment to Jurong.
