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    Hercules Offshore enters into restructuring agreement

    Company News // June 19, 2015

    Hercules Offshore has entered into a Restructuring Support Agreement with a steering group of its senior noteholders, collectively owning or controlling in excess of 67 per cent of the aggregate outstanding principal amount of the company's 10.25 per cent senior notes due 2019, 8.75 per cent senior notes due 2021, 7.5 per cent senior notes due 2021 and 6.75 per cent senior notes due 2022.

    Pursuant to the agreement, the noteholders have agreed to support a substantial deleveraging transaction pursuant to which approximately US$1.2 billion of the company's outstanding notes will be converted to new common equity, and backstop US$450 million of new debt financing which will fully fund the remaining construction cost of Hercules Highlander and provide additional liquidity to fund the company's operations.

    "We have reached a restructuring agreement with an overwhelming majority of our senior noteholders that will allow Hercules to substantially reduce its debt burden and secure additional liquidity to help us navigate the current downcycle," said President and Chief Executive Officer John T Rynd.

    "The agreement we reached contemplates a value maximizing transaction for the company, which we expect will impact our balance sheet only, while our operations will continue as usual. Once our financial restructuring is completed, the new capital structure will provide a better foundation for Hercules to meet the challenges in the global offshore drilling market due to the down cycle in crude oil prices and expected influx of newbuild jackup rigs over the coming years."

    A key component of the agreement is that pursuant to the contemplated restructuring, all trade creditors, suppliers and contractors are expected to be paid in the ordinary course of business, and customer relationships will be unimpaired. Employees can expect they will be paid in the ordinary course. 

    "Hercules has sufficient liquidity to fund its operations through the period in which the restructuring contemplated by the agreement will take place, which is important in our ability to meet our existing and future obligations to our customers, employees and vendors," Mr Rynd concluded.


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