Oil driller Hercules is one step closer to bankruptcy
On Wednesday, the Houston-based operator of drilling rigs and liftboats announced an agreement with senior noteholders that could bring the company one step closer to filling for Chapter 11 bankruptcy.
As part of the agreement, about $1.2 billion in senior notes will be converted into new common equity and the senior noteholders will provide $450 million in new capital.
Thus, the company expects to begin either the prepackaged reorganization plan or a Chapter 11 filling within the next few weeks.
Hercules President and CEO John T. Rynd said in a release on Wednesday:
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. 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 downcycle in crude oil prices and expected influx of newbuild jackup rigs over the coming years.
Rynd added that as part of the planned restructuring, all trade creditors, suppliers, contractors and employees will be paid as normal.
Hercules executives do not expect customer relationships to be affected at all.
The company currently operates 27 jackup rigs, as well as 24 liftboats in the Gulf of Mexico, the Middle East, Asia, and elsewhere. A new rig, Hercules Highlander, is currently under construction.
(via WSJ)