HERO Re-enters Chapter 11 with Plans to Dissolve the Company
Hercules Offshore (ticker: HERO) announced today that it has decided to return to Chapter 11 bankruptcy less than seven months after the company’s initial bankruptcy claim. Hercules plans to dissolve the company and sell all remaining assets instead of restructuring and staying in business.
Hercules said in a press release it plans to liquidate company assets and use the proceeds from the sales to repay creditors, subject to the approval of bankruptcy court. The company plans to pay upwards of $12.5 million to shareholders and pay unsecured creditors in full.
“Under the terms of the RSA, Hercules and certain of its U.S. subsidiaries will solicit acceptances and rejections of its pre-packaged Chapter 11 plan from first lien lenders and shareholders, file voluntary Chapter 11 petitions to compromise the Company’s obligations to its first lien lenders and provide a recovery to its shareholders, and then place all of the Company’s unsold assets into a wind-down vehicle to ensure their continued, safe operation until they can be 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 that following the first bankruptcy, business deteriorated rapidly due to the fall in oil prices and rig count. The company’s swift return to bankruptcy illustrates the lingering effects of oil’s brief crash below $30 per barrel in early 2016, despite the rebound since.
Hercules cited “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” as reasons for its distress.
Hercules’ assets include jackup rigs and liftboats. The company also provides various shallow-water offshore services, such as drilling, platform inspection and decommissioning.
