A U.S. bankruptcy court in Delaware has approved Hercules Offshore’s reorganization plan, setting the company up to exit bankruptcy less than two months after its initial Chapter 11 filing.
An attorney for the Houston-based rig operator told Bloomberg last week that the company should complete all the steps necessary to formally emerge from bankruptcy by the end of October.
Hercules entered Chapter 11 bankruptcy on Aug. 13 with a creditor-supported restructuring plan after announcing in June that it planned to file. The crux of the plan called for the company to cut $1.2 billion in debt, with investors trading their senior notes for 96.9% of Hercules’ equity. Some note holders also agreed to provide $450 million in new debt financing, allowing the company to fully fund the remaining construction cost of the high-specification jackup rig Hercules Highlander and provide additional liquidity to fund operations. The $270 million Hercules Highlander is due for delivery in April 2016.
The Hercules filing came on the heels of other bankruptcies, such as Houston offshore service company Cal Dive and oil producers American Eagle and Dune Energy. The drop in oil prices since 2014 that has brought layoffs and cold stacking of rigs is compounded by the industry’s levels of high-yield debt, according to analysts.
Bloomberg reports that at least six oil and gas companies have filed for bankruptcy listing debt greater than $500 million since October 2014, and that Hercules would be the first to exit bankruptcy since the crude slump began to trigger insolvencies.