Offshore drilling company, Hercules Offshore, has finally filled for chapter 11 bankruptcy protection, after months of wrangling with debtors.
The company’s fate was sealed Thursday in a US bankruptcy court.
As part of the bankruptcy protection, Hercules Offshore will initiate a debt for equity swap with current bondholders, a process that is expected to take around 45-60 days.
The company has said that it currently has over 300 senior note holders with combined holdings in excess of $1.2 billion. Hercules Offshore said that the senior note holders voted overwhelmingly to accept the plan, with only two, holding a combined stake of US$320,000 voting against.
Hercules Offshore, who’s estimated value ranges between between US$535 million and US$725 million, has stated in bankruptcy court that it strongly believes it will be out of debt come 7th November 2015.
The company is yet another in the offshore energy industry facing big problems, since the global oil price crashed earlier this year. Offshore operators are reeling back on investment in an industry that at present can see no end to low global oil prices.
Hercules have themselves stacked as many as 18 drilling rigs out of its fleet. The rigs that are yet to be stacked have had heavy renegotiations from renters, forcing day rates down dramatically.
Once such company is Saudi Aramco, who earlier this year, cancelled all contracts with Hercules Offshore until it slashed its day rates.