Hercules Offshore Inc (fka HEROQ)

[PinkBu]

Don't be too sure...

http://www.wsj.com/articles/hercules-offshore-overhauls-plan-to-improve-shareholder-recovery-1474054217

By Jacqueline Palank
Sept. 16, 2016 3:30 p.m. ET

Hercules Offshore Inc. sweetened shareholders’ payout in its bankruptcy after a battle led by distressed investor Centerbridge Partners.

Thursday, the offshore oil-and-gas driller submitted an amended debt-payment plan that offers a cash payout of $15 million to shareholders who rejected a previous plan.

Depending on the success of the sales of Hercules’ rigs and other assets, however, shareholder recoveries could rise as high as $138 million, according to an analysis by Hercules investment bankers at PJT Partners.


A prior analysis of potential asset sale outcomes by PJT had forecast a shareholder recovery of $0 to $27 million, court papers show.

Led by Centerbridge, shareholders teamed up to oppose a plan they said would give Hercules senior lenders a “massive windfall” in the company’s second chapter 11 filing in as many years.

Bankruptcy law puts shareholders at the back of the repayment line, making it rare for them to recover anything. Hercules had said it expected to give shareholders something, but the Centerbridge-led group thought it was entitled to more than what the company was offering.

Court papers show mediation led by U.S. Bankruptcy Court Judge Christopher Sontchi produced a settlement in which lenders agreed to reduce about $546 million in claims by $32.5 million. The deal also includes a pledge from the lenders to allow the shareholders to receive the $15 million in cash before the lenders are paid.

General unsecured creditors are expected to be paid in full.

The Hercules debt-payment plan is subject to the approval of the U.S. Bankruptcy Court in Wilmington, Del, at a hearing Thursday. A status hearing in the case is set for Monday.

Hercules exited a prior chapter 11 proceeding in August 2015 and returned to bankruptcy this June, citing factors that include the continued decline in oil prices. The quick return to bankruptcy raised questions with shareholders such as Centerbridge, who wanted the company to use its ample cash supply to ride out the commodities rout for a hopeful return to profitability next year.