The drilling company Hercules Offshore is in danger of bankruptcy after defaulted on loan for 450 million USD. The company delays to settle payment, which was due on Thursday and the creditor can request bankruptcy of the company. Hercules Offshore goes into same situation for the second time in last 12 months after emerged in February 2016 from Chapter 11 bankruptcy protection, which entered in August 2015. The creditors claim that the terms of the loan have been violated and have legal rights to demand immediate repayment of the whole balance. Hercules denied it has failed to comply with the requirements set by lenders.
The plunged oil prices seriously affected the balance sheet of the company, as in 2015 about half of its Gulf rigs were idled. In August 2015 the company filled filed for bankruptcy with a restructuring plan to cut costs and to improve liquidity and cash flows balance. The deal converted debts of Hercules Offshore about 1.2 billion USD into stock for its creditors, and the company emerged from bankruptcy. Part from the restructuring deal was the above mentioned load for 450 million USD, which should help the offshore operator for complete building of Hercules Highlander rig, which is under construction in Singapore. Hercules offshore has 5-year contract with Maersk oil for the rig for drilling in the North Sea.
The creditor accused Hercules Offshore Nigeria Limited, which is subsidiary of Hercules Offshore, that failed to failed to offer a vessel’s mortgage as collateral for the loan on April 15. Also the company didn’t meet a deadline to consolidate its Gibraltar-based affiliate into another unit of the company.
Meanwhile, the international rating agency Standard & Poor’s lowered its corporate credit rating and issue-level rating on Hercules Offshore from CCC+ to CCC- with negative outlook, released Manda Business News. The recovery rating on the debt issue remains ‘3’, indicating our expectation of meaningful recovery in the event of a payment default.
The offshore drilling company continue to believe that will find a way to settle the dispute with creditors and to complete the next debt payments until the end of next week’s deadline.