Hercules Offshore seeks amendment to change covenants, pricing, size

By Sara Rosenberg

New York, July 9 - Hercules Offshore Inc. is looking to amend its credit facility to modify covenants, increase pricing and downsize the revolver, according to a market source.

Under the amendment, the leverage test would be waived for six quarters and then it would be relaxed to 7.0 times in the first quarter of 2011 with step-downs in the future, the source said.

In addition, the way that the fixed-charge coverage ratio is calculated would be changed.

As for pricing, it would be increased to Libor plus 400 basis points with a 2% Libor floor from Libor plus 175 bps with no floor, the source continued.

And, the revolver size would be reduced to $200 million from $250 million.

UBS is leading the amendment that was launched to investors on Wednesday.

Consents are due on July 17.

Lenders are being offered a 50 bps amendment fee.

Hercules Offshore is a Houston-based provider of shallow-water drilling and marine services to the oil and natural gas exploration and production industry.

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