By Sara Rosenberg
New York, Feb. 28 - Hercules Offshore Inc. has received lender consents on its credit facility amendment that allows for the purchase of 20 jackup rigs and related assets from Seahawk Drilling Inc., increases pricing and provides some covenant relief, according to a news release.
Under the amendment, pricing on the term loan is increasing to Libor plus 550 basis points from Libor plus 400 bps. The 2% Libor floor was left unchanged.
Regarding covenants, the amendment would revise the total leverage ratio (see table), with the revised ratio based on whether or not the Seahawk acquisition has been completed in the relevant quarter.
The amendment also permanently reduces the revolver to $140 million from $175 million and increases the company's investment basket to $50 million from $25 million.
Lenders were offered a 25 bps amendment fee.
UBS is the lead bank on the deal.
Hercules is buying the Seahawk assets for 22.3 million shares of its common stock and cash consideration of $25 million.
Closing on the acquisition is expected to occur in the second quarter, subject to bankruptcy court approval, successful completion of the amendment and regulatory approvals.
Meanwhile the amendment is expected to close within the next week, subject to certain conditions.
Hercules Offshore is a Houston-based operator of rigs and marine support vessels.
Total leverage ratio
| Period | Previous ratio | Amended ratio | Amended ratio
|
| (upon acquisition) | (if no acquisition)
|
| Oct. 1, 2010-Dec. 31, 2010 | 7.50 to 1 | No change | No change
|
| Jan. 1, 2011-March 31, 2011 | 7.00 to 1 | No change | No change
|
| April 1, 2011-June 30, 2011 | 6.75 to 1 | No change | No change
|
| July 1, 2011-Sept. 30, 2011 | 6.00 to 1 | 7.50 to 1 | 7.50 to 1.00
|
| Oct. 1, 2011-Dec. 31, 2011 | 5.50 to 1 | 7.75 to 1 | 7.75 to 1.00
|
| Jan. 1, 2012-March 31, 2012 | 5.25 to 1 | 7.50 to 1 | 7.75 to 1.00
|
| April 1, 2012-June 30, 2012 | 5.00 to 1 | 7.25 to 1 | 7.50 to 1.00
|
| July 1, 2012-Sept. 30, 2012 | 4.75 to 1 | 6.75 to 1 | 7.00 to 1.00
|
| Oct. 1, 2012-Dec. 31, 2012 | 4.50 to 1 | 6.25 to 1 | 6.50 to 1.00
|
| Jan. 1, 2013-March 31, 2013 | 4.25 to 1 | 6.00 to 1 | 6.25 to 1.00
|
| April 1, 2013 and thereafter | 4.00 to 1 | 5.75 to 1 | 6.00 to 1.00
|
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