Hercules Offshore lenders give forbearance for $450 million term loan

By Susanna Moon

Chicago, April 21 – Hercules Offshore, Inc. entered into a forbearance agreement Monday under its $450 million senior secured term loan, according to an 8-K filing with the Securities and Exchange Commission.

Under the forbearance, lenders have agreed to forbear from exercising their rights and remedies under the credit agreement for the alleged failure until April 28.

During this time, the company will be unable to receive any of the escrowed amount or to accept delivery of the Hercules Highlander.

The company said it is communicating with the shipyard and its customer about these matters.

As announced Nov. 6, Hercules entered into a credit agreement for the term loan facility with Jefferies Finance LLC as the administrative agent and collateral agent.

The loans were issued with an original issue discount at 97.

Of the proceeds, $200 million were placed into an escrow account to be used to finance the remaining installment payment on the company’s Hercules Highlander rig. Remaining proceeds were being used to complete the company’s pre-packaged plan of reorganization. Hercules completed its financial restructuring and emerged from Chapter 11 bankruptcy on Nov. 6.

All loans mature on May 6, 2020.

Interest on the loans is Libor plus 950 basis points, with a 1% Libor floor.

Hercules, a Houston-based provider of offshore drilling equipment and services, filed for bankruptcy on Aug. 13.

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