Hercules to exit Chapter 11

Hercules Offshore plans to emerge from Chapter 11 bankruptcy on Friday, becoming one of the first embattled oil and gas industry players to restructure since the slump began.

“While we are excited to have this milestone behind us, the hard work of successfully turning around the company is just beginning,” CEO John Rynd said during a conference call with investors Thursday.

The shallow-water rig contractor worked for months with creditors to hammer out an agreement to convert most of its corporate debt into shares. Upon emergence, Houston-based Hercules’ existing debt will be terminated, new shares will be issued, and it will receive funding for a new $450 million term loan.

“Our business is going through a challenging time,” Rynd said. “That is why we have moved proactively with a comprehensive restructuring to significantly improve our balance sheet. Very soon, we will emerge with a clean balance sheet.”

The restructuring comes as the offshore market continues getting hammered by plummeting demand coupled with a glut of offshore rigs.

To cope with the tough market conditions, Hercules has slashed costs by operating a smaller fleet and continues to look for ways to save money, Rynd said.

Under the restructuring plan, Hercules will get an injection of new liquidity into its balance sheet, allowing the company to continue funding operations and pay for the delivery of the Hercules Highlander, a jackup rig that is under construction.