Hercules Offshore solicits votes on reorganization

HOUSTON, July 14 (UPI) -- U.S. rig company Hercules Offshore said Tuesday it started a solicitation of votes from shareholders for a prepackaged plan for reorganization.

"Assuming the company receives the required acceptances, the company intends to commence a prepackaged Chapter 11 case shortly after the conclusion of the solicitation period [Aug. 12]," Hercules said in a statement.

Hercules, which has headquarters in Houston, announced plans to start the proceedings in June. The company posted a first quarter net loss of $57.1 million, compared to net income of $19.9 million during the first quarter of 2014.

Oil prices are off nearly half from their June 2014 levels as supplies far outweighs global demand. The Organization of Petroleum Exporting Countries said in its latest market report demand should increase marginally by 2016, though oil production from Saudi Arabia was at a level not seen in 30 years.

Hercules in its latest quarterly report said it expected the demand for offshore rigs could remain lower for the year amid few signs of a recovery in the oil price market. Hercules in early 2015 restructured a deal with Saudi Aramco after the oil company reduced the day rates for rig leases with Hercules to $67,000 per day.

The company said the terms of the restructuring would support $1.2 billion of outstanding notes and provide $450 million in new debt financing, which would support the construction costs of a new rig, Hercules Highlander.

One of the largest rig services companies in the world, Diamond Offshore Drilling, announced in May it lost $256 million during the first quarter of the year.