Shallow-water driller Hercules Offshore could be forced into bankruptcy for the second time in less than a year as some creditors claim it has defaulted on a $450 million loan, according to regulatory filings.
In a filing last week with the Securities and Exchange Commission, the Houston company said creditors could push it back into bankruptcy as soon as Thursday. Creditors allege that two of Hercules’ international affiliates violated the terms of the loan, giving lenders the right to demand immediate payment, according to the filing.
Hercules denied it has failed to comply with the requirements set by lenders, according to filing. Company officials did not respond to requests for comment. The creditors who alleged Hercules was in default were not named in the regulatory documents.
Hercules’ customers include some of the world’s biggest energy companies, including Chevron Corp. and Saudi Aramco, the state-owned oil company of Saudi Arabia, according Hercules’ annual report filed with the SEC. Hercules employed about 1,000 people at the end of last year, according to the document.
Hercules was among the first corporate casualties of plunging oil prices. At the height of the boom in mid-2014, Hercules contracted about 20 shallow-water rigs to drillers in the Gulf of Mexico. But as prices fell and drillers retreated from offshore, Hercules was left with fewer customers and hefty debts.
By 2015, about half of its Gulf rigs were idled. In August, the company filed for bankruptcy with a restructuring plan already in place. The deal converted Hercules’ $1.2 billion in debt into stock for its creditors, and the company emerged from bankruptcy in November.
As part of the restructuring deal, Hercules took out a $450 million loan to help it complete its Hercules Highlander rig, which is under construction in Singapore. Hercules has a five-year contract for the rig with the Danish company Maersk, which plans to drill in the North Sea.
Creditors claim Hercules first violated the terms of the loan when it subsidiary, Hercules Offshore Nigeria Limited, failed to offer a vessel’s mortgage as collateral for the loan on April 15, according to the SEC filing. The second violation occurred when Hercules didn’t meet a deadline to consolidate its Gibraltar-based affiliate into another unit of the company, according to the filing.
Hercules said in the filing that creditors have asserted the company is in default, although they have not given formal notice. Hercules also said that it believes there are ways to avoid default before next week’s deadline.
In its most recent earnings release in March, Hercules reported a net loss of $23.7 million on revenues of $32.4 million between Nov. 6, when the reorganized company emerged from bankruptcy, and Dec. 31.