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Hercules Offshore CEO John Rynd. Image courtesy of C. T. Bauer College of Business/Youtube.

Houston-based Hercules Offshore filed for Chapter 11 bankruptcy on Thursday as part of its ongoing financial restructuring.

The company anticipates that it will receive court authority to pay employee wages and benefits without interruption and continue to pay trade creditors and suppliers in the ordinary course of business.

The Chapter 11 reorganization is expected to conclude in about 45 to 60 days.

As announced on July 13, the pre-packaged plan provides a substantial deleveraging transaction that calls for more than $1.2 billion of the company’s outstanding senior notes to be converted to 96.9 percent of new common equity.

Additionally, $450 million in new debt financing would be provided by holders of the senior notes who wish to participate on a pro rata basis, with the full amount backstopped by certain members of the steering group of noteholders.

Hercules said the financing will fully fund the remaining construction cost of the Hercules Highlander and provide additional liquidity to fund the company’s operations.

The company’s senior noteholders overwhelmingly approved the pre-packaged plan, Hercules said.

More than 300 senior noteholders with aggregate holdings in excess of $1.2 billion of senior notes voted in favor of the plan, while only two holders with about $320,000 of the senior notes voted against it.

The plan also provides for the company’s current shareholders, despite being substantially “out of the money” by about $500 million, to have the opportunity to receive a pro rata portion of the remaining 3.1 percent of the new common equity, as well as certain warrants, subject to the requirements of the plan and court approval.

The company said it has sufficient resources and recurring revenue from operations to continue serving its customers.

“Today’s filing is the next step in our financial restructuring.  We are working toward a new capital structure which will provide a better foundation for Hercules to meet the challenges in the global offshore drilling market due to the downcycle in crude oil prices and expected influx of newbuild jackup rigs over the coming years,”  Hercules Offshore president and CEO John T. Rynd said