Item 1.01. Entry into a Material Definitive Agreement.
As previously disclosed by Hercules Offshore, Inc. (the “
Company
”) on the Current Report on Form 8-K filed on
May 27, 2016, the Company and certain of its U.S. domestic direct and indirect subsidiaries (together with the Company, the “
Debtors
”) and certain of the Company’s other domestic and foreign direct and indirect
subsidiaries (collectively with the Debtors, the “
HERO Entities
”) on May 26, 2016, as amended by the Amendment to the Restructuring Support Agreement, dated July 8, 2016, and the Amendment No. 2 to the
Restructuring Support Agreement, dated August 12, 2016, entered into an agreement (as may be further amended, modified or supplemented from time to time, together, with the term sheet, the “
Restructuring Support
Agreement
”) with an ad hoc group of lenders (each an “
Ad Hoc Group Member
” and collectively, the “
Ad Hoc Group
”) representing approximately 99% of the obligations outstanding under the
credit agreement entered into on November 6, 2015, among the Company and certain of its subsidiaries, as guarantors, and Jefferies Finance LLC, as administrative agent and collateral agent, and the lenders party thereto. The Restructuring
Support Agreement sets forth, subject to certain conditions, the commitment to and obligations of, on the one hand, the HERO Entities, and on the other hand, each of the Ad Hoc Group Members (and any successors or permitted assigns that become party
thereto) in connection with a controlled wind down of the HERO Entities’ operations pursuant to, among other things, a pre-packaged plan (as amended from time to time, the “
Plan
”) filed under chapter 11 of the United
States Bankruptcy Code on June 5, 2016 in the United States Bankruptcy Court for the District of Delaware (the “
Court
”).
On November 2, 2016, the Company and the other HERO Entities entered into Amendment No. 3 to Restructuring Support Agreement (the
“
RSA Amendment
”) with each of the Ad Hoc Group Members. Capitalized terms used and not otherwise defined herein have the meanings assigned to them in the RSA Amendment. Pursuant to the RSA Amendment:
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(i)
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the outside date to enter a confirmation order with the Court is extended to November 11, 2016, which shall be a final order on or before November 25, 2016;
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(ii)
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the outside date to consummate the Plan is extended to December 2, 2016;
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(iii)
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the amount of the Rejection Lender Wind Down Claim (as defined in the Restructuring Support Agreement) is reduced by $32.5 million to $546.5 million;
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(iv)
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if the class of Company common stock (“
HERO Common Stock
”) votes to reject the Plan, the pro rata amount that each holder of HERO Common Stock receives is increased to also include the Rejection
Shareholder Cash Distribution (as defined in the Plan);
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(v)
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under the terms of the Plan, holders of HERO Common Stock (except for holders of HERO Common Stock that are also First Lien Lenders that are parties to the Restructuring Support Agreement) are not deemed to be released
or deemed to have given releases with respect to certain claims or causes of action under the Plan; if the class of HERO Common Stock holders vote to reject the Plan, and upon the payment in full of the Lender Wind Down Claim (as defined in the
Restructuring Support Agreement), the two members of the Wind Down Entity Board (as defined in the Restructuring Support Agreement) designated by the Requisite Consenting Lenders (as defined in the Restructuring Support Agreement) shall be replaced
by two members designated by the Equity Committee provided, that the Equity Committee shall have designated such members by 11:59 p.m. (Eastern Time) on October 11, 2016;
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(vi)
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if the class of HERO Common Stock holders vote to reject the Plan, the Wind Down Entity (as defined in the Restructuring Support Agreement) shall make distributions (i) first, on account of the Rejection
Shareholder Cash Distribution, (ii) after the Rejection Shareholder Cash Distribution has been funded in full, on account of the Rejection Lender Wind Down Claim and (iii) after payment in full of the Rejection Lender Wind Down Claim, to
holders of Wind Down Entity Interests on a pro rata basis; and
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(vii)
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the provisions relating to the severance and incentive plans for the Executives (as defined in the Restructuring Support Agreement) were comprehensively updated.
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The RSA Amendment was necessitated by a change to the timeline of the Debtors’ chapter 11 cases occasioned by the agreement of the
Debtors, the Ad Hoc Group and the official committee of equity security holders appointed in the Debtors’ chapter 11 cases to participate in, and the determination by the Court to order, mediation with respect to certain objections filed to the
Plan and related matters, as well as certain modifications to the Restructuring Support Agreement and the Plan that were agreed to by the parties. Court-ordered mediation before The Honorable Christopher S. Sontchi took place on September 6,
2016 (the “
Mediation
”). In connection with the Mediation, the Debtors and the Ad Hoc Group reached a settlement (the “
Mediation Settlement
”), which related to, among other things, the First Lien Claim
Reduction Amount (as defined in the Plan) and the Rejection Shareholder Cash Distribution. The Court hearing to consider the confirmation of the Plan, incorporating the Mediation Settlement, commenced on September 22, 2016 and concluded on
September 27, 2016. On November 1, 2016, the Court issued an opinion confirming the Plan.
The summary of the RSA Amendment set
forth above does not purport to be complete, and is qualified in its entirety by reference to the RSA Amendment, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated into this Item 1.01 by reference.