History
Seahawk Drilling, a Gulf of Mexico rig contractor, was hit by a drilling permit freeze, filed for Chapter 11 in 2011, sold its rigs to Hercules Offshore, and cancelled its shares.
2009-2010: A Gulf-only fleet meets a permit freeze
Seahawk Drilling was cleared to begin trading on Nasdaq in August 2009. It was a contractor whose whole fleet of jackup rigs (drilling platforms that stand on the seabed) worked in the US Gulf of Mexico. That concentration became a problem on May 6, 2010, when the US Department of the Interior announced that no new offshore drilling permits would be issued until a safety review was done. Seahawk warned that a longer pause would hurt results and that rigs would sit idle as their contracts ended.
By August 2010 only a few rigs were working. Several contracts were deferred, four rigs were available with no work, and one was earning a standby rate while it waited for a permit. On September 1, 2010 the company borrowed about $11.5 million under its August 2009 revolving credit agreement with Natixis as agent, and added about $2.3 million of its own cash, to pay for work on the Seahawk 3000 after earlier jacking damage. At the end of September it agreed to sell the idle Seahawk 2505 to Essar Oilfield Services India for $14,550,000, well below its book value of about $42.5 million. The sale depended on Essar winning a contract by February 8, 2011.
2011: Bankruptcy and sale to Hercules
On February 11, 2011 Seahawk and seven subsidiaries filed for Chapter 11 bankruptcy (court-supervised restructuring) in Corpus Christi, Texas. The same day it agreed to sell substantially all its assets to Hercules Offshore for 22,321,425 Hercules shares plus $25,000,012 in cash. A $35 million loan from D.E. Shaw funded the process and partly repaid the Natixis facility, which stood at about $17.9 million and was accelerated by the filing. Pride International also sent a default notice under a tax support agreement and demanded cash collateral.
Nasdaq said on February 15 that the stock would be delisted, with trading suspended from February 24, and in March the exchange filed to remove the securities from listing. The court approved the sale on April 5, and it closed on April 27. The consideration was worth about $154.5 million at Hercules' $5.80 closing price the day before. The cash went mostly to repay the D.E. Shaw loan and expenses, and the Hercules shares went into escrow. A wind-down loan of up to $14.25 million from Hayman Capital funded what remained of the company.
The court confirmed the liquidation plan on September 28, 2011. On the Effective Date, expected around October 4, all 12,582,455 existing shares were to be cancelled. Former shareholders keep only a right to any leftover Hercules shares and cash, paid after all allowed claims are paid or reserved in full. The filings do not say whether anything will be left. The directors and remaining officer were to step down, and a Liquidating Trust would take 100 new shares and become sole stockholder. As of October 3, 2011, about 22.3 million Hercules shares were still in escrow, awaiting resolution of the Pride dispute before distribution.
Written from the 10 story beats below (2009 to 3 Oct 2011), which come from the company's own announcements and filings.