Contract drilling services provider Hercules Offshore Inc. (HERO), announced the pricing of senior notes of $400.0 million due to mature in 2021. The company also declared that the notes will carry a yearly interest of 8.750%.
The notes will be sold at par and through private placement amongst selected investors. Hercules Offshore intends to utilize the net proceeds from this offering and its cash on hand to finance other deals.
These transactions would include acquiring shares of Discovery Offshore SA and also paying the $333.9 million final payment of Discovery Triumph and Discovery Resilience. The cash on hand portion will also include $104.0 million, which is expected to be received from the sale of inland barge rigs and associated properties.
On Apr 25, 2013, Hercules Offshore reported first-quarter 2013 adjusted loss per share of 2 cents, which was narrower than the Zacks Consensus Estimate of a loss per share of 3 cents. The better-than-expected result was primarily due to improved results from most of its business units.
Headquartered in Houston, Hercules Offshore operates a fleet of 38 jackup rigs, 13 barge rigs and 63 liftboats. It provides services such as platform inspection, well service, maintenance and decommissioning work to various oil and gas producers.
Hercules Offshore currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
However, there are certain other firms in the energy sector that are expected to perform better over the short term. These include InterOil Corporation (IOC), Cheniere Energy Partners LP (CQP) and Oiltanking Partners LP (OILT). All these firms sport a Zacks Rank #1 (Strong Buy).
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