Hercules Offshore to File Chapter 11

Rig provider Hercules Offshore Inc said it had entered into a restructuring agreement with a majority of its debtors, which would lead to a Chapter 11 filing within the next few weeks.

A 44 percent fall in global crude oil prices since last June has severely curtailed drilling activities, shrinking cash flows at oilfield service providers and rig contractors.

About $1.2 billion of Hercules' notes will be converted into new equity, leaving existing shareholders with 3.1 percent of the company's stock, Hercules said in a regulatory filing on Wednesday.

Hercules shares were down 67 percent at 22 cents in premarket trading on Thursday.

The company's note holders have also agreed to back stop $450 million in new debt financing to fund the remaining construction cost of a new rig.

Hercules said it expects to file under Chapter 11 by July 8.

Up to Wednesday's close of 66.56 cents, Hercules shares had slumped about 87 percent in the last 12 months.

Reporting by Tanvi Mehta