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Seahawk Drilling, Inc. Files for Bankruptcy Protection to Sell Assets to Hercules Offshore

|Includes:HAWKQ, PDE, Quintiles Transnational Holdings Inc. (Q)

 Seahawk Drilling, Inc. (NASDAQ: HAWK) and seven affiliates filed for chapter 11 protection on Friday in Corpus Christi, Texas on Friday in order to effectuate a "prompt" sale of all of the companies' assets.  According to court filings, Seahawk and its affiliates have "determined that this is the best way to ensure that the maximum value of their assets will inure to the benefit of all of their creditors and interestholders, rather than solely to its pre-petition bank lenders."  The companies were formerly affiliates of Pride International, Inc., but were spun-off to Pride shareholders in August 2009.  They provide contract drilling services to the oil and natural gas exploration and production industry throughout the U.S. Gulf of Mexico with a fleet of 20 shallow water jackup rigs.

Seahawk Drilling generated $222.5 million in revenues in 2009, which was a 60% decrease from 2008 revenues.  For the three months ended September 30, 2010, Seahawk generated a $32 million loss from continuing operations on revenues of $18.6 million (significantly decreased from $67.6 million in revenues from the year earlier period).  The companies had assets of almost $505 million as of September 30, 2010.  They employ approximately 900 people.

Prior to the bankruptcy filing, Seahawk engaged in a process, managed by Simmons & Company International, to identify a stalking horse bidder for the assets.  Court filings state that Simmons contacted "significantly more than one hundred potential parties," which resulted in several term sheets.  Ultimately, Seahawk's board of directors selected Hercules Offshore, Inc. (NASDAQ: HERO) as the stalking horse bidder.  Pursuant to the parties' proposed asset purchase agreement, Hercules would acquire substantially all of the companies' assets for aggregate consideration of 22,321,425 shares of Hercules Common Stock plus $25,000,012 in cash.  Based upon the February 10, 2011 closing price of Hercules stock, the consideration is valued at approximately $105 million (before adjustments).  D.E. Shaw Direct Capital Portfolios, L.L.C. has agreed to provide a $35 million debtor-in-possession (DIP) financing facility to Seahawk Drilling.

Key court filings to date include (click on the title of any document for more information or to purchase):
For access to all major pleadings filed in this case, please visit

Read more: Bankruptcy News & Analysis: Seahawk Drilling, Inc. Files for Bankruptcy Protection to Sell Assets

Stocks: Q, HAWKQ, PDE