Hercules Increases Stake in Discovery Offshore, Divesting Domestic Liftboats
Hercules Offshore made dual announcements today, adding to its stake in Discovery Offshore as its divest from domestic liftboats.
According to the company's press release, Hercules has agreed to purchase enough additional Discovery Offshore shares to put it in a majority interest position. In accordance with the Norwegian Securities Trading Act, Hercules will make a mandatory cash tender offer for all remaining outstanding shares of Discovery, the company said.
This increase in ownership will provide Hercules with unprecedented entry into the high-specification jackup market, according to President and CEO John Rynd. Discovery Offshore is a Luxembourg-based public limited liability company incorporated in 2011 for the purpose of owning new ultra high-specification jackup drilling rigs. Its main assets are two Keppel FELS Super A high-specification harsh environment jackup rigs.
"The two Discovery rigs are world-class assets with market leading capabilities that place them among the highest specification jackup rigs in the world," said Rynd in a statement today. "These rigs will significantly expand our service offerings to the most demanding drilling customers, and open new international markets that have growing needs for assets of this caliber. With construction of both Discovery rigs nearing completion, we feel conditions are right for us to acquire the entire entity."
As the company adds to its stake in Discovery, it has agreed to sell almost all its domestic liftboats assets for around $54 million in cash, hanging on to just $7.3 million in working capital. The agreement with All Coast LLC includes 29 marketed liftboats, 10 cold-stacked liftboats, and related assets. Hercules expects to take a $4 million impairment charge. According to Rynd, the divestiture comes as part of the company's larger strategic realignment toward more profitable long-term markets.
The company has also exited its inland barge segment, and is looking increasingly toward U.S. Gulf of Mexico and international drilling operations, as well as its international liftboat business, for sustainable profits. Hercules expects the divestiture to be completed in July.
The article Hercules Increases Stake in Discovery Offshore, Divesting Domestic Liftboats originally appeared on Fool.com.
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