NEW YORK ( TheStreet) -- Shares of Seahawk Drilling ( HAWK) dropped in extended action on Friday after the Houston-based offshore driller said it plans to file for bankruptcy protection and that it's sold substantially all of its assets to Hercules Offshore ( HERO) for roughly $105 million in cash and stock. The consideration from Hercules is to include roughly 22.3 million of its common shares, as well as "sufficient cash" to cover Seahawk's $25 million worth of debt and working capital liabilities. The $105 million value for the deal is based a closing price of $3.62 for Hercules' common stock.
Seahawk shares were last quoted at $4, down 49.4%, on volume of less than 70,000, according to Nasdaq.com. Based on a regular session close at $7.90, the shares had fallen almost 67% in the past 52 weeks. "After a thorough and disciplined process, an independent committee of Seahawk's directors and its full Board of Directors determined that an asset sale to Hercules provides the highest level of value to Seahawk's stakeholders," said Randy Stilley, the company's CEO in a statement. Seahawk said it plans to implement the sale through the Chapter 11 filing, and it will seek expedited approval of this plan from the Bankruptcy Court. It expects the transaction to close in the second quarter. "The filing permits us to effectuate the sale in an efficient manner, allowing us to address legacy liabilities inherited from Pride International, Inc. as part of the August 2009 spin-off, and ensure we continue to operate our business as usual as we proceed with the sale process," Stilley said. The company noted that it's already secured a $35 million debtor-in-possession credit facility from D. E. Shaw to support its ongoing business so it doesn't anticipate an impact on its operations during the bankruptcy and sale process. Seahawk traces its troubles to the "dramatic slow-down" in issuance of shallow water drilling permits in the U.S. Gulf of Mexico following the BP oil spill in April of last year, as well as continued low prices for natural gas and slowdown in the economy.