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UPDATE 1-Hercules' Seahawk assets buy under cloud on bribery probe
April 8, 2011 / 3:42 PM / 7 years ago

UPDATE 1-Hercules' Seahawk assets buy under cloud on bribery probe

* Deal to buy Seahawk rigs under scanner

* SEC declines to comment

* Shares down 8 pct (Adds SEC reaction, background)

By Krishna N Das

BANGALORE, April 8 (Reuters) - An investigation to ascertain if Hercules Offshore Inc bribed officials overseas could cast a shadow on the shallow-water oil driller’s plan to buy assets of Seahawk Drilling Inc .

Houston-based Hercules said on Thursday it was being probed by the U.S. Securities and Exchange Commission (SEC) for potential violations of the Foreign Corrupt Practices Act. The Department of Justice (DOJ) was also reviewing certain of the company’s activities. [ID:nL3E7F73Q3]

“While obviously a negative, there are too few details to ascertain the degree of damage,” Raymond James analysts said in a note.

“Does the investigation endanger the Seahawk acquisition?” the analysts asked.

As part of its bankruptcy protection proceedings, Seahawk intends to sell 20 rigs to Hercules for about $100 million. [ID:nL3E7DB22W]

Hercules -- whose international markets include West Africa, Latin America, India, the Middle East and Malaysia -- did not immediately reply to a voice mail seeking comment.

An SEC spokeswoman declined to comment. A DOJ spokesperson was not immediately available to comment.

The investigation will at least be a distraction, involving both personnel and financial resources, and though the extent is yet to be determined, the process could be drawn out, said Matt Beeby, analyst with Global Hunter Securities.

Late last year, Hercules’ bigger rival Pride International Inc paid $56.2 million to settle a case related to bribing officials in Venezuela and Mexico. [ID:nSGE6B60CL]

Shares of Hercules were down 7 percent at $5.97 in morning trade on Friday on Nasdaq. They had earlier touched $5.50. (Reporting by Krishna N Das in Bangalore; Editing by Sriraj Kalluvila, Maju Samuel)

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