Mark Rachesky's MHR Fund Management Goes Activist on Seahawk Drilling (HAWK) ~ market folly

Thursday, March 3, 2011

Mark Rachesky's MHR Fund Management Goes Activist on Seahawk Drilling (HAWK)

Mark Rachesky's MHR Fund Management has filed an activist 13D with the SEC regarding shares of Seahawk Drilling (HAWKQ). The filing, reflecting portfolio activity on February 16th, indicates MHR has disclosed a 9.8% ownership stake in HAWKQ with 1,173,513 shares. This is not a new position as MHR held the same amount of shares at 2010 year-end.

HAWKQ Selling Assets to Hercules Offshore (HERO)

Rachesky's firm seems to take issue with the debtors of HAWKQ who have fast-tracked a proposed sale transaction with Hercules Offshore (HERO). The proposed sale would result in the debtors receiving $25 million in cash and 22.3 million shares of Hercules common stock in exchange for the sale of substantially all of its assets.

Going Activist: Formation of Equity Committee

MHR has filed in conjunction with Andalusian Capital Partners, FISBC Global Asset Management, and Mercer Park. We'd also point out that Kyle Bass' Hayman Capital disclosed a 8.4% stake in HAWK in a separate and unrelated filing.

Per various exhibits filed with MHR's 13D, we see that they've been granted appointment of an equity committee to secure independent representation for public shareholders "at this crucial stage of these Chapter 11 proceedings, while the Debtors are attempting to fast-track a DIP motion and prearranged sale that equity has not had adequate time to review."

Fund Manager Background

So, we'll have to see what Rachesky has up his sleeve in this regard since his committee formation was granted. Rachesky, prior to founding MHR was a senior investment officer and managing director for Carl Icahn. Needless to say, he's got plenty of experience in the activist realm.

Rachesky earned his B.S. in molecular aspects of cancer from the University of Pennsylvania and an M.D. from Stanford University School of Medicine. Additionally, he earned an MBA from the Stanford Graduate School of Business; the man is a degree-earning machine.

Per Google Finance, Seahawk Drilling was spun-off from Pride International and "operates a jackup rig business that provides contract drilling services to the oil and natural gas exploration and production industry in the Gulf of Mexico."

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