Seabulk to get huge cash injection
Seabulk International, Inc., the one-time Hvide Marine, could be back in the newbuilding market before too long.
The company last night announced a series of deals that will, among other things, see it get a $100 million injection of new equity, an $80 million term loan and a $100 million revolving credit facility. As part of the agreement, president and CEO Gerhard Kurz has agreed to extend his contract of employment by five years.
Here's the nitty gritty. Seabulk has signed a definitive agreement with DLJ Merchant Banking Partners III, L.P., a CSFB Private Equity fund, and affiliated entities, and Carlyle/Riverstone Global Energy and Power Fund I, L.P. for the private placement of 12.5 million shares of newly issued Seabulk common stock at a cash price of $8.00 per share.
The $100 million investment would give the new investors approximately 51% of the pro forma, fully diluted common shares of Seabulk and majority representation on its board. The investment is subject to shareholder approval, refinancing of the Seabulks senior credit facility, certain regulatory approvals and satisfaction of other customary conditions.
The new investors have also agreed to purchase, for $8.00 per share, all of the Seabulkcommon stock and common stock purchase warrants beneficially owned by accounts managed by Loomis, Sayles & Co., L.P., an SEC-registered investment advisor. These accounts, which collectively represent approximately 49% of Seabulk's outstanding shares of common stock, currently hold approximately 5.2 million shares (excluding shares issuable upon exercise of warrants). Loomis has agreed to approve the investment transaction and the related amendments to Seabulk's certificate of incorporation, subject to approvals and certain other conditions customary for transactions of this type.
Taken together, the two deals would give the new investors approximately 73% of the pro forma, fully diluted shares of the company.
Seabulk also announced that it has signed a commitment letter with Fortis Capital Corp. and NIB Capital Bank N.V., as arrangers, for a $180 million senior secured credit facility, which would replace its existing facility. The new credit facility will consist of an $80 million term loan and a $100 million revolving credit facility and will have a five- year maturity.
In connection with the closing of the new investment, the Company expects to redeem or repurchase all of its outstanding 12-1/2% Senior Secured Notes due 2007. In addition, and as a condition to the closing of the new investment, president and CEO Gerhard E. Kurz has agreed to a five-year extension of his employment contract.
Seabulk says proceeds from the new equity investment and new bank credit facility, totaling approximately $280 million, will be used to repay its existing bank debt, repurchase or redeem its outstanding senior notes, and provide growth capital for new initiatives.
"Today's developments are a significant step forward and put us in a better position to grow the company and generate additional value for all our shareholders," commented Kurz. "We are raising this equity at a substantial premium to our market price. We have a strong operating and management team, and leading market positions in our three lines of business -- offshore energy support, marine transportation and towing. What has been lacking was the financing to reduce our debt load, maximize our financial flexibility and acquire new tonnage. With the help of our new investors, those goals are now within reach. Needless to say, we are extremely pleased that two world-class private equity investors -- DLJ Merchant Banking Partners III and Carlyle/Riverstone Global Energy and Power Fund I -- have chosen to support the Company's efforts. We are also pleased that Fortis Capital and NIB Bank will participate as senior lenders to the Company."
Under Nasdaq Stock Market rules a shareholder vote will be required to approve the new share issuance and to approve the necessary amendments to the company's certificate of incorporation. The amendments include several provisions intended, for certain periods following closing, to ensure independent director oversight of affiliated party transactions and to provide certain protective rights to minority shareholders. Closing of the transactions is expected to take place by the end of the third quarter.
The Royal Bank of Canda's RBC Capital Markets acted as investment advisor to Seabulk in connection with the private equity transaction.
DLJ Merchant Banking Partners III, L.P. and affiliated funds are managed by CSFB Private Equity, the global private equity arm of Credit Suisse First Boston. CSFB Private Equity is one of the largest managers of alternative assets in the world, with $26 billion of assets under management. The investment is being made in conjunction with Global Energy Partners, a merchant banking affiliate of CSFB Private Equity, that makes investments in energy companies.
Carlyle/Riverstone Global Energy and Power Fund I, L.P. is a venture established by Riverstone Holdings LLC of New York and the Carlyle Group of Washington, D.C. to make private equity investments across all major segments of the energy and power industries. The Carlyle Group's chairman is former Secretary of Defense Frank Carlucci
Fortis Capital Corp. is the agent for the new credit facility and co- advisor to Seabulk on the equity transaction. Fortis Capital Corp. is a U.S.-based subsidiary of Fortis Bank S.A./N.V., Brussels, Belgium. NIB Capital Bank N.V. is co-arranger with Fortis Capital on the new credit facility. NIB Capital Bank is a European-based merchant bank.