May 16, 2008
Trico Marine swoops on DeepOcean
Trico Marine Services, Inc. (Nasdaq: TRMA) and DeepOcean ASA (OB Match: DEEP) say that Trico, through its Trico Shipping AS subsidiary, has entered into agreements to acquire 55,728,955 shares in DeepOcean, representing 51.5% of the total share capital on a fully diluted basis, for NOK 32 per share.
As a result of these agreements, Trico Shipping will launch a mandatory offer to acquire the remaining shares in DeepOcean, for a consideration of NOK 32 per share in cash, consistent with Norwegian law.
The Board of Directors of DeepOcean recommends that shareholders accept this offer.
Background to the offer
Haugesund, Norway, based DeepOcean is a market leader in the provision of high quality inspection, maintenance and repair ("IMR"), construction support and subsea intervention services. It is also a leading independent supplier of subsea trenching and cable laying services.
DeepOcean controls a fleet of 14 multi-purpose service vessels ("MPSVs") and anchor handling towing supply vessels equipped with dynamic positioning systems, operates a fleet of modern remote operated vehicles ("ROVs") and trenching equipment and has pioneered the development of deepwater module handling systems.
DeepOcean employs over 700 people, including approximately 100 engineers.
Trico's strategy has been to expand its presence in the fast growing subsea services market, and in November 2007, it acquired Active Subsea ASA, a Norwegian offshore services company with a fleet of eight medium-sized MPSVs under construction.
The acquisition of DeepOcean will create one of the world's largest providers of integrated subsea services. This rapidly growing market is characterized by a high level of required technical and operational expertise and serves a demanding customer base.
Trico expects to be able to accelerate DeepOcean's growth across Trico's global platform, leveraging Trico's existing infrastructure, vessels and resources to bring DeepOcean's specialized service offering to new customers throughout Trico's operating regions.
Joseph S. Compofelice, Chairman and CEO of Trico commented, "The acquisition of DeepOcean represents a very important move into the highest level of technology and operating expertise in the fast growth area of subsea services. It is a natural extension of our November 2007 acquisition of Active Subsea where we acquired a fleet of new MPSVs designed specifically for global IMR services utilizing ROVs. DeepOcean will continue to be headquartered in Haugesund and will continue to operate on a stand alone basis headed by its current CEO Kåre Johannes Lie and his existing operating team, who have worked together for years to grow DeepOcean's business and service capabilities."
Speaking on behalf of the Board and Management of DeepOcean, Chairman Johan Rokstad said, "After careful consideration of all the stakeholders of DeepOcean, its customers, its employees and most importantly its shareholders, our Board of Directors felt that not only was value maximized for DeepOcean by virtue of this investment by Trico, but the future of DeepOcean was very much enhanced by the global scope of Trico, enabling DeepOcean to aggressively pursue its expansion plans in Mexico, West Africa, Southeast Asia and Brazil."
Acquisition of shares in DeepOcean
The Board of Directors of DeepOcean has resolved to issue 20,000,000 new shares in DeepOcean to Trico Shipping, at a price of NOK 32 per share. This represents 18.5% of the total share capital of DeepOcean on a fully diluted basis.
Trico Shipping has entered into agreements to acquire 17,495,055 shares in DeepOcean in the open market at a price of NOK 32 per share. This represents 16.2% of the total share capital of DeepOcean on a fully-diluted basis.
DeepOcean management and West Supply IV AS (a shareholder of DeepOcean and an affiliate of Østensjø Rederi AS, represented on the Board of Directors by the Chairman Johan Rokstad) have agreed to sell all of their combined 18,233,900 DeepOcean shares to Trico Shipping, for a consideration consisting of a combination of cash and Trico equity securities with a total value of NOK 32 per share. These DeepOcean shares represent 16.9% of the total share capital of DeepOcean on a fully diluted basis. These purchases will be settled at the same time as shares acquired in open market transactions.
As a result of these transactions, Trico Shipping will be making a mandatory cash offer for DeepOcean shares in accordance with the Norwegian Securities Trading Act, chapter 6. The offer will close and be settled after the announced ex-dividend date, leaving the announced dividend of NOK 0.50 per share with the present owners.
Prior to these transactions, Trico and its affiliates did not hold any shares in DeepOcean.
The value of the offer price and the announced dividend combined will be NOK 32 per share. The offer price for each DeepOcean share will be NOK 31.50 payable in cash, in addition to the announced dividend for 2007 of NOK 0.50 per share.
Relative to the closing share price on May 15, 2008, the value of the offer price and announced dividend combined represents a premium of 28%.
Relative to the average closing share price over the last month, the value of the offer price and announced dividend combined represents a premium of 27%.
Relative to the average closing share price over the last 6 months, the value of the offer price and announced dividend combined represents a premium of 29%.
The total offer values the equity of DeepOcean, including the 20,000,000 shares issued to Trico, at NOK 3.5 billion ($682 million). On March 31, 2008, DeepOcean's net interest bearing debt, adjusted for proceeds from the 20,000,000 shares issued to Trico, totaled NOK 649 million ($128 million). This implies an enterprise value of NOK 4.1 billion ($810 million).
An offer document detailing the background and conditions for the offer is being finalized and is expected to be distributed to all shareholders on or about the week of May 27th. The offer period is expected to be four weeks. Cash payment as settlement for shares tendered in the offer will take place as soon as practically possible after the closing date of the offer period and not later than 14 days after the closing date of the offer period.
Financing of the offer
Trico has obtained financing for the acquisition and the offer through a combination of cash, new and existing credit facilities and the issuance of new convertible debt securities.
Trico has entered into definitive agreements with a group of new and existing institutional investors to issue $300 million aggregate principal amount of 6.50% Senior Convertible Debentures due 2028.