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General: Superior Offshore International announces LOI with strategic partner for ownersh

Posted on 04.01.2008 - 16:00 EST in GENERAL NEWS by Rons_ROV_Links

Superior Offshore International announces LOI with strategic partner for ownership and charter back of the 'Superior Achiever'Superior Offshore International announces LOI with strategic partner for ownership and charter back of the 'Superior Achiever'

Superior Offshore International, Inc. (Nasdaq:DEEP) today announced it has signed a letter of intent ("LOI") with a strategic partner (the "Purchaser") for ownership of the Superior Achiever, a DP-III deepwater construction and dive support vessel that is expected to be delivered in late 2008. This transaction would enable Superior Offshore to pay off its current term loan obligation and significantly reduce its 2008 capital requirements.

The Purchaser, an international provider of offshore supply vessels serving the offshore oil and natural gas industry, would agree to time charter the Superior Achiever or another acceptable vessel to the Company for a five-year term, with the Company having the option to terminate the charter on a six-month rolling basis. The LOI also provides that the Company and the Purchaser would agree to negotiate in good faith toward the establishment of a non-exclusive joint marketing and cooperation agreement and that the parties would endeavor to seek mutually beneficial business opportunities utilizing the complementary joint resources of both parties.

Under the LOI, Superior Offshore expects to realize proceeds of over $70.0 million from the sale of the vessel, which would be used to repay in full the $55.0 million, plus interest and any other obligations, currently outstanding under the Company's existing senior secured term loan (the "Term Loan") with Fortis Capital Corp. ("Fortis"). The Company expects to use the balance of the proceeds for general corporate purposes.

Upon consummation of the sale, the Company expects to have no outstanding term debt. In addition, the Company expects that its previously projected capital expenditures for 2008 will be reduced by over $30.0 million as a result of selling the Superior Achiever. The LOI is exclusive and non-binding, except as to certain limited provisions, and is subject to the parties' further agreement with respect to certain material terms and the execution of definitive agreements relating to the sale and charter of the vessel. The Company expects to close the sale on or before January 21, 2008.

In connection with the LOI, Superior Offshore also has received until January 21, 2008, an extension of a waiver from Fortis Bank with respect to the Company's compliance with certain covenants under the Term Loan. In addition, AIG Commercial Equipment Finance, Inc. ("AIGCEF") has notified the Company that AIGCEF has elected not to proceed with the five-year, $80.0 million senior secured credit facility contemplated by the commitment letter, dated November 30, 2007, between the Company and AIGCEF, which had been intended to replace the Term Loan.

"The execution of this strategic transaction will allow us to pay off our term loan and reduce our 2008 capital requirement by approximately $30.0 million, with the remaining proceeds to be used for general corporate purposes," said Jim Mermis, Superior Offshore's President and Chief Executive Officer. "This transaction will also give us the financial flexibility to better focus on what we do best – and on what will make the best returns for our shareholders over time – high-value subsea construction, engineering and project management services for domestic and international customers."
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