General: Superior Offshore announces definitive agreements with Hornbeck Offshore Service
Posted on 16.01.2008 - 12:00 EST in GENERAL NEWS by Rons_ROV_Links
Superior Offshore International, Inc. (Nasdaq: DEEP) today announced that it has reached definitive agreements with Hornbeck Offshore Services LLC, a wholly owned subsidiary of Hornbeck Offshore Services, Inc. (NYSE: HOS) ("Hornbeck"), for the sale and charter-back of the Superior Achiever
, a DP-III deepwater construction and dive support vessel that is under construction and is expected to be delivered in late 2008.
Under the agreements with Hornbeck, Superior Offshore will receive approximately $70 million in cash, which represents its investment to date in the new vessel. Superior Offshore will use the proceeds of the sale to repay its $55 million term loan obligation to Fortis Bank and will pay down substantially all of its outstanding borrowings under its senior secured credit facility with JPMorgan Chase Bank. Following the completion of the sale and the application of the proceeds, Superior Offshore will have no outstanding term debt and will have reduced its 2008 capital requirements by approximately $30 million. Closing is subject to customary conditions, including obtaining third-party consents, and is expected to occur on or before January 21, 2008.
Hornbeck has agreed to a five-year time charter for the Superior Achiever or another acceptable vessel. Superior Offshore will have the option to terminate the charter with 90 days' advance notice prior to the end of each six-month period within the term. Superior Offshore and Hornbeck also have agreed to explore non-exclusive joint marketing and cooperation agreements for new business opportunities that would utilize the complementary resources of the two companies.
The vessel - which will keep the name, Superior Achiever
- will be capable of working in harsh or deepwater environments. Superior Offshore expects to deploy the vessel by the end of this year to international markets and/or deepwater Gulf of Mexico projects.
"We are pleased to sign this definitive agreement with Hornbeck, one of the world's leading new-generation vessel operators," said Jim Mermis, Superior Offshore's President and Chief Executive Officer. "Hornbeck has one of the youngest fleets in the offshore supply vessel industry and is on the leading edge of advanced technology serving the deepwater oil and gas industry. We believe our subsea construction services are a natural fit with Hornbeck's multi-class fleet of deepwater vessels.
"This transaction will benefit our shareholders by streamlining our capital structure," Mermis added. "Once the transaction is closed and funded, we will retire our term loan and significantly deleverage our balance sheet." Withdrawing 2008 Guidance
Separately, Superior Offshore is withdrawing its prior 2008 guidance due to the recent events that have changed the Company's financial and operational profile, including the decision to cancel the acquisition of Ocean Flow International L.L.C.; the pending sale and charter-back of the Achiever; and current negotiations with respect to several potential long-term charters.
"We will continue to focus on our primary markets in the Gulf of Mexico, Trinidad, the Middle East and Africa, with a streamlined focus on operational effectiveness and efficiency," Mermis said. "We expect to be in a position to provide new guidance for 2008 financial results on or before we report fourth quarter and full year 2007 results in March."