Cal Dive expects the combination will diversify Cal Dive’s vessel fleet and services offering with the addition of complementary assets consisting of pipelay, pipebury and derrick barges; expand Cal Dive’s geographic footprint, enhancing international growth opportunities and further diversifying the company’s operations; provide for greater economies of scale and increased operational flexibility; be accretive to earnings and cash flow per share; and preserve Cal Dive’s financial flexibility for future growth initiatives.
The combined company will operate a fleet of 23 diving support vessels, seven pipelay/pipebury barges, one dedicated pipebury barge, one multi-service vessel, one combination derrick/pipelay barge and two-derrick barges.
The boards of directors of Cal Dive and Horizon unanimously approved the transaction. Closing of the transaction is subject to regulatory approvals and other customary conditions, as well as Horizon stockholder approval, and is expected to occur in the third quarter of 2007.
Quinn J. Hebert, Chief Executive Officer, President and Director of Cal Dive, stated, “We are very excited about this transaction as it is perfectly aligned with the strategic goals that we have outlined to our investors. The addition of Horizon’s pipelay, pipebury and derrick barges diversifies Cal Dive’s fleet and services offering by enabling us to offer trunkline and salvage and decommissioning services. Additionally, Horizon’s operations strengthen Cal Dive’s existing platform to further penetrate targeted international regions. We intend to leverage the strong organizations of both Cal Dive and Horizon to create long-term value for our companies’ stockholders, customers and over 2,000 employees. We look forward to welcoming Horizon’s employees to the Cal Dive organization and working together to realize the significant opportunities we expect to achieve from this combination.”
David Sharp, Chief Executive Officer, President and Director of Horizon, stated, “We believe that this transaction provides our stockholders the opportunity to realize both immediate value through the cash consideration and the potential of continuing to participate in a larger organization with greater economies of scale and the diverse resources needed for sustained success in our industry. Cal Dive is a company we know very well through our longstanding business relationship and we believe that our employees will benefit greatly from the strong cultural fit.”
Following the transaction, Quinn Hebert will continue to serve as President and Chief Executive Officer of the combined company and the Cal Dive Board of Directors will be expanded to include two Horizon directors for a total Board of eight members. The combined company will continue to be based in Houston, Texas.
Under the terms of the agreement, Horizon stockholders will receive in the merger a combination of 0.625 shares of Cal Dive common stock and $9.25 in cash for each share of Horizon common stock outstanding, or an estimated total of 20.4 million Cal Dive shares and $302.5 million in cash. Based on Cal Dive’s closing stock price on Monday, June 11, 2007, this equates to a transaction value of approximately $19.25 per Horizon share, which represents premiums of approximately 14 percent to Horizon’s closing price on Monday, June 11, 2007, and approximately 18 percent to Horizon’s 30-day average trading price.
It is expected that the transaction will be its stockholders will receive tax free to Horizon and the stock portion of the consideration tax-free. Upon completion of the transaction, it is anticipated that Horizon stockholders will own approximately 20 percent of the common stock of Cal Dive compared to approximately 80 percent owned by existing Cal Dive stockholders. It is further anticipated that Helix Energy Solutions Group, Inc., Cal Dive’s majority stockholder, will own approximately 59 percent of the combined company, compared to its current ownership of approximately 73 percent of Cal Dive.
The cash portion of the transaction will be funded through a $675 million commitment from Bank of America, consisting of a $375 million senior secured term loan and a $300 million senior secured revolving credit facility. There is no financing condition to consummation of the transaction. Following the transaction, Cal Dive believes its strong cash flow from operations will allow it to reduce its net debt, fully fund its current capital program and pursue future growth initiatives. The limited amortization payments and prepayable nature of the term loan provide Cal Dive significant financial flexibility. In connection with this transaction, Banc of America Securities LLC and J.P. Morgan Securities Inc. have terminated an equity lockup agreement that was scheduled to expire on June 12, 2007.
Banc of America Securities LLC acted as financial advisor and Fulbright & Jaworski, L.L.P. acted as legal advisor to Cal Dive for this transaction. Lehman Brothers Inc. acted as financial advisor and Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P. acted as legal advisor to Horizon for this transaction.
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