Deep Down Sells $40 MM of Common Stock

Deep Down announced that it has closed a $40 million private placement of common stock to institutional and accredited investors. Deep Down sold 57,142,857 shares of its Common Stock at a price of $0.70 per share. As part of this transaction, Deep Down will file a registration statement covering the resale of the shares of Common Stock acquired in this offering. Dahlman Rose & Company, LLC acted as exclusive placement agent for the financing.

Deep Down used $22.0 million of the net proceeds to complete the previously announced acquisition of Flotation Technologies, which closed today. Flotation recently introduced its patent pending CoreTec drilling riser buoyancy modules, which Deep Down believes can become the industry standard for ultra deepwater applications. Deep Down will use approximately $12.5 million of the net proceeds to repay a $12 million mezzanine facility that was provided by Prospect Capital Corporation. This mezzanine facility has a 15.5% annual interest rate. The Company will use the remaining net proceeds for working capital and general corporate purposes.

"We are extremely pleased by the vote of confidence conveyed by the professional investors who are participating in this private placement. The ability to raise $40 million with these sophisticated investors validates the business plan and strategy we have developed," commented Ronald E. Smith, Deep Down's President and CEO. "Repayment of the mezzanine facility will give us an essentially debt-free balance sheet and save us over $2.0 million per year in interest and other related costs," added Eugene L. Butler, Deep Down's CFO. "As evidenced by the recent $9 million letter of intent from Delba International to supply and install the deepwater marine drilling riser flotation system for the new-build Delba III semisubmersible drilling rig, we are already experiencing significantly positive developments from our planned ownership of Flotation Technologies," concluded Robert E. Chamberlain, Jr., Deep Down's Chairman.