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SCHEDULE 14A INFORMATION
----------------
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant | |
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SEABULK INTERNATIONAL, INC.
(Name of Registrant as Specified in Its Charter)
None.
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
[SEABULK INTERNATIONAL LOGO]
YOUR VOTE IS VERY IMPORTANT
To our stockholders:
Our board of directors has called a Special Meeting of Stockholders, as
described in the enclosed Notice of Special Meeting of Stockholders and Proxy
Statement. The special meeting is being called so that our stockholders may
consider and act upon matters necessary to enable us to raise capital through
the issuance of shares of our common stock. At the special meeting our
stockholders will be asked to approve the issuance of 12,500,000 shares of our
common stock to certain investors and an amendment to our certificate of
incorporation necessary for us to issue the shares. The purchase price for the
shares to be issued is $8.00 per share, for a total purchase price of $100
million.
We believe that the stock issuance will provide us with needed additional
capital and the financial flexibility to, among other things, enable us to
refinance our existing credit facility and senior secured notes, which may in
turn provide a financial basis to seek growth opportunities to strengthen our
fleet.
In addition to our issuance of shares of common stock, the investors
have agreed to purchase all of our common stock and common stock purchase
warrants owned by accounts managed by Loomis, Sayles & Co., L.P., a
registered investment advisor. As a result of the stock issuance and assuming
the purchase of all shares of our common stock and common stock purchase
warrants currently held by the accounts managed by Loomis Sayles, the
investors would beneficially own approximately 73% of our common stock on a
fully diluted basis (that is, assuming conversion of all of our options and
warrants into shares of our common stock). Additionally, Loomis Sayles has
agreed to cause the shares of our common stock that it is authorized to vote
at the special meeting to be voted in favor of the stock issuance and the
amendment to our certificate of incorporation.
The special meeting will be held:
, , 2002
, local time
Port Everglades Administration Building
1850 Eller Drive
Ft. Lauderdale, Florida
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE STOCK
ISSUANCE AND FOR THE AMENDMENT TO OUR CERTIFICATE OF INCORPORATION.
Your vote is important, regardless of the number of shares you own. Please
vote as soon as possible to make sure that your shares are represented at the
special meeting. To vote your shares, please complete and return the enclosed
proxy card, or use telephone or Internet voting. You also may cast your vote in
person at the special meeting.
Very truly yours,
Gerhard E. Kurz
President and Chief Executive Officer
This proxy statement is dated , and is first being mailed to stockholders
on or about .
SEABULK INTERNATIONAL, INC.
-----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD , 2002
To our stockholders:
Notice is hereby given that a Special Meeting of Stockholders of Seabulk
International, Inc. will be held on , 2002 at a.m., local time, at
the Port Everglades Administration Building, 1850 Eller Drive, Ft. Lauderdale,
Florida, for the following purposes:
1. to approve the issuance by us of 12,500,000 shares of our common
stock pursuant to a stock purchase agreement by and among us and certain
investors, dated as of June 13, 2002, as it may be amended from time to
time;
2. to amend our certificate of incorporation to (a) increase the
number of authorized shares of our common stock from 20,000,000 to
40,000,000; (b) eliminate the classification of our board into three
classes of directors; and (c) add certain minority stockholder
protection provisions; and
3. to transact such other business as may properly come before the
meeting or any adjournment thereof.
The Marketplace Rules of the Nasdaq Stock Market, on which our common stock
is quoted, require stockholder approval of an issuance of securities resulting
in a "change of control." Stockholder approval of the stock issuance is being
sought solely because the stock issuance will result in a change of control
under the Marketplace Rules.
Our board of directors has fixed the close of business on , 2002
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting and any adjournments thereof.
If you plan to attend, please mark the appropriate box on your proxy card
to help us plan for the meeting. Because of security requirements at Port
Everglades, you should also call Investor Relations at 954-524-4200, ext. 333
and leave your name so that the Port has a list of attendees prior to the
meeting.
Your vote is important to us. We encourage you to sign and return your
proxy card, or use telephone or Internet voting, before the meeting, so that
your shares will be represented and voted at the meeting.
By Order of the Board of Directors,
Alan R. Twaits
SENIOR VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
Fort Lauderdale, Florida
, 2002
TABLE OF CONTENTS
SUMMARY......................................................................1
THE SPECIAL MEETING..........................................................4
Date, Time and Place of Special Meeting.............................4
Purpose of Meeting is to Vote on the Following Items................4
Record Date.........................................................4
Outstanding Shares Held on Record Date..............................4
Shares Entitled to Vote.............................................4
Quorum Requirement..................................................4
Vote Necessary to Approve the Proposals.............................4
Voting by Proxy.....................................................5
How to Vote by Proxy................................................5
Other Business, Adjournments........................................6
THE STOCK ISSUANCE AND RELATED TRANSACTIONS..................................7
The Parties.........................................................7
Purpose and Background of the Transactions..........................7
Recommendation of our Board of Directors...........................12
Opinion of Financial Advisor.......................................12
Amendment to our Certificate of Incorporation......................16
Stockholders Agreement.............................................18
Loomis Sayles Transaction..........................................20
The Credit Facility Refinancing....................................21
Interests of Certain Persons in the Transactions...................21
Use of Proceeds....................................................22
Effects of the Transactions on Stockholders........................22
THE STOCK PURCHASE AGREEMENT................................................24
The Stock Issuance.................................................24
The Closing........................................................24
Transaction Fee....................................................24
Covenants..........................................................24
Representations and Warranties.....................................27
Conditions.........................................................28
Termination........................................................29
Payment of Termination Fees and Related Expenses...................30
Expenses...........................................................30
Amendments and Waivers.............................................31
INFORMATION CONCERNING THE DESIGNEES
TO OUR BOARD OF DIRECTORS..............................................32
Nautilus Designees.................................................32
Carlyle/Riverstone Designees.......................................32
Continuing Directors...............................................33
UNAUDITED PRO FORMA FINANCIAL INFORMATION...................................34
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT.......................................37
STOCKHOLDER PROPOSALS FOR THE
2003 ANNUAL MEETING OF STOCKHOLDERS....................................39
WHERE YOU CAN FIND MORE INFORMATION.........................................39
FORWARD-LOOKING STATEMENTS..................................................39
ANNEX A -- Form of Amendment to Certificate of Incorporation
ANNEX B -- Opinion of RBC Dain Rauscher Inc.
ANNEX C -- Current Board of Directors
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SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROXY STATEMENT AND
MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. TO UNDERSTAND
FULLY THE PROPOSALS TO BE ACTED UPON, YOU SHOULD CAREFULLY READ THE ENTIRE PROXY
STATEMENT, INCLUDING THE ATTACHED ANNEXES.
SEABULK INTERNATIONAL, INC.
Seabulk International, Inc. is a leading provider of marine support and
transportation services, primarily to the energy and chemical industries. Our
three main businesses are offshore energy support, marine transportation and
towing. Our principal business address is 2200 Eller Drive, P.O. Box 13038, Fort
Lauderdale, Florida 33316 and our telephone number at such address is (954)
523-2200.
THE STOCK ISSUANCE
Pursuant to a stock purchase agreement, dated June 13, 2002, Nautilus
Acquisition, L.P. (which we are referring to as Nautilus in this proxy
statement), an affiliate of DLJ Merchant Banking Partners III, L.P. (which we
are referring to as DLJMB in this proxy statement), and a group of investment
partnerships (which we are referring to as the Carlyle/Riverstone Investment
Partnerships in this proxy statement) that are being funded by investors of the
Carlyle/Riverstone Global Energy and Power Fund I, L.P. (which we are referring
to as Carlyle/Riverstone in this proxy statement) have agreed to purchase
12,500,000 shares of our common stock for $8.00 per share, for a total purchase
price of $100 million. As a result of the stock issuance, but without taking
into account the purchase of our shares of common stock or common stock purchase
warrants from accounts managed by Loomis Sayles & Co., L.P., a registered
investment advisor (which we are referring to as Loomis Sayles in this proxy
statement), the investors will acquire beneficial ownership of approximately 51%
of our common stock on a fully diluted basis. At the closing of the stock
issuance, we would also pay a transaction fee to certain parties related to the
investors. The material terms of the stock purchase agreement are described in
this proxy statement under the heading "The Stock Purchase Agreement."
REASONS FOR THE STOCK ISSUANCE
We believe that the stock issuance will provide us with needed additional
capital and the financial flexibility to, among other things, enable us to
refinance our existing credit facility and senior secured notes, which may in
turn provide a financial basis to seek growth opportunities to strengthen our
fleet.
OPINION OF FINANCIAL ADVISOR
In connection with the stock issuance, our board of directors received the
opinion of RBC Dain Rauscher Inc. (which we are referring to as RBC in this
proxy statement) that the purchase price of $8.00 (less applicable transaction
fees and expenses) per share to be paid by the investors in the stock issuance
is fair, from a financial point of view, to us. The full text of the RBC
opinion, which is attached as Annex B to this proxy statement, sets forth
assumptions made, matters considered and limitations on the review undertaken in
connection with the opinion. WE URGE YOU TO READ THIS OPINION IN ITS ENTIRETY.
CONDITIONS TO THE COMPLETION OF THE STOCK ISSUANCE
The completion of the stock issuance is subject to the satisfaction or
waiver of a number of conditions, including the approval by our stockholders of
the stock issuance and the amendment to our certificate of incorporation, a
ruling by the United States Coast Guard that following consummation of the
transactions contemplated by the stock purchase agreement, we will comply with
the requirements of Section 2 of the Shipping Act, 1916 for the ownership and
operation of vessels in the United States coastwise trade and the refinancing of
our existing credit facility. These and other conditions are summarized in this
proxy statement under the heading "The Stock Purchase Agreement--Conditions."
TERMINATION AND TERMINATION FEE
The stock purchase agreement may be terminated in certain instances. If the
stock purchase agreement is terminated
o by us to pursue a superior proposal, or
o by the investors as a result of our board of directors changing
its recommendation with respect to the stock issuance and the
amendment to our certificate of incorporation or recommending an
alternative transaction,
we would be required to pay the investors a $6 million termination fee and
reimburse the investors for their fees and expenses, in an amount not to
exceed $2 million. In certain other events of termination, including the
termination of the stock purchase agreement as a result of our stockholders
not approving the stock issuance and the amendment to our certificate of
incorporation, we would be required to reimburse the investors for their fees
and expenses, in an amount not to exceed $700,000. See "The Stock Purchase
Agreement--Termination," "--Payment of Termination Fees and Expenses" and
"--Expenses."
AMENDMENT TO OUR CERTIFICATE OF INCORPORATION
Our stockholders are also being asked to approve an amendment to our
certificate of incorporation that would:
o increase the number of authorized shares of our common stock from
20,000,000 to 40,000,000;
o eliminate the classification of our board into three classes of
directors; and
o provide certain protective rights to minority stockholders
described in "The Stock Issuance and Related
Transactions--Amendment to our Certificate of Incorporation."
The form of amendment to our certificate of incorporation is attached as
Annex A to this proxy statement. WE URGE YOU TO READ THE FORM OF AMENDMENT TO
OUR CERTIFICATE OF INCORPORATION IN ITS ENTIRETY.
LOOMIS SAYLES TRANSACTION
The investors have also agreed to purchase from accounts managed by Loomis
Sayles:
o all of our common stock beneficially owned by these accounts for
$8.00 per share,
o all of our common stock purchase warrants beneficially owned by
these accounts for $7.99 per common stock purchase warrant, and
o all of our Class A common stock purchase warrants beneficially
owned by these accounts for $0.01 per Class A warrant.
As of July 3, 2002, these accounts collectively represented approximately 48%
of the outstanding shares of our common stock (excluding shares issuable upon
exercise of warrants). Assuming the closing of the stock issuance and the
purchase of all shares of our common stock and common stock purchase warrants
owned by the accounts managed by Loomis Sayles, the investors would beneficially
own approximately 73% of our common stock on a fully diluted basis.
STOCKHOLDER VOTES REQUIRED
In accordance with the Marketplace Rules of The Nasdaq Stock Market,
approval of the stock issuance requires the approval of the holders of a
majority of the total votes cast by holders of shares of our common stock on
such
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proposal. Approval of the amendment to our certificate of incorporation requires
the approval of the holders of a majority of the outstanding shares of our
common stock. Pursuant to a separate agreement with the investors, Loomis
Sayles, a registered investment advisor, has agreed to cause the common stock
that it is authorized to vote to be voted at the special meeting in favor of the
stock issuance and the amendment to our certificate of incorporation, subject to
certain conditions. As of July 3, 2002, these accounts collectively represented
approximately 48% of our outstanding shares of common stock (excluding shares
issuable upon exercise of warrants).
If our stockholders approve the amendment to our certificate of
incorporation but do not approve the stock issuance, the amendment will not be
made effective. If our stockholders approve the stock issuance but do not
approve the amendment to our certificate of incorporation, the stock issuance
and related transactions will not be consummated.
RECOMMENDATION TO STOCKHOLDERS
Our board of directors unanimously recommends that you vote FOR the stock
issuance and that you vote FOR the amendment to our certificate of
incorporation.
STOCKHOLDERS AGREEMENT
At the closing of the stock issuance, we, the investors and Gerhard E.
Kurz, our President and Chief Executive Officer, will enter into a stockholders
agreement. The stockholders agreement will provide that our board of directors
will have ten members. Initially, four directors will be designated by Nautilus;
two directors will be designated by one of the Carlyle/Riverstone Investment
Partnerships; three directors will continue from our current board of directors;
and our Chief Executive Officer, Mr. Kurz, will serve as a director.
In addition to the minority stockholder protection provisions contained in
the amendment to our certificate of incorporation, the stockholders agreement
will impose restrictions on certain business combinations between us and
entities that are in control of us. See "The Stock Issuance and Related
Transactions--Stockholders Agreement."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information we file at the SEC's public reference room at 450 Fifth Street,
N.W., Washington, D.C., 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available to
the public from the web site maintained by the SEC at www.sec.gov. See "Where
You Can Find More Information."
We filed a Current Report on Form 8-K on June 19, 2002 reporting the
execution of the stock purchase agreement by us and the investors. A copy of the
stock purchase agreement and related documents are filed as exhibits to the Form
8-K.
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THE SPECIAL MEETING
Our board of directors is sending this proxy statement and the enclosed
proxy card to solicit proxies from our stockholders for use at a special meeting
to vote for approval of the issuance of shares of our common stock to the
investors and the amendment to our certificate of incorporation. We are first
mailing the Notice of Special Meeting of Stockholders, this proxy statement and
the enclosed proxy card to our stockholders on or about , 2002.
DATE, TIME AND PLACE OF SPECIAL MEETING
, , 2002
Port Everglades Administration Building
1850 Eller Drive
Fort Lauderdale, Florida
PURPOSE OF MEETING IS TO VOTE ON THE FOLLOWING ITEMS
1. A proposal to approve the issuance by us of 12,500,000 shares of our
common stock pursuant to a stock purchase agreement by and among us and certain
investors, dated as of June 13, 2002, as it may be amended from time to time.
2. A proposal to amend our certificate of incorporation to (a) increase
the number of authorized shares of our common stock from 20,000,000 to
40,000,000; (b) eliminate the classification of our board into three classes
of directors; and (c) add certain minority stockholder protection provisions.
RECORD DATE
Holders of record of common stock at the close of business on
, 2002, will be entitled to vote.
OUTSTANDING SHARES HELD ON RECORD DATE
As of July 3, 2002, there were approximately 10,623,938 shares of our
common stock outstanding.
SHARES ENTITLED TO VOTE
Each share of our common stock that you own as of the record date entitles
you to one vote on each matter to be voted upon at the meeting. Common stock
held in our treasury will not be voted.
QUORUM REQUIREMENT
Holders of a majority of the outstanding shares of our common stock on the
record date, whether present in person or represented by proxy, will constitute
a quorum for the transaction of business at the meeting. The shares held by each
stockholder who signs and returns the enclosed form of proxy will be counted for
purposes of determining the presence of a quorum at the meeting.
VOTE NECESSARY TO APPROVE THE PROPOSALS
1. To approve the stock issuance, it is necessary to obtain the affirmative
vote of the holders of shares (in person or by proxy) of our common stock as of
the record date representing a majority of the total votes cast at the meeting.
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2. To approve the amendment to our certificate of incorporation, it is
necessary to obtain the affirmative vote of the holders of shares (in person or
by proxy) of our common stock as of the record date representing a majority of
the outstanding shares of our common stock.
IF OUR STOCKHOLDERS APPROVE THE AMENDMENT TO OUR CERTIFICATE OF
INCORPORATION BUT DO NOT APPROVE THE STOCK ISSUANCE, THE AMENDMENT WILL NOT BE
MADE EFFECTIVE. IF OUR STOCKHOLDERS APPROVE THE STOCK ISSUANCE BUT DO NOT
APPROVE THE AMENDMENT TO OUR CERTIFICATE OF INCORPORATION, THE STOCK ISSUANCE
AND RELATED TRANSACTIONS WILL NOT BE CONSUMMATED, SINCE WE WILL NOT HAVE
SUFFICIENT AUTHORIZED SHARES TO CONSUMMATE THE STOCK ISSUANCE.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR STOCKHOLDERS VOTE
FOR THE STOCK ISSUANCE AND FOR THE AMENDMENT TO OUR CERTIFICATE OF
INCORPORATION.
VOTING BY PROXY
Voting instructions are included on your proxy card. If you properly give
your proxy and submit it to us in time to vote, one of the individuals named as
your proxy will vote your shares as you have specified at the meeting, or at any
adjournment or postponement thereof. You may specify that your shares be voted
for or against a proposal submitted at the meeting or that you are abstaining
from voting for a proposal. If no specification is made, the shares will be
voted for the stock issuance and the amendment to our certificate of
incorporation. Abstentions and broker non-votes will have the same effect as
votes against the amendment to our certificate of incorporation. Abstentions and
broker non-votes will not be treated as votes cast and have no effect on the
outcome of the vote on the stock issuance.
HOW TO VOTE BY PROXY
BY TELEPHONE OR INTERNET.* Call toll-free 1-800-435-6710 and follow the
instructions. You will need to give the control number contained on your proxy
card.
Or go to www.eproxy.com/sblk and follow the instructions. You will need to
give the control number contained on your proxy card.
*If you hold shares through a broker or other custodian, please follow the
voting instructions for the voting form used by that firm.
IN WRITING. Complete, sign, date and return your proxy card in the enclosed
envelope.
REVOKING YOUR PROXY. You may revoke your proxy before it is voted by:
o submitting a new proxy with a later date, including a proxy given
by telephone or via the Internet;
o notifying our corporate secretary in writing before the meeting
that you have revoked your proxy; or
o voting in person at the meeting.
Attendance at the special meeting is not in itself sufficient to revoke a
proxy.
VOTING IN PERSON. If you plan to attend the meeting and wish to vote in
person, we will give you a ballot at the meeting. However, if your shares are
held in the name of your broker, bank or other nominee, you must bring an
account statement or letter from the nominee indicating that you are the
beneficial owner of the shares on , 2002, the record date for
voting.
CONFIDENTIAL VOTING. Votes will be tabulated by an automated system
administered by Mellon Investor Services, LLC, our transfer agent. Your
individual vote is kept confidential from us unless special circumstances exist.
For example, a copy of your proxy card will be sent to us if you write comments
on the card.
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PROXY SOLICITATION. We will pay the costs of soliciting proxies. In
addition to solicitation by use of the mail, certain of our officers and
employees may solicit the return of proxies by telephone, telegram, in person,
or by electronic mail (e-mail). Mellon Investor Services, LLC, our transfer
agent, has been engaged as well. We have requested that brokerage houses,
custodians, nominees, and fiduciaries forward soliciting materials to the
beneficial owners of common stock and we will reimburse them for their
reasonable out-of-pocket expenses. We are paying Mellon Investor Services, LLC a
customary fee, plus expenses to assist with the solicitation. In addition, we
may elect to engage a proxy solicitation firm to assist in our proxy soliciting
efforts.
The extent to which these proxy soliciting efforts will be necessary
depends upon how promptly proxies are submitted. In order to assure the presence
of the necessary quorum at the meeting, please vote by phone or Internet or sign
and mail the enclosed proxy promptly in the envelope provided. No postage is
required if mailed within the United States. Signing and returning the proxy
will not prevent you from attending the meeting and voting in person, should you
so desire.
OTHER BUSINESS, ADJOURNMENTS
Our board of directors has no knowledge of any additional business to be
presented for consideration at the meeting. Should any such matters properly
come before the meeting or any adjournments thereof, the persons named in the
enclosed proxy will have discretionary authority to vote such proxy in
accordance with their best judgment on such other matters and with respect to
matters incident to the conduct of the meeting.
Adjournments may be made for the purpose of, among other things, soliciting
additional proxies. Any adjournment may be made from time to time by the
chairman of the meeting or by the holders of our common stock representing a
majority of the votes present in person or by proxy at the meeting, whether or
not a quorum exists, without further notice other than by an announcement made
at the meeting. We do not currently intend to seek an adjournment of the
meeting.
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THE STOCK ISSUANCE AND RELATED TRANSACTIONS
THE PARTIES
SEABULK INTERNATIONAL, INC. We are a leading provider of marine support and
transportation services, primarily to the energy and chemical industries. Our
three main businesses are offshore energy support, marine transportation, and
towing. Our offshore energy services fleet is one of the world's largest and
provides services to operators of offshore oil and gas exploration, development
and production facilities in the Gulf of Mexico, offshore West Africa, the
Arabian Gulf, South America and Southeast Asia. Our marine transportation fleet
carries petroleum products, crude oil, and specialty chemicals in the U.S.
domestic trade. Our towing fleet is one of the largest and most modern in the
United States.
THE INVESTORS. Nautilus, which is an affiliate of DLJMB, and the
Carlyle/Riverstone Investment Partnerships, which are being funded by
investors of Carlyle/Riverstone, have agreed to purchase shares of our common
stock pursuant to the terms of the stock purchase agreement. DLJMB and
affiliated funds are managed by CSFB Private Equity, the global private
equity arm of Credit Suisse First Boston. CSFB Private Equity is one of the
largest managers of alternative assets in the world, with $26 billion of
assets under management. Carlyle/Riverstone is a private equity fund that has
been organized by the joint venture between The Carlyle Group, a leading
global private equity firm, and Riverstone Holdings LLC, a private equity
firm focused on the energy and power industry. Carlyle/Riverstone seeks to be
a leading global private equity firm focused on the energy and power sector.
With respect to the proposed investment by Nautilus in us, Nautilus GP, LLC
will have exclusive management and decision making authority (including
voting and dispositive power).
PURPOSE AND BACKGROUND OF THE TRANSACTIONS
We emerged from protection under the reorganization provisions of Chapter
11 of the U.S. Bankruptcy Code on December 15, 1999 substantially leveraged with
a bank credit facility and 12 1/2% senior secured notes. These debt instruments
place significant constraints on our use of available operating capital. Since
our emergence from bankruptcy, a combination of additional factors has caused
our management to explore ways of raising additional capital to enable us to
refinance our debt and provide flexibility to seek prudent opportunities to
strengthen our fleet.
By the first quarter of 2000, our earnings were lower than expected and we
anticipated that we would not be in compliance with our existing credit
facility. As a result, we entered into the first of several amendments to our
credit facility with the lending banks under which certain covenants were
modified. In 2000, we were also required, under the terms of our 12 1/2% senior
secured notes, to issue additional 12 1/2% senior secured notes as additional
"pay in kind" interest on the senior secured notes as a result of our inability
to obtain a minimum credit rating of B- by Standard & Poor's Rating Group. These
additional senior secured notes continue to be issued quarterly since we have
been unable to obtain the required credit rating.
Since January 2001, our board of directors and finance committee have
discussed the need to refinance our debt and have considered various options.
During April and May 2001, our management held meetings with several
nationally recognized investment banking firms, including RBC, to discuss
various refinancing options, including raising capital through:
o equity offerings, both through public and private issuances;
o a possible sale or spin-off of business lines and related assets;
o high yield debt offerings; and
o new bank debt.
During the course of these meetings, we were generally advised that in
order to refinance existing debt with a high yield debt offering and/or with new
bank debt, new equity would be required. At that time, advice from the
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investment banking firms regarding the minimum amount of equity needed ranged
from $25 million to $75 million. In discussions regarding the possibility of a
sale or spin-off of our tanker assets, we were generally advised that retaining
our tanker assets would be beneficial to us, both for attracting capital
infusions, whether debt or equity, as well as strategically.
On May 17, 2001, our board of directors and its finance committee held
meetings at which our management reported on the meetings with representatives
of the several investment banking firms. At these meetings, our finance
committee recommended and our board of directors agreed that the following
actions be taken:
o determine, based on discussions with Standard & Poor's Rating
Group, the requisite size of an equity issuance needed to obtain
a minimum debt rating of B-;
o consider a public equity offering of common stock in the amount
of $25 million to $30 million, or in such other amount as
Standard & Poor's would recommend to achieve the desired minimum
debt rating; and
o consider following the public equity offering with a high yield
debt offering and new bank debt on more favorable terms to repay
our outstanding 12 1/2% senior secured notes and the existing
credit facility.
During early and mid 2001, after learning of a potential investment
opportunity independently, DLJMB and Carlyle/Riverstone each separately
contacted us about a possible equity investment. Our management indicated an
interest in continuing discussions with each of them, and each then began
preliminary due diligence.
On June 12, 2001, we and RBC made a ratings improvement presentation to
Standard & Poor's Rating Group. Standard & Poor's suggested that an equity
offering would be required before a ratings improvement would be possible.
On June 15, 2001, following discussions with other possible funding sources
for a replacement credit facility, we received a preliminary term sheet for a
new credit facility from Fortis Capital Corp. The term sheet conditioned the
refinancing of our existing credit facility with a new credit facility on
completing an equity issuance.
On July 2, 2001, our management reported to our board of directors that
refinancing our existing credit facility and our 12 1/2% senior secured notes
would result in, among other effects, a non-recurring negative charge against
our earnings, thus further reducing our stockholders' equity. This would likely
further increase the amount of new equity that would be required to achieve a
ratings improvement.
In July 2001, RBC reported to management that it believed the public equity
markets would not be receptive to a public equity offering by us at that time.
RBC recommended that we seek alternative sources of financing, including
possible equity financing from private equity investors and a new credit
facility. Management reported its discussions with RBC to our finance committee
and our board of directors. Our finance committee recommended that our board of
directors defer refinancing at that time due to a low stock price and an
inhospitable market for high yield debt offerings.
In August 2001, we had preliminary discussions with a potential strategic
merger partner, but discussions faltered over issues regarding our balance sheet
and debt structure, as well as our valuation. Also in August 2001, the investors
separately had discussions with us regarding a potential equity investment in
us.
During September 2001, DLJMB and Carlyle/Riverstone each presented to us,
for discussion purposes, separate initial preliminary term sheets regarding
structures for possible equity investments in us. Pricing terms were not
indicated and each of DLJMB and Carlyle/Riverstone indicated that further due
diligence would be required before any formal proposal could be made.
During November 2001, management reported to our finance committee that we
had received a bank refinancing proposal from Fortis Capital Corp. In addition,
the investors jointly approached us with a new stock
8
issuance proposal of up to $150 million at $6.00 per share of common stock,
which would have represented approximately 70% of our outstanding common stock.
At that time our common stock was trading at approximately $4.05 per share.
During December 2001, our finance committee reviewed presentations made by
RBC and another nationally recognized investment banking firm for the purpose of
selecting a financial advisor to provide a valuation analysis of us. Our finance
committee selected RBC to perform the valuation analysis.
In late December 2001, we proposed to the investors that they consider
making a minority equity investment in us of $30 million to $40 million.
However, the investors responded that they were not interested in making a
minority investment in us at that time.
On January 17, 2002, RBC made a presentation regarding a valuation analysis
of us to our finance committee. Our finance committee decided, subject to
approval by our entire board of directors, to further engage RBC to evaluate the
investors' stock issuance proposal and provide us with a valuation approach to
evaluate the proposal and to review other potential alternatives to the
investors' proposal available to us.
At a board of directors meeting on the same date, RBC presented a valuation
analysis of us. Our board agreed to our finance committee's recommendation to
further engage RBC.
Our board instructed management to attempt to negotiate a higher price for
the proposed stock issuance to the investors and obtain an explanation from the
investors of their contemplated operating plan and financial plan, including
debt restructuring assumptions and the proposed capital structure.
On January 28, 2002, our finance committee held a meeting to further
discuss and review the stock issuance proposal of the investors. Our board of
directors met on January 29, 2002 to review the status of the proposed stock
issuance. At the meeting of our board, our directors were advised that the
investors were planning to attempt to contact Loomis Sayles, as advisor to
accounts which held a substantial number of shares of our common stock.
During February 2002, we engaged RBC to advise us with respect to the
proposed stock issuance to the investors. Also in February, our board of
directors determined that the investors' current proposal was inadequate.
Additionally, we were advised by the investors that in February 2002, the
investors had a preliminary meeting with a representative of Loomis Sayles to
notify such representative of a potential equity investment by the investors in
us and to inform Loomis Sayles that if such an investment were to occur, the
investors would be willing to purchase shares owned by accounts that Loomis
Sayles manages.
During February and March 2002, the investors conducted extensive business
due diligence.
During March 2002, our Chief Executive Officer, Mr. Kurz, had preliminary
discussions with a potential strategic acquirer regarding a possible offer for
the equity in us or our assets. After its initial review, however, the potential
acquirer declined to pursue an offer for us or our assets.
On March 26, 2002, a nationally recognized investment banking firm made a
presentation to our management regarding optimization of our capital structure
by issuing senior high yield debt and equity and refinancing some or all of our
debt.
In March 2002, the investors revised their stock issuance proposal to
include an equity investment of up to $125 million at $6.00 to $7.00 per share
of common stock, depending on the results of their continuing due diligence
investigation.
On March 28, 2002, RBC made a presentation to our board of directors in
which an evaluation of the revised stock issuance proposal of the investors was
discussed and considered against other strategic and financial alternatives,
including analysis of potential strategic combinations. At this meeting,
management updated our board of directors on the status of the ongoing
preliminary discussions with the investors about a possible equity investment in
us.
9
On April 4, 2002, we received a revised written preliminary proposal
from the investors, which proposed an equity investment of $100 million at
$8.00 per share in exchange for new shares of common stock representing
approximately 51% of our outstanding common stock on a fully diluted basis.
On that date, the closing trading price of our common stock was $5.44 per
share. As with each previous proposal, the investors' proposal was made
subject to obtaining a waiver of the application of Section 203 of the
General Corporation Law of Delaware with respect to the investment.
Generally, Section 203 imposes a three-year restriction on an owner of more
than 15% of the voting securities of a Delaware corporation from
participating in a business combination transaction with the corporation,
unless, among other exceptions, the board of directors of the corporation
approves the transaction by which the owner becomes a 15% stockholder or the
business combination is approved by the holders of at least two-thirds of the
outstanding voting securities not held by the owner or its affiliates.
On April 5, 2002, our board of directors met with representatives of RBC
and our outside legal counsel. At the meeting, our board considered the
investors' most recently revised proposal. Our outside legal counsel advised our
board as to their fiduciary duties. The revised preliminary proposal required
representation on our board of directors by designees of the investors
commensurate with their proposed ownership interest. At a meeting held on April
8, 2002, our board of directors requested that our management respond to the
investors' latest proposal and agreed to continue to negotiate for a proposed
stock issuance to the investors. After this meeting, the investors commenced
extensive legal, tax, accounting and regulatory and confirmatory business due
diligence investigations.
On April 12, 2002, we and RBC presented an updated rating agency
presentation to Standard & Poor's for a possible high yield debt offering.
Standard & Poor's again responded that an equity offering would be required to
obtain an increase in our debt rating.
In April and May 2002, counsel for the investors circulated drafts of the
purchase agreement for the stock issuance and the possible purchase of the
shares owned by accounts managed by Loomis Sayles, in addition to drafts of the
amendment to our certificate of incorporation which set forth the minority
stockholder protections. During this time, we, along with our counsel, and the
investors, along with their counsel, negotiated the stock purchase agreement and
the amendment to our certificate of incorporation, including the minority
stockholder protections required by our board to grant a waiver under Section
203 of the General Corporation Law of Delaware with respect to the stock
issuance and the investors' possible purchase of securities owned by accounts
managed by Loomis Sayles.
Our management and legal counsel held further negotiations with the
investors and their legal counsel during April 2002. Representatives of the
investors also held discussions with representatives of Loomis Sayles. These
negotiations resulted in a revised proposal from the investors that, in
conjunction with the proposed issuance of 12,500,000 shares of newly issued
common stock at $8.00 per share, Loomis Sayles would agree, subject to
certain exceptions and limitations, to cause all shares of our common stock
held in its managed accounts that Loomis Sayles had the power to vote to be
voted in favor of the stock issuance and the amendment to our certificate of
incorporation and to cause all such shares that Loomis Sayles had the power
to sell to be sold to the investors at the same price. The investors'
proposal was again conditioned on approval of our board of directors and a
waiver of the application of Section 203 of the General Corporation Law of
Delaware with respect to the stock issuance and the investors' possible
purchase of securities owned by accounts managed by Loomis Sayles. Our
response was that a waiver of the application of Section 203 would be
conditioned upon the inclusion of minority stockholder protection provisions
in our certificate of incorporation and a proposed stockholders agreement
that are satisfactory to our board of directors.
On April 22, 2002, Wexford Capital LLC, together with related entities and
individuals, filed a Schedule 13D with the Securities and Exchange Commission
(which we are referring to as the SEC in this proxy statement) reporting their
beneficial ownership of 2,158,101 shares of our common stock, representing
approximately 20.5% of our outstanding common stock, including their recent
purchase of 1,618,166 shares at a price of $4.85 per share. The filing indicated
that Wexford Capital LLC and related persons made the acquisition for investment
purposes and without any plans or proposals which would relate to or result in
extraordinary corporate transactions, including mergers, reorganizations or
liquidation, the sale of a material amount of Company assets or any change to
the existing board of directors or management. The filing further indicated that
Wexford Capital LLC and related persons reserved the right to make further
acquisitions of our common stock depending on, among other things, prevailing
economic and market conditions. Wexford Capital LLC did not seek a waiver of
the application of Section 203 of the General Corporation Law of Delaware
with respect to these purchases of our common stock and these purchases were
not approved by our board of directors.
10
We were advised by the investors that during the first week of May 2002,
representatives of DLJMB and Loomis Sayles met to discuss the potential terms of
an investment in us and the possibility of the investors purchasing the shares
owned by accounts managed by Loomis Sayles.
On May 7, 2002, our board of directors held a meeting at which
representatives of RBC and our outside legal counsel were in attendance. The
directors were updated on the progress of discussions with the investors and the
issues that would need to be resolved prior to entering into any formal
agreement with the investors for the stock issuance.
On May 8, 2002, we, along with our special maritime counsel and counsel for
the investors, had a preliminary meeting with a representative of the United
States Coast Guard to discuss the potential investment.
On May 14, 2002, our finance committee held a meeting at which outside
legal counsel was present. Legal counsel delivered a report on the status of the
negotiations for a proposed transaction with the investors which included
progress that had been made to date and the issues that would still need to be
addressed. Our finance committee was also advised of the reported status of
negotiations between Loomis Sayles and the investors regarding the sale of the
shares owned by accounts managed by Loomis Sayles. At a board of directors
meeting the same day, RBC presented an overview of the proposed transaction and
a valuation analysis and outside legal counsel presented a summary of the
proposed transaction including a discussion of the issues that remained to be
resolved before reaching any formal agreement.
On May 29, 2002, we signed a commitment letter with Fortis to refinance our
existing credit facility, which was subject to various conditions including the
successful closing of a private placement of equity in a minimum amount of $100
million.
On June 3, 2002, Wexford Capital LLC sent a letter to our Chief Executive
Officer in which Wexford stated its belief that we should raise equity and
suggested the possibility of an initial public offering of our offshore
business.
On June 6, 2002, our board of directors held a meeting at which
representatives of RBC and outside legal counsel were present. The directors
reviewed the outstanding issues relating to the stock issuance negotiations and
the related documents. The directors thoroughly discussed, together with
representatives of RBC and outside legal counsel, the proposed terms of the
stock issuance, drafts of the necessary documentation and the proceedings
necessary to implement it.
On June 12, 2002, our board of directors convened a meeting to continue to
discuss the proposed stock issuance and related transactions, including the
resolution of all open issues and review of the final drafts of related proposed
documents. In addition, the directors and RBC discussed Wexford Capital LLC's
suggested initial public offering of our offshore business. RBC made a
presentation to our board of directors in which it discussed the information
described under "--Opinion of Financial Advisor." RBC then gave its oral opinion
to our board, which was subsequently confirmed in writing, that, subject to no
material changes occurring to the terms and documents relating to the proposed
stock issuance and related transactions, the stock issuance purchase price of
$8.00 (less applicable transaction fees and expenses) per share to the investors
was fair, as of such date, from a financial point of view, to us. Legal counsel
described the terms and conditions of the draft stock purchase agreement and
other related matters. Our board of directors discussed the matters presented by
RBC and legal counsel, including the factors discussed under "--Recommendation
of our Board of Directors." After discussion and due consideration, our board of
directors unanimously approved the stock purchase agreement and related matters
and authorized management to finalize the terms. Our board also authorized the
waiver of application to the investors of the limitations contained in Section
203 of the General Corporation Law of Delaware resulting from the stock issuance
and the purchase by the investors of the shares owned by accounts managed by
Loomis Sayles in accordance with the approved agreements.
On June 13, 2002, we and the investors entered into the stock purchase
agreement. In addition, the investors and Loomis Sayles entered into an
agreement for the investors to purchase all of our common stock and all of our
common stock purchase warrants beneficially owned by accounts managed by Loomis
Sayles, subject to certain
11
conditions, including the completion of the stock issuance. On that date, we
publicly announced the agreement for the stock issuance and related
transactions.
On June 21, 2002, Wexford Capital LLC and related entities and individuals
filed with the SEC an amendment to their Schedule 13D reporting open market
purchases of an additional 222,200 shares of our common stock at an average
purchase price of $7.01 per share. Wexford Capital also reported that they and
the other related reporting persons advised us that they would seek a seat on
our board of directors and that, while they had no specific plans or proposals
for any extraordinary corporate transactions, they were also contemplating a
more pro-active role in the development of our business. On July 3, 2002, an
additional SEC filing on Form 4 reported that Wexford Capital LLC had purchased
an additional 51,500 shares of our common stock, resulting in Wexford Capital
LLC and related entities reportedly beneficially owning an aggregate of
2,431,801 shares, or 22.9%, of our outstanding common stock.
RECOMMENDATION OF OUR BOARD OF DIRECTORS
OUR BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE STOCK ISSUANCE AND THE
AMENDMENT TO OUR CERTIFICATE OF INCORPORATION, HAS DETERMINED THAT THE STOCK
ISSUANCE AND THE AMENDMENT TO OUR CERTIFICATE OF INCORPORATION ARE ADVISABLE AND
IN THE BEST INTEREST OF OUR STOCKHOLDERS AND RECOMMENDS THAT OUR STOCKHOLDERS
VOTE FOR THEIR APPROVAL.
Prior to approving the stock issuance, our board of directors considered
various alternatives to the stock issuance, including public equity offerings,
high yield debt issuances and other private placements of equity securities. In
approving the stock issuance, our board of directors concluded that the sale of
common stock to investors presented the best course of action for us at this
time. Our board of directors decided not to pursue the other alternatives
considered. These alternatives would likely have been to the exclusion of the
investors' offer without any assurance that a better offer or transaction could
be realized.
The material factors considered by our board of directors in making such
recommendation include the following:
o the fairness of the price to be received by us;
o the opinion of RBC that the purchase price of $8.00 (less
applicable transaction fees and expenses) per share to be paid by
the investors in the stock issuance was fair, from a financial
point of view, to us, together with other analyses and
presentations;
o the substantial premium to market value represented by the price
to be paid by the investors;
o our need for additional capital;
o the financial flexibility made available to us resulting from the
stock issuance which will, among other things, enable us to
refinance our existing credit facility which will provide
flexibility to seek growth opportunities to strengthen our fleet;
and
o Loomis Sayles's desire to sell shares of our common stock held in
accounts managed by Loomis Sayles in an orderly manner.
OPINION OF FINANCIAL ADVISOR
GENERAL. We first signed a letter with RBC on December 21, 2001 that, among
other things, gave RBC the right to act as financial advisor to us in connection
with a possible equity investment in us and provide us with a fairness opinion,
if necessary, with respect to any such equity investment. In February 2002, we
engaged RBC to act as our exclusive investment banker and financial advisor and
to provide a fairness opinion to us with respect to the stock issuance to the
investors.
12
RBC delivered a formal written opinion to our board of directors dated June
13, 2002 that, as of such date and based upon and subject to the assumptions and
limitations set forth in the opinion, the purchase price of $8.00 (less
applicable transaction fees and expenses) per share to be paid by the investors
in the stock issuance was fair, from a financial point of view, to us.
RBC provided the opinion described above for the information and assistance
of our board of directors in connection with our consideration of the stock
issuance. The terms of the stock purchase agreement and the stock issuance
purchase price, however, were determined through negotiation between the
investors and us, and were approved by our board of directors.
In connection with rendering its opinion, RBC, among other things:
o reviewed the financial terms of the stock issuance as set forth
in the stock purchase agreement among the investors and us;
o reviewed and analyzed certain publicly available information we
filed with the SEC and certain other financial and operating
information we supplied, including certain historical audited
financial statements, and certain internal unaudited financial
information;
o conducted discussions with our senior management with respect to
our business prospects and financial outlook; and
o received and reviewed financial forecasts prepared by our
management on our potential future performance on a stand-alone
basis.
In arriving at its opinion, RBC performed the following analyses in
addition to the review and inquiries referred to in the preceding paragraph:
o reviewed the historical market prices and trading activity of our
common stock;
o compared valuation metrics of selected comparable publicly-traded
companies to the valuation metrics implied by the stock issuance
purchase price;
o compared valuation metrics, to the extent publicly available, of
selected precedent transactions to the valuation metrics implied
by the stock issuance purchase price; and
o performed other studies and analyses as RBC considered
appropriate.
In rendering its opinion, RBC (i) assumed that our financial forecasts have
been reasonably prepared on a basis reflecting the best currently available
estimates and judgments of our management and that we will perform substantially
in accordance with such financial forecasts and (ii) relied upon and assumed the
accuracy and completeness of all the financial, legal, tax, operating and other
information we provided to them. RBC did not conduct a physical inspection of
any of our properties or facilities, nor has it made or considered any
independent evaluations or appraisals of any of our assets or liabilities. RBC
has assumed that all governmental, regulatory or other approvals and consents
required in connection with the consummation of the stock issuance will be
obtained.
In its opinion, RBC noted that it considered our management's assessment as
to our financing requirements, the availability of alternative financing and the
potential effects on us and our business of a failure to obtain additional
capital in the near term. Since our engagement of RBC in February 2002, RBC did
not have discussions with third parties other than the investors regarding an
equity investment or a business combination involving us.
The RBC opinion is necessarily based upon economic, market, financial and
other conditions as they existed on, and on information made available to it as
of, the date of its opinion. RBC does not have any obligation to update, revise
or reaffirm its opinion.
13
A COPY OF RBC'S OPINION TO OUR BOARD OF DIRECTORS IS ATTACHED AS ANNEX B
HERETO AND SHOULD BE READ CAREFULLY IN ITS ENTIRETY BY OUR STOCKHOLDERS. THE RBC
OPINION ADDRESSES SOLELY, IN CONNECTION WITH THE STOCK ISSUANCE TO THE
INVESTORS, THE FAIRNESS OF THE STOCK ISSUANCE PURCHASE PRICE FROM A FINANCIAL
POINT OF VIEW TO US AND DOES NOT CONSTITUTE A RECOMMENDATION TO ANY OF OUR
STOCKHOLDERS AS TO HOW ANY SUCH STOCKHOLDER SHOULD VOTE AT THE SPECIAL MEETING
WITH RESPECT TO THE PROPOSAL TO APPROVE THE STOCK ISSUANCE TO THE INVESTORS. IN
ADDITION, OUR STOCKHOLDERS SHOULD CAREFULLY CONSIDER THE DESCRIPTION OF THE
ANALYSIS RBC PERFORMED IN CONNECTION WITH RENDERING ITS OPINION WHEN OUR
STOCKHOLDERS DETERMINE WHETHER TO APPROVE THE STOCK ISSUANCE TO THE INVESTORS.
FINANCIAL ANALYSES. The following is a presentation of the material
financial analyses used by RBC in connection with rendering its opinion. The
following summary does not purport to be a complete description of the analyses
performed by RBC. To the extent that the following quantitative information is
based on market data, it is based on market data as they existed at or about
June 12, 2002, and is not necessarily indicative of current conditions. Some of
the summaries of the financial analyses below include information in tabular
format. The tables alone are not a complete description of RBC's financial
analyses and should be read in conjunction with the text of the analyses.
HISTORICAL STOCK PRICE PERFORMANCE. RBC reviewed the closing prices,
trading volume and average closing prices of our common stock from and including
January 24, 2000 through June 12, 2002. Additionally, RBC reviewed the
relationship between the movements of our common stock to the Philadelphia Oil
Service Sector Index and comparable publicly traded marine support and
transportation companies including: SEACOR SMIT, Inc., Gulfmark Offshore, Inc.,
Tidewater, Inc., Teekay Shipping Corp. and Trico Marine Services, Inc. (which we
are referring to as the Comparable Companies in this proxy statement).
PREMIUM ANALYSIS. RBC calculated the premium implied by $8.00 per share
relative to certain base prices. The table below sets forth RBC's premium
analysis:
Premium
Base Implied
Historical Period Price by $8.00
- ----------------- ----- --------
As of June 12, 2002..................... $6.00 33.3%
30-day average.......................... $5.97 34.0%
60-day average.......................... $5.59 43.1%
90-day average.......................... $4.80 66.8%
52-week high............................ $7.73 3.5%
52-week low............................. $2.70 196.3%
RBC noted that the premium analysis does not constitute a valuation
technique as such, but serves as a comparison of the proposed stock issuance
price to various base prices.
COMPARABLE PUBLIC MARKET VALUATION ANALYSIS. RBC reviewed and compared the
earnings before interest, taxes, depreciation and amortization (which we are
referring to as EBITDA in this proxy statement) and earnings before interest and
taxes (which we are referring to as EBIT in this proxy statement) of us and the
Comparable Companies for the last twelve months (which we are referring to as
LTM in this proxy statement), estimated calendar year 2002 and estimated
calendar year 2003. Additionally, RBC reviewed and compared selected margin,
leverage and liquidity metrics of us and the Comparable Companies, including LTM
EBITDA margin, total debt to LTM EBITDA and LTM trading volume to market float
(which we are referring to as Float Turnover in this proxy statement).
The financial information, multiples and metrics for the Comparable
Companies were derived from the closing prices of the common stock of each of
the companies as of June 12, 2002, and published analysts' reports and other
publicly available information. The financial information, multiples and metrics
for us were derived from the closing prices of the common stock as of June 12,
2002, management projections and other publicly available information. The
results of RBC's analysis are presented in the table below:
14
Comparable
Seabulk vs. Comparable Companies Seabulk Companies' Range
- -------------------------------- ------- ----------------
Enterprise Value(1)/EBITDA LTM 4.8x 5.4x - 8.9x
Estimated 2002 4.8x 7.2x - 10.2x
Estimated 2003 4.4x 5.1x - 7.4x
Enterprise Value(1)/EBIT LTM 10.0x 8.4x - 17.2x
Estimated 2002 10.2x 10.6x - 48.2x
Estimated 2003 8.8x 6.6x - 15.2x
LTM EBITDA Margin 34.6% 35.7% - 59.6%
Total Debt/LTM EBITDA 4.5x 0.2x - 3.9x
Float Turnover 0.6x 0.7x - 5.7x
- ---------------
(1) Defined as market value of common and preferred stock plus debt net of cash
and marketable securities and minority interest.
RBC also reviewed and compared our implied multiples, based on the $8.00
stock issuance price, to the Comparable Companies for the LTM period, estimated
calendar year 2002 and estimated calendar year 2003. Based on management
projections and publicly available information, the $8.00 stock issuance price
implies Enterprise Value/EBITDA multiples for the LTM, estimated calendar year
2002 and estimated calendar year 2003 periods of 5.2x, 5.2x and 4.7x,
respectively, and Enterprise Value/EBIT multiples for the LTM, estimated
calendar year 2002 and estimated calendar year 2003 periods of 10.8x, 11.1x and
9.6x , respectively.
COMPARABLE TRANSACTION ANALYSIS. Using publicly available information, RBC
examined selected transactions in the oil services industry. Specifically, RBC
reviewed the following transactions:
DATE ACQUIROR TARGET
---- -------- ------
05/15/02 Ensco International, Inc. Chiles Offshore, Inc.
02/26/02 Nabors Industries, Inc. Enserco Energy Service Company, Inc.
02/20/02 BJ Services Company Osca, Inc.
12/05/01 CAL Dive International, Inc. Canyon Offshore, Inc.
11/26/01 Veritas DGC, Inc. Petroleum Geo-Services ASA
09/17/01 Nabors Industries, Inc. Command Drilling Corp.
09/03/01 Santa Fe International Corp. Global Marine, Inc.
06/21/01 Dresser, Inc. LVF Holding & Entech Industries, Inc.
03/06/01 SEACOR SMIT, Inc. Stirling Shipping Company, Ltd.
02/05/01 Patterson Energy, Inc. UTI Energy Corp.
08/21/00 Transocean Sedco Forex, Inc. R&B Falcon Corp.
06/11/00 Maverick Tube Corp. Prudential Steel, Ltd.
05/15/00 Weatherford International, Inc. Alpine Oil Services Corp.
03/22/00 TuboScope, Inc. Varco International, Inc.
03/16/00 National-Oilwell, Inc. IRI International Corp.
RBC calculated a range of multiples of Enterprise Value to EBITDA and EBIT
for the LTM periods prior to the respective transaction announcements implied in
these transactions. EBITDA and EBIT multiples implied by these transactions
ranged from 4.5x to 37.9x and 5.7x to 33.3x, respectively. Based on the stock
issuance price of $8.00, the proposed issuance implies LTM EBITDA and EBIT
multiples of 5.2x and 10.8x, respectively.
15
OTHER CONSIDERATIONS. The preceding discussion is a summary of the material
financial analyses RBC furnished to our board of directors, but it does not
purport to be a complete description of the analyses RBC performed or of RBC's
presentation to our board of directors. The preparation of a fairness opinion is
a complex process and is not necessarily susceptible to partial analysis or
summary description. Selecting portions of the analyses of the summary set forth
above, without considering the analyses as a whole, could create an incomplete
view of the processes underlying the opinion RBC rendered to our board of
directors in connection with the stock issuance. In arriving at its opinion as
to the fairness of the stock issuance purchase price, RBC considered the results
of all of its analyses and did not attribute any particular weight to any single
factor or analysis that it considered. Rather, RBC made its determination on the
basis of its experience and professional judgment after considering the results
of all of the analyses it considered. No company or transaction used as a
comparison in the analyses RBC performed is directly comparable to us or the
stock issuance. In addition, RBC prepared its analyses solely for purposes of
rendering an opinion to our board of directors that the purchase price of $8.00
(less applicable transaction fees and expenses) per share to be paid by the
investors in the stock issuance was fair, from a financial point of view, to us.
The analyses that RBC performed in connection with rendering its opinion were
not appraisals and do not necessarily reflect the prices at which businesses or
securities actually may be sold. In addition, analyses based upon forecasts of
future results are not necessarily indicative of actual future results, which
may be significantly more or less favorable than suggested by these analyses.
Because the analyses RBC performed in connection with rendering its opinion are
inherently subject to uncertainty, being based upon numerous factors or events
beyond the control of us or our advisors, neither we, RBC nor any other person
assumes responsibility if future results are materially different from those
forecast or are not achieved in the time periods contemplated.
In requesting the opinion, we did not impose any limitations on the scope
of the investigations that RBC conducted to enable it to deliver its opinion.
In the ordinary course of its business, RBC is regularly engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, corporate restructurings, underwritings, secondary distributions
of listed and unlisted securities, private placements and valuations for
corporate and other purposes. We selected RBC to deliver an opinion with respect
to the proposed stock issuance on the basis of such experience. We have engaged
RBC in the past as financial advisor and to render investment banking services
in connection with possible transactions and may engage RBC in the future in
connection with securities transactions.
Pursuant to our arrangement with RBC, we paid RBC an advisory fee of
$250,000 (which will be credited against the transaction fee described below)
and a fee of $500,000 for rendering its fairness opinion. We have also agreed,
upon closing of the stock issuance, to pay RBC a transaction fee of 1?% of the
gross proceeds (but net of any fees or commission payable or credited to the
investors) to us of the stock issuance up to $100 million and 2.0% of such gross
proceeds in excess of $100 million. In addition to the above fees, we have also
agreed to reimburse RBC for its reasonable out-of-pocket expenses (including
legal expenses) incurred in connection with the services RBC provided to us and
to indemnify RBC against specific liabilities and expenses relating to or
arising out of its engagement, including liabilities under the federal
securities laws.
AMENDMENT TO OUR CERTIFICATE OF INCORPORATION
Approval of the amendment to our certificate of incorporation is a
condition to the stock issuance. The amendment must be approved by the
affirmative vote of the holders of a majority of the outstanding shares of our
common stock. After approval, the amendment will become effective upon the
filing of a certificate of amendment in accordance with the General Corporation
Law of Delaware. However, the amendment will not take effect unless and until
the stock issuance is consummated. A form of the amendment to our certificate of
incorporation is included as Annex A to this proxy statement.
INCREASE IN AUTHORIZED SHARES OF OUR COMMON STOCK. We must increase the
number of authorized shares of our common stock in order to have a sufficient
number of authorized shares to issue in the stock issuance to the investors. Our
board of directors believes that it is advisable to amend Article IV of our
certificate of incorporation to increase the number of authorized shares of
common stock from 20,000,000 shares to 40,000,000 shares.
In addition, our board of directors believes that this increase in the
number of authorized shares of our common stock is advisable and in our best
interest because it will provide us with greater flexibility in effecting future
16
acquisitions and financings. We expect that our future growth may require the
use of common stock from time to time either as consideration for acquisitions
or as part of a financing for us either through the use of common stock or
securities convertible into common stock. The increase in the number of
authorized shares would allow us to complete the stock issuance and provide us
with additional flexibility to effect any such acquisitions and financings
without the delay and expense associated with obtaining the approval or consent
of our stockholders at the same time the shares are needed. Such shares may be
issued in conjunction with both public offerings and private placements of
shares of common stock.
Other than the stock issuance, we do not have any current plans, proposals
or understandings that would require the use of the additional authorized shares
of our common stock to be issued. We, however, anticipate that some portion of
the additional shares could be used by us in the future for acquisitions as well
as for public offerings or private placements of common stock or securities
convertible or exchangeable into shares of our common stock. Such shares could
also be used for our stock-based compensation plans. Our stockholders do not
have any preemptive rights to purchase additional shares of common stock.
REMOVAL OF CLASSIFICATION OF OUR BOARD OF DIRECTORS. Currently, our
certificate of incorporation and by-laws provide for the division of our board
of directors into three classes with staggered terms of three years. The
amendment would eliminate the three classes of directors such that each director
is elected annually by our stockholders. The removal of our board classification
was negotiated by us with the investors in connection with the adoption of a
broad number of provisions of the amendment to our certificate of incorporation
and the stockholders agreement related to independent director approvals and
protection of minority stockholders. Our board of directors believes that, if
the stock issuance and the related transactions are consummated, the defensive
need to classify our board of directors is substantially reduced in view of the
investors' projected ownership of over 70% of our outstanding common stock.
MINORITY STOCKHOLDER PROTECTION PROVISIONS. The amendment to our
certificate of incorporation would provide certain protections for minority
stockholders (as described below) as follows:
o For three years, our board of directors will include no less than
three independent directors who meet the requirements for independent
directors under the rules or listing requirements of any national
stock exchange or SEC recognized quotation system on which our common
stock is traded.
o For three years, any contract or transaction between us and a control
person (as described below) having a value greater than $300,000 must
be approved by a majority of the independent directors and there must
be at least two independent directors then in office, except that
independent director approval will not be required for (i) directors'
fees or benefits consistent with those currently in effect; (ii)
contracts currently in effect; (iii) pro rata payment of dividends
paid to all stockholders; or (iv) transactions on substantially the
same terms as transactions with stockholders who are not control
persons.
o For one year, we will not enter into any business combination (as
described below) with a control person that would result in minority
stockholders receiving less than $8.00 per share.
o For two years, we will not enter into any business combination with a
control person without the approval of the holders of a majority of
our outstanding common stock held by minority stockholders except for
(i) a merger that may be effected without a stockholder vote pursuant
to Section 253 of the General Corporation Law of Delaware or (ii) a
business combination that occurs within 150 days following a tender
offer in which a majority of our common stock then held by a majority
of the minority stockholders have tendered and the price paid in the
merger is the same as the price paid in the tender offer.
Minority stockholders means the holders of our common stock, other than any
holder that is a control person.
17
A control person generally means a person or group beneficially owning more
than 30% of the outstanding shares of our common stock. Control person is
defined in the amendment to our certificate of incorporation. See the form of
amendment to our certificate of incorporation attached as Annex A to this proxy
statement.
A business combination generally means a merger or consolidation involving
us or a sale of 10% or more of our assets. Business combination is defined in
the amendment to our certificate of incorporation. See the form of amendment to
our certificate of incorporation attached as Annex A to this proxy statement.
These minority stockholder protection provisions could be amended by either
the independent directors or a majority of the minority stockholders. In
addition, the provisions terminate if less than 2% of the shares of common stock
are held by persons other than our control persons and insiders. These minority
stockholder protection provisions are in addition to those that will be
contained in the stockholders agreement. See "--Stockholders Agreement--Minority
Stockholder Protection Provisions."
STOCKHOLDERS AGREEMENT
It is a condition to the closing of the stock issuance that we, the
investors and Gerhard E. Kurz, our President and Chief Executive Officer, enter
into a stockholders agreement on certain agreed terms as described below.
BOARD REPRESENTATION. The stockholders agreement will provide that the
investors will vote the shares owned by them to cause our board of directors to
consist of ten members and be constituted as follows:
o Nautilus will be entitled to designate four of our directors;
o one of the Carlyle/Riverstone Investment Partnerships will be entitled
to designate two of our directors;
o three of our directors will be independent directors (that is,
non-investor designated directors), who initially will be chosen from
directors currently serving on our board of directors; and
o the Chief Executive Officer will serve as a director.
The stockholders agreement will provide that directors designated by
Nautilus and one of the Carlyle/Riverstone Investment Partnerships will also be
represented on the compensation committee and, subject to compliance with Nasdaq
and SEC rules, the audit committee of our board of directors.
The initial independent directors and any directors designated to our
board to fill a vacancy caused by the disqualification, death, removal or
resignation of one of the independent directors are referred to in this proxy
statement as continuing directors. The stockholders agreement will provide that
for a period of one year following the closing of the stock issuance, (1) the
initial continuing directors will not be removed except for cause, (2) the
investors will not take any action that will cause the continuing directors to
be less than a majority of the total number of independent directors on our
board of directors; and (3) to the extent an annual meeting is held for the
election of our directors, the investors will vote for the election of the
continuing directors.
In the event that Nautilus owns less than 50%, but more than 10%, of
the shares of common stock initially purchased by it, it will be entitled to
designate only two of our directors. In the event Nautilus owns less than 10%,
but more than 5%, of the shares of common stock initially purchased by it, it
will be entitled to designate only one of our directors. In the event Nautilus
owns less than 5% of the stock initially purchased by it, it will no longer be
entitled to designate a director.
In the event that the Carlyle/Riverstone Investment Partnerships own
less than 50%, but more than 10%, of the shares of common stock initially
purchased by them, collectively, they will be entitled to designate only one of
our directors. In the event the Carlyle/Riverstone Investment Partnerships own
less than 10% of the shares of common stock initially purchased by them,
collectively, they will no longer be entitled to designate a director.
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UNANIMOUS VOTE OF INVESTOR DESIGNATED DIRECTORS. So long as affiliates
of DLJMB or the Carlyle/Riverstone Investment Partnerships own shares of common
stock equaling at least 15% of the outstanding shares of our common stock on a
fully diluted basis, the unanimous vote of the directors designated by the
investors will be required for the following actions:
o share repurchases by us;
o certain affiliated party transactions (as described in section
(c) of Article XIV of our certificate of incorporation, as it
is proposed to be amended;
o equity or debt financings; and
o amendments to our certificate of incorporation or by-laws,
including any changes to the number of directors.
REGISTRATION RIGHTS. The investors will have the right to require us to
effect up to six demand registrations, provided that shares of common stock to
be offered in any such registration have an aggregate offering price in excess
of $20 million. Nautilus will be entitled to request four demand registrations.
The Carlyle/Riverstone Investment Partnerships will be entitled to request two
demand registrations. However, we will not be required to effect two demand
registrations under the stock purchase agreement in any nine-month period. We
will also have customary "black-out" rights to delay a registration. If a demand
registration is to involve an underwritten public offering, the investor
requesting such registration will have the right to select the underwriters.
The investors will have unlimited piggyback registration rights,
subject to customary pro rata cut-backs based on the number of shares requested
to be covered under such registration.
The investors will agree not to offer, sell or transfer any shares
during the 14 days prior to the filing of a registration statement or prospectus
or any amendments thereto (except for shares, if any, sold in that public
offering) and during a period thereafter equal to (1) 180 days, or (2) such
other period as reasonably required by the managing underwriters of an
underwritten offering.
All fees and expenses (including reasonable fees and expenses of
counsel) in connection with a registration will be paid by us, other than
underwriting fees and discounts.
Registration rights are transferable upon sale of shares subject to
certain limitations. See "--Transfer."
RIGHT OF FIRST REFUSAL AND TAG-ALONG RIGHTS. The parties to the
stockholders agreement will be subject to rights of first refusal and tag-along
rights in any proposed transfer of our common stock owned by them. Specifically,
the investors will have pro rata tag-along rights in any proposed transfer of
any of our common stock owned by the parties to the stockholders agreement. The
investors would have the right of first refusal to purchase any shares proposed
to be transferred by the other parties on a pro rata basis (based on the number
of shares held by such investor). The rights of first refusal and tag-along
rights will be subject to limited customary exceptions, including sales pursuant
to Rule 144 of the Securities Act of 1933, sales pursuant to demand or
piggy-back registration rights and sales to certain permitted transferees.
MINORITY STOCKHOLDER PROTECTION PROVISIONS. For a period of two years
or until a qualified minority transaction (as described below) or a business
combination is effected in compliance with our certificate of incorporation, at
any time a control person beneficially owns 90% or more of our outstanding
common stock, we will not enter into a business combination (including a merger
pursuant to Section 253 of the General Corporation Law of Delaware) without the
approval of holders of a majority of the outstanding shares of our common stock
held by the minority stockholders, provided, that such approval will not be
required for (1) a business combination that occurs within 150 days following
the consummation of a tender offer by a control person for all of the shares of
our common stock then held by the minority stockholders provided that a majority
of the shares held by the minority stockholders were tendered in the tender
offer and the price paid in the business combination is the same as the price
paid in the tender offer or (2) a qualified minority transaction. Additional
minority stockholder protection
19
provisions are contained in the amendment to our certificate of incorporation.
See "--Amendment to our Certificate of Incorporation."
A qualified minority transaction means a business combination that
follows a public tender offer by a control person where (1) the control person
purchases all shares that are validly tendered and (2) to the extent that a
control person has purchased shares in the six-month period prior to the
consummation of the tender offer, the offer price is, at a minimum, the highest
price per share paid by such control person or affiliate of such control person
in the six-month period prior to the commencement of the tender offer.
TRANSFER. No party to the stockholders agreement may transfer shares of
common stock owned by it to the extent that such transfer would result in our
not meeting the requirements of Section 2 of the Shipping Act, 1916, as amended,
commonly referred to as the Jones Act, for the ownership and operation of
vessels in the United States coastwise trade. Subject to this transfer
restriction, the rights and obligations of the investors under the stockholders
agreement would be assigned in connection with any transfer of shares of our
common stock, provided that the right to designate a member of our board of
directors may not be assigned and registration rights are assignable only if the
transferee is acquiring at least 500,000 shares of common stock (assuming
exercise of all warrants).
TERMINATION. Except with respect to registration rights, the
stockholders agreement will terminate upon a change of control (as described
below) of us. The stockholders agreement would not terminate upon a future
public offering of shares of our common stock.
With respect to registration rights, such rights will terminate upon
the earlier of (1) the seventh anniversary of the stock issuance or (2) when,
with respect to each holder of registrable securities, such holder owns less
than 3% of the shares of our common stock (including upon exercise of all
warrants) initially purchased by such holder.
A change of control occurs when a person or group (as determined
pursuant to Rule 13d-3 of the Exchange Act) other than affiliates of the
investors (with respect to a group, all such members shall be non-affiliates)
acquires more than 50% of the outstanding shares of our common stock.
LOOMIS SAYLES TRANSACTION
Pursuant to an agreement between the investors and Loomis Sayles, the
investors have agreed to purchase from accounts managed by Loomis Sayles:
o all of our common stock beneficially owned by these accounts for
$8.00 per share,
o all of our common stock purchase warrants beneficially owned by
these accounts for $7.99 per common stock purchase warrant, and
o all of our Class A common stock purchase warrants beneficially
owned by these accounts for $0.01 per Class A warrant.
As of July 3, 2002, these accounts collectively represented approximately 48%
of the outstanding shares of our common stock (excluding shares issuable upon
exercise of warrants). Loomis Sayles has agreed to cause the shares of our
common stock owned by accounts managed by it, which it is authorized to vote,
to be voted in favor of the approval of the stock issuance and the amendment
to our certificate of incorporation, subject to certain conditions including
the purchase of its shares by the investors. Loomis, Sayles Voting, Inc., the
special general partner of Loomis Sayles, has authorized Loomis Sayles's
performance under the Loomis Sayles Agreement. Assuming the closing of the
stock issuance and the purchase of all of the shares owned by accounts
managed by Loomis Sayles by the investors, the investors would beneficially
own approximately 73% of our common stock on a fully diluted basis. The
closing of the stock issuance is a condition to the obligations of the
investors to purchase the shares owned by accounts managed by Loomis Sayles.
However, the purchase of the shares owned by accounts managed by Loomis
Sayles by the investors is not a condition to the closing of the stock
issuance.
20
THE CREDIT FACILITY REFINANCING
We have signed a commitment letter relating to the refinancing of our
existing credit facility with Fortis Capital Corp. and NIB Capital Bank N.V., as
arrangers, for a $180 million senior secured credit facility, which would
replace our existing facility. The consummation of the refinancing is a
condition to the closing of the stock issuance. See "The Stock Purchase
Agreement--Conditions."
If entered into, the new credit facility will consist of an $80 million
term loan and a $100 million revolving credit facility and will have a five-year
maturity. We currently contemplate that proceeds from the term loan portion of
the new credit facility will be used to pay a portion of the cost to redeem or
otherwise retire our outstanding 12 1/2% senior secured notes due 2007. If
entered into, the revolving portion of the credit facility will be subject to
semi-annual reductions commencing six months after closing. Interest under the
new credit facility is based upon an applicable margin over a variable indexed
rate. The new credit facility will be secured by first liens on substantially
all of our vessels (excluding the double hull tanker vessels financed with
non-recourse U.S. Department of Transportation Maritime Administration Title XI
financing) and second liens on five other vessels which are subject to Maritime
Administration Title XI financing first mortgages, and will be guaranteed by
substantially all of our subsidiaries. The new credit facility will be subject
to various financial maintenance covenants, including minimum adjusted tangible
net worth requirements, minimum ratios of adjusted EBITDA to adjusted interest
expense, a minimum ratio of fair market value of collateralized assets to
adjusted funded debt and a maximum ratio of adjusted funded debt to adjusted
EBITDA. The refinancing of our credit facility is subject to various conditions
including the successful closing of a private placement of equity in a minimum
amount of $100 million, such as the stock issuance.
INTERESTS OF CERTAIN PERSONS IN THE TRANSACTIONS
In considering the recommendations of our board of directors with respect
to the stock issuance and the amendment to our certificate of incorporation, our
stockholders should be aware that certain of our officers and directors may have
interests in the stock issuance and the related transactions that are different
from, or in addition to, their interests as stockholders generally. Our board of
directors was aware of these interests and considered them, among other matters,
in approving the stock purchase agreement and the transactions contemplated by
the stock purchase agreement.
It is a condition to the investors' obligation to complete the stock
issuance that we and Gerhard E. Kurz, our President and Chief Executive Officer,
have executed an amendment to Mr. Kurz's employment agreement pursuant to which
the term of the agreement would be extended for five years and Mr. Kurz's base
salary would be increased to $500,000 per annum.
If Mr. Kurz's employment is terminated by us "without cause" or by him for
"good reason," he is entitled to the remainder of his base salary and the
maximum bonus to which he would be entitled for the term of the agreement. If
his employment is terminated following a "change in control" of us, he is
entitled to receive two times his annual base salary plus two times his maximum
bonus.
Pursuant to the terms of the stockholders agreement, three directors from
our current board of directors designated by the investors will continue as
directors after the stock issuance and may not be removed except for cause for a
period of one year following the stock issuance. The investors have agreed to
vote for the election of such directors at any annual meeting held during such
one-year period. See "--Stockholders Agreement--Board Representation."
Outstanding unvested options for common stock granted under our Stock
Option Plan for Directors will vest upon completion of the stock issuance. The
50,000 shares of restricted common stock held by Mr. Kurz under our Amended and
Restated Equity Ownership Plan and his Restricted Stock Agreement will vest upon
completion of the stock issuance. Outstanding unvested options granted under our
Amended and Restated Equity Ownership Plan would vest if the employment of the
optionholder were terminated under certain circumstances within two years
following the stock issuance.
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The following table shows (1) the number of unvested options held by
our directors and granted under our Stock Option Plan for Directors that will
become exercisable upon the consummation of the stock issuance and (2) the
average exercise price of such options.
NUMBER OF AVERAGE
NAME UNVESTED OPTIONS EXERCISE PRICE
---- ---------------- --------------
Peter H. Cressy 4,000 $6.19
James J. Gaffney 8,000 $6.19
Donald R. Shepherd 4,000 $6.19
Thomas P. Moore, Jr. 4,000 $6.19
John F. McGovern 4,000 $6.19
Robert L. Keiser 4,000 $6.19
Jean Fitzgerald 4,000 $6.19
USE OF PROCEEDS
We currently intend to use the proceeds from the stock issuance, along with
the expected proceeds from the new credit facility:
o to repay our obligations under our existing credit facility,
of which approximately $147.7 million was outstanding as of
June 30, 2002;
o to redeem or otherwise retire at a price estimated at $101.0
million all of our outstanding 12 1/2% senior secured notes,
of which approximately $97.4 million (par value), including
"pay-in-kind" notes issued as additional interest, was
outstanding as of June 30, 2002;
o to pay fees and expenses incurred in connection with the stock
issuance and the new credit facility, including, assuming the
stock issuance is completed, an aggregate $3 million
transaction fee to certain parties related to the investors
and a $500,000 finder's fee payable to a third party in
connection with the stock issuance; and
o for working capital and general corporate expenses.
EFFECTS OF THE TRANSACTIONS ON STOCKHOLDERS
Pursuant to the stock purchase agreement, 12.5 million shares of our
common stock will be issued to the investors in the stock issuance. Together
with up to an additional approximately 5.3 million shares of our common stock
(including shares issuable upon exercise of warrants) which may be purchased
from accounts managed by Loomis Sayles, the investors would collectively own
approximately 17.8 million shares of our common stock, or approximately 73%
of our common stock on a fully diluted basis. For additional information
relating to beneficial ownership of our common stock following the completion
of the stock issuance, see "Security Ownership of Certain Beneficial Owners
and Management." For information concerning the pro forma effects on our
financial condition and results of operations of the stock issuance, the
refinancing of our existing credit facility and the redemption or other
retirement of our 12 1/2% senior secured notes, see "Pro Forma Financial
Information."
Stockholders should consider the following factors which may affect them,
as well as the other information contained in this proxy statement, in
evaluating the proposals.
CONTINUED NASDAQ LISTING. We believe that we will continue to be listed on
the Nasdaq National Market following the stock issuance and the related
transactions. However, if we were to no longer meet the requirements of Nasdaq
for continued listing and the listing of our common stock were to be
discontinued, the market for our common stock could be adversely affected.
22
POSSIBLE EFFECT ON MARKET PRICE. We are unable to predict the potential
effects of the stock issuance and related transactions on the trading activity
and the market price of our common stock. In connection with the stockholders
agreement, we have granted the investors demand and piggyback registration
rights in connection with the resale of the shares to be issued to the investors
in the stock issuance. See "--Stockholders Agreement--Registration Rights."
These registration rights would facilitate the resale of the investors' shares
into the public market and any resale of these shares would increase the number
of shares of our common stock available for public trading. Sales by the
investors of a substantial number of shares of our common stock in the public
market, or the perception that such sales might occur, could have a material
adverse effect on the price of our common stock.
INVESTORS WILL BE SIGNIFICANT STOCKHOLDERS. Upon the completion of the
stock issuance, the investors will beneficially own approximately 51% of our
outstanding common stock on a fully diluted basis, and will be among our largest
stockholders. In addition, if the investors purchase all of the shares owned by
accounts managed by Loomis Sayles, the investors will beneficially own
approximately 73% of our common stock on a fully diluted basis. As significant
stockholders, the investors will be able to significantly influence matters
submitted to our stockholders for a vote, subject to certain minority
stockholder protection provisions that will be contained in the stockholders
agreement and will be included in our certificate of incorporation. See
"--Stockholders Agreement--Minority Stockholder Protection Provisions" and
"--Amendment to our Certificate of Incorporation--Minority Stockholder
Protection Provisions."
RECONSTITUTION OF OUR BOARD OF DIRECTORS. At the closing of the stock
issuance, our board of directors will be reconstituted to provide for ten
members: four of whom will be designated by Nautilus; two of whom will be
designated by one of the Carlyle/Riverstone Investment Partnerships; three of
whom will be chosen from our current directors; and one of whom will be our
Chief Executive Officer. Our current directors who are not chosen to continue as
directors will resign. See "--Stockholders Agreement--Board Representation" and
"Information Concerning the Designees to our Board of Directors."
DILUTION. The issuance of additional shares of our common stock will have a
dilutive effect on book value per share and a substantial dilutive effect on a
stockholder's percentage voting power. The issuance may also have a dilutive
effect on future earnings per share. Our pro forma book value per share at March
31, 2002 would have been $8.19 per share compared to actual book value per share
of $12.06 per share at that date.
FEDERAL TAX CONSEQUENCES. The stock issuance will result in an "ownership
change" as broadly defined in Section 382 of the Internal Revenue Code. As the
result of the ownership change, utilization of our net operating loss
carryforwards under federal income tax laws and certain other beneficial tax
attributes will be subject to an annual limitation. The limitation of net
operating losses that can be utilized annually will equal the product of an
applicable interest rate mandated under federal income tax laws and our value at
the time of the ownership change.
At December 31, 2001, we had a net operating loss carryforward of
approximately $168.0 million, which is available to offset future federal
taxable income through 2021. We also have foreign tax credit carryforwards,
expiring in years 2002 through 2005, of approximately $16.5 million, which are
available to reduce future federal income tax liabilities. We estimate that the
annual limitation under Section 382 would limit application of these
carryforwards to $4.2 million a year. A substantial portion of our net operating
loss carryforwards and tax credits may not be utilized due to this annual
limitation.
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THE STOCK PURCHASE AGREEMENT
THE STOCK ISSUANCE
The investors will purchase 12,500,000 shares of our newly issued common
stock for $8.00 per share, for an aggregate purchase price of $100 million. The
stock issuance will result in the investors owning approximately 51% of our
common stock on a fully diluted basis.
THE CLOSING
The closing of the stock issuance will take place as soon as practicable
and within three business days after the closing conditions set forth in the
stock purchase agreement (other than those conditions that by their nature are
to be satisfied at the closing) have been satisfied or waived, unless the
parties agree to a different date.
TRANSACTION FEE
Upon the closing of the stock issuance, we will pay a transaction fee of $3
million (3% of the investment) to certain parties related to the investors.
COVENANTS
We and the investors have each undertaken to perform certain covenants in
the stock purchase agreement. The principal covenants are as follows:
OUR OPERATIONS PENDING CLOSING. We have agreed to restrictions on our
activities until the earlier of the closing of the stock issuance or the
termination of the stock purchase agreement. In general, subject to certain
exceptions, we are required to conduct our operations in the ordinary and usual
course of business consistent with past practice, to seek to preserve intact our
current business organizations, to seek to keep available the service of our
current officers and employees and to seek to preserve our relationships with
customers, suppliers and others having business dealings with us. Subject to
certain exceptions, we have agreed to specific restrictions that prohibit us or
our subsidiaries from taking the following actions without the prior written
consent of the investors:
o amending our certificate of incorporation or by-laws (or other
similar governing instruments);
o authorizing for issuance, issuing, selling, delivering, agreeing
or committing to issue, sell or deliver any stock or other equity
interest or equity equivalent;
o splitting, combining or reclassifying any shares of our capital
stock;
o declaring, setting aside or paying any dividend or other
distribution or payment to our stockholders;
o redeeming, repurchasing or otherwise acquiring any of our
securities;
o amending the terms of any of our securities;
o adopting a plan of liquidation or dissolution;
o becoming a party to any merger, consolidation, combination,
recapitalization, reorganization or restructuring;
o incurring or assuming any long-term or short-term debt or issuing
any debt securities, except under our current credit facility;
24
o assuming or guaranteeing the obligations of any other person;
o making loans, advances or capital contributions to, or
investments in, any other person;
o pledging the shares of capital stock of us or our subsidiaries or
any of our material assets;
o adopting, amending or terminating any employee benefit plans;
o increasing the compensation or benefits of any director, officer
or employee except for normal increases consistent with past
practice that are not material to us;
o acquiring, selling, leasing or disposing of assets having an
initial cost or fair market value in excess of $500,000 or which
are otherwise material to us;
o changing any accounting principles or practices except as may be
required by a change in law or a change in generally accepted
accounting principles;
o revaluing our assets;
o acquiring (by merger, consolidation, or acquisition of stock or
assets) any person or divisions or any equity interest;
o entering into any contract other than in the ordinary course of
business;
o amending any material contract;
o authorizing any new capital expenditure not in our annual budget
in excess of $250,000 individually or $500,000 in the aggregate;
o departing from any normal drydock and maintenance practices or
discontinuing replacement of spares in operating our fleet or
deferring any scheduled maintenance on any vessels;
o making or revoking any tax election, settling or compromising any
tax liability or changing any aspect of our method of accounting
for tax purposes;
o paying, discharging or satisfying any material claims,
liabilities or obligations other than in the ordinary course;
o amending or waiving any material right, or the benefits of any
confidentiality, standstill or similar agreement to which we or
any of our subsidiaries is a party;
o settling or compromising any pending or threatened suit, action
or material claim;
o entering into any agreement that limits or restricts us or any of
our subsidiaries from engaging or competing in any line of
business or in any geographic area; and
o changing our credit, collection or payment policies, procedures
or practices.
STOCKHOLDERS' MEETING. We have agreed to cause a special meeting of our
stockholders to be called and held as soon as practicable for the purpose of
voting on the approval of the stock issuance and the amendment to our
certificate of incorporation and to solicit proxies from our stockholders to
obtain the requisite vote on these matters. We have also agreed that, subject to
fiduciary duties under applicable law, our board of directors will recommend to
our stockholders the approval of the stock issuance and the amendment to our
certificate of incorporation and will not withdraw, amend or modify, in a manner
adverse to the investors, its recommendation. Any such withdrawal,
25
amendment or modification would give the investors the right to terminate the
stock purchase agreement and entitle them to receive a termination fee and
limited expense reimbursements. See "--Termination" and "--Payment of
Termination Fees and Expenses."
COMMERCIALLY REASONABLE EFFORTS TO CLOSE. Generally, each party has agreed
to use commercially reasonable efforts to take such actions as are necessary,
proper or advisable to consummate the transactions at the earliest practicable
date.
BOARD OF DIRECTORS. We will cause the investor designees (who must be
reasonably acceptable to us) to constitute a majority of our board of directors
(and committees to the extent requested by the investors) and to cause at least
three incumbent directors, as designated by the investors, to continue as
members of our board of directors for an initial one year term. Our current
directors who are not designated by the investors to continue as members of our
board of directors will resign. The stockholders agreement and the amendment to
our certificate of incorporation also contain provisions regarding our board of
directors. See "The Stock Issuance and Related Transactions--Stockholders
Agreement" and "The Stock Issuance and Related Transactions--Amendment to our
Certificate of Incorporation."
NO SOLICITATION. Except as described below, we have agreed not to, directly
or indirectly through any officer, director, employee, representative or agent
of ours or any of our subsidiaries, do any of the following:
o make any offer or proposal to any person to, directly or
indirectly, (1) sell, issue or otherwise transfer any of our
capital stock, (2) sell or otherwise transfer any of our material
assets or properties or (3) effect any recapitalization,
refinancing, restructuring, merger, consolidation or other
business combination involving us (we are referring to any of the
foregoing as an alternative transaction in this proxy statement);
o grant any waivers with respect to Section 203 of the General
Corporation Law of Delaware to any third parties;
o solicit or encourage the initiation of (including by way of
furnishing information) any inquiries or proposals regarding any
alternative transaction (which we are referring to as an
acquisition proposal in this proxy statement); or
o have any discussion with or provide any non-public information or
data to any third party that would encourage, facilitate or
further an acquisition proposal, or engage in any negotiations
concerning an acquisition proposal, or knowingly facilitate any
effort or attempt to make or implement an acquisition proposal.
However, in response to an unsolicited bona fide written acquisition
proposal, we may have discussions with and provide non-public information and
data (so long as such information has been or is concurrently provided to the
investors) to a third party that has made such acquisition proposal if:
o our board of directors determines in good faith (1) that the
acquisition proposal would, if consummated, be reasonably likely
to constitute a superior proposal, as described below, and (2)
after consulting with outside legal counsel, that failing to take
such action would constitute a breach of the fiduciary
obligations of our board of directors under applicable law;
o we have given the investors 48 hours notice that it is taking
such action; and
o the third party executes a confidentiality/standstill agreement
in reasonably customary form.
A superior proposal is a bona fide unsolicited acquisition proposal to
acquire for cash more than 50% of our common stock on a fully diluted basis or
to invest $100 million or more for newly issued equity in us, that, in either
case, is not subject to a financing condition or due diligence and for which our
board of directors has determined in good faith (based on the advice of an
investment banker of nationally recognized reputation) would provide greater
26
value from a financial point of view to us and our stockholders and is
reasonably likely to be completed. We may not accept a superior proposal unless
we have provided the investors seven business days to negotiate a revised
transaction with us.
REDEMPTION OF NOTES AND RELATED MATTERS. We have agreed to redeem and
discharge at closing our 12 1/2% senior secured notes. We and the investors may
also alternatively agree to commence a tender offer for such notes.
THE RULING. We and the investors have agreed to cooperate to make a request
to the United States Coast Guard for a ruling that following consummation of the
transactions contemplated by the stock purchase agreement, we will comply with
the requirements of Section 2 of the Shipping Act, 1916, as amended, for the
ownership and operation of vessels in the United States coastwise trade. Subject
to certain limitations on the duties of the investors, we and the investors have
further agreed to supply any additional information that may be requested in
respect of the ruling as promptly as practicable and to use commercially
reasonable efforts to take all other actions necessary to obtain the ruling as
soon as practicable.
THE BY-LAWS. We have agreed to amend our by-laws to provide (1) that a
quorum for meetings of our board of directors will consist of seven directors
and (2) for the elimination of the classification of our board of directors.
REPRESENTATIONS AND WARRANTIES
The stock purchase agreement contains representations and warranties made
by the parties. The representations and warranties made by us relate to:
o our corporate existence, qualification to conduct business and
corporate standing and power;
o our ownership of subsidiaries;
o our capitalization;
o our corporate authority to enter into, and carry out the
obligations under, the stock purchase agreement and
enforceability of the stock purchase agreement;
o the votes required for approval;
o our board approval under Section 203 of the General Corporation
Law of Delaware;
o our due authorization of the shares to be issued by us in the
stock issuance;
o our filings with the SEC;
o our financial statements;
o the absence of undisclosed liabilities;
o the absence of certain changes or events;
o the information supplied for use in this proxy statement;
o consents and approvals required to consummate the transactions
contemplated by the stock purchase agreement;
o the absence of defaults;
o our pending or threatened litigation;
27
o our compliance with laws;
o our tax matters;
o our employee plans and labor matters;
o our environmental matters;
o our real property matters;
o the absence of questionable payments;
o our material contracts;
o our insurance matters;
o title and condition of our assets;
o our transactions with related parties;
o our maritime matters;
o our suppliers and customers;
o the payment of fees to finders or brokers in connection with the
stock purchase agreement;
o the opinion of financial advisor;
o our foreign ownership; and
o the United States Coast Guard ruling.
The representations and warranties contained in the stock purchase
agreement do not survive the closing of the stock issuance.
CONDITIONS
The parties' respective obligations to complete the stock issuance are
subject to the satisfaction or waiver of various conditions, the most
significant of which are:
o the approval of the stock issuance and the amendment to our
certificate of incorporation by our stockholders;
o the expiration or termination of the applicable waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act;
o the absence of any law, injunction or order prohibiting the
completion of the transactions contemplated by the stock purchase
agreement;
o the refinancing of our existing credit facility;
o the representations and warranties contained in the stock
purchase agreement of the other party being true and correct in
all material respects, except for those qualified as to
materiality which
28
shall be true and correct, on the date of the stock purchase
agreement and on the date of the closing of the stock issuance,
except to the extent that those representations and warranties
speak as of another date;
o the other party having adequately performed or complied with its
obligations and covenants contained in the stock purchase
agreement;
o the amendment to our certificate of incorporation having become
effective; and
o the execution of the stockholders agreement.
We do not have to complete the stock issuance unless the United States
Coast Guard ruling has been obtained and does not impose any material adverse
prohibitions, liabilities, limitations, conditions or restrictions on us.
Additionally, the investors do not have to complete the stock issuance
unless:
o a favorable United States Coast Guard ruling has been obtained;
o the shares to be issued by us in the stock issuance have been
approved for listing and quotation on the Nasdaq National Market
System, subject to official notice of issuance;
o the investors have received an opinion of our counsel in form and
substance reasonably satisfactory to the investors;
o persons designated by the investors constitute at least a
majority of our board of directors (and, to the extent requested
by the investors, the committees of our board of directors);
o the limited partners of the investors, to the extent applicable,
have approved amendments to the partnership agreements or other
governing documents and the investors have obtained citizenship
certificates or other consents, as necessary to comply with the
United States Coast Guard ruling;
o we and Mr. Kurz have executed a revised employment agreement;
o there is no law, injunction, order or decree of a governmental
authority or any pending suit, action, arbitration or proceeding
seeking to prohibit or limit the transactions contemplated by the
stock purchase agreement or which would cause the termination or
material limitation of any of our material rights, permits,
licenses or franchises; and
o we have at least $17.5 million of cash on hand or available for
borrowing after the closing of the transactions contemplated by
the stock purchase agreement and payment of certain fees and
expenses (subject to downward adjustment if transaction expenses
exceed $11 million).
TERMINATION
TERMINATION BY US OR THE INVESTORS. Either we or the investors may
terminate the stock purchase agreement if:
o we and the investors mutually agree to terminate;
o there is a material breach of a representation, warranty or
covenant in the stock purchase agreement by the other party that
cannot be cured or is not cured within ten business days of
notice;
29
o the closing has not occurred by October 15, 2002, provided that
the terminating party's failure to fulfill any obligation under
the stock purchase agreement is not the cause of the closing not
having occurred; or
o conditions of such party's obligations to close have become
incapable of being satisfied, provided that the terminating party
has not breached a representation, warranty or covenant under the
stock purchase agreement in any material respect.
TERMINATION BY US. We may terminate the stock purchase agreement if each of
the following has occurred:
o our board of directors has determined that it has received a
superior proposal;
o we have provided the investors seven business days to negotiate a
revised transaction with us; and
o we have paid to the investors the applicable termination fee and
expense reimbursement as described below.
TERMINATION BY THE INVESTORS. The investors may terminate the stock
purchase agreement if:
o a law or any final and non-appealable injunction, order or decree
of a governmental authority prohibits or limits the transactions
contemplated by the stock purchase agreement or would cause the
termination or material limitation of any of our material rights,
permits, licenses or franchises; or
o our board of directors has withdrawn, amended or modified its
recommendation to our stockholders to approve the stock issuance
and the amendment to our certificate of incorporation in a manner
adverse to the investors or has recommended an alternative
transaction to our stockholders.
PAYMENT OF TERMINATION FEES AND RELATED EXPENSES
We would be required to pay a $6 million fee plus expenses of the investors
up to $2 million as described below if the stock purchase agreement is
terminated:
o by us to pursue a superior proposal by a third party as described
above; or
o by the investors as a result of our board of directors changing
its recommendation to our stockholders to vote in favor of the
stock issuance or the amendment to our certificate of
incorporation or recommending an alternative transaction by a
third party to our stockholders.
EXPENSES
We will pay our own costs and expenses in connection with the stock
purchase agreement, including broker's and finder's fees. In addition, we are
required to reimburse the investors:
o for out-of-pocket costs and expenses incurred since January 1,
2002 in connection with the stock purchase agreement and expenses
in connection with the investor's agreement with Loomis Sayles if
the transactions contemplated by the stock purchase agreement are
consummated;
o for out-of-pocket costs and expenses incurred since January 1,
2002 in connection with the stock purchase agreement if the
investors terminate the stock purchase agreement as a result of
any intentional breach of a representation, warranty or covenant
by us;
30
o up to $700,000 for out-of-pocket costs and expenses incurred
since January 1, 2002 in connection with the stock purchase
agreement if the investors terminate the stock purchase agreement
as a result of the approval of the stock issuance and the
amendment to our certificate of incorporation by our stockholders
not being obtained; or
o up to $2 million for out-of-pocket costs and expenses incurred
since January 1, 2002 in connection with the stock purchase
agreement if we terminate the stock purchase agreement to pursue
a superior proposal or the investors terminate the stock purchase
agreement as a result of our board of directors changing its
recommendation to our stockholders to vote in favor of the stock
issuance or the amendment to our certificate of incorporation or
recommending an alternative transaction to our stockholders.
AMENDMENTS AND WAIVERS
The stock purchase agreement may be amended at any time. All amendments to
the stock purchase agreement must be in writing signed by each party.
Any party to the stock purchase agreement may waive any condition, right,
breach or default that such party has the right to waive. All waivers must be in
writing and signed by the party against whom the waiver is to be effective.
31
INFORMATION CONCERNING THE DESIGNEES
TO OUR BOARD OF DIRECTORS
Following the stock issuance, our board of directors will have ten
members, consisting of four individuals designated by Nautilus, two
individuals designated by one of the Carlyle/Riverstone Investment
Partnerships, three individuals continuing from our current board of
directors and our Chief Executive Officer. All of our other current directors
will resign as of the stock issuance. The continuing directors will appoint
the investor designees. YOU ARE NOT BEING ASKED TO VOTE FOR THE ELECTION OF
DIRECTORS.
NAUTILUS DESIGNEES
The following individuals are Nautilus's designees for our board of
directors.
ARI BENACERRAF, AGE 38. Mr. Benacerraf serves as a Managing Director of
Credit Suisse First Boston Corporation in the Merchant Banking Group, a position
he has held since November 2000. Mr. Benacerraf joined Credit Suisse First
Boston Corporation in November 2000 upon the merger with Donaldson, Lufkin &
Jenrette, where he was a Principal in the Merchant Banking Group since 1995. Mr.
Benacerraf serves on the board of directors of Frontier Drilling ASA, Localiza
Rent-a-Car S.A. and Brand Services, Inc. Mr. Benacerraf holds an M.B.A. degree
from the Johnson School of Management at Cornell University.
DAVID DURKIN, AGE 33. Mr. Durkin serves as a Vice President of Credit
Suisse First Boston Corporation in the Merchant Banking Group, a position he has
held since November 2000. Mr. Durkin joined Credit Suisse First Boston
Corporation in November 2000 upon the merger with Donaldson, Lufkin & Jenrette,
where he was a Vice President in the Merchant Banking Group since 2000. Prior to
that, he served as a Vice President in the Leveraged Finance Group and other
roles within investment banking since 1996. Mr. Durkin serves on the board of
directors of AKI, Inc. Mr. Durkin holds an M.B.A. degree from the Wharton School
at the University of Pennsylvania.
KENNETH V. HUSEMAN, AGE 50. Mr. Huseman serves as the President and Chief
Executive Officer of BASiC Energy Services, a position he has held since April
1999. Prior to that, Mr. Huseman held several executive roles at Key Energy
Services and its predecessors, including serving as Chief Operating Officer
between 1996 and 1999. From 1978 through 1993, Mr. Huseman held several senior
operational positions at Pool Energy Services. Mr. Huseman received a B.B.A. in
Accounting from Texas Tech University.
STEVEN WEBSTER, AGE 50. Mr. Webster serves as the Managing Director of
Global Energy Partners, an affiliate of DLJ Merchant Banking Partners, which
makes private equity investments in the energy business. From December 1997
to May 1999, Mr. Webster was the CEO and President of R&B Falcon Corporation,
an offshore drilling contractor, and prior to that, was Chairman & CEO of
Falcon Drilling Company, which he founded in 1988. Mr. Webster has been a
director of Carrizo Oil & Gas, Inc. since 1993 and the Chairman of the Board
since 1997. Mr. Webster is also a director of Grey Wolf, Inc., Geokinetics,
Inc., Frontier Drilling ASA, Crown Resources Corporation, BASiC Energy
Services, Encore Bancshares, Inc., Laredo Energy and Brigham Exploration
Company, as well as several other private companies. He is also a trust
manager of Camden Property Trust. Mr. Webster holds an M.B.A. degree from
Harvard Business School.
CARLYLE/RIVERSTONE DESIGNEES
The following individuals are Carlyle/Riverstone's domestic investment
vehicle's designees for our board of directors.
PIERRE F. LAPEYRE, JR., AGE 40. Mr. Lapeyre is a Founder and Managing
Director of Riverstone, responsible for sourcing and negotiating investments, as
well as post-closing financial structuring and monitoring. In addition, he
serves on the Fund's Managing Committee responsible for all portfolio activity.
Prior to founding Riverstone in 2000, Mr. Lapeyre was a Managing Director at
Goldman Sachs & Co., where he spent 14 years in the Global Energy and Power
Group. Mr. Lapeyre currently serves on the Board of Legend Natural Gas and
InTank Services. Mr. Lapeyre received his B.S. degree in Finance/Economics from
The University of Kentucky, and his M.B.A. from The University of North
Carolina.
32
DAVID M. LEUSCHEN, AGE 51. Mr. Leuschen is a Founder and Managing Director
of Riverstone, responsible for sourcing and negotiating investments, as well as
post-closing portfolio company monitoring. In addition, he serves on the Fund's
Managing Committee responsible for all portfolio activity. Prior to founding
Riverstone in 2000, Mr. Leuschen spent 22 years with Goldman Sachs. He joined
the firm in 1977, founded the firm's Global Energy and Power Group in 1982,
became a Partner in 1986, and remained a Partner with the firm until leaving to
found Riverstone in 2000. Mr. Leuschen has served as a Director of Frontier
Drilling ASA, Legend Natural Gas, InTank Services, and Mega Energy LLC, as well
as a significant number of other industry-related business and nonprofit boards
of directors. He is also owner and President of Switchback Ranch LLC, an
integrated cattle ranching operation in the western U.S. Mr. Leuschen received
his A.B. degree from Dartmouth College, and his M.B.A. from Dartmouth's Amos
Tuck School of Business.
CONTINUING DIRECTORS
The stock purchase agreement contemplates that Mr. Kurz and three other
current directors to be designated by the investors will continue as members of
our board of directors after the stock issuance. The biographical information
for each of the members of our current board of directors, from which the
continuing directors will be selected, is attached as Annex C to this proxy
statement.
33
UNAUDITED PRO FORMA FINANCIAL INFORMATION
We have prepared the following pro forma consolidated financial information
to show the pro forma financial adjustments to our consolidated balance sheet as
of March 31, 2002 resulting from the stock issuance, the refinancing of our
existing credit facility and the redemption of our 12 1/2% senior secured notes,
assuming these transactions had been completed on that date.
Based upon the unaudited pro forma balance sheet presented below, our pro
forma book value per share at March 31, 2002 would have been $8.19 per share
compared to actual book value per share of $12.06 per share at that date.
We have not presented complete pro forma results of operations. Subsequent
to the closing of the proposed transactions, interest expense included in our
results of operations will differ from historical results due to proposed
changes to the amount of debt outstanding and differences in contractual
interest rates. Assuming the proposed transactions were consummated at the
beginning of the relevant period, our pro forma interest expense for the year
ended December 31, 2001 would have been $34.0 million compared to actual
interest expense of $55.9 million for that period, and for the three months
ended March 31, 2002 would have been $8.0 million compared to actual interest
expense of $12.7 million. Interest under the new credit facility is based upon
an applicable margin over a variable indexed rate. Pro forma adjustments to
interest expense were based on current indexed interest rates that would be
applicable under the new credit facility with interest rate margins applicable
to pro forma capitalization as of March 31, 2002. Pro forma adjustments to
interest expense also include the elimination of non-cash amortization of
original issue discount and deferred financing costs on our existing debt, net
of amortization of pro forma estimated financing costs related to the proposed
transactions.
At the date of closing of the proposed transactions, we will record charges
of approximately $29.2 million related to the extinguishment of our existing
credit facility and 12 1/2% senior notes and a charge of $0.2 million related to
the recognition of unearned compensation on stock awards that will vest as a
result of the transactions.
The pro forma financial information is provided for illustrative purposes
and may not reflect what our financial position or results of operations would
have been if the proposed transactions were consummated on the dates indicated
and are not meant to reflect what our financial position or results of
operations will be in any future period.
34
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
(IN THOUSANDS)
HISTORICAL PRO FORMA PRO FORMA
MARCH 31, 2002 ADJUSTMENTS MARCH 31, 2002
-------------- ----------- --------------
ASSETS
Current assets:
Cash and cash equivalents................................ $ 24,059 $ 24,059
Restricted cash.......................................... 1,337 1,337
Trade accounts receivable, net........................... 49,070 49,070
Other receivables........................................ 11,113 11,113
Marine operating supplies................................ 8,207 8,207
Prepaid expenses and other............................... 2,174 2,174
------------ ------------
Total current assets................................... 95,960 95,960
Vessels and equipment, net.................................. 580,664 580,664
Deferred costs, net......................................... 49,122 $ 3,900(a)
(11,115)(b) 41,907
Other....................................................... 6,665 6,665
------------ ------------ ------------
Total assets........................................... $ 732,411 $ (7,215) $ 725,196
============ ============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable......................................... $ 12,321 $ 12,321
Current maturities of long-term debt..................... 30,849 (17,626)(c)
1,929(d) 15,152
Current obligations under capital leases................. 2,883 2,883
Accrued interest......................................... 8,700 (3,257)(e) 5,443
Accrued liabilities and other............................ 39,546 39,546
------------ ------------ ------------
Total current liabilities.............................. 94,299 (18,954) 75,345
Long-term debt.............................................. 392,928 (137,746)(c)
170,000(d) 425,182
Obligations under capital leases............................ 31,034 31,034
Senior notes................................................ 82,310 (82,310)(f) --
Other liabilities........................................... 4,412 4,412
------------ ------------ ------------
Total liabilities...................................... 604,983 (69,010) 535,973
Minority interest........................................... 743 743
Stockholders' equity:
Preferred stock............................................ -- --
Common stock............................................. 105 125(g) 230
Additional paid-in capital............................... 167,259 91,075(g) 258,334
Unearned compensation.................................... (173) 173(h) --
Accumulated deficit...................................... (40,506) (29,578)(h) (70,084)
------------ ------------ ------------
Total stockholders' equity............................. 126,685 61,795 188,480
------------ ------------ ------------
Total liabilities and stockholders' equity........... $ 732,411 $ (7,215) $ 725,196
============ ============= ============
SEE ACCOMPANYING NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE
SHEET.
35
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(a) Reflects the incurrence of $3.9 million in estimated loan costs related
to the new credit facility which will be capitalized as deferred
financing costs.
(b) Reflects the write-off of approximately $11.1 million in deferred
financing costs related to our existing credit facility and 12 1/2%
senior secured notes.
(c) Reflects the repayment of $155.3 million of debt under the existing
credit facility, of which $17.6 million was classified as current
maturities of long-term debt and $137.7 was classified as long-term
debt as of March 31, 2002.
(d) Reflects borrowings of $171.9 million under the proposed new credit
facility, which includes $80.0 million of term loan obligations and
$91.9 million under a revolving facility, of which approximately $1.9
million will be classified as current maturities of long-term debt at
inception.
(e) Reflects the payment of approximately $3.3 million of accrued interest
in connection with the repayment of our existing credit facility and
the redemption of our 12 1/2% senior secured notes.
(f) Reflects the redemption of our 12 1/2% senior secured notes with the
proceeds of the proposed transactions.
(g) Reflects the receipt of the proceeds of the stock issuance, net of
transaction expenses estimated at $8.8 million.
(h) Reflects the write-off of $0.2 million of unearned compensation
resulting from the required acceleration of vesting in certain stock
awards and an increase in accumulated deficit resulting from (1) the
write-off of $11.1 million of deferred financing costs related to our
existing credit facility and 12 1/2% senior secured notes, (2) an
estimated $18.1 million loss on the redemption of our 12 1/2% senior
secured notes and (3) other non-capitalizable expenses of $0.2 million
associated with the transactions described above.
36
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of our common stock as of July 3, 2002 as adjusted to reflect the pro
forma sale of shares of our common stock to the investors in the stock issuance
by:
o each person who is known by us to be the beneficial owner of more
than 5% of our outstanding common stock;
o each of our directors;
o our chief executive officer and each of our four other most
highly compensated executive officers as of December 31, 2001;
and
o all of our directors and executive officers as a group.
Except as otherwise indicated in the following table, the number of shares
of our common stock and the percentage ownership of such shares reported to be
beneficially owned in the table below do not give effect to the sale of shares
of our common stock and warrants by accounts managed by Loomis Sayles to the
investors. Except as otherwise indicated, we believe that the beneficial owners
of the common stock listed, based on information furnished by such owners, have
sole investment and voting power with respect to such shares, subject to
community property laws where applicable.
BENEFICIAL OWNERSHIP
-------------------------------------------------------------------
BEFORE STOCK ISSUANCE AFTER STOCK ISSUANCE
------------- -- -------------- -------------- -- --------------
NAME AND ADDRESS OF
BENEFICIAL OWNER(1) SHARES (2) PERCENTAGE (2) SHARES (2) PERCENTAGE (2)
------------- -------------- -------------- --------------
Nautilus and related entities(3)
c/o DLJ Merchant Banking Partners
11 Madison Avenue
New York, New York 10010 -- -- 8,333,333 36.0%
Carlyle/Riverstone Investment Partnerships
and related entities(4)
c/o Riverstone Holdings LLC
712 Fifth Avenue, 19th Floor
New York, New York 10019 -- -- 4,166,667 18.0
Above investors as a group(5) -- -- 12,500,000 54.1
Loomis, Sayles & Company, L.P.(6)(7)
One Financial Center
Boston, MA 02111 5,265,939 48.8% (7) (7)
Wexford Capital L.L.C.(8)
411 West Putnam Avenue
Greenwich, CT 06830 2,431,801 22.9 2,431,801 10.5
Gerhard E. Kurz 192,500 1.8 192,500 *
Jean Fitzgerald 34,500 * 38,500 *
James J. Gaffney 28,000 * 36,000 *
Andrew W. Brauninger 20,000 * 20,000 *
Robert L. Keiser 19,000 * 23,000 *
Thomas P. Moore, Jr. 18,000 * 22,000 *
William R. Ludt(9) 17,334 * 17,334 *
Peter H. Cressy 14,000 * 18,000 *
John F. McGovern 14,000 * 18,000 *
Donald R. Shepherd 14,000 * 18,000 *
L. Stephen Willrich 10,334 * 10,334 *
J. Stephen Nouss(10) 6,767 * 6,767 *
All executive officers and directors
as a group (15 persons) 391,330 3.6 423,330 1.8
37
- ------------------
* Less than 1%.
(1) Unless otherwise indicated, the address of each of the persons whose name
appears in the table above is: c/o Seabulk International, Inc., 2200 Eller
Drive, P.O. Box 13038, Fort Lauderdale, Florida 33316.
(2) Includes shares issuable upon the exercise of options and warrants that
have vested and are exercisable within 60 days of the date of this proxy
statement. Before the stock issuance, includes shares issuable upon the
exercise of options as follows: Mr. Kurz, 112,500; Mr. Fitzgerald, 34,000;
Mr. Gaffney, 28,000; Mr. Brauninger, 20,000; Mr. Keiser, 14,000; Mr. Moore,
14,000; Mr. Ludt, 17,334; Mr. Cressy, 14,000; Mr. McGovern, 14,000; Mr.
Shepherd, 14,000; Mr. Willrich, 10,334; and 15 directors and executive
officers as a group, 299,830. After the stock issuance, includes the
foregoing and additional shares issuable upon the exercise of options which
become exercisable upon the consummation of the stock issuance as follows:
Mr. Fitzgerald, 4,000; Mr. Gaffney, 8,000; Mr. Keiser, 4,000; Mr. Moore,
4,000; Mr. Cressy, 4,000; Mr. McGovern, 4,000; Mr. Shepherd, 4,000; and 15
directors and executive officers as a group, 32,000. The shares underlying
such options and warrants are deemed to be outstanding for the purpose of
computing the percentage of outstanding common stock owned by such persons
individually and by each group of which they are a member, but are not
deemed to be outstanding for the purpose of computing the percentage of any
other person.
(3) The share number in the above table represents the shares of common stock
to be purchased by Nautilus. Nautilus Intermediary, L.P. is the sole
general partner of Nautilus; DLJ Merchant Banking Partners III, L.P. is the
sole general partner of Nautilus Intermediary, L.P.; and, Nautilus GP, LLC
is the special general partner of DLJ Merchant Banking Partners III, L.P.
Nautilus GP, LLC exercises the ultimate investment discretion and control
over the shares held by Nautilus. The amounts in the above table do not
include shares of our common stock that Nautilus has agreed to purchase,
contemporaneously with the stock issuance, from accounts managed by Loomis
Sayles. In such purchase, Nautilus may purchase up to 3,510,626 shares of
our common stock and up to 114,151 warrants for our common stock. Assuming
all such shares and warrants are purchased and the stock issuance is
completed, Nautilus will own approximately 49% of our outstanding shares of
common stock on a fully diluted basis. Nautilus and its related entities
may be considered a group together with the Carlyle/Riverstone Investment
Partnerships and therefore be deemed to beneficially own the shares owned
by the Carlyle/Riverstone Investment Partnerships. Such entities disclaim
any such beneficial ownership.
(4) The share number in the above table represents the shares of common stock
to be purchased by the Carlyle/Riverstone Investment Partnerships,
including C/R Marine Domestic Partnership, L.P., a Delaware limited
partnership, and C/R Marine Non-U.S. Partnership, L.P., a Delaware limited
partnership. C/R Marine GP Corp., a Delaware corporation, exercises
investment discretion and control over the shares held by the
Carlyle/Riverstone Investment Partnerships directly through its capacity as
the sole general partner of the Carlyle/Riverstone Investment Partnerships.
William E. Conway, Jr., Daniel A. D'Aniello, David M. Rubenstein, Pierre F.
Lapeyre, Jr., David M. Leuschen and Jim H. Derryberry, as the executive
officers and directors of C/R Marine GP Corp., may be deemed to share
beneficial ownership of the shares shown as beneficially owned by the
Carlyle/Riverstone Investment Partnerships. Such persons disclaim such
beneficial ownership. Each of the Carlyle/Riverstone Investment
Partnerships may be deemed to beneficially own the shares by the other the
Carlyle/Riverstone Investment Partnerships. Such partnerships disclaim such
beneficial ownership. The amounts in the above table do not include shares
of our common stock that the Carlyle/Riverstone Investment Partnerships
have agreed to purchase, contemporaneously with the stock issuance, from
accounts managed by Loomis Sayles. In such purchase, the Carlyle/Riverstone
Investment Partnerships have agreed to purchase up to 1,755,313 shares of
our common stock and up to 57,075 warrants for our common stock. Assuming
all such shares and warrants are purchased and the stock issuance is
completed, the Carlyle/Riverstone Investment Partnerships will own
approximately 24% of our outstanding shares of common stock on a fully
diluted basis. Such entities may be considered a group together with
Nautilus and therefore be deemed to beneficially own the shares owned by
Nautilus. Such entities disclaim any such beneficial ownership.
(5) Assuming the stock issuance is completed and Nautilus and the
Carlyle/Riverstone Investment Partnerships purchase all of the shares of
our common stock and warrants from accounts managed by Loomis Sayles, they
will beneficially own approximately 73% of our outstanding shares of common
stock on a fully diluted basis.
(6) Loomis Sayles has advised us that it has sole dispositive power with
respect to these shares as discretionary investment managers for a number
of client accounts. 171,226 of the total 5,265,939 shares consists of
warrants which upon exercise are converted into shares of our common stock.
Loomis Sayles also has sole voting power with respect to 4,012,483 shares
and shared voting power with respect to 316,027 shares. The securities held
by Loomis Sayles as discretionary investment manager are voted by Loomis,
Sayles Voting, Inc., a special general partner of Loomis Sayles which has
the sole authority with respect to voting and dispositions of our
securities.
(7) Loomis Sayles has agreed to cause all shares and warrants that Loomis
Sayles has the power to sell to be sold to the investors contemporaneously
with the stock issuance.
(8) According to a filing on Schedule 13D, Wexford Capital LLC, by reason of
its status as investment advisor, may be deemed to beneficially own all
shares that are beneficially owned by each of Wexford Spectrum Investors,
LLC, Valentis Investors, LLC, Solitair Corp. and Taurus Investors, LLC, all
of which have the same address as Wexford Capital LLC. Each of Charles E.
Davidson and Joseph M. Jacobs, of the same address, by reason of his status
as controlling person of Wexford Capital LLC, may be deemed to have
beneficial ownership of all shares beneficially owned by Wexford Capital
LLC.
(9) Mr. Ludt resigned as of June 30, 2002.
(10) Mr. Nouss resigned as of March 31, 2002.
38
STOCKHOLDER PROPOSALS FOR THE
2003 ANNUAL MEETING OF STOCKHOLDERS
Any stockholder who wishes to present a proposal for consideration at the
Annual Meeting of Stockholders to be held in 2003 must submit such proposal in
accordance with the rules of the SEC. In order for a proposal to be included in
the proxy materials relating to the 2003 Annual Meeting, it must be received by
us no later than December 10, 2002. If a stockholder intends to submit a
proposal at the 2003 Annual Meeting of Stockholders that is not eligible for
inclusion in the proxy materials relating to that meeting, the stockholder must
do so no later than February 28, 2003. If such stockholder fails to comply with
the foregoing notice provision, the proxy holders will be allowed to use their
discretionary voting authority when and if the proposal is raised at the 2003
Annual Meeting of Stockholders. Such proposals and notice should be addressed to
Alan R. Twaits, Senior Vice President, General Counsel and Secretary, Seabulk
International, Inc., 2200 Eller Drive, P.O. Box 13038, Ft. Lauderdale, Florida
33316.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any reports, statements or other
information we file at the SEC's public reference room at 450 Fifth Street,
N.W., Washington, D.C., 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available to
the public from commercial document retrieval services and the web site
maintained by the SEC at www.sec.gov.
We filed a Current Report on Form 8-K on June 19, 2002 reporting the
execution of the stock purchase agreement by us and the investors. A copy of the
stock purchase agreement and related documents are filed as exhibits to the Form
8-K.
FORWARD-LOOKING STATEMENTS
This proxy statement contains statements that do not directly or
exclusively relate to historical facts. Such statements are "forward-looking
statements." You can typically identify forward-looking statements by the use of
forward-looking words, such as "may," "will," "could," "project," "believe,"
"anticipate," "expect," "estimate," "potential," "plan," "forecast," and other
similar words. Forward-looking statements in this proxy statement include
statements regarding the following:
o completion of the stock issuance;
o the refinancing of our existing credit facility;
o the redemption or other retirement of our 12 1/2% senior secured
notes;
o the amendment to our certificate of incorporation;
o the purchase by the investors of our common stock and warrants
from accounts managed by Loomis Sayles;
o estimates of fees and expenses relating to the stock issuance,
the refinancing of our existing credit facility and the
redemption or other retirement of our 12 1/2% senior secured
notes; and
o pro forma financial information.
The forward-looking statements in this proxy statement reflect our
intentions, plans, expectations, assumptions and beliefs about future events and
are subject to risks, uncertainties and other factors, many of which are outside
our control. Important factors could cause actual results to differ materially
from the expectations expressed or implied in the forward-looking statements
contained herein. Except as required by law, we undertake no obligation to
update or revise our forward-looking statements, whether as a result of new
information, future events or otherwise.
39
<Page>
ANNEX A
FORM OF
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
SEABULK INTERNATIONAL, INC.
FILED IN THE OFFICE OF THE SECRETARY OF STATE OF DELAWARE ON , 2002
Seabulk International, Inc., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"DGCL"), hereby certifies that:
1. The name of the corporation is Seabulk International, Inc. (the
"Corporation").
2. The Certificate of Incorporation of the Corporation is hereby amended to
change the number of shares of stock which the Corporation shall have
authority to issue so that Article IV, paragraph (a) of the Certificate of
Incorporation is hereby amended to read in its entirety as follows:
"(a) The total number of shares of stock which the Corporation shall
have authority to issue is Forty-Five Million (45,000,000), consisting of
Five Million (5,000,000) shares of Preferred Stock, without par value (the
"PREFERRED STOCK"), and Forty Million (40,000,000) shares of Common Stock,
par value $0.01 per share (the "COMMON STOCK")."
3. The Certificate of Incorporation of the Corporation is hereby amended to
delete the third paragraph of Article IX.
4. The following Article XIV of the Certificate of Incorporation of the
Corporation is hereby inserted in its entirety to read as follows:
ARTICLE XIV
(a) For purposes of this Article XIV, the following terms shall have
the meanings specified below:
(1) "Affiliate" shall mean, with respect to any Person, any
other Person directly or indirectly controlling, controlled by, or
under direct or indirect common control with, such Person. For the
purposes of this definition, "control" when used with respect to any
Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the
foregoing.
(2) "Business Combination" shall mean (A) any merger or
consolidation of the Corporation or any direct or indirect
majority-owned subsidiary of the Corporation with any Control
Person (as defined below), or (B) any sale, lease, exchange, mortgage,
pledge, transfer or other disposition (in one transaction or a series
of transactions) by the Corporation or a majority-owned subsidiary of
the Corporation, except proportionately as a stockholder of the
Corporation, to or with a Control Person, whether as part of a
dissolution (except as part of an insolvency or bankruptcy
proceeding under applicable laws) or otherwise, of assets of the
Corporation or of any direct or indirect majority-owned subsidiary of
the Corporation which assets have an aggregate Fair Market Value equal
to 10% or more of either the aggregate Fair Market Value of all the
assets of the Corporation determined on a consolidated basis or the
aggregate Fair Market Value of all the outstanding stock of the
Corporation; PROVIDED, HOWEVER, that the foregoing shall not apply to
mortgages, pledges, transfers or other dispositions made pursuant to
any credit facility or other loan or financing arrangement of the
Corporation or any of its majority-owned subsidiaries with respect to
which a Control Person is an agent or member of a bona fide
syndication of financial institutions or other lenders.
(3) A "Control Person" is (x) a Person or group of Persons (as
contemplated by
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Section 13(d)(3) of the Exchange Act) who beneficially owns (as
determined pursuant to Rule 13d-3 under the Exchange Act) more than
30% of the outstanding shares of Voting Stock of the Corporation,
(y) any Person or group of Persons who by agreement, arrangement or
understanding has the right or power to elect a majority of the
members of the board of directors of the Corporation, or (z) any
Affiliate of any such Person or member of a group of such Persons
described in clause (x) or (y) (other than the Corporation and
direct or indirect majority-owned subsidiaries of the Corporation);
provided that (i) no Person or group (an "Exempt Person") shall be a
Control Person if, and for so long as, (A) the Exempt Person is not
a Person or group described in clause (y) or an Affiliate of such
Person or group and (B) a Person (who is not a member of a group
that includes the Exempt Person) or group (which does not include
the Exempt Person as a member), together with any Affiliates of such
other Person (or member of such group) beneficially owns a majority
of the outstanding shares of Voting Stock of the Corporation and
(ii) no individual who is a member of management and a party to the
Stockholders Agreement as of the date of filing of a Certificate of
Amendment initially including this Article XIV shall be a Control
Person solely by reason of being a party to such Stockholders
Agreement.
(4) "Determination Date" shall mean, with respect to each
Business Combination for which Fair Market Value is being
calculated, the date that the Board of Directors of the Corporation
approves the Business Combination pursuant to which Fair Market
Value is being calculated.
(5) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated
thereunder.
(6) "Fair Market Value" shall mean with respect to property,
securities or rights other than cash, its fair market value as of
the Determination Date as mutually determined by the Independent
Directors and the directors of the Corporation who are not
Independent Directors (the "non-Independent Directors"); PROVIDED,
HOWEVER, that, if the Independent Directors and the non-Independent
Directors are unable to agree within fifteen days as to Fair Market
Value, the Fair Market Value shall be determined by an independent
third party appraiser selected by the Independent Directors and the
non-Independent Directors. Notwithstanding the foregoing, any
publicly-traded securities shall be valued as follows:
(a) If traded on a securities exchange or through the Nasdaq
National Market, the value shall be deemed to be the average
of the reported closing prices of the securities on such
exchange or market over the 30-day period ending three (3)
days prior to the Determination Date; or
(b) If actively traded over-the-counter, the value shall be
deemed to be the average of the closing bid or sale prices
(whichever is applicable) over the 30-day period ending three
(3) days prior to the Determination Date.
(7) "Independent Directors" shall mean directors of the
Corporation who (A) meet the standards for independent directors
under the rules or listing requirements of any national stock
exchange or Securities and Exchange Commission recognized quotation
system on which the Common Stock is then listed or quoted or, if the
Common Stock is not listed or quoted, the last national stock
exchange or Securities and Exchange Commission recognized quotation
system on which the Common Stock was listed or quoted and (B) are not
officers, directors, employees or immediate family members of a
Control Person.
(8) "Minority Stockholders" shall mean the holders of Common
Stock of the Corporation, other than any holder that constitutes a
Control Person.
(9) "Person" shall mean any individual, partnership,
corporation, limited liability company, joint venture, association,
joint-stock company, trust, unincorporated organization, or other
entity.
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(10) "Stockholders Agreement" dated as of the date of the filing
of the Certificate of Amendment initially including this Article XIV
by and among the Corporation, the Investors named therein and
certain members of management, as such agreement may be amended in
accordance with the terms thereof.
(11) "Voting Stock" shall have the meaning set forth in Section
203 of the General Corporation Law of the State of Delaware, as such
section was in effect on the date of the filing of the Certificate
of Amendment initially including this Article XIV.
(b) No less than three of the directors of the Corporation shall at
all times be Independent Directors, except for temporary periods resulting
from the resignation, removal from office, disqualification or death of an
Independent Director. Vacancies created by the resignation, removal from
office, disqualification or death of an Independent Director shall be
filled as promptly as reasonably practicable in accordance with the
Corporation's by-laws or by the stockholders in accordance with the terms
of the Stockholders Agreement or any stockholders agreement then in effect
to which the Corporation is a party and in any case by the next annual
meeting of stockholders of the Corporation.
(c) The Corporation will not, and will not permit, cause or suffer any
direct or indirect majority-owned subsidiary of the Corporation to, enter
into or engage in any contract or transaction, or any series of similar
contracts or transactions, with any Control Person, having a value to the
Control Persons reasonably estimated by the Independent Directors to be
more than $300,000, or reasonably estimated by the Independent Directors
to involve or expected to involve payments by the Corporation in excess of
$300,000 in any twelve-month period, unless (1) there are at least two
Independent Directors then in office and (2) such contract or transaction,
or series of similar contracts or transactions, are approved by a majority
of the Independent Directors then in office; PROVIDED, HOWEVER, that such
approval shall not be required with respect to any of the following: (a)
directors' fees, indemnification or similar arrangements or any
compensation, reimbursement, incentive or benefit plan or arrangement
entered into by the Corporation or any of its subsidiaries with a director
of the Corporation or any of its subsidiaries who is a Control Person that
are consistent with benefits pursuant to agreements and policies in effect
on the date of the filing of the Certificate of Amendment initially
including this Article XIV; (b) any contract to which the Control Person
and the Corporation or any of its subsidiaries is a party that is in
effect on the date of the filing of the Certificate of Amendment initially
including this Article XIV or any transaction contemplated thereby; (c)
pro rata payments of dividends or other distributions that are also paid
or made to the Corporation's other stockholders; or (d) transactions
(including a placement or offering of additional securities of the
Corporation) that are on substantially the same terms as transactions with
stockholders of the Corporation that do not constitute Control Persons.
Additionally, such contract or transaction shall not be void or voidable
to the extent that a Control Person notifies the Independent Directors of
such contract or transaction, or series of contracts or transactions, and
the Independent Directors determine that such contract or transaction, or
series of contracts or transactions, does not meet the $300,000 threshold,
notwithstanding that such contract or transaction, or series of contracts
or transactions, ultimately results in value or payments in excess of
$300,000. Such approval shall be in addition to any other approval
required by applicable law.
(d) Until the date which is one year from the date of the filing of
the Certificate of Amendment initially including this Article XIV, the
Corporation will not, and will not permit, cause or suffer any direct or
indirect majority-owned subsidiary of the Corporation to, enter into or
become party to any Business Combination with any Control Person that
would result in Minority Stockholders receiving cash, property, rights or
securities having an aggregate Fair Market Value of less than $8.00 per
share of Common Stock of the Corporation (as such price may be adjusted
pursuant to the following sentence, the "Minimum Price"). If, between the
date hereof and the date of the consummation of any such Business
Combination, the outstanding Common Stock of the Corporation shall have
been changed into a different number of shares or different class by
reason of any reclassification, recapitalization, stock split, reverse
stock split, combination or exchange (as part of a reclassification or
recapitalization) of shares, or a stock dividend payable in any other
securities shall be declared with a record date within such period, or any
similar event shall have occurred, the Minimum Price shall be
appropriately adjusted to provide to the
A-3
<Page>
Minority Stockholders the same economic effect as contemplated by this
paragraph (d) prior to such event.
(e) Until the date which is two years from the date of the filing of
the Certificate of Amendment initially including this Article XIV, the
Corporation will not, and will not permit, cause or suffer any direct or
indirect majority-owned subsidiary of the Corporation to, enter into or
become party to any Business Combination with any Control Person without
the approval of the holders of a majority of the outstanding Common Stock
held by Minority Stockholders and Control Persons that are not Affiliates
of the Control Person that enters into or is party to such Business
Combination; PROVIDED, HOWEVER, that such approval shall not be required
for (i) a merger to be effected pursuant to Section 253 of the DGCL (a
"Short-form Merger"), or (ii) a Business Combination that occurs within
150 days following the consummation of a tender offer by a Control Person
for all of the shares of Common Stock then held by the Minority
Stockholders, provided that (x) such tender offer is subject to the
nonwaiveable condition that there have been validly tendered and not
withdrawn a majority of the shares of Common Stock then held by the
Minority Stockholders; (y) such condition is met; and (z) the consideration
to be paid in respect of shares of Common Stock held by remaining Minority
Stockholders in such merger shall be the same consideration per share as
the consideration paid per share in such tender offer.
(f) In addition to any other vote of stockholders or the Board of
Directors of the Corporation required by law or this Certificate of
Incorporation, this Article XIV may not be amended, altered or modified
unless either (1)(A) there are at least two Independent Directors then in
office and (B) such amendment, alteration, or modification is approved by a
majority of the Independent Directors then in office or (2) such amendment,
alteration, or modification is approved by the holders of a majority of
the Common Stock of the Corporation held by Minority Stockholders.
(g) Except for provisions that by their terms expire earlier, this
Article XIV shall cease to have any further force and effect on the date
which is three years from the date of the filing of the Certificate of
Amendment initially including this Article XIV, or such earlier date on
which no less than 98% of the Corporation's Common Stock is held by
Control Persons or officers, directors, or employees of the Corporation."
5. The foregoing amendment to the Certificate of Incorporation of the
Corporation was duly adopted by the Board of Directors and the stockholders
of the Corporation in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.
A-4
<Page>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment
to be signed by , its , this day of , 2002.
SEABULK INTERNATIONAL, INC.
------------------------------
Name:
Title:
A-5
<Page>
ANNEX B
[RBC Dain Rauscher letterhead]
June 13, 2002
The Board of Directors
Seabulk International, Inc.
2200 Eller Drive
Ft. Lauderdale, FL 33316
To the Board of Directors:
You have requested our opinion, as of the date hereof, as to the fairness,
from a financial point of view, to Seabulk International, Inc., a Delaware
corporation (the "Company"), of the consideration to be received by the
Company (the "Investment") pursuant to the terms of the issuance and sale by
the Company of 12,500,000 shares (the "Shares") of common stock at $8.00 (less
applicable transaction fees and expenses) per Share (the "Per Share
Investment") to the Investors (as defined below) in accordance with the Stock
Purchase Agreement (the "Agreement") by and among the Company and the
investors listed on Schedule 1 to the Agreement (the "Investors"), dated as of
June 13, 2002.
RBC Dain Rauscher Inc. ("RBC"), a member company of RBC Capital Markets, as
part of its investment banking services, is regularly engaged in the valuation
of businesses and their securities in connection with mergers and
acquisitions, corporate restructurings, underwritings, secondary distributions
of listed and unlisted securities, private placements and valuations for
corporate and other purposes.
We are acting as financial advisor to the Company in connection with the
Investment, and we will receive a fee for our services, a portion of which is
contingent upon the consummation of the Investment. We will also receive a
fee for providing this opinion, which is not contingent upon the consummation
of the Investment. In addition, the Company has agreed to indemnify us for
certain liabilities arising out of our engagement. We have also been retained
to act as lead manager and book-running manager in connection with the
possible issuance of public or Rule 144A debt securities of the Company. In
the ordinary course of business, RBC may act as a market maker and broker in
the publicly traded securities of the Company and Credit Suisse Group, the
parent company of one or more of the Investors, and receives customary
compensation in connection therewith, and may also actively trade securities
of the Company and Credit Suisse Group for its own account and the accounts of
its customers, and, accordingly, may hold a long or short position in such
securities. RBC has been working with the Company to identify potential
acquisitions, which could be consummated after the closing of the Investment.
In arriving at our opinion, we have undertaken such review, analyses and
inquiries as we deemed necessary and appropriate under the circumstances.
Among other things, we have: (i) reviewed the financial terms of the
Agreement; (ii) reviewed and analyzed certain publicly available information
filed by the Company with the Securities and Exchange Commission and certain
other financial and operating information supplied to us by the Company,
including certain historical audited financial statements, and certain
internal unaudited financial information; (iii) conducted discussions with
senior management of the Company with respect to the business prospects and
financial outlook of the Company; and (iv) received and reviewed financial
forecasts prepared by the Company's management on the potential future
performance of the Company on a stand-alone basis.
In arriving at our opinion, we performed the following analyses in addition to
the review and inquiries referred to in the preceding paragraph: (i) reviewed
the historical market prices and trading activity of the Company's common
stock; (ii) compared valuation metrics of selected comparable publicly-traded
companies to the valuation metrics implied by the Per Share Investment; (iii)
compared valuation metrics, to the extent publicly available, of selected
precedent transactions to the valuation metrics implied by the Per Share
Investment; and (iv) performed other studies and analyses as we considered
appropriate.
We have assumed that the Company's financial forecasts have been reasonably
prepared on a basis reflecting the best currently available estimates and
judgments of the Company's management. We express no opinion as to the
Company's financial forecasts or the assumptions on which they were based. We
have also assumed that the Company will perform substantially in accordance
with these financial forecasts.
B-1
<Page>
The Board of Directors
Seabulk International
Page 2
We have assumed and relied upon the accuracy and completeness of the
financial, legal, tax, operating, and other information provided to us by the
Company or its representatives (including, without limitation, the financial
statements and related notes thereto of the Company), and have not assumed
responsibility for independently verifying and have not independently verified
such information. We have not assumed any responsibility to perform, and have
not performed, an independent evaluation or appraisal of any of the respective
assets or liabilities of the Company, and we have not been furnished with any
such valuations or appraisals. In addition, we have not assumed any
obligation to conduct, and have not conducted, any physical inspection of the
property or facilities of the Company.
RBC has considered the assessment of the Company's management as to the
Company's financing requirements, the availability of alternative financing
and the potential effects on the Company and its business of a failure to
obtain additional capital in the near term. During the course of our
engagement, RBC did not have discussions with third parties regarding an
equity investment or a business combination involving the Company.
For purposes of rendering our opinion, RBC has assumed that the
representations and warranties of the parties contained in the Agreement are
true and correct, each party will perform all of the covenants and agreements
to be performed by it under the Agreement and all conditions to the
obligations of each party to consummate the Investment will be satisfied
without any material waiver or modification thereof. RBC has assumed that all
governmental, regulatory or other approvals and consents required in
connection with the consummation of the Investment will be obtained.
RBC does not express any opinion as to the prices at which the Shares may
trade following the date of this opinion, at the closing of the Investment, or
at any time in the future. Our opinion speaks only as of the date hereof, is
based on the conditions as they exist and information which we have been
supplied as of the date hereof, and is without regard to any market, economic,
financial, legal, or other circumstances or event of any kind or nature which
may exist or occur after such date.
RBC has assumed that the Investment will be exempt from the registration
requirements of the Securities Act of 1933, as amended, and has further
assumed that the Investment will be consummated in a manner that in all other
respects complies with the requirements of federal and state securities laws,
rules and regulations.
Our opinion expressed herein is provided for the information and assistance of
the Board of Directors of the Company in connection with the transaction
contemplated by the Agreement and does not constitute a recommendation to any
stockholder as to how such stockholder should vote with respect to the
Investment. This opinion may be published in its entirety and described,
subject to our prior approval, in the Company's proxy statement with respect
to voting on the approval of the Investment, but shall not be otherwise
published or used, nor shall any public references to us be made, without our
prior written consent.
Our opinion does not address the merits of the underlying decision by the
Company to engage in the Investment or the relative merits of the Investment
compared to any alternative business strategy or transaction in which the
Company might engage.
Our opinion addresses solely the fairness of the Per Share Investment, from a
financial point of view, to the Company. In accordance with our standard
practice, our opinion does not in any way address aspects of the transaction
other than the consideration to be received by the Company pursuant to the
Agreement.
Based on our experience as investment bankers and subject to the foregoing,
including the various assumptions and limitations set forth herein, it is our
opinion that, as of the date hereof, the Per Share Investment is fair, from a
financial point of view, to the Company.
Very truly yours,
/s/ RBC DAIN RAUSCHER INC.
RBC DAIN RAUSCHER INC.
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ANNEX C
SEABULK INTERNATIONAL, INC.
CURRENT BOARD OF DIRECTORS
PETER H. CRESSY, AGE 60. Dr. Cressy, a member of our board of
directors since March 2000, has been President and Chief Executive Officer of
the Distilled Spirits Council of the United States, Inc. (DISCUS) since
September 1999. Prior to joining DISCUS, he was Chancellor of the University
of Massachusetts at Dartmouth for six years. From 1991 to 1993, he was
President of the Massachusetts Maritime Academy. Dr. Cressy, who has a Ed.D.
in education from the University of San Francisco and is a Yale graduate, is a
retired U.S. Navy Rear Admiral. He joined the Navy in 1963. During his 28-year
career, he held senior positions at the State Department, on Capitol Hill, at
the Pentagon and held major command assignments. He concluded his naval
career as Commander, Fleet Air Mediterranean and Commander, NATO Air
Mediterranean during Operation Desert Storm. Dr. Cressy is a Director of the
distilled spirits industry's educational foundation, The Century Council.
JEAN FITZGERALD, AGE 76. Mr. Fitzgerald has served as a member of our
board of directors since March 1994. He was our Chairman and Chief Executive
Officer from June 1999 to April 2000. From 1992 to 1999, he served in a
variety of consulting and association management positions. From 1990 to
1992, he was Executive Vice President of NDE Testing & Equipment, Inc., a
nationwide storage-tank testing company. From 1988 to 1990, he was with
Frederic R. Harris, Inc., an international consulting engineering firm. Mr.
Fitzgerald was a co-founder and the President of American Tank Testing
Service, Inc., a firm that was subsequently acquired by NDE Environmental
Corporation, from 1986 to 1987. In 1982 and 1983, he served as our Vice
President for Governmental Affairs. His other business experience includes
service as President of Tracor Marine, Inc. from 1976 to 1979 and Director of
Engineering of Tracor's Systems Technology Division from 1974 to 1976. Mr.
Fitzgerald retired from the U.S. Navy in 1974 with the rank of Captain.
During his naval career he commanded major fleet units at sea and served in
the offices of the Chief of Naval Operations and the Secretary of Defense. He
is a past Commissioner and Chairman of the Port Everglades Authority. Mr.
Fitzgerald was a Class III director until March 2002, when he was appointed by
the Board of Directors to be a Class I director to fill a vacancy in that
class.
JAMES J. GAFFNEY, AGE 61. Mr. Gaffney has been a director since
December 1999 and Chairman of the Board since April 2000. He is a consultant
to GS Capital Partners II, LP, a private investment fund affiliated with Water
Street Recovery Fund I, LP and Goldman Sachs & Co. He is also Vice Chairman
of Viking Pacific Holdings, Ltd. He was previously Chairman of Vermont
Industries, Ltd., a New Zealand-based diversified holding company involved in
manufacturing and distribution from 1997 to 1999. From 1995 to 1997, he was
President and Chief Executive Officer of General Aquatics, Inc., a company
involved in swimming pool construction and the manufacture of swimming pool
equipment. From 1993 to 1995, he was President and Chief Executive Officer of
KDI Corporation, a conglomerate with interests in swimming pool construction
and related equipment, defense and cellular electronics products, and the
engineering and metal plating industries. Mr. Gaffney is a Director of
Imperial Sugar Company, SCP Pool Corporation, Safelite Glass Corp. and Hexcel
Corporation.
ROBERT L. KEISER, AGE 59. Mr. Keiser has served as a director since
March 2000. He is former Chairman of the Board of the Kerr-McGee Corporation,
an international energy concern, from which he retired in 1999. He was
previously Chairman and Chief Executive Officer of the Oryx Energy Company
from 1995 to 1999, and Chief Operating Officer from 1991 to 1994. A graduate
of the University of Missouri in Rolla, he joined the Sun Company, Inc. in
1965 and became Vice President of Planning and Development for Oryx when that
company was spun off from Sun in 1988. Mr. Keiser is a member of the Board of
Trustees of his alma mater and a member of the Society of Petroleum Engineers.
GERHARD E. KURZ, AGE 62. Mr. Kurz has been Chief Executive Officer
and a member of our board of directors since April 2000 and was appointed
President in September 2000. He formerly served as President of Mobil
Shipping and Transportation Company (MOSAT), a Mobil Oil-affiliated company
from which he retired in March 2000. Mr. Kurz joined Mobil in London in 1964
as a Chartering Assistant. In 1965 he was transferred to Mobil's Marine
Division in New York. After a series of assignments, he was named Vice
President of Planning, Middle East and Marine Transportation, and then
President of MOSAT in 1989. Mr. Kurz is past Chairman of the Marine
Preservation Association and the Oil Companies International Marine Forum. He
serves on the Board of Directors of the American Bureau of Shipping and
previously chaired its Finance and Nominating Committees. He
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<Page>
also serves on the Boards of the Seamen's Church Institute, the Coast Guard
Foundation, and the Newport News Mariners' Museum. He is a founding member
and Chairman of the Massachusetts Maritime Academy's International Business
Advisory Council and a member of the International Advisory Board to the
Panama Canal Authority. Mr. Kurz is the recipient of numerous awards and
honors, including the International Maritime Hall of Fame Award, the 1999
SeaTrade "Personality of the Year" award, the Seamen's Church Institute Silver
Bell Award, the Order of the U.S.S. St. Mary's Medal from the State University
of New York Maritime College, and the U. S. Coast Guard Award and Medal for
Meritorious Public Service. He holds an Honorary Doctorate Degree from
Massachusetts Maritime Academy.
JOHN F. MCGOVERN, AGE 56. Mr. McGovern has been a member of our
board of directors since December 1999. He has been affiliated with Aurora
Capital LLC since 1999. From 1981 to 1999, he held a series of executive
positions with Georgia Pacific Corporation, rising from Vice President-Project
Financing in 1981 to Executive Vice President and Chief Financial Officer from
1994 until 1999. From 1972 to 1981, he was a Vice President with Chase
Manhattan Bank in its Forest Products and Packaging Division. Mr. McGovern is
a Director and the Chief Executive Officer of ChanneLinx, Inc. and also serves
as a Director of Forest2Market and the Morehouse School of Medicine.
THOMAS P. MOORE, JR., AGE 63. Mr. Moore, a member of our board of
directors since December 1999, is a Principal of State Street Global Advisors
and is a member of the State Street Global Advisors International Equity Team.
From 1986 through 2001, he was a Senior Vice President of State Street
Research & Management Company and was head of the State Street Research
International Equity Team. From 1977 to 1986 he served in positions of
increasing responsibility with Petrolane, Inc., including Administrative Vice
President (1977-1981), President of Drilling Tools, Inc., an oilfield
equipment rental subsidiary (1981-1984), and President of Brinkerhoff-Signal,
Inc., an oil well contract drilling subsidiary (1984-1986). Mr. Moore is a
Chartered Financial Analyst and a Director of First Community Bank in
Woodstock, VT.
DONALD R. SHEPHERD, AGE 65. Mr. Shepherd has been a member of our
board of directors since December 1999. He served as Chairman of Loomis,
Sayles & Company, L.P., an investment management firm, from 1992 to 1995 and
as its Chief Executive Officer from 1990 to 1995, having joined the firm in
1972 as Vice President-Portfolio Management. He was named Managing Partner in
1981 and served as a Director from 1985 to 1995. Mr. Shepherd has a B.B.A.
from the University of Michigan and is a Director of Advantica Restaurant
Group.
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This proxy, when properly executed, will be voted as specified. If no specification is made, Please mark |X|
it will be voted for proposals 1 and 2, and in the discretion of the Proxy or Proxies on any your votes as
other matters that may properly come before the Meeting or any adjournments thereof. indicated in
this example
1. PROPOSAL TO APPROVE THE ISSUANCE OF 12,500,000 SHARES FOR AGAINST ABSTAIN
OF COMMON STOCK PURSUANT TO A STOCK PURCHASE AGREEMENT | | | | | |
BY AND AMONG THE COMPANY AND CERTAIN INVESTORS, DATED
JUNE 13, 2002, AS IT MAY BE AMENDED FROM TIME TO TIME; MARK HERE IF YOU PLAN TO | |
ATTEND THE MEETING
2. PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCOR- FOR AGAINST ABSTAIN
PORATION, TO (A) INCREASE THE NUMBER OF AUTHORIZED | | | | | | MARK HERE FOR ADDRESS | |
SHARES OF COMMON STOCK FROM 20,000,000 TO 40,000,000; CHANGE AND NOTE BELOW
(B) ELIMINATE THE CLASSIFICATION OF OUR BOARD INTO
THREE CLASSES OF DIRECTORS, AND (C) ADD CERTAIN
MINORITY STOCKHOLDER PROTECTION PROVISIONS;
3. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT
THEREOF.
Any proxy heretofore given by the
undersigned with respect to such
stock is hereby revoked. Receipt
of the Notice of Special Meeting
and Proxy Statement is hereby
acknowledged. PLEASE MARK, SIGN,
DATE AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.
Signature____________________________________ Signature____________________________________ Date____________________________________
Joint owners must EACH sign. Please sign EXACTLY as your name(s) appear(s) on this proxy. When signing as attorney, trustee,
executor, administrator, guardian or corporate officer, please give your FULL title.
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^FOLD AND DETACH HERE^
VOTE BY INTERNET OR TELEPHONE OR MAIL
24 HOURS A DAY, 7 DAYS A WEEK
Internet and telephone voting is available through 4PM Eastern Time
the business day prior to the special meeting day.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner
as if you marked, signed and returned your proxy card.
- -------------------------------------- -------------------------------------- --------------------------------------
INTERNET TELEPHONE MAIL
http://www.eproxy.com/sblk 1-800-435-6710
Use the Internet to vote your proxy. Use any touch-tone telephone to vote Mark, sign and date
Have your proxy card in hand when OR your proxy. Have your proxy card in OR your proxy card
you access the web site. You will be hand when you call. You will be and
prompted to enter your control number, prompted to enter your control number, return it in the
located in the box below, to create located in the box below, and then enclosed postage-paid
and submit an electronic ballot. follow the directions given. envelope.
- -------------------------------------- -------------------------------------- --------------------------------------
IF YOU VOTE YOUR PROXY BY INTERNET OR BY TELEPHONE,
YOU DO NOT NEED TO MAIL BACK YOUR PROXY CARD.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
SEABULK INTERNATIONAL, INC.-- COMMON STOCK PROXY -- FOR THE SPECIAL MEETING OF STOCKHOLDERS AT A.M. LOCAL TIME, ,
, 2002 AT THE PORT EVERGLADES ADMINISTRATION BUILDING, 1850 ELLER DRIVE, FORT LAUDERDALE, FLORIDA.
The undersigned hereby appoints Gerhard E. Kurz and Alan R. Twaits, or either of them, with full power of substitution, as
Proxies to represent and vote all of the shares of Common Stock of Seabulk International, Inc. held of record by the undersigned at
the above-stated Special Meeting, and any adjournments thereof, upon the matters set forth in the Notice of Special Meeting of
Stockholders and Proxy Statement dated , 2002, as follows:
(Continued on Reverse Side)
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^ FOLD AND DETACH HERE ^