Deep Down and Cuming Corporation Sign Amendment to Purchase Agreement
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HOUSTON, TX – October 4, 2010 – Deep Down, Inc. (OTCBB: DPDW) ("Deep Down" or the "Company"), an oilfield services company specializing in products and services for the deepwater and ultra-deepwater oil and gas industry, today announced that it has entered into an amendment to the purchase agreement, by and among Deep Down, Cuming Corporation ("Cuming") and the selling stockholders (the "Amendment") dated effective as of July 31, 2010, to provide for an extension of the exclusivity period and the date on which Deep Down or the selling stockholders may terminate the purchase agreement. The Amendment extended the date for which either of Deep Down or the selling stockholders may terminate the purchase agreement if the Acquisition is not completed to October 31, 2010, provided that the party wishing to terminate is not in breach of the purchase agreement. The Amendment also revised the components of the purchase price from (a) approximately $37 million in the form of a combination of cash and shares of Deep Down and the assumption of approximately $13 million of net customer deposit liabilities based upon Cuming's balance sheet as of December 31, 2009 to (b) a cash payment of $48.25 million plus or less an amount for net customer deposit assets or net customer deposit liabilities, respectively. Currently Cuming estimates this additional adjustment amount to be a net customer deposit asset of approximately $1.9 million as of October 31, 2010. Additionally, the Amendment increased the target net working capital from $9.1 million to $17.35 million.
The Company plans to finance the acquisition with a combination of debt and equity and is actively engaged in negotiating final terms with a private equity firm and a commercial bank. Nevertheless, consummation of the transaction remains subject to several conditions including Deep Down's obtaining adequate external financing to fund the purchase price.
Previously on May 3, 2010, the Company announced entry into the conditional purchase agreement to acquire Cuming. Privately-held Cuming was founded in 1980 and is a leading manufacturer of buoyancy and insulation products with a wide range of deepwater oil and gas industry applications. Cuming's operations are highly complementary with those of Deep Down's Flotation Technologies subsidiary, which produces syntactic foam products for customers in the oil and gas, defense, scientific and industrial sectors. At the closing of the transaction, Deep Down expects to acquire 100% of the stock of Cuming.
About Deep Down, Inc.
Deep Down, Inc. is an oilfield services company serving the worldwide offshore exploration and production industry. Deep Down's proven services and technological solutions include distribution system installation support and engineering services, umbilical terminations, loose-tube steel flying leads, distributed and drill riser buoyancy, ROVs and tooling, marine vessel automation, control, and ballast systems. Deep Down supports subsea engineering, installation, commissioning, and maintenance projects through specialized, highly experienced service teams and engineered technological solutions. The company's primary focus is on more complex deepwater and ultra-deepwater oil production distribution system support services and technologies, used between the platform and the wellhead. More information about Deep Down is available at www.deepdowncorp.com.
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