08/08/07 - Deep Down Completes $6 Million Financing
HOUSTON, TX – August 8, 2007 – Deep Down, Inc. (OTCBB: DPDW) today announced that it has entered into a $6 million secured credit agreement with Prospect Capital Corporation to recapitalize the balance sheet and provide working capital to accelerate development of its corporate growth strategies.
“We are pleased to welcome Prospect to our business plan as a financial partner. This relationship is designed to more quickly facilitate our Company’s internal and external corporate growth strategies, in particular acquisitions of complementary businesses,” commented Robert E. Chamberlain, Jr., Deep Down’s chairman.
The senior debt facility provides for a 4-year term, an annual interest rate of 15.5% with the ability to defer up to 3.0% through a PIK (paid-in-kind) feature, principal payments of $75,000 per quarter beginning September 30, 2008, and a warrant to purchase up to 4,960,585 shares of common stock at an exercise price of $0.507 per share (set on the date the Letter of Intent was executed). The warrant is not exercisable until the two-year anniversary of the financing.
Ron Smith, Deep Down’s president commented, “This is a milestone event for the shareholders of this Company and I could not be more excited about our new relationship with Prospect. I expect this agreement to significantly enhance our growth abilities and accelerate shareholder value.”
“We plan to use $1.4 million to redeem $2.8 million of Series E Exchangeable Preferred stock, approximately $940,000 to pay off bank debt, and the balance of net proceeds for working capital, capital expenditures, and general corporate purposes,” added Gene Butler, Deep Down’s chief financial officer.
About Prospect Capital Corporation
Prospect Capital Corporation (www.prospectstreet.com) is a closed-end investment company that lends to and invests in private and microcap public businesses. Prospect Capital's investment objective is to generate both current income and capital appreciation through debt and equity investments.
About Deep Down, Inc.
Deep Down specializes in the provision of innovative solutions, installation management, engineering services, support services, custom fabrication, and storage management services for the offshore subsea control, umbilical, and pipeline industries. The company fabricates component parts of subsea distribution systems and assemblies that specialize in the development of subsea fields and tie backs. These items include umbilicals, flow lines, distribution systems, pipeline terminations, controls, winches, and launch and retrieval systems, among others. Deep Down provides these services from the initial field conception phase, through manufacturing, site integration testing, installation, topside connections, and the final commissioning of a project. The Company’s ElectroWave subsidiary offers products and services in the fields of electronic monitoring and control systems for the energy, military, and commercial business sectors. ElectroWave designs, manufactures, installs, and commissions integrated PLC and SCADA based instrumentation and control systems, including ballast control and monitoring, drilling instrumentation, vessel management systems, marine advisory systems, machinery plant control and monitoring systems, and closed circuit television systems.
The Company’s strategy is to consolidate service providers to the offshore industry, as well as designers and manufacturers of subsea, surface, and offshore rig equipment used by major, independent, and foreign national oil and gas companies in deep-water exploration and production of oil and gas throughout the world. Deep Down’s customers include BP Petroleum, Royal Dutch Shell, Exxon Mobil Corporation, Devon Energy Corporation, Chevron Corporation, Anadarko Petroleum Corporation, Marathon Oil Corporation, Kerr-McGee Corporation, Nexen Inc., BHP, Amerada Hess, Helix, Oceaneering International, Inc., Subsea 7, Inc., Transocean Offshore, Diamond Offshore, Marinette Marine Corporation, Acergy, Veolia Environmental Services, Noble Energy Inc., Aker Kvaerner, Cameron, Oil States, Dril-Quip, Inc., Nexans, Cabett, JDR, and Duco, among others. For further company information, please visit www.deepdowninc.com and www.electrowaveusa.com.
One of our most important responsibilities is to communicate with shareholders in an open and direct manner. Comments are based on current management expectations, and are considered "forward-looking statements," generally preceded by words such as "plans," "expects," "believes," "anticipates," or "intends." We cannot promise future returns. Our statements reflect our best judgment at the time they are issued, and we disclaim any obligation to update or alter forward-looking statements as the result of new information or future events. Deep Down urges investors to review the risks and uncertainties contained within its filings with the Securities and Exchange Commission.