<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 6, 1995
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
HORNBECK OFFSHORE SERVICES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 74-2153030
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
7707 HARBORSIDE DRIVE
GALVESTON, TEXAS 77554
(409) 744-9500
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
---------------------
LARRY D. HORNBECK
PRESIDENT
7707 HARBORSIDE DRIVE
GALVESTON, TEXAS 77554
(409) 744-9500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------------
with copies to:
<TABLE>
<S> <C>
R. CLYDE PARKER, JR., ESQ. J. MARK METTS, ESQ.
KECK, MAHIN & CATE VINSON & ELKINS L.L.P.
2800 FIRST CITY MAIN BUILDING 2300 FIRST CITY TOWER
1021 MAIN STREET 1001 FANNIN STREET
HOUSTON, TEXAS 77002 HOUSTON, TEXAS 77002
(713) 951-0990 (713) 758-2222
</TABLE>
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
---------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier registration statement for the same
offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
NUMBER OF SHARES PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE
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<S> <C> <C> <C> <C>
Common Stock, $.10 par value per
share(3)............................... 2,300,000 $15.5625 $35,793,750 $12,343
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</TABLE>
(1) Includes 300,000 shares of Common Stock that may be purchased by the
Underwriters to cover over-allotments.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933.
(3) Including associated preferred stock purchase rights. Prior to the
occurrence of certain events, the preferred stock purchase rights will not
be evidenced by or traded separately from the Common Stock.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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***************************************************************************
* *
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
* WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT *
* BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
* REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
* CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY *
* NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH *
* SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO *
* REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH *
* STATE. *
* *
***************************************************************************
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JULY 6, 1995
PROSPECTUS
2,000,000 SHARES
[HORNBECK OFFSHORE LOGO]
HORNBECK OFFSHORE SERVICES, INC.
COMMON STOCK
------------------------
Of the 2,000,000 shares of Common Stock, $.10 par value (the "Common
Stock"), of Hornbeck Offshore Services, Inc. (the "Company") offered hereby,
1,000,000 shares are being sold by the Company and 1,000,000 shares are being
sold by certain stockholders (the "Selling Stockholders"). See "Selling
Stockholders." The Company will not receive any of the proceeds from the sale of
shares by the Selling Stockholders.
The Common Stock is traded in the over-the-counter market and quoted on the
Nasdaq National Market under the trading symbol "HOSS." On June 30, 1995, the
last reported sale price of the Common Stock on the Nasdaq National Market was
$15 3/4. See "Price Range of Common Stock and Dividend Policy."
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
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<CAPTION>
PROCEEDS TO
PRICE TO UNDERWRITING PROCEEDS TO SELLING
PUBLIC DISCOUNT(1) COMPANY(2) STOCKHOLDERS(2)
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<S> <C> <C> <C> <C>
Per Share.............. $ $ $ $
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Total(3)............... $ $ $ $
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</TABLE>
(1) The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities under the Securities Act
of 1933. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $ and
payable by the Selling Stockholders estimated at $ .
(3) Certain Selling Stockholders have granted the Underwriters a 30-day option
to purchase up to an additional 300,000 shares solely to cover
over-allotments, if any. If such option is exercised in full, the total
Price to Public, Underwriting Discount and Proceeds to Selling Stockholders
will be $ , $ and $ , respectively. See
"Underwriting."
------------------------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if issued to and accepted by them, and certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
such offer and to reject orders in whole or in part. It is expected that
delivery of the shares of Common Stock will be made in New York, New York on or
about , 1995.
------------------------
MERRILL LYNCH & CO.
THE ROBINSON-HUMPHREY
COMPANY, INC.
SIMMONS & COMPANY
INTERNATIONAL
------------------------
The date of this Prospectus is , 1995.
<PAGE> 3
AVAILABLE INFORMATION
This Prospectus constitutes a part of a Registration Statement on Form S-3
(herein, together with all amendments and exhibits thereto, referred to as the
"Registration Statement") filed by the Company with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus does not contain all the information
contained in the Registration Statement, certain portions of which are omitted
as permitted by the rules and regulations of the Commission. For further
information with respect to the Company and the securities offered hereby,
reference is made to the Registration Statement, including the exhibits thereto,
which may be inspected at the Commission's offices, without charge, or copies of
which may be obtained from the Commission upon payment of prescribed fees.
Statements contained in this Prospectus as to the contents of any contract or
other document filed as an exhibit to the Registration Statement are not
necessarily complete, and in each instance reference is hereby made to the copy
of such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company with the Commission may be inspected and copied at the Public Reference
Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and the Regional Offices of the Commission at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and
Seven World Trade Center, New York, New York 10048. Copies of such material may
also be obtained from the Public Reference Section of the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents heretofore filed by the Company with the Commission
pursuant to the Exchange Act are hereby incorporated by reference herein:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1994;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1995;
3. The Company's Form 8-K-A dated January 27, 1995 amending its Current
Report on Form 8-K dated November 15, 1994;
4. The Company's Form 8-K dated June 21, 1995.
5. The description of the Common Stock included in the Company's Form 8-A/A
Amendment No. 2 dated June 21, 1995.
6. The description of the Company's preferred stock purchase rights
included in the Company's Form 8-A dated June 21, 1995.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the shares of Common Stock shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in this Prospectus or
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any subsequently filed
document that also is, or is deemed to be, incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
Upon oral or written request of any person, including any beneficial owner,
to whom this Prospectus is delivered, the Company will provide without charge a
copy of any document incorporated in this Prospectus by reference, exclusive of
exhibits (unless such exhibits are specifically incorporated by reference into
such documents), to such person. Requests for such documents should be directed
to Hornbeck Offshore Services, Inc., 7707 Harborside Drive, Galveston, Texas
77554, Attention: Corporate Secretary (Telephone 409/744-9500).
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE> 4
PROSPECTUS SUMMARY
The following is a summary of certain information in this Prospectus. This
summary should be read in conjunction with, and is qualified in its entirety by,
the more detailed information and financial statements, including the notes
thereto, appearing elsewhere in this Prospectus and in the documents
incorporated herein by reference. Unless otherwise indicated, information in
this Prospectus assumes that the over-allotment option is not exercised. All
references in this Prospectus to the "Gulf of Mexico" or the "Gulf" refer to the
U.S. Gulf of Mexico. Investors should carefully consider the information set
forth under the caption "Risk Factors."
GENERAL
The Company is engaged in the offshore marine services business, serving
the oil and gas industry primarily in the Gulf of Mexico through its operation
and management of a diversified fleet of 62 vessels, consisting of supply,
tug-supply, utility, crew and specialty service vessels. These vessels enable
the Company to provide a wide range of services such as towing and anchor
handling of mobile drilling rigs and equipment; transporting supplies necessary
to sustain drilling, workover and production activities; supporting offshore
pipelaying and construction; and assisting geophysical evaluation. Fifty-seven
of these vessels are owned, four are chartered and one is managed by the
Company. The Company operates the second largest fleet of supply vessels both in
the Gulf of Mexico and in the world. The Company also has equity interests in
Ravensworth Investments Limited, an Isle of Man-based company ("Ravensworth"),
and Seaboard Holdings Limited, an Aberdeen, Scotland-based company ("Seaboard"),
that together have the largest safety standby fleet operating in the North Sea,
a combined total of 29 vessels.
The Company's operating strategy is to provide its customers with
high-quality, quick-response service and a diverse and well-equipped and
maintained fleet of vessels. Management believes that the Company's operating
capabilities and reputation in the offshore marine services industry allow it to
compete favorably with other fleets in the Gulf of Mexico. Management has
identified several strategies for future growth. The Company, which has made
three significant Gulf fleet acquisitions and several smaller acquisitions since
1990, continues to search for opportunities to enhance its position in the Gulf
of Mexico through the strategic acquisition of vessels available in that market.
The Company will seek to increase the size of its fleet by purchasing or
building new vessels if market conditions justify such purchases or
construction. The Company also continues to pursue potential opportunities for
growth in the offshore marine service business in international markets, as
evidenced by its 1993 purchase of a 49.9% interest in Ravensworth and 1994
purchase of a 49.9% interest in Seaboard. See "Business and Properties -- North
Sea Affiliates."
After declining through much of 1994, drilling activity in the Gulf of
Mexico stabilized in early 1995 and more recently has begun to increase.
Consequently, the offshore marine services industry is beginning to show
improved utilization over 1994. Dayrates, however, are currently below prior
year levels. Historically, improved utilization has generally led to increased
dayrates. On June 30, 1995, the utilization rate for the Company's vessels was
86% and the average supply vessel dayrate was $3,191. Based upon the Company's
current fleet size and composition, current operating conditions and capital
structure, utilization of 85% and the number of shares of Common Stock
outstanding after this offering, every $100 per day change in the annual average
dayrate for the Company's supply vessels in the Gulf results in an approximate
change in annual earnings per share of $.08. The number of offshore supply
vessels available for service in the Gulf of Mexico dropped from a peak of
approximately 700 in 1985 to 235 in 1993 before climbing to the present level
estimated to be 289. This recent increase in available vessels was primarily a
result of redeployment of vessels to the Gulf of Mexico from other areas.
Management continues to believe that the number of vessels available in the Gulf
will decrease because current dayrates in the Gulf of Mexico do not justify the
expense of building new vessels and current regulations prohibit foreign
operators and foreign registered vessels from entering the offshore marine
services business in the Gulf of Mexico. Furthermore, increased activities in
overseas areas could result in reduction of Gulf fleet size as vessels are
deployed to those areas. See "Business and Properties -- Certain Government
Regulation." The Company's management also believes that many of the vessels
previously servicing the oil and gas industry could not be readily returned to
service in the Gulf of Mexico because of their condition or certain restrictions
imposed by the Maritime Administration of the U.S.
3
<PAGE> 5
Department of Transportation ("MARAD") on their return to offshore service
vessel use in United States coastal waters.
The Company was incorporated in Delaware in 1981. All of the Company's
operations are conducted through subsidiaries and unconsolidated affiliates. The
Company's principal executive offices are located at 7707 Harborside Drive,
Galveston, Texas 77554, and its telephone number is (409) 744-9500. The Company
also has an office in Morgan City, Louisiana and affiliated offices in Douglas,
Isle of Man and Aberdeen, Scotland. Unless otherwise required by the context,
the term "Company" as used herein refers to Hornbeck Offshore Services, Inc. and
its consolidated subsidiaries.
THE OIL & GAS VESSEL ACQUISITION
On November 15, 1994, the Company added to its fleet of vessels operating
in the Gulf of Mexico by completing the acquisition of thirteen large offshore
supply vessels and related assets (collectively, the "Oil & Gas Vessels") from
Oil & Gas Rental Services, Inc. for aggregate consideration of $46,000,000 in
cash (the "Oil & Gas Vessel Acquisition"). The Company financed a portion of the
purchase price with a new $20,000,000 term loan secured by the Oil & Gas Vessels
and by drawing down $3,000,000 under its new revolving credit facility. The
Company obtained the remainder of the purchase price from its cash reserves.
The Oil & Gas Vessels are considered to be among the highest quality boats
operating in the Gulf of Mexico. The Oil & Gas Vessels include four 220 foot
vessels and seven vessels between 188 and 192 feet. Because the vessels are all
large, high-quality boats, they command premium dayrates which can run as high
as 30-50% above those for standard 180 foot supply boats.
THE SEABOARD ACQUISITION
Effective November 30, 1994, the Company's newly formed 49.9% owned
affiliate, Seaboard, acquired all of the outstanding capital stock of Seaboard
Offshore Group Limited ("SOGL") which, together with its subsidiaries, owns six
safety standby vessels operating in the North Sea (the "Seaboard Acquisition").
The acquisition of the SOGL equity securities was accomplished for nominal
consideration. To facilitate the transaction, the Company made a 1.5 million
Pounds Sterling loan to SOGL and guaranteed approximately 302,000 Pounds
Sterling of SOGL debt. Ravensworth Holdings Limited, the 50.1% owner of the
Company's 49.9% owned North Sea affiliate, Ravensworth, guaranteed to the
Company the repayment of 50.1% of the loan to SOGL. Through its 49.9% owned
affiliate, Hornbeck Offshore Limited (the "North Sea Manager"), formed in
conjunction with the Seaboard Acquisition, the Company positioned itself to
provide management services for all of its operations in the North Sea. See
"Business and Properties -- North Sea Affiliates."
THE OFFERING
<TABLE>
<S> <C>
Common Stock Offered By:
The Company...................................... 1,000,000 shares
The Selling Stockholders......................... 1,000,000 shares
Common Stock to be Outstanding after the
Offering......................................... 14,167,265 shares
Use of Proceeds by the Company..................... To repay certain indebtedness incurred
to fund a portion of the acquisition
price of the Oil & Gas Vessel
Acquisition.
See "Use of Proceeds."
Nasdaq National Market Symbol...................... HOSS
</TABLE>
---------------------
NOTICE TO NON-U.S. CITIZENS
Ownership and control of the Common Stock of the Company and shares of any
other class of capital stock of the Company by non-U.S. citizens are limited by
the terms of the Company's Restated Certificate of Incorporation. Under certain
circumstances, transfers of capital stock to non-U.S. citizens may be void and
certain capital stock owned by non-U.S. citizens may not be permitted to vote or
receive dividends or other distributions. See "Description of Securities --
Foreign Ownership" and "Certain United States Tax Consequences for Non-U.S.
Holders of Common Stock."
4
<PAGE> 6
SUMMARY HISTORICAL AND PRO FORMA INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND FLEET DATA)
<TABLE>
<CAPTION>
PRO FORMA
THREE MONTHS ENDED AS ADJUSTED
YEAR ENDED DECEMBER 31,(1) MARCH 31, YEAR ENDED
------------------------------------------------- ------------------- DECEMBER 31,
1990 1991 1992 1993 1994 1994 1995 1994(2)
------- ------- ------- -------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues............................ $22,681 $20,419 $18,435 $ 47,291 $ 45,834 $ 11,506 $ 12,671 $ 60,379
Depreciation and amortization....... 3,427 4,229 4,749 7,394 10,007 2,273 3,281 13,264
Operating profit.................... 7,270 2,933 567 16,371 8,767 2,534 1,376 12,320
Equity in earnings (loss) of
affiliates........................ 5 818 1,408 269 (330) 1,408
Net income.......................... 4,513 1,930 62 10,665 8,023 1,902 487 9,391
Earnings per share of Common
Stock............................. .51 .18 .01 .90 .60 .14 .04 .70
BALANCE SHEET DATA:
Working capital..................... $17,227 $10,135 $ 6,607 $ 40,987 $ 14,747 $ 38,059 $ 17,614
Property and equipment, net......... 38,862 44,138 58,783 55,396 101,563 57,683 99,347
Investment in affiliates............ 15,223 16,851 15,516 14,586
Total assets........................ 64,183 62,740 73,112 124,672 147,882 124,161 146,208
Long-term debt (less current
portion).......................... 12,618 13,663 14,659 7,833 21,023 6,770 20,034
Stockholders' equity................ 40,375 37,450 46,064 99,590 106,907 101,560 105,611
FLEET DATA:
Vessel utilization rates(3)......... 89% 83% 80% 85% 80% 75% 74%
Average dayrates(4)................. $ 3,050 $ 2,445 $ 1,995 $ 3,284 $ 3,272 $ 3,776 $ 3,154
Number of vessels in fleet at end of
period............................ 29 34 52 51 63 50 63(5)
</TABLE>
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(1) Historical figures for 1990 and thereafter reflect the effect of the
acquisition (the "Point Marine Acquisition") of Point Marine, Inc., and an
affiliated entity from its effective date, January 30, 1990. Historical
figures for 1992 and thereafter reflect the acquisition of 21 offshore
service vessels (collectively, the "Petrol Acquisition") from Portal Energy
Corporation, Pentad Offshore Corporation and Petrol Marine Corporation
(collectively, "Petrol") from its effective date, November 19, 1992.
Historical figures for 1993 and thereafter reflect the effect of the
Company's acquisition of 49.9% of the outstanding capital stock of
Ravensworth (the "Ravensworth Acquisition") from its effective date, July
23, 1993. Historical figures for 1994 and thereafter reflect the effects of
the Oil & Gas Vessel Acquisition and the Seaboard Acquisition from their
effective dates of November 15, 1994 and November 30, 1994, respectively.
The historical figures, therefore, are not necessarily indicative of future
results or trends. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- General" and "Business and
Properties -- North Sea Affiliates."
(2) Summary pro forma operations data give effect to the Oil & Gas Vessel
Acquisition as if such transaction had taken place on January 1, 1994. See
the Consolidated Financial Statements and the Unaudited Pro Forma Combined
Financial Information of the Company included or incorporated by reference
herein.
(3) Utilization rates are average rates for all vessels based on a 365-day year.
Vessels are considered utilized when they are generating charter revenue.
The utilization rate for the Company's vessels on June 30, 1995, was 86%.
See "Business and Properties -- The Industry."
(4) Average dayrates are average revenue per day per utilized vessel. Average
dayrates of the Company reflect dayrates of all supply vessels, excluding
the four large 220' supply vessels in the Company's fleet which typically
earn dayrates significantly above other supply vessels in the Company's
fleet.
(5) Subsequent to March 31, 1995, the Company discontinued management of one
vessel and has accepted an offer for the sale of one vessel.
5
<PAGE> 7
RISK FACTORS
Investors should carefully consider the following risk factors before
purchasing shares of the Common Stock offered by this Prospectus.
INDUSTRY CONDITIONS
Although different geographic markets were affected at different times and
to varying degrees, the level of activity in the oil and gas exploration and
development industry and, therefore, the offshore marine services industry was
depressed in the Gulf during the middle and late 1980s. In the period from 1988
and through the first half of 1995, the U.S. Gulf of Mexico's market has
experienced several periods of increased offshore activity as well as periods,
both seasonal and otherwise, where demand for offshore marine services has
decreased. Decreased drilling activity, together with the overbuilding of new
vessels in the early 1980s, resulted in an excess number of supply vessels,
operating losses and a significant contraction in the offshore marine services
industry serving the Gulf of Mexico in the middle and late 1980s. The number of
offshore supply vessels available for service in the Gulf of Mexico dropped from
a peak of approximately 700 in 1985 to 235 in 1993, before climbing to the
present level estimated to be 289. Offshore drilling, while recently improved,
continues to be at relatively low levels and oil and gas prices remain volatile.
A reduced level of oil and gas prices could lead to less exploration and
development of offshore areas, reduced activity for the offshore marine services
industry and a material adverse effect on the Company's financial condition and
results of operations.
GOVERNMENT REGULATION
The Company's vessels are subject to various statutes and regulations
governing their operation and maintenance. Under the Merchant Marine Act of
1920, if persons other than U.S. citizens should in the aggregate own in excess
of 25% of any class of the Company's outstanding capital stock, the Company's
vessels would lose the privilege of engaging in the U.S. coastwise trade, which
covers substantially all of the Company's operations in the Gulf of Mexico. In
order to aid compliance with the foregoing requirements, the Company's charter
contains certain provisions limiting foreign ownership of the Common Stock and
any other class of capital stock. The operations of the Company are subject to
federal, state and, for onshore activities, local laws and regulations relating
to protection of the environment. Although the Company believes that its
operations are in general compliance with applicable environmental regulations,
risks of substantial costs and liabilities are inherent in offshore marine
service operations, and there can be no assurance that significant costs and
liabilities will not be incurred. Moreover, it is possible that other
developments, such as increasingly strict environmental laws, regulations and
enforcement policies thereunder, and claims for damages to property, persons or
the environment resulting from the Company's operations could result in
substantial costs and liabilities to the Company. Without limiting the
generality of the foregoing, the Company's operations are subject to the Outer
Continental Shelf Lands Act, and regulations promulgated thereunder, which
regulate the activities of offshore service vessels, require vessel owners and
operators to demonstrate financial and operational responsibility and provide
for certain limitations on the liability of vessel owners and operators. The
Company's operations also are subject to the Federal Water Pollution Control Act
of 1972, as amended, which imposes strict controls against the discharge of oil
and other pollutants into surface waters within their jurisdiction. Any
hazardous substances transported by the Company are subject to regulation under
the Resource Conservation and Recovery Act and the Hazardous Materials
Transportation Act. Numerous other environmental laws and regulations also apply
to the operations of the Company, and such laws and regulations are subject to
frequent changes. The Company's insurance policies provide coverage for
accidental occurrences of seepage and pollution and/or cleanup and containment
of the foregoing. Although the Company's losses from such occurrences have not
historically exceeded its insurance coverage, there is no assurance that this
will continue to be the case. Management believes, however, that the Company's
insurance coverage is adequate and comparable to that generally carried in the
offshore marine services industry. See "Business and Properties -- Certain
Government Regulation" and "Description of Securities -- Foreign Ownership."
6
<PAGE> 8
KEY PERSONNEL
The Company is materially dependent upon the continued services of its
Chairman of the Board, President and Chief Executive Officer, Larry D. Hornbeck.
See "Management."
OPERATING RISKS AND INSURANCE
The operation of marine service vessels involves an inherent risk of
catastrophic marine disaster, adverse weather conditions, mechanical failure,
collisions and property losses to the vessel and its tow and cargo. Any such
event may result in loss of revenues and increased costs and other liabilities.
Although the Company's losses from such hazards have not historically exceeded
its insurance coverage, there is no assurance that this will continue to be the
case. Management believes, however, that the Company's insurance coverage is
adequate and comparable to that generally carried in the offshore marine
services industry.
SHARES ELIGIBLE FOR FUTURE SALE
Of the 13,167,265 shares of Common Stock outstanding as of June 30, 1995,
2,505,579 shares (the "Restricted Shares"), including 1,000,000 shares being
offered by Selling Stockholders hereunder, are "restricted securities" as such
term is defined in Rule 144 adopted under the Securities Act, or are held by
persons who may be deemed "affiliates" of the Company, and consequently are
subject to the resale limitations of Rule 144. After the consummation of this
offering (assuming the Underwriters' over-allotment option is exercised in
full), holders of 1,210,133 shares of Common Stock (substantially all of which
are Restricted Shares) will be entitled to have their shares registered under
the Securities Act under certain conditions, which registration would permit the
sale of such shares without regard to the provisions of Rule 144. No prediction
can be made regarding the effect, if any, that eventual market sales of
Restricted Shares or sales of shares of Common Stock or other securities
pursuant to registration or otherwise will have on the market price for the
Common Stock prevailing from time to time. There is a possibility that
Restricted Shares not sold in this offering or other shares of Common Stock may
be resold in the public market and that such sales may adversely affect
prevailing market prices of the Common Stock.
NO DIVIDENDS
The Company has never paid dividends on its Common Stock and expects for
the foreseeable future to retain any earnings otherwise available for such
dividends for use in its operations and for expansion. See "Price Range of
Common Stock and Dividend Policy."
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the shares
of Common Stock offered by this Prospectus are estimated to be approximately
$14.6 million. The Company intends to use all such proceeds to repay a portion
of the bank term loan incurred to fund a portion of the acquisition price with
respect to the Oil & Gas Vessel Acquisition. Such indebtedness bears interest at
the bank's prime rate or, at the election of the Company, at LIBOR plus 1%, and
is payable over a five-year period, with the final payment being due on November
15, 1999. At June 30, 1995 the weighted average interest rate was 7.125%. As of
June 30, 1995, the Company is negotiating with its bank lender to make available
an amount corresponding to the debt repayment as a line of credit for future
acquisitions or other corporate purposes. Although the Company continues to
search for appropriate acquisition opportunities, the Company has no agreements
or understandings at the present time with respect to any particular
acquisition.
7
<PAGE> 9
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1995 (i) on a historical basis and (ii) as adjusted to give effect to
the sale of the shares of Common Stock offered hereby by the Company and the
application of the estimated net proceeds to the Company of the offering,
assuming the offering had occurred as of March 31, 1995. This table should be
read in conjunction with the Consolidated Financial Statements of the Company,
the Unaudited Pro Forma Combined Financial Information of the Company and the
respective related notes thereto, included or incorporated by reference herein.
<TABLE>
<CAPTION>
MARCH 31, 1995
------------------------
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt (excluding current portion).................... $ 20,034 $ 5,434
======== =========
Stockholders' equity:
Common stock, $.10 par value................................ $ 1,314 $ 1,414
Additional paid-in capital.................................. 81,866 96,366
Retained earnings........................................... 22,431 22,431
-------- -----------
Total stockholders' equity.................................. 105,611 120,211
-------- -----------
Total capitalization................................ $125,645 $ 125,645
======== =========
</TABLE>
8
<PAGE> 10
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The Common Stock trades in the over-the-counter market and sales are
reported on the Nasdaq National Market under the symbol "HOSS." At June 15,
1995, the Company had 238 holders of record of Common Stock. See the cover page
of this Prospectus for a recent closing sale price of the Common Stock, as
reported on the Nasdaq National Market.
The following table sets forth the range of high and low sales prices of
the Common Stock as reported by the Nasdaq National Market for the periods
indicated.
<TABLE>
<CAPTION>
PRICE RANGE
OF COMMON
STOCK
-------------
HIGH LOW
---- ----
<S> <C> <C>
1992
First quarter........................................................ $3 1/2 $2 5/8
Second quarter....................................................... 3 1/2 2 3/4
Third quarter........................................................ 5 7/8 2 7/8
Fourth quarter....................................................... 7 3/8 5 3/8
1993
First quarter........................................................ 10 1/2 6
Second quarter....................................................... 18 1/8 9 7/8
Third quarter........................................................ 20 3/4 14 5/8
Fourth quarter....................................................... 24 3/4 12 1/2
1994
First quarter........................................................ 18 5/8 13 1/2
Second quarter....................................................... 17 3/8 12 7/8
Third quarter........................................................ 15 7/8 11 1/2
Fourth quarter....................................................... 15 1/2 12 1/4
1995
First quarter........................................................ 12 7/8 8 7/8
Second quarter....................................................... 16 5/8 11 1/4
Third quarter (through July 5)....................................... 15 3/4 15 1/2
</TABLE>
The Company has never paid cash dividends on its Common Stock. The Company
intends to retain any future earnings otherwise available for cash dividends on
the Common Stock for use in its operations and for expansion, and does not
anticipate that any cash dividends will be paid in the foreseeable future. If
the Company were to change its current policy of retaining earnings otherwise
available for cash dividends, the Company's ability to pay cash dividends would
be subject to continuing compliance with certain financial covenants in the loan
agreement governing its bank term loan and revolving credit facility. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- General" and "-- Liquidity and Capital Resources."
9
<PAGE> 11
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
The following selected historical financial data for the Company as of and
for the years ended December 31, 1990 through December 31, 1994 were derived
from the audited consolidated financial statements of the Company, and as of and
for the three months ended March 31, 1994 and March 31, 1995 were derived from
the unaudited consolidated financial statements of the Company. Historical
amounts reflect the effects of the Seaboard Acquisition after November 30, 1994,
the Oil & Gas Vessel Acquisition after November 15, 1994, the Ravensworth
Acquisition after July 23, 1993, the Petrol Acquisition after November 19, 1992
and the Point Marine Acquisition after January 30, 1990, and therefore are not
necessarily indicative of future results or trends. The pro forma statement of
operations gives effect to the Oil & Gas Vessel Acquisition as if such
transaction had taken place on January 1, 1994. The historical and pro forma
data should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," the Consolidated Financial
Statements of the Company, the Statements of Revenue and Direct Expenses for the
assets involved in the Oil & Gas Vessel Acquisition, the Unaudited Pro Forma
Combined Financial Information of the Company, and the respective related notes
thereto, included or incorporated by reference herein.
<TABLE>
<CAPTION>
THREE MONTHS PRO FORMA
ENDED AS ADJUSTED
YEAR ENDED DECEMBER 31, MARCH 31, YEAR ENDED
------------------------------------------------- ------------------- DECEMBER 31,
1990 1991 1992 1993 1994 1994 1995 1994
------- ------- ------- -------- -------- -------- -------- ------------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.............................. $22,681 $20,419 $18,435 $ 47,291 $ 45,834 $ 11,506 $ 12,671 $ 60,379
Depreciation and amortization......... 3,427 4,229 4,749 7,394 10,007 2,273 3,281 13,264
Operating profit...................... 7,270 2,933 567 16,371 8,767 2,534 1,376 12,320
Income before income taxes, equity in
earnings (loss) of affiliates and
extraordinary charge................ 6,616 2,919 57 14,657 9,824 2,496 1,201 12,501
Income taxes.......................... (2,103) (989) (4,530) (3,209) (863) (384) (4,518)
Equity in earnings (loss) of
affiliates.......................... 5 818 1,408 269 (330) 1,408
Income before extraordinary charge.... 4,513 1,930 62 10,945 8,023 1,902 487 9,391
Extraordinary charge for early
extinguishment of debt, net of
income tax effect................... 280
Net income............................ 4,513 1,930 62 10,665 8,023 1,902 487 9,391
Earnings per share before
extraordinary charge................ .51 .18 .01 .92 .60 .14 .04 .70
Loss per share from extraordinary
charge for early extinguishment of
debt, net of income tax effect...... (.02)
Net income per share.................. .51 .18 .01 .90 .60 .14 .04 .70
BALANCE SHEET DATA:
Working capital....................... $17,227 $10,135 $ 6,607 $ 40,987 $ 14,747 $ 38,059 $ 17,614
Property and equipment, net........... 38,862 44,138 58,783 55,396 101,563 57,683 99,347
Investments in affiliates............. 15,223 16,851 15,516 14,586
Total assets.......................... 64,183 62,740 73,112 124,672 147,882 124,161 146,208
Long-term debt (less current
portion)............................ 12,618 13,663 14,659 7,833 21,023 6,770 20,034
Stockholders' equity.................. 40,375 37,450 46,064 99,590 106,907 101,560 105,611
</TABLE>
10
<PAGE> 12
HORNBECK OFFSHORE SERVICES, INC.
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined statement of operations for the
year ended December 31, 1994, combines the historical results of operations of
the Company and the historical revenue and direct expenses for the assets
involved in the Oil & Gas Vessel Acquisition from January 1, 1994, through the
acquisition date (November 15, 1994). The statement also includes pro forma
adjustments which assume that the acquisition occurred as of January 1, 1994.
Assumptions underlying the pro forma adjustments are described in the Company's
Notes to Unaudited Pro Forma Combined Financial Information, which should be
read in conjunction with this statement. The statement should also be read in
conjunction with the Consolidated Financial Statements of the Company and the
Statements of Revenue and Direct Expenses for the assets involved in the Oil &
Gas Vessel Acquisition incorporated by reference herein. The following Unaudited
Pro Forma Combined Financial Information does not purport to be indicative of
the actual results of operations which would have occurred had the operations of
the Company and the operations with respect to the assets involved in the Oil &
Gas Vessel Acquisition actually been combined during the full year ended
December 31, 1994, or the future results of operations for the combined entity
after the Oil & Gas Vessel Acquisition.
11
<PAGE> 13
HORNBECK OFFSHORE SERVICES, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL
HORNBECK OIL & GAS VESSELS
OFFSHORE (FOR THE PERIOD
SERVICES, 1/1/94 PRO FORMA
INC. THROUGH 11/15/94) ADJUSTMENTS COMBINED
----------- ----------------- ----------- ----------
<S> <C> <C> <C> <C>
Charter revenues................. $ 45,834 $14,545 $ 60,379
----------- ------- -----------
Costs and expenses:
Direct labor and other
operating expenses.......... 23,484 7,323 30,807
Depreciation and
amortization................ 10,007 962 $ 2,295 (A) 13,264
General and administrative..... 3,576 412 3,988
Interest expense............... 864 876 (B) 1,740
Other costs and expenses....... (1,921) (1,921)
----------- ------- ------- -----------
36,010 8,697 3,171 47,878
----------- ------- ------- -----------
Income before income taxes and
equity in earnings of
affiliates..................... 9,824 5,848 (3,171) 12,501
Provision for income taxes....... (3,209) (1,309)(C) (4,518)
Equity in earnings of
affiliates..................... 1,408 1,408
----------- ------- -------- -----------
Net income....................... $ 8,023 $ 5,848 $ (4,480) $ 9,391
=========== ======= ======== ===========
Earnings per share............... $ 0.60 $ 0.70
=========== ===========
Common and common equivalent
shares outstanding (D)......... 13,460,000 13,460,000
</TABLE>
12
<PAGE> 14
HORNBECK OFFSHORE SERVICES, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
(A) This adjustment reflects depreciation expense related to the purchase
price allocated to the acquired Oil & Gas Vessels. The Oil & Gas
Vessels are being depreciated over a dollar-weighted-average remaining
life of approximately 16 years.
(B) This adjustment relates to additional pro forma interest expense in
connection with debt incurred at the date of the acquisition of the Oil
& Gas Vessels at an interest rate of approximately 5.5%.
(C) This adjustment relates to a pro forma tax expense (at a rate of
approximately 34%) related to the historical and pro forma adjustments
for the Oil & Gas Vessels for the year ended December 31, 1994.
(D) Common and common equivalent shares outstanding represent average
shares outstanding on a historical basis for the Company.
13
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the financial condition and results of
operations of the Company. This discussion should be read in conjunction with
the information contained in the financial statements and the related notes
incorporated by reference herein.
GENERAL
The Company
The Company's operating revenue is directly affected by average dayrates
and fleet utilization, which are closely aligned with the offshore oil and gas
exploration and development industry. The level of exploration and development
of offshore areas is affected by both short-term and long-term trends in oil and
gas prices which, in turn, are related to the demand for petroleum products and
the current availability of oil and gas resources. Although different geographic
markets were affected at different times and to varying degrees, the level of
activity in the oil and gas exploration and development industry and, therefore,
the offshore marine services industry, was depressed in the Gulf during the
middle and late 1980s. In the period from 1988 through the first half of 1995,
the U.S. Gulf of Mexico's market has experienced several periods of increased
offshore activity as well as periods, both seasonal and otherwise, where demand
for offshore marine services has decreased. Many industry experts anticipate
that increased natural gas demand will increase drilling and workover activity
in the U.S. Gulf. On the other hand, a reduced level of oil and gas prices could
lead to less exploration and development of offshore areas, reduced activity for
the offshore marine services industry, and an adverse effect on the Company's
financial condition and results of operations. In the North Sea, since the
Company's 1993 acquisition of its Ravensworth affiliate, safety standby vessel
demand has declined due to lower drilling activity caused by oil price declines
and certain tax law changes affecting that area. Currently, there are industry
expectations of increased drilling activity in the North Sea during the second
half of 1995. Such drilling activity changes would increase demand and,
potentially, dayrates for the safety standby vessel market. The Company,
however, cannot predict future demand levels for its markets.
The offshore marine services industry is cyclical, with periods of
increased demand for services resulting in higher utilization and dayrates and
periods of lower demand resulting in lower utilization and dayrates. An upward
or downward movement in dayrates has little direct impact on operating costs and
expenses for a vessel. An increase or decrease in utilization of a vessel will
incrementally increase or decrease certain operating costs and expenses but
generally not in proportion to the associated revenue change.
The Company's results of operations have not been significantly affected by
inflation during the past five years. Since the time of the Company's investment
in Ravensworth in mid-1993, it has become exposed to potential foreign exchange
gains or losses. Through March 31, 1995, the Company has not recorded any
significant foreign exchange gains or losses.
The Company seeks to expand its fleet through acquisitions when industry
cycles or other factors create attractive purchase opportunities. Through
acquisitions, including those described below, the Company has grown to become
the operator of the second largest fleet of supply vessels both in the Gulf of
Mexico and in the world. The Company's most recent significant acquisitions are
described below.
The Petrol Acquisition
On November 19, 1992, the Company strengthened its fleet in the Gulf of
Mexico by acquiring from Petrol 20 offshore supply vessels and one utility
vessel for $18,500,000. The aggregate consideration paid to Petrol consisted of
$4,750,000 in cash, $5,250,000 in unsecured notes issued by the Company and
1,365,462 restricted shares of Common Stock then valued at a market price of
$8,500,000. As a condition to the transaction, $2,000,000 of the cash
consideration was escrowed for purposes of refurbishing and recertifying seven
of the acquired vessels that were not in service on the date of the acquisition.
These seven vessels were subsequently repaired, refurbished, and returned to
service. Because the escrowed funds were insufficient to pay for all of the
costs for the required work on the seven vessels, the future debt service for
the notes issued to
14
<PAGE> 16
Petrol in connection with the Petrol Acquisition was reduced by the excess of
such costs over the escrowed funds, a total of approximately $1.8 million. In a
transaction finalized effective March 18, 1994, the Company prepaid the balance
of the unsecured notes.
The Ravensworth Acquisition
On July 23, 1993, the Company completed the Ravensworth Acquisition,
acquiring 49.9% of the outstanding capital stock of Ravensworth and certain
options to acquire the balance of such capital stock. The Company purchased the
49.9% equity interest for a purchase price of $11,000,000 payable in cash in
U.S. dollars and 158,978 shares of restricted Common Stock of the Company valued
at approximately $2.7 million. Based on Ravensworth's performance in 1994
measured on the basis of earnings before depreciation, interest and taxes
("EBDIT"), the option price for the 9.9% option exercised effective July 23,
1993 as part of the Ravensworth Acquisition was adjusted downward by
approximately $1,800,000, resulting in the surrender and cancellation of
approximately 106,000 shares of the Company's Common Stock originally issued as
partial consideration for such option exercise. See "Business and
Properties -- North Sea Affiliates."
The Oil & Gas Vessel Acquisition
On November 15, 1994, the Company added to its fleet of vessels operating
in the Gulf of Mexico by completing the Oil & Gas Vessel Acquisition, acquiring
thirteen large offshore supply vessels and related assets from Oil & Gas Rental
Services, Inc. for aggregate consideration of $46,000,000 in cash. The Company
financed a portion of the purchase price with a new $20,000,000 term loan
secured by the Oil & Gas Vessels and by drawing down $3,000,000 under its new
revolving credit facility. The Company obtained the remainder of the purchase
price from its cash reserves.
The Oil & Gas Vessels are considered to be among the highest quality boats
operating in the Gulf of Mexico. The Oil & Gas Vessels include four 220 foot
vessels and seven vessels between 188 and 192 feet. Because the vessels are all
large, high-quality boats, they command premium dayrates which can run as high
as 30-50% above those for standard 180 foot supply boats.
The Seaboard Acquisition
Effective November 30, 1994, the Company's newly formed 49.9% owned
affiliate, Seaboard, acquired all of the outstanding capital stock of SOGL
which, together with its subsidiaries, owns six safety standby vessels
operating in the North Sea. The acquisition of the SOGL equity securities was
accomplished for nominal consideration. To facilitate the transaction, the
Company made a 1.5 million Pounds Sterling loan to SOGL and guaranteed
approximately 302,000 Pounds Sterling of SOGL debt. Ravensworth Holdings
Limited, the 50.1% owner of the Company's 49.9% owned North Sea affiliate,
Ravensworth, guaranteed to the Company the repayment of 50.1% of the loan to
SOGL. Through the North Sea Manager, its 49.9% owned affiliate formed in
conjunction with the Seaboard Acquisition, the Company positioned itself to
provide management services for all of its operations in the North Sea. See
"Business and Properties -- North Sea Affiliates."
LIQUIDITY AND CAPITAL RESOURCES
Cash provided from operating activities totaled $6,664,000 for the first
three months of 1995, compared to $7,733,000 in the same period of the prior
year. The Company had cash and equivalents of $13,552,000 at March 31, 1995. The
change in operating cash flow occurred despite an increase in average fleet size
because of reduced utilization which resulted in lower revenues and cash
receipts on a per vessel basis.
At December 31, 1994, the Company had cash and equivalents of approximately
$8,572,000. For the year ended December 31, 1994, a period of downturn in the
offshore marine services business, cash provided by operating activities totaled
approximately $19,148,000, an increase of $2,919,000 versus the amount reported
for 1993.
In connection with the Oil & Gas Vessel Acquisition, the Company entered
into a loan agreement (the "Loan Agreement") with a bank (for itself and as
agent for any future lenders who may participate in the
15
<PAGE> 17
loans under the Loan Agreement) to provide a portion of the funds for the Oil &
Gas Vessel Acquisition and a revolving credit facility. Under the Loan
Agreement, the Company obtained a term loan in the amount of $20 million,
payable over a five-year period in quarterly installments of $714,284 commencing
March 31, 1995, with the balance due November 15, 1999. The term loan is secured
by the 13 Oil & Gas Vessels acquired. The Loan Agreement also provides for a
revolving credit facility of up to $10 million based on a Borrowing Base (as
defined in the Loan Agreement) comprised of eligible accounts receivable of the
Company and its subsidiaries. The loans bear interest at the bank's prime rate
or, at the election of the Company, at LIBOR plus 1%.
The Company anticipates it will be able to generate sufficient cash flow
from operations to meet its debt repayment and capital expenditure requirements
and be in a position to invest a portion of its cash flow in other acquisitions
in the offshore marine services industry. Planned growth will be funded through
future cash flow and/or additional debt or equity financing. The Company
believes that it possesses sufficient unencumbered assets (recognizing that only
22 of the 57 U.S. flag vessels in which the Company has an ownership interest
constitute collateral for outstanding debt) to support future debt financing.
Additionally, after giving effect to the use of proceeds to the Company of the
offering, the Company will have long-term debt totalling approximately $5
million. Assuming the Company can renegotiate its present bank agreement to
substitute additional borrowing capacity equivalent to the amount it prepays
with the use of proceeds from the offering, the Company's borrowing line will
increase to approximately $25 million. See "Use of Proceeds."
Pursuant to an option agreement entered into in connection with the
Ravensworth acquisition, the Company may acquire the remaining 50.1% of
Ravensworth equity that it does not presently own during the period January 1,
1995 through March 31, 1997. The option price will bear interest from the
original acquisition date and the option prices are subject to upward or
downward adjustment based on actual Ravensworth EBDIT performance. Performance
of the North Sea Manager and of Seaboard is combined with that of Ravensworth
for purposes of making such EBDIT calculations. Based on Ravensworth's EBDIT
performance in 1994, the option price for the 9.9% option exercised effective
July 23, 1993 as part of the Ravensworth Acquisition was adjusted downward by
approximately $1,800,000, resulting in the surrender and cancellation of
approximately 106,000 shares of the Company's common stock originally issued as
partial consideration for such option exercise. Assuming no performance
adjustments and the exercise of two equal annual options to purchase the
remaining Ravensworth equity on or before March 31, 1996 and March 31, 1997,
respectively, the total future purchase price, including interest, would result
in a payment of approximately $5.7 million in cash together with $11.4 million
of Common Stock. Pursuant to option agreements entered into in connection with
the Seaboard Acquisition and the formation of the North Sea Manager, the Company
may acquire the remaining 50.1% of the North Sea Manager and Seaboard that it
does not presently own. In connection with the exercise of its options to
acquire the remaining outstanding capital stock of Ravensworth, the Company will
be entitled to receive for no additional consideration a corresponding amount of
the remaining equity interests in the North Sea Manager. If the Company has
exercised its options to acquire the remainder of the capital stock of
Ravensworth, the Company may exercise an option to acquire the remaining
outstanding capital stock of Seaboard for nominal consideration through June 30,
1999, and thereafter for the appraised value of the Seaboard fleet and
associated assets less the outstanding debt and a provision for contingent
liabilities of Seaboard and its subsidiaries (the "Market Value").
The Company's commitments for future capital expenditures are not material.
The Company is subject to regulations which require supply vessels to be
drydocked twice in a five-year period and, therefore, each year a portion of the
Company's vessels undergo routine drydocking for maintenance and repairs.
16
<PAGE> 18
RESULTS OF OPERATIONS
Three Months Ended March 31, 1995 Versus Three Months Ended March 31, 1994
Revenues increased by $1,165,000 or 10% from $11,506,000 in the first
quarter of 1994 to $12,671,000 in the first quarter of 1995. Relevant fleet
statistics affecting the Company's revenues are as follows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
-----------------
1994 1995
------ ------
<S> <C> <C>
Number of vessels in fleet at end of period....................... 50 63(1)
Average supply vessel dayrate..................................... $3,776 $3,154
Average fleet utilization......................................... 75% 74%
</TABLE>
- ---------------
(1) Subsequent to March 31, 1995, the Company discontinued management of one
vessel and accepted an offer for the sale of one vessel.
Revenues increased due to the larger number of vessels in the fleet. This
increase was partially offset by the impact of lower dayrates. Direct labor and
other operating expenses increased from $5,765,000 in the first quarter of 1994
to $7,043,000 in the first quarter of 1995, an increase of $1,278,000 or 22%.
This increase is due to the increased number of vessels in the fleet in 1995.
Generally, operating costs and expenses do not change in direct proportion to
revenues. Depreciation and amortization also increased because of the
acquisition of vessels since the first quarter of 1994. Average depreciation on
a per vessel basis increased in 1995 because vessels acquired since the first
quarter of 1994 cost more than the average in the fleet existing prior to that
date.
The Company reported a loss of $330,000 for its share of losses of certain
affiliates for the three months ended March 31, 1995 as compared to income of
$269,000 in the same period of the prior year. The Company's North Sea safety
standby vessel affiliates recognized losses because of lower revenues due
primarily to decreased utilization and dayrates and because of higher expense
levels associated with certain vessels being repaired or upgraded in
anticipation of stronger market demand in the second half of 1995. Utilization
of vessels averaged 74% and average dayrates were 3,750 Pounds Sterling in the
first quarter of 1994 compared to 69% average utilization and 3,424 Pounds
Sterling average day rates in the first quarter of 1995.
Interest expense increased $244,000 or 109% because of the additional
borrowings made in November 1994 in connection with the Oil & Gas Vessel
Acquisition.
Income taxes represent a lower or higher percentage of pretax income than
an expected "statutory" rate of approximately 34% due primarily to the fact that
no income tax effect is recognized for the Company's equity in earnings of
foreign affiliates. Additionally, in 1995, certain property taxes paid on
vessels generate state income tax credits which lower effective state tax rates.
Year Ended December 31, 1994 Versus Year Ended December 31, 1993
Revenues declined by $1,457,000 or 3% in 1994 compared to 1993. The primary
cause for this reduction was the decline in overall fleet utilization in 1994 to
80% compared to 85% in the prior year. Relevant fleet statistics affecting the
Company's revenues are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-----------------
1993 1994
------ ------
<S> <C> <C>
Number of vessels in fleet at end of period........................ 51 63(1)
Average supply vessel dayrate...................................... $3,284 $3,272
Average fleet utilization.......................................... 85% 80%
</TABLE>
- ---------------
(1) Includes 13 vessels acquired on November 15, 1994.
17
<PAGE> 19
Although dayrates averaged approximately the same in 1993 and 1994, market
conditions differed significantly. Dayrates increased during 1993, reaching
approximately $4,000 per day for average supply vessel rates by the end of 1993.
Dayrates declined in 1994 through the middle of the year to approximately $3,000
per day, remained steady in much of the third quarter and increased in the
fourth quarter of 1994 to slightly over $3,200 on average. Utilization declined
in the first half of 1994, then increased in the second half of the year.
Direct labor and other operating expenses increased by $2,896,000 or 14% in
1994 compared to 1993. Most of this increase was attributable to higher
insurance premiums and insurance deductibles paid by the Company in 1994.
Additionally, labor increased by 8.5% due to crewmembers' wage rate adjustments
and payroll taxes related thereto. Generally, operating costs and expenses do
not change in direct proportion to revenues.
Depreciation and amortization increased 35% because of increased
depreciation in 1994 on vessels purchased and because of a $1,630,000 increase
in amortization of deferred drydocking costs compared to 1993 due to a larger
fleet size that caused higher levels of deferred drydocking.
General and administrative expenses increased 22% because of an increased
number of shore-based employees required to support the Company's increased
fleet, both domestically and overseas, and because of higher insurance, travel,
franchise tax and shareholder-related expenses associated with a larger company.
Equity in earnings of affiliates increased due to the inclusion in 1994
of such earnings for all of 1994 compared to inclusion in 1993 from only the
July 1993 acquisition date. Full-year operating income of affiliates was
actually down in 1994 compared to 1993 due to lower dayrates in 1994.
Utilization and dayrates averaged approximately 84% and 3,637 Pounds Sterling,
respectively, during the period subsequent to the acquisition in 1993 and 71%
and 3,607 Pounds Sterling, respectively, during calendar year 1994. The gain
on sale of assets relates to three vessels sold during the second quarter of
1994. Interest and other income increased primarily because of higher levels of
investment and interest rates in 1994. Interest expense declined because of
debt repayments in early 1994.
Year Ended December 31, 1993 Versus Year Ended December 31, 1992
Revenues and expenses increased substantially in 1993 compared to 1992.
These increases are primarily the result of increases in the number of vessels
in the Company's fleet due to the November 1992 Petrol Acquisition, increases in
the average supply vessel dayrate and increases in the average fleet utilization
as reflected in the following table:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-----------------
1992 1993
------ ------
<S> <C> <C>
Number of vessels in fleet at end of period........................ 52 51
Average supply vessel dayrate...................................... $1,995 $3,284
Average fleet utilization.......................................... 80% 85%
</TABLE>
The increased dayrates and utilization were caused primarily by increased
drilling activity in the Gulf of Mexico. The range of average dayrates in 1993
for the Company increased from approximately $2,800 per day at the beginning of
the year to approximately $4,100 per day by the end of the year.
Revenues increased $28,856,000 or 157% from $18,435,000 in 1992 to
$47,291,000 in 1993. The significant increase was primarily attributable to
higher utilization and dayrates and the increase in the average number of
vessels in the Company's fleet.
Direct labor and other operating expenses increased $9,358,000 or 83% in
1993 compared to 1992 primarily because of the significantly larger number of
vessels in the fleet and higher utilization. Generally, operating costs and
expenses do not change in direct proportion to revenues.
Depreciation and amortization increased by 56% in 1993 compared to 1992
because of additional vessels purchased in late 1992 and higher drydocking
amortization.
18
<PAGE> 20
General and administrative expenses increased 56% from $1,889,000 in 1992
to $2,938,000 in 1993 primarily because of the addition of personnel resulting
from the Petrol Acquisition in late 1992.
Net income increased $10,603,000 from net income of $62,000 ($.01 per
share) in 1992 to a net income of $10,665,000 $(.90 per share) in 1993 primarily
because of the larger fleet size and the higher dayrates and utilization
discussed above. The increase in net income was partially offset by nonrecurring
salvage expense of $945,000 recorded in 1993.
BUSINESS AND PROPERTIES
GENERAL
The Company is engaged in the offshore marine services business, serving
the oil and gas industry primarily in the Gulf of Mexico through its operation
and management of a diversified fleet of 62 vessels, consisting of supply,
tug-supply, utility, crew and specialty service vessels. These vessels enable
the Company to provide a wide range of services, such as towing and anchor
handling of mobile drilling rigs and equipment; transporting supplies necessary
to sustain drilling, workover and production activities; supporting offshore
pipelaying and construction; and assisting geophysical evaluation. Fifty-seven
of these vessels are owned, four are chartered and one is managed by the
Company. The Company operates the second largest fleet of supply vessels both in
the Gulf of Mexico and in the world. The Company also has 49.9% equity interests
in Ravensworth and Seaboard, which together have the largest safety standby
fleet operating in the North Sea, a combined total of 29 vessels. Founded in
1981, the Company is headquartered in Galveston, Texas and also conducts its
Gulf of Mexico operations from its office in Morgan City, Louisiana. North Sea
operations of Ravensworth and Seaboard are conducted from offices in Douglas,
Isle of Man, and Aberdeen, Scotland.
THE INDUSTRY
Offshore service vessels are generally used to support offshore oil and gas
exploration, development and production and to provide other marine services.
The largest class of offshore service vessels are supply vessels (also called
workboats), which are typically at least 150 feet in length and capable of
transporting drillpipe, drilling fluids and construction materials. Other
service vessels include tug/supply vessels, which have more powerful engines and
are capable of towing and positioning offshore rigs; crewboats, which transport
personnel; special service vessels, including geophysical boats which perform
offshore seismic testing functions; and safety vessels, which are available for
emergency response services related to oil and gas exploration, drilling and
production. Although vessels servicing the offshore oil and gas industry are
used to support existing production platforms, incremental vessel demand is
largely dependent on new offshore drilling activity associated with new wells or
the workover of older wells. Therefore, the demand for offshore service vessels
generally correlates with oil and gas prices. The level of activity in the
industry has been very cyclical. The decrease in drilling activity, together
with the overbuilding of new vessels in the early 1980s, resulted in an
oversupply of service vessels, operating losses and significant contraction in
the offshore marine services industry serving the Gulf of Mexico in the middle
and late 1980s.
Future demand for the Company's vessels will be influenced by drilling
activity in the Gulf of Mexico, by the degree of success of the Company's
efforts to market its vessels outside the Gulf of Mexico and by the availability
of competing vessels. The number of offshore supply vessels available for
service in the Gulf of Mexico dropped from a peak of approximately 700 in 1985
to 235 in 1993 before climbing to the present level estimated to be 289. This
recent increase in available vessels was primarily a result of redeployment of
vessels to the Gulf of Mexico from other areas. Management continues to believe
that the number of vessels available in the Gulf will decrease because current
dayrates in the Gulf of Mexico do not justify the expense of building new
vessels and current regulations prohibit foreign operators and foreign
registered vessels from entering the offshore marine services business in the
Gulf of Mexico and because increased activities in overseas areas could result
in reduction of Gulf fleet size as vessels are deployed to those areas. While
such deployment would decrease competition in the Gulf of Mexico, it could
increase the competition in other areas. It is also possible that additional
vessels could be redeployed to the Gulf of Mexico from other areas.
19
<PAGE> 21
The Company's management believes that many of the vessels previously
servicing the oil and gas industry in the Gulf of Mexico could not be readily
returned to service in the Gulf of Mexico because their condition would not meet
U.S. Coast Guard and other industry standards or certain restrictions imposed by
MARAD on their return to offshore service vessel use in United States coastal
waters. In addition, the entry into the Gulf of Mexico market of certain foreign
flag vessels currently operating in foreign waters is restricted as a result of
the provisions of the Merchant Marine Act of 1920, which limits vessels carrying
merchandise or passengers for hire in domestic waters to U.S. flag vessels,
built in U.S. shipyards, which are owned and operated by U.S. citizens.
The cyclical nature of the offshore marine services business and the
decreased number of vessels have also contributed to a reduction in the number
of vessel owning and operating companies. The Company estimates that there are
currently 20 other supply vessel operating companies competing in the Gulf of
Mexico, significantly lower than estimates made as recently as 1990. The largest
three companies (the Company, Tidewater, Inc. and Seacor Holdings, Inc.) are
estimated to operate 55% of the supply vessels operating in the Gulf of Mexico.
Fifteen companies have ten or fewer supply vessels.
During the fourth quarter of 1992 and calendar 1993, supply vessel
operations improved due to increased drilling activity in the Gulf of Mexico
coupled with further downsizing of the industry's offshore vessel fleet. From
December 1992 to December 1993, the number of contracted drilling rigs in the
Gulf of Mexico increased from 109 to 137. In 1994, the number of contracted
drilling rigs decreased to a low of approximately 120 before recovering to
approximately 140 by year-end. Average industry utilization for offshore supply
vessels, however, declined significantly from December 1993 levels of
approximately 96% to a low in May 1994 of 80% due primarily to the increased
number of vessels in the industry fleet. Company utilization and average supply
vessel dayrates declined from December 1993 levels of approximately 89% and
$4,026, respectively, to a low utilization rate of approximately 67% in June
1994, at which time the average dayrate was $3,153. On June 30, 1995, the
utilization rate for the Company's vessels was 86% and the average supply vessel
dayrate was $3,191. The Company believes its current utilization and average
dayrates are substantially comparable to those of the other major competitors in
the offshore marine services business.
THE COMPANY'S FLEET
The Company's fleet has an average age of approximately 15 years. The
Company's vessels support the entire range of the offshore exploration and
development business, including towing and anchor-handling of mobile drilling
rigs and equipment, transporting supplies necessary to sustain drilling,
workover and production activities, supporting offshore pipelaying and
construction activities, and assisting geophysical evaluation.
The following table provides information, as of June 30, 1995, regarding
the 57 vessels owned, the four vessels bareboat-chartered and the one vessel
managed by the Company.
<TABLE>
<CAPTION>
LENGTH
OVERALL YEAR
NAME IN FEET CLASSIFICATION COMPLETED IHP
----------------------------------------------- ------- -------------- --------- -----
<S> <C> <C> <C> <C>
OWNED(1):
HOS War Admiral.............................. 220 Supply 1991 4,000
HOS Man O'War................................ 220 Supply 1991 4,000
HOS Boss Hoss................................ 220 Supply 1991 4,000
HOS Sea Hero................................. 220 Supply 1991 4,000
HOS Gallant Fox.............................. 214 Supply 1978 3,600
HOS Sly Fox.................................. 214 Supply 1978 3,600
HOS Majestic Prince.......................... 192 Supply 1979 3,900
HOS Whirlaway................................ 192 Supply 1979 3,900
HOS Chief.................................... 192 Supply 1982 2,500
HOS Belle.................................... 192 Supply 1982 2,500
HOS Dark Star................................ 192 Supply 1985 4,600
HOS Native Dancer............................ 192 Supply 1975 2,240
HOS Sword Dancer............................. 192 Supply 1974 2,240
HOS Normandy................................. 191 Tug/Supply 1982 4,600
</TABLE>
(Table continued on following page)
20
<PAGE> 22
<TABLE>
<CAPTION>
LENGTH
OVERALL YEAR
NAME IN FEET CLASSIFICATION COMPLETED IHP
----------------------------------------------- ------- -------------- --------- -----
<S> <C> <C> <C> <C>
HOS Bravo.................................... 191 Tug/Supply 1982 4,600
HOS Chaleur.................................. 191 Tug/Supply 1982 4,600
HOS Liberty.................................. 191 Tug/Supply 1982 4,600
HOS Fortune.................................. 191 Tug/Supply 1979 4,600
HOS Samson................................... 191 Tug/Supply 1979 4,600
HOS Goliath(2)............................... 190 Tug/Supply 1973 6,200
HOS Crusader................................. 188 Supply 1981 3,000
HOS High Quest............................... 188 Supply 1980 3,000
HOS Black Gold............................... 188 Supply 1981 3,000
HOS Lone Wolf................................ 188 Supply 1981 3,000
HOS Gate Dancer.............................. 188 Supply 1981 3,000
HOS Career Boy............................... 187 Supply 1973 2,250
HOS Risen Star............................... 185 Supply 1977 3,600
HOS Swaps.................................... 185 Supply 1977 3,600
HOS Cavalcade................................ 185 Supply 1977 3,600
HOS Dover.................................... 185 Supply 1978 3,600
HOS Barrow................................... 185 Supply 1978 3,600
HOS Success.................................. 185 Supply 1976 3,600
HOS Conception............................... 185 Supply 1976 3,600
HOS Canonero................................. 180 Supply 1975 2,500
HOS Nashua................................... 180 Supply 1978 2,500
HOS Iron Leige............................... 180 Supply 1979 2,500
HOS Gun Bow.................................. 180 Supply 1979 2,500
HOS Gallant Man.............................. 180 Supply 1979 2,500
HOS Seattle Slew............................. 180 Supply 1979 2,500
HOS High Gun................................. 180 Supply 1979 2,500
HOS Avatar................................... 180 Supply 1979 2,500
HOS Bold Ruler............................... 180 Supply 1975 1,800
HOS Alydar................................... 180 Supply 1979 2,100
HOS Alysheba................................. 180 Supply 1983 3,600
HOS Affirmed................................. 180 Supply 1975 2,100
HOS Bold Forbes.............................. 180 Supply 1976 2,240
HOS Agile.................................... 180 Supply 1979 3,000
HOS Carry Back............................... 180 Supply 1981 1,800
HOS Gallant Knight........................... 175 Supply 1982 1,800
HOS Advocator................................ 170 Supply 1976 2,100
HOS Cape Charles............................. 166 Supply 1981 1,800
HOS Count Fleet.............................. 166 Supply 1976 2,240
HOS Shut Out................................. 166 Supply 1977 2,240
HOS Count Turf............................... 166 Supply 1976 2,240
HOS Secretariat.............................. 150 Supply 1980 1,860
HOS Assault.................................. 110 Crew 1979 2,025
HOS Messenger................................ 110 Crew 1979 2,025
BAREBOAT CHARTERED:
HOS Bold Venture............................. 192 Supply 1981 2,500
HOS Centurion................................ 187 Supply 1982 2,500
HOS Citation................................. 187 Supply 1982 2,500
HOS Determine................................ 185 Supply 1982 2,500
MANAGED:
Gyre......................................... 170 Research 1979 2,250
</TABLE>
- ---------------
(1) At June 30, 1995, 22 vessels owned by the Company were pledged as security
for approximately $3,880,000 of MARAD-guaranteed debt and approximately
$18,572,000 of bank debt.
(2) Effective June 30, 1995, the Company accepted an offer for the sale of the
HOS Goliath.
21
<PAGE> 23
BUSINESS STRATEGY
The Company's operating strategy is to provide its customers with
high-quality, quick-response service and a diverse and well equipped and
maintained fleet of vessels. Offshore supply fleets compete on the basis of a
variety of factors, including quality and type of equipment, price, service and
reputation. Management believes that the Company's operating capabilities and
reputation in the offshore marine services industry allow it to compete
favorably with other fleets in the Gulf of Mexico.
Management has identified several strategies for future growth. The
Company, which has made three significant Gulf fleet acquisitions and several
smaller acquisitions since 1990, continues to search for opportunities to
enhance its position in the Gulf of Mexico through the strategic acquisition of
vessels available in that market. The Company also will seek to increase the
size of its fleet by purchasing or building new vessels if market conditions
justify such purchases or construction. Additionally, the Company continues to
pursue potential opportunities for growth in the offshore marine services
business in international markets, as evidenced by the July 1993 Ravensworth
Acquisition and the November 1994 Seaboard Acquisition. See "-- North Sea
Affiliates."
CUSTOMERS AND CHARTER TERMS
Substantially all of the Company's charters in the Gulf of Mexico are
short-term contracts (30 to 45 days) or spot contracts (less than 30 days) and
all are cancelable upon short notice. The terms of charters are determined
through negotiation and vary widely. Because of renewals, the stated duration of
charters frequently has little relationship to the actual time a vessel is
chartered to a particular customer. Charters are obtained through competitive
bidding or, with established customers, through negotiation. The Company
believes that the short terms of its charters can be advantageous as they will
enable the Company to benefit from any increase in dayrates resulting from
increased demand in the offshore marine services industry. Conversely, the short
charter terms do not protect the Company against any decrease in utilization or
dayrates resulting from a downturn in the industry. As discussed below,
Ravensworth and Seaboard generally conduct their business pursuant to longer
term contracts for vessel support service.
The Company's customers consist principally of major and independent oil
and gas exploration and development companies. During 1994, the vessels were
chartered to 114 customers. The number and identity of the Company's customers
vary from year to year. In past years, several customers have accounted for 10%
or more of the Company's consolidated revenues, although the identity of such
customers varies from year to year. Typically, invoices for services were paid
within 30 to 45 days of the invoice date. Because of the variety and number of
customers each year, the Company's management believes that the loss of any one
customer would not have a material adverse effect on the Company.
CERTAIN GOVERNMENT REGULATION
Many aspects of the offshore marine services industry are subject to direct
governmental regulation. The Company is subject to the jurisdiction of the U.S.
Coast Guard, the National Transportation Safety Board and the U.S. Customs
Service, as well as private industry organizations such as the American Bureau
of Shipping. The Coast Guard and the National Transportation Safety Board set
safety standards and are authorized to investigate vessels at will. The
operations of Ravensworth and Seaboard and the North Sea Manager are subject to
direct governmental regulation, including by the Department of Transportation
and the Health and Safety Executive of the United Kingdom. If the Company
expands its operations to foreign waters, it will also be subject to regulation
by other governments.
In addition to laws and regulations directly affecting the Company, the
Company's business is also influenced by laws, regulations and policies which
impact the drilling programs of its customers and of the oil and gas industry as
a whole.
The operations of the Company are subject to federal, state and, for
onshore activities, local laws and regulations relating to protection of the
environment. Although the Company believes that its operations are in
22
<PAGE> 24
general compliance with applicable environmental regulations, risks of
substantial costs and liabilities are inherent in offshore marine service
operations, and there can be no assurance that significant costs and liabilities
will not be incurred. Moreover, it is possible that other developments, such as
increasingly strict environmental laws, regulations and enforcement policies
thereunder, and claims for damages to property, persons or the environment
resulting from the Company's operations could result in substantial costs and
liabilities to the Company. Without limiting the generality of the foregoing,
the Company's operations are subject to the Outer Continental Shelf Lands Act,
and regulations promulgated thereunder, which regulate the activities of
offshore service vessels, require vessel owners and operators to demonstrate
financial and operational responsibility and provide for certain limitations on
the liability of vessel owners and operators. The Company's operations also are
subject to the Federal Water Pollution Control Act of 1972, as amended, which
imposes strict controls against the discharge of oil and other pollutants into
surface waters within their jurisdiction. Any hazardous substances transported
by the Company are subject to regulation under the Resource Conservation and
Recovery Act and the Hazardous Materials Transportation Act. Numerous other
environmental laws and regulations also apply to the operations of the Company,
and such laws and regulations are subject to frequent changes. The Company's
insurance policies provide coverage for accidental occurrences of seepage and
pollution and/or cleanup and containment of the foregoing. Although the
Company's losses from such occurrences have not historically exceeded its
insurance coverage, there is no assurance that this will continue to be the
case. Management believes, however, that the Company's insurance coverage is
adequate and comparable to that generally carried in the offshore marine
services industry.
The Company has received and is responding to a subpoena for documents from
the United States District Court for the Southern District of Texas, Houston
Division. The scope of the subpoena suggests an interest in the Company's
compliance with certain environmental statutes and regulations, violations of
which could carry both civil and criminal liabilities. The subpoena seeks
information concerning the Company's vessels since January 1, 1993 regarding
vessel operations as they relate to the purchase, use and disposition of
petroleum and related products.
It is the Company's policy to comply with all applicable laws, including
laws designed to protect the environment. While management and the board of
directors of the Company do not believe that any outcome of the investigation
would have a material adverse effect on the financial position of the Company,
they cannot predict the nature or ultimate outcome of the investigation or any
proceeding that might be based thereon.
NORTH SEA AFFILIATES
Business
Ravensworth and Seaboard, through their subsidiaries, are engaged in the
offshore marine services business primarily serving the oil and gas industry in
the North Sea by providing safety standby vessels. Under the United Kingdom's
Offshore Installations (Emergency Procedures) Regulations 1976 and Code for the
Assessment of the Suitability of Standby Vessels, as revised in 1991
(collectively, the "Safety Code"), existing manned platforms and offshore
drilling rigs are subject to offshore marine safety requirements and offshore
operations and operators are required to engage and maintain the availability of
safety standby vessels. The Safety Code requires that a vessel "standby" to
provide a means of rescuing platform or rig personnel in the event of an
emergency at such an offshore facility.
Through the combined fleet of 29 vessels, 23 owned and six chartered,
Ravensworth and Seaboard provide such safety standby services, generally
pursuant to long-term charters. Of the 29 vessels, 24 are currently under
charters as of June 15, 1995. Eleven of these charters expire in 1995, five
expire in 1996, four expire in 1997, two expire in 1999 and two expire in 2003.
Charters at Ravensworth and Seaboard are generally terminable upon varying
notice periods, and certain charters provide for compensation for early
termination or effectively prohibit termination due to charter rates being above
then prevailing market rates. Due to the requirement to maintain a safety
standby vessel in the operational area 24 hours per day, seven days per week,
most charters provide for the safety standby service to be provided without
specifying a particular vessel, thus allowing Ravensworth and Seaboard to move
their vessels to an alternative project, to shipyards for repairs and
maintenance, or to port to exchange crews and take on fuel and supplies, by
replacing the
23
<PAGE> 25
primary vessel with a relief vessel. The requirement for constant coverage,
however, requires, as a practical matter, that Ravensworth and Seaboard have
vessels available for substitution when primary vessels are off-line and
therefore prohibits commitment of all vessels to separate full time charters.
From time to time, under short-term arrangements, Ravensworth and Seaboard may
either charter in other vessels to meet their contractual commitments or charter
out their own vessels to enable third parties to meet similar obligations.
Dayrates for the Ravensworth and Seaboard vessels are not comparable to
Gulf of Mexico supply vessel dayrates because (i) they are governed by long-term
charters and (ii) the rates are designed to cover significant additional costs
borne by Ravensworth and Seaboard not applicable to supply vessel operations.
These additional costs include larger, more expensive crews and fuel costs. Fuel
costs are normally paid by the customer in supply vessel operations.
All of the Ravensworth vessels and all of the Seaboard vessels are operated
by Seaboard and the North Sea Manager. The crews and officers who work on the
vessels are employed by foreign subsidiaries of Ravensworth and Seaboard.
Ravensworth has three full time and two part time employees who perform
general and administrative functions of the Ravensworth operations and oversee
the safety standby operations generally, including the contractual relations
with clients. Seaboard, which is over time transferring management to the North
Sea Manager, has 34 employees who manage the day-to-day operations.
Ravensworth's 23 existing vessels are registered as British ships, with
ports of registry at Douglas, Isle of Man; Aberdeen, Scotland; Glasgow,
Scotland; or London, England. Five of Seaboard's vessels are registered as
British ships, and one Seaboard vessel is registered as a Bahamian ship, all
with ports of registry at Inverness, Scotland. All of these vessels are subject
to the laws of the applicable jurisdiction as to ownership, registration and
manning of vessels. In addition, such vessels are subject to the requirements of
a number of international conventions to which the jurisdictions where the
vessels are registered are parties. Further, vessels operated as safety standby
vessels in the U.K. sector of the North Sea are subject to the requirements of
the Department of Transportation and of the Health and Safety Executive of the
United Kingdom pursuant to the Safety Code.
Ravensworth and Seaboard Fleets
The following table provides information as of June 30, 1995, regarding the
29 vessels in which either Ravensworth or Seaboard has an interest, each of
which is a safety standby vessel.
<TABLE>
<CAPTION>
LENGTH YEAR
OVERALL COMPLETED/
NAME IN FEET CONVERTED IHP
-------------------------------------------------------- ------- ---------- ----
<S> <C> <C> <C>
RAVENSWORTH OWNED:
Seaboard Snipe........................................ 185 1972/1992 3600
Scott Guardian........................................ 180 1993 2250
Trafalgar Guardian.................................... 180 1994 2250
Seaboard Swan......................................... 175 1971/1991 4200
Seaboard Transporter.................................. 175 1971/1990 4200
Seaboard Skua......................................... 175 1971/1991 4200
Seaboard Carrier...................................... 175 1967/1990 3000
Seaboard Scout........................................ 175 1974/1990 2500
Sunset Baronet........................................ 175 1985/1992 2200
Sunset Earl........................................... 175 1985/1991 2200
Safe Protector........................................ 175 1973/1991 2200
Sunset Searcher....................................... 174 1985/1991 4200
Sunset Seeker......................................... 174 1985/1991 4200
Seaboard Capella...................................... 168 1968/1991 2500
Seaboard Swallow...................................... 165 1972/1990 2500
</TABLE>
(Table continued on following page)
24
<PAGE> 26
<TABLE>
<CAPTION>
LENGTH YEAR
OVERALL COMPLETED/
NAME IN FEET CONVERTED IHP
---- ------- ---------- ----
<S> <C> <C> <C>
Seaboard Swift........................................ 165 1973/1990 2500
Seaboard Castor....................................... 154 1947/1992 1100
RAVENSWORTH SALE/CHARTER/PURCHASE INTEREST:(1)
Seaboard Sapphire..................................... 182 1980/1990 2700
Seaboard Supreme...................................... 182 1981/1990 2700
Seaboard Sentry....................................... 182 1979/1990 2700
Seaboard Support...................................... 182 1979/1990 2700
Seaboard Sceptre...................................... 180 1981/1990 2700
Seaboard Sovereign.................................... 180 1979/1990 2700
SEABOARD OWNED:
Seaboard Implacable................................... 245 1965/1984 2500
Seaboard Illustrious.................................. 234 1972/1986 2160
Seaboard Integrity.................................... 231 1969/1985 1750
Seaboard Intrepid..................................... 231 1969/1985 1750
Seaboard Invincible................................... 231 1971/1986 2400
Seaboard Coral........................................ 200 1977/1992 4200
</TABLE>
- ---------------
(1) These six vessels are operated under charters. Pursuant to agreements
entered into at the time the vessels were sold and chartered back,
Ravensworth may acquire the owners of the vessels or be required to
repurchase such vessels from such owners.
RAVENSWORTH ACQUISITION TERMS
On July 23, 1993, the Company effected the Ravensworth Acquisition by
acquiring 49.9% of the outstanding capital stock of Ravensworth from Ravensworth
Holdings Limited ("RHL"), the sole beneficial holder of the outstanding capital
stock of Ravensworth, for a purchase price of $11 million in cash and
approximately $2.7 million in the form of 158,978 restricted shares of Common
Stock of the Company.
In connection with the Ravensworth Acquisition, the Company acquired
options to purchase the remaining outstanding capital stock of Ravensworth,
exercisable after January 1, 1995 in two equal annual installments, with the
first option exercisable on or before March 31, 1996 (the "1995 Option") and the
second option exercisable on or before March 31, 1997 (the "1996 Option").
The Company may, at its election, accelerate the exercise of the 1996
Option to any date on or after January 1, 1995. The 1996 Option will expire
unless the 1995 Option is exercised in full. The consideration payable upon
exercise of the 1995 Option and the 1996 Option is to be paid one-third in cash
and two-thirds in Common Stock valued at Market Price, as defined in the
applicable agreements. The Company may elect to pay in U.S. dollars any payments
that would otherwise be made to RHL in the Company's Common Stock. The per share
option exercise prices are equal to the per share price originally paid by the
Company for its initial 49.9% investment, plus simple interest at 7% (compounded
annually) from the closing of the initial acquisition through date of payment.
The aggregate option payment for the 1995 Option (or the 9.9% option exercised
as part of the Ravensworth Acquisition) is subject to reduction by 50% of any
deficit in actual Ravensworth EBDIT below a target EBDIT for 1994 and 1995, and
the option payment for the 1996 Option will be reduced by 25% of such deficit
for 1996. Based on Ravensworth's EBDIT performance in 1994, the option price for
the 9.9% option exercised in 1993 was adjusted downward by approximately
$1,800,000, resulting in the surrender and cancellation of approximately 106,000
of such 158,978 shares of the Company's Common Stock. Any downward adjustment in
excess of the aggregate option payment otherwise payable with respect to the
1995 Option will be carried forward as an adjustment to any future option
payment or, if not fully so utilized, applied against the Put payment described
below, if applicable, or applied in connection with payments called for under
the third party sale arrangement discussed below. The maximum decrease in option
25
<PAGE> 27
payment with respect to any year for which EBDIT is measured against a specified
target is limited to $4 million. Any decrease in excess of $4 million for any
such year will not be carried forward.
The Company is required to pay RHL annual performance incentives equal to
50% of the excess, if any, of actual Ravensworth EBDIT over certain targeted
EBDIT levels with respect to fiscal year 1995, and 25% with respect to fiscal
year 1996 (the "Performance Incentives"). The maximum Performance Incentive
payment in any year for which EBDIT is measured against a specified target is
limited to $4 million. If Performance Incentives are required, they will be paid
in cash in U.S. dollars. Future Performance Incentives are payable only if the
Company exercises the 1995 Option.
If the Company exercises the 1995 Option but does not exercise the 1996
Option, RHL has a corresponding "put" (the "Put"), upon termination of the
option exercise period, to require the Company to purchase the shares of
Ravensworth covered by the 1996 Option at the same price, including adjustments,
and for the same consideration as is applicable to the 1996 Option. If the
Company does not exercise the 1995 Option by March 31, 1996, the 1995 Option and
the 1996 Option will expire and either the Company or RHL will have the right to
initiate the sale of Ravensworth to an unrelated third party. In the event such
a third party makes an offer that is accepted by RHL or the Company, as the case
may be, but rejected by the other, the rejecting party shall be obligated to
purchase the accepting party's Ravensworth shares on terms and conditions
substantially identical to the terms and conditions of the offer made by the
third party.
Pursuant to rights granted in connection with the Ravensworth Acquisition,
the Company is entitled to nominate directors to be elected to the Board of
Directors of Ravensworth commensurate with its ownership interest in
Ravensworth, and RHL has agreed to vote its shares for the Company's designees
to Ravensworth's Board. The Company has nominated and caused to be elected three
directors to the six-member Board of Directors of Ravensworth. In addition, the
consent of the Company is required before Ravensworth takes certain significant
actions.
SEABOARD ACQUISITION
Effective November 30, 1994, the Company's newly formed 49.9%-owned
affiliate, Seaboard, effected the Seaboard Acquisition by acquiring all of the
outstanding capital stock of SOGL which, together with its subsidiaries, owns
six (6) safety standby vessels operating in the North Sea. The acquisition of
the SOGL equity securities was accomplished for nominal consideration. To
facilitate the transaction, the Company made a 1.5 million Pounds Sterling loan
to SOGL and guaranteed approximately 302,000 Pounds Sterling of SOGL debt. RHL,
the 50.1% owner of the Company's 49.9% owned North Sea affiliate, Ravensworth,
guaranteed to the Company the repayment of 50.1% of the loan to SOGL. Proceeds
to RHL from the sale of shares of Common Stock in this offering will be used to
purchase up to a 50.1% participation in the Company's loan to SOGL with a
corresponding reduction in its guarantee obligation to the Company. These funds
will be added to the Company's working capital to be used for general corporate
purposes.
The North Sea Manager, the Company's 49.9% owned affiliate formed in
conjunction with the Seaboard Acquisition, provides management services to the
six Seaboard vessels as well as the 23 Ravensworth vessels. The remaining 50.1%
equity interest in Seaboard and the remaining 50.1% equity interest in North Sea
Manager are owned by RHL. In connection with the exercise of its options to
acquire the remaining outstanding capital stock of Ravensworth, the Company will
be entitled to receive for no additional consideration a corresponding amount of
the remaining equity interests in North Sea Manager. If the Company has
exercised its options to acquire the remainder of the capital stock of
Ravensworth, the Company may exercise an option to acquire the remaining
outstanding capital stock of Seaboard for nominal consideration through June 30,
1999, and thereafter at Market Value, as defined.
In connection with consummating the Seaboard Acquisition, SOGL's existing
loans were restructured on a substantially non-recourse basis to the Company. In
addition, the transaction made provisions to bring the full management function
for both the Ravensworth and Seaboard fleets under the control of the Company
and RHL through the North Sea Manager, a major milestone in the development of
the Company's North Sea presence.
26
<PAGE> 28
The performance of Seaboard and its subsidiaries and the North Sea Manager
will be combined with the performance of Ravensworth for purposes of calculating
EBDIT-based performance incentives or option price adjustments provided for in
the Ravensworth Acquisition.
Pursuant to rights granted in connection with the Seaboard Acquisition and
the formation of the North Sea Manager, the Company is entitled to nominate
directors to be elected to the boards of directors of Seaboard and the North Sea
Manager commensurate with its ownership interests in such companies, and RHL has
agreed to vote its shares for the Company's designees to such companies' boards.
The Company has nominated and caused to be elected the appropriate directors to
the boards of directors of such companies. In addition, the consent of the
Company is required before Seaboard or the North Sea Manager take certain
significant actions.
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table and descriptions set forth information regarding
directors and executive officers of the Company. Directors are elected at the
Company's annual meeting of stockholders and serve for one-year terms or until
their successors are elected and qualified, or until their earlier resignation
or removal in accordance with the Company's bylaws. Officers are elected
annually by the Board of Directors and serve for one-year terms or until their
successors are chosen or until their resignation or removal.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Larry D. Hornbeck............. 56 Chairman of the Board of Directors, President
and Chief Executive Officer
Bernie W. Stewart............. 50 Senior Vice President and Chief Operating
Officer
Robert W. Hampton............. 43 Vice President, Treasurer and Chief Financial
Officer
E.J. Hebert................... 56 Vice President -- Operations
Roger M. Sykes................ 51 Vice President -- Marketing
Terry Jett.................... 51 Vice President of Sales, Manager -- East
Harvey C. Haskett............. 53 Vice President of Sales -- West
Richard R. Ellison............ 44 Vice President and Secretary
John D. Opiela................ 37 Vice President and Controller
Robert E. Schuller, Jr........ 65 Director
Billy Pugh.................... 70 Director
Warren B. Idsal............... 49 Director
Anthony W. Henfrey............ 50 Director
L. E. Simmons................. 48 Director
Bruce W. Hunt................. 37 Director
</TABLE>
Larry D. Hornbeck is Chairman of the Board, President and Chief Executive
Officer of the Company. He has held these positions and has been a director
since he founded the Company in January 1981. Prior to 1981, Mr. Hornbeck was
Chairman of the Board, President and Chief Executive Officer of Seal Fleet,
Inc., a publicly held international offshore supply vessel company. Mr. Hornbeck
has more than 26 years of senior management experience in the offshore marine
services industry, including international operations. He also serves as a
director of Coastal Towing, Inc.
Bernie W. Stewart has been Senior Vice President and Chief Operating
Officer of the Company since February 1995. From October 1993 until he joined
the Company, he pursued various business opportunities. From 1986 to October
1993, Mr. Stewart was President of Western Oceanic Inc., a wholly owned
subsidiary of The Western Company of North America.
Robert W. Hampton has been Vice President, Treasurer and Chief Financial
Officer of the Company since February 1990. He was Vice President of American
Exploration Company, a publicly held independent
27
<PAGE> 29
oil and gas company, from 1986 to 1989. From 1982 to 1986, Mr. Hampton was a
Senior Manager in the Houston office of Price Waterhouse. Mr. Hampton has more
than five years of experience in the offshore marine services industry.
E. J. Hebert has been the Vice President -- Operations of the Company since
December 1992. He was President and General Manager of Petrol Marine Corporation
from 1986 to 1992. Mr. Hebert has more than 17 years of experience in the
offshore marine services industry, including international operations.
Roger M. Sykes has been Vice President -- Marketing of the Company since
March 1993 and from January 1992 to March 1993 he was the Vice
President -- International of the Company. He was Director of International
Marketing of Zapata Gulf Marine from 1985 to December 1991. Mr. Sykes has
managed International and domestic marketing of offshore marine service vessels
for more than 21 years.
Terry Jett has been Vice President of Sales, Manager -- East of the Company
since March 1993 and prior to that he was a Vice President of Operations and
Chief Operating Officer of the Morgan City office from January 1990 to March
1993. He was Vice President of Point Marine, Inc. from August 1976 until January
1990. Mr. Jett has more than 23 years of experience in the offshore marine
services industry.
Harvey C. Haskett has been Vice President of Sales West of the Company
since March 1993 and prior to that he was a Vice President of Operations of the
Company from December 1981 to March 1993. He was a director of the Company from
May 1982 to June 1989. Prior to joining the Company in 1981, Mr. Haskett was an
officer of Seal Fleet, Inc., a publicly held offshore supply vessel company. Mr.
Haskett has more than 23 years of experience in the offshore marine services
industry.
Richard R. Ellison has been Vice President and Secretary of the Company
since August 1987. Mr. Ellison also served as Treasurer until February 1990. He
was a director of the Company from August 1987 to June 1989. From December 1980
to August 1987, Mr. Ellison was Assistant Treasurer of Texas Foundries, Inc.,
which manufactures custom castings. Mr. Ellison has more than seven years of
experience in the offshore marine services industry.
John D. Opiela has been Vice President and Controller of the Company since
March 1993 and prior to that he was Vice President and Controller of the Morgan
City office from January 1990 to March 1993. He was the Controller of Point
Marine, Inc. from November 1988 until January 1990. From 1983 through November
1988, Mr. Opiela worked for the accounting firm, L.D. Crocker and Company. Mr.
Opiela has more than six years of experience in the offshore marine services
industry.
Robert E. Schuller, Jr. has been President of Schuller & Allan, Inc., a
naval architectural and engineering firm since 1966. He has been a director of
the Company since 1981.
Billy Pugh has been the President of Ingleside Marine, Inc. since October
1989. Mr. Pugh served as the President and a director of Billy Pugh Offshore,
Inc. and its predecessors from 1956 to October 1989 and served as Vice President
of Owens Well Service, Inc. from October 1989 until his retirement in November
1992. He has been a director of the Company since 1981.
Warren B. Idsal has been a Senior Vice President and Director of Corporate
Finance for Principal Financial Securities, Inc. ("Principal") since August
1991. From January 1991 until he joined Principal, he served as Deputy Treasurer
of the Texas State Treasury. From February 1990 to December 1990, Mr. Idsal was
a principal and executive officer of Benedetto, Gartland & Greene, Inc., an
investment banking firm. Mr. Idsal has been a director of the Company since
1989.
Anthony W. Henfrey served from November 1987 to April 1990 as a Managing
Director of Simmons & Company International, an investment banking firm
specializing in the oil and gas service and equipment industry. He has been a
private investor since April 1990. From February 1991 to November 1994 he was
Executive Chairman and since November 1994 has been Non-Executive Chairman of
Oceonics Group PLC, an offshore services company headquartered in Great
Yarmouth, England. He served from July 1994 to April 1995 as Director and from
November 1994 to April 1995 as Deputy Chairman of Pavilion Service Group, a
leading retailer of gasoline, convenience store merchandise and catering service
on the UK freeway network, headquartered in Uxbridge, England. He has been a
director of the Company since August 1990.
28
<PAGE> 30
L. E. Simmons has for more than five years served as President of L. E.
Simmons & Associates Incorporated (formerly SCF Investment Partners, Inc.),
which, through an affiliate, manages private institutional investment
partnerships. He has been a director of the Company since 1991. Mr. Simmons also
serves as a director of Zions Bancorporation and Computalog Limited.
Bruce W. Hunt has been President of each of Petro-Hunt Corporation, Portal
Energy Corporation and Petrol Marine Corporation since 1988, and Vice President
of Pentad Resources, Inc., since 1992. He has been a director of the Company
since 1992.
SELLING STOCKHOLDERS
The following table sets forth certain information regarding the Common
Stock owned by each of the Selling Stockholders:
<TABLE>
<CAPTION>
OWNERSHIP PRIOR OWNERSHIP AFTER
TO THE OFFERING THE OFFERING
------------------- SHARES TO -----------------
NUMBER PERCENT BE SOLD NUMBER PERCENT
--------- ------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
Distributees of HOS-2 Partners, L.P.(1):
British Empire Securities & General
Trust plc............................ 12,784 * 12,784 -0-
Sundial International Fund Limited...... 57,671 * 57,671 -0-
Grandmony Holdings Inc.................. 31,767 * 31,767 -0-
Pegasus Holding Corp.................... 57,671 * 57,671 -0-
The University of Texas Permanent
University Fund...................... 76,894 * 76,894 -0-
The Board of Regents of the University
of Texas System...................... 19,224 * 19,224 -0-
FSI Corporation......................... 58,449 * 58,449 -0-
Hillman/Chesapeake Limited
Partnership.......................... 115,388 * 115,388 -0-
Petrol Marine Corporation(2).............. 47,981 * 45,000 2,981 *
Pentad Offshore Corporation(2)............ 657,053 5.0 235,912 421,141 3.0
Portal Energy Corporation(2).............. 660,428 5.0 235,912 424,516 3.0
Ravensworth Holdings Limited(3)........... 53,328 * 53,328 -0-
--------- --------- -------
1,848,638 1,000,000 848,638
========= ========= =======
</TABLE>
- ---------------
* Less than one percent.
(1) Each of the distributees was formerly a partner of HOS-2 Partners, L.P. and
received the shares of Common Stock to be sold by it in the offering
pursuant to a distribution from such partnership.
(2) Each such Selling Stockholder received the shares of Common Stock to be sold
by it pursuant to the offering as partial consideration in the Petrol
Acquisition.
(3) RHL received the shares of Common Stock to be sold by it pursuant to the
offering as partial consideration for the equity securities of Ravensworth
purchased by the Company.
In connection with the financing of a 1990 acquisition, certain Selling
Stockholders received registration rights from the Company pursuant to which the
Company is paying the expenses of such Selling Stockholders in connection with
this offering other than the Underwriters' discounts and commissions
attributable to the shares being sold by such Selling Stockholders and the
travel costs and fees of counsel for the Selling Stockholders. In connection
with the Petrol Acquisition and the Ravensworth Acquisition, certain Selling
Stockholders received registration rights from the Company pursuant to which the
Company is paying the expenses of such Selling Stockholders in connection with
this offering other than the following expenses, to the extent attributable to
the shares being sold by such Selling Stockholders: Commission registration,
listing and filing fees, printing expenses, messenger and delivery expenses and
underwriting fees, discounts and
29
<PAGE> 31
commissions. Such Selling Stockholders are paying all of their out-of-pocket
expenses, including travel costs and fees of counsel.
DESCRIPTION OF SECURITIES
A total of 25,000,000 shares of Common Stock, par value $.10 per share (the
"Common Stock"), is authorized by the Company's Restated Certificate of
Incorporation, as amended (the "Restated Certificate of Incorporation"), of
which 13,166,878 shares are issued and outstanding as of June 30, 1995. Upon the
sale by the Company of the 1,000,000 shares offered by the Company in the
offering, 14,167,265 shares of Common Stock will be outstanding. All outstanding
shares of Common Stock (including the shares of Common Stock offered by the
Selling Stockholders) are, and the shares of Common Stock offered by the Company
in the offering when issued as described in this Prospectus will be, duly and
validly issued, fully paid and nonassessable. The holders of Common Stock do not
have any preemptive right to subscribe for or to purchase any additional
securities issued by the Company. There are no conversion, redemption or sinking
fund provisions associated with the Common Stock.
Dividends. Dividends may be paid on the Common Stock out of any funds
legally available for such purpose when, as and if declared by the board of
directors, but subject to the payment or provision for payment of all dividends
required on outstanding shares of the preferred stock and of any other stock
ranking prior to Common Stock as to dividends. See "Price Range of Common Stock
and Dividend Policy."
Voting Rights. Each holder of Common Stock is entitled to one vote per
share on all matters voted on by the stockholders of the Company, subject to
voting rights of holders of preferred stock.
Liquidation Rights. In the event of any liquidation, dissolution or winding
up of the Company, after payment or provision for payment of the debts and other
liabilities of the Company and the preferential amounts to which the holders of
any stock ranking prior to Common Stock in the distribution of assets upon
liquidation, the holders of shares of Common Stock and the holders of any other
stock ranking on a parity with Common Stock in the distribution of assets upon
liquidation will be entitled to share ratably in the remaining assets of the
Company.
Transfer Agent. The transfer agent and registrar of the Company's Common
Stock is First Interstate Bank of Texas, N.A., Houston, Texas.
PREFERRED STOCK
A total of 5,000,000 shares of preferred stock, par value $1.00 per share,
is authorized by the Company's Restated Certificate of Incorporation. A total of
500,000 shares of preferred stock has been designated as Series B Junior
Participating Preferred Stock ("Series B Preferred Stock") in connection with
the Company's Stockholder Rights Plan discussed below. No other series of
preferred stock is designated and, as of July 5, 1995, no shares of preferred
stock are outstanding.
STOCKHOLDER RIGHTS PLAN AND CERTAIN CHARTER AND BYLAW PROVISIONS
The Company's board of directors adopted a Stockholder Rights Plan (the
"Plan") on June 20, 1995 and declared a dividend of one right ("Right") for each
outstanding share of the Company's Common Stock to stockholders of record on
July 5, 1995. The Rights only become exercisable, and transferable apart from
the Company's Common Stock, ten business days following a public announcement
that a person or group has acquired beneficial ownership of, or has commenced a
tender or exchange offer for, 20% or more of the Company's Common Stock (each a
"Triggering Event").
Each Right initially entitles the holder to purchase one one-hundredth of
one share of the Company's Series B Preferred Stock at a price of $60.00,
subject to adjustment. In the event that a person becomes a 20% or more holder
("Acquiring Person") of the Company's Common Stock, each holder of a Right
(other than the Acquiring Person) will be entitled, instead, to receive upon
exercise of each Right a number of shares of the Company's Common Stock (or, in
certain circumstances, cash, property or other securities of the
30
<PAGE> 32
Company) having a current market price equal to twice the exercise price for one
one-hundredth of a share of Series B Preferred Stock. Similarly, if after a
Triggering Event the Company is acquired in a merger or other business
combination, or 50% or more of the Company's assets or earning power are sold or
transferred, each Right will entitle the holder thereof (other than the
Acquiring Person) to receive a number of shares of common stock of the acquiring
company having a current market price equal to twice the exercise price for one
one-hundredth of a share of Series B Preferred Stock.
The Rights may be redeemed by the Company in whole, but not in part, at a
redemption price of $.01 per Right at any time prior to the Rights becoming
exercisable. The Rights will expire on June 20, 2005. Pursuant to the Plan, all
500,000 shares of the Company's Series B Preferred Stock have been reserved for
issuance upon exercise of Rights.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group who attempts to acquire the Company
without the approval of the Company's board of directors. As a result, the
overall effect of the Rights may be to render more difficult or discourage any
attempt to acquire the Company even if such acquisition may be favorable to the
interests of the Company's stockholders. Because the Company's board of
directors can redeem the Rights or approve certain offers, the Rights should not
interfere with any merger or other business combination approved by the
Company's board of directors.
The description and terms of the Rights are set forth in a Rights Agreement
between the Company and First Interstate Bank of Texas, N.A., as Rights Agent.
Under Delaware law the power to adopt, amend and repeal bylaws is conferred
solely on the stockholders unless the corporation's certificate of incorporation
also confers this power upon its board of directors. The Company's Restated
Certificate of Incorporation grants this power to the board of directors. The
Restated Certificate of Incorporation requires the affirmative vote or consent
of holders of not less than 66-2/3% of each class of stock of the Company issued
and outstanding and entitled to vote in elections of directors of the Company to
approve the merger or consolidation of the Company with any other corporation,
or the liquidation of the Company. A provision of the Company's bylaws provides
that a special meeting of stockholders may be called only by the chairman of the
board of directors, the president, three or more directors or the holders of not
less than one-quarter of the shares having voting power at the meeting. These
provisions, in addition to the Plan and the existence of authorized but unissued
capital stock, may have the effect, either alone or in combination with each
other, of making more difficult or discouraging a given transaction or change of
management deemed undesirable by the board of directors even if such transaction
or change is favorable to the interests of stockholders.
FOREIGN OWNERSHIP
Under the Merchant Marine Act of 1920, the transportation of merchandise or
passengers for hire in domestic waters is limited to vessels owned by U.S.
citizens that are built in, and registered under the laws of, the United States.
For purposes of these requirements, no corporation is deemed a U.S. citizen
unless, among other things, no more than 25% of any class of its voting
securities are owned by non-U.S. citizens, none of the corporation's chief
executive officer, president or chairman of the board are non-U.S. citizens and
no more than a minority of its board of directors necessary to constitute a
quorum are non-U.S. citizens. If the Company should fail to meet any of the
foregoing citizenship requirements, its vessels become ineligible to engage in
trade in U.S. domestic waters. Furthermore, the foregoing citizenship
requirements must be met in order for the Company to continue to qualify for
MARAD-guaranteed financing that currently exists with respect to certain of its
vessels. Certain provisions of the Company's Restated Certificate of
Incorporation are intended to aid compliance with the foregoing requirements
regarding non-U.S. citizen ownership. Based on the composition of its management
and board of directors and the recently completed annual test of its stock
ownership, the Company meets these citizenship requirements.
Under the provisions of the Restated Certificate of Incorporation (i) any
transfer, or attempted or purported transfer, of any shares of capital stock
which would result in the ownership or control by one or more persons who is not
a U.S. citizen for purposes of United States coastwide domestic shipping (as
defined in the Shipping Act of 1916, as amended), of an aggregate percentage of
the shares of capital stock in excess of a
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<PAGE> 33
fixed percentage (the "Permitted Percentage") which is equal to 5% less than the
percentage that would prevent the Company from being a U.S. citizen (currently
25%) for purposes of engaging in United States coastwise domestic shipping,
will, until such excess no longer exists, be void and ineffective as against the
Company; and (ii) if at any time ownership of Common Stock (either of record or
beneficial) by persons other than U.S. citizens exceeds the Permitted
Percentage, the Company may withhold payment of any dividends on such shares
deemed to be in excess of the Permitted Percentage and will suspend the voting
rights of such shares.
Certificates representing the Common Stock bear legends concerning the
restrictions on ownership by persons other than U.S. citizens. In addition, the
Company's board of directors is authorized to adopt bylaw provisions (i)
requiring, as a condition precedent to the transfer of shares on the records of
the Company, representations and other proof as to the identity of existing or
prospective stockholders; and (ii) establishing and maintaining a dual stock
certificate system under which different forms of certificates may be used to
indicate whether or not the owner thereof is a U.S. citizen.
CERTAIN UNITED STATES TAX CONSEQUENCES
FOR NON-U.S. HOLDERS OF COMMON STOCK
The following is a general discussion of certain United States federal
income and estate tax consequences of the ownership and disposition of Common
Stock applicable to Non-U.S. Holders of Common Stock, but does not purport to
be a complete analysis of all the potential tax considerations relating
thereto. A "Non-U.S. Holder" is any person other than (i) a citizen or resident
of the United States, (ii) a corporation or partnership created or organized in
the United States or under the laws of the United States or of any State
thereof or (iii) an estate or trust whose income is includable in gross income
for U.S. federal income tax purposes regardless of its source. An individual
may, subject to certain exceptions, be deemed to be a resident of the United
States (as opposed to a nonresident) by virtue of being present in the United
States on at least 31 days in the calendar year and for an aggregate of at
least 183 days during a three-year period ending with the current calendar year
(counting for such purposes all of the days present in the current year,
one-third of the days present in the immediately preceding year, and one-sixth
of the days present in the second preceding year). U.S. residents are subject
to U.S. federal income tax as if they were U.S. citizens. This discussion is
for general information only and does not consider any specific facts or
circumstances, or any state, local or non-U.S. tax consequences, that may apply
to a particular Non-U.S. Holder. Furthermore, this discussion is based on
current provisions of the Internal Revenue Code of 1986 and Treasury
regulations and judicial interpretations as of the date hereof, all of which
are subject to change. PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX
ADVISORS REGARDING THE FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSEQUENCES OF
OWNING AND DISPOSING OF COMMON STOCK.
Dividends. Generally, dividends paid to a Non-U.S. Holder of Common Stock
will be subject to U.S. withholding tax at the rate of 30% of the amount of the
dividend, or at a lower applicable treaty rate. Under current Treasury
regulations, dividends paid to an address in a foreign country are presumed to
be paid to a resident of such country for purposes of determining the
applicability of a treaty rate. Under proposed Treasury regulations not
currently in effect, however, a holder of Common Stock who wished to claim the
benefit of an applicable treaty rate would be required to file Internal Revenue
Service Form 1001 (Ownership, Exemption, or Reduced Rate Certificate) and,
subject to a de minimis exception, Form 8306 (Certificate of Residence) with the
Company or its agent. Such Forms would contain the holder's name and address and
other pertinent information certified by such holder under penalties of perjury,
and in the case of Form 8306 would include an official statement by the
"competent authority" (as contemplated by the applicable tax treaty) in the
foreign country attesting to the holder's status as a resident of such country.
If, however, the dividend is effectively connected with the conduct of a
trade or business within the United States by a Non-U.S. Holder, the dividend
will be subject to regular U.S. federal income tax at ordinary federal income
tax rates (on a net income basis), which is not collected by withholding,
provided the Non-U.S. Holder files an Internal Revenue Service Form 4224 with
the Company or its agent. Moreover, in the case of a Non-U.S. Holder that is a
corporation, a branch profits tax at the rate of 30% (or lower
32
<PAGE> 34
applicable treaty rate) may be imposed on such corporation on its earnings
(including dividends) effectively connected with a U.S. trade or business to the
extent that such earnings are considered to be repatriated away from the U.S.
trade or business.
Sale of Common Stock. Generally, a Non-U.S. Holder will not be subject to
U.S. federal income tax on any gain recognized upon the sale (or other
disposition) of Common Stock unless (i) such gain is effectively connected with
the conduct of a trade or business within the United States by such holder (in
which case the branch profits tax described above may also apply if the holder
is a foreign corporation), (ii) such holder is an individual who has been
present in the United States for at least 183 days during the taxable year of
the disposition and the Common Stock is a capital asset with respect to the
holder, or (iii) the Company is or has been a "United States real property
holding corporation" for federal income tax purposes and the Non-U.S. Holder
owned, directly or pursuant to certain attribution rules at any time during the
five-year period ending on the date of disposition, more than 5% of the
Company's Common Stock (assuming that Common Stock is regularly traded on an
established securities market). The Company believes that it is not presently a
United States real property holding corporation.
Information Reporting and Backup Withholding. The Company must report
annually to the Internal Revenue Service and to each Non-U.S. Holder the amount
of dividends paid to, and the tax withheld with respect to, each Non-U.S.
Holder. These reporting requirements apply regardless of whether withholding was
reduced by an applicable tax treaty or not required. Copies of these information
returns may also be made available under the provisions of a specific treaty or
agreement with the tax authorities in the country in which the Non-U.S. Holder
resides. U.S. backup withholding tax (which is a withholding tax imposed at the
rate of 31% on certain payments to persons that fail to furnish the information
required under U.S. information reporting requirements) will generally not apply
to dividends paid on Common Stock to a Non-U.S. Holder at an address outside the
United States unless the payor has knowledge that the payee is a United States
person.
Payment of the proceeds of a sale of Common Stock to or through a U.S.
office of a broker will be subject to information reporting and backup
withholding unless the holder certifies as to its status as a Non-U.S. Holder
under penalties of perjury or otherwise establishes an exemption. Payment of the
proceeds of a sale of Common Stock to or through a non-U.S. office of a broker
generally will not be subject to backup withholding or information reporting;
however, if such broker is (i) a United States Person; (ii) a "controlled
foreign corporation," or (iii) a foreign person that derives 50% or more of its
gross income from the conduct of a trade or business in the United States, such
payment will be subject to information reporting (but currently not backup
withholding, although the issue of whether backup withholding should apply is
under consideration by the Internal Revenue Service) unless such broker has
documentary evidence in its records that the holder is a Non-U.S. Holder and
certain other conditions are met or the holder otherwise establishes an
exemption.
Any amounts withheld under the backup withholding rules will be credited
against the Non-U.S. Holder's federal income tax liability, if any, or refunded,
provided the required information is furnished to the Internal Revenue Service.
Estate Tax. Common Stock owned (or treated as owned) by an individual who,
at the time of death, is neither a citizen or a domiciliary of the United States
will be includable in his gross estate for United States federal estate tax
purposes and thus may be subject to U.S. estate tax, unless an applicable estate
tax treaty provides otherwise.
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<PAGE> 35
UNDERWRITING
Subject to the terms and conditions set forth in the Purchase Agreement
among the Company, the Selling Stockholders and the Underwriters named below
(the "Purchase Agreement"), the Company and the Selling Stockholders have agreed
to sell to each of the Underwriters, and each of the Underwriters, for whom
Merrill Lynch, Pierce, Fenner & Smith Incorporated, The Robinson-Humphrey
Company, Inc. and Simmons & Company International are acting as representatives
(the "Representatives"), has severally agreed to purchase from the Company and
the Selling Stockholders the number of shares of Common Stock set forth below
opposite their respective names. The Underwriters are committed to purchase all
of such shares if any are purchased. Under certain circumstances, the
commitments of non-defaulting Underwriters may be increased as set forth in the
Purchase Agreement.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS FIRM SHARES
------------------------------------------------------------------------- -----------
<S> <C>
Merrill Lynch, Pierce, Fenner & Smith....................................
Incorporated
The Robinson-Humphrey Company, Inc.......................................
Simmons & Company International..........................................
---------
Total....................................................... 2,000,000
=========
</TABLE>
The Representatives have advised the Company and the Selling Stockholders
that the Underwriters propose to offer the shares of Common Stock to the public
initially at the offering price as set forth on the cover page of this
Prospectus, and to certain dealers at such price less a concession not in excess
of $ per share. The Underwriters may allow, and such dealers may
reallow, a discount not in excess of $ per share on sales to certain
other dealers. After the initial public offering, the public offering price,
concession and discount may be changed.
Certain Selling Stockholders have granted the Underwriters options to
purchase up to 300,000 additional shares of Common Stock at the public offering
price, less the underwriting discount. Each of Portal Energy Corporation and
Pentad Offshore Corporation have granted such an option for up to 150,000 shares
of Common Stock. Such options, which expire 30 days after the date of this
Prospectus, may be exercised solely to cover over-allotments. To the extent the
Underwriters exercise the options, each of the Underwriters will be obligated,
subject to certain conditions, to purchase approximately the same percentage of
the option shares that the number of shares to be purchased initially by that
Underwriter bears to the total number of shares to be purchased initially by the
Underwriters.
The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments the Underwriters may be required to
make in respect thereof.
The Company, the Selling Stockholders and certain directors and members of
management have agreed that they will not, without the prior written consent of
the Representatives, offer, sell or otherwise dispose of any shares of Common
Stock or securities convertible into or exercisable for Common Stock (except for
the shares offered hereby or, with respect to the Company and members of
management incident to existing agreements or benefit plans) for a period of 90
days after the date of this Prospectus.
LEGAL MATTERS
Certain legal matters in connection with the shares of Common Stock offered
hereby are being passed upon for the Company by Keck, Mahin & Cate, Houston,
Texas, for certain of the Selling Stockholders by Liddell, Sapp, Zivley, Hill &
LaBoon, L.L.P. Houston, Texas, for certain of the Selling Stockholders by Kelly,
Hart & Hallman, Ft. Worth, Texas and for the Underwriters by Vinson & Elkins
L.L.P., Houston, Texas.
34
<PAGE> 36
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Company's Annual Report on Form 10-K for the year ended December 31, 1994
have been so incorporated in reliance on the report of Price Waterhouse LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
The statements of revenue and direct expenses of the Cargo Vessel Division
of Oil & Gas Rental Services, Inc. for the years ended October 31, 1994 and
October 31, 1993, incorporated by reference in this Prospectus, have been so
incorporated by reference to the Company's Current Report on Form 8-K-A dated
January 27, 1995 amending its Current Report on Form 8-K dated November 15, 1994
in reliance on the report of Bourgeois Bennett, L.L.C., independent accountants,
given on the authority of said firm as experts in auditing and accounting.
35
<PAGE> 37
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESMAN OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING
DESCRIBED HEREIN. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
STOCKHOLDERS OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH
SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................
Incorporation of Certain Documents by
Reference............................
Prospectus Summary.....................
Risk Factors...........................
Use of Proceeds........................
Capitalization.........................
Price Range of Common Stock and
Dividend Policy......................
Selected Historical and Pro Forma
Financial Data.......................
Unaudited Pro Forma Combined Financial
Information..........................
Management's Discussion and Analysis of
Financial Condition and Results of
Operations...........................
Business and Properties................
Management.............................
Selling Stockholders...................
Description of Securities..............
Certain United States Tax Consequences
for Non-U.S. Holders of Common
Stock................................
Underwriting...........................
Legal Matters..........................
Experts................................
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2,000,000 SHARES
[HORNBECK OFFSHORE LOGO]
HORNBECK OFFSHORE
SERVICES, INC.
COMMON STOCK
---------------------------
PROSPECTUS
---------------------------
MERRILL LYNCH & CO.
THE ROBINSON-HUMPHREY
COMPANY, INC.
SIMMONS & COMPANY
INTERNATIONAL
, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 38
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses to be paid by the Company in
connection with the issuance and distribution of the securities being
registered. All expenses other than the Commission registration fee and the NASD
filing and listing fees are estimated.
<TABLE>
<S> <C>
Commission registration fee................................................ $12,170
Listing fee................................................................ 17,500
NASD Filing Fee............................................................ 4,079
Fees and expenses of accountants........................................... *
Fees and expenses of counsel............................................... *
Printing and engraving expenses............................................ *
Blue Sky fees and expenses................................................. *
Miscellaneous.............................................................. *
-------
Total............................................................ $ *
</TABLE>
- ---------------
* To be filed by amendment.
In connection with the financing of a 1990 acquisition, certain Selling
Stockholders received registration rights from the Company pursuant to which the
Company is paying the expenses of such Selling Stockholders in connection with
the distribution of their securities being registered, other than the
underwriters' discounts and commissions attributable to the shares being sold by
such Selling Stockholders and the travel costs and fees and expenses of counsel
for such Selling Stockholders estimated at $20,000. In connection with the
Petrol Acquisition and the Ravensworth Acquisition, certain Selling Stockholders
received registration rights from the Company pursuant to which the Company is
paying the expenses of such Selling Stockholders in connection with this
offering other than the following expenses, to the extent attributable to the
shares being sold by such Selling Stockholders: Commission registration, listing
and filing fees, printing expenses, messenger and delivery expenses and
underwriting fees, discounts and commissions. Such Selling Stockholders are
paying all of their out-of-pocket expenses, including travel costs and fees of
counsel. All such costs to such Selling Stockholders are estimated at
$ .
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subsection (a) of Section 145 of the Delaware General Corporation Law
empowers a corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification may be made in
respect of any claim, issue or matter as to which such person shall have been
II-1
<PAGE> 39
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 145 further provides that to the extent a director, officer,
employee or agent of a corporation has been successful on the merits or
otherwise in the defense of any action, suit or proceeding referred to in
subsections (a) and (b) of Section 145 or in the defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith; that
indemnification provided for by Section 145 shall not be deemed exclusive of any
other rights to which the indemnified party may be entitled; that
indemnification provided for by Section 145 shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of such
person's heirs, executors and administrators; and empowers the corporation to
purchase and maintain insurance on behalf of a director, officer, employee or
agent of the corporation against any liabilities asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liabilities under Section 145.
Section 102(b)(7) of the Delaware General Corporation Law provides that a
certificate of incorporation may contain a provision eliminating or limiting the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of a fiduciary duty as a director, provided that
such provision shall not eliminate or limit the liability of a director (i) for
any breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit.
Article Eight of the Company's restated certificate of incorporation states
that:
The corporation shall indemnify, to the full extent permitted by
Section 145 of the General Corporation Law of Delaware, as amended from
time to time, all persons whom it may indemnify pursuant thereto. No
director shall be personally liable to the Corporation or any stockholder
for monetary damages for breach of fiduciary duty as a director, except on
any matter in respect of which such director shall be liable under Section
174 of Title 8 of the General Corporation Law of Delaware or any amendment
thereto or successor provision thereto or shall be liable by reason that,
in addition to any and all other requirements for such liability, such
director (i) shall have breached his or her duty or loyalty to the
Corporation or its stockholders, (ii) shall not have acted in good faith
or, in failing to act, shall not have acted in good faith, (iii) shall have
acted in a manner involving intentional misconduct or a knowing violation
of law, or in failing to act, shall have acted in a manner involving
intentional misconduct or a knowing violation of law or (iv) shall have
derived an improper personal benefit. Neither the amendment nor repeal of
this Article Eight nor the adoption of any provision of the Certificate of
Incorporation inconsistent with this Article Eight, shall eliminate or
reduce the effect of this Article Eight in respect of any matter occurring,
or any cause of action, suit or claim that, but for this Article Eight
would accrue or arise, prior to such amendment, repeal or adoption of an
inconsistent provision.
The Company's bylaws further provide that the Company shall indemnify its
officers, directors and employees to the fullest extent permitted by law.
In addition to the provisions of the Company's restated certificate of
incorporation and bylaws, the Company has taken such other steps as are
reasonably necessary to effect its indemnification policy. Included among such
other steps is liability insurance provided by the Company for its directors and
officers for certain losses arising from claims or charges made against them in
their capacities as directors or officers of the Company and its North Sea
affiliates.
II-2
<PAGE> 40
ITEM 16. EXHIBITS.
Each Exhibit set forth below is, except as noted, incorporated by reference
to the applicable Commission filing referenced in the description thereof.
<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<S> <C>
*1 -- Form of Purchase Agreement.
2(a) -- Asset Purchase Agreement dated as of November 16, 1992, by and among
Registrant, a subsidiary of Registrant and Petrol Marine Corporation
(Form 8-K, November 25, 1992, SEC File No. 0-10809, Exhibit 2(a)).
2(b) -- Asset Purchase Agreement dated as of November 16, 1992, by and among
Registrant, certain subsidiaries of Registrant, Pentad Offshore
Corporation and Pentad Resources, Inc. (Form 8-K, November 25, 1992,
SEC File No. 0-10809, Exhibit 2(b)).
2(c) -- Asset Purchase Agreement dated as of November 16, 1992, by and among
Registrant, certain subsidiaries of Registrant, Portal Energy
Corporation and Portal Corporation (Form 8-K, November 25, 1992, SEC
File No. 0-10809, Exhibit 2(c)).
2(d) -- Stock Purchase Agreement, dated May 26, 1993, by and between the
Registrant and Ravensworth Holdings Limited (Form 8-K, May 26, 1993,
SEC File No. 0-10809, Exhibit 2(d)).
2(e) -- Stock Option and Ancillary Rights Agreement, dated May 26, 1993, by
and between Registrant and Ravensworth Holdings Limited. (Form 8-K,
May 26, 1993, SEC File No. 0-10809, Exhibit 2(b)).
2(f) -- Agreement for Purchase and Sale of Vessels, dated November 15, 1994,
by and between Registrant and Oil & Gas Rental Services, Inc. (Form
8-K, October 6, 1994, SEC File No. 0-10809, Exhibit 2(a)).
2(g) -- Share, Business and Asset Acquisition Agreement relating to purchase
of Seaboard Offshore Group Limited, dated as of November 30, 1994, by
and among Seaboard Holdings Limited and the Shareholders of Seaboard
Offshore Group Limited and joined for certain limited purposes by
other parties (Form 10-K, December 31, 1994, SEC File No. 0-10809,
Exhibit 2(g)).
4(a) -- Restated Certificate of Incorporation of Hornbeck Offshore Services,
Inc., as amended, including Certificate of Designations of Series B
Junior Participating Preferred Stock (Form 8-A/A Amendment No. 2,
June 21, 1995, Hornbeck Offshore Services, Inc., Exhibit 3.2i).
4(b) -- Restated Bylaws of Hornbeck Offshore Services, Inc. as of June 20,
1995 (Form 8-A/A Amendment No. 2, June 21, 1995, Hornbeck Offshore
Services, Inc., Exhibit 3.2ii).
4(c) -- Rights Agreement dated as of June 20, 1995 between Hornbeck Offshore
Services, Inc. and First Interstate Bank of Texas, N.A., as Rights
Agent, which includes as Exhibit A the Certificate of Designations of
Series B Junior Participating Preferred Stock, as Exhibit B the form
of Right Certificate and as Exhibit C the form of Summary of Rights
to Purchase Stock (Form 8-A, June 21, 1995, Hornbeck Offshore
Services, Inc., Exhibit 4.1).
4(d) -- Agreement Concerning Registration Rights between Registrant and Larry
D. Hornbeck, dated as of June 28, 1989. (Form S-1, March 22, 1990,
Registration No. 33-33999, Exhibit 4(b)).
4(e) -- Special Rights Agreement, dated January 30, 1990, by and between
Registrant, HOS-2 Partners, L.P. (Form 8-K, January 30, 1990, SEC
File No. 0-10809, Exhibit 4.7).
4(f) -- Registration Rights Agreement, dated January 30, 1990, by and among
Registrant, HOS-2 Partners, L.P. and Collecting Bank, N.A. (a bank in
liquidation) (Form 8-K, January 30, 1990, SEC File No. 0-10809,
Exhibit 4.8).
</TABLE>
II-3
<PAGE> 41
<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<S> <C>
4(g) -- Stockholders Agreement dated as of November 19, 1992, by and among
Registrant, Petrol Marine Corporation, Pentad Offshore Corporation,
Portal Energy Corporation, acknowledged and agreed to by Bruce W.
Hunt and acknowledged and agreed to for certain limited purposes by
HOS Partners, L.P. and HOS-2 Partners, L.P. (Form 8-K, November 25,
1992, SEC File No. 0-10809, Exhibit 28(b)).
4(h) -- Amendment No. 1 to Stockholders Agreement dated as of March 18, 1994
by and among Petrol Marine Corporation, Pentad Offshore Corporation,
Portal Energy Corporation, acknowledged and agreed to by Bruce W.
Hunt, and acknowledged and agreed to for certain limited purposes by
HOS Partners, L.P. and HOS-2 Partners, L.P. (Form 10-K, December 31,
1994, SEC File No. 0-10809, Exhibit 4(e)).
4(i) -- Registration Rights Agreement, dated July 23, 1993, by and between
Hornbeck Offshore Services, Inc. and Ravensworth Holdings Limited
(Form 10-K, December 31, 1993, SEC File No. 0-10809, Exhibit 4(g)).
*5 -- Opinion of Keck, Mahin & Cate
23(a) -- Consent of Price Waterhouse LLP, Registrant's Independent
Accountants.
23(b) -- Consent of Bourgeois Bennett, L.L.C., Independent Accountants for
Cargo Vessel Division of Oil & Gas Rental Services, Inc.
*23(c) -- Consent of Keck, Mahin & Cate (included in Exhibit 5).
24(a) -- Power of Attorney pursuant to which amendments to this Registration
Statement may be filed (included as part of the signature page
contained in Part II of this Registration Statement).
</TABLE>
- ---------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby agrees to furnish to the Commission upon
request a copy of all instruments with respect to long-term debt of the
registrant and its consolidated subsidiaries and of any unconsolidated
subsidiaries for which financial statement are required to be filed.
II-4
<PAGE> 42
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on July 5, 1995.
HORNBECK OFFSHORE SERVICES INC.
(Registrant)
By: /s/ LARRY D. HORNBECK
--------------------------------
Larry D. Hornbeck
Chairman of the Board, President
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Larry D. Hornbeck, Robert W. Hampton and Richard
R. Ellison, and each one of them, his true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ LARRY D. HORNBECK Director, Chairman of the July 5, 1995
- --------------------------------------------- Board, President and Chief
(Larry D. Hornbeck) Executive Officer (Principal
Executive Officer)
/s/ ROBERT W. HAMPTON Vice President, Treasurer and July 5, 1995
- --------------------------------------------- Chief Financial Officer
(Robert W. Hampton) (Principal Financial and
Accounting Officer)
/s/ ANTHONY W. HENFREY Director July 5, 1995
- ---------------------------------------------
(Anthony W. Henfrey)
/s/ BRUCE W. HUNT Director July 5, 1995
- ---------------------------------------------
(Bruce W. Hunt)
/s/ WARREN B. IDSAL Director July 5, 1995
- ---------------------------------------------
(Warren B. Idsal)
/s/ BILLY PUGH Director July 5, 1995
- ---------------------------------------------
(Billy Pugh)
/s/ ROBERT E. SCHULLER, JR. Director July 5, 1995
- ---------------------------------------------
(Robert E. Schuller, Jr.)
/s/ L. E. SIMMONS Director July 5, 1995
- ---------------------------------------------
(L. E. Simmons)
</TABLE>
II-5
<PAGE> 43
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<S> <C>
*1 -- Form of Purchase Agreement.
2(a) -- Asset Purchase Agreement dated as of November 16, 1992, by and among
Registrant, a subsidiary of Registrant and Petrol Marine Corporation
(Form 8-K, November 25, 1992, SEC File No. 0-10809, Exhibit 2(a)).
2(b) -- Asset Purchase Agreement dated as of November 16, 1992, by and among
Registrant, certain subsidiaries of Registrant, Pentad Offshore
Corporation and Pentad Resources, Inc. (Form 8-K, November 25, 1992,
SEC File No. 0-10809, Exhibit 2(b)).
2(c) -- Asset Purchase Agreement dated as of November 16, 1992, by and among
Registrant, certain subsidiaries of Registrant, Portal Energy
Corporation and Portal Corporation (Form 8-K, November 25, 1992, SEC
File No. 0-10809, Exhibit 2(c)).
2(d) -- Stock Purchase Agreement, dated May 26, 1993, by and between the
Registrant and Ravensworth Holdings Limited (Form 8-K, May 26, 1993,
SEC File No. 0-10809, Exhibit 2(d)).
2(e) -- Stock Option and Ancillary Rights Agreement, dated May 26, 1993, by
and between Registrant and Ravensworth Holdings Limited. (Form 8-K,
May 26, 1993, SEC File No. 0-10809, Exhibit 2(b)).
2(f) -- Agreement for Purchase and Sale of Vessels, dated November 15, 1994,
by and between Registrant and Oil & Gas Rental Services, Inc. (Form
8-K, October 6, 1994, SEC File No. 0-10809, Exhibit 2(a)).
2(g) -- Share, Business and Asset Acquisition Agreement relating to purchase
of Seaboard Offshore Group Limited, dated as of November 30, 1994, by
and among Seaboard Holdings Limited and the Shareholders of Seaboard
Offshore Group Limited and joined for certain limited purposes by
other parties (Form 10-K, December 31, 1994, SEC File No. 0-10809,
Exhibit 2(g)).
4(a) -- Restated Certificate of Incorporation of Hornbeck Offshore Services,
Inc., as amended, including Certificate of Designations of Series B
Junior Participating Preferred Stock (Form 8-A/A Amendment No. 2,
June 21, 1995, Hornbeck Offshore Services, Inc., Exhibit 3.2i).
4(b) -- Restated Bylaws of Hornbeck Offshore Services, Inc. as of June 20,
1995 (Form 8-A/A Amendment No. 2, June 21, 1995, Hornbeck Offshore
Services, Inc., Exhibit 3.2ii).
4(c) -- Rights Agreement dated as of June 20, 1995 between Hornbeck Offshore
Services, Inc. and First Interstate Bank of Texas, N.A., as Rights
Agent, which includes as Exhibit A the Certificate of Designations of
Series B Junior Participating Preferred Stock, as Exhibit B the form
of Right Certificate and as Exhibit C the form of Summary of Rights
to Purchase Stock (Form 8-A, June 21, 1995, Hornbeck Offshore
Services, Inc., Exhibit 4.1).
4(d) -- Agreement Concerning Registration Rights between Registrant and Larry
D. Hornbeck, dated as of June 28, 1989. (Form S-1, March 22, 1990,
Registration No. 33-33999, Exhibit 4(b)).
4(e) -- Special Rights Agreement, dated January 30, 1990, by and between
Registrant, HOS-2 Partners, L.P. (Form 8-K, January 30, 1990, SEC
File No. 0-10809, Exhibit 4.7).
4(f) -- Registration Rights Agreement, dated January 30, 1990, by and among
Registrant, HOS-2 Partners, L.P. and Collecting Bank, N.A. (a bank in
liquidation) (Form 8-K, January 30, 1990, SEC File No. 0-10809,
Exhibit 4.8).
4(g) -- Stockholders Agreement dated as of November 19, 1992, by and among
Registrant, Petrol Marine Corporation, Pentad Offshore Corporation,
Portal Energy Corporation, acknowledged and agreed to by Bruce W.
Hunt and acknowledged and agreed to for certain limited purposes by
HOS Partners, L.P. and HOS-2 Partners, L.P. (Form 8-K, November 25,
1992, SEC File No. 0-10809, Exhibit 28(b)).
</TABLE>
<PAGE> 44
<TABLE>
<CAPTION>
EXHIBIT NO.
-----------
<S> <C>
4(h) -- Amendment No. 1 to Stockholders Agreement dated as of March 18, 1994
by and among Petrol Marine Corporation, Pentad Offshore Corporation,
Portal Energy Corporation, acknowledged and agreed to by Bruce W.
Hunt, and acknowledged and agreed to for certain limited purposes by
HOS Partners, L.P. and HOS-2 Partners, L.P. (Form 10-K, December 31,
1994, SEC File No. 0-10809, Exhibit 4(e)).
4(i) -- Registration Rights Agreement, dated July 23, 1993, by and between
Hornbeck Offshore Services, Inc. and Ravensworth Holdings Limited
(Form 10-K, December 31, 1993, SEC File No. 0-10809, Exhibit 4(g)).
*5 -- Opinion of Keck, Mahin & Cate
23(a) -- Consent of Price Waterhouse LLP, Registrant's Independent
Accountants.
23(b) -- Consent of Bourgeois Bennett, L.L.C., Independent Accountants for
Cargo Vessel Division of Oil & Gas Rental Services, Inc.
*23(c) -- Consent of Keck, Mahin & Cate (included in Exhibit 5).
24(a) -- Power of Attorney pursuant to which amendments to this Registration
Statement may be filed (included as part of the signature page
contained in Part II of this Registration Statement).
</TABLE>
- ---------------
* To be filed by amendment.
<PAGE> 1
EXHIBIT 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated February 10, 1995 appearing on page F-2 of the Hornbeck Offshore
Services, Inc. Annual Report on Form 10-K for the year ended December 31, 1994.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ PRICE WATERHOUSE LLP
- ----------------------------
PRICE WATERHOUSE LLP
July 5, 1995
Houston, Texas
<PAGE> 1
EXHIBIT 23B
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the reference to our firm under the caption "Experts"
and to the incorporation by reference in the July 1995 Registration Statement
(Form S-3) and related Prospectus of Hornbeck Offshore Services, Inc. of our
report dated November 23, 1994 on the statements of revenue and direct expenses
of the Cargo Vessel Division of Oil & Gas Rental Services, Inc. for its years
ended Octopber 31, 1994 and 1993 included in Form 8-K-A of Hornbeck Offshore
Services, Inc. dated January 27, 1995 which amends its Form 8-K dated November
15, 1994.
/s/ BOURGEOIS BENNETT, L.L.C.
---------------------------------
BOURGEOIS BENNETT, L.L.C.
Certified Public Accountants.
New Orleans, Louisiana,
July 5, 1995.
