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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
__X__ ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE
REQUIRED]
For the fiscal year ended December 31, 1994
OR
_____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE
REQUIRED]
For the transition period from ___________ to
___________.
Commission File No. 1-5587
READING & BATES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 73-0642271
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
901 Threadneedle, Suite 200, Houston, TX 77079
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 713-496-5000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- ---------------------
Common Stock, $.05 par value New York Stock Exchange
Pacific Stock Exchange
$1.625 Convertible Preferred Stock,
$1.00 par value New York Stock Exchange
Pacific Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No___
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ ]
AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY
NONAFFILIATES ON FEBRUARY 28, 1995 - $345,064,148
NUMBER OF SHARES OF COMMON STOCK OUTSTANDING
ON FEBRUARY 28, 1995 - 59,711,023
DOCUMENTS INCORPORATED BY REFERENCE
1) Proxy Statement for Annual Meeting of Stockholders to be held on May 2,
1995 - Part III
TABLE OF CONTENTS
PART I
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
PART III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
PART IV
Item 14. Exhibits, Financial Statements and Reports on Form 8-K
Signatures
READING & BATES CORPORATION AND SUBSIDIARIES
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE YEAR ENDED DECEMBER 31, 1994
PART I
Item 1. Business and Item 2. Properties
Business Developments
Reading & Bates Corporation was incorporated in 1955 under the laws
of the State of Delaware. Unless the context otherwise indicates, the
term "Company" herein refers to the total business conducted by the
Company and its subsidiaries.
The Company provides contract drilling services in major offshore oil
and gas producing areas worldwide. The Company began as one of the
first offshore contract drillers in 1956, and considers itself one of
the most experienced offshore drilling contractors in the world. The
Company's active offshore drilling fleet currently consists of ten jack-
up drilling units, three fourth-generation and two third-generation
semisubmersible drilling units and two drilling tenders. A second-
generation semisubmersible was acquired in 1994 for conversion to a
floating production unit. However, for an interim period the rig may be
deployed as a conventional drilling unit depending upon specific market
opportunities. Nine of the Company's jack-up rigs have maximum drilling
depth capabilities of 25,000 feet and can operate in water depths of up
to 300 feet. The Company's five semisubmersible rigs have maximum
drilling depth capabilities ranging from 25,000 to 30,000 feet and
maximum water depth capabilities ranging from 1,500 to 4,000 feet (with
two rigs capable of upgrades to 6,000 feet and 10,000 feet). The
Company's two drilling tenders each have maximum drilling depth
capabilities of 20,000 feet and both are capable of mooring in up to 400
feet of water.
The Company's fleet is internationally diversified. Two of the
Company's rigs are located in the Gulf of Mexico. The remainder of the
Company's rigs are located in various parts of the world, including in
the North Sea and waters offshore Australia, China, Holland, India,
Indonesia, Italy, Ivory Coast, Malaysia, Singapore, Tunisia and the
United Kingdom.
On February 28, 1995, the Company announced that it had received an
unsolicited merger proposal from Sonat Offshore Drilling Inc. ("Sonat
Offshore") providing for the acquisition of 100% of the common stock of
the Company for a combination of Sonat Offshore common stock and $100
million in cash. As proposed by Sonat Offshore, the Company's
shareholders would, at their election, receive either (i) .357 shares of
Sonat Offshore common stock or (ii) $7.50 of cash for each share of the
Company. The Company has engaged Morgan Stanley & Co. Incorporated to
act as its financial advisor with respect to evaluating the Sonat
Offshore proposal.
See "FINANCIAL CONDITION" under Item 7 for discussions of the
purchase of certain notes and interests relating to the three
previously leased drilling units "GEORGE H. GALLOWAY", "C.E. THORNTON"
and "F.G. McCLINTOCK", the purchase of a second-generation
semisubmersible drilling unit "RIG 41" (ex "BENVRACKIE") and the early
termination of the operating lease on the "SONNY VOSS".
In 1994, as part of the Company's strategy of geographic
diversification and increasing participation in the fourth-generation
semisubmersible sector of the offshore drilling market, the Company
increased its ownership in Arcade Drilling AS ("Drilling"), a Norwegian
company which owns the fourth-generation semisubmersibles "HENRY
GOODRICH" and "SONAT ARCADE FRONTIER". A 1994 transaction, which
included the Company selling its entire ownership in Arcade Shipping AS
("Shipping") and purchasing from Shipping its entire ownership in
Drilling, increased the Company's ownership in Drilling to 68.1%. As of
December 31, 1994, the Company had acquired approximately 73.9% of the
outstanding stock of Drilling, at an accumulated cost of approximately
$112.3 million. See Note B of Notes to Consolidated Financial
Statements and "FINANCIAL CONDITION - Arcade Acquisition".
Pursuant to an agreement dated August 31, 1991 (the "Standstill
Agreement") with Sonat Offshore, which owns approximately 25% of the
stock of Drilling, the Company and its affiliates are subject to certain
restrictions on engaging in various transactions with Drilling,
including transactions with respect to the rigs owned by Drilling and
the stock of Drilling (unless, in some cases, the terms are no less
favorable to Drilling or to Sonat Offshore than similar transactions
with an unaffiliated third party). Such restrictions continue (so far
as the Company's obligations are concerned) until the earliest of (i)
the date when the Company no longer owns the 46% of Drilling stock
previously owned by Shipping, (ii) September 1, 1998, or (iii) the date
when Sonat Offshore owns less than 5% of Drilling (the "Standstill
Period").
The Standstill Agreement further provides that during the Standstill
Period the Company may not permit Drilling to early terminate certain
management agreements (as amended, the "Management Agreements") pursuant
to which Sonat Offshore manages the "HENRY GOODRICH" and the "SONAT
ARCADE FRONTIER". In return for general management and the marketing of
such rigs outside the Norwegian continental shelf, Sonat Offshore
receives a variable management fee from Drilling. The Management
Agreements expire by their terms in December 1995. One of the
Management Agreements has been modified in connection with a drilling
contract for the "HENRY GOODRICH" to allow Sonat Offshore to bareboat
charter such rig with renewal options up to May 1997, subject to
continuation of such drilling contract.
Business Strategy
The Company engages in contract drilling in major offshore oil and
gas producing areas worldwide. The Company's principal operating
strategy is to achieve a high utilization of its fleet by operating in
promising areas throughout the world and to earn premium dayrates by
concentrating its capabilities in the harsh environment and/or
deepwater drilling segments of the market. The Company's emphasis on the
harsh environment and/or deepwater segments is also reflected in its
recent acquisitions of the capital stock of Drilling. In addition, the
Company intends selectively to seek opportunities to manage and/or
market rigs owned by third parties.
The offshore drilling industry is highly competitive. In addition to
price, factors such as the quality of a drilling company's fleet, the
overseas operating experience of its management and employees, the
experience and reputation of its engineering staff, its reputation as a
deepwater operator and customer relationships determine a contract
drilling company's ability to compete favorably with the many other
contractors in the international offshore drilling market. In addition,
high utilization of a drilling company's rigs, as compared to the
industry average, may enhance its operational capabilities and safety
performance by promoting retention of trained personnel and equipment
maintenance.
The Company intends to continue to modernize and expand its fleet,
in order to meet with the requirements of competitive conditions and the
changing needs of its customers. In this regard, the Company has from
time to time in the past engaged in, and currently continues to engage
in, preliminary discussions with other industry participants with
respect to business combinations that would potentially strengthen its
competitive position in the offshore drilling industry. The Company
continues to consider the selective acquisition of existing rigs,
directly or through business combination transactions. The Company does
not currently contemplate entering into arrangements for the
construction of any new rigs. However, if the Company were able to
enter into a firm drilling contract or contracts of sufficient duration
to allow the Company to obtain financing, the Company may under the
circumstances consider the construction of a new drilling unit or units.
The Company is also evaluating various opportunities to expand its
activities in the area of floating production facilities, and is
reviewing a range of potential floating production projects. These
potential projects include the acquisition and/or construction of
specific floating production units, the provision of management and
other contract services involving floating production facilities, and
the establishment of joint ventures or other cooperative arrangements
with various third parties. In February 1995, the Company announced
that the letter of intent with DeepTech International Inc. to form a new
joint venture company to acquire and operate semisubmersible drilling
units to be converted for use as floating production systems had been
terminated to allow both companies to pursue their floating production
system opportunities independently.
The Company's wholly owned subsidiary, Reading & Bates Development
Co., is the General Contractor for the provision of a semisubmersible
floating production system for the Liuhua 11-1 Project being jointly
developed by Amoco Orient Petroleum Company and China Offshore Oil
Nanhai East Corporation in the South China Sea.
Drilling Contracts, Marketing and Customers
Rigs are generally employed under individual contracts which extend
over a period of time covering either the drilling of a well or wells (a
"well-to-well contract") or a stated term (a "term contract").
Contracts for the employment of rigs are most often awarded based on
competitive bidding; however, some contracts are the result of
negotiations between the drilling contractor and the customer. Most
contracts provide for early termination and many provide for extension
options exercisable by the customer. The Company's drilling contracts
generally provide for payment in U.S. dollars. The Company's drilling
contracts also typically provide for compensation on a "daywork" basis,
under which the Company receives a fixed amount per day that the rig is
operating under contract. Certain of the contracts may allow the
Company to recover some or all of its mobilization and demobilization
costs associated with moving a rig between contracts, depending on
market conditions then prevailing. The dayrate under such daywork
contracts is generally lower or not payable when the rig is under tow to
or from the drill site (other than field moves) or when operations are
suspended because of weather or mechanical problems. Under daywork
contracts, the Company generally is responsible for paying the operating
expenses of the rig, including wages and the cost of incidental
supplies. Although the majority of the Company's contracts are
constructed under the traditional "daywork" basis as described above,
the Company has participated via a joint venture in "turnkey" contracts.
Essentially, a turnkey contract provides for the drilling of a well on a
fixed price basis. In 1993, the Company formally established a group of
employees to offer turnkey contracts and in 1994 the Company entered
into a joint venture with F. J. Brown & Associates, Inc. to offer
turnkey services in both the international markets and the U.S. Gulf of
Mexico market. So far, the cumulative net results of the Company's
turnkey contracts are immaterial in total and insignificant as compared
to the Company's operating income from the traditional daywork
contracting method. Additionally, the Company's joint venture approach
to entering the turnkey market has minimized the Company's overhead
costs and capital investment costs, thus somewhat reducing financial
risks to the Company. In general, the Company seeks to have a
reasonable balance of short- and long-term contracts to minimize the
downside impact of a decline in the market, while obtaining the benefit
of increasing market prices in a rising market.
The Company maintains a decentralized organizational system, with
foreign regional offices throughout the world. The Company's primary
marketing efforts are carried out through these regional offices and its
Houston office.
When the Company's rigs operate in foreign locations, operations are
often conducted in conjunction with local companies. Representative of
the offshore areas where the Company has arrangements with local
companies are Abu Dhabi, Brazil, Brunei, China, India, Indonesia, Korea,
Malaysia and Nigeria. The purpose of these arrangements is to draw on
the marketing, technical, supply and government relations assistance of
local third parties and in some cases to comply with local legal
requirements. Typically, the financial terms of these arrangements are
such that the third party receives a stated percentage of drilling
revenues. Most of the Company's existing arrangements are with third
parties with which the Company has had a relationship for ten or more
years. The drilling units owned by Drilling are operated under
management agreements with Sonat Offshore which terminate in 1995 unless
extended as in the case of the "HENRY GOODRICH", as discussed above.
The Company has a base of customers which includes major and
independent foreign and domestic oil and gas companies, as well as
foreign state-owned oil companies. During 1994, the Company performed
services for approximately 32 different customers.
The following is a listing of customers from whom the Company
received revenues equal to or in excess of ten percent of total
operating revenues:
<TABLE>
<CAPTION>
1994 1993 1992
----------------- ----------------- -----------------
% of Total % of Total % of Total
Customer Revenue Revenues Revenue Revenues Revenue Revenues
-------- ------- -------- ------- -------- ------- --------
(in millions) (in millions) (in millions)
<S> <C> <C> <C> <C> <C> <C>
Royal Dutch/Shell
Group and affiliates $ 35.2 21% $ 39.6 22% $ 27.8 18%
AGIP S.p.A. and
affiliates $ * * $ 37.7 20% $ 40.9 26%
British Gas Exploration
and Production Limited
and affiliates $ * * $ 20.3 11% $ * *
--------------------
*Less than 10%
</TABLE>
As is typical in the industry, the Company does business with a
relatively small number of customers at any given time. The loss of any
one of such customers could, at least on a short-term basis, have a
material adverse impact on the Company's business or results of
operations. Management believes, however, that the Company would have
alternative customers for its services in the event of the loss of any
single customer and that the loss of any one customer would not have a
material adverse effect on the Company on a long-term basis.
Financial information by geographic area is furnished in Note L of
Notes to Consolidated Financial Statements.
Rig Descriptions and Utilization Statistics
Mobile offshore drilling rigs consist of a hull, positioning equipment
and drilling equipment. The design of a rig determines the marine
environment in which it can operate. The drilling equipment determines
the drilling operations which a rig is capable of performing and is
principally comprised of hoisting equipment, power plant, fluid handl-
ing systems, well control apparatus and a means of rotating the drill
string and tubulars. A rig also has living quarters, cranes, a heliport
and material storage facilities.
Although the Company's fleet consists of jack-up rigs, semi-
submersibles and drilling tenders, there are several other types of
rigs that compete with the Company's rigs for drilling contracts. The
major categories of rigs include the following:
1. Jack-Up Rigs. Jack-up rigs are mobile self-elevating
drilling platforms equipped with legs which can be
lowered to the ocean floor until a foundation is
established to support the drilling platform. The rig
hull includes the drilling rig, jacking system, crew
quarters, loading and unloading facilities, storage
areas for bulk and liquid materials, helicopter
landing deck and other related equipment. The rig
legs may have a lower hull ("mat") attached to the
bottom of them in order to provide a more stable
foundation in soft bottom areas. Independent leg rigs
are better suited for harder or uneven seabed
conditions. Jack-up rigs are generally subject to
maximum water depth of approximately 350 feet, and
some jack-up rigs may drill in water depths as shallow
as ten feet. The water depth limit of a particular
rig is determined by the length of the rig's legs and
the operating environment. Moving a rig from one
drill site to another involves jacking the hull down
into the water until it is afloat and then jacking up
its legs with the hull floating on the surface of the
water. The hull is then towed to the new drilling
site by tugs and the legs are then jacked down to the
ocean floor. The jacking operation continues until
the hull is raised out of the water, preloaded with
sea water and elevated to a level that provides a
final air gap above the effects of the sea. Drilling
operations are then conducted with the hull in its
raised position. A cantilever jack-up has a feature
which allows the drilling platform to be extended out
from the hull, allowing it to perform drilling or
workover operations over pre-existing platforms or
structures. Certain cantilever jack-up rigs have
"skid-off" capability, which allows the derrick
equipment set to be skidded onto an adjacent platform,
thereby increasing the operational capability of the
rig. Slot type jack-up rigs are configured for the
drilling operations to take place through a slot in
the hull. Slot type rigs are usually used for
exploratory drilling, in that their configuration
makes them difficult to position over existing
platforms or structures.
2. Semisubmersible Rigs. Semisubmersible rigs are
floating platforms which, by means of a water
ballasting system, can be submerged to a predetermined
depth so that the lower hulls, or pontoons, are below
the water surface during drilling operations. The rig
is "semi-submerged", remaining afloat, in a position
in which the lower hull is about 60-80 feet below the
water line and the upper deck protrudes well above the
surface. The upper deck is attached to the pontoons
with columns. These rigs maintain their
position over the well through the use of an anchoring
system or computer controlled thruster system. They
have lower wave-induced motions than other types of
floating units because of their geometry at the water
line. Some semisubmersible rigs are designed to work
in water depths up to 6,000 feet. Some are self-
propelled and move between locations under their own
power when afloat on the pontoons; however, most
semisubmersible rigs are relocated with the assistance
of tugs. Some semisubmersible rigs are capable of
operating in the "submersible" mode, sitting on the
bottom in water depths of approximately 40 to 50 feet.
3. Submersible Rigs. Submersible rigs are somewhat
similar in configuration to semisubmersible rigs, but
the lower hull of the rig rests on the sea floor
during drilling operations. A submersible rig is
towed to the well site where it is submerged by
flooding its lower hull until it rests on the sea
floor, with the upper hull above the water surface.
After completion of the drilling operations, the rig
is refloated by pumping water out of the lower hull
and it is towed to another location. Submersible rigs
typically operate in water depths of 12 to 70 feet,
although some submersible rigs are capable of
operating at greater depths.
4. Self-Contained Platform Rigs. Platform rigs consist
of drilling equipment, power generation machinery and
quarters arranged in modular packages which are
transported to and assembled, using derrick barges, on
fixed offshore platforms provided by the customer.
Upon completion of drilling operations, the rig is
disassembled and moved to another location. Platform
rigs are typically used for development drilling and
workover operations. Fixed offshore platforms are
steel tower-like structures which stand on the sea
floor, with the top portion, or deck, being above the
water level and providing the site for the platform
rig. Platform rigs are dependent on the availability
of derrick barges or other lifting assistance, and
transport barges.
5. Drilling Tenders. Drilling tenders are usually non-
self-propelled barges or semisubmersibles which are
moored alongside a platform and contain the quarters,
mud pits, mud pumps, power generation, etc. Thus, the
only equipment on the platform is the derrick
equipment set consisting of the substructure,
drillfloor, derrick and drawworks. Drilling tenders
allow smaller, less costly platforms to be used for
development projects. Self-erecting tenders carry
their own derrick equipment set and have a crane
capable of erecting it on the platform, thereby
eliminating the cost associated with a separate
derrick barge and related equipment. Older tenders
frequently require the assistance of a derrick barge
to erect the derrick equipment set.
6. Drillships. Drillships are ships equipped for
drilling and are typically self-propelled and move
from one location to another under their own power.
Drillships are positioned over the well through use of
either an anchoring system or computer controlled
thruster system similar to those used on
semisubmersible rigs. Certain drillships are capable
of drilling in water depths of more than 6,000 feet.
However, drillships normally require water depth of at
least 200 feet in order to conduct operations.
There are several factors that determine the type of rig most
suitable for a particular job. The most significant are the marine
environment and water depth. Seabed conditions at the proposed drilling
location, whether the drilling is being done over a platform or other
structure, the intended well depth, variable load requirements and well
control equipment requirements (i.e. high pressure and high temperature
wells) are other factors. Thus, the market tends to be highly segmented
and considerable variation in utilization and dayrates often exists for
various rigs as a function of their capabilities.
Assuming available rigs meet customer requirements, price is the
most important competitive factor in obtaining a drilling contract.
Confidence of customers in the financial stability of the
contractor, the quality of its rigs, the competence of its personnel,
the reputation for reliability and condition of its rigs and its safety
record are also important in securing drilling contracts.
Published industry statistics of rig utilization include data
based on both the "contract method", which measures the number of
days under contract (whether or not earning revenues) compared to the
total days the rigs were owned, and the "operating method", which
measures utilization in terms of the number of days the rigs are earning
revenues to the total days the rigs are owned. Consequently, the
available industry data set forth below may not be directly comparable
to the Company's data calculated based on the operating method. The
following table sets forth certain data regarding rig utilization for
the industry and the Company's fleet. Industry data is based upon all
operational rigs of the types indicated for the periods indicated and
includes many rigs that are dissimilar to the Company's rigs in many
respects, including performance capabilities, age, operational criteria
and environmental capabilities. The increase in the Company's
semisubmersibles in 1992 reflects the two rigs owned by Drilling.
<TABLE>
<CAPTION>
Averages for
Years Ended December 31,
--------------------------------------
1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Company:
Jack-Ups
--------
Total Rigs 11 11 11 11 11
Utilization Rate
(Operating Method) 69% 84% 71% 89% 80%
Semisubmersibles(1)
----------------
Total Rigs 5 5 5 3 3
Utilization Rate
(Operating Method) 80% 80% 64% 76% 92%
Drilling Tenders
----------------
Total Rigs 2 2 2 2 2
Utilization Rate
(Operating Method) 100% 100% 100% 18% 48%
Industry:(2)
Jack-Ups
--------
Total Rigs 319 323 331 340 345
Utilization Rate 78% 82% 71% 76% 78%
Semisubmersibles
----------------
Total Rigs 133 134 141 147 145
Utilization Rate 74% 76% 73% 81% 77%
Drilling Tenders
----------------
Total Rigs 31 31 32 33 36
Utilization Rate 70% 77% 80% 74% 67%
______________________
(1) The Company's semisubmersible utilization percentage for
1994 does not include the second-generation semisubmersible
"RIG 41" (ex "BENVRACKIE").
(2) Industry averages were calculated from data derived from
the Offshore Rig Locator.
</TABLE>
Rig activity, particularly for jack-ups, in the Gulf of Mexico is
sensitive to gas prices. In 1991, industry utilization was adversely
affected by the low natural gas prices prevailing in the United States.
Nonetheless, worldwide utilization rates for 1991 remained flat from
1990 at 77%. The trend in the Gulf of Mexico was reversed beginning in
the second half of 1992 primarily due to a strengthening in the price of
natural gas. However, due to decreasing activity elsewhere, the
worldwide utilization rates slipped to 69% in 1992. The industry then
saw an improvement in worldwide utilization rates as they increased to
78% in 1993 and 76% in 1994. In response to changing demand, offshore
drilling rigs can be moved from one region to another. The cost of such
moves is significant, however, and is weighed against the benefits
expected to be derived. The Company normally will not undertake a major
mobilization of a drilling unit without its customer agreeing to
reimburse the Company for all or a substantial portion of such costs,
unless the dayrates in the new area are expected to be sufficient to
justify such expenditures.
The Company's operations have benefitted from a decline in the
availability of operational rigs during the last several years. The
decline in the number of available operational rigs is expected to
continue in the near future because of the continued aging and
deterioration of existing rigs. In addition, the construction of new
rigs is generally uneconomical under current market conditions.
Nevertheless, there continues to be an excess of capacity in the
industry. Further, there continues to be a number of available rigs not
currently active in the market. The reentry of this idle capacity into
the active market could depress dayrates and utilization rates of the
Company's rigs. However, many of these inactive rigs would require
significant capital expenditures to reenter the market.
The Company's Fleet
At March 1, 1995, fifteen of the Company's seventeen active drilling
units were operating or committed under contract. Fourteen of the
drilling contracts expire prior to the end of 1995 with one contract
extending past 1995. (See Note 7 to the table below regarding the
Company's recent acquisition of "RIG 41") The Company's fleet currently
operates, to a large extent, pursuant to short-term contracts having
anticipated durations of less than one year. The number of rigs working
at any given date can fluctuate considerably. No representation can be
made with respect to the continuance of current utilization rates, or
the length, conditions or terms of any new contracts or commitments.
The following table sets forth the types of equipment operated by the
Company and the locations and status of such equipment as of March 1,
1995.
<TABLE>
<CAPTION>
OFFSHORE DRILLING UNITS
Water Drilling
Year Depth Depth
Type and Name Constructed Capability Capability Location Status
(expressed in feet)
<S> <C> <C> <C> <C> <C>
Jack-Ups
F. G. McCLINTOCK(1)(5) 1975 300 25,000 Holland Operating
D. K. McINTOSH (2) 1978 250 20,000 India Stacked
RON TAPPMEYER (2) 1978 300 25,000 Australia Operating
C. E. THORNTON (1)(5) 1974 300 25,000 Ivory Coast Operating
RANDOLPH YOST (2) 1979 300 25,000 Malaysia Operating
D. R. STEWART (2) 1980 300 25,000 Italy Operating
HARVEY H. WARD (3) 1981 300 25,000 Australia Committed(8)
ROGER W. MOWELL (4) 1982 300 25,000 Italy Operating
J. T. ANGEL (4) 1982 300 25,000 Tunisia Operating
GEORGE H. GALLOWAY(5) 1985 300 25,000 Gulf of
Mexico Stacked
Semisubmersibles
JIM CUNNINGHAM (4) 1982 1,500 25,000 China Operating
M. G. HULME, JR. (2) 1983 2,500 25,000 Gulf of
Mexico Operating
JACK BATES (2) 1986 4,000 30,000 Malaysia Operating
HENRY GOODRICH (6) 1985 2,000 30,000 North Sea Operating
SONAT ARCADE
FRONTIER(6) 1987 2,000 25,000 North Sea Operating
RIG 41(7) 1976 660 25,000 United
Kingdom Cold Stacked
Drilling Tenders
CHARLEY GRAVES (2) 1975 400 20,000 Malaysia Operating
W. D. KENT (2) 1977 400 20,000 Indonesia Operating
(1) The "F.G. McCLINTOCK" and the "C.E. THORNTON" were upgraded in
1984 and converted to cantilever with "skid-off" capability.
(2) Subject to a first preferred mortgage in favor of Internationale
Nederlanden Bank N.V. ("ING Bank").
(3) Subject to a first preferred mortgage in favor of Den norske Bank.
(4) Subject to a first preferred mortgage in favor of ABC Equipment
Leasing, Inc. and a second preferred mortgage in favor of ING Bank.
(5) In the third quarter of 1994, the Company purchased certain notes
and interests relating to the lease debt outstanding associated with
operating leases of the "GEORGE H. GALLOWAY" and "C.E. THORNTON", and
the secured contingent obligations associated with the capital lease
of the "F.G. McCLINTOCK". See Note E of Notes to Consolidated
Financial Statements.
(6) Drilling unit is owned by Drilling and subject to a first preferred
mortgage in favor of The Chase Manhattan Bank, N.A. See Notes B
and C of Notes to Consolidated Financial Statements.
(7) The second-generation semisubmersible "RIG 41" (ex "BENVRACKIE")
was purchased by the Company in September 1994 with the intent to
contribute the rig to a new joint venture with DeepTech International
Inc. for conversion to a floating production system. However, it was
subsequently agreed by the Company and DeepTech International Inc.
not to establish the new joint venture and the rig currently remains
idle for conversion to a floating production system or deployment,
after completion of upgrades, as a conventional drilling unit.
(8) The Company has received a letter of intent to commence drilling
operations in April 1995.
</TABLE>
All but two of the Company's drilling rigs ("D.K. McINTOSH" and "RIG
41") have top drive units which increase the rig's marketability and
dayrates. A top drive unit is a drilling tool which allows drilling
with 90-foot lengths of drill pipe rather than 30-foot lengths, thus
reducing the number of connections. A top drive unit also permits
rotation of the drill string while tripping in and out of the hole.
These characteristics increase drilling speed and efficiency and reduce
the risk of the drill string sticking during operations, especially
during the drilling of highly deviated directional wells which are
common in development drilling operations.
The Company's jack-up drilling rigs are capable of drilling to depths
of 20,000 to 25,000 feet in water depths ranging between 10 and 300
feet, depending on the rig. All but one of the Company's jack-up rigs
("D.K. McINTOSH") have the cantilever feature, which allows the drilling
platform to be extended out from the hull of the rig, facilitating
operations over existing structures such as well platforms. Nine of the
Company's jack-up rigs are independent leg rigs and one is a mat-
supported rig.
The Company's active semisubmersible drilling rigs are capable of
drilling to depths of 25,000 feet to 30,000 feet in maximum water depths
ranging from 1,500 feet to 4,000 feet. The "JACK BATES", the "SONAT
ARCADE FRONTIER" and the "HENRY GOODRICH" are among the most technically
advanced "fourth-generation" semisubmersible drilling units in
existence. Semisubmersibles are frequently classified into four
generations, based primarily on rig capabilities. The fourth-generation
classification generally refers to semisubmersibles that have been built
since 1984, and have large physical size, harsh environment capability,
high variable loads, top drive units, 15,000 psi blowout preventers and
superior motion characteristics. There are currently 13 fourth-
generation semisubmersibles worldwide. These rigs are the best choice
for operators in deepwater and/or harsh environments or for drilling
that requires larger variable loads and the ability to handle large
pieces of subsea equipment. There are limited markets for this type of
rig and a relatively small group of users. The principal markets are
the North Sea/Norway, the Gulf of Mexico, the Far East and offshore
Brazil.
The "JACK BATES" was built in 1986. This rig was designed for moored
drilling operations, with the assistance of a computer-controlled
thruster system, in up to 7,500 feet of water and is currently outfitted
for operations in up to 4,000 feet of water. This rig was also
specifically designed for operations in harsh marine environments. Its
low-heave motion response characteristics reduce the effects of wave
motions and thus reduce downtime in harsh environments. Other features
of this unit are its mechanized drilling and handling systems, its
mooring system and equipment, its payload capabilities and its
engineering design characteristics that facilitate upgrades in water
depth capabilities at significantly lower expense relative to other
semisubmersibles. The "JACK BATES" has a variable load capacity of
approximately 6,000 tons. The rig is currently working in Malaysia for
Mobil Petroleum Malaysia Inc. through mid-June 1995 and will then
mobilize to China to commence a four month drilling contract with Arco
China Inc.
The "SONAT ARCADE FRONTIER" is one of the most modern dynamically-
positioned drilling units in existence and is also equipped with a
conventional mooring system, enabling it to perform a wide range of
drilling assignments. Built in 1987, this rig has a 4,000 ton variable
load capacity and is currently capable of drilling high-pressure wells
in up to 2,000 feet of water, but can be upgraded to operate in depths
of up to 6,000 feet of water. The "SONAT ARCADE FRONTIER" started its
first contract in 1991 with Conoco (U.K.) Ltd. in the North Sea and is
certified to operate in both the Norwegian and the U.K. sectors of the
North Sea. In 1991, the rig also completed operations in the Barents
Sea for Conoco Norway and Esso Norge AS, for which it was specially
outfitted for temperatures as low as minus 25 degrees Celsius. The rig
is currently operating for British Petroleum in the U.K. sector of the
North Sea.
The "HENRY GOODRICH" has a 6,800 ton variable load capacity and can
be upgraded to operate in depths of up to 10,000 feet of water, although
it is currently outfitted for drilling high-pressure, deep wells in
water depths of up to 2,000 feet. Built in 1985, this rig is one of the
few drilling units capable of drilling under arctic conditions. The rig
has a conventional mooring system and is designed to accept a dynamic
positioning system. The "HENRY GOODRICH" is certified to operate in the
U.K. sector of the North Sea. The rig is currently operating under a
multi-year contract for Shell U.K. Limited in the U.K. sector of the
North Sea.
The Company's two drilling tenders are highly specialized self-
erecting drilling tenders. These units are equipped with two cranes
which provide the capability of erecting their derrick equipment sets on
offshore platforms without the need for separate crane barges or
associated equipment. Both of these units are capable of drilling to
depths of 20,000 feet.
The Company follows a policy of keeping its equipment well maintained
and technologically competitive. However, its equipment could be made
obsolete by the development of new techniques and equipment. In
addition, industry-wide shortages of supplies, services, skilled
personnel and equipment necessary to conduct the Company's business have
occurred in the past, and such shortages could occur again.
Floating Production Facilities
The Company is actively pursuing opportunities to participate in the
design, construction, project management and/or ownership of floating
production facilities.
Floating production offers a lower cost alternative to fixed
platforms as water depth increases. There are two major categories of
floating production facilities, those with surface (dry) wellheads and
those with subsea (wet) wellheads. Those with surface wellheads, such
as tension leg platforms and deep draft vessels like the SPAR buoy,
generally require larger investments than systems utilizing subsea
wellheads.
The systems utilizing subsea wellheads have the flexible production
risers connected to a moored vessel, either a semisubmersible or a
monohull, with the processing equipment mounted on deck.
If a semisubmersible vessel is utilized, it is called a floating
production unit or system. This unit or system does not provide any
storage, and the processed crude oil must be exported either through a
pipeline or a floating storage vessel which is, in turn, offloaded by
shuttle tankers.
If a monohull vessel is utilized, it has inherent storage capability
and is called a floating production, storage and offloading vessel.
These vessels can be spread moored in mild/moderate environments but are
turret moored in harsh environments to minimize mooring forces and
vessel motion. These vessels normally export processed crude directly
to shuttle tankers.
Turnkey
Industry sources indicate that in general turnkey contract drilling,
especially in the Gulf of Mexico, is a growing market. The number of
turnkey wells drilled in the Gulf of Mexico has been increasing for each
of the past three years and may continue to grow as more operators
reduce their work force size and rely on the operational expertise of
experienced drilling contractors to perform what were previously
operator duties. In response to this trend, the Company is pursuing
opportunities to participate in the turnkey sector of the offshore
drilling market. In 1993, the Company formally established a group of
employees to offer turnkey contracts and in 1994 the Company entered
into a joint venture with F. J. Brown & Associates, Inc. to offer
turnkey services in both the international markets and the Gulf of
Mexico market.
A turnkey contract, as opposed to a "daywork" contract, consists of
providing the drilling unit as well as all materials and services
normally provided by the operator to drill a well to a predetermined
depth and hole specification for a fixed price. The concept of a fixed
price contract essentially places the operational risk associated with
the drilling of a well with the turnkey contractor rather than the
operator. Examples of materials and services normally provided by the
operator under traditional daywork contracts but provided by the turnkey
contractor under the turnkey fixed charge contract include provision of
well site supervision, directional services, well-bore casings, drilling
fluids, supply vessels, helicopters, cementing services, mud logging
services, electric logging services, shore base facilities, and diving
services, etc.
Industry Conditions and Competition
The financial performance of the offshore contract drilling industry,
domestically and abroad, is dependent upon the exploration and
production programs of oil and gas producers. These programs are
substantially influenced by producing companies' financial planning,
demand for and price of oil and natural gas, exploration success,
restrictions and incentives relative to exploration and production
imposed by governmental authorities controlling offshore production
areas and economic conditions in general. A dramatic decline in demand
for offshore drilling services began in 1985. This decline reflected
the effects of lower earnings of oil and gas producers and the unstable
oil and gas price environment. As a result, the entire offshore
drilling industry experienced lower dayrates and associated earnings.
Demand for drilling services turned upward in the latter part of 1987.
This upward trend continued through 1990 but conditions deteriorated in
1991 and 1992, primarily as a result of depressed conditions in the Gulf
of Mexico. However, as U.S. natural gas prices increased in late 1992,
conditions in the Gulf of Mexico improved and continued to improve
throughout most of 1993. Overall industry conditions improved in 1993
from 1992, as industry utilization increased. Industry utilization for
1994 has remained essentially flat as compared to 1993. As 1994 ended,
market conditions in the Gulf of Mexico, primarily for jack-ups, had
again begun to deteriorate due to a weakening price for natural gas.
Deeper water drilling demand, which is more driven by the price of oil
has not been affected.
Political and military events in the Middle East and in the former
Soviet Union are an example of the factors which contribute to the
volatility of world oil prices. Other factors which influence demand
for the Company's services include the ability of the Organization of
Petroleum Exporting Countries ("OPEC") to set and maintain production
targets, the level of production by non-OPEC countries, worldwide demand
for oil and gas, domestic production of natural gas, general economic
and political conditions, availability of new offshore oil and gas
leases and concessions to explore and develop, and governmental
regulations. Accordingly, there is and probably will continue to be
uncertainty as to the future level of demand for the Company's services
and the timing and duration of any increases in demand.
The offshore contract drilling market is highly competitive and no
one competitor is dominant. There are approximately 92 competitors in
the offshore drilling industry deploying approximately 500 rigs around
the world. The supply of such equipment has, since 1982, substantially
exceeded demand. The result has been a prolonged period of intense
price competition during which many rigs have been idle for long periods
of time. Consequently, some drilling contractors have gone out of
business, sought protection under the bankruptcy laws or consolidated
with other contractors. Notwithstanding these events, the industry
remains highly fragmented and competitive. The Company believes that
competition for drilling contracts will continue to be intense for the
foreseeable future. Certain of the Company's competitors are larger and
have greater financial resources than the Company, which may enable them
to better withstand industry downturns, to compete on the basis of
dayrates, or to build new rigs or acquire existing rigs that become
available for purchase.
The harsh environment or deepwater capabilities of the Company's
fourth-generation semisubmersibles and the versatility of its nine 300
foot cantilever jack-up rigs, the geographical dispersion of the
Company's rigs throughout the world and its experienced drilling
personnel are positive elements in the pursuit of the Company's strategy
and have enabled the Company to maintain a relatively strong
competitive position in the industry. Further, the Company believes
that the reputation for quality equipment, performance and safety it has
built over the past four decades compares favorably with many of its
competitors.
Environmental Matters
In recent years, increased concern has been raised over protection of
the environment. Offshore drilling in certain areas has been opposed by
environmental groups and, in certain areas, has been restricted. To the
extent laws are enacted or other governmental actions are taken that
prohibit or restrict offshore drilling or impose environmental
protection requirements that result in increased costs to the oil and
gas industry in general and the offshore contract drilling industry in
particular, the business and prospects of the Company could be adversely
affected.
The Company's operations may involve the use or handling of materials
that may be classified as environmentally hazardous substances. Laws
and regulations protecting the environment have generally become more
stringent, and may in certain circumstances impose "strict liability",
rendering a person liable for environmental damage without regard to
negligence or fault on the part of such person. Such laws and
regulations may expose the Company to liability for the conduct of or
conditions caused by others, or for acts of the Company which were in
compliance with all applicable laws at the time such acts were taken.
The Company does not believe that environmental regulations have had any
material adverse effect on its capital expenditures, results of
operations or competitive position, and does not anticipate that any
material expenditures will be required to enable it to comply with
existing laws and regulations. However, the modification of existing
laws or regulations or the adoption of new laws or regulations
curtailing exploratory or developmental drilling for oil and gas for
economic, environmental or other reasons could have a material adverse
effect on the Company's operations.
The Oil Pollution Act of 1990 ("OPA '90") and regulations promulgated
pursuant thereto impose a variety of regulations on "responsible
parties" related to the prevention of oil spills and liability for
damages resulting from such spills. A "responsible party" includes the
owner or operator of a facility or vessel, or the lessee or permittee of
the area in which an offshore facility is located. OPA '90 assigns
liability to each responsible party for oil removal costs and a variety
of public and private damages. While liability limits apply in some
circumstances, a party cannot take advantage of liability limits if the
spill was caused by gross negligence or willful misconduct or resulted
from violation of a federal safety, construction or operating
regulation. If the party fails to report a spill or to cooperate fully
in the cleanup, liability limits likewise do not apply. Few defenses
exist to the liability imposed by OPA '90. OPA '90 also imposes ongoing
requirements on a responsible party. These include proof of financial
responsibility (to cover at least some costs in a potential spill) and
preparation of an oil spill contingency plan. A failure to comply with
ongoing requirements or inadequate cooperation in a spill event may
subject a responsible party to civil or criminal enforcement action. In
short, OPA '90 places a burden on drilling rig owners or operators to
conduct safe operations and take other measures to prevent oil spills.
If a spill occurs, OPA '90 then imposes liability for resulting damages.
The Company generally seeks to obtain indemnity agreements whenever
possible from the Company's customers requiring such customers to hold
the Company harmless in the event of liability for pollution that
originates below the water surface, including, where applicable,
liability under OPA '90, and maintains marine liability insurance and
contingent operators extra expense coverage which affords limited
protection to the Company. There is no assurance that such insurance or
contractual indemnification will be sufficient or effective to protect
the Company from liability under OPA '90.
In addition, the Outer Continental Shelf Lands Act and regulations
promulgated pursuant thereto impose a variety of regulations relating
to safety and environmental protection applicable to lessees, permitees
and other parties operating on the Outer Continental Shelf. Specific
design and operational standards may apply to Outer Continental Shelf
vessels, rigs, platforms, vehicles and structures. Violations of lease
conditions or regulations issued pursuant to the Outer Continental Shelf
Lands Act can result in substantial civil and criminal penalties as well
as potential court injunctions curtailing operations and the
cancellation of leases. Such enforcement liabilities can result from
either governmental or citizen prosecution.
Governmental Regulation
Many aspects of the Company's operations are affected by domestic and
foreign political developments and are subject to numerous domestic and
foreign governmental laws and regulations that may relate directly or
indirectly to the contract drilling industry, including, without
limitation, laws and regulations controlling the discharge of materials
into the environment, requiring removal and cleanup under certain
circumstances or otherwise relating to the protection of the
environment, and certification, licensing and other requirements imposed
by treaties, laws, regulations and conventions in the jurisdictions in
which the Company operates. The contract drilling industry is dependent
on demand for services from the oil and gas exploration industry and,
accordingly, is affected by changing taxes, price controls and other
laws relating to the energy business generally. The Company does not
believe that governmental regulations have had any material adverse
effect on its capital expenditures, results of operations or competitive
position, and does not anticipate that any material expenditures will be
required to enable it to comply with existing laws and regulations.
However, the modification of existing laws and regulations or the
adoption of new laws and regulations curtailing or increasing the
effective cost of exploratory or developmental drilling for oil and gas
for economic, environmental or other reasons could have a material
adverse effect on the Company's operations. The Company cannot
currently determine the extent to which future earnings may be affected
by new legislation or regulations or compliance with new or existing
regulations which may become applicable as a result of rig relocation.
Operating Risks and Insurance
The Company's contract drilling operations are subject to the many
hazards inherent in the offshore drilling industry. In the drilling of
oil and gas wells, especially exploratory wells where little is known of
the subsurface formations, there always exists a possibility of
encountering unexpected conditions of extreme pressure and temperature
and the risk of a blowout, cratering and fires that could cause injury
or death to personnel, substantial damages to the property of the
Company and others, pollution, and suspension of drilling operations.
The Company's offshore drilling equipment is also subject to hazards
inherent in marine operations, either while on site or under tow, such
as capsizing, grounding, collision, damage from heavy weather or sea
conditions and unsound location. The Company may also be subject to
liability for oil spills, reservoir damage and other accidents that
could cause substantial damage. The Company maintains such insurance
protection as it deems prudent, including physical damage or loss and
liability insurance on its offshore drilling rigs. In addition, the
Company generally seeks to obtain indemnity agreements whenever possible
from the Company's customers, requiring such customers to hold the
Company harmless in the event of loss of production, reservoir damage or
liability for pollution that originates below the water surface. When
obtained, such contractual indemnification protection may not in all
cases be supported by adequate insurance maintained by the customer.
There is no assurance that such insurance or contractual indemnity
protection will be sufficient or effective under all circumstances or
against all hazards to which the Company may be subject. The principal
hazards against which the Company may not be fully insured or
indemnified are environmental liabilities which may result from a
blowout or similar accident or a liability resulting from reservoir
damage alleged to be caused by the negligence of the Company. Further,
there is no assurance that the Company will be able to obtain adequate
insurance coverage at the rates it deems reasonable in the future.
Recognizing these risks, the Company has various programs that are
designed to promote a safe environment for its personnel and equipment.
The Company's foreign operations are also subject to certain
political, economic and other uncertainties, including, among others,
risks of war, expropriation, nationalization, renegotiation or
nullification of existing contracts, taxation policies, foreign exchange
restrictions, changing political conditions, international monetary
fluctuations and other hazards arising out of foreign governmental
sovereignty over certain areas in which the Company conducts operations.
Currently, when conducting foreign drilling operations in areas the
Company perceives as politically unstable, the Company may (i) negotiate
contracts providing for indemnification against expropriation and
certain other political risks or (ii) purchase insurance covering such
risks, to the extent available and practical. The Company believes it
is adequately covered by insurance, but no assurance can be given with
respect to the availability of such insurance at acceptable rates in the
future. Since 1979, the Company has not experienced any material losses
associated with the above-described political risks.
Employees
At January 31, 1995, the Company had approximately 1,500 employees.
Although a shortage of trained labor would be likely if demand for
contract drilling services, including those performed by the Company,
rapidly increases, management believes the effects upon the Company
would be mitigated as a result of the manner in which it reduced its
work force in response to declines during the recent downturn in
industry drilling activity. Specifically, the Company followed a
practice of laying off less experienced, lower-level employees before
others. The Company does not consider a possibility of a shortage of
qualified personnel currently to be a factor in its business due to
depressed industry conditions. Retention might become more difficult
without significant increases in compensation, however, if demand for
contract drilling services, including those performed by the Company,
increases rapidly. The Company does not have any material collective
bargaining agreements.
Item 3. Legal Proceedings
The Company is one of the defendants in certain litigation brought
in July 1984 by the Cheyenne-Arapaho Tribes of Oklahoma in the U.S.
District Court for the Western District of Oklahoma, seeking to set
aside two communitization agreements with respect to three leases
involving tribal lands in which the Company previously owned interests
and to have those leases declared expired. In June 1989, the U.S.
District Court entered an interim order in favor of the plaintiffs. On
appeal, the U.S. Court of Appeals for the Tenth Circuit upheld the
decision of the trial court and petitions for rehearing of that decision
were denied. Petitions for writs of certiorari filed by the parties with
the U.S. Supreme Court have been denied, and the case has been remanded
to the trial court for determination of damages.
In November 1988, a lawsuit was filed in the U.S. District Court for
the Southern District of West Virginia against Reading & Bates Coal Co.,
a wholly owned subsidiary of the Company, by SCW Associates, Inc.
claiming breach of an alleged agreement to purchase the stock of Belva
Coal Company, a wholly owned subsidiary of Reading & Bates Coal Co. with
coal properties in West Virginia. When those coal properties were sold
in July 1989 as part of the disposition of the Company's coal
operations, the purchasing joint venture indemnified Reading & Bates
Coal Co. and the Company against any liability Reading & Bates Coal Co.
might incur as the result of this litigation. A judgment for the
plaintiff of $32,000 entered in February 1991 was satisfied and Reading
& Bates Coal Co. was indemnified by the purchasing joint venture. On
October 31, 1990, SCW Associates, Inc., the plaintiff in the above-
referenced action, filed a separate ancillary action in the Circuit
Court, Kanawha County, West Virginia against the Company and a wholly
owned subsidiary of Reading & Bates Coal Co., Caymen Coal, Inc. (former
owner of the Company's West Virginia coal properties), as well as the
joint venture, Mr. William B. Sturgill personally (former President of
Reading & Bates Coal Co.), three other companies in which the Company
believes Mr. Sturgill holds an equity interest, two employees of the
joint venture, First National Bank of Chicago and First Capital
Corporation. The lawsuit seeks to recover compensatory damages of
$50 million and punitive damages of $50 million for alleged tortious
interference with the contractual rights of the plaintiff and to impose
a constructive trust on the proceeds of the use and/or sale of the
assets of Caymen Coal, Inc. as they existed on October 15, 1988.
Subsequently, the court entered an order dismissing the Company's
indirect subsidiary. The Company intends to defend its interests
vigorously and believes the damages alleged by the plaintiff in this
action are highly exaggerated. In any event, the Company believes that
it has valid defenses and that it will prevail in this litigation.
The Company is involved in these and various other legal actions
arising in the normal course of business. After taking into
consideration the evaluation of such actions by counsel for the Company,
management is of the opinion that outcome of known claims and litigation
will not have a material adverse effect on the Company's business or
consolidated financial position or results of operations. See Note E of
Notes to Consolidated Financial Statements.
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders of the Company
during the fourth quarter of fiscal year 1994.
Regulation S-K Item 401(b)
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information concerning
each executive officer of the Company. Unless otherwise indicated,
each has served in the positions set forth for more than five
years. Executive officers are elected for a term of one year. There
are no family relationships between any of the persons named.
<TABLE>
<CAPTION>
Positions and Offices
Name and Age Presently Held with the Registrant
------------ ----------------------------------
<S> <C>
P. B. Loyd, Jr., 48 (1) Chairman, Director, President and Chief
Executive Officer
C. K. Rhein, Jr., 42 (2) Vice Chairman and Director
W. K. Hillin, 53 (3) Senior Vice President, General Counsel and
Secretary
T. W. Nagle, 44 (4) Vice President and Chief Financial Officer
L. E. Voss, Jr., 55 (5) Vice President - Operations
C. R. Ofner, 49 (6) Vice President - Business Development
D. L. McIntire, 57 (7) Vice President - Human Resources
----------------
(1) Mr. Loyd was named President for the Company in October 1993,
Chairman and Chief Executive Officer for the Company in June 1991
and has been a Director since April 1991. Mr. Loyd controls
Greenwing Investments, Inc., a stockholder of the Company, and has
been President of Loyd & Associates, Inc., a financial consulting
firm, since 1989. Mr. Loyd was Chief Executive Officer and a
Director of Chiles-Alexander International, Inc. from 1987 to 1989,
President and a Director of Griffin-Alexander Drilling Company from
1984 to 1987 and prior to that, a Director and Chief Financial
Officer of Houston Offshore International, all of which are
companies in the offshore drilling industry.
(2) Mr. Rhein was named Vice Chairman for the Company in June 1991 and
has been a Director since April 1991. Mr. Rhein has also been
President, Chief Executive Officer and Director of Danielson Holding
Corporation, a financial services holding company, since 1990, and a
Director of National American Insurance Company of California, an
insurance company, since 1987. Since 1987, he has been a Managing
Director of Whitman Heffernan Rhein & Co., Inc., and a general
partner of WHR Management Company, L.P., which manages various
partnerships which are stockholders of the Company. Prior to April
1, 1987, he was a partner in the law firm of Anderson Kill Olick &
Oshinsky, P.C.
(3) Mr. Hillin was named Vice President - Legal for Reading & Bates
Drilling Co. ("RBDC"), a wholly owned subsidiary of the Company, in
1978. In March 1986 he was named Vice President - Legal with the
Company, was appointed Vice President - Finance and Legal in January
1988, was appointed Senior Vice President - Finance and
Administration in November 1988 and in July 1990 was also appointed
General Counsel and Secretary. He was appointed to his present
position with the Company in August 1991.
(4) Mr. Nagle was named Director - Finance and Administration for RBDC
in June 1985. In January 1989, he was named Director - Business
Development for the Company. In April 1990, he was named Director -
Support Services for RBDC. He was appointed to his present position
with the Company in August 1991.
(5) Mr. Voss was named Vice President - Operations Far East for RBDC in
March 1982 and Vice President and General Manager - North and South
America for RBDC in January 1987. In April 1988, he was appointed
Vice President and General Manager - Worldwide Operations and
Engineering and was appointed Senior Vice President - Operations in
April 1990. He was appointed to his present position with the
Company in August 1991 and was appointed President of RBDC in May
1992.
(6) Mr. Ofner was named Vice President and General Manager for RBDC in
January 1987. In April 1988, he was appointed Vice President and
Regional Manager and was appointed Senior Vice President - Sales and
Marketing in April 1990. He was appointed to his present position
with the Company in August 1991.
(7) Mr. McIntire was named Director - Human Resources for RBDC in April
1986, Manager - Personnel Operations in January 1989 and Director -
Human Resources for the Company in January 1990. He was appointed
to his present position with the Company in August 1991.
</TABLE>
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters
The Company's Common Stock is traded on the New York and Pacific
Stock Exchanges under the symbol "RB". The following table shows for
the periods indicated the high and low sales prices of the Common Stock
as reported on the New York Stock Exchange Composite Transactions Tape.
<TABLE>
<CAPTION>
1994 1993
------------ ------------
Quarter High Low High Low
------- ---- ----- ---- -----
<S> <C> <C> <C> <C>
First 7 3/4 5 3/8 8 4
Second 7 1/4 5 3/8 8 5/8 6 3/8
Third 7 1/4 5 5/8 10 5/8 6 1/8
Fourth 7 5 1/2 10 3/8 6 1/4
</TABLE>
There were approximately 5,990 holders of record of the Company's
Common Stock as of February 28, 1995.
The Company has not paid dividends on the Common Stock since
the first quarter of 1986 and management does not expect any dividends
will be declared or paid in the foreseeable future. The Company's
credit facility agreement with ING Bank prohibits the Company from
declaring or paying dividends on the Common Stock in any one year in
excess of 50% of its cumulative net income subsequent to March 29, 1991,
the date of the first drawdown under such financing.
As a result of the Company's recapitalization in 1991, all of
the Company's outstanding Non-voting Convertible Class B Common Stock
(the "Class B Stock") was converted into Common Stock and at the
Company's 1994 Annual Meeting, the stockholders approved a proposal to
amend the Company's Charter to delete the Class B Stock in its entirety.
Item 6. Selected Financial Data
READING & BATES CORPORATION
AND SUBSIDIARIES
(in thousands except per share amounts)
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------------------
1994 1993 1992 1991(1) 1990(2)
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Operating revenues (3) $ 169,058 $ 183,752 $ 156,659 $ 126,800 $ 113,015
========= ========= ========= ========= =========
Income (loss) from
continuing operations $ (17,146) $ 4,656 $ 3,402 $ (17,385) $ (53,831)
========= ========= ========= ========= =========
Income from discontinued
operations $ - $ - $ - $ 2,156 $ 518
========= ========= ========= ========= =========
Cumulative effect and
extraordinary item (4) $ - $ - $ - $ (15,135) $ 2,899
========= ========= ========= ========= =========
Net income (loss) $ (17,146) $ 4,656 $ 3,402 $ (30,364) $ (50,414)
Dividends on
preferred stock 4,859 2,052 - - -
Accretion in redemption
price of redeemable
stocks - - 5,275 1,862 -
--------- --------- --------- --------- ---------
Net income (loss)
applicable to
common stockholders $ (22,005) $ 2,604 $ (1,873) $ (32,226) $ (50,414)
========= ========= ========= ========= =========
Income (loss) from
continuing operations
per share (5) $ (.39) $ .05 $ (.04) $ (.51) $ (7.26)
========= ========= ========= ========= =========
Income from
discontinued operations
per share (5) $ - $ - $ - $ .06 $ .07
========= ========= ========= ========= =========
Cumulative effect and
extraordinary item
per share (4)(5) $ - $ - $ - $ (.40) $ .39
========= ========= ========= ========= =========
Net income (loss)
per share (5) $ (.39) $ .05 $ (.04) $ (.85) $ (6.80)
========= ========= ========= ========= =========
Total assets $ 586,063 $ 612,474 $ 614,628 $ 443,521 $ 384,561
========= ========= ========= ========= =========
Long-term obligations
(including current
portion) and
redeemable stocks $ 126,036 $ 116,796 $ 143,385 $ 95,510 $ 327,470
========= ========= ========= ========= =========
Dividends on
Common Stock $ - $ - $ - $ - $ -
========= ========= ========= ========= =========
(1) The Company's financial position at December 31, 1991
and the net loss for the year then ended reflect a
recapitalization and related quasi-reorganization of
the Company in 1991.
(2) Restated for discontinued operations.
(3) Certain amounts prior to 1991 have been reclassified
for comparative purposes. Such reclassifications had
no effect on the net loss or the overall financial
condition of the Company.
(4) Year ended December 31, 1991 includes a $18,860,000
expense ($.50 per share) for cumulative effect of
change in accounting principle.
(5) Years prior to 1992 have been restated to reflect the
one-for-five reverse stock split on October 2, 1992.
</TABLE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
FINANCIAL CONDITION
Arcade Acquisition
In June 1994, the Company completed a transaction which increased its
direct ownership in Drilling and sold its entire ownership in Shipping.
The transaction consisted of the Company selling its entire 82.6%
ownership in Shipping for approximately $27.8 million, purchasing from
Shipping its entire 46.2% ownership in Drilling and equity securities in
Dragon Oil for approximately $45.4 million and Shipping repaying a loan
of approximately $12.9 million to the Company. This transaction
resulted in a net cash outflow of $4.7 million. Also in September 1994,
the Company purchased an additional 5.7% of Drilling's outstanding
shares pursuant to a mandatory tender offer in Norway required by the
Oslo Stock Exchange. As of December 31, 1994, the Company's direct
ownership in Drilling was 73.9%. See Note B of Notes to Consolidated
Financial Statements.
Purchase of Leased Debt
In the third quarter of 1994, the Company purchased certain notes and
interests relating to the lease debt outstanding associated with the
operating leases of the drilling units "GEORGE H. GALLOWAY" and "C.E.
THORNTON", and the secured contingent obligations associated with the
capital lease of the "F.G. McCLINTOCK". Total consideration for the
transaction was approximately $36.5 million which consisted of the
Company paying cash of approximately $12.2 million and issuing 4,230,235
shares of the Company's Common Stock, par value $.05 per share,
totalling approximately $24.3 million at then prevailing stock prices.
In October 1994, the Company filed a shelf registration registering such
shares (see "Shelf Registration" below). See Note E of Notes to
Consolidated Financial Statements.
Sale/Leaseback of the "SONNY VOSS"
In March 1992, the Company entered into a sale/leaseback of the
"SONNY VOSS". Proceeds received of $27.7 million resulted in a gain of
$6.3 million which was deferred and was being amortized over the lease
term. In December 1994, for a fee of $.5 million, the Company negotiated
an early release from all of its remaining lease obligations with
respect to the "SONNY VOSS". Such lease obligations were scheduled to
have expired in September 1995 and the net effect of the early release
on the Company's results of operations was a gain of $.5 million
recognized as a reduction of operating expenses in the fourth quarter
of 1994. See Note E of Notes to Consolidated Financial Statements.
Purchase of Second-Generation Semisubmersible
In September 1994, the Company purchased the second-generation
semisubmersible "RIG 41" (ex "BENVRACKIE") with the intent to contribute
the drilling unit to a new joint venture with DeepTech International
Inc. The objective of the new joint venture company was to acquire and
operate semisubmersible drilling units to be converted for use as
floating production systems. However, it was subsequently agreed by the
Company and DeepTech International Inc. not to establish the new joint
venture and the rig currently remains idle for conversion to a floating
production system or deployment, after completion of upgrades, as a
conventional drilling unit.
Income Tax Refund
In August 1992, the Company received cash of $14.2 million and
recognized interest income of $10.6 million and income tax benefits of
$1.9 million, net of $1.7 million of income tax benefits that had been
previously recognized. The Company's consolidated federal tax returns
for the tax years from September 30, 1974 to December 31, 1981 were then
examined by the Internal Revenue Service (the "IRS"). The Joint
Committee on Taxation approved a settlement agreement between the
Company and the IRS for those years which provided the Company with such
tax refund. See Note G of Notes to Consolidated Financial Statements.
Public Offerings
In October 1992, the Company completed a public offering (the "1992
Offering") of 8 million shares of its Common Stock (including shares
issued pursuant to an underwriter's over-allotment) pursuant to which
the Company raised gross proceeds of approximately $40 million in cash
(net proceeds of approximately $38.1 million). The proceeds were
utilized to repurchase 272,123 shares of Common Stock issued in the
settlement of the Company's Supplemental Executive Retirement Plan
obligation and 3,102,857 shares of Common Stock issued in a private
placement in 1991 and accounted for as Common Stock Subject to
Redemption in the Company's financial statements and for general
corporate purposes. See Note H of Notes to Consolidated Financial
Statements.
In July 1993, the Company effected a public offering (the "1993
Offering") of 2,990,000 shares of $1.625 Convertible Preferred Stock,
par value $1.00 per share (the "Preferred Stock"), pursuant to which the
Company raised gross proceeds of approximately $74.7 million in cash
(net proceeds of approximately $71.2 million). The proceeds were
utilized to repay indebtedness under Facilities F and the then current
outstanding balance of Facility C, both under the ING Facility,
approximately $11.6 million and $5.5 million, respectively. See
"LIQUIDITY AND CAPITAL RESOURCES - ING Facility". The remaining
proceeds were used by the Company for working capital and general
corporate purposes. The Preferred Stock is convertible at the option of
the holder at any time into shares of the Company's Common Stock at a
conversion rate of 2.899 shares of Common Stock for each share of
Preferred Stock (equivalent to a conversion price of $8.625 per share of
Common Stock), subject to adjustment in certain events. Annual dividends
are $1.625 per share and are cumulative and are payable quarterly
commencing September 30, 1993. The Preferred Stock is redeemable at any
time on and after September 30, 1996, at the option of the Company, in
whole or in part, at a redemption price of $26.1375 per share, and
thereafter at prices decreasing ratably annually to $25.00 per share on
and after September 30, 2003, plus accrued and unpaid dividends. The
holders of the Preferred Stock do not have any voting rights, except as
required by applicable law, and except that, among other things,
whenever accrued and unpaid dividends on the Preferred Stock are equal
to or exceed the equivalent of six quarterly dividends payable on the
Preferred Stock, the holders of the Preferred Stock will be entitled to
elect two directors to the Board until the dividend arrearage has been
paid in full. The term of office of all directors so elected will
terminate immediately upon such payment. The Preferred Stock has a
liquidation preference of $25.00 per share, plus accrued and unpaid
dividends. The Company has declared and paid all cumulative dividends
accrued on the Preferred Stock through December 31, 1994.
Shelf Registration
In October 1994, the Company filed a shelf registration registering
the 4,230,235 shares of the Company's Common Stock issued for the
purchase of the leased rigs as discussed above. Pursuant to the terms
of agreements governing the issuance of such shares and a registration
rights agreement among the Company and certain other holders of the
Company's Common Stock, as currently in effect, the Company is required
to maintain continuously effective shelf registration statements with
respect to approximately 26 million shares of its Common Stock
(including the 4,230,235 shares referred to above) until the earlier to
occur of (i) the sale of such shares by the holders thereof or (ii)
August 1, 1996 (in the case of approximately 21.7 million shares) or
September 14, 1996 (in the case of the 4,230,235 shares referred to
above).
Reverse Stock Split
On October 2, 1992, the Company effected a one-for-five reverse stock
split of the Common Stock. All share and per share amounts have been
restated. See Note H of Notes to Consolidated Financial Statements.
Miscellaneous
In February 1992, Statement of Financial Accounting Standards No.
109, Accounting for Income Taxes ("SFAS 109") was issued and supersedes
substantially all existing income tax pronouncements. The Company
adopted SFAS 109 effective January 1, 1993. The cumulative effect of
the accounting change at January 1, 1993 was not material to the
Company's consolidated results of operations or financial position. See
Note A of Notes to Consolidated Financial Statements.
In October 1993, the Company announced that Mr. J. T. Angel,
President and Chief Operating Officer, as well as a member of the Board
of Directors, resigned from those positions in order to pursue other
business interests. In the fourth quarter of 1993, the Company recorded
a charge of approximately $1.1 million against earnings related to a
severance agreement with Mr. Angel.
Included in the Company's 1992 results of operations is a net loss of
approximately $1.2 million on foreign currency transactions. Such loss
was primarily due to a settlement by Drilling of unhedged monetary
assets, related to an isolated 1992 financing transaction, which was
denominated in a currency other than the U.S. dollar.
For a discussion of certain legal proceedings see Part I, Item 3.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Cash provided by operating activities during 1994 amounted to
approximately $30.8 million, an increase of $4.3 million from 1993.
Cash provided by operating activities during 1993 amounted to
approximately $26.5 million, a decrease of $11.1 million from 1992.
Cash used in investing activities was $48.8 million in 1994 compared
to $29.4 million in 1993. During 1994, the Company used $10.7 million
to purchase additional shares in Drilling and $38.4 million to purchase
property and equipment, such as the purchase of certain notes and
interests relating to the lease debt outstanding associated with the
operating leases of the drilling units "GEORGE H. GALLOWAY" and "C. E.
THORNTON" and the secured contingent obligations associated with the
capital lease of the drilling unit "F. G. McCLINTOCK", and the purchase
of the second-generation semisubmersible drilling unit "RIG 41" (ex
"BENVRACKIE"). Since the first quarter of 1992, the Company has
consolidated the results of Drilling, which resulted in an increase in
cash of $47.3 million (which is subject to restrictions on availability
as described below under "Drilling"). Also, in March 1992, the Company
entered into a sale/leaseback transaction of the "SONNY VOSS" drilling
unit that provided approximately $27.7 million of cash. See "FINANCIAL
CONDITION".
Cash used in financing activities was $20 million in 1994 compared to
cash provided by financing activities of $30.1 million in 1993. During
1994, the Company made principal payments of $24.6 million, paid
Preferred Stock dividends of $4.9 million and received $9.5 million from
the ING Facility. During 1993, the Company received $71.2 million of
net proceeds from the 1993 Offering, received $11.6 million from the ING
Facility and made principal payments of $50.6 million and paid dividends
of $2.1 million on the Preferred Stock. During 1992, the Company made
principal payments of $34.8 million, repurchased and retired Common
Stock Subject to Redemption (issued in a private placement in 1991)
using $35.7 million and received $38.1 million net proceeds from the
1992 Offering. See "FINANCIAL CONDITION".
Liquidity of the Company should be considered in light of the
significant fluctuations in demand experienced by drilling contractors
as rapid changes in oil and gas producers' expectations and budgets
occur. These fluctuations can rapidly impact the Company's liquidity as
supply and demand factors directly affect utilization and dayrates,
which are the primary determinants of cash flow from the Company's
operations. Despite continued weakness in the offshore drilling
business, the Company's management currently expects that its cash flow
from operations, in combination with cash on hand and other sources,
including short-term loans, debt rescheduling, new debt, new equity,
asset disposals and/or by delaying a portion of planned capital or other
expenditures, will be sufficient to satisfy the Company's 1995 working
capital needs, dividends on Preferred Stock, planned investments,
capital expenditures, debt and other payment obligations. In view of
the Company's debt repayment schedule for 1995, amounting in the
aggregate to $45.1 million (including that of Drilling), the Company
expects certain debt rescheduling and/or other financing will likely be
required in 1995. Management is constantly evaluating alternatives
available to the Company and believes that sufficient flexibility exists
to meet any liquidity shortfalls.
At December 31, 1994, approximately $18.3 million of total
consolidated cash and cash equivalents of $42.3 million were restricted
from the Company's use outside of Drilling's activities.
Capital Expenditures and Deferred Charges
Planned capital expenditures and deferred charges (including
mobilization, demobilization and contract preparation costs not
recoverable from the Company's customers or claim proceeds from
insurance underwriters) for 1995 are expected to aggregate approximately
$27.5 million principally for upgrades or replacement of equipment
either to fulfill obligations under existing contracts or to improve the
marketability of certain of the Company's drilling units and for
mobilization of the Company's drilling units between drilling sites.
The Company anticipates that such capital expenditures will be funded
through cash provided by operations and/or new financing. Certain
projects currently being considered by the Company would require, if
they materialize, capital expenditures or other cash requirements not
included in the above estimate. In addition to planned capital
expenditures referred to above, the Company will also continue to review
acquisitions of drilling units from time to time and will also consider
further investments in floating production equipment. See "Item 1.
Business - Business Strategy".
ING Facility
The Company's principal credit facility agreement (the "ING
Facility") with ING Bank currently consists of four facilities,
"Facility A", "Facility C", "Facility D" and "Facility E". A
fifth credit facility ("Facility F") was both created and repaid
during 1993. Facility A is in the form of a term loan with an original
balance of $30 million. Principal payments which commenced on June 30,
1993 consist of eight equal semiannual installments of $3.75 million
with interest payments at a varying rate equal to the 6 month London
Interbank Offered Rate ("LIBOR") (7% at December 31, 1994) plus 1.5%.
Facilities C, D & E consist of $30 million of working capital financing.
Facility C is in the form of an overdraft account, available until
August 1, 1995, up to a maximum of $15 million ($12.2 million was
utilized as of December 31, 1994). Interest on amounts outstanding
under Facility C is paid quarterly at the prime rate of Citibank, N.A.
(8.5% as of December 31, 1994) plus 1.25%. Facility D is in the form of
a $5 million long-term letter of credit which collateralizes a $15
million note payable relating to the "HARVEY H. WARD" drilling unit.
Facility E is in the form of short-term letters of credit aggregating
$10 million, which support bid, performance and other bonds needed by
the Company in the ordinary course of its business. Facility F con-
sisted of a revolving credit facility in an amount not to exceed $15.5
million, for the purchase of shares of Shipping and Drilling. In March
1993, the Company received approximately $11.6 million from Facility F
and in July 1993 the Company repaid Facility F from proceeds from the
1993 Offering. In addition, a seperate facility ("Facility B") provided
by ING Bank is in the form of a term loan with an original balance of
$45 million. Principal payments which commence on June 30, 1993 consist
of nine equal semiannual installments of approximately $4.4 million and
a final installment of $5.2 million. Interest is payable quarterly at
the 3 month LIBOR (6.5% at December 31, 1994) plus 1.9375%. Facility B
is the result of ING Bank acquiring, in June 1991, certain interests in
two promissory notes issued in connection with the previous sale and
leaseback to the Company of the "C.E. THORNTON" and the "GEORGE H.
GALLOWAY" drilling units. The present value of the Company's obligations
under such operating leases at such date amounted to approximately $45
million. Also, in August 1993, ING Bank agreed to provide a temporary
$10 million letter of credit facility, available until June 30, 1997, to
cover import duties for drilling equipment in Indonesia. See Notes C, D,
E and F of Notes to Consolidated Financial Statements.
Substantially all of the Company's assets that do not serve as
collateral for other obligations of the Company collateralize the ING
Facility. Also, the Company has pledged to ING Bank all of its shares
of Drilling to collateralize the Company's obligations to ING Bank under
the ING Facility. The terms of the as currently amended and in effect
ING Facility, among other things (i) require the Company to meet certain
financial covenants, (ii) prohibit the encumbrance of the Company's
assets, (iii) restrict the declaration or payment of dividends by the
Company to not more than 50% of cumulative net income from the date of
the first drawdown under the ING Facility, (iv) prohibit the Company
from engaging in any merger or consolidation or the sale of all or
substantially all of its assets or the acquisition of all or
substantially all of the assets of any entity, (v) prohibit the Company
from incurring indebtedness (with certain exceptions including unsecured
debt subordinated to the ING Facility), (vi) prohibit the Company from
creating or acquiring new subsidiaries, (vii) prohibit the Company from
prepaying indebtedness other than to ING Bank, (viii) prohibit the sale,
transfer or assignment of any of the rigs serving as collateral in the
ING Facility or any other material asset of the Company or any of the
subsidiaries named as borrowers under the ING Facility and (ix) restrict
the Company's ability to advance funds to or guarantee obligations. It
is also an event of default under the ING Facility if there should occur
a material adverse change in the financial or business condition of the
Company or certain of its subsidiaries. Thus, the Company has very
limited means of securing additional working capital through additional
borrowings or credit facilities without the consent of ING Bank. The
Company did not meet the fixed charge covenant for 1994 and has received
a waiver for such covenant from ING Bank. At the present time the
Company anticipates that it will meet all of such covenants or obtain
necessary waivers for 1995. The ability of the Company to meet all of
its financial covenants under the ING Facility on an ongoing basis or
obtain waivers in the future will be subject to economic conditions then
prevailing in the offshore drilling industry and the Company's relative
performance.
Drilling
As of December 31, 1994, Drilling had a $52.5 million term loan
payable to The Chase Manhattan Bank, N.A. as agent for a syndicate of
banks (including itself). The adjusted payment terms of this bank
obligation currently provide for repayment of principal in 17 semiannual
installments which commenced in August 1991. The Company has not
guaranteed repayment of such obligation. Drilling has also entered into
an interest rate swap agreement, which is combined with the bank credit
facility for payment purposes (as set forth below). The swap agreement
terminates in August 1996 and the notional principal swapped amount will
have been reduced on a semiannual basis to $30.6 million at that time.
At December 31, 1994, the notional principal amount of $38.1 million
bears interest at 10.69% and the remaining principal amount bears
interest at the 6 month LIBOR (7% at December 31, 1994) plus 1.875%.
The loan is collateralized by the drilling units "HENRY GOODRICH" and
"SONAT ARCADE FRONTIER". The loan agreement requires Drilling to meet
certain financial conditions, including maintaining current assets of at
least twice the level of current liabilities and liquid assets of at
least $10 million, maintaining a ratio of operating cash flow (including
actual and projected cash flows) to interest charges of at least 1.75 to
1 and maintaining a ratio of total liabilities to tangible net worth of
no more than 1 to 1. Additionally, the loan agreement (i) restricts the
payment of dividends by Drilling to not more than 50% of net earnings
after tax per year, (ii) prohibits Drilling from making loans, granting
credit, giving any guarantee or indemnity to or for the benefit of any
other person or assuming any liability with respect to any obligation of
any other person, (iii) prohibits Drilling from engaging in any merger
or consolidation and (iv) prohibits the encumbrance of Drilling's assets
or the sale of such assets other than at fair market value, in each case
without the prior written consent of the banks party to the loan
agreement holding a majority of the outstanding balance. It is also an
event of default if there should occur a material adverse change in the
financial or business condition of Drilling. Pursuant to a series of
waivers, for the period from May 1, 1992 to May 1, 1993, the bank
syndicate waived the requirement that Drilling comply with the actual
operating cash flow ratio covenant. For the period from January 1,
1992, to April 30, 1993, the bank syndicate waived the requirement that
Drilling comply with the projected operating cash flow ratio covenant.
In connection with the most recent waiver, Drilling was required to pay
on April 30, 1993 (i) a fee to the bank syndicate of approximately $.1
million and (ii) the last two semiannual installments (totalling $8
million). In addition, the interest rate was increased to LIBOR plus
1.875% for the remainder of the loan. Since May 1, 1993, Drilling has
not requested any additional waivers. Drilling expects to meet its
repayment obligations under the facility through cash flow generated
from operations and current working capital. At December 31, 1994,
Drilling held $18.3 million in cash and cash equivalents available to
satisfy such obligations, but otherwise subject to the restrictions on
use of such cash and cash equivalents set out in such loan agreement.
The ability of Drilling to meet all of its financial covenants under its
obligations on an ongoing basis or obtain waivers thereof in the future
will be subject to economic conditions then prevailing in the offshore
drilling industry and Drilling's relative performance. See Note C of
Notes to Consolidated Financial Statements.
RESULTS OF OPERATIONS
The Company reported a net loss for 1994 of $17.1 million ($.39 loss
per share after preferred stock dividends of $4.9 million), compared to
net income of $4.7 million ($.05 earnings per share after preferred
stock dividends of $2.1 million) for 1993 and net income of $3.4 million
($.04 loss per share after $5.3 million of accretion in redemption price
of redeemable stocks) for 1992.
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Operating Revenues (in thousands) $ 169,058 $ 183,752 $ 156,659
========= ========= =========
</TABLE>
Operating revenues are primarily a function of dayrates and
utilization. The $14.7 million decrease in 1994 over 1993 is primarily
due to the decreased utilization of the jack-up and fourth-generation
semisubmersible fleets. The $27.1 million increase in 1993 over 1992 is
primarily due to the increased utilization of the semisubmersible and
jack-up fleets.
Drilling unit utilization measured in terms of the number of days the
units were earning revenues to the total days the units were owned or
leased by the Company (the operating method) for the years ended
December 31, 1994, 1993 and 1992 is shown below by class:
<TABLE>
<CAPTION>
Years Ended
Drilling Unit Utilization December 31,
------------------------- ----------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Jack-Ups . . . . . . . . . . . . . . 69% 84% 71%
Fourth-Generation Semisubmersibles . 76% 82% 64%
Third-Generation Semisubmersibles. . 85% 78% 63%
Drilling Tenders . . . . . . . . . . 100% 100% 100%
Total Fleet . . . . . . . . . . . 75% 85% 72%
</TABLE>
The utilization trends experienced by the Company are generally
consistent with those experienced by the industry.
Average dayrates for the Company's drilling units for the years
ended December 31, 1994, 1993 and 1992 are shown below by class (in
thousands):
<TABLE>
<CAPTION>
Years Ended
Average Dayrates December 31,
---------------- --------------------
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Jack-Ups . . . . . . . . . . . . . . $24.4 $24.6 $28.3
Fourth-Generation Semisubmersibles . 59.2 63.7 51.9
Third-Generation Semisubmersibles . . 32.7 29.6 30.5
Drilling Tenders . . . . . . . . . . 29.4 26.9 26.3
Total Fleet . . . . . . . . . . . . . 32.0 31.7 31.7
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Operating Expenses (in thousands) . . . . . . $ 122,981 $ 117,596 $ 114,010
========= ========= =========
Operating Expenses as Percentage of Revenues. 72.7% 64.0% 72.8%
======== ======== ========
</TABLE>
Operating expenses as a percentage of revenues increased by 8.7% in
1994 compared to 1993 due to decreased revenues as well as increased
operating costs in Australia and overall equipment maintenance costs.
Included in operating expenses for 1994 is a credit of approximately
$3.1 million due to the recognition of the remaining deferred gain on
the sale/leaseback of the "SONNY VOSS" as the Company was prematurely
released from its lease obligation.
Included in operating expenses for 1993 is a credit of approximately
$1.8 million due to the recognition of the deferred gain on the
sale/leaseback of the "SONNY VOSS" and a credit of approximately $1.2
million due to the recognition of a gain on the "JACK BATES" casualty
caused by Hurricane Andrew in 1992.
Included in operating expenses for 1992 is a credit for approximately
$1.4 million due to the recognition of the deferred gain on the
sale/leaseback of the "SONNY VOSS" and a credit of approximately $3.8
million due to the recognition of a gain on the "W.D. KENT" crane
casualty in 1991.
Operating expenses do not necessarily fluctuate in proportion to
changes in operating revenues due to the continuation of personnel on
board and equipment maintenance when the Company's drilling units are
stacked. It is only during prolonged stacked periods that the Company
is significantly able to reduce labor costs and equipment maintenance
expense. Additionally, labor costs fluctuate due to the geographic
diversification of the Company's drilling units and the mix of labor
between expatriates and nationals as stipulated in the drilling
contracts. Labor costs have increased in the last three fiscal years
primarily due to higher salary levels, inflation and the decline of the
U.S. dollar relative to certain foreign currencies of countries where
the Company operates. Equipment maintenance expenses fluctuate
depending upon the type of activity the drilling unit is performing and
the age and condition of the equipment. Scheduled maintenance of
equipment and overhauls are performed on a basis of number of hours
operated in accordance with the Company's preventive maintenance
program.
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Depreciation and Amortization (in thousands) $ 28,909 $ 29,758 $ 32,978
======== ======== ========
</TABLE>
Depreciation and amortization expense decreased $.8 million in 1994
compared to 1993.
Depreciation and amortization expense decreased $3.2 million in 1993
compared to 1992 despite an increase in fleet utilization. The decrease
is primarily due to a change in the estimated useful lives of the
fourth-generation semisubmersible fleet from an average 16 years to 25
years which resulted in a decrease in depreciation expense of
approximately $6.8 million for the year ended December 31, 1993. This
change was made to reflect the estimated period during which such assets
will remain in service.
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
General and Administrative
Expenses (in thousands). . . . . . . $ 17,993 $ 18,086 $ 16,834
======== ======== ========
</TABLE>
General and administrative expenses increased $1 million in 1994
compared to 1993 after adjusting 1993 by $1.1 million of termination
benefits that were accrued in 1993. The increase is primarily due to an
increase in payroll and related expenses.
General and administrative expenses increased $1.3 million in 1993
compared to 1992 primarily due to $1.1 million of termination benefits
that were incurred in 1993.
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Interest Expense (in thousands) . . . . $ 13,694 $ 13,818 $ 16,266
======== ======== ========
</TABLE>
Despite a decrease in the average principal debt balance outstanding
during 1994 compared to 1993, as a result of the repayment of scheduled
principal payments on the Company's long-term obligations, interest
expense remained constant in 1994 compared to 1993 due to higher
interest rates in 1994. Noncash interest expense attributable to
amortization of discount and deferrals associated with the Company's 8%
Senior Subordinated Convertible Debentures due 1998 and the 8%
Convertible Subordinated Debentures due 1995 of Reading & Bates Energy
Corporation N.V., a subsidiary of the Company, for the year ended
December 31, 1994 was $3.6 million.
Interest expense decreased $2.4 million in 1993 compared to 1992
primarily due to the decrease in the average principal debt balance
outstanding during each year as a result of the repayment of scheduled
principal payments on the Company's long-term obligations. Noncash
interest expense attributable to amortization of discount and deferrals
associated with the Company's 8% Senior Subordinated Convertible
Debentures due 1998 and the 8% Convertible Subordinated Debentures due
1995 of Reading & Bates Energy Corporation N.V., a subsidiary of the
Company, for the year ended December 31, 1993 was $3.1 million.
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------
1994 1993 1992
------- ------- --------
<S> <C> <C> <C>
Interest Income (in thousands) . . . . $ 3,263 $ 2,070 $ 12,935
======= ======= ========
</TABLE>
Interest income increased $1.2 million in 1994 compared to 1993 due
to interest earned on the increased average outstanding cash and cash
equivalents balance due to proceeds received from the preferred stock
offering in July 1993. The decrease in interest income for 1993
compared to 1992 is due to the receipt of $10.6 million in 1992 of
interest on a United States federal income tax refund.
<TABLE>
<CAPTION>
Years Ended December 31,
----------------------------
1994 1993 1992
------- ------- --------
<S> <C> <C> <C>
Other Income (Expenses), Net (in thousands) $(2,647) $ (508) $ 5,235
======= ======= ========
</TABLE>
For 1994, other, net included the recognition of a $1.2 million loss
associated with interests in the exploration and production of oil and
gas, a $.8 million expense for the change in the estimate of the reserve
for prior workmans compensation claims and a $.7 million loss on the
sale of a cash investment due to the decline in the market value.
For 1992, other, net included a $6.8 million curtailment gain as a
result of the Company modifying its postretirement benefits. See Note I
of Notes to Consolidated Financial Statements.
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Income Tax Expense (in thousands) . . . $ 4,093 $ 4,008 $ 102
======= ======= =======
</TABLE>
Income tax expense for 1992 includes a $1.9 million United States
federal income tax refund and a deferred income tax benefit of $1.2
million recognized as a result of consolidating Drilling.
Income tax expense was recognized for the years ended December 31,
1994 and 1992 despite losses before income taxes of $13.9 million and
$5.3 million, respectively. These expenses resulted from income tax
expense incurred with respect to certain foreign operations.
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Minority Interest (in thousands) . . . $ 850 $ 2,608 $ 8,763
======= ======= =======
</TABLE>
Income from minority interest has decreased from year to year as a
result of the Company's increased ownership in Drilling and Drilling
incurring smaller losses.
The impact of inflation on the Company's operations for the three
years ended December 31, 1994 has not been material.
Item 8. Financial Statements and Supplementary Data
READING & BATES CORPORATION AND SUBSIDIARIES
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
Reading & Bates Corporation
We have audited the accompanying consolidated balance sheets of
Reading & Bates Corporation (a Delaware corporation) and Subsidiaries as
of December 31, 1994 and 1993, and the related consolidated statements
of operations, cash flows and stockholders' equity for each of the three
years in the period ended December 31, 1994. These financial statements
are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Reading & Bates Corporation and Subsidiaries as of December 31, 1994 and
1993, and the consolidated results of their operations and their cash
flows for each of the three years in the period ended December
31, 1994 in conformity with generally accepted accounting principles.
/s/Arthur Andersen LLP
Houston, Texas
February 16, 1995
READING & BATES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 1994 and 1993
(dollars in thousands)
<TABLE>
<CAPTION>
1994 1993
--------- ---------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 42,319 $ 80,385
Accounts receivable:
Trade, net 34,430 36,536
Other 2,952 3,880
Materials and supplies inventory 8,421 8,709
Other current assets 4,038 4,842
--------- ---------
Total current assets 92,160 134,352
--------- ---------
PROPERTY AND EQUIPMENT:
Drilling 775,189 746,418
Other 6,270 5,778
--------- ---------
Total property and equipment 781,459 752,196
Accumulated depreciation and
amortization (291,140) (277,534)
--------- ---------
Net property and equipment 490,319 474,662
--------- ---------
DEFERRED CHARGES AND OTHER ASSETS 3,584 3,460
--------- ---------
TOTAL ASSETS $ 586,063 $ 612,474
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
READING & BATES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 1994 and 1993
(in thousands except share amounts)
<TABLE>
<CAPTION>
1994 1993
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Short-term obligations $ 12,222 $ 2,735
Long-term obligations due within one year 44,099 20,234
Accounts payable - trade 12,398 7,656
Accrued liabilities 16,763 21,066
Income taxes 6,580 4,931
--------- ---------
Total current liabilities 92,062 56,622
LONG-TERM OBLIGATIONS 81,937 96,562
OTHER NONCURRENT LIABILITIES 42,958 68,433
DEFERRED INCOME TAXES 3,075 2,807
--------- ---------
Total liabilities 220,032 224,424
--------- ---------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 43,871 68,507
--------- ---------
STOCKHOLDERS' EQUITY:
$1.625 convertible preferred stock,
$1.00 par value: 2,990,000 shares
authorized, issued and outstanding
at December 31, 1994 and 1993
(liquidation preference, $74,750) 2,990 2,990
Common stock, $.05 par value:
Authorized 425,000,000 shares, issued
and outstanding 59,711,023 shares at
December 31, 1994, 55,488,588 shares
at December 31, 1993 2,986 2,774
Capital in excess of par value 337,406 312,916
Retained earnings (deficit) from
March 31, 1991 (19,984) 2,021
Other (1,238) (1,158)
--------- ---------
Total stockholders' equity 322,160 319,543
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 586,063 $ 612,474
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
READING & BATES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands except per share amounts)
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
OPERATING REVENUES $ 169,058 $ 183,752 $ 156,659
--------- --------- ---------
COSTS AND EXPENSES:
Operating expenses 122,981 117,596 114,010
Depreciation and amortization 28,909 29,758 32,978
General and administrative 17,993 18,086 16,834
--------- --------- ---------
Total costs and expenses 169,883 165,440 163,822
--------- --------- ---------
OPERATING INCOME (LOSS) (825) 18,312 (7,163)
--------- --------- ---------
OTHER INCOME (EXPENSE):
Interest expense (13,694) (13,818) (16,266)
Interest income 3,263 2,070 12,935
Other, net (2,647) (508) 5,235
--------- --------- ---------
Total other income (expense) (13,078) (12,256) 1,904
--------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAX EXPENSE AND
MINORITY INTEREST (13,903) 6,056 (5,259)
INCOME TAX EXPENSE 4,093 4,008 102
MINORITY INTEREST 850 2,608 8,763
--------- --------- ---------
NET INCOME (LOSS) (17,146) 4,656 3,402
DIVIDENDS ON PREFERRED STOCK 4,859 2,052 -
ACCRETION IN REDEMPTION PRICE OF
REDEEMABLE STOCKS - - 5,275
--------- --------- ---------
NET INCOME (LOSS) APPLICABLE TO
COMMON STOCKHOLDERS $ (22,005) $ 2,604 $ (1,873)
========= ========= =========
NET INCOME (LOSS) PER COMMON SHARE $ (.39) $ .05 $ (.04)
========= ========= =========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 56,900 55,497 49,018
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
READING & BATES CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (17,146) $ 4,656 $ 3,402
Adjustments to reconcile net income
(loss)to net cash provided by operating
activities:
Depreciation and amortization 28,909 29,758 32,978
Gain on dispositions of property
and equipment (1,982) (1,900) (4,326)
Recognition of deferred expenses 4,640 2,654 2,147
Postretirement benefits curtailment gain - - (6,769)
Minority interest in loss of consolidated
subsidiaries (850) (2,608) (8,763)
Changes in assets and liabilities:
Accounts receivable 2,973 (3,828) 10,867
Materials and supplies inventory 288 (556) 1,405
Deferred charges and other assets (5,112) (3,509) 1,551
Accounts payable - trade 4,742 2,959 (313)
Accrued interest 4,000 3,418 3,189
Accrued lease expense 3,344 (5,014) 3,500
Accrued liabilities 4,485 (1,301) (1,947)
Income taxes 1,649 194 (1,616)
Deferred income taxes 268 388 (1,668)
Other, net 564 1,233 3,935
--------- --------- ---------
Net cash provided by operating
activities 30,772 26,544 37,572
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Dispositions of property and equipment 141 1,088 28,311
Purchases of property and equipment,
net of noncash item (38,424) (10,149) (13,809)
Decrease in investments in and
advances to unconsolidated investees 209 187 286
Business acquisitions (10,738) (20,558) 32,332
--------- --------- ---------
Net cash provided by (used in)
investing activities (48,812) (29,432) 47,120
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds (payments) from short-term
obligations 9,487 (10,747) (23,059)
Proceeds from long-term obligations - 11,624 -
Net proceeds from issuance of
preferred stock - 71,184 -
Net proceeds from issuance of
Common Stock - - 38,064
Principal payments on long-term
obligations (24,654) (39,858) (11,734)
Dividends paid on preferred stock (4,859) (2,052) -
Repurchase and retirement of redeemable
and common stocks - - (35,749)
--------- --------- ---------
Net cash provided by (used in)
financing activities (20,026) 30,151 (32,478)
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (38,066) 27,263 52,214
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 80,385 53,122 908
--------- --------- ---------
CASH AND CASH EQUIVALENTS AT
END OF YEAR $ 42,319 $ 80,385 $ 53,122
========= ========= =========
Supplemental Cash Flow Disclosures:
Interest paid $ 9,368 $ 10,649 $ 14,035
Income taxes paid $ 3,877 $ 3,648 $ 4,741
Noncash investing activities:
Purchase of property and equipment
in exchange for Common Stock $ 24,324 $ - $ -
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
READING & BATES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the Three Years Ended December 31, 1994
(in thousands)
<TABLE>
<CAPTION>
Preferred Stocks
------------------------------------
Redeemable Convertible
---------------- ----------------
Shares Amount Shares Amount
------ -------- ------ --------
<S> <C> <C> <C> <C>
Balances at December 31, 1991 7 $ 12,795 - $ -
Net income
Public offering
Accretion of redeemable stocks 1,097
Conversion of redeemable stock (7) (13,892)
Repurchase of redeemable stock
Activity in Company stock plans
Other
------ -------- ------ --------
Balances at December 31, 1992 - - - -
Net income
Public offering 2,990 2,990
Dividends paid on preferred stock
Conversion of debentures
Activity in Company stock plans
Additional minimum liability
Other
------ -------- ------ --------
Balances at December 31, 1993 - - 2,990 2,990
Net loss
Dividends paid on preferred stock
Purchase of leased rigs
Activity in Company stock plans
Additional minimum liability
Other
------ -------- ------ --------
Balances at December 31, 1994 - $ - 2,990 $ 2,990
====== ======== ====== ========
</TABLE>
Page 2
<TABLE>
<CAPTION>
Common Stocks
--------------------------------------
Subject to
Redemption Common
------------------ ----------------
Shares Amount Shares Amount
------ --------- ------ --------
<S> <C> <C> <C> <C>
Balances at December 31, 1991 1,731 $ 15,310 47,482 $ 2,374
Net income
Public offering 8,000 400
Accretion of redeemable stocks 4,178
Conversion of redeemable stock 1,371 13,892
Repurchase of redeemable stock (3,102) (33,380)
Activity in Company stock plans 300 15
Other (280) (14)
------ --------- ------ --------
Balances at December 31, 1992 - - 55,502 2,775
Net income
Public offering
Dividends paid on preferred stock
Conversion of debentures
Activity in Company stock plans 34 2
Additional minimum liability
Other (47) (3)
------ --------- ------ --------
Balances at December 31, 1993 - - 55,489 2,774
Net loss
Dividends paid on preferred stock
Purchase of leased rigs 4,230 212
Activity in Company stock plans
Additional minimum liability
Other (8)
------ -------- ------ --------
Balances at December 31, 1994 - $ - 59,711 $ 2,986
====== ======== ====== ========
</TABLE>
Page 3
<TABLE>
<CAPTION>
Capital in Retained
Excess of Earnings
Par Value (Deficit) Other
--------- -------- --------
<S> <C> <C> <C>
Balances at December 31, 1991 $ 206,752 $ 1,290 $ -
Net income 3,402
Public offering 37,663
Accretion of redeemable stocks (5,275)
Conversion of redeemable stock
Repurchase of redeemable stock
Activity in Company stock plans 2,645 (1,423)
Other (2,406)
--------- -------- --------
Balances at December 31, 1992 244,654 (583) (1,423)
Net income 4,656
Public offering 68,194
Dividends paid on preferred stock (2,052)
Conversion of debentures 3
Activity in Company stock plans 754 848
Additional minimum liability (583)
Other (689)
--------- -------- --------
Balances at December 31, 1993 312,916 2,021 (1,158)
Net loss (17,146)
Dividends paid on preferred stock (4,859)
Purchase of leased rigs 24,112
Activity in Company stock plans 507 265
Additional minimum liability (342)
Other (129) (3)
--------- -------- --------
Balances at December 31, 1994 $ 337,406 $(19,984) $ (1,238)
========= ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
READING & BATES CORPORATION
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
______________
(A) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION - The consolidated financial statements
include the accounts of Reading & Bates Corporation
("Reading & Bates") and its subsidiaries, including its
majority-owned subsidiary Arcade Drilling AS ("Drilling")
(collectively, the "Company"). As of December 31, 1994,
Reading & Bates owned approximately 73.9% of the
outstanding stock of Drilling (See Note B). Investments
in unconsolidated investees are accounted for on the
equity method. All significant intercompany accounts and
transactions have been eliminated.
CASH AND CASH EQUIVALENTS - The Company considers all
highly liquid investments purchased with a maturity of
three months or less to be cash and cash equivalents. At
December 31, 1994, $18.3 million of the cash and cash
equivalents balance related to Drilling. Such cash and
cash equivalents balance is available to Drilling for all
purposes subject to certain debt covenants under a credit
facility provided by The Chase Manhattan Bank, N.A.
("Chase Manhattan") which require the maintenance of a
minimum of $10 million in liquid assets and, under certain
circumstances, prohibit Drilling from paying dividends or
granting loans (including to the Company).
MATERIALS AND SUPPLIES INVENTORY - Materials and
supplies are stated at the lower of average cost or
market.
PROPERTY AND EQUIPMENT - Property and equipment are
recorded at historical cost as adjusted in the Company's
quasi-reorganization in 1989. Reading & Bates' drilling
units are depreciated under either the units-of-production
method or the straight-line method. Drilling's drilling
units are depreciated under the straight-line method.
Estimated useful lives for drilling equipment range from
three to twenty-five years. Gain (loss) on disposal of
properties is credited (charged) to income. Effective
January 1, 1993, the Company changed its estimate of the
useful lives of its fourth-generation semisubmersible
fleet from an average of 16 years to 25 years. This
change was made to reflect the estimated period during
which such assets will remain in service. For the year
ended December 31, 1993, the change had the effect of
reducing depreciation expense and increasing net income by
approximately $6.8 million or $.12 per share.
STOCKHOLDERS' EQUITY - The Company's accumulated
deficit at March 31, 1991 was eliminated as a result of
the Company's recapitalization in 1991.
INCOME TAXES - Deferred income taxes are recognized
for revenues and expenses reported in different years for
financial statement purposes and income tax purposes. In
February 1992, Statement of Financial Accounting Standards
No. 109, Accounting for Income Taxes ("SFAS 109") was
issued and supersedes substantially all existing income
tax pronouncements. The Company adopted SFAS 109
effective January 1, 1993. The cumulative effect of the
accounting change at January 1, 1993 was not material to
the Company's consolidated results of operations or
financial position.
REVENUE RECOGNITION - Revenues from drilling
contracts are recognized as they are earned. Proceeds
associated with the early termination of a contract for a
drilling unit are recorded as deferred income and
recognized as drilling contract revenues over the
remaining term of the contract or until such time as the
drilling unit begins a new contract. There were no such
amounts deferred at December 31, 1994 or 1993. In 1993,
the Company secured a contract to convert a
semisubmersible drilling unit into a floating production
system. Under this contract the Company, for a fixed fee
and certain incentives, functions as an agent for its
customer and accordingly, disbursements made on behalf of
the customer are netted against receipts from the customer
in the accompanying financial statements. Disbursements
and receipts associated with the contract amounted to
approximately $65 million through December 31, 1994.
FOREIGN CURRENCY TRANSACTIONS - The net gains and
losses resulting from foreign currency transactions
included in determining net income amounted to a net loss
of $.6 million in 1994, a net gain of $.1 million in 1993
and a net loss of $1.2 million in 1992. The Company may
enter into forward exchange contracts to hedge specific
commitments and anticipated transactions. During 1994 and
1993, the Company did not enter into any forward exchange
contracts.
EARNINGS (LOSS) PER SHARE - Net income (loss) per
share is computed by dividing net income (loss) applicable
to common stockholders by the weighted average number of
common shares outstanding during the year. Net income
(loss) applicable to common stockholders has been adjusted
for dividends on preferred stock and accretion in
redemption price of redeemable stocks. The effects of
common equivalent shares were antidilutive
for all periods presented and, accordingly, no adjustment
was made for these common equivalent shares. Common
shares and per share amounts for all periods presented
have been adjusted to reflect the one-for-five reverse
stock split on October 2, 1992. The computation of fully
diluted earnings per share is not presented as the results
are antidilutive.
CONCENTRATION OF CREDIT RISK - The Company maintains
cash balances with commercial banks throughout the world.
The Company also invests in commercial paper of companies
with strong credit ratings, in interest-bearing deposits
with major banks and in U.S. government backed securities.
These investments generally mature within three months
and, therefore, bear minimal risk. However, in 1994 the
Company incurred a $.7 million loss on the sale of a cash
investment due to the decline in the market value. No
losses were incurred during 1993. At December 31, 1994,
the Company had investments in interest-bearing deposits
with four major banks. At December 31, 1993, the Company
had investments in commercial paper of one company,
interest-bearing deposits with three major banks and an
investment in U.S. government backed securities.
The Company's revenues were generated primarily from
its eighteen drilling units. Revenues can be generated
from a small number of customers which are primarily major
U.S. oil and gas companies or their subsidiaries and
foreign government-owned oil and gas companies. The
Company performs ongoing credit evaluations of its
customers' financial conditions and generally requires no
collateral from its customers. The Company's allowance
for doubtful accounts was $373,000 at December 31, 1994
and 1993.
INDUSTRY CONDITIONS - Results of operations and
financial condition of the Company should be considered in
light of the significant fluctuations in demand
experienced by drilling contractors as rapid changes in
oil and gas producers' expectations, budgets and drilling
plans occur. These fluctuations can rapidly impact the
Company's results of operations and financial condition as
supply and demand factors directly affect utilization and
dayrates, which are the primary determinants of cash flow
from the Company's operations.
LIQUIDITY - As of December 31, 1994, the Company's
total consolidated cash and cash equivalents were $42.3
million. Of this amount, approximately $18.3 million is
restricted from the Company's use outside of Drilling.
The Company's management currently expects that its cash
flow from operations, in combination with cash on hand and
other sources, including short-term loans, debt
rescheduling, new debt, new equity, asset disposals and/or
by delaying a portion of planned capital or other
expenditures, will be sufficient to satisfy the Company's
1995 working capital needs, dividends on preferred stock,
planned investments, capital expenditures, debt and other
payment obligations.
RECLASSIFICATION - Certain prior period amounts in
the consolidated financial statements have been
reclassified for comparative purposes. Such
reclassifications had no effect on the net income (loss)
or the overall financial condition of the Company.
(B) INVESTMENT IN ARCADE
ARCADE ACQUISITION - In June 1991, as part of its
strategy of emphasizing geographic diversification and
"fourth-generation" semisubmersible drilling technology,
the Company began acquiring the stock of Arcade Shipping
AS ("Shipping") and Drilling, both of which are Norwegian
companies (the "Arcade Acquisition"). Beginning with the
first quarter of 1992, the Company began to consolidate
the accounts of Drilling and Shipping into the
consolidated financial statements of the Company.
Drilling owns the "HENRY GOODRICH" and the "SONAT ARCADE
FRONTIER", two fourth-generation semisubmersible drilling
units. Shipping, which the Company sold in June 1994, had
two principal lines of operations, the shipping operations
which included owning and chartering vessels and the
drilling operations which principally consisted of the
ownership of approximately 46.2% of the outstanding
stock of Drilling. The shipping operations of Shipping
had been accounted for as discontinued operations until
June 1994, when the Company completed a transaction
which consisted of the Company selling its entire 82.6%
ownership in Shipping for approximately $27.8 million,
purchasing from Shipping its entire 46.2% ownership in
Drilling and equity securities in Dragon Oil for
approximately $45.4 million and Shipping repaying a loan
of approximately $12.9 million to the Company. This
transaction resulted in a net cash outflow of $4.7
million.
The Arcade Acquisition has been funded through a
margin loan from Carnegie International Limited, a private
placement of both preferred and common stocks, the
Company's working capital and a revolving credit facility
from Internationale Bank N.V. ("ING Bank"). As of
December 31, 1994, the Company had acquired approximately
73.9% of the outstanding stock of Drilling, at an
accumulated cost of approximately $112.3 million.
Details of business acquisitions as shown on the
Consolidated Statement of Cash Flows for the first year of
consolidation were as follows (in thousands):
<TABLE>
1992
---------
<S> <C>
Fair value of assets acquired $ 285,303
Less liabilities assumed 95,374
Less minority interest 108,458
---------
81,471
Less investments in unconsolidated
investees at December 31, 1991 65,707
---------
Cash paid in during the year ended
December 31, 1992 15,764
Cash acquired 48,096
----------
Net cash acquired from business acquisitions $ 32,332
==========
</TABLE>
The following unaudited pro forma selected financial
data for the three years ended December 31, 1994 show the
consolidated data as if the Arcade Acquisition (ownership
percentage as of December 31, 1994) and related financing
activities had occurred on January 1, 1992, (in thousands
except per share amounts):
<TABLE>
<CAPTION>
(unaudited)
Years Ended December 31,
---------------------------------
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Operating revenues $ 169,058 $ 183,752 $ 156,659
========= ========= =========
Net income (loss) $ (17,768) $ 2,576 $ (3,214)
========= ========= =========
Earnings (loss) per share $ (.40) $ .01 $ (.16)
========= ========= =========
</TABLE>
DISCONTINUED OPERATIONS OF SHIPPING - On June 22,
1994, the Company sold its entire ownership in Shipping
(see above). Shipping's operating revenues and net loss
from January 1, 1994 to the date of sale were
approximately $6.5 million and $2 million, respectively.
Shipping's assets held for sale at December 31, 1993,
which consisted of vessels, tankers and chartering
contracts, were $55.3 million and related liabilities
totalled $59.5 million, including $37.1 million of long-
term obligations and a $17.3 million reserve for losses on
ultimate disposal and operations until disposal.
Accordingly, the net position of the shipping operations
in the accompanying balance sheet at December 31,
1993 was $4.2 million. Operating revenues and net loss
of discontinued operations not included in the
Consolidated Statement of Operations for the year ended
December 31, 1993 were $14.8 million and $4.6 million,
respectively. Operating revenues and net loss of
discontinued operations not included in the Consolidated
Statement of Operations for the year ended December 31,
1992 were $34.1 million and $3.2 million, respectively.
(C) LONG-TERM OBLIGATIONS
Long-term obligations at December 31, 1994 and 1993
consisted of the following (in thousands):
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Bank Obligations:
ING Bank - Facility A (1) $ 15,000 $ 22,500
ING Bank - Facility B (2) 27,321 -
Chase Manhattan (3) 52,500 61,500
Variable rate note payable (4) 3,750 6,750
8% Senior Subordinated Convertible Debentures
due December 1998 ("New Debentures") (5) 9,190 7,947
8% Convertible Subordinated Debentures due
December 1995 ("Old Debentures") (5) 14,026 13,116
Notes payable (6) 4,249 4,983
-------- --------
Total 126,036 116,796
Less long-term obligations due within one year (44,099) (20,234)
-------- --------
Long-term obligations $ 81,937 $ 96,562
======== ========
_____________________
(1) The amended payment terms of Facility A of the
Company's principal credit facility agreement (the
"ING Facility") with ING Bank provide for repayment
of principal in eight equal semiannual installments
which commenced on June 30, 1993 and interest
payments at a varying rate equal to the 6 month
London Interbank Offered Rate ("LIBOR")(7% at
December 31, 1994) plus 1.5%. The terms of the ING
Facility require the Company to meet certain
covenants including, among others, maintaining
minimum levels of consolidated tangible net worth and
current ratios, and a minimum ratio level of earnings
to interest expense and lease rentals and maintaining
a level of consolidated indebtedness below a certain
maximum. It is also an event of default under the
ING Facility if there should occur a material adverse
change in the financial or business condition of the
Company or certain of its subsidiaries. The Company
did not meet the minimum ratio level of earnings to
interest expense and lease rentals for 1994 and has
received a waiver for such covenant from ING Bank.
The ING Facility is collateralized by vessel
mortgages on eleven of the drilling units owned by
the Company, related assignments of insurance and
drilling contracts, receivables and the shares of
stock of the principal subsidiaries of the Company.
(2) In the fourth quarter of 1994, the Company reclassed
the remaining lease obligation (Facility B) from
other liabilities to debt obligations as a result of
the Company purchasing certain notes and interests
relating to the lease debt outstanding associated
with the operating leases of the drilling units
"GEORGE H. GALLOWAY" and "C.E. THORNTON", and the
secured contingent obligations associated with the
capital lease of the "F.G. McCLINTOCK" (See Note E).
The amended payment terms of Facility B of the ING
Facility provide for repayment of principal in nine
equal semiannual installments of $4.4 million which
commenced on June 30, 1993, one payment of $5.2
million on December 31, 1997 and quarterly interest
payments at the 3 month LIBOR (6.5% at December 31,
1994) plus 1.9375%.
(3) The adjusted payment terms of this bank obligation of
Drilling provide for repayment of principal in
seventeen semiannual installments which commenced in
August 1991. Drilling has also entered into an
interest rate swap agreement, which is combined with
the bank credit facility for payment purposes (as set
forth below). The fair value at December 31, 1994 of
the interest rate swap is estimated to be $1 million
which represents the estimated amount Drilling would
pay to terminate the agreement, taking into
consideration current interest rates as quoted from
the parties to the agreement. The swap agreement
terminates in August 1996 and the notional principal
swapped amount will have been reduced on a semiannual
basis to $30.6 million at that time. At December 31,
1994, the notional principal amount of $38.1 million
bears interest at 10.69% and the remaining principal
amount bears interest at the 6 month LIBOR (7% at
December 31, 1994) plus 1.875%. The bank obligation
is collateralized by the drilling units "HENRY
GOODRICH" and "SONAT ARCADE FRONTIER", related
assignments of insurance and drilling contracts, and
receivables. The loan agreement requires Drilling to
meet certain financial conditions including, among
others, minimum current ratio levels, liquid assets
and a ratio of operating cash flow to interest
charges and maintaining a ratio level of total
liabilities to tangible net worth below a certain
maximum. It is also an event of default should
circumstances arise which give reasonable grounds in
the opinion of the bank syndicate for the belief that
Drilling may not (or may be unable to) perform or
comply with its obligation. Pursuant to a series of
waivers, for the period from May 1, 1992, to May 1,
1993, the bank syndicate waived the requirement that
Drilling comply with the actual operating cash flow
ratio covenant. For the period from January 1, 1992,
to April 30, 1993, the bank syndicate waived the
requirement that Drilling comply with the projected
operating cash flow ratio covenant. In connection
with the last waiver, Drilling was required to pay on
April 30, 1993 (i) a fee to the bank syndicate of
approximately $.1 million and (ii) the last two
semiannual installments (totalling $8 million). In
addition, the interest rate was increased to LIBOR
plus 1.875% for the remainder of the loan. Since May
1, 1993, Drilling has not requested any additional
waivers.
(4) The variable rate note payable bears interest at the
prime rate (8.5 % at December 31, 1994) plus 1% and
is payable in twenty equal quarterly installments
from June 1991 through March 1996. Effective January
3, 1995, the interest rate was changed from the prime
rate plus 1% to the 3 month LIBOR (6.5% at January 3,
1995) plus 1%. The note is collateralized by a
drilling unit and by a $5 million letter of credit.
The loan agreement limits the payment of dividends
and the creation of additional indebtedness (of one
of the Company's subsidiaries) and requires the
maintenance of certain levels of working capital and
net worth. An event of default shall occur should
there be a material adverse change in the financial
or business condition of the Company or one of its
subsidiaries.
(5) The Old Debentures are convertible into the Company's
Common Stock at $900 per share. The New Debentures
are convertible into the Company's Common Stock at
$37.035 per share. The accrued interest expense
associated with the Old Debentures was $100,000 at
December 31, 1994 and 1993. Long-term accrued
interest associated with the New Debentures at
December 31, 1994 and 1993, was $10,419,000 and
$8,930,000, respectively. The New Debentures were
recorded at, and the remaining Old Debentures were
adjusted to, amounts equal to the net present value
of their respective future cash payments required,
discounted at 15%, which is the interest rate the
Company believes it would have been required to pay
to obtain financing of a similar nature from other
sources. Based on limited information available to
the Company, the recorded amounts of the Old and New
Debentures at December 31, 1994 approximate their
fair market value. The face amount of the Old
Debentures and the related unamortized discount at
December 31, 1994 totalled $14,995,000 and $969,000,
respectively. The face amount of the Old Debentures
and the related unamortized discount at December
31, 1993 totalled $14,995,000 and $1,879,000,
respectively. The face amount of the New Debentures
and the related unamortized discount at December 31,
1994 totalled $18,605,000 and $9,415,000
respectively. The face amount of the New Debentures
and the related unamortized discount at December 31,
1993 totalled $18,605,000 and $10,658,000,
respectively. During 1994, there were no conversions
of New Debentures to Common Stock. During 1993,
$3,500 (face amount) of New Debentures plus accrued
interest through December 31, 1992 were converted
into 130 shares of the Company's Common Stock.
(6) The Company suspended payments on debt collateralized
by bank letters of credit in 1987 and, as a result,
such letters of credit were drawn and the related
obligations and accrued interest were paid. One such
obligation provided for a prepayment penalty of
$6,450,000 which was accrued by the Company in 1987.
During the first quarter of 1989, an agreement was
reached with the original creditor which allows the
Company, under two notes, to pay interest only on 65%
of the prepayment penalty ("Note 1") through December
1991 and to repay 70% of the principal of Note 1 in
equal quarterly installments from March 1992 through
December 1995 with a final payment due in March 1997.
The remaining 35% ("Note 2") and accrued interest
thereon will be forgiven if all principal and
interest payments are made when due on Note 1, but
otherwise will be due in April 1997. Both notes bear
interest at 6.5% until March 29, 1992, and thereafter
at 13.5%. Interest on Note 1 is payable quarterly.
The Company reclassified $6,450,000 from accrued
liabilities to long-term obligations as of March 31,
1989.
</TABLE>
In February 1993, the ING Facility with ING Bank was
amended and an additional credit facility was created
("Facility F") to finance a portion of the Arcade
Acquisition. Facility F consisted of revolving credit
and/or stand-by letters of credit that were to be
available to the Company until January 1, 1995, in an
amount not to exceed $15.5 million. In March 1993, the
Company received approximately $11.6 million from Facility
F and in July 1993 the Company repaid Facility F from
proceeds from a preferred stock offering (see Note H). No
amounts relating to Facility F were outstanding at
December 31, 1994.
Aggregate annual maturities of long-term obligations,
excluding the unamortized discount on the New and Old
Debentures, for the five years ending December 31, 1999
and thereafter are as follows: $45,068,000 (1995);
$27,089,000(1996); $24,657,000(1997); $31,606,000(1998);
$8,000,000(1999) and $0 (thereafter).
(D) SHORT-TERM OBLIGATIONS
Short-term obligations at December 31, 1994 and 1993
consisted of the following (in thousands):
<TABLE>
<CAPTION>
1994 1993
-------- -------
<S> <C> <C>
ING Bank revolving credit facility $ 12,222 $ 2,735
======== =======
</TABLE>
The Company has a $15 million revolving credit
facility in the form of an overdraft account maintained
with ING Bank ("Facility C"). A substantial portion of
collections on the Company's receivables is paid into the
account and is applied automatically against any
outstanding balance. Facility C is used primarily for
working capital requirements. Overdraft borrowing is
available under Facility C (as amended) through August 1,
1995. Facility C bears interest at prime (8.5% at
December 31, 1994 and 6% at December 31, 1993) plus 1.25%.
The amount of unused revolving credit borrowing available
under Facility C at December 31, 1994 was approximately
$2.8 million.
(E) COMMITMENTS AND CONTINGENCIES
CAPITAL EXPENDITURES - At December 31, 1994, the
Company had purchase commitments of $2.2 million for
equipment on drilling units.
OPERATING LEASES - The Company has operating leases
covering premises and equipment. Net rent expense
amounted to $11.2 million (1994), $12.7 million (1993) and
$11.5 million (1992). As of December 31, 1994, future
minimum rental payments relating to operating leases were
$1.9 million (1995), $.9 million (1996), $.8 million
(1997), $.7 million (1998), $.7 million (1999) and $0
(thereafter). Certain operating leases contain renewal
options and have options to purchase the asset at fair
market value at the end of the lease term.
In the third quarter of 1994, the Company purchased
certain notes and interests relating to the lease debt
outstanding associated with the operating leases of the
drilling units "GEORGE H. GALLOWAY" and "C.E. THORNTON",
and the secured contingent obligations associated with the
capital lease of the "F.G. McCLINTOCK". Total
consideration for the transaction was approximately $36.5
million which consisted of cash of approximately $12.2
million and the Company issuing 4,230,235 shares of the
Company's Common Stock, par value $.05 per share,
totalling approximately $24.3 million at then prevailing
stock prices. Since through such purchases, the Company
now controls and has effective ownership of the three
rigs, it recorded the purchase of the notes and interests
as purchases of the rigs. In the fourth quarter of 1994,
the Company reclassed the remaining lease obligation
(Facility B) from other liabilities to debt obligations
(see Notes C and F).
In March 1992, the Company entered into a
sale/leaseback of the "SONNY VOSS". Proceeds received of
$27.7 million resulted in a gain of $6.3 million which was
deferred and was being amortized over the lease term. In
December 1994, for a fee of $.5 million, the Company
negotiated an early release from all of its remaining
lease obligations with respect to the "SONNY VOSS". Such
lease obligations were scheduled to have expired in
September 1995 and the net effect of the early release on
the Company's statement of operations was a gain of $.5
million recognized as a reduction of operating expenses in
the fourth quarter of 1994.
LITIGATION - The Company is one of the defendants in
certain litigation brought in July 1984 by the Cheyenne-
Arapaho Tribes of Oklahoma in the U.S. District Court for
the Western District of Oklahoma, seeking to set aside two
communitization agreements with respect to three leases
involving tribal lands in which the Company previously
owned interests and to have those leases declared expired.
In June 1989, the U.S. District Court entered an interim
order in favor of the plaintiffs. On appeal, the U.S.
Court of Appeals for the Tenth Circuit upheld the decision
of the trial court and petitions for rehearing of that
decision were denied. Petitions for writs of certiorari
filed by the parties with the U.S. Supreme Court have been
denied, and the case has been remanded to the trial court
for determination of damages.
In November 1988, a lawsuit was filed in the U.S.
District Court for the Southern District of West Virginia
against Reading & Bates Coal Co., a wholly owned
subsidiary of the Company, by SCW Associates, Inc.
claiming breach of an alleged agreement to purchase the
stock of Belva Coal Company, a wholly owned subsidiary of
Reading & Bates Coal Co. with coal properties in West
Virginia. When those coal properties were sold in July
1989 as part of the disposition of the Company's coal
operations, the purchasing joint venture indemnified
Reading & Bates Coal Co. and the Company against any
liability Reading & Bates Coal Co. might incur as the
result of this litigation. A judgment for the plaintiff
of $32,000 entered in February 1991 was satisfied and
Reading & Bates Coal Co. was indemnified by the purchasing
joint venture. On October 31, 1990, SCW Associates, Inc.,
the plaintiff in the above-referenced action, filed a
separate ancillary action in the Circuit Court, Kanawha
County, West Virginia against the Company and a wholly
owned subsidiary of Reading & Bates Coal Co., Caymen Coal,
Inc. (former owner of the Company's West Virginia coal
properties), as well as the joint venture, Mr. William B.
Sturgill personally (former President of Reading & Bates
Coal Co.), three other companies in which the Company
believes Mr. Sturgill holds an equity interest, two
employees of the joint venture, First National Bank of
Chicago and First Capital Corporation. The lawsuit seeks
to recover compensatory damages of $50 million and
punitive damages of $50 million for alleged tortious
interference with the contractual rights of the plaintiff
and to impose a constructive trust on the proceeds of the
use and/or sale of the assets of Caymen Coal, Inc. as they
existed on October 15, 1988. Subsequently, the court
entered an order dismissing the Company's indirect
subsidiary. The Company intends to defend its interests
vigorously and believes the damages alleged by the
plaintiff in this action are highly exaggerated. In any
event, the Company believes that it has valid defenses and
that it will prevail in this litigation.
The Company is involved in these and various other
legal actions arising in the normal course of business.
After taking into consideration the evaluation of such
actions by counsel for the Company, management is of the
opinion that the outcome of known claims and litigation
will not have a material adverse effect on the Company's
business or consolidated financial position or results of
operations.
EMPLOYMENT CONTRACTS - The Company has committed
under employment contracts to provide two key executives
with severance benefits totalling approximately $3.2
million which vest in September 2003 or earlier if the
executive both reduces his ownership of the Company's
common stock below a specified level and resigns. The
Company amortizes the cost of the severance benefits over
the ten year period from September 1993 to September 2003,
unless the executive reduces his stock ownership and
resigns prior to September 2003 in which case the
unamortized severance cost would be expensed.
LETTERS OF CREDIT - At December 31, 1994, the Company
had letters of credit outstanding and unused totalling
$13.1 million and $11.9 million, respectively. At
December 31, 1993, the Company had letters of credit
outstanding and unused totalling $19.2 million and $.7
million, respectively.
(F) ACCRUED LIABILITIES AND OTHER NONCURRENT LIABILITIES
The components of "Accrued liabilities" at December
31, 1994 and 1993 were as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Lease obligation - Facility B
(see Notes C and E) $ - $ 8,839
Accrued expenses - general 8,831 8,433
Accrued interest expense 1,666 1,329
Other 6,266 2,465
-------- --------
Total $ 16,763 $ 21,066
======== ========
</TABLE>
The components of "OTHER NONCURRENT LIABILITIES" at
December 31, 1994 and 1993 were as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Long-term lease obligation -
Facility B (see Notes C and E) $ - $ 19,558
Postretirement benefit obligations 15,950 15,256
Pension obligations 6,994 9,382
Accrued interest expense related
to the New Debentures 10,419 8,930
Net liabilities associated with
discontinued operations 7,003 11,177
Deferred gain - 3,072
Other 2,592 1,058
-------- --------
Total $ 42,958 $ 68,433
======== ========
</TABLE>
(G) INCOME TAXES
The Company's consolidated federal tax returns for
the tax years from September 30, 1974 to December 31, 1981
were examined by the Internal Revenue Service (the
"IRS"). A settlement agreement between the Company and
the IRS for those tax years provided the Company with a
tax refund of approximately $3.6 million plus related
interest of approximately $10.6 million. The Company
received cash of $14.2 million and as a result recognized
interest income and income tax benefits of $12.5 million
in the third quarter of 1992.
Income tax expense (benefit) for the years ended
December 31, 1994, 1993 and 1992 consisted of the
following (in thousands):
<TABLE>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Current:
Foreign $ 3,825 $ 3,620 $ 3,707
Federal - - (1,937)
-------- -------- --------
Total current 3,825 3,620 1,770
Deferred 268 388 (1,668)
-------- -------- --------
Total $ 4,093 $ 4,008 $ 102
======== ======== ========
</TABLE>
The domestic and foreign components of income (loss)
before income taxes for the years ended December 31, 1994,
1993 and 1992 were as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Domestic $(27,211) $(22,056) $ (6,824)
Foreign 13,308 28,112 1,565
-------- -------- --------
Total $(13,903) $ 6,056 $ (5,259)
======== ======== ========
</TABLE>
The effective tax rate, as computed on income before
income taxes, differs from the statutory U.S. income tax
rate for the years ended December 31, 1994, 1993 and 1992
due to the following:
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Statutory rate 35 % 35 % 34 %
Limitation on recognition of
tax benefits (35) (35) (34)
U.S. federal refund - - (37)
Foreign tax expense 28 60 48
Other 1 6 (9)
-- -- --
Effective rate 29 % 66 % 2 %
== == ==
</TABLE>
Income taxes of $4,093,000, $4,008,000 and $102,000
were recognized in 1994, 1993 and 1992, respectively,
despite losses before income taxes. The expense resulted
primarily from income tax expense incurred with respect to
certain foreign operations. The Company was limited in
utilization of tax benefits from investment tax credits
prior to 1986 and operating losses in 1994, 1993 and 1992.
Deferred income taxes result from those transactions
which affect financial and taxable income in different
years. The nature of these transactions (all of which
were long-term) and the income tax effect of each as of
December 31, 1994 and 1993 was as follows (in thousands):
<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Deferred tax liability - depreciation $ 128,232 $ 118,278
--------- ---------
Deferred tax assets:
Rig leases (24,247) (31,802)
Postretirement benefits (7,007) (7,193)
Net operating loss carryforwards (133,140) (121,621)
Valuation allowance 39,318 45,257
Other (81) (112)
--------- ---------
Total deferred tax assets (125,157) (115,471)
--------- ---------
Net deferred tax liability $ 3,075 $ 2,807
========= =========
</TABLE>
Valuation allowance is necessary to reflect the
anticipated expiration of net operating loss carryforwards
prior to their utilization.
Recapitalizations of the Company in 1989 and 1991
resulted in ownership changes for federal income tax
purposes. As a result of these ownership changes, the
amount of net operating loss and other tax attribute
carryforwards generated prior to the ownership changes
which may be utilized to offset federal taxable income is
limited by the Internal Revenue Code to approximately
$2.7 million annually plus certain built-in gains that
existed as of the date of such changes. Net tax operating
losses of $36,086,000 arising since the 1991 ownership
change are not subject to this limitation. Any tax
benefits due to the utilization of carryforwards which
were generated prior to the recapitalization in 1991 will
be reported as a credit to "Capital in excess of par
value".
(H) CAPITAL SHARES
CONVERTIBLE PREFERRED STOCK - In July 1993, the
Company effected a public offering of 2,990,000 shares of
$1.625 Convertible Preferred Stock, par value $1.00 per
share (the "Preferred Stock"), pursuant to which the
Company raised gross proceeds of approximately $74.7
million in cash (net proceeds of approximately $71.2
million). The proceeds were utilized to repay indebtedness
under Facilities F and the then current outstanding
balance of Facility C, both under the ING Facility,
approximately $11.6 million and $5.5 million,
respectively. The remaining proceeds were used by the
Company for working capital and general corporate
purposes. The Preferred Stock is convertible at the option
of the holder at any time into shares of the Company's
Common Stock at a conversion rate of 2.899 shares of
Common Stock for each share of Preferred Stock (equivalent
to a conversion price of $8.625 per share of Common
Stock), subject to adjustment in certain events. Annual
dividends are $1.625 per share and are cumulative and are
payable quarterly commencing September 30, 1993. The
Preferred Stock is redeemable at any time on and after
September 30, 1996, at the option of the Company, in whole
or in part, at a redemption price of $26.1375 per share,
and thereafter at prices decreasing ratably annually to
$25.00 per share on and after September 30, 2003, plus
accrued and unpaid dividends. The holders of the Preferred
Stock do not have any voting rights, except as required by
applicable law and except that, among other things,
whenever accrued and unpaid dividends on the Preferred
Stock are equal to or exceed the equivalent of six
quarterly dividends payable on the Preferred Stock, the
holders of the Preferred Stock will be entitled to elect
two directors to the Board until the dividend arrearage
has been paid in full. The term of office of all directors
so elected will terminate immediately upon such payment.
The Preferred Stock has a liquidation preference of $25.00
per share, plus accrued and unpaid dividends.
COMMON STOCK - On October 2, 1992, following
stockholder approval, the Company effected a one-for-five
reverse stock split.
In October 1992, the Company effected a public
offering of 8 million shares of Common Stock pursuant to
which the Company raised gross proceeds of approximately
$40 million in cash (net proceeds of approximately $38.1
million). The proceeds were utilized to repurchase
272,123 shares of Common Stock which had been issued for
the settlement of the Company's Supplemental Executive
Retirement Plan obligation (the "SERP Shares"), to
repurchase 3,102,857 shares of Common Stock which had been
issued as a result of the conversion of shares issued in a
private placement in 1991 (the "Private Placement Shares")
and for general corporate purposes. As of November 6,
1992, all of the 272,123 SERP Shares and all of the
3,102,857 Private Placement Shares had been repurchased by
the Company. Supplemental earnings per share for the year
ended December 31, 1992 would have been $.06 per share
which assumes the public offering and the repurchase of
the SERP Shares and the Private Placement Shares,
described above, both occurred on January 1, 1992.
In the third quarter of 1994, the Company issued
4,230,235 shares of the Company's Common Stock in
association with the purchase of certain notes and
interests relating to the lease debt outstanding on the
drilling units "GEORGE H. GALLOWAY" and the "C. E.
THORNTON", and the secured contingent obligations on the
"F. G. McCLINTOCK" (see Note E).
As of December 31, 1994, authorized, unissued shares
of Common Stock were reserved for issuance as follows:
<TABLE>
<S> <C>
Issuance under stock option plan (net of forfeitures) 1,768,300
Issuance under long-term incentive plan 700,000
Conversion of Preferred Stock 8,668,010
Conversion of 8% Senior Subordinated
Convertible Debentures 944,391
Conversion of 8% Convertible Subordinated Debentures 16,661
Conversion of Class A Stock 81
----------
Total 12,097,443
==========
</TABLE>
Class A (Cumulative Convertible) Capital Stock (the
"Class A Stock") has been included with "Capital in excess
of par value" due to the insignificance of the $880
outstanding at December 31, 1994 and 1993.
(I) EMPLOYEE BENEFIT PLANS
PENSION PLANS - The Company has three noncontributory
pension plans. Substantially all of its employees are
covered by one or more of these plans. Plan benefits are
primarily based on years of service and average high
thirty-six month compensation.
The Reading & Bates Pension Plan (the "Domestic
Plan") is qualified under the Employee Retirement Income
Security Act (ERISA). It is the Company's policy to fund
this plan not less than the minimum required by ERISA. It
is the Company's policy to contribute to the Reading &
Bates Offshore Pension Plan (the "Offshore Plan") an
amount equal to the normal cost plus amounts sufficient to
amortize the initial unfunded actuarial liability and
subsequent unfunded liability caused by plan or assumption
changes over thirty years. The unfunded liability arising
from actuarial gains and losses is funded over fifteen
years. The Offshore Plan is a nonqualified plan and is
not subject to ERISA funding requirements. The Domestic
and Offshore Plans invest in cash equivalents, fixed
income and equity securities.
The Reading & Bates Retirement Benefit Replacement
Plan (the "Replacement Plan") is a self-administered
unfunded excess benefit plan. All members of the Domestic
Plan or the Reading & Bates Savings Plan are potential
participants in the Replacement Plan.
Net Pension costs for the years ended December 31,
1994, 1993 and 1992 included the following components (in
thousands):
<TABLE>
<CAPTION>
1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Service cost - benefits earned
during the year $ 1,412 $ 1,354 $ 1,375
Interest cost on projected
benefit obligation 4,284 4,328 4,125
Actual return on plan assets 1,004 (3,694) (3,399)
Net amortization and deferral (5,953) (1,454) (1,990)
-------- -------- --------
Net pension costs $ 747 $ 534 $ 111
======== ======== ========
</TABLE>
The funded status of the plans at December 31, 1994
was as follows (in thousands):
<TABLE>
<CAPTION>
Domestic Offshore Replacement
Plan Plan Plan
-------- -------- -----------
<S> <C> <C> <C>
Actuarial present value of
benefit obligations:
Vested benefit obligation $ 36,996 $ 9,501 $ 1,840
Nonvested benefit obligation 1,288 497 70
-------- -------- --------
Accumulated benefit obligation 38,284 9,998 1,910
Effect of projected future
compensation levels 3,368 1,320 46
-------- -------- --------
Projected benefit obligation 41,652 11,318 1,956
Plan assets at fair value 34,936 8,754 -
-------- -------- --------
Projected benefit obligation in
excess of plan assets 6,716 2,564 1,956
Unrecognized cumulative net
(loss) gain (9,047) (1,680) 4,626
Prior service cost unrecognized
in pension cost 2,343 381 274
Unrecognized net implementation
asset (obligation) 2,411 112 (2,933)
Additional minimum liability 925 - -
-------- -------- --------
Accrued pension cost $ 3,348 $ 1,377 $ 3,923
======== ======== ========
</TABLE>
The additional minimum liability is shown as a
reduction of stockholders' equity.
The weighted average discount rate and rate of
increase in future compensation levels used in determining
the actuarial present value of the projected benefit
obligations was 8.5% and 4.5%, respectively. The weighted
average expected long-term rate of return on assets was
10.25%.
POSTRETIREMENT BENEFITS - In addition to providing
pension benefits, the Company provides certain health care
and life insurance benefits for retired employees. The
Company's employees may become eligible for these benefits
if they reach normal or early retirement age while working
for the Company and if they have accumulated fifteen years
of service. Health care costs are paid as they are
incurred. Life insurance benefits are provided through an
insurance company whose premiums are based on benefits
paid during the year.
Effective April 1, 1992, the Company modified its
postretirement benefits. The effect of these
modifications significantly reduced the Company's
postretirement benefit costs and accumulated benefit
obligation, and resulted in a $6.8 million curtailment
gain recognized in the Company's results of operations
(included in Other, net) for the year ended December 31,
1992 primarily due to the change in attribution period.
Other modifications include employee cost-sharing through
increases in deductibles and out-of-pocket limits and
increased service period requirements.
Postretirement benefit costs for the years ended
December 31, 1994, 1993 and 1992 included the following
(in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Service cost - benefits earned during the year $ 350 $ 258 $ 312
Interest cost on projected benefit obligations 1,241 1,128 998
Amortization (benefit) cost -
Accumulated Projected Benefit Obligation (539) (728) (743)
------- ------- -------
Total postretirement benefit costs $ 1,052 $ 658 $ 567
======= ======= =======
</TABLE>
The health care cost trend rates used to measure the
expected cost in 1995 for medical, dental and vision
benefits were 8%, 5.5% and 5.5%, respectively, each graded
down to an ultimate trend rate of 5%, 4.5% and 4.5%,
respectively, to be achieved in the year 2021. The
weighted average discount rate and rate of increase in
future compensation levels used in determining the
actuarial present value of the projected benefit
obligation was 8.5% and 4.5%, respectively. The effect of
a one-percentage-point increase in health care cost trend
rates for future periods would increase the service cost
and interest cost portion of net periodic postretirement
benefit cost approximately 18.8%. The accumulated
postretirement benefit obligation would increase by
approximately 12.8%.
The amounts recognized in the Company's Consolidated
Balance Sheet at December 31, 1994 and 1993 was as follows
(in thousands):
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Plan assets at fair value $ - $ -
Accumulated postretirement benefit obligation:
Retirees 9,330 12,940
Fully eligible active plan participants 540 726
Other active plan participants 2,183 3,333
Unrecognized prior service cost 3,963 4,911
Unrecognized cumulative net (loss) gain 1,288 (5,080)
Other (789) (986)
-------- --------
Postretirement benefit liability recognized
in the Consolidated Balance Sheet $ 16,515 $ 15,844
======== ========
</TABLE>
SAVINGS PLANS - The Company has two savings plans,
the Reading & Bates Savings Plan and the Reading & Bates
Offshore Savings Plan. Under the plans, an employee may
contribute up to 10% of base salary (subject to certain
limitations) and the Company may make matching
contributions at a rate of up to $1.00 for each dollar
contributed by the employee up to 6% of the employee's
base salary. Since January 1, 1992, the Company has made
matching contributions at a rate of $.50 for each dollar
contributed by the employee. Employees may direct the
investment of their contributions and the contributions
of the Company in various plan options.
Twenty-five percent of the Company's contribution
vests after two years of an employee's service with the
Company, 50% after three years, 75% after four years and
100% after five years. Compensation costs under the plans
amounted to $531,000 in 1994, $502,000 in 1993 and
$381,000 in 1992.
CAREER STOCK PLAN - On March 19, 1992, and at the
Annual Meeting of Stockholders on May 20, 1992, the
Company's Board of Directors and stockholders,
respectively, approved the Company's 1992 Long-Term
Incentive Plan (the "1992 Plan"). The 1992 Plan provides
for grants of stock options, stock appreciation rights,
stock awards and cash awards, which may be granted singly,
in combination or in tandem. The 1992 Plan is unfunded
insofar as the plan provides for awards of cash, Common
Stock or rights thereto. An aggregate of 1,000,000 shares
of Common Stock is available for awards granted wholly or
partly in Common Stock. The Company has granted
Restricted Stock Awards under the 1992 Plan totalling
300,000 shares of Common Stock. Such shares awarded are
restricted as to transfer until vested pursuant to a
schedule whereby 1/24th of the total number of shares is
vested per calendar quarter from June 30, 1992 through
March 31, 1998 (subject to certain conditions). The
market value at the date of grant of the
Common Stock granted was recorded as unearned compensation
and is amortized to expense over the periods during which
the restrictions lapse or shares vest. Unearned
compensation is shown as a reduction of stockholders'
equity.
STOCK OPTION PLAN - On November 29, 1990, and at a
special meeting on March 26, 1991, the Company's Board of
Directors and stockholders, respectively, approved the
Company's 1990 Stock Option Plan (the "1990 Plan"). The
1990 Plan is intended to provide an incentive that will
allow the Company to retain in its employ, persons of the
training, experience and ability necessary for the
development and financial success of the Company. The
1990 Plan authorized options with respect to 1,966,000
shares of Common Stock to be granted to certain employees
of the Company at an adjusted option price of $7.375 per
share. On September 25, 1991, options with respect to all
1,966,000 shares were granted. As of December 31, 1994,
33,700 options had been exercised and 1,461,100 shares
were vested. Total adjusted compensation under the plan of
approximately $1,550,000 represents the excess of market
price at the measurement date over the option price
multiplied by the number of options granted. This amount
is being recognized as expense over the four year vesting
period which commenced in March 1991. Compensation
recognized under the plan for the three years ending
December 31, 1994, 1993 and 1992 totalled approximately
$507,000, $507,000 and $117,000, respectively. The plan
will terminate on March 29, 2001.
(J) RELATED PARTY TRANSACTIONS
In 1994, as a part of the purchase of certain notes
and interests relating to two of the leased drilling units
"C.E. THORNTON" and "F.G. McCLINTOCK" (see Note E), the
Company paid cash of $93,500 and issued 44,000 shares of
Common Stock to BCL Investment Partners, L.P. ("BCL"), a
major shareholder of the Company during 1994. Such cash
and Common Stock represented payment for BCL's
proportionate holdings of such notes and interests and was
paid pro rata to all sellers of such notes and interests.
Drilling has a rig management agreement with Sonat
Offshore Drilling Inc. ("Sonat Offshore"), a major
shareholder of Drilling, for the operation and marketing
of both of its drilling units. For each of the years
ending December 31, 1994, 1993 and 1992, Drilling paid to
Sonat Offshore approximately $2.5 million for such
management services. In addition, Drilling has a bareboat
charter agreement with Sonat Offshore for one of its
drilling units. For the years ended December 31, 1994,
1993, and 1992, Drilling received from Sonat Offshore
approximately $13.9 million, $14.7 million, and $3.8
million, respectively, for such bareboat charter. At
December 31, 1994 and 1993, Drilling had a net receivable
from Sonat Offshore of $4.9 million and $6 million,
respectively.
(K) SUBSEQUENT EVENT (unaudited)
On February 28, 1995, the Company announced that it
had received an unsolicited merger proposal from Sonat
Offshore providing for the acquisition of 100% of the
common stock of the Company for a combination of Sonat
Offshore common stock and $100 million in cash. As
proposed by Sonat Offshore, the Company's shareholders
would, at their election, receive either (i) .357 shares
of Sonat Offshore common stock or (ii) $7.50 of cash for
each share of the Company. To the extent that the
election results in an under- or oversubscription as to
the $100 million of cash, a proration formula would be
utilized. The Company has engaged Morgan Stanley & Co.
Incorporated to act as its financial advisor with respect
to evaluating the Sonat Offshore proposal. The Company's
board of directors is currently evaluating the Sonat
Offshore proposal.
(L) MAJOR CUSTOMERS AND GEOGRAPHIC INFORMATION
The Company, together with its 50% or less owned
unconsolidated investees, operates principally in
international offshore contract drilling of oil and gas
wells. For the year ended December 31, 1994, revenues
from one customer of $35.2 million accounted for 21% of
the Company's total operating revenues. For the year
ended December 31, 1993, revenues from three customers of
$39.6 million, $37.7 million and $20.3 million accounted
for 22%, 20% and 11%, respectively, of the Company's total
operating revenues. For the year ended December 31, 1992,
revenues from two customers of $40.9 million and $27.8
million accounted for 26% and 18%, respectively, of the
Company's total operating revenues.
Geographic information about the Company's operations
for the three years ended December 31, 1994 is as follows
(in thousands):
<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Operating revenues:
United States $ 20,151 $ 10,878 $ 8,095
Southeast Asia 69,751 54,119 46,636
Mediterranean-
Middle East 19,344 53,777 42,330
Europe 43,646 50,292 45,835
Australia 11,516 5,890 -
Other Foreign 4,650 8,796 13,763
Corporate - - -
--------- --------- ---------
Total $ 169,058 $ 183,752 $ 156,659
========= ========= =========
Operating profit (loss):(1)
United States $ (3,691) $ (268) $ 2,733
Southeast Asia 18,413 13,756 11,472
Mediterranean-
Middle East 463 17,654 7,988
Europe 1,874 6,313 (7,815)
Australia 1,500 832 -
Other Foreign (3,395) (3,481) (1,474)
Corporate (18,636) (17,002) (14,832)
--------- --------- ---------
Total $ (3,472) $ 17,804 $ (1,928)
========= ========= =========
Identifiable assets:
United States $ 82,639 $ 19,032 $ 71,014
Southeast Asia 166,896 139,522 111,981
Mediterranean-
Middle East 37,892 112,879 111,201
Europe 218,755 240,973 276,307
Australia 17,175 21,399 -
Other Foreign 13,072 2,313 6,087
Corporate 49,634 76,144 37,414
--------- --------- ---------
Total $ 586,063 $ 612,262 $ 614,004
========= ========= =========
(1) Operating profit (loss) represents operating revenues less
operating expenses, depreciation and amortization, general
and administrative and other, net.
</TABLE>
READING & BATES CORPORATION
AND SUBSIDIARIES
SUPPLEMENTAL CONSOLIDATED FINANCIAL INFORMATION
QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data for the two years
ended December 31, 1994, are as follows (in thousands except
for per share amounts):
<TABLE>
<CAPTION>
Quarter
-------------------------------------------------
First Second Third Fourth Total
-------- -------- -------- -------- --------
1994:
----
<S> <C> <C> <C> <C> <C>
Operating revenues $ 42,357 $ 39,493 $ 42,773 $ 44,435 $169,058
Gross income (1) $ 6,420 $ 1,032 $ 3,413 $ 3,656 $ 14,521
Net loss $ (1,491) $ (6,038) $ (4,005) $ (5,612) $(17,146)
Net loss per
share applicable
to common
stockholders $ (.05) $ (.13) $ (.09) $ (.11) $ (.39)
1993:
----
Operating revenues $ 35,939 $ 48,307 $ 51,429 $ 48,077 $183,752
Gross income (1) $ 4,183 $ 10,841 $ 12,662 $ 8,204 $ 35,890
Net income (loss) $ (2,188) $ 2,239 $ 5,118 $ (513) $ 4,656
Net income (loss)
per share
applicable to
common
stockholders $ (.04) $ .04 $ .08 $ (.03) $ .05
___________________
(1) Gross income represents operating revenues less operating
expenses, depreciation and amortization, and other, net.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
PART III
The information called for by Part III of Form 10-K is incorporated by
reference from the Registrant's Proxy Statement relating to its annual
meeting of Stockholders to be held May 2, 1995, which will be filed by
the Registrant with the Securities and Exchange Commission no later than
120 days after the close of the fiscal year. Also reference is made to
the information contained under the captioned "Executive Officers of
Registrant" contained in Part I hereof.
PART IV
Item 14. Exhibits, Financial Statements and Reports on Form 8-K
(a) Financial Statements and Exhibits
1. Financial Statements:
Report of Independent Public Accountants
Consolidated Balance Sheet as of December 31, 1994 and 1993
Consolidated Statement of Operations for the years ended
December 31, 1994, 1993 and 1992
Consolidated Statement of Cash Flows for the years ended
December 31, 1994, 1993 and 1992
Consolidated Statement of Stockholders' Equity for the
years ended December 31, 1994, 1993 and 1992
Notes to Consolidated Financial Statements
Supplemental Consolidated Financial Information (unaudited)
2. Exhibits:
Exhibit 3.1 - The Registrant's Restated Certificate of
Incorporation. (Filed as Exhibit 3.1 to Post-
Effective Amendment No. 2 to the Company's
Registration Statement on Form 8-A/A dated May 27,
1994 and incorporated herein by reference.)
Exhibit 3.2 - The Registrant's Bylaws, as amended and restated
effective March 2, 1995. (Filed as Exhibit 3.1 to
the Registrant's Form 8-K dated March 3, 1995 and
incorporated herein by reference.)
Exhibit 4.1 - Indenture relating to the Registrant's 8% Senior
Subordinated Convertible Debentures due 1998 dated
as of August 29, 1989, between the Registrant and IBJ
Schroder Bank & Trust Company, as Trustee. (Filed as
Exhibit 4.1 to the Company's Annual Report on Form
10-K for 1989 and incorporated herein by reference.)
Exhibit 4.2 - Form of the Registrant's registered 8% Senior
Subordinated Convertible Debentures due 1998. (Filed
as Exhibit 4.2 to Registration No. 33-28580 and
incorporated herein by reference.)
Exhibit 4.3 - Form of the Registrant's bearer 8% Senior
Subordinated Convertible Debentures due 1998. (Filed
as Exhibit 4.3 to Registration No. 33-28580 and
incorporated herein by reference.)
Exhibit 4.4 - Indenture dated as of December 1, 1980 among Reading
& Bates Energy Corporation N.V., the Registrant, as
Guarantor, and U.S. Trust Company, as Successor
Trustee, relating to the 8% Convertible Subordinated
Debentures due 1995 issued by Reading & Bates
Energy Corporation N.V., and guaranteed by the
Registrant. (Filed as Exhibit 4.4 to Registration
No. 33-28580 and incorporated herein by reference.)
Exhibit 4.5 - Form of 8% Convertible Subordinated Debentures due
1995 issued by Reading & Bates Energy Corporation
N.V., and guaranteed by the Registrant. (Filed as
Exhibit 4.5 to Registration No. 33-28580 and
incorporated herein by reference.)
Exhibit 4.6 - Form of the Registrant's Common Stock Certificate.
(Filed as Exhibit 4.6 to Registration No. 33-51120
and incorporated herein by reference.)
Exhibit 4.7 - Form of Preferred Stock Certificate for $1.625
Convertible Preferred Stock ($1.00 par value).
(Filed as Exhibit 4.4 to Registration No. 33-65476
and incorporated herein by reference.)
Exhibit 4.8 - Registration Rights Agreement dated as of March 29,
1991 among the Registrant, Holders as referred
therein and members of Offering Committee as referred
therein. (Filed as Exhibit 4.22 to the Company's
Annual Report on Form 10-K for 1990 and incorporated
herein by reference.)
Exhibit 4.9 - Amendment No. 1, dated as of September 1, 1992, to
the Registration Rights Agreement filed as Exhibit
4.7 hereto. (Filed as Exhibit 4.18 to Registration
No. 33-51120 and incorporated herein by reference.)
Exhibit 4.10 - Amendment No. 2, dated as of June 1, 1993, to the
Registration Rights Agreement. (Filed as Exhibit 4.8
to Registration No. 33-65476 and incorporated herein
by reference.)
Exhibit 4.11 - Amendment No. 3, dated as of August 1, 1994, to the
Registration Rights Agreement. (Filed as Exhibit 4.5
to the Registration No. 33-56029 and incorporated
herein by reference.)
Exhibit 4.12 - Agreement dated as of March 27, 1991 among the
Registrant, R&B Rig Investment Partners, L.P., R&B
MODU Investment Associates, L.P., M&W Investment
Partners, L.P., and BCL Investment Partners, L.P.
(Filed as Exhibit 4.24 to the Company's Annual Report
on Form 10-K for 1990 and incorporated herein by
reference.)
Exhibit 4.13 - Termination Agreement dated as of September 14, 1993
between the Registrant and BCL Investment Partners,
L.P. (Filed as Exhibit 4.13 to the Company's Annual
Report on Form 10-K for 1993 and incorporated herein
by reference.)
Exhibit 4.14 - Agreement dated March 29, 1991 between the Registrant
and R&B Investment Partnership, L.P. (Filed as
Exhibit 4.25 to the Company's Annual Report on Form
10-K for 1990 and incorporated herein by reference.)
Exhibit 4.15 - Amendment No. 1 dated as of January 1, 1992 between
the Registrant and R&B Investment Partnership, L.P.
(Filed as Exhibit 4.15 to the Company's Annual Report
on Form 10-K for 1993 and incorporated herein by
reference.)
Exhibit 4.16 - Amendment No. 2 dated as of January 1, 1992 between
the Registrant and R&B Investment Partnership, L.P.
(Filed as Exhibit 4.16 to the Company's Annual Report
on Form 10-K for 1993 and incorporated herein by
reference.)
Exhibit 4.17 - Termination Agreement dated as of September 14, 1993
between the Registrant and R&B Investment
Partnership, L.P. (Filed as Exhibit 4.17 to the
Company's Annual Report on Form 10-K for 1993 and
incorporated herein by reference.)
Exhibit 4.18 - Preferred Stock Subscription Agreement dated as of
September 3, 1991 between Registrant and the
subscribers, as amended. (Filed as Exhibit 4.12 to
Registration No. 33-51120 and incorporated herein by
reference.)
Exhibit 4.19 - Subscription Agreement dated as of September 3, 1991
between Registrant and the subscribers, as amended.
(Filed as Exhibit 4.14 to Registration No. 33-51120
and incorporated herein by reference.)
Exhibit 4.20 - Agreement dated as of October 15, 1992 between the
Registrant and the Subscribers as defined therein.
(Filed as Exhibit 10.63 to Registration No. 33-51120
and incorporated herein by reference.)
Exhibit 4.21 - Common Stock Issuance Agreement dated April 19, 1991
between the Company and J. W. Bates, Jr., as amended.
(Filed as Exhibit 4.15 to Registration No. 33-51120
and incorporated herein by reference.)
Exhibit 4.22 - Common Stock Issuance Agreement dated April 15, 1991
between the Company and R. A. Tappmeyer, as amended.
(Filed as Exhibit 4.16 to Registration No. 33-51120
and incorporated herein by reference.)
Exhibit 4.23 - Common Stock Issuance Agreement dated April 1991
between the Company and C. E. Thornton, as amended.
(Filed as Exhibit 4.17 to Registration No. 33-51120
and incorporated herein by reference.)
Exhibit 4.24 - Common Stock Issuance Agreement dated as of August
24, 1994 between the Company and BCL Investment
Partners L.P.
Exhibit 10.1 - Amended and Restated Lease Restructuring Agreement
dated as of March 29, 1991 among the Registrant,
other obligors, the Lessors, the Lease Lenders, the
Lease Trustees, the Lease Equity Participant and the
Lease Agent, all as named therein. (Filed as Exhibit
4.26 to the Company's Annual Report on Form 10-K for
1990 and incorporated herein by reference.)
Exhibit 10.2 - Bareboat Charter Party Amendment No. 2 dated
March 29, 1991 between The Connecticut National Bank,
as Owner Trustee and Reading & Bates Drilling Co., a
subsidiary of the Registrant, as Charterer. (Filed
as Exhibit 4.27 to the Company's Annual Report on
Form 10-K for 1990 and incorporated herein by
reference.)
Exhibit 10.3 - Bareboat Charter Party Amendment No. 3 dated as of
March 29, 1991 between The Connecticut National Bank,
as Owner Trustee and Reading & Bates Exploration Co.,
a subsidiary of the Registrant, as Charterer. (Filed
as Exhibit 4.28 to the Company's Annual Report on
Form 10-K for 1990 and incorporated herein by
reference.)
Exhibit 10.4 - Amendment No. 1 to Trust Indenture and First
Preferred Ship Mortgage dated as of March 29, 1991
between Reading & Bates Exploration Co., a subsidiary
of the Registrant, and State Street Bank and Trust
Company of Connecticut, National Association, as
Indenture Trustee. (Filed as Exhibit 4.29 to the
Company's Annual Report on Form 10-K for 1990 and
incorporated herein by reference.)
Exhibit 10.5 - Credit Facility Agreement dated as of March 29, 1991
among the Registrant, Reading & Bates Drilling Co.,
Reading & Bates Exploration Co., Reading and Bates,
Inc. and Resources Conservation Company, subsidiaries
of the Registrant, and NMB Postbank Groep, N.V.
(Filed as Exhibit 4.30 to the Company's Annual Report
on Form 10-K for 1990 and incorporated herein by
reference.)
Exhibit 10.6 - Amendment No. 1, dated as of May 24, 1991, to the
Credit Facility Agreement dated as of March 29, 1991
among the Registrant, Reading & Bates Drilling Co.,
Reading & Bates Exploration Co., Reading & Bates,
Inc. and Resources Conservation Company, subsidiaries
of the Registrant, and NMB Postbank Groep, N.V.
(Filed as Exhibit 4.32 to the Company's Annual Report
on Form 10-K for 1991 and incorporated herein by
reference.)
Exhibit 10.7 - Amendment No. 2, dated as of June 28, 1991, to the
Credit Facility Agreement dated as of March 29, 1991
among the Registrant, Reading & Bates Drilling Co.,
Reading & Bates Exploration Co., Reading & Bates,
Inc. and Resources Conservation Company, subsidiaries
of the Registrant, and NMB Postbank Groep, N.V.
(Filed as Exhibit 4.33 to the Company's Annual Report
on Form 10-K for 1991 and incorporated herein by
reference.)
Exhibit 10.8 - Amendment No. 3, dated as of August 30, 1991, to the
Credit Facility Agreement dated as of March 29, 1991
among the Registrant, Reading & Bates Drilling Co.,
Reading & Bates Exploration Co., Reading & Bates,
Inc. and Resources Conservation Company, subsidiaries
of the Registrant, and NMB Postbank Groep, N.V.
(Filed as Exhibit 4.34 to the Company's Annual Report
on Form 10-K for 1991 and incorporated herein by
reference.)
Exhibit 10.9 - Amendment No. 4, dated as of June 30, 1992, to the
Credit Facility Agreement dated as of March 27, 1991
among the Registrant, Reading and Bates Drilling Co.,
Reading and Bates Exploration Co. and Reading and
Bates, Inc., subsidiaries of the Registrant, and
Internationale Nederlanden Bank N.V. (formerly known
as NMB Postbank Groep N.V.). (Filed as Exhibit 10.61
to Registration No. 33-51120 and incorporated herein
by reference.)
Exhibit 10.10 - Amendment No. 5, dated as of February 23, 1993, to
the Credit Facility Agreement dated as of March 27,
1991 among the Registrant, Reading and Bates Drilling
Co., Reading and Bates Exploration Co., and Reading
and Bates, Inc., subsidiaries of the Registrant, and
Internationale Nederlanden Bank N.V. (Filed as
Exhibit 10.10 to the Company's Annual Report on Form
10-K for 1992 and incorporated herein by reference.)
Exhibit 10.11 - Agreement dated August 18, 1993 among the Registrant,
Reading & Bates Drilling Co., Reading & Bates
Exploration Co., and Reading & Bates, Inc.,
subsidiaries of the Registrant, and Internationale
Nederlanden Bank N.V. (Filed as Exhibit 10.11 to the
Company's Annual Report on Form 10-K for 1993 and
incorporated herein by reference.)
Exhibit 10.12 - Pledge Agreement dated August 18, 1993 among the
Registrant, Reading & Bates Drilling Co., Reading &
Bates Exploration Co., and Reading & Bates, Inc.,
subsidiaries of the Registrant, and Internationale
Nederlanden Bank N.V. (Filed as Exhibit 10.12 to the
Company's Annual Report on Form 10-K for 1993 and
incorporated herein by reference.)
Exhibit 10.13*- Reading & Bates 1990 Stock Option Plan. (Filed as
Appendix A to the Company's Proxy Statement dated
April 26, 1993 and incorporated herein by reference.)
Exhibit 10.14*- 1992 Long-Term Incentive Plan of Reading & Bates
Corporation. (Filed as Exhibit B to the Registrant's
Proxy Statement dated April 27, 1992 and incorporated
herein by reference.)
Exhibit 10.15*- Director Stock Option Agreement dated as of September
14, 1993 between the Registrant and C. A. Donabedian.
(Filed as Exhibit 10.15 to the Company's Annual
Report on Form 10-K for 1993 and incorporated herein
by reference.)
Exhibit 10.16*- Director Stock Option Agreement dated as of September
14, 1993 between the Registrant and J. W. McLean.
(Filed as Exhibit 10.16 to the Company's Annual
Report on Form 10-K for 1993 and incorporated herein
by reference.)
Exhibit 10.17*- Director Stock Option Agreement dated as of September
14, 1993 between the Registrant and R. L. Sandmeyer.
(Filed as Exhibit 10.17 to the Company's Annual
Report on Form 10-K for 1993 and incorporated herein
by reference.)
Exhibit 10.18*- Director Stock Option Agreement dated as of September
14, 1993 between the Registrant and S. A. Webster.
(Filed as Exhibit 10.18 to the Company's Annual
Report on Form 10-K for 1993 and incorporated herein
by reference.)
Exhibit 10.19 - Pledge of shares of stock of Reading & Bates Drilling
Co., Reading & Bates Exploration Co., and Reading and
Bates, Inc., to NMB Postbank Groep N.V. and/or its
affiliates or trustees acting on behalf of any of the
foregoing. (Filed as Exhibit 10.33 to the Company's
Annual Report on Form 10-K for 1990 and incorporated
herein by reference.)
Exhibit 10.20 - Agreement dated as of August 31, 1991 among
Registrant, Arcade Shipping AS and Sonat Offshore
Drilling Inc. (Filed as Exhibit 10.40 to the
Company's Annual Report on Form 10-K for 1991 and
incorporated herein by reference.)
Exhibit 10.21*- Employment Agreement dated as of November 1, 1991
between the Registrant and L. E. Voss, Jr. (Filed as
Exhibit 10.34 to the Company's Annual Report on Form
10-K for 1991 and incorporated herein by reference.)
Exhibit 10.22*- Amendment No. 1, dated as of October 1, 1993, to the
Employment Agreement dated as of November 1, 1991
between the Registrant and L. E. Voss, Jr. (Filed as
Exhibit 10.22 to the Company's Annual Report on Form
10-K for 1993 and incorporated herein by reference.)
Exhibit 10.23*- Employment Agreement dated as of November 1, 1991
between the Registrant and T. W. Nagle. (Filed as
Exhibit 10.35 to the Company's Annual Report on Form
10-K for 1991 and incorporated herein by reference.)
Exhibit 10.24*- Amendment No. 1, dated as of October 1, 1993, to the
Employment Agreement dated as of November 1, 1991
between the Registrant and T. W. Nagle. (Filed as
Exhibit 10.24 to the Company's Annual Report on Form
10-K for 1993 and incorporated herein by reference.)
Exhibit 10.25*- Employment Agreement dated as of November 1, 1991
between the Registrant and C. R. Ofner. (Filed as
Exhibit 10.36 to the Company's Annual Report on Form
10-K for 1991 and incorporated herein by reference.)
Exhibit 10.26*- Amendment No. 1, dated as of October 1, 1993, to the
Employment Agreement dated as of November 1, 1991
between the Registrant and C. R. Ofner. (Filed as
Exhibit 10.26 to the Company's Annual Report on Form
10-K for 1993 and incorporated herein by reference.)
Exhibit 10.27*- Employment Agreement dated as of November 1, 1991
between the Registrant and D. L. McIntire. (Filed as
Exhibit 10.37 to the Company's Annual Report on Form
10-K for 1991 and incorporated herein by reference.)
Exhibit 10.28*- Amendment No. 1, dated as of October 1, 1993, to the
Employment Agreement dated as of November 1, 1991
between the Registrant and D. L. McIntire. (Filed as
Exhibit 10.28 to the Company's Annual Report on Form
10-K for 1993 and incorporated herein by reference.)
Exhibit 10.29*- Employment Agreement dated as of November 1, 1991
between the Registrant and W. K. Hillin. (Filed as
Exhibit 10.38 to the Company's Annual Report on Form
10-K for 1991 and incorporated herein by reference.)
Exhibit 10.30*- Amendment No. 1, dated as of October 1, 1993, to the
Employment Agreement dated as of November 1, 1991
between the Registrant and W. K. Hillin. (Filed as
Exhibit 10.30 to the Company's Annual Report on Form
10-K for 1993 and incorporated herein by reference.)
Exhibit 10.31*- Employment Agreement dated as of January 1, 1992
between the Registrant and Paul B. Loyd, Jr. (Filed
as Exhibit 10.42 to Registration No. 33-51120 and
incorporated herein by reference.)
Exhibit 10.32*- Amendment No. 1, dated as of October 1, 1993, to the
Employment Agreement dated as of January 1, 1992
between the Registrant and Paul B. Loyd, Jr. (Filed
as Exhibit 10.32 to the Company's Annual Report on
Form 10-K for 1993 and incorporated herein by
reference.)
Exhibit 10.33*- Employment Agreement dated as of January 1, 1992
between the Registrant and C. Kirk Rhein, Jr. (Filed
as Exhibit 10.43 to Registration No. 33-51120 and
incorporated herein by reference.)
Exhibit 10.34*- Amendment No. 1, dated as of October 1, 1993, to the
Employment Agreement dated as of January 1, 1992
between the Registrant and C. Kirk Rhein, Jr.
(Filed as Exhibit 10.34 to the Company's Annual
Report on Form 10-K for 1993 and incorporated herein
by reference.)
Exhibit 10.35*- Employment Agreement dated as of January 1, 1992
between the Registrant and J. T. Angel. (Filed as
Exhibit 10.44 to Registration No. 33-51120 and
incorporated herein by reference.)
Exhibit 10.36*- Agreement amending Employment Agreement dated October
7, 1993 between the Registrant and J. T. Angel.
(Filed as Exhibit 10.36 to the Company's Annual
Report on Form 10-K for 1993 and incorporated herein
by reference.)
Exhibit 10.37 - Galloway Waiver Agreement dated as of May 31, 1991
among the Noteholders, the Owner Trustee and the
Indenture Trustee named therein. (Filed as Exhibit
10.45 to Registration No. 33-51120 and incorporated
herein by reference.)
Exhibit 10.38 - Thornton Waiver Agreement dated as of May 31, 1991
among the Noteholders, the Owner Trustee and the
Indenture Trustee named therein. (Filed as Exhibit
10.46 to Registration No. 33-51120 and incorporated
herein by reference.)
Exhibit 10.39 - Galloway Rescission Agreement dated as of June 28,
1991 among Reading & Bates Drilling Co., the
Registrant, the Noteholders, the Owner Trustee, the
Indenture Trustee and the Owner Participant named
therein. (Filed as Exhibit 10.47 to Registration No.
33-51120 and incorporated herein by reference.)
Exhibit 10.40 - Galloway Assignment Agreement dated as of June 28,
1991 between the Holders named therein and the NMB
Postbank Groep N.V. (Filed as Exhibit 10.48 to
Registration No. 33-51120 and incorporated herein by
reference.)
Exhibit 10.41 - Thornton Rescission Agreement dated as of June 28,
1991 among Reading & Bates Exploration Co., the
Registrant, the Noteholders, the Owner Trustee, the
Indenture Trustee and the Owner Participant named
therein. (Filed as Exhibit 10.49 to Registration No.
33-51120 and incorporated herein by reference.)
Exhibit 10.42 - Thornton Assignment Agreement dated as of June 28,
1991 between the Holders named therein and NMB
Postbank Groep N.V. (Filed as Exhibit 10.50 to
Registration No. 33-51120 and incorporated herein by
reference.)
Exhibit 10.43 - Facility Agreement dated February 21, 1991 between
Arcade Drilling AS, Chase Investment Bank Limited and
The Chase Manhattan Bank, N.A. (Filed as Exhibit
10.51 to Registration No. 33-51120 and incorporated
herein by reference.)
Exhibit 10.44 - Hull 515 Rig Management Agreement dated October 26,
1990 between Arcade Drilling AS and Sonat Offshore
Drilling Inc. (Filed as Exhibit 10.52 to
Registration No. 33-51120 and incorporated herein by
reference.)
Exhibit 10.45 - HG Rig Management Agreement dated October 26, 1990
between Arcade Drilling AS and Sonat Offshore
Drilling Inc. (Filed as Exhibit 10.53 to
Registration No. 33-51120 and incorporated herein by
reference.)
Exhibit 10.46 - Modification Agreement dated as of May 27, 1992
between Arcade Drilling AS and Sonat Offshore
Drilling Inc. (Filed as Exhibit 10.54 to
Registration No. 33-51120 and incorporated herein by
reference.)
Exhibit 10.47 - Credit Facility Letter dated May 12, 1992 between
Arcade Shipping AS and The Chase Manhattan Bank,
N.A., as amended on May 14, 1992. (Filed as Exhibit
10.55 to Registration No. 33-51120 and incorporated
herein by reference.)
Exhibit 10.48 - Letter Agreement dated May 12, 1992 between the
Registrant and The Chase Manhattan Bank, N.A.
regarding undertakings with respect to a credit
facility issued as of the same date to Arcade
Shipping AS. (Filed as Exhibit 10.56 to Registration
No. 33-51120 and incorporated herein by reference.)
Exhibit 10.49 - Charter Payments Agreement dated as of September 30,
1991 among the Registrant, Reading & Bates Drilling
Co., Reading & Bates Exploration Co., Reading and
Bates, Inc. and NMB Postbank Groep, N.V. (Filed as
Exhibit 10.57 to Registration No. 33-51120 and
incorporated herein by reference.)
Exhibit 10.50 - Amendment No. 1, dated as of June 30, 1992, to
Charter Payments Agreement dated as of September 30,
1991 among the Registrant, Reading and Bates Drilling
Co., Reading and Bates Exploration Co., Reading and
Bates, Inc. and Internationale Nederlanden Bank N.V.
(formerly known as NMB Postbank Groep N.V.). (Filed
as Exhibit 10.36 to the Company's Annual Report on
Form 10-K for 1992 and incorporated herein by
reference.)
Exhibit 10.51 - Floating Rate Loan Facility Agreement dated September
19, 1991 between Gade Shipping Corporation,
Skandinaviska Enskilda Banken, London Branch and Den
norske Bank AS. (Filed as Exhibit 10.58 to
Registration No. 33-51120 and incorporated herein by
reference.)
Exhibit 10.52 - Bareboat Charter dated September 4, 1991 between K/S
UL Arcade and Arcade Shipping AS (regarding
motorvessel "ARCADE FALCON"). (Filed as Exhibit
10.59 to Registration No. 33-51120 and incorporated
herein by reference.)
Exhibit 10.53 - Bareboat Charter dated September 4, 1991 between K/S
UL Arcade and Arcade Shipping AS (regarding
motorvessel "ARCADE EAGLE"). (Filed as Exhibit 10.60
to Registration No. 33-51120 and incorporated herein
by reference.)
Exhibit 10.54 - ISDA Interest and Currency Exchange Agreement dated
as of October 26, 1990 between The Chase Manhattan
Bank, N.A. and K/S Frontier Drilling, and Novation
Agreement with respect thereto dated February 28,
1991. (Filed as Exhibit 10.62 to Registration
No. 33-51120 and incorporated herein by reference.)
Exhibit 10.55 - Assignment Agreement "F. G. McClintock" dated as of
August 24, 1994 between the Company and BCL
Investment Partners L.P.
Exhibit 10.56 - Assignment Agreement "F. G. McClintock" dated as of
September 27, 1994 between the Company and BT
Advisors, Inc.
Exhibit 10.57 - Assignment Agreement "C. E. Thornton" dated as of
August 24, 1994 between the Company and BCL
Investment Partners L.P.
Exhibit 10.58 - Assignment Agreement "C. E. Thornton" dated as of
September 27, 1994 between the Company and BT
Advisors, Inc.
Exhibit 10.59 - Assignment Agreement "George H. Galloway" dated as of
August 24, 1994 between the Company and Elliott
Associates L.P.
Exhibit 11 - Computation of Earnings Per Common Share
Exhibit 21 - Schedule of Subsidiaries of the Company
Exhibit 23 - Consent of Arthur Andersen LLP
Exhibit 27 - Financial Data Schedule. (Exhibit 27 is being
submitted as an exhibit only in the electronic format
of this Annual Report on Form 10-K being submitted to
the Securities and Exchange Commission.)
Exhibit 99 - Annual Report on Form 11-K with respect to Reading &
Bates Savings Plan.
Instruments with respect to certain long-term
obligations of the Company are not being filed as
exhibits hereto as the securities authorized thereunder
do not exceed 10% of the Company's total assets. The
Company agrees to furnish a copy of each such instrument
to the Securities and Exchange Commission upon its
request.
* Management contract or compensatory plan or
arrangement required to be filed as an exhibit
pursuant to the requirements of Item 14(c) of Form
10-K.
(b) Reports on Form 8-K
During the three months ending December 31, 1994, one
Current Report on Form 8-K was filed on October 20, 1994
announcing the Company's 3rd quarter 1994 earnings.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed by the undersigned, thereunto duly authorized on
March 13, 1995.
READING & BATES CORPORATION
By /s/ Paul B. Loyd, Jr.
----------------------------
Paul B. Loyd, Jr.
President, Chief Executive Officer,
Chairman and Director
Pursuant to the requirements of the Securities Exchange Act of l934,
this report has been signed below by the following persons on behalf of
the Registrant in the capacities indicated on March 13, 1995.
By /s/ Paul B. Loyd Jr. By
-------------------------- --------------------------
Paul B. Loyd, Jr. Willem Cordia
President, Chief Executive Officer, Director
Chairman and Director
By /s/ C. Kirk Rhein, Jr. By /s/ Charles A. Donabedian
-------------------------- --------------------------
C. Kirk Rhein, Jr. Charles A. Donabedian
Vice Chairman and Director Director
By /s/ Tim W. Nagle By /s/ J. W. McLean
-------------------------- --------------------------
Tim W. Nagle J. W. McLean
Vice President and Director
Chief Financial Officer
Principal Accounting Officer
By /s/ Ted Kalborg By /s/ Arnold L. Chavkin
-------------------------- --------------------------
Ted Kalborg Arnold L. Chavkin
Director Director
By /s/ Steven A. Webster By /s/ Robert L. Sandmeyer
-------------------------- --------------------------
Steven A. Webster Robert L. Sandmeyer
Director Director
</TABLE>
EXHIBIT 4.24
Schedule to Exhibit 4.24 pursuant to Item 601 of Regulation S-K.
Common Stock Issuance Agreement dated as of August 24,
1994 between the Company and The Equitable Life Assurance
Society of the United States.
Common Stock Issuance Agreement dated as of August 24,
1994 between the Company and Grace Brothers, Ltd.
Common Stock Issuance Agreement dated as of August 24,
1994 between the Company and Elliott Associates, L.P.
Common Stock Issuance Agreement dated as of August 24,
1994 between the Company and Ingalls & Snyder Value
Partners L. P.
Common Stock Issuance Agreement dated as of August 24,
1994 between the Company and John Hancock Mutual Life
Insurance Company.
Common Stock Issuance Agreement dated as of August 24,
1994 between the Company and Knights of Columbus.
Common Stock Issuance Agreement dated as of August 24,
1994 between the Company and Massachusetts Mutual Life
Insurance Company.
Common Stock Issuance Agreement dated as of August 24,
1994 between the Company and New England Mutual Life
Insurance Company.
Common Stock Issuance Agreement dated as of August 24,
1994 between the Company and Pan-American Life Insurance
Company. <PAGE>
COMMON STOCK ISSUANCE AGREEMENT
This Common Stock Issuance Agreement (this
"Agreement") is dated as of August 24, 1994, by and between
Reading and Bates Corporation (the "Company") and each of the
purchasers (a "Purchaser") whose name is set forth on the
signature pages hereto. Capitalized terms used but not defined
herein are used as defined in the Offer Letter of the Company
dated August 8, 1994 (the "Offer Letter") and the Assignment
Agreement referred to in the Offer Letter.
Recitals
1. The Company and each Purchaser has agreed to
enter into and perform the Offer Letter and Assignment
Agreement and has delivered to the Company a duly completed
acceptance form (the "Acceptance Form") in the form attached to
the Offer Letter and holder questionnaire (the "Holder
Questionnaire") in the form of EXHIBIT A hereto.
2. In connection with the transactions contemplated
by the Offer Letter and the Assignment Agreement, the Company
has agreed to issue certain shares (the "Shares") of its Common
Stock, $.05 par value (the "Common Stock") to each Purchaser.
3. The Purchasers have requested that the Company
undertake to register the Shares under the Securities Act of
1933, as amended (the "Act"), for resale from time to time
following the date of the closing referred to in the Assignment
Agreement (the "Closing Date").
Accordingly, in consideration of the premises and the
mutual agreements contained herein and in the Offer Letter and
the Assignment Agreement, the parties hereto hereby agree as
follows:
Section 1. Agreements to Issue and Purchase.
Subject to all the terms and conditions set forth herein and in
the Offer Letter and the Assignment Agreement, (i) the Company
hereby agrees to issue and sell in a private offering to each
Purchaser and (ii) each Purchaser agrees, severally and not
jointly, to acquire from the Company, the number of Shares
indicated with respect to such Purchaser in the Offer Letter
and the Company's acceptance letter with respect thereto.
Section 2. Delivery of the Shares. Issuance and
delivery to each Purchaser of the Shares by the Company shall
be made at the closing referred to in the Assignment Agreement
promptly following the receipt by the Company of listing
approval for the Shares on the New York Stock Exchange. The
place and time of delivery for the Shares may be varied by
agreement between the Purchasers and the Company.
Section 3. Legends; Transfer Restrictions.
(a) To insure compliance with the applicable
provisions of the Act and the terms of this Agreement, no
Shares shall be sold or transferred except in a transaction
permitted by this Section 3 or involving the registration of
such Shares under the Act.
(b) Except as otherwise provided in Section 3(e)
hereof, each certificate for any Shares shall be issued with a
legend in substantially the following form:
"The transfer of the securities represented by this
certificate is subject to the conditions specified in that
certain Common Stock Issuance Agreement dated as of
August 24, 1994, with Reading & Bates Corporation (the
"Company"), as the same may from time to time be amended.
The securities represented by this certificate have not
been registered under the United States Securities Act of
1933, as amended (the "Securities Act"), or under any
state securities or laws and may not be offered or sold
unless such offer or sale is made pursuant to an effective
registration statement under the Securities Act or is made
in a transaction exempt from the registration requirements
of the Securities Act and applicable state securities
laws.
(c) Each holder of Shares shall have the right to
transfer Shares (i) to any Person who agrees in writing to take
the same subject to the terms and provisions of this Agreement
or (ii) pursuant to Rule 144 under the Act; provided, that in
the case of clause (i) above, no such transfer shall be
effective unless the written agreement providing for such
transfer includes representations and warranties (expressed to
be for the benefit of the Company as well as all other
Purchasers) substantially in the form set forth in Section 6
hereof and signed counterparts of such agreement are delivered
to the Company. Each such transferee shall be subject to the
same transfer restrictions imposed by this Agreement.
(d) Notwithstanding anything to the contrary in this
Agreement, no holder of Shares shall transfer any Shares
pursuant to Section 3(c) hereof, and no such transfer shall be
effective, unless such holder has delivered to the Company an
opinion of counsel reasonably satisfactory to the Company
(which counsel may include attorneys who are employees of such
holder) that registration in respect of such transfer is not
required under the Act.
(e) Notwithstanding the foregoing provisions of this
Section 3, all of the restrictions imposed hereby upon the
transferability of the Shares shall terminate as to such Shares
when:
(i) they have been registered under the Act and sold
in accordance with such registration; or
(ii) counsel reasonably satisfactory to the Company
has rendered an opinion to the Company that all of the
Shares may be freely sold to the public without compliance
with the registration provisions of the Act or any volume
or manner of sale restrictions under Rule 144; or
(iii) counsel reasonably satisfactory to the Company
has rendered an opinion to the Company that such Shares
may be freely sold to the public without compliance with
the registration provisions of the Act.
Whenever the restrictions imposed by this Section 3
terminate as to any Shares, the holder thereof shall be
entitled to receive from the Company, without expense, a new
certificate not bearing the legends otherwise required pursuant
to this Section 3.
Section 4. Registration by the Company. The Company
and the several Purchasers hereby agree as follows:
(a) The Company undertakes and agrees to take all
necessary action required to permit the holders of the Shares
to offer and sell the Shares pursuant to an effective shelf
registration statement covering the Shares (a "Registration
Statement") at all times during the Registration Period (as
defined below) and to ensure that one or more Registration
Statement(s) and any related prospectus (each, a "Prospectus")
remain continuously effective and in full compliance with all
applicable provisions of the Securities Act of 1933, as amended
(the "Act"), the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and the respective rules and regulations
of the Securities and Exchange Commission (the "Commission")
thereunder (the "Rules and Regulations") until the end of the
Registration Period. In furtherance of the foregoing, the
Company shall file a Registration Statement within 30 days of
the Closing Date and shall thereafter use its best efforts to
cause such Registration Statement to be declared effective as
soon as practicable.
(b) The "Registration Period" shall begin on the
date that a Registration Statement with respect to the Shares
is declared effective and shall continue until terminated by
the Company by notice to the holders of Shares; provided, that
the Company shall not terminate the Registration Period prior
to the earlier to occur of (i) the second anniversary of the
Closing Date or (ii) the sale of all of the Shares pursuant to
a Registration Statement. Notwithstanding the foregoing, the
Registration Period shall be extended by a period of time
following such second anniversary equal to any period of time
that offers and sales of Shares under the Registration
Statement are prevented by any stop order, injunction or other
action of the Commission or any Notice of Amendment pursuant to
Section 4(e).
(c) During the Registration Period, the Company will
advise holders of Shares promptly and, if requested by such
holders, will confirm such advice in writing: (i) of any
request by the Commission for amendment of or a supplement to
the Registration Statement or the Prospectus or for additional
information; (ii) of the issuance of any stop order suspending
the effectiveness of the Registration Statement or of the
suspension of qualification of the Shares for offering or sale
in any jurisdiction or the initiation of any proceeding for
such purpose; and (iii) of any change in the Company's
condition (financial or other), business, prospects,
properties, net worth or results of operations, or of the
happening of any event, which makes any statement of a material
fact made in the Registration Statement or the Prospectus (as
then amended or supplemented) untrue or which requires the
making of any additions to or changes in the Registration
Statement or the Prospectus (as then amended or supplemented)
in order to state a material fact required to be stated therein
or necessary in order to make the statements therein not
misleading, or of the necessity to amend or supplement the
Prospectus (as then amended or supplemented) to comply with the
applicable requirements of the Act or the Exchange Act or the
Rules and Regulations. If at any time a stop order suspending
the effectiveness of the Registration Statement shall be
issued, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible time.
(d) During the Registration Period, the Company will
expeditiously deliver to each holder of Shares, without charge,
copies of the Registration Statement and the Prospectus and of
any amendment or supplement thereto. The Company consents to
the use of the Registration Statement and the Prospectus and of
any current amendment or supplement thereto by each holder of
Shares for non-underwritten resales of Shares during the
Registration Period in accordance with the Act, the Exchange
Act and the Rules and Regulations.
(e) If during the Registration Period any event
shall occur that in the judgment of the Company is required to
be set forth in the Prospectus as then amended or supplemented
or should be set forth therein in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading, or if it is necessary to supplement
or amend the Prospectus or to file under the Exchange Act any
document which, upon filing, will be incorporated by reference
therein in order to comply with the Act, the Exchange Act or
the Rules and Regulations, the Company will forthwith notify
the holders of Shares in writing of such event or requirement
(a "Notice of Amendment") and prepare and file with the
Commission an appropriate supplement or amendment thereto and
furnish copies thereof, together with a written notice of such
amendment or supplement ("Notice of Correction"), to the
holders of Shares. Following any Notice of Amendment as
aforesaid, no holder of Shares shall effect any offer or sale
of Shares prior to receipt from the Company of a Notice of
Correction. Each holder of Shares included in the Registration
Statement undertakes and agrees expeditiously to provide a
complete and accurate Holder Questionnaire or otherwise confirm
to the Company any information regarding such holder included
or required to be included in the Registration Statement, to
update such holder's Holder Questionnaire whenever necessary
and to inform the Company in writing of any additions to or
other changes in such information, including any changes in the
number of Shares or other securities of the Company from time
to time owned by such holder.
(f) In connection with each Registration Statement,
the Company shall pay all filing fees of the Commission,
printing expenses, stock exchange listing fees, Company counsel
and auditor fees (but not fees of counsel or auditors for the
holders of Shares), registrar and transfer agent fees and "blue
sky" and National Association of Securities Dealers, Inc. fees.
(g) The Company will not take, directly or
indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of
the price of the Common Stock in connection with the issuance
of the Shares contemplated hereby.
(h) The Company shall (i) apply to the New York
Stock Exchange for the listing of the Shares thereon prior to
the Closing Date, (ii) use its best efforts to have the Shares
approved for listing, subject to notice of issuance, thereon
and (iii) maintain the listing of the Shares thereon as long as
the Common Stock is so listed.
(i) Notwithstanding anything to the contrary in this
Agreement, the Company shall be permitted to effect the
registration, issuance, offer, underwriting and/or sale of
securities issued by the Company or its subsidiaries (whether
issued and outstanding prior to or subsequent to the date
hereof) at any time during the Registration Period (including,
without limitation, by including other securities issued by the
Company in a Registration Statement or by extending any
existing shelf registration pursuant to Rule 415 under the Act)
and holders of Shares shall not be entitled to participate in
any such registration, offering or transaction (other than a
Registration Statement with respect to the Shares) without the
Company's prior consent.
(j) In connection with a reasonable and customary
due diligence investigation relating to the Registration
Statement, the Company shall (i) make reasonably available for
inspection by holders of Shares and their attorneys,
accountants and other agents and representatives all relevant
financial and other records, corporate documents and properties
and (ii) cause the Company's officers, directors and employees
to cooperate in supplying all information reasonably requested
by such persons; provided, that that any information that is
designated by the Company as confidential shall be kept
confidential by such persons, unless disclosure thereof is
required by applicable law or regulation or such information
becomes publicly available other than as a result of a breach
hereof by any such person. In addition, promptly following
effectiveness of a Registration Statement, the Company shall
deliver to each Purchaser opinions of counsel substantially in
form of EXHIBITS B-1 and B-2 and a certificate of its
President, Vice President or Treasurer substantially in the
form of EXHIBIT C.
Section 5. Representations and Warranties of the
Company. The Company represents and warrants to each
Purchaser, on and as of the Closing Date, as follows:
(a) The Registration Statement in the form in which
it becomes effective and any supplement or amendment thereto
when filed with the Commission will comply in all material
respects with the applicable provisions of the Act and the
Rules and Regulations and will not at any such times contain an
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading, except that this
representation and warranty does not apply to statements in or
omissions from the Registration Statement or the Prospectus
made in reliance upon and in conformity with information
relating to any holder of Shares furnished to the Company by or
on behalf of any such holder for use therein.
(b) All the Shares have been duly authorized and,
when issued and delivered to the Purchasers against payment
therefor in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable and free of any preemptive
or similar rights; all of the Shares have been approved for
listing, subject to notice of issuance, on the New York Stock
Exchange, and the capital stock of the Company will conform to
the description thereof in the Registration Statement or the
Prospectus.
(c) The Company is a corporation duly organized and
validly existing in good standing under the laws of the State
of Delaware with full power and authority (corporate and other)
to own, lease and operate its properties and to conduct its
business as currently conducted.
(d) Neither the issuance and sale of the Shares, the
execution, delivery or performance of this Agreement by the
Company, nor the consummation by the Company of the
transactions contemplated hereby, (i) requires any consent,
approval, authorization or other order of or registration or
filing with, any court, regulatory body, administrative agency
or other governmental body, agency or official (except such as
may be required for the registration of the Shares under the
Act and compliance with the securities laws of various
jurisdictions, which will be effected in accordance with this
Agreement) or conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, the Restated
Certificate of Incorporation (the "Charter") or Bylaws or other
organizational documents of the Company, or (ii) conflicts or
will conflict with or constitutes or will constitute a breach
of or default under, any agreement, indenture, lease or other
instrument to which the Company is a party or by which it or
any of its property may be bound, or violates or will violate
any statute, law, regulation or filing or any judgment,
injunction, order or decree applicable to the Company or any of
its properties, or will result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of
the Company pursuant to the terms of any agreement or
instrument to which it is a party or by which it may be bound
or to which any of its property or assets is subject.
(e) The execution and delivery of, and the
performance by the Company of its obligations under, this
Agreement have been duly and validly authorized by the Company,
and this Agreement has been duly executed and delivered by the
Company and constitutes the valid and legally binding agreement
of the Company, enforceable against the Company in accordance
with its terms.
(d) Neither the Company nor anyone acting on its
behalf has directly or indirectly offered the Shares or any
part thereof or any similar securities for sale to, or
solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, anyone other
than the Purchasers and other parties to the Assignment
Agreement. Neither the Company nor anyone acting on its behalf
has taken or will take any action which would subject the
issuance and sale of the Shares to the registration and
prospectus delivery provisions of the Act prior to registration
of the Shares as contemplated hereby.
(e) The Company has not, and nor has anyone acting on
its behalf, employed or engaged any agent, broker or finder or
incurred any liability for any brokerage fees, commissions or
finders' fees in connection with the transactions contemplated
hereby.
Section 6. Representations and Warranties of the
Purchasers. Each Purchaser represents and warrants to the
Company, on and as of the Closing Date, as follows:
(a) Such Purchaser has been provided an opportunity
to obtain such documents and information concerning the
Company, the Shares, the Offer Letter, the Assignment Agreement
and the transactions contemplated hereby and thereby as it has
deemed appropriate in making its own analysis and financial and
legal evaluation of the Company, the Shares, the Offer Letter,
the Assignment Agreement and the transactions contemplated
hereby and thereby, and such Purchaser represents and warrants
that it has, independently and based on such documents and
information as it has deemed appropriate, made its own
appraisal of the financial condition, business,
creditworthiness and affairs of the Company and of the value
and terms of the Shares, this Agreement, the Offer Letter, the
Assignment Agreement and rights assigned pursuant thereto.
(b) Such Purchaser represents and warrants that it
is acquiring the Shares for its own account or the account of
one or more separate accounts maintained and controlled by it,
for which such Purchaser has investment discretion with respect
to the acquisition of the Shares and on whose behalf such
Purchaser has authority to make this representation, in each
case for investment and not with a view to the distribution
thereof or with any present intention of distributing all or
any portion thereof, all without prejudice to its right at any
time, in accordance with this Agreement, lawfully dispose of
all or any part of the Shares. Such Purchaser acknowledges and
agrees that the Shares have not been registered under the Act
or any state securities law, or approved by the Securities and
Exchange Commission or any state agency, and may be resold or
otherwise transferred only if registered pursuant to the
provisions of such Act and applicable state securities law or
if an exemption from registration is available.
(c) The execution and delivery of, and the
performance by such Purchaser of its obligations under, this
Agreement have been duly and validly authorized by such
Purchaser, and this Agreement has been duly executed and
delivered by such Purchaser and constitutes the valid and
legally binding agreement of such Purchaser, enforceable
against such Purchaser in accordance with its terms.
(d) Such Purchaser represents that it is an
"accredited investor" as such term is defined in Regulation D
under the Act, is financially able to bear the risks of the
investment in the Shares and has such knowledge and experience
in financial and business matters that it is capable of
evaluating the merits and risks thereof.
(e) Such Purchaser has not, and nor has anyone
acting on such Purchaser's behalf, employed or engaged any
agent, broker or finder or incurred any liability for any
brokerage fees, commission or finders' fees in connection with
the transactions contemplated hereby.
(f) The information set forth in the Acceptance Form
and Holder Questionnaire of such Purchaser is true and complete
in all material respects and may be used by the Company in a
Registration Statement until updated or revised by written
notice to the Company.
Section 7. Indemnification.
(a) In connection with the Registration Statement,
the Company agrees to indemnify and hold harmless each holder
of securities covered thereby, the directors, officers,
employees and agents of each holder and each person who
controls any holder within the meaning of the Act or the
Exchange Act against any and all losses, claims, damages or
liabilities, joint or several, to which they or any of them may
become subject under the Act, the Exchange Act or other Federal
or state statutory laws or regulations, at common law or
otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement as
originally filed or in any amendment thereof, or in any
preliminary Prospectus or Prospectus, or in any amendment
thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any
legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss,
claim, damage, liability or action; provided, that (i) the
Company will not be liable to the extent that any such loss,
claim, damage or liability arises out of or is based upon any
such untrue statement or alleged untrue statement or omission
or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by
or on behalf of any such holder specifically for inclusion
therein and (ii) such indemnity with respect to any Prospectus
shall not inure to the benefit of any holder (or any director,
officer, employee or agent of such holder or any person
controlling such holder) from whom the person asserting any
such loss, claim, damage or liability purchased the Shares if
such person did not receive a copy of the current Prospectus as
amended and supplemented and distributed to the holders by the
Company at or prior to the confirmation of the sale of such
Shares, to such person in any case where such delivery is
required by the Securities Act and the untrue statement or
omission of a material fact contained in the Prospectus was
corrected in such current Prospectus as so amended and
supplemented. This indemnity agreement will be in addition to
any liability which the Company may otherwise have.
(b) Each holder of Shares covered by the
Registration Statement severally agrees to indemnify and hold
harmless (i) the Company, (ii) each of its directors, (iii)
each of its officers who signs the Registration Statement and
(iv) each person who controls the Company within the meaning of
either the Act or the Exchange Act to the same extent as the
foregoing indemnity from the Company to each holder, but only
with reference to written information relating to such holder
furnished to the Company on or behalf of such holder
specifically for inclusion in the Registration Statement or the
Prospectus. This indemnity agreement will be in addition to
any liability which any holder may otherwise have.
(c) Promptly after receipt by an indemnified party
under this Section 7 of notice of the commencement of any
action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this
Section 7, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under
paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the
forfeiture by the indemnifying party of substantial rights and
defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in
paragraph (a) or (b) above. The indemnifying party shall be
entitled to appoint counsel of the indemnifying party's choice
at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is
sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any
separate counsel retained by the indemnified party or parties
except as set forth below); provided, that such counsel shall
be reasonably satisfactory to the indemnified party.
Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate
counsel, if (i) the use of counsel chosen by the indemnifying
party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the actual or
potential defendants in, or targets of, any such action include
both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there
may be legal defenses available to it or any other indemnified
party which are different from or additional to those available
to the indemnifying party, (iii) the indemnifying party shall
not have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within a
reasonable time after notice of the institution of such action
or (iv) the indemnifying party shall authorize the indemnified
party to employ separate counsel at the expense of the
indemnifying party. An indemnifying party will not, without
the prior written consent of the indemnified parties, settle,
compromise or consent to the entry of any judgment with respect
to any pending or threatened claim, action, suit or proceeding
in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless
such settlement, compromise or consent includes an
unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or
proceeding.
(d) In the event that the indemnity provided in
paragraph (a) or (b) above is unavailable to or insufficient to
hold harmless an indemnified party for any reason, then each
indemnifying party, in lieu of indemnifying such indemnified
party, shall have a joint and several obligation to contribute
to the aggregate losses, claims, damages and liabilities
(collectively "Losses") to which such indemnified party shall
be subject in such proportion as is appropriate to reflect the
relative benefits received by such indemnifying party, on the
one hand, and such indemnified party, on the other hand, from
the the Registration Statement; provided, that in no case shall
any holder of Shares be responsible, in the aggregate, for any
amount in excess of the value of Shares sold by such person in
the transaction giving rise to such Losses. If the allocation
provided by the immediately preceding sentence is unavailable
for any reason, the indemnifying party and the indemnified
party shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative
fault of such indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the
statements or omissions which resulted in such Losses as well
as any other relevant equitable considerations. No person
guilty of fraudulent misrepresentation shall be entitled to
contribution from any person not guilty thereof.
Section 8. Miscellaneous.
(a) This Agreement shall be binding on, and inure to
the benefit of, the parties hereto and their respective
successors and permitted assigns pursuant to Section 3(c)(i)
and (d) hereof.
(b) This Agreement may be signed in counterparts,
each of which shall be an original and which taken together
shall constitute one agreement. This Agreement and any
modification or waiver hereof may be executed by facsimile
signature.
(c) This Agreement may be modified, waived,
discharged or terminated only by an instrument in writing
signed by the Company and holders of a majority of the Shares
(without counting for such purposes Shares held by the Company
or its affiliates).
(d) All notices and other communications hereunder
shall be in writing and shall be served either (i) personally,
(ii) by certified mail, (iii) by overnight courier service, or
(iv) by telecopier, in each case addressed to the party to whom
notice is being given at its address as set forth below or at
such other address as may hereafter be designated in writing by
either party hereto. All such notices or other communications
shall be deemed to have been given on (i) the date received if
delivered personally, (ii) five business days after the date of
posting if transmitted by certified mail, (iii) the first
business day after receipt by the overnight courier service, or
(iv) the date of transmission with confirmation answerback if
transmitted by telecopier. Said parties may designate in
writing from time to time other and additional places to which
notices may be sent.
All notices to the Company shall be given to it at:
READING & BATES CORPORATION
901 Theadneedle
Houston, Texas 77079
Attn: Wayne K. Hillin, Esq.
Telephone Number: (713) 496-5000
Telecopy Number: (713) 496-0285
Copy to:
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
Attn: Douglas R. Davis, Esq.
Richard S. Mitchell, Esq.
Telephone Number: (212) 530-5000
Telecopy Number: (212) 530-5219
All notices to holders of Shares shall be given at
the address set forth for each Purchaser on the Acceptance Form
or otherwise indicated in writing to the Company by any such
holder.
(e) Damages in the event of breach of this Agreement
would be difficult, if not impossible, to ascertain, and it is
therefore agreed that each party hereto, in addition to and
without limiting any other remedy or right it may have, will
have the right to an injunction or other equitable relief in
any court of competent jurisdiction, enjoining any such breach,
and enforcing specifically the terms and provisions hereof.
The existence of this right will not preclude the parties
hereto from pursuing any other rights and remedies at law or in
equity which they may have.
(f) If any provision of this Agreement is held to be
illegal, invalid or unenforceable, and if the rights or
obligations of any party hereto will not be materially and
adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced
as if such illegal, invalid or unenforceable provision had
never comprised a part hereof, (iii) the remaining provisions
of this Agreement will remain in full force and effect and will
not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (iv) in lieu of such
illegal, invalid or unenforceable provision, there will be
added automatically as a part of this Agreement a legal, valid
and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
(g) The terms and provisions of this Agreement are
intended solely for the benefit of each party hereto and their
respective successors and permitted assigns pursuant to Section
3(c)(i) and (d) hereof, and is not the intention of the parties
to confer third-party beneficiary rights upon any other person.
(h) Except as otherwise expressly provided in this
Agreement, each party will pay its own costs and expenses.
[Signature Page Follows]
IN WITNESS WHEREOF, the undersigned have duly
executed this Agreement as of the date above first written.
Company
READING & BATES CORPORATION
By:____________________________
Name:
Title:
Purchaser
Name:
By:____________________________
Name:
Title: <PAGE>
EXHIBIT A
HOLDER QUESTIONNAIRE
Holder Questionnaire pursuant to the Common Stock
Issuance Agreement dated as of August 24, 1994 among READING &
BATES CORPORATION and the Purchasers referred to therein (the
"Agreement"). Each capitalized term used herein without
definition shall have the meaning ascribed thereto in the
Agreement.
Please complete, execute, date and return to:
Reading & Bates Corporation
901 Threadneedle
Suite 200
Houston, TX 77079
Attention: Wayne K. Hillin, Esq.
The information requested below is required for
purposes of any Registration Statement in which any Holder
participates, and for purposes of certain Exchange Act
filings.THE UNDERSIGNED HOLDER AGREES TO UPDATE AND AMEND THIS
QUESTIONNAIRE IF THERE IS ANY MATERIAL CHANGE IN THE
INFORMATION CONTAINED HEREIN AND TO PROVIDE ANY ADDITIONAL
INFORMATION REQUESTED BY THE COMPANY PURSUANT TO SECTION 4(e)
OF THE AGREEMENT.
Information for notices:
Legal Name of
Holder : ____________________
Street Address : ____________________
Post Office Box : ____________________
City/State/Zip : ____________________
Fed. Tax ID. No.
(if any) : _________________________
Telex Number: _____________ Answerback __________________
Telecopier Number: ________ Type of Telecopier: _________
Contacts: (Please include Back-ups)
1. Name:_______________________________________________
Title:______________________________________________
Function:___________________________________________
Business Telephone:_________________________________
Home Telephone:_____________________________________
2. Name:_______________________________________________
Title:______________________________________________
Function:___________________________________________
Business Telephone:_________________________________
Home Telephone:_____________________________________
Information required for any Registration Statement and
Prospectus pursuant to Item 507 of Regulation S-K under the
Securities Act:
1. Describe the nature of any position, office or
other material relationship (excluding normal banking
relationships) which such Holder has had within the past three
years with the Company or any of its affiliates.
2. Enter below in the space indicated the number of
shares of Common Stock or other securities of Reading & Bates
Corporation convertible into or exchangeable or exercisable for
Common Stock owned as of the date of this certificate (i) by
the Holder signing this certificate for its own account and
(ii) in the aggregate by affiliates (as defined in Exchange Act
Rule 12b-2) of such Holder for their own accounts (excluding,
in each case, any Common Stock or other securities of Reading &
Bates Corporation convertible into or exchangeable or
exercisable for Common Stock held by the Holder or its
affiliates in investment accounts, in trust accounts, in
custody accounts or in other similar fiduciary capacities).
Holder Affiliates
________ __________ Shares of Common Stock
________ __________ Other convertible or exchangeable
securities (Specify title of
class or series and number of
shares of Common Stock underlying
such securities)
The undersigned Holder hereby represents that the
information contained herein is true and complete in all
material respects as of the date hereof, and agrees to
supplement this Holder Questionnaire upon the request of the
Company and to update and amend this Holder Questionnaire if
there is any material change in the information contained
herein. The undersigned Holder hereby authorizes the Company
to use the information contained herein in any registration
statement or prospectus filed by the Company pursuant to the
Agreement and to rely upon the information contained herein,
until this Holder Questionnaire is amended or withdrawn, in
executing any certificate, agreement or document contemplated
by the Agreement.
[signature page follows] <PAGE>
IN WITNESS WHEREOF the undersigned has duly executed
this document as of the date set forth below.
___________________________
Name of Holder
By__________________________
Signature of Authorized Signatory
____________________________
Printed Name of Authorized Signatory
____________________________
Title
____________________________
Date
COMPANY USE ONLY
Date Received _______________ <PAGE>
EXHIBIT B-1
[___________, 1994]
To Each Addressee
Listed on Schedule I Hereto
Ladies and Gentlemen:
We have acted as special New York counsel to Reading
& Bates Corporation, a Delaware corporation (the "Company"), in
connection with the Registration Statement on Form S-3
(Registration No. 33-_____) (the "Shelf Registration
Statement") filed by the Company pursuant to the Securities Act
of 1933, as amended (the "Act") and Rule 415 thereunder
relating to the registration under the Act of an aggregate of
[___________] outstanding shares (the "Shares") of the
Company's common stock, $.05 par value per share (the "Common
Stock"), pursuant to the Common Stock Issuance Agreement dated
as of [August __], 1994, as amended to the date hereof (the
"Agreement"). This opinion is being furnished pursuant to
Section 4(j) of the Agreement. Capitalized terms used herein
and not expressly defined herein shall have the definitions
specified in the Agreement. The term "Shelf Registration
Statement" as used herein means the Shelf Registration
Statement (including all financial schedules and exhibits), as
amended at the time it became effective under the Act. The
term "Prospectus" as used herein means the prospectus in the
form included in the Shelf Registration Statement. Any
reference herein to the Shelf Registration Statement or the
Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12
of Form S-3 under the Act, as of the date of the Shelf
Registration Statement or the Prospectus, as the case may be,
and any reference to any amendment or supplement to the Shelf
Registration Statement or the Prospectus shall be deemed to
refer to and include any documents filed after such date under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), which, upon filing, are incorporated by reference
therein, as required by paragraph (b) of Item 12 of Form S-3.
As used herein, the term "Incorporated Documents" means the
documents which at the time are incorporated by reference into
the Shelf Registration Statement, the Prospectus, or any
amendment or supplement thereto.
In rendering the opinions expressed below, we have
examined originals or copies certified or otherwise identified
to our satisfaction of all such records of the Company,
agreements and other instruments, certificates of public
officials, certificates of officers and representatives of the
Company and such other documents as we have deemed necessary as
a basis for the opinions expressed below. In our examination
we have assumed and have not verified the genuineness of
signatures on all documents which we have examined, the
authenticity of all documents submitted to us as originals and
the conformity with authentic original documents of all
documents submitted to us as copies. As to various questions
of fact material to such opinions we have, when relevant facts
were not independently established, relied upon the
representations and warranties of the Company made in or
pursuant to the Agreement and upon certificates of government
officials and of the Company and its officers.
Based on the foregoing, and having regard to legal
considerations we deem relevant, we are of the opinion that:
1. The Company is a corporation validly existing in
good standing under the laws of the State of Delaware, with
full corporate power and authority to own, lease and operate
its properties and to conduct its business as described in the
Shelf Registration Statement and the Prospectus (and any
amendment or supplement thereto filed as of the date hereof).
2. The form of certificate evidencing the Shares
conforms to the requirements of the Delaware General
Corporation Law.
3. The Shelf Registration Statement has become
effective under the Act and, to our best knowledge after
reasonable inquiry, no stop order suspending the effectiveness
of the Shelf Registration Statement has been issued and no
proceedings for that purpose are pending before or contemplated
by the Commission; and any required filing of the Prospectus
pursuant to Rule 424(b) under the Act has been made in
accordance with such Rule.
4. No consent, approval, authorization or other
order of, or registration or filing with, any court, regulatory
body, administrative agency or other governmental body, agency,
or official is required on the part of the Company under the
Act or the Exchange Act (except as have been obtained or made
under the Act and the Exchange Act and such as may be required
under state securities or Blue Sky laws governing the sale,
purchase and distribution of the Shares) for the valid offer
and sale of the Shares by the Holders pursuant to the Shelf
Registration Statement.
5. The Shelf Registration Statement and the
Prospectus and any supplements or amendments thereto filed as
of the date hereof (except for the financial statements and the
notes thereto and the schedules and other financial and
statistical data included therein, as to which we express no
opinion) comply as to form in all material respects with the
requirements of the Act; and as of their respective dates each
of the Incorporated Documents (except for the financial
statements and the notes thereto and other financial and
statistical data included therein, as to which we express no
opinion) complies as to form in all material respects with the
Exchange Act and the rules and regulations of the Commission
thereunder.
We have participated in conferences with officers and
other representatives of the Company at which the contents of
the Shelf Registration Statement and the Prospectus were
discussed and, although we are not expressing an opinion upon
and do not assume responsibility for the accuracy, completeness
or fairness of the statements contained in the Shelf
Registration Statement or the Prospectus, on the basis of the
foregoing, nothing has come to our attention that has caused us
to believe that the Shelf Registration Statement, including the
Incorporated Documents, at the time the Shelf Registration
Statement became effective (except for the financial statements
and the notes thereto and the schedules and other financial and
statistical data included therein, as to which we give no
assurances), contained an untrue statement of a material fact
or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, or that the Prospectus, as of its date and as of
the date hereof (except for the financial statements and the
notes thereto and the schedules and other financial and
statistical data included therein, as to which we give no
assurances), or any amendment or supplement to the Prospectus
filed as of the date hereof, as of its date and as of the date
hereof, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the
statements made, in the light of the circumstances under which
they were made, not misleading.
The foregoing opinions are limited to the federal
laws of the United States of America, the corporate laws of the
State of Delaware and the laws of the State of New York, and we
do not express any opinion as to the laws of any other
jurisdiction.
We are delivering this opinion to you pursuant to
Section 4(j) of the Agreement, and no person other than you is
entitled to rely on this opinion.
Very truly yours,
<PAGE>
SCHEDULE I
[INSERT NAMES OF PURCHASERS]
EXHIBIT B-2
[____________], 1994
To Each Addressee
Listed on Schedule I Hereto
Ladies and Gentlemen:
I have acted as Senior Vice President, Secretary and
General Counsel to Reading & Bates Corporation, a Delaware
corporation (the "Company"), in connection with the
Registration Statement on Form S-3 (Regis. No. 33-_____) (the
"Shelf Registration Statement") filed by the Company pursuant
to the Securities Act of 1933, as amended (the "Act"), and Rule
415 thereunder relating to the registration under the Act of an
aggregate of [________] outstanding shares (the "Shares") of
the Company's common stock, $.05 par value per share (the
"Common Stock"), pursuant to the Common Stock Issuance
Agreement dated as of [August __], 1994, as amended to the date
hereof (the "Agreement"). This opinion is being furnished
pursuant to Section 4(j) of the Agreement. Capitalized terms
used herein and not expressly defined herein shall have the
definitions specified in the Agreement. The term "Shelf
Registration Statement" as used herein means the Shelf
Registration Statement (including all financial schedules and
exhibits), as amended at the time it became effective under the
Act. The term "Prospectus" as used herein means the prospectus
in the form included in the Shelf Registration Statement. Any
reference herein to the Shelf Registration Statement or the
Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12
of Form S-3 under the Act, as of the date of the Shelf
Registration Statement or the Prospectus, as the case may be,
and any reference to any amendment or supplement to the Shelf
Registration Statement or the Prospectus shall be deemed to
refer to and include any documents filed after such date under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), which, upon filing, are incorporated by reference
therein, as required by paragraph (b) of Item 12 of Form S-3.
As used herein, the term "Incorporated Documents" means the
documents which at the time are incorporated by reference into
the Shelf Registration Statement, the Prospectus, or any
amendment or supplement thereto.
In rendering the opinions expressed below, I have
examined originals or copies certified or otherwise identified
to my satisfaction of all such records of the Company,
agreements and other instruments, certificates of public
officials, certificates of officers and representatives of the
Company and such other documents as I have deemed necessary as
a basis for the opinions expressed below. In my examination I
have assumed and have not verified the genuineness of the
signatures on all documents which I have examined, the
authenticity of all documents submitted to me as originals and
the conformity with authentic original documents of all
documents submitted to me as copies. As to various questions
of fact material to such opinions I have, when relevant facts
were not independently established, relied upon certificates of
government officials and of officers of the Company and its
subsidiaries.
Based on the foregoing, and having regard to legal
considerations I deem relevant, I am of the opinion that:
1. The Company is a corporation duly organized and
validly existing in good standing under the laws of the State
of Delaware, with full corporate power and authority, and all
necessary governmental authorizations, approvals, orders,
licenses, certificates, franchises and permits of and from all
governmental regulatory officials and bodies, to own, lease and
operate its properties and to conduct its business as now being
conducted and as described in the Shelf Registration Statement
and the Prospectus (and any amendment or supplement thereto
filed as of the date hereof), except where the failure so to
have any such authorizations, approvals, orders, licenses,
certificates, franchises or permits, individually or in the
aggregate, does not and would not have a material adverse
effect on the condition (financial or other), business,
properties, net worth or results of operations of the Company
and its subsidiaries taken as a whole (a "Material Adverse
Effect").
2. The Company is duly registered and qualified to
conduct its business and is in good standing in each
jurisdiction or place where the nature or location of its
properties or the conduct of its business requires such
registration or qualification, except where the failure so to
register or qualify does not have a Material Adverse Effect.
3. Each of the Company's subsidiaries listed on
Schedule II hereto (the "Subsidiaries") is a corporation duly
organized and validly existing in good standing under the laws
of the jurisdiction of its organization, with full corporate
power and authority, and all necessary governmental
authorizations, approvals, orders, licenses, certificates,
franchises and permits of and from all governmental regulatory
officials and bodies, to own, lease, and operate its properties
and to conduct its business as described in the Shelf
Registration Statement and the Prospectus, and any amendment or
supplement thereto filed as of the date hereof, except where
the failure so to have any such authorizations, approvals,
orders, licenses, certificates, franchises or permits,
individually or in the aggregate, does not and would not have a
Material Adverse Effect; and all the outstanding shares of
capital stock of each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and
nonassessable, and, except as set forth in the Prospectus, are
owned by the Company directly, or indirectly through one of the
other Subsidiaries, free and clear of any perfected security
interest, or, to my best knowledge, any lien, adverse claim,
restriction, security interest or other encumbrance, other than
the lien, adverse claim, restriction, security interest or
other encumbrance granted pursuant to the existing credit
agreement between the Company and Internationale Nederlanden
Bank N.V., except where any failure so to own such capital
stock does not and would not have a Material Adverse Effect.
4. The Company's authorized equity capitalization
is as set forth in the Shelf Registration Statement and the
Prospectus; the capital stock of the Company conforms to the
description thereof contained in the Shelf Registration
Statement and the Prospectus; all of the issued and outstanding
shares of capital stock of the Company, including the Shares,
have been duly and validly authorized and issued and are fully
paid and nonassessable; and the Shares have been duly
authorized for listing, subject to official notice of issuance,
on the New York Stock Exchange.
5. Neither the Company nor any of the Subsidiaries
is in violation of its respective certificate or articles of
incorporation or bylaws, or other organizational documents, and
to my knowledge neither the Company nor any of its subsidiaries
is in default in the performance of any obligation, agreement
or condition contained in any bond, debenture, note or other
evidence of indebtedness, except as may be disclosed in the
Prospectus or except for any such violation or default that
does not and would not have a Material Adverse Effect.
6. Neither the offer, sale or delivery of the
Shares, nor the compliance by the Company with the provisions
of the Agreement relating to the Shelf Registration Statement
conflicts or will conflict with or constitutes or will
constitute a breach of, or a default under, the certificate or
articles of incorporation or bylaws, or other organizational
documents, of the Company or any of the Subsidiaries or any
agreement, indenture, lease or other instrument to which the
Company or any of the Subsidiaries is a party or by which any
of them or any of their respective properties is bound that is
an exhibit to the Shelf Registration Statement or to any of the
Incorporated Documents, or is known to me after reasonable
inquiry, or will result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the
Company or any of the Subsidiaries, nor will any such action
result in any violation of any existing law, regulation, ruling
(assuming compliance with all applicable state securities and
Blue Sky laws), judgment, injunction, order or decree known to
me after reasonable inquiry, applicable to the Company, the
Subsidiaries or any of their respective properties.
7. To my knowledge, (A) other than as described or
contemplated in the Prospectus (or any supplement thereto filed
as of the date hereof), there are no legal or governmental
proceedings pending or threatened against the Company or any of
its subsidiaries, or to which the Company or any of its
subsidiaries, or any of their property, is subject, which are
required to be described in the Shelf Registration Statement or
Prospectus (or any amendment or supplement thereto filed as of
the date hereof) but are not described as required and (B)
there are no agreements, contracts, indentures, leases or other
instruments, that are required to be described in the Shelf
Registration Statement or the Prospectus (or any amendment or
supplement thereto filed as of the date hereof) or to be filed
as an exhibit to the Shelf Registration Statement or any
Incorporated Document, that are not described or filed as
required, as the case may be, by the Act or the Exchange Act.
8. To my knowledge, neither the Company nor any of
its subsidiaries is in violation of any law, ordinance,
administrative or governmental rule or regulation applicable to
the Company or any of its subsidiaries or of any decree of any
court or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries which, individually or
in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
I have participated in conferences with officers and
other representatives of the Company, at which the contents of
the Shelf Registration Statement and the Prospectus were
discussed and, although I am not expressing an opinion upon and
do not assume responsibility for the accuracy, completeness or
fairness of the statements contained in the Shelf Registration
Statement or the Prospectus, on the basis of the foregoing,
nothing has come to my attention that has caused me to believe
that the Shelf Registration Statement (including the
Incorporated Documents at the time the Shelf Registration
Statement became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus, as of its date and as
of the date hereof, or any amendment or supplement to the
Prospectus filed as of the date hereof, as of its date and as
of the date hereof, contained an untrue statement of a material
fact or omitted to state a material fact necessary in order to
make the statements made, in the light of the circumstances
under which they were made, not misleading.
To the extent that my opinions expressed above relate
to the due qualification and good standing as a foreign
corporation of any of the Company or its subsidiaries in any
jurisdiction other than the States of Texas, Oklahoma, and
Delaware, I have relied solely on certificates of the relevant
public officials in those jurisdictions. With respect to my
opinion set forth above about the due incorporation, valid
existence in good standing, corporate power and authority and
status of issued stock with respect to Reading & Bates Coal
Co., I have relied exclusively on certificates of public
authorities in the State of Nevada, corporate documents
relating to the formation and maintenance of that Subsidiary
prepared by counsel in that jurisdiction, and practices and
procedures that I have customarily followed (and believe to be
proper) in acting as General Counsel to that Subsidiary.
I am qualified to practice law in the State of Texas
and the State of Oklahoma, and I do not express any opinion
herein concerning any laws other than (i) the laws of the State
of Texas, the laws of the State of Oklahoma, the corporate laws
of the State of Delaware and the federal laws of the United
States of America, and (ii) to the limited extent described
above, (A) the laws of the State of Nevada and (B) the laws of
the jurisdictions other than the States of Texas, Oklahoma and
Delaware covered by my opinions expressed above relating to due
qualification and good standing.
I am delivering this opinion to you pursuant to
Section 4(j) of the Agreement, and no person other than you is
entitled to rely on this opinion.
Very truly yours,
<PAGE>
SCHEDULE I
[INSERT NAMES OF PURCHASERS]
SCHEDULE II
Juridsdiction of
Subsidiary Name Incorporation
1. Reading & Bates Drilling Co. Oklahoma
2. Reading & Bates Exploration Co. Oklahoma
3. Reading and Bates Borneo Drilling Co., Ltd. Oklahoma
4. Reading and Bates, Inc. Oklahoma
5. Reading & Bates Petroleum Co. Texas
6. Reading & Bates Coal Co. Nevada
7. HRB Rig Corporation Oklahoma
8. Reading & Bates Management Services Inc. Delaware
EXHIBIT C
READING & BATES CORPORATION
Officers' Certificate
Reference is made to Section 4(J) of the Common Stock
Issuance Agreement dated as of [August __], 1994, as amended
(the "Agreement"), among Reading & Bates Corporation, a
Delaware corporation (the "Company") and the Purchasers
referred to therein. Capitalized terms used herein and not
defined herein have the meanings ascribed to such terms in the
Agreement. Pursuant to such Section 4(j), the undersigned
hereby certifies that he is the Vice President and Chief
Financial Officer of the Company, that he has carefully
examined and reviewed the Registration Statement and the
related prospectus referred to below, the matters herein set
forth and the Agreement with appropriate officers and employees
of the Company, and further certifies to the best of his
knowledge on behalf of the Company that:
1. The Company has filed with the Commission a Registration
Statement (Regis. No. 33-_____)(the "Shelf Registration
Statement"), including a related preliminary prospectus, for
the registration under the Securities Act of [________] Shares.
The Shelf Registration Statement was declared effective by the
Commission on [_________], 1994. The Company has also filed
with the Commission after effectiveness of the Shelf
Registration Statement a final prospectus in accordance with
Rule 424(b) under the Securities Act. The term "Shelf
Registration Statement" as used herein means the Shelf
Registration Statement (including all financial schedules and
exhibits), as amended at the time it became effective under the
Securities Act. The term "Prospectus" as used herein means the
prospectus in the form included in the Shelf Registration
Statement. Any reference herein to the Shelf Registration
Statement or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Act, as of the date
of the Shelf Registration Statement or the Prospectus, as the
case may be, and any reference to any amendment or supplement
to the Shelf Registration Statement or the Prospectus shall be
deemed to refer to and include any documents filed after such
date under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which, upon filing, are incorporated by
reference therein, as required by paragraph (b) of Item 12 of
Form S-3.
2. At the time of filing, the preliminary prospectus filed
with the Commission as part of the Shelf Registration Statement
did not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading;
provided, that the Company makes no representations or
warranties as to the information contained in or omitted from
such preliminary prospectus in reliance upon and in conformity
with the information furnished in writing to the Company by or
on behalf of any holder of Shares specifically for use in
connection with the preparation of such preliminary prospectus,
other than that the Company has no knowledge of any such untrue
statement or omission in respect of such information.
3. On the Effective Date, the Shelf Registration Statement and
the Prospectus did not include any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they
were made, not misleading. Since the initial filing of the
Shelf Registration Statement, no event has occurred which
should have been set forth in an amendment or supplement to the
Prospectus but which has not been so set forth. Since the
respective dates as of which information is given in the Shelf
Registration Statement and the Prospectus, as amended or
supplemented, there has not been any material adverse change in
the condition, financial or other, or earnings of the Company,
whether or not arising from transactions in the ordinary course
of business. The Company has no material contingent
obligations which are required to be disclosed in the Shelf
Registration Statement or the Prospectus and are not disclosed
therein. No stop order suspending the effectiveness of the
Shelf Registration Statement is in effect and no proceedings
for the issuance of such an order have been taken or to the
knowledge of the Company are contemplated by the Commission.
There are no material legal proceedings to which the Company is
a party or of which property of the Company is the subject
which are required to be disclosed in the Shelf Registration
Statement or the Prospectus and are not disclosed therein.
There are no material contracts to which the Company is a party
which are required to be disclosed in the Shelf Registration
Statement or the Prospectus and are not disclosed therein.
Notwithstanding any of the representations and warranties set
forth herein, the Company makes no representations or
warranties as to the information contained in or omitted from
the Shelf Registration Statement or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in
conformity with information furnished to the Company by or on
behalf of any holder of Shares specifically for use in
connection with preparation of the Shelf Registration Statement
or the Prospectus (or any amendment or supplement thereto),
other than that the Company has no knowledge of any such untrue
statement or omission in respect of such information.
4. The public accountants who certified the Company's
financial statements incorporated by reference in the Shelf
Registration Statement are independent public accountants
within the meaning of the Securities Act and the applicable
published rules and regulations thereunder. The historical
financial statements, together with the related schedules and
notes, forming part of the Shelf Registration Statement and the
Prospectus comply in all material respects with the
requirements of, and have been prepared, and fairly present the
financial condition, results of operations and changes in
financial condition, respectively, of the Company and its
consolidated subsidiaries at the respective dates and for the
respective periods indicated, in accordance with generally
accepted accounting principles consistently applied throughout
such periods (except as specified therein). The historical
financial data set forth in the Prospectus are derived from the
accounting records of the Company and its subsidiaries, and are
a fair presentation of the data purported to be shown. The pro
forma financial statements (if any), together with the related
notes, forming part of the Shelf Registration Statement and the
Prospectus comply in all material respects with the
requirements of the Securities Act and the rules and
regulations thereunder.
5. Except as set forth in the Prospectus, each of the Company
and its subsidiaries (the "Subsidiaries") has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction in which it is
chartered or organized, with full corporate power and authority
to own its properties and conduct its business as described in
the Prospectus, and is duly qualified to do business as a
foreign corporation and is in good standing under the laws of
each jurisdiction which requires such qualification, in each
case where the failure to be so qualified might materially
affect the condition (financial or other), earnings, prospects,
business or properties of the Company and the Subsidiaries,
taken as a whole.
6. Except as set forth in the Prospectus, all the outstanding
shares of capital stock of each Subsidiary have been duly and
validly authorized and issued and are fully paid and
nonassessable, and all outstanding shares of capital stock of
the Subsidiaries are owned by the Company either directly or
through Subsidiaries free and clear of all liens, in each case
where the failure so to own the capital stock of a Subsidiary
might materially affect the condition (financial or other),
earnings, prospects, business or properties of the Company and
the Subsidiaries taken as a whole.
7. Except as set forth in the Prospectus, neither the Company
nor any of the Subsidiaries is in violation of any term or
provision of any charter, by-law, franchise, license, permit,
judgment, decree or order or any applicable statute, rule or
regulation, which violation is material to the condition
(financial or other), earnings, prospects, business or
properties of the Company and the Subsidiaries, taken as a
whole.
8. Except as set forth in the Prospectus, no default exists
and no event has occurred which with notice, lapse of time or
both, would constitute a default, in the due performance and
observance of any term, covenant or condition of any agreement
to which the Company or any of the Subsidiaries is a party or
by which it or any of them is bound, which default is or would
be material to the condition (financial or other), earnings,
prospects, business or properties of the Company and the
Subsidiaries, taken as a whole.
9. Except as set forth in the Prospectus, the Company and the
Subsidiaries have all requisite corporate power and authority
and have received and are operating in compliance in all
material respects with all governmental or regulatory or other
franchises, grants, authorizations, approvals, licenses,
permits, easements, consents, certificates and orders necessary
to own their respective properties and conduct their respective
businesses as currently owned and conducted and as proposed to
be conducted, except where the failure would not materially
affect the condition (financial or other), earnings, prospects,
business or properties of the Company and the Subsidiaries,
taken as a whole.
10. Except as set forth in the Prospectus, since the date of
the most recent financial statements incorporated by reference
in the Prospectus, there has been no material adverse change in
the condition (financial or other), earnings, prospects,
business or properties of the Company and the Subsidiaries,
taken as a whole, whether or not arising from transactions in
the ordinary course of business.
11. Except as set forth in the Prospectus, there is no pending
or, to the best knowledge of the Company, threatened action,
suit, or judicial, arbitral, rule-making or other
administrative or other proceeding before any court or
governmental agency, authority or body or any arbitrator
involving the Company or any of the Subsidiaries which might
materially affect the condition (financial or other), earnings,
prospects, business or properties of the Company and its
Subsidiaries, taken as a whole, or which otherwise is of a
character required to be disclosed in the Prospectus. There is
no franchise, contract or other document of a character
required to be described in the Shelf Registration Statement or
the Prospectus, or to be filed as an exhibit, which is not
adequately described or filed as required. Such franchises,
contracts and other documents that are described in the
Prospectus conform in all material respects to the descriptions
thereof contained in the Prospectus.
12. Except as set forth in the Prospectus, there is no pending
or, to the best knowledge of the Company, threatened action,
suit or judicial, arbitral, rule-making or other administrative
or other proceeding against the Company which questions the
validity of the Agreement or any action taken or to be taken
pursuant to or in connection with the Agreement.
13. The Company's authorized equity capitalization is as set
forth in the Prospectus. The capital stock of the Company
conforms to the description thereof contained in the
Prospectus. All of the issued and outstanding shares of
capital stock of the Company have been duly and validly
authorized and issued and are fully paid and nonassessable.
14. Neither the offer and sale of the Common Shares to be sold
pursuant to the Shelf Registration Statement, nor the
performance by the Company of its obligations under the
Agreement, will conflict with, result in a breach of, or
constitute a default under, the charter or by-laws of the
Company or any of the Subsidiaries or the terms of any
indenture or other agreement or instrument to which the Company
or any of the Subsidiaries is a party or by which it or any of
them is bound, or any statute applicable to the Company or any
of the Subsidiaries or any order, decree, rule or regulation
applicable to the Company or any of the Subsidiaries of any
court, regulatory body, administrative agency, governmental
body or arbitrator.
15. Except as set forth in the Prospectus, no holders of any
securities of the Company have any rights to the registration
of such securities under any registration statement except the
Holders.
16. The Company has complied in all material respects with all
its agreements contained in the Agreement with respect to the
Shelf Registration Statement.
IN WITNESS WHEREOF, the undersigned has executed this
Certificate as of the [__] day of [_________], 1994.
______________________________
Tim W. Nagle
Vice President and
Chief Financial Officer
EXHIBIT 10.55
Schedule to Exhibit 10.55 pursuant to Item 601 of Regulation S-K.
Assignment Agreement "F. G. McClintock" dated as of August 24, 1994 between
the Company and Grace Brothers, Ltd.
Assignment Agreement "F. G. McClintock" dated as of August 24, 1994 between
the Company and The Equitable Life Assurance Society of the United States.
Assignment Agreement "F. G. McClintock" dated as of August 24, 1994 between
the Company and the Knights of Columbus.
Assignment Agreement "F. G. McClintock" dated as of August 24, 1994 between
the Company and John Hancock Mutual Life Insurance Company.
Assignment Agreement "F. G. McClintock" dated as of August 24, 1994 between
the Company and Massachusetts Mutual Life Insurance Company.
Assignment Agreement "F. G. McClintock" dated as of August 24, 1994 between
the Company and New England Mutual Life Insurance Company.
ASSIGNMENT AGREEMENT
"F.G. McClintock"
This ASSIGNMENT AGREEMENT dated as of August 24, 1994, between the
noteholder whose name appears on the signature pages hereto (the
"Assignor") and READING & BATES CORPORATION (the "Assignee").
WHEREAS, Reading & Bates Exploration Co. (together with its successors
and assigns, the "Owner"), is a party to the Trust Indenture and First
Preferred Ship Mortgage dated September 1, 1989, as amended and restated as
of March 29, 1991 (as amended, supplemented and otherwise modified from
time to time, the "Indenture") between the Owner and Shawmut Bank
Connecticut, National Association (formerly known as The Connecticut
National Bank), a national banking association, as successor trustee to The
First National Bank of Boston, a national banking association, as trustee
thereunder (in such capacity, together with its successors and assigns in
such capacity, the "Indenture Trustee") (capitalized terms used herein and
not otherwise defined herein are used herein as defined in the Indenture);
WHEREAS, the Assignor proposes to assign to the Assignee, among other
things, all of its right, title and interest in, to and under the Interest
held by it, the Indenture, each Guaranty and Security Agreement and the
McClintock Restructuring Documents, all as more specifically set forth in
Section 1 below;
WHEREAS, the Assignee proposes to accept such assignment from the
Assignor on the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. Assignment.
(a) On the terms and subject to the conditions set forth herein and
in the 1991 Assignment, the Assignor hereby sells, assigns and transfers to
the Assignee, effective August 24, 1994 or such later date as the parties
hereto may mutually agree (the "Effective Date"), all its right, title and
interest in, to and under (i) the Indenture, (ii) the Interest held by it,
(iii) each Guaranty and Security Agreement, (iv) the Guarantee dated March
29, 1991 by State Street Bank and Trust Company and (v) each of the
McClintock Restructuring Documents, including, without limitation, all
related claims for amounts payable thereunder and all rights, powers or
remedies on the part of the Assignor, whether arising thereunder or by
statute or at law or in equity or otherwise in respect thereof (the
"Assignment").
(b) The Assignee hereby accepts such sale, assignment and transfer,
effective as of the Effective Date, and assumes all of the obligations of
the Assignor under the Interest held by the Assignor, the Indenture and
each of the McClintock Restructuring Documents.
(c) Upon satisfaction of the conditions set forth in Section 5, the
Assignee shall, as of the Effective Date, succeed to the rights and be
obligated to perform the obligations of a "Holder" (and other words of
similar import) for purposes of the Indenture and each of the McClintock
Restructuring Documents and the Assignor shall, as of the Effective Date,
be released from its obligations under the Indenture and each of the
McClintock Restructuring Documents to the extent such obligations have been
assumed by the Assignee. Such sale, assignment and transfer is without
recourse to the Assignor and is without representation or warranty except
as specifically set forth herein.
(d) The closing of the Assignment shall take place at the offices of
Milbank, Tweed, Hadley & McCloy, counsel to the Assignee, 1 Chase Manhattan
Plaza, New York, New York 10005, on the date (which shall be a business
day) indicated by the Assignee to the Assignor, which date shall be no more
than fifteen business days following the Termination Date (as defined in
that certain Offer Letter (the "Offer Letter") dated as of August 8, 1994
between the Assignor and the Assignee) or such other time and place as the
parties may mutually agree.
SECTION 2. Payment. As consideration for the sale, assignment and
transfer set forth in Section 1 hereof, the Assignee shall pay to the
Assignor at the closing such amounts and such consideration in the form of
capital stock of the Assignee as may be specified pursuant to the Offer
Letter. Each of the Assignor and the Assignee agrees that if it receives
any amount under the Indenture or the McClintock Restructuring Documents
which is for the account of the other, it shall hold the same in trust for
the other to the extent of the other's interest therein and shall pay
promptly the same to the other.
SECTION 3. Accrued Payments, Etc. The Assignor agrees that any
payment it may receive after the Effective Date pursuant to the Operative
Documents, whether applicable to a period before or after the Effective
Date, shall inure to the benefit of the Assignee and the Assignor shall pay
such amounts to the Assignee promptly upon receipt.
SECTION 4. Transfer Costs. The Assignor and the Assignee agree that
each party shall bear its own expenses in connection with this Assignment
Agreement; provided, that the Assignee shall pay the reasonable fees and
expenses of (a) Debevoise & Plimpton, special counsel to the Assignor, and
(b) the Indenture Trustee, in connection with this Assignment Agreement and
the transactions contemplated hereby.
SECTION 5. Conditions Precedent. The effectiveness of the Assignment
hereunder is subject to (a) the due execution and delivery of this
Assignment Agreement by the Assignor and the Assignee; (b) the satisfaction
of the conditions set forth in the Offer Letter; (c) the receipt by the
Assignor of the payment referred to in Section 2 hereof; and (d) such other
documents as the parties hereto may reasonably request. At the closing of
the Assignment, the Assignor shall execute and deliver to the Assignee or
its counsel documents in the form attached hereto as Exhibit A, which (i)
request that the Owner execute and deliver, in the form attached to said
Exhibit A as Annex A thereto, an Officers' Certificate which certifies as
to those matters required by Section 2.4 of the Indenture, and (ii) gives
notice to the Indenture Trustee of, and specifies the details of, the
Assignment and the name and address of the Assignee as required by Section
2.4 of the Indenture.
SECTION 6. Representations and Warranties of the Assignor. The
Assignor represents and warrants to the Assignee as follows:
(a) The Assignor has full power and authority, and has taken all
action necessary to execute and deliver this Assignment Agreement and any
other documents required or permitted to be executed and delivered by it in
connection with this Assignment Agreement and to fulfill its obligations
under, and to consummate the transactions contemplated by, this Assignment
Agreement, and no governmental authorizations or other authorizations are
required in connection therewith.
(b) This Assignment Agreement constitutes the legal, valid and
binding obligation of the Assignor, enforceable against the Assignor in
accordance with its terms, except as such enforceability may be limited by
(i) bankruptcy, insolvency, reorganization, moratorium or similar laws of
general applicability affecting the enforcement of creditors' rights and
(ii) the application of general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
(c) The Assignor is, and on the Effective Date will be, the sole
owner of the Interest held by it, and has, and on the Effective Date will
have, good title to its rights and interests hereby assigned pursuant to
this Assignment Agreement, free and clear of all liens, security interests,
assignments, claims or other charges or encumbrances or any nature
whatsoever.
(d) The Assignor has been provided an opportunity to obtain such
documents and information concerning the Assignee, the Offer Letter, this
Assignment Agreement and the transactions contemplated hereby and thereby
as it has deemed appropriate in making its own analysis and financial and
legal evaluation of the Assignee, the Offer Letter, this Assignment
Agreement and the transactions contemplated hereby and thereby, and the
Assignor represents and warrants that it has, independently and based on
such documents and information as it has deemed appropriate, made its own
appraisal of the financial condition, business, creditworthiness and
affairs of the Assignee and of the value and terms of this Assignment
Agreement, the Offer Letter, and the rights assigned pursuant hereto.
(e) The Assignor represents that it is an "accredited investor" as
such term is defined in Regulation D under the Act and has such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of the transaction contemplated hereby.
(f) The Assignor has not, and nor has anyone acting on the Assignor's
behalf, employed or engaged any agent, broker or finder or incurred any
liability for any brokerage fees, commission or finders' fees in connection
with the transactions contemplated hereby.
SECTION 7. Representations and Warranties of the Assignee. The
Assignee hereby represents and warrants to the Assignor as follows:
(a) The Assignee has full power and authority, and has taken all
action necessary to execute and deliver this Assignment Agreement and any
other documents required or permitted to be executed and delivered by it in
connection with this Assignment Agreement and to fulfill its obligations
under, and to consummate the transactions contemplated by, this Assignment
Agreement, and no governmental authorizations or other authorizations are
required in connection therewith.
(b) This Assignment Agreement constitutes the legal, valid and binding
obligation of the Assignee, enforceable against the Assignee in accordance
with its terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or similar laws of
general applicability affecting the enforcement of creditors' rights and
(ii) the application of general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law).
SECTION 8. Further Assignments. Nothing contained herein shall
prohibit or otherwise restrict the rights of the Assignee to further
transfer or assign the Interest and other interests hereby assigned to it
hereunder.
SECTION 9. Further Assurances. The Assignor and the Assignee hereby
agree to execute and deliver such other instruments and documents, and take
such other action, as either party may reasonably request in connection
with the transactions contemplated by this Assignment Agreement including,
without limitation, the delivery of any notices to the Indenture Trustee
which may be required in connection with the Assignment contemplated
hereby.
SECTION 10. Governing Law; Submission to Jurisdiction, Etc.. This
Assignment Agreement shall be deemed to be a contractual obligation under,
and shall be governed by and construed and interpreted in accordance with,
the law of the State of New York. Each of the Assignor and the Assignee
hereby submits to the nonexclusive jurisdiction of the United States
District Court for the Southern District of New York and of any New York
state court sitting in New York City for the purposes of all legal
proceedings arising out of or relating to this Assignment Agreement or the
transactions contemplated hereby. Each of the Assignor and the Assignee
hereby waives, to the fullest extent permitted by applicable law, any
objection to the laying of venue of any such proceeding brought in such a
court and any claim that any such proceeding brought in such a court has
been brought in an inconvenient forum.
SECTION 11. Binding Effect. This Assignment Agreement shall be
binding upon and inure to the benefit of each of the parties hereto and
their respective successors and assigns.
SECTION 12. Amendments. Any provision of this Assignment Agreement
may be modified or supplemented only by an instrument in writing signed by
each of the parties hereto.
SECTION 13. Interpretation. The headings of the various sections
hereof are for convenience of reference only and shall not affect the
meaning or construction of any provision hereof.
SECTION 14. Counterparts. This Assignment Agreement may be executed
in one or more counterparts, each of which shall be an original but all of
which, taken together, shall constitute one and the same instrument and any
of the parties hereto may execute this Assignment Agreement by signing any
such counterpart.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed and delivered by their duly authorized officers as
of the day and year first above written.
Assignor
Name:
By____________________________
Title:
Assignee
READING & BATES CORPORATION
By____________________________
Title:
Exhibit A
[NAME OF ASSIGNOR]
[Address of Assignor]
[Effective Date]
Shawmut Bank Connecticut,
National Association, as
Indenture Trustee
777 Main Street
Hartford, Connecticut 06103
Attn: Corporate Trust Administration
Reading & Bates Exploration Co.,
as Owner and Mortgagor
901 Threadneedle
Houston, TX 77079
Attn: Wayne K. Hillin, Esq.
Re: Trust Indenture and First Preferred Mortgage dated September 1,
1989, as amended and restated as of March 27, 1991 (the
"Indenture") between Reading & Bates Exploration Co. as owner
and mortgagor thereunder (the "Owner") and Shawmut Bank
Connecticut, National Association (formerly known as The
Connecticut National Bank), as trustee thereunder (the
"Indenture Trustee") and Assignment Agreement dated as of
[August __], 1994 (the "Assignment Agreement") between the
undersigned (the "Assignor") and Reading & Bates Corporation
(the "Assignee")
Ladies and Gentlemen:
We hereby give notice that, effective as of the date hereof, the
Assignor has sold, assigned and transferred to the Assignee, among other
things, all its right, title and interest in and to each Interest held by
it, the Indenture and each of the McClintock Restructuring Documents, all
as more particularly described in Section 1 to the Assignment Agreement
(the foregoing sale, assignment and transfer being herein collectively
referred to as the "Assignment"), and the Assignee has assumed all the
obligations of the Assignor thereunder with respect to the Assignment.
Terms not defined herein are used herein as defined in the Assignment
Agreement.
The Assignor hereby requests that the Owner execute and deliver an
Officers' Certificate in the form attached hereto as Annex A.
The address for notices and payments, and payment instructions for the
Assignee are as follows:
Address for notices in respect of
payments and prepayments:
READING & BATES CORPORATION
901 Threadneedle
Houston, Texas 77079
Attn: Tim W. Nagle
Telephone Number: (713) 496-5000
Telecopy Number: (713) 496-0285
Address for all other notices:
READING & BATES CORPORATION
901 Threadneedle
Houston, Texas 77079
Attn: Wayne K. Hillin, Esq.
Telephone Number: (713) 496-5000
Telecopy Number: (713) 496-0285
Payment Instructions:
Bankers Trust Company
1 Bankers Trust Plaza
New York, New York 10006
For account of Reading & Bates Corporation
Account Number 00-132-716
ABA Number 0210-0103-3
Please sign and return the enclosed copy of this letter to the
Assignee at the above address to indicate your receipt hereof.
Very truly yours,
Name:____________________
By_______________________
Title:
ACKNOWLEDGED:
READING & BATES EXPLORATION CO.,
as Owner and Mortgagor
By______________________________
Title:
SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION, as
Indenture Trustee
By______________________________
Title:
Annex A
READING & BATES EXPLORATION CO.
901 Threadneedle
Houston, TX 77079
[Effective Date]
Shawmut Bank Connecticut,
National Association,
as Indenture Trustee
777 Main Street
Hartford, CT 06103
Ladies and Gentlemen:
The undersigned, a [President/Vice President] and [Treasurer/Assistant
Treasurer] of Reading & Bates Exploration Co. (the "Owner") as owner and
mortgagor under that certain Trust Indenture and First Preferred Mortgage
dated September 1, 1989, as amended and restated as of March 29, 1991 (the
"Indenture") hereby certify to you pursuant to Section 2.4 of the Indenture
that:
(a) pursuant to a certain Assignment Agreement dated as of
[August __,] 1994 between [_______________] (the "Assignor") and the
Reading & Bates Corporation (the "Assignee"), Assignor has sold,
assigned and transferred to the Assignee all of its right, title and
interest in and to the Interest held by the Assignee;
(b) the payee of such Interest shall hereafter be [the
Assignee/[INSERT NAME OF NOMINEE]] and the address for notices and
payments, and payment instructions for the Assignee are as set forth
in that certain letter (in the form of Exhibit A to the Assignment
Agreement) delivered or being delivered to you by the Assignor.
Each of the undersigned hereby requests that the Indenture
Trustee register the Interest so assigned in the name of the Assignee or
its nominee in the same original principal amount and dated the same date
as each Interest so assigned hereunder.
Each of the undersigned hereby confirms that each Interest
assigned as set forth herein is entitled to the benefits of the Indenture.
Very truly yours,
READING & BATES EXPLORATION CO.
By____________________________
Title: [[Vice] President]
By____________________________
Title: [[Assistant] Treasurer]
EXHIBIT 10.56
ASSIGNMENT AGREEMENT
"F.G. McClintock"
This ASSIGNMENT AGREEMENT dated as of September 27,
1994, between the noteholder whose name appears on the
signature pages hereto (the "Assignor") and READING & BATES
CORPORATION (the "Assignee").
WHEREAS, Reading & Bates Exploration Co. (together
with its successors and assigns, the "Owner"), is a party
to the Trust Indenture and First Preferred Ship Mortgage
dated September 1, 1989, as amended and restated as of
March 29, 1991 (as amended, supplemented and otherwise
modified from time to time, the "Indenture") between the
Owner and Shawmut Bank Connecticut, National Association
(formerly known as The Connecticut National Bank), a
national banking association, as successor trustee to The
First National Bank of Boston, a national banking
association, as trustee thereunder (in such capacity,
together with its successors and assigns in such capacity,
the "Indenture Trustee") (capitalized terms used herein and
not otherwise defined herein are used herein as defined in
the Indenture);
WHEREAS, the Assignor proposes to assign to the
Assignee, among other things, all of its right, title and
interest in, to and under the Interest held by it, the
Indenture, each Guaranty and Security Agreement and the
McClintock Restructuring Documents, all as more
specifically set forth in Section 1 below;
WHEREAS, the Assignee proposes to accept such
assignment from the Assignor on the terms and subject to
the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and
the mutual agreements contained herein, the parties hereto
agree as follows:
SECTION 1. Assignment.
(a) On the terms and subject to the conditions set
forth herein and in the 1991 Assignment, the Assignor
hereby sells, assigns and transfers to the Assignee,
effective as of the date hereof or such later date as the
parties hereto may mutually agree (the "Effective Date"),
all its right, title and interest in, to and under (i) the
Indenture, (ii) the Interest held by it, (iii) each
Guaranty and Security Agreement, (iv) the Guarantee dated
March 29, 1991 by State Street Bank and Trust Company and
(v) each of the McClintock Restructuring Documents,
including, without limitation, all related claims for
amounts payable thereunder and all rights, powers or
remedies on the part of the Assignor, whether arising
thereunder or by statute or at law or in equity or
otherwise in respect thereof (the "Assignment").
(b) The Assignee hereby accepts such sale, assignment
and transfer, effective as of the Effective Date, and
assumes all of the obligations of the Assignor under the
Interest held by the Assignor, the Indenture and each of
the McClintock Restructuring Documents.
(c) Upon satisfaction of the conditions set forth in
Section 5, the Assignee shall, as of the Effective Date,
succeed to the rights and be obligated to perform the
obligations of a "Holder" (and other words of similar
import) for purposes of the Indenture and each of the
McClintock Restructuring Documents and the Assignor shall,
as of the Effective Date, be released from its obligations
under the Indenture and each of the McClintock
Restructuring Documents to the extent such obligations have
been assumed by the Assignee. Such sale, assignment and
transfer is without recourse to the Assignor and is without
representation or warranty except as specifically set forth
herein.
(d) The closing of the Assignment shall take place at
the offices of Milbank, Tweed, Hadley & McCloy, counsel to
the Assignee, 1 Chase Manhattan Plaza, New York, New York
10005, on the date (which shall be a business day)
indicated by the Assignee to the Assignor, which date shall
be no more than five business days following the date
hereof or such other time and place as the parties may
mutually agree.
SECTION 2. Payment. As consideration for the sale,
assignment and transfer set forth in Section 1 hereof, the
Assignee shall pay to the Assignor $1,456,000 in cash by
wire transfer to the account indicated by Assignor to
Assignee in writing promptly following execution hereof.
Each of the Assignor and the Assignee agrees that if it
receives any amount under the Indenture or the McClintock
Restructuring Documents which is for the account of the
other, it shall hold the same in trust for the other to the
extent of the other's interest therein and shall pay
promptly the same to the other.
SECTION 3. Accrued Payments, Etc. The Assignor
agrees that any payment it may receive after the Effective
Date pursuant to the Operative Documents, whether
applicable to a period before or after the Effective Date,
shall inure to the benefit of the Assignee and the Assignor
shall pay such amounts to the Assignee promptly upon
receipt.
SECTION 4. Transfer Costs. The Assignor and the
Assignee agree that each party shall bear its own expenses
in connection with this Assignment Agreement. The Assignee
agrees to pay the reasonable fees and expenses of the
Indenture Trustee in connection with this Assignment
Agreement and the transactions contemplated hereby.
SECTION 5. Conditions Precedent. The effectiveness
of the Assignment hereunder is subject to (a) the due
execution and delivery of this Assignment Agreement by the
Assignor and the Assignee; (b) the receipt by the Assignor
of the payment referred to in Section 2 hereof; and (c)
such other documents as the parties hereto may reasonably
request. At the closing of the Assignment, the Assignor
shall execute and deliver to the Assignee or its counsel
documents in the form attached hereto as Exhibit A, which
(i) request that the Owner execute and deliver, in the form
attached to said Exhibit A as Annex A thereto, an Officers'
Certificate which certifies as to those matters required by
Section 2.4 of the Indenture, and (ii) gives notice to the
Indenture Trustee of, and specifies the details of, the
Assignment and the name and address of the Assignee as
required by Section 2.4 of the Indenture.
SECTION 6. Representations and Warranties of the
Assignor. The Assignor represents and warrants to the
Assignee as follows:
(a) The Assignor has full power and authority, and
has taken all action necessary to execute and deliver this
Assignment Agreement and any other documents required or
permitted to be executed and delivered by it in connection
with this Assignment Agreement and to fulfill its
obligations under, and to consummate the transactions
contemplated by, this Assignment Agreement, and no
governmental authorizations or other authorizations are
required in connection therewith.
(b) This Assignment Agreement constitutes the legal,
valid and binding obligation of the Assignor, enforceable
against the Assignor in accordance with its terms, except
as such enforceability may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or similar laws of
general applicability affecting the enforcement of
creditors' rights and (ii) the application of general
principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or
at law).
(c) The Assignor is, and on the Effective Date will
be, the sole owner of the Interest held by it, and has, and
on the Effective Date will have, good title to its rights
and interests hereby assigned pursuant to this Assignment
Agreement, free and clear of all liens, security interests,
assignments, claims or other charges or encumbrances of any
nature whatsoever.
(d) The Assignor has been provided an opportunity to
obtain such documents and information concerning the
Assignee, this Assignment Agreement and the transactions
contemplated hereby and thereby as it has deemed
appropriate in making its own analysis and financial and
legal evaluation of the Assignee, this Assignment Agreement
and the transactions contemplated hereby and thereby, and
the Assignor represents and warrants that it has,
independently and based on such documents and information
as it has deemed appropriate, made its own appraisal of the
financial condition, business, creditworthiness and affairs
of the Assignee and of the value and terms of this
Assignment Agreement, and the rights assigned pursuant
hereto.
(e) The Assignor represents that it is an "accredited
investor" as such term is defined in Regulation D under the
Act and has such knowledge and experience in financial and
business matters that it is capable of evaluating the
merits and risks of the transaction contemplated hereby.
(f) The Assignor has not, and nor has anyone acting
on the Assignor's behalf, employed or engaged any agent,
broker or finder or incurred any liability for any
brokerage fees, commission or finders' fees in connection
with the transactions contemplated hereby.
SECTION 7. Representations and Warranties of the
Assignee. The Assignee hereby represents and warrants to
the Assignor as follows:
(a) The Assignee has full power and authority, and has
taken all action necessary to execute and deliver this
Assignment Agreement and any other documents required or
permitted to be executed and delivered by it in connection
with this Assignment Agreement and to fulfill its
obligations under, and to consummate the transactions
contemplated by, this Assignment Agreement, and no
governmental authorizations or other authorizations are
required in connection therewith.
(b) This Assignment Agreement constitutes the legal,
valid and binding obligation of the Assignee, enforceable
against the Assignee in accordance with its terms, except
as such enforceability may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or similar laws of
general applicability affecting the enforcement of
creditors' rights and (ii) the application of general
principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or
at law).
(c) The Assignee has been provided an opportunity to
obtain such documents and information concerning the
Assignor, this Assignment Agreement and the transactions
contemplated hereby and thereby as it has deemed
appropriate in making its own analysis and financial and
legal evaluation of the Assignor, this Assignment Agreement
and the transactions contemplated hereby and thereby, and
the Assignee represents and warrants that it has,
independently and based on such documents and information
as it has deemed appropriate, made its own appraisal of the
financial condition, business, creditworthiness and affairs
of the Assignor and of the value and terms of this
Assignment Agreement, and the rights assigned pursuant
hereto. The Assignee is acquiring the interests assigned
to Assignee hereunder for its own account for the purpose
of investment and not with a present view to, or for sale
in connection with any, distribution therof, provided that
the disposition of the Assignee's property shall at all
times be and remain within its control.
(d) The Assignee represents that it is an "accredited
investor" as such term is defined in Regulation D under the
Act and has such knowledge and experience in financial and
business matters that it is capable of evaluating the
merits and risks of the transaction contemplated hereby.
SECTION 8. Further Assignments. Nothing contained
herein shall prohibit or otherwise restrict the rights of
the Assignee to further transfer or assign the Interest and
other interests hereby assigned to it hereunder.
SECTION 9. Further Assurances. The Assignor and the
Assignee hereby agree to execute and deliver such other
instruments and documents, and take such other action, as
either party may reasonably request in connection with the
transactions contemplated by this Assignment Agreement
including, without limitation, the delivery of any notices
to the Indenture Trustee which may be required in
connection with the Assignment contemplated hereby.
SECTION 10. Governing Law; Submission to
Jurisdiction, Etc.. This Assignment Agreement shall be
deemed to be a contractual obligation under, and shall be
governed by and construed and interpreted in accordance
with, the law of the State of New York. Each of the
Assignor and the Assignee hereby submits to the
nonexclusive jurisdiction of the United States District
Court for the Southern District of New York and of any New
York state court sitting in New York City for the purposes
of all legal proceedings arising out of or relating to this
Assignment Agreement or the transactions contemplated
hereby. Each of the Assignor and the Assignee hereby
waives, to the fullest extent permitted by applicable law,
any objection to the laying of venue of any such proceeding
brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an
inconvenient forum.
SECTION 11. Binding Effect. This Assignment
Agreement shall be binding upon and inure to the benefit of
each of the parties hereto and their respective successors
and assigns.
SECTION 12. Amendments. Any provision of this
Assignment Agreement may be modified or supplemented only
by an instrument in writing signed by each of the parties
hereto.
SECTION 13. Interpretation. The headings of the
various sections hereof are for convenience of reference
only and shall not affect the meaning or construction of
any provision hereof.
SECTION 14. Counterparts. This Assignment Agreement
may be executed in one or more counterparts, each of which
shall be an original but all of which, taken together,
shall constitute one and the same instrument and any of the
parties hereto may execute this Assignment Agreement by
signing any such counterpart.
[Signature page to follow.] <PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Assignment Agreement to be executed and delivered by
their duly authorized officers as of the day and year first
above written.
Assignor
Name:
By____________________________
Title:
Assignee
READING & BATES CORPORATION
By____________________________
Title:
<PAGE>
EXHIBIT A
September 27, 1994
Shawmut Bank Connecticut,
National Association, as
Indenture Trustee
777 Main Street
Hartford, Connecticut 06103
Attn: Corporate Trust Administration
Reading & Bates Exploration Co.,
as Owner and Mortgagor
901 Threadneedle
Houston, TX 77079
Attn: Wayne K. Hillin, Esq.
Re: Trust Indenture and First Preferred Mortgage
dated September 1, 1989, as amended and restated
as of March 27, 1991 (the "Indenture") between
Reading & Bates Exploration Co. as owner and
mortgagor thereunder (the "Owner") and Shawmut
Bank Connecticut, National Association (formerly
known as The Connecticut National Bank), as
trustee thereunder (the "Indenture Trustee") and
Assignment Agreement dated as of September 27,
1994 (the "Assignment Agreement") between the
undersigned (the "Assignor") and Reading & Bates
Corporation (the "Assignee")
Ladies and Gentlemen:
We hereby give notice that, effective as of the date
hereof, the Assignor has sold, assigned and transferred to
the Assignee, among other things, all its right, title and
interest in and to each Interest held by it, the Indenture
and each of the McClintock Restructuring Documents, all as
more particularly described in Section 1 to the Assignment
Agreement (the foregoing sale, assignment and transfer
being herein collectively referred to as the "Assignment"),
and the Assignee has assumed all the obligations of the
Assignor thereunder with respect to the Assignment. Terms
not defined herein are used herein as defined in the
Assignment Agreement.
The Assignor hereby requests that the Owner execute
and deliver an Officers' Certificate in the form attached
hereto as Annex A.
The address for notices and payments, and payment
instructions for the Assignee are as follows:
Address for notices in respect of
payments and prepayments:
READING & BATES CORPORATION
901 Threadneedle
Houston, Texas 77079
Attn: Tim W. Nagle
Telephone Number: (713) 496-5000
Telecopy Number: (713) 496-0285
Address for all other notices:
READING & BATES CORPORATION
901 Threadneedle
Houston, Texas 77079
Attn: Wayne K. Hillin, Esq.
Telephone Number: (713) 496-5000
Telecopy Number: (713) 496-0285
Payment Instructions:
Bankers Trust Company
1 Bankers Trust Plaza
New York, New York 10006
For account of Reading & Bates Corporation
Account Number 00-132-716
ABA Number 0210-0103-3
Please sign and return the enclosed copy of this
letter to the Assignee at the above address to indicate
your receipt hereof.
Very truly yours,
Name:____________________
By_______________________
Title:
ACKNOWLEDGED:
READING & BATES EXPLORATION CO.,
as Owner and Mortgagor
By______________________________
Title:
SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION, as
Indenture Trustee
By______________________________
Title:
<PAGE>
Annex A
READING & BATES EXPLORATION CO.
901 Threadneedle
Houston, TX 77079
[Effective Date]
Shawmut Bank Connecticut,
National Association,
as Indenture Trustee
777 Main Street
Hartford, CT 06103
Ladies and Gentlemen:
The undersigned, a [President/Vice President] and
[Treasurer/Assistant Treasurer] of Reading & Bates
Exploration Co. (the "Owner") as owner and mortgagor under
that certain Trust Indenture and First Preferred Mortgage
dated September 1, 1989, as amended and restated as of
March 29, 1991 (the "Indenture") hereby certify to you
pursuant to Section 2.4 of the Indenture that:
(a) pursuant to a certain Assignment Agreement
dated as of September 27, 1994 between
[_______________] (the "Assignor") and the Reading &
Bates Corporation (the "Assignee"), Assignor has sold,
assigned and transferred to the Assignee all of its
right, title and interest in and to the Interest held
by the Assignee;
(b) the payee of such Interest shall hereafter
be [the Assignee/[INSERT NAME OF NOMINEE]] and the
address for notices and payments, and payment
instructions for the Assignee are as set forth in that
certain letter (in the form of Exhibit A to the
Assignment Agreement) delivered or being delivered to
you by the Assignor.
Each of the undersigned hereby requests that the
Indenture Trustee register the Interest so assigned in the
name of the Assignee or its nominee in the same original
principal amount and dated the same date as each Interest
so assigned hereunder.
Each of the undersigned hereby confirms that each
Interest assigned as set forth herein is entitled to the
benefits of the Indenture.
Very truly yours,
READING & BATES EXPLORATION CO.
By____________________________
Title: [[Vice] President]
By____________________________
Title: [Assistant] [Treasurer]
EXHIBIT 10.57
Schedule to Exhibit 10.57 pursuant to Item 601 of
Regulation S-K.
Assignment Agreement "C. E. Thornton" dated as of
August 24, 1994 between the Company and Grace
Brothers, Ltd.
Assignment Agreement "C. E. Thornton" dated as of
August 24, 1994 between the Company and The Equitable
Life Assurance Society of the United States.
Assignment Agreement "C. E. Thornton" dated as of
August 24, 1994 between the Company and John Hancock
Mutual Life Insurance Company.
Assignment Agreement "C. E. Thornton" dated as of
August 24, 1994 between the Company and Knights of
Columbus.
Assignment Agreement "C. E. Thornton" dated as of
August 24, 1994 between the Company and Massachusetts
Mutual Life Insurance Company.
Assignment Agreement "C. E. Thornton" dated as of
August 24, 1994 between the Company and New England
Mutual Life Insurance Company.<PAGE>
ASSIGNMENT AGREEMENT
"C.E. Thornton"
This ASSIGNMENT AGREEMENT dated as of August 24,
1994, between the noteholder whose name appears on the
signature pages hereto (the "Assignor") and READING & BATES
CORPORATION (the "Assignee").
WHEREAS, Shawmut Bank Connecticut, National
Association (formerly known as The Connecticut National
Bank), a national banking association, as successor trustee
to The First National Bank of Boston, a national banking
association, not in its individual capacity but solely as
trustee under the Trust Agreement (in such capacity,
together with its successors and assigns in such capacity,
the "Owner Trustee"), has issued its 15% Secured Notes due
December 7, 1999 (Reading and Bates "C.E. Thornton"
Equipment Trust) (collectively, the "Notes") pursuant to
the Trust Indenture and Security Agreement dated December
7, 1984, as amended and restated as of March 27, 1991 (as
amended, supplemented and otherwise modified from time to
time, the "Indenture") between the Owner Trustee and State
Street Bank and Trust Company of Connecticut, National
Association, a national banking association, as trustee
thereunder (in such capacity, together with its successors
and assigns in such capacity, the "Indenture Trustee")
(capitalized terms used herein and not otherwise defined
herein are used herein as defined in the Indenture);
WHEREAS, pursuant to that certain Thornton
Assignment Agreement dated as of June 28, 1991 (as amended,
supplemented and otherwise modified from time to time, the
"1991 Assignment") between the Assignor and the other
institutions signatory thereto (collectively, the "1991
Assignors"), and Internationale Nederlanden Bank (formerly
known as NMB Postbank Groep N.V.)(the "1991 Assignee"),
each 1991 Assignor sold to 1991 Assignee, and 1991 Assignee
thereby purchased from each such 1991 Assignor, an interest
equal to the principal of, and interest on, the Notes held
by such 1991 Assignor, but only to the extent such
principal and interest represented payments of Alternative
Basic Hire or Regular Basic Hire (the foregoing assignment
and the rights thereunder being herein collectively
referred to as the "Excluded Rights"); and said 1991
Assignment expressly excludes therefrom, and reserves to
the Assignor, any property taken by the Owner Trustee, the
Indenture Trustee or any holder of a Note as collateral for
the Notes or Regular Basic Hire or Alternative Basic Hire
and any right to assert or seek to exercise any legal right
or claim against the Owner Trustee, the Indenture Trustee,
Reading & Bates Exploration Co. ("RBX"), the Owner
Participant, any holder of a Note or any Guarantor
including, without limitation, any right to give
instructions under the Indenture to the Owner Trustee or
the Indenture Trustee;
WHEREAS, the Assignor proposes to assign to the
Assignee, among other things, all of its right, title and
interest in, to and under the Notes, the Indenture and the
other Operative Documents, including all of its rights not
heretofore assigned pursuant to the 1991 Assignment, all as
more specifically set forth in Section 1 below;
WHEREAS, the Assignee proposes to accept such
assignment from the Assignor on the terms and subject to
the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing
and the mutual agreements contained herein, the parties
hereto agree as follows:
SECTION 1. Assignment.
(a) On the terms and subject to the conditions
set forth herein and in the 1991 Assignment, the Assignor
hereby sells, assigns and transfers to the Assignee,
effective August 24, 1994 or such later date as the parties
hereto may mutually agree (the "Effective Date"), all its
right, title and interest in, to and under (i) each Note
held by it and any accrued and unpaid interest thereon
through the Effective Date, (ii) the Indenture, (iii) the
Thornton Restructuring Documents, (iv) the 1991 Assignment,
(v) the Thornton Waiver Agreement dated as of May 31, 1991,
as amended, among each of the Noteholders, the Owner
Trustee and the Indenture Trustee, (vi) the Thornton
Rescission Agreement dated as of June 28, 1991, as amended,
among RBX, the Assignee, each of the Noteholders, the Owner
Trustee, the Indenture Trustee and the Owner Participant,
(vii) the Guarantee dated March 29, 1991 by State Street
Bank and Trust Company and (viii) each of the other
Operative Documents to which it is a party, including,
without limitation, all related claims for amounts payable
thereunder and all rights, powers or remedies on the part
of the Assignor, whether arising thereunder or by statute
or at law or in equity or otherwise in respect thereof,
provided, that there is expressly excluded from the
foregoing sale, assignment and transfer all Excluded Rights
(the "Assignment").
(b) The Assignee hereby accepts such sale,
assignment and transfer, effective as of the Effective
Date, and assumes all of the obligations of the Assignor
under the Notes held by the Assignor, the Indenture and the
other Operative Documents.
(c) Upon satisfaction of the conditions set
forth in Section 5, the Assignee shall, as of the Effective
Date, succeed to the rights and be obligated to perform the
obligations of a "Noteholder" (and other words of similar
import) for purposes of the Indenture and the other
Operative Documents and the Assignor shall, as of the
Effective Date, be released from its obligations under the
Indenture and the other Operative Documents to the extent
such obligations have been assumed by the Assignee. Such
sale, assignment and transfer is without recourse to the
Assignor and is without representation or warranty except
as specifically set forth herein.
(d) The closing of the Assignment shall take
place at the offices of Milbank, Tweed, Hadley & McCloy,
counsel to the Assignee, 1 Chase Manhattan Plaza, New York,
New York 10005, on the date (which shall be a business day)
indicated by the Assignee to the Assignor, which date shall
be no more than fifteen business days following the
Termination Date (as defined in that certain Offer Letter
(the "Offer Letter") dated as of August 8, 1994 between the
Assignor and the Assignee) or such other time and place as
the parties may mutually agree.
SECTION 2. Payment. As consideration for the
sale, assignment and transfer set forth in Section 1
hereof, the Assignee shall pay to the Assignor at the
closing such amounts and such consideration in the form of
capital stock of the Assignee as may be specified pursuant
to the Offer Letter. Each of the Assignor and the Assignee
agrees that if it receives any amount under the Indenture
or the other Operative Documents which is for the account
of the other, it shall hold the same in trust for the other
to the extent of the other's interest therein and shall pay
promptly the same to the other.
SECTION 3. Accrued Payments, Etc. The Assignor
agrees that any payment it may receive after the Effective
Date pursuant to the Operative Documents, whether
applicable to a period before or after the Effective Date,
shall inure to the benefit of the Assignee and the Assignor
shall pay such amounts to the Assignee promptly upon
receipt.
SECTION 4. Transfer Costs. The Assignor and the
Assignee agree that each party shall bear its own expenses
in connection with this Assignment Agreement. The Assignee
agrees to pay the reasonable fees and expenses of the
Indenture Trustee in connection with this Assignment
Agreement and the transactions contemplated hereby.
SECTION 5. Conditions Precedent. The
effectiveness of the Assignment hereunder is subject to (a)
the due execution and delivery of this Assignment Agreement
by the Assignor and the Assignee; (b) the satisfaction of
the conditions set forth in the Offer Letter; (c) the
receipt by the Assignor of the payment referred to in
Section 2 hereof; and (d) such other documents as the
parties hereto may reasonably request. At the closing of
the Assignment, the Assignor shall endorse the Notes held
by it to the order of the Assignee or its nominee, and
shall deliver the Notes held by it to the Assignee or its
counsel. In addition, the Assignor shall, in the form
attached hereto as Exhibit A, request that the Owner
Trustee execute, and the Indenture Trustee authenticate and
deliver, new Notes registered in the name of the Assignee
or its nominee. Each such new Note shall be dated the
Delivery Date and be in the same aggregate principal amount
of the Note or Notes surrendered, and the Indenture Trustee
shall make a notation on each new Note of the aggregate
amount of all payments or prepayments of principal
previously made on the old Note or Notes with respect to
which such new Note is issued, the date on which such new
Note is issued and the date to which interest on such old
Note or Notes has been paid.
SECTION 6. Representations and Warranties of the
Assignor. The Assignor represents and warrants to the
Assignee as follows:
(a) The Assignor has full power and authority,
and has taken all action necessary to execute and deliver
this Assignment Agreement and any other documents required
or permitted to be executed and delivered by it in
connection with this Assignment Agreement and to fulfill
its obligations under, and to consummate the transactions
contemplated by, this Assignment Agreement, and no
governmental authorizations or other authorizations are
required in connection therewith.
(b) This Assignment Agreement constitutes the
legal, valid and binding obligation of the Assignor,
enforceable against the Assignor in accordance with its
terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or
similar laws of general applicability affecting the
enforcement of creditors' rights and (ii) the application
of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or
at law).
(c) The Assignor is, and on the Effective Date
will be, the sole owner of the Notes held by it, and has,
and on the Effective Date will have, good title to its
rights and interests hereby assigned pursuant to this
Assignment Agreement, free and clear of all liens, security
interests, assignments, claims or other charges or
encumbrances or any nature whatsoever (except as provided
in the 1991 Assignment).
(d) The Assignor has been provided an
opportunity to obtain such documents and information
concerning the Assignee, the Offer Letter, the Notes, this
Assignment Agreement and the transactions contemplated
hereby and thereby as it has deemed appropriate in making
its own analysis and financial and legal evaluation of the
Assignee, the Offer Letter, the Notes, this Assignment
Agreement and the transactions contemplated hereby and
thereby, and the Assignor represents and warrants that it
has, independently and based on such documents and
information as it has deemed appropriate, made its own
appraisal of the financial condition, business,
creditworthiness and affairs of the Assignee and of the
value and terms of the Notes, this Assignment Agreement,
the Offer Letter, and the rights assigned pursuant hereto.
(e) The Assignor represents that it is an
"accredited investor" as such term is defined in Regulation
D under the Act and has such knowledge and experience in
financial and business matters that it is capable of
evaluating the merits and risks of the transaction
contemplated hereby.
(f) The Assignor has not, and nor has anyone
acting on the Assignor's behalf, employed or engaged any
agent, broker or finder or incurred any liability for any
brokerage fees, commission or finders' fees in connection
with the transactions contemplated hereby.
SECTION 7. Representations and Warranties of the
Assignee. The Assignee hereby represents and warrants to
the Assignor as follows:
(a) The Assignee has full power and authority,
and has taken all action necessary to execute and deliver
this Assignment Agreement and any other documents required
or permitted to be executed and delivered by it in
connection with this Assignment Agreement and to fulfill
its obligations under, and to consummate the transactions
contemplated by, this Assignment Agreement, and no
governmental authorizations or other authorizations are
required in connection therewith.
(b) This Assignment Agreement constitutes the
legal, valid and binding obligation of the Assignee,
enforceable against the Assignee in accordance with its
terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or
similar laws of general applicability affecting the
enforcement of creditors' rights and (ii) the application
of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or
at law).
SECTION 8. Further Assignments. Nothing
contained herein shall prohibit or otherwise restrict the
rights of the Assignee to further transfer or assign the
Notes and other interests hereby assigned to it hereunder.
SECTION 9. Further Assurances. The Assignor and
the Assignee hereby agree to execute and deliver such other
instruments and documents, and take such other action, as
either party may reasonably request in connection with the
transactions contemplated by this Assignment Agreement
including, without limitation, the delivery of any notices
to the Owner Trustee or the Indenture Trustee which may be
required in connection with the Assignment contemplated
hereby.
SECTION 10. Governing Law; Submission to
Jurisdiction, Etc.. This Assignment Agreement shall be
deemed to be a contractual obligation under, and shall be
governed by and construed and interpreted in accordance
with, the law of the State of New York. Each of the
Assignor and the Assignee hereby submits to the
nonexclusive jurisdiction of the United States District
Court for the Southern District of New York and of any New
York state court sitting in New York City for the purposes
of all legal proceedings arising out of or relating to this
Assignment Agreement or the transactions contemplated
hereby. Each of the Assignor and the Assignee hereby
waives, to the fullest extent permitted by applicable law,
any objection to the laying of venue of any such proceeding
brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an
inconvenient forum.
SECTION 11. Binding Effect. This Assignment
Agreement shall be binding upon and inure to the benefit of
each of the parties hereto and their respective successors
and assigns.
SECTION 12. Amendments. Any provision of this
Assignment Agreement may be modified or supplemented only
by an instrument in writing signed by each of the parties
hereto.
SECTION 13. Interpretation. The headings of the
various sections hereof are for convenience of reference
only and shall not affect the meaning or construction of
any provision hereof.
SECTION 14. Counterparts. This Assignment
Agreement may be executed in one or more counterparts, each
of which shall be an original but all of which, taken
together, shall constitute one and the same instrument and
any of the parties hereto may execute this Assignment
Agreement by signing any such counterpart.
[Signature page to follow.] <PAGE>
IN WITNESS WHEREOF, the parties hereto have
caused this Assignment Agreement to be executed and
delivered by their duly authorized officers as of the day
and year first above written.
Assignor
Name:
By____________________________
Title:
Assignee
READING & BATES CORPORATION
By____________________________
Title:
<PAGE>
Exhibit A
[NAME OF ASSIGNOR]
[Address of Assignor]
[Effective Date]
State Street Bank and Trust
Company of Connecticut,
National Association, as
Indenture Trustee
750 Main Street
Hartford, Connecticut 06115
Attn: Corporate Trust Administration
Shawmut Bank Connecticut,
National Association, as
Owner Trustee
777 Main Street
Hartford, Connecticut 06103
Attn: Corporate Trust Administration
Re: Trust Indenture and Security Agreement dated
December 7, 1984, as amended and restated as
of March 27, 1991 (the "Indenture") between
State Street Bank and Trust Company,
National Association, as Indenture Trustee
thereunder (the "Indenture Trustee") and
Shawmut Bank Connecticut, National
Association (formerly known as The
Connecticut National Bank), as owner trustee
(the "Owner Trustee") and Assignment
Agreement dated as of [August __], 1994 (the
"Assignment Agreement") between the
undersigned (the "Assignor") and Reading &
Bates Corporation (the "Assignee")
Ladies and Gentlemen:
We hereby give notice that, effective as of the
date hereof, the Assignor has sold, assigned and
transferred to the Assignee, among other things, its right,
title and interest in and to the Note[s] delivered herewith
and the other Operative Documents as more particularly
described in Section 1 to the Assignment Agreement, but
expressly excluding therefrom all Excluded Rights (the
foregoing sale, assignment and transfer being herein
collectively referred to as the "Assignment"), and the
Assignee has assumed all the obligations of the Assignor
thereunder with respect to the Assignment. Terms not
defined herein are used herein as defined in the Assignment
Agreement.
The Assignor hereby delivers its Note[s] to the
Indenture Trustee pursuant to the terms of the Assignment
Agreement and Section 2.07 of the Indenture. The Assignor
requests that the Owner Trustee execute, and the Indenture
Trustee authenticate and deliver, a new Note registered in
the name of the Assignee in the same original principal
amount and dated the same date as each Note delivered
hereunder. In addition, the Assignor requests, pursuant to
the terms of Section 2.07 of the Indenture, that the
Indenture Trustee shall make a notation on each new Note of
the aggregate amount of all payments or prepayments of
principal previously made on the old Note delivered
hereunder and with respect to which such new Note is
issued, the date on which such new Note is issued and the
date to which interest on such old Note has been paid.
The address for notices and payments, and payment
instructions for the Assignee are as follows:
Address for notices in respect of
payments and prepayments:
READING & BATES CORPORATION
901 Theadneedle
Houston, Texas 77079
Attn: Tim W. Nagle
Telephone Number: (713) 496-5000
Telecopy Number: (713) 496-0285
Address for all other notices:
READING & BATES CORPORATION
901 Theadneedle
Houston, Texas 77079
Attn: Wayne K. Hillin, Esq.
Telephone Number: (713) 496-5000
Telecopy Number: (713) 496-0285
Payment Instructions:
Bankers Trust Company
1 Bankers Trust Plaza
New York, New York 10006
For account of Reading & Bates Corporation
Account Number 00-132-716
ABA Number 0210-0103-3
Please sign and return the enclosed copy of this
letter to the Assignee at the above address to indicate
your receipt hereof.
Very truly yours,
Name:____________________
By_______________________
Title:
<PAGE>
ACKNOWLEDGED:
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
as Indenture Trustee
By______________________________
Title:
SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION, as
Owner Trustee
By______________________________
Title:
<PAGE>
EXHIBIT 10.58
ASSIGNMENT AGREEMENT
"C.E. Thornton"
This ASSIGNMENT AGREEMENT dated as of September 27,
1994, between the noteholder whose name appears on the
signature pages hereto (the "Assignor") and READING & BATES
CORPORATION (the "Assignee").
WHEREAS, Shawmut Bank Connecticut, National
Association (formerly known as The Connecticut National Bank),
a national banking association, as successor trustee to The
First National Bank of Boston, a national banking association,
not in its individual capacity but solely as trustee under the
Trust Agreement (in such capacity, together with its
successors and assigns in such capacity, the "Owner Trustee"),
has issued its 15% Secured Notes due December 7, 1999 (Reading
and Bates "C.E. Thornton" Equipment Trust) (collectively, the
"Notes") pursuant to the Trust Indenture and Security
Agreement dated December 7, 1984, as amended and restated as
of March 27, 1991 (as amended, supplemented and otherwise
modified from time to time, the "Indenture") between the Owner
Trustee and State Street Bank and Trust Company of
Connecticut, National Association, a national banking
association, as trustee thereunder (in such capacity, together
with its successors and assigns in such capacity, the
"Indenture Trustee") (capitalized terms used herein and not
otherwise defined herein are used herein as defined in the
Indenture);
WHEREAS, pursuant to that certain Thornton
Assignment Agreement dated as of June 28, 1991 (as amended,
supplemented and otherwise modified from time to time, the
"1991 Assignment") between the Assignor and the other
institutions signatory thereto (collectively, the "1991
Assignors"), and Internationale Nederlanden Bank (formerly
known as NMB Postbank Groep N.V.)(the "1991 Assignee"), each
1991 Assignor sold to 1991 Assignee, and 1991 Assignee thereby
purchased from each such 1991 Assignor, an interest equal to
the principal of, and interest on, the Notes held by such 1991
Assignor, but only to the extent such principal and interest
represented payments of Alternative Basic Hire or Regular
Basic Hire (the foregoing assignment and the rights thereunder
being herein collectively referred to as the "Excluded
Rights"); and said 1991 Assignment expressly excludes
therefrom, and reserves to the Assignor, any property taken by
the Owner Trustee, the Indenture Trustee or any holder of a
Note as collateral for the Notes or Regular Basic Hire or
Alternative Basic Hire and any right to assert or seek to
exercise any legal right or claim against the Owner Trustee,
the Indenture Trustee, Reading & Bates Exploration Co.
("RBX"), the Owner Participant, any holder of a Note or any
Guarantor including, without limitation, any right to give
instructions under the Indenture to the Owner Trustee or the
Indenture Trustee;
WHEREAS, the Assignor proposes to assign to the
Assignee, among other things, all of its right, title and
interest in, to and under the Notes, the Indenture and the
other Operative Documents, including all of its rights not
heretofore assigned pursuant to the 1991 Assignment, all as
more specifically set forth in Section 1 below;
WHEREAS, the Assignee proposes to accept such
assignment from the Assignor on the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing
and the mutual agreements contained herein, the parties hereto
agree as follows:
SECTION 1. Assignment.
(a) On the terms and subject to the conditions set
forth herein and in the 1991 Assignment, the Assignor hereby
sells, assigns and transfers to the Assignee, effective as of
the date hereof or such later date as the parties hereto may
mutually agree (the "Effective Date"), all its right, title
and interest in, to and under (i) each Note held by it and any
accrued and unpaid interest thereon through the Effective
Date, (ii) the Indenture, (iii) the Thornton Restructuring
Documents, (iv) the 1991 Assignment, (v) the Thornton Waiver
Agreement dated as of May 31, 1991, as amended, among each of
the Noteholders, the Owner Trustee and the Indenture Trustee,
(vi) the Thornton Rescission Agreement dated as of June 28,
1991, as amended, among RBX, the Assignee, each of the
Noteholders, the Owner Trustee, the Indenture Trustee and the
Owner Participant, (vii) the Guarantee dated March 29, 1991 by
State Street Bank and Trust Company and (viii) each of the
other Operative Documents to which it is a party, including,
without limitation, all related claims for amounts payable
thereunder and all rights, powers or remedies on the part of
the Assignor, whether arising thereunder or by statute or at
law or in equity or otherwise in respect thereof, provided,
that there is expressly excluded from the foregoing sale,
assignment and transfer all Excluded Rights (the
"Assignment").
(b) The Assignee hereby accepts such sale,
assignment and transfer, effective as of the Effective Date,
and assumes all of the obligations of the Assignor under the
Notes held by the Assignor, the Indenture and the other
Operative Documents.
(c) Upon satisfaction of the conditions set forth
in Section 5, the Assignee shall, as of the Effective Date,
succeed to the rights and be obligated to perform the
obligations of a "Noteholder" (and other words of similar
import) for purposes of the Indenture and the other Operative
Documents and the Assignor shall, as of the Effective Date, be
released from its obligations under the Indenture and the
other Operative Documents to the extent such obligations have
been assumed by the Assignee. Such sale, assignment and
transfer is without recourse to the Assignor and is without
representation or warranty except as specifically set forth
herein.
(d) The closing of the Assignment shall take place
at the offices of Milbank, Tweed, Hadley & McCloy, counsel to
the Assignee, 1 Chase Manhattan Plaza, New York, New York
10005, on the date (which shall be a business day) indicated
by the Assignee to the Assignor, which date shall be no more
than five business days following the date hereof or such
other time and place as the parties may mutually agree.
SECTION 2. Payment. As consideration for the sale,
assignment and transfer set forth in Section 1 hereof, the
Assignee shall pay to the Assignor $1,162,000 in cash by wire
transfer to the account indicated by Assignor to Assignee in
writing promptly following execution hereof. Each of the
Assignor and the Assignee agrees that if it receives any
amount under the Indenture or the other Operative Documents
which is for the account of the other, it shall hold the same
in trust for the other to the extent of the other's interest
therein and shall pay promptly the same to the other.
SECTION 3. Accrued Payments, Etc. The Assignor
agrees that any payment it may receive after the Effective
Date pursuant to the Operative Documents, whether applicable
to a period before or after the Effective Date, shall inure to
the benefit of the Assignee and the Assignor shall pay such
amounts to the Assignee promptly upon receipt.
SECTION 4. Transfer Costs. The Assignor and the
Assignee agree that each party shall bear its own expenses in
connection with this Assignment Agreement. The Assignee
agrees to pay the reasonable fees and expenses of the
Indenture Trustee in connection with this Assignment Agreement
and the transactions contemplated hereby.
SECTION 5. Conditions Precedent. The effectiveness
of the Assignment hereunder is subject to (a) the due
execution and delivery of this Assignment Agreement by the
Assignor and the Assignee; (b) the receipt by the Assignor of
the payment referred to in Section 2 hereof; and (c) such
other documents as the parties hereto may reasonably request.
At the closing of the Assignment, the Assignor shall endorse
the Notes held by it to the order of the Assignee or its
nominee, and shall deliver the Notes held by it to the
Assignee or its counsel. In addition, the Assignor shall, in
the form attached hereto as Exhibit A, request that the Owner
Trustee execute, and the Indenture Trustee authenticate and
deliver, new Notes registered in the name of the Assignee or
its nominee. Each such new Note shall be dated the Delivery
Date and be in the same aggregate principal amount of the Note
or Notes surrendered, and the Indenture Trustee shall make a
notation on each new Note of the aggregate amount of all
payments or prepayments of principal previously made on the
old Note or Notes with respect to which such new Note is
issued, the date on which such new Note is issued and the date
to which interest on such old Note or Notes has been paid.
SECTION 6. Representations and Warranties of the
Assignor. The Assignor represents and warrants to the
Assignee as follows:
(a) The Assignor has full power and authority, and
has taken all action necessary to execute and deliver this
Assignment Agreement and any other documents required or
permitted to be executed and delivered by it in connection
with this Assignment Agreement and to fulfill its obligations
under, and to consummate the transactions contemplated by,
this Assignment Agreement, and no governmental authorizations
or other authorizations are required in connection therewith.
(b) This Assignment Agreement constitutes the
legal, valid and binding obligation of the Assignor,
enforceable against the Assignor in accordance with its terms,
except as such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium or similar
laws of general applicability affecting the enforcement of
creditors' rights and (ii) the application of general
principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
(c) The Assignor is, and on the Effective Date will
be, the sole owner of the Notes held by it, and has, and on
the Effective Date will have, good title to its rights and
interests hereby assigned pursuant to this Assignment
Agreement, free and clear of all liens, security interests,
assignments, claims or other charges or encumbrances or any
nature whatsoever (except as provided in the 1991 Assignment).
(d) The Assignor has been provided an opportunity
to obtain such documents and information concerning the
Assignee, the Notes, this Assignment Agreement and the
transactions contemplated hereby and thereby as it has deemed
appropriate in making its own analysis and financial and legal
evaluation of the Assignee, the Notes, this Assignment
Agreement and the transactions contemplated hereby and
thereby, and the Assignor represents and warrants that it has,
independently and based on such documents and information as
it has deemed appropriate, made its own appraisal of the
financial condition, business, creditworthiness and affairs of
the Assignee and of the value and terms of the Notes, this
Assignment Agreement, and the rights assigned pursuant hereto.
(e) The Assignor represents that it is an
"accredited investor" as such term is defined in Regulation D
under the Act and has such knowledge and experience in
financial and business matters that it is capable of
evaluating the merits and risks of the transaction
contemplated hereby.
(f) The Assignor has not, and nor has anyone acting
on the Assignor's behalf, employed or engaged any agent,
broker or finder or incurred any liability for any brokerage
fees, commission or finders' fees in connection with the
transactions contemplated hereby.
SECTION 7. Representations and Warranties of the
Assignee. The Assignee hereby represents and warrants to the
Assignor as follows:
(a) The Assignee has full power and authority, and
has taken all action necessary to execute and deliver this
Assignment Agreement and any other documents required or
permitted to be executed and delivered by it in connection
with this Assignment Agreement and to fulfill its obligations
under, and to consummate the transactions contemplated by,
this Assignment Agreement, and no governmental authorizations
or other authorizations are required in connection therewith.
(b) This Assignment Agreement constitutes the legal,
valid and binding obligation of the Assignee, enforceable
against the Assignee in accordance with its terms, except as
such enforceability may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or similar laws of
general applicability affecting the enforcement of creditors'
rights and (ii) the application of general principles of
equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(c) The Assignee has been provided an opportunity
to obtain such documents and information concerning the
Assignor, the Notes, this Assignment Agreement and the
transactions contemplated hereby and thereby as it has deemed
appropriate in making its own analysis and financial and legal
evaluation of the Assignor, the Notes, this Assignment
Agreement and the transactions contemplated hereby and
thereby, and the Assignee represents and warrants that it has,
independently and based on such documents and information as
it has deemed appropriate, made its own appraisal of the
financial condition, business, creditworthiness and affairs of
the Assignor and of the value and terms of the Notes, this
Assignment Agreement, and the rights assigned pursuant hereto.
The Assignee is acquiring the interests assigned to the
Assignee hereunder for its own account for the purpose of
investment and not with a present view to, or for sale in
connection with any, distribution thereof, provided that the
disposition of the Assignee's property shall at all times be
and remain within its control.
(d) The Assignee represents that it is an
"accredited investor" as such term is defined in Regulation D
under the Act and has such knowledge and experience in
financial and business matters that it is capable of
evaluating the merits and risks of the transaction
contemplated hereby.
SECTION 8. Further Assignments. Nothing contained
herein shall prohibit or otherwise restrict the rights of the
Assignee to further transfer or assign the Notes and other
interests hereby assigned to it hereunder.
SECTION 9. Further Assurances. The Assignor and
the Assignee hereby agree to execute and deliver such other
instruments and documents, and take such other action, as
either party may reasonably request in connection with the
transactions contemplated by this Assignment Agreement
including, without limitation, the delivery of any notices to
the Owner Trustee or the Indenture Trustee which may be
required in connection with the Assignment contemplated
hereby.
SECTION 10. Governing Law; Submission to
Jurisdiction, Etc.. This Assignment Agreement shall be deemed
to be a contractual obligation under, and shall be governed by
and construed and interpreted in accordance with, the law of
the State of New York. Each of the Assignor and the Assignee
hereby submits to the nonexclusive jurisdiction of the United
States District Court for the Southern District of New York
and of any New York state court sitting in New York City for
the purposes of all legal proceedings arising out of or
relating to this Assignment Agreement or the transactions
contemplated hereby. Each of the Assignor and the Assignee
hereby waives, to the fullest extent permitted by applicable
law, any objection to the laying of venue of any such
proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an
inconvenient forum.
SECTION 11. Binding Effect. This Assignment
Agreement shall be binding upon and inure to the benefit of
each of the parties hereto and their respective successors and
assigns.
SECTION 12. Amendments. Any provision of this
Assignment Agreement may be modified or supplemented only by
an instrument in writing signed by each of the parties hereto.
SECTION 13. Interpretation. The headings of the
various sections hereof are for convenience of reference only
and shall not affect the meaning or construction of any
provision hereof.
SECTION 14. Counterparts. This Assignment
Agreement may be executed in one or more counterparts, each of
which shall be an original but all of which, taken together,
shall constitute one and the same instrument and any of the
parties hereto may execute this Assignment Agreement by
signing any such counterpart.
[Signature page to follow.] <PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Assignment Agreement to be executed and delivered by
their duly authorized officers as of the day and year first
above written.
Assignor
Name:
By____________________________
Title:
Assignee
READING & BATES CORPORATION
By____________________________
Title:
<PAGE>
EXHIBIT A
September 27, 1994
State Street Bank and Trust
Company of Connecticut,
National Association, as
Indenture Trustee
750 Main Street
Hartford, Connecticut 06115
Attn: Corporate Trust Administration
Shawmut Bank Connecticut,
National Association, as
Owner Trustee
777 Main Street
Hartford, Connecticut 06103
Attn: Corporate Trust Administration
Re: Trust Indenture and Security Agreement dated
December 7, 1984, as amended and restated as of
March 27, 1991 (the "Indenture") between State
Street Bank and Trust Company, National
Association, as Indenture Trustee thereunder
(the "Indenture Trustee") and Shawmut Bank
Connecticut, National Association (formerly
known as The Connecticut National Bank), as
owner trustee (the "Owner Trustee") and
Assignment Agreement dated as of September 27,
1994 (the "Assignment Agreement") between the
undersigned (the "Assignor") and Reading &
Bates Corporation (the "Assignee")
Ladies and Gentlemen:
We hereby give notice that, effective as of the date
hereof, the Assignor has sold, assigned and transferred to the
Assignee, among other things, its right, title and interest in
and to the Notes delivered herewith and the other Operative
Documents as more particularly described in Section 1 to the
Assignment Agreement, but expressly excluding therefrom all
Excluded Rights (the foregoing sale, assignment and transfer
being herein collectively referred to as the "Assignment"),
and the Assignee has assumed all the obligations of the
Assignor thereunder with respect to the Assignment. Terms not
defined herein are used herein as defined in the Assignment
Agreement.
The Assignor hereby delivers its Notes to the
Indenture Trustee pursuant to the terms of the Assignment
Agreement and Section 2.07 of the Indenture. The Assignor
requests that the Owner Trustee execute, and the Indenture
Trustee authenticate and deliver, a new Note registered in the
name of the Assignee or its nominee in the same original
principal amount and dated the same date as each Note
delivered hereunder. In addition, the Assignor requests,
pursuant to the terms of Section 2.07 of the Indenture, that
the Indenture Trustee shall make a notation on each new Note
of the aggregate amount of all payments or prepayments of
principal previously made on the old Note delivered hereunder
and with respect to which such new Note is issued, the date on
which such new Note is issued and the date to which interest
on such old Note has been paid.
The address for notices and payments, and payment
instructions for the Assignee are as follows:
Address for notices in respect of
payments and prepayments:
READING & BATES CORPORATION
901 Theadneedle
Houston, Texas 77079
Attn: Tim W. Nagle
Telephone Number: (713) 496-5000
Telecopy Number: (713) 496-0285
Address for all other notices:
READING & BATES CORPORATION
901 Theadneedle
Houston, Texas 77079
Attn: Wayne K. Hillin, Esq.
Telephone Number: (713) 496-5000
Telecopy Number: (713) 496-0285
Payment Instructions:
Bankers Trust Company
1 Bankers Trust Plaza
New York, New York 10006
For account of Reading & Bates Corporation
Account Number 00-132-716
ABA Number 0210-0103-3
Please sign and return the enclosed copy of this
letter to the Assignee at the above address to indicate your
receipt hereof.
Very truly yours,
Name:____________________
By_______________________
Title: <PAGE>
ACKNOWLEDGED:
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
as Indenture Trustee
By______________________________
Title:
SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION, as
Owner Trustee
By______________________________
Title:
EXHIBIT 10.59
Schedule to Exhibit 10.59 pursuant to Item 601 of Regulation S-K.
Assignment Agreement "George H. Galloway" dated as of August 24,
1994 between the Company and Grace Brothers, Ltd.
Assignment Agreement "George H. Galloway" dated as of August 24,
1994 between the Company and Ingalls & Snyder.
Assignment Agreement "George H. Galloway" dated as of August 24,
1994 between the Company and John Hancock Mutual Life Insurance
Company.
Assignment Agreement "George H. Galloway" dated as of August 24,
1994 between the Company and Pan-American Life Insurance Company. <PAGE>
ASSIGNMENT AGREEMENT
"George H. Galloway"
This ASSIGNMENT AGREEMENT dated as of August 24, 1994,
between the noteholder whose name appears on the signature pages hereto
(the "Assignor") and READING & BATES CORPORATION (the "Assignee").
WHEREAS, Shawmut Bank Connecticut, National Association
(formerly known as The Connecticut National Bank), a national banking
association, not in its individual capacity but solely as trustee under
the Trust Agreement (in such capacity, together with its successors and
assigns in such capacity, the "Owner Trustee"), has issued its 13 5/8%
Secured Notes due June 21, 2000 (Reading and Bates "George H. Galloway"
Equipment Trust) (collectively, the "Notes") pursuant to the Trust
Indenture and Security Agreement dated June 21, 1985, as amended and
restated as of March 27, 1991 (as amended, supplemented and otherwise
modified from time to time, the "Indenture") between the Owner Trustee
and State Street Bank and Trust Company of Connecticut, National
Association, a national banking association (as successor trustee to
The New Connecticut Bank and Trust Company National Association), as
trustee thereunder (in such capacity, together with its successors and
assigns in such capacity, the "Indenture Trustee") (capitalized terms
used herein and not otherwise defined herein are used herein as defined
in the Indenture);
WHEREAS, pursuant to that certain Galloway Assignment
Agreement dated as of June 28, 1991 (as amended, supplemented and
otherwise modified from time to time, the "1991 Assignment") between
the Assignor and the other institutions signatory thereto
(collectively, the "1991 Assignors"), and Internationale Nederlanden
Bank (formerly known as NMB Postbank Groep N.V.) (the "1991 Assignee"),
each 1991 Assignor sold to 1991 Assignee, and 1991 Assignee thereby
purchased from each such 1991 Assignor, an interest equal to the
principal of, and interest on, the Notes held by such 1991 Assignor,
but only to the extent such principal and interest represented payments
of Alternative Basic Hire or Regular Basic Hire (the foregoing
assignment and the rights thereunder being herein collectively referred
to as the "Excluded Rights"); and said 1991 Assignment expressly
excludes therefrom, and reserves to the Assignor, any property taken by
the Owner Trustee, the Indenture Trustee or any holder of a Note as
collateral for the Notes or Regular Basic Hire or Alternative Basic
Hire and any right to assert or seek to exercise any legal right or
claim against the Owner Trustee, the Indenture Trustee, Reading & Bates
Exploration Co. ("RBX"), the Owner Participant, any holder of a Note or
any Guarantor including, without limitation, any right to give
instructions under the Indenture to the Owner Trustee or the Indenture
Trustee;
WHEREAS, the Assignor proposes to assign to the Assignee,
among other things, all of its right, title and interest in, to and
under the Notes, the Indenture and the other Operative Documents,
including all of its rights not heretofore assigned pursuant to the
1991 Assignment, all as more specifically set forth in Section 1 below;
WHEREAS, the Assignee proposes to accept such assignment
from the Assignor on the terms and subject to the conditions set forth
herein;
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements contained herein, the parties hereto agree as
follows:
SECTION 1. Assignment.
(a) On the terms and subject to the conditions set forth
herein and in the 1991 Assignment, the Assignor hereby sells, assigns
and transfers to the Assignee, effective August 24, 1994 or such later
date as the parties hereto may mutually agree (the "Effective Date"),
all its right, title and interest in, to and under (i) each Note held
by it and any accrued and unpaid interest thereon through the Effective
Date, (ii) the Indenture, (iii) the Galloway Restructuring Documents,
(iv) the 1991 Assignment, (v) the Galloway Waiver Agreement dated as of
May 31, 1991, as amended, among each of the Noteholders, the Owner
Trustee and the Indenture Trustee, (vi) the Galloway Rescission
Agreement dated as of June 28, 1991, as amended, among RBX, the
Assignee, each of the Noteholders, the Owner Trustee, the Indenture
Trustee and the Owner Participant, (vii) the Guarantee dated March 29,
1991 by State Street Bank and Trust Company and (viii) each of the
other Operative Documents to which it is a party, including, without
limitation, all related claims for amounts payable thereunder and all
rights, powers or remedies on the part of the Assignor, whether arising
thereunder or by statute or at law or in equity or otherwise in respect
thereof, provided, that there is expressly excluded from the foregoing
sale, assignment and transfer all Excluded Rights (the "Assignment").
(b) The Assignee hereby accepts such sale, assignment and
transfer, effective as of the Effective Date, and assumes all of the
obligations of the Assignor under the Notes held by the Assignor, the
Indenture and the other Operative Documents.
(c) Upon satisfaction of the conditions set forth in
Section 5, the Assignee shall, as of the Effective Date, succeed to the
rights and be obligated to perform the obligations of a "Noteholder"
(and other words of similar import) for purposes of the Indenture and
the other Operative Documents and the Assignor shall, as of the
Effective Date, be released from its obligations under the Indenture
and the other Operative Documents to the extent such obligations have
been assumed by the Assignee. Such sale, assignment and transfer is
without recourse to the Assignor and is without representation or
warranty except as specifically set forth herein.
(d) The closing of the Assignment shall take place at the
offices of Milbank, Tweed, Hadley & McCloy, counsel to the Assignee, 1
Chase Manhattan Plaza, New York, New York 10005, on the date (which
shall be a business day) indicated by the Assignee to the Assignor,
which date shall be no more than fifteen business days following the
Termination Date (as defined in that certain Offer Letter (the "Offer
Letter") dated as of August 8, 1994 between the Assignor and the
Assignee) or such other time and place as the parties may mutually
agree.
SECTION 2. Payment. As consideration for the sale,
assignment and transfer set forth in Section 1 hereof, the Assignee
shall pay to the Assignor at the closing such amounts and such
consideration in the form of capital stock of the Assignee as may be
specified pursuant to the Offer Letter. Each of the Assignor and the
Assignee agrees that if it receives any amount under the Indenture or
the other Operative Documents which is for the account of the other, it
shall hold the same in trust for the other to the extent of the other's
interest therein and shall pay promptly the same to the other.
SECTION 3. Accrued Payments, Etc. The Assignor agrees
that any payment it may receive after the Effective Date pursuant to
the Operative Documents, whether applicable to a period before or after
the Effective Date, shall inure to the benefit of the Assignee and the
Assignor shall pay such amounts to the Assignee promptly upon receipt.
SECTION 4. Transfer Costs. The Assignor and the Assignee
agree that each party shall bear its own expenses in connection with
this Assignment Agreement; provided, that the Assignee shall pay the
reasonable fees and expenses of (a) Debevoise & Plimpton, special
counsel to the Assignor, and (b) the Indenture Trustee, in connection
with this Assignment Agreement and the transactions contemplated
hereby.
SECTION 5. Conditions Precedent. The effectiveness of the
Assignment hereunder is subject to (a) the due execution and delivery
of this Assignment Agreement by the Assignor and the Assignee; (b) the
satisfaction of the conditions set forth in the Offer Letter; (c) the
receipt by the Assignor of the payment referred to in Section 2 hereof;
and (d) such other documents as the parties hereto may reasonably
request. At the closing of the Assignment, the Assignor shall endorse
the Notes held by it to the order of the Assignee or its nominee, and
shall deliver the Notes held by it to the Assignee or its counsel. In
addition, the Assignor shall, in the form attached hereto as Exhibit A,
request that the Owner Trustee execute, and the Indenture Trustee
authenticate and deliver, new Notes registered in the name of the
Assignee or its nominee. Each such new Note shall be dated the
Delivery Date and be in the same aggregate principal amount of the Note
or Notes surrendered, and the Indenture Trustee shall make a notation
on each new Note of the aggregate amount of all payments or prepayments
of principal previously made on the old Note or Notes with respect to
which such new Note is issued, the date on which such new Note is
issued and the date to which interest on such old Note or Notes has
been paid.
SECTION 6. Representations and Warranties of the Assignor.
The Assignor represents and warrants to the Assignee as follows:
(a) The Assignor has full power and authority, and has
taken all action necessary to execute and deliver this Assignment
Agreement and any other documents required or permitted to be executed
and delivered by it in connection with this Assignment Agreement and to
fulfill its obligations under, and to consummate the transactions
contemplated by, this Assignment Agreement, and no governmental
authorizations or other authorizations are required in connection
therewith.
(b) This Assignment Agreement constitutes the legal, valid
and binding obligation of the Assignor, enforceable against the
Assignor in accordance with its terms, except as such enforceability
may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or similar laws of general applicability affecting the
enforcement of creditors' rights and (ii) the application of general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(c) The Assignor is, and on the Effective Date will be,
the sole owner of the Notes held by it, and has, and on the Effective
Date will have, good title to its rights and interests hereby assigned
pursuant to this Assignment Agreement, free and clear of all liens,
security interests, assignments, claims or other charges or
encumbrances or any nature whatsoever (except as provided in the 1991
Assignment).
(d) The Assignor has been provided an opportunity to
obtain such documents and information concerning the Assignee, the
Offer Letter, the Notes, this Assignment Agreement and the transactions
contemplated hereby and thereby as it has deemed appropriate in making
its own analysis and financial and legal evaluation of the Assignee,
the Offer Letter, the Notes, this Assignment Agreement and the
transactions contemplated hereby and thereby, and the Assignor
represents and warrants that it has, independently and based on such
documents and information as it has deemed appropriate, made its own
appraisal of the financial condition, business, creditworthiness and
affairs of the Assignee and of the value and terms of the Notes, this
Assignment Agreement, the Offer Letter, and the rights assigned
pursuant hereto.
(e) The Assignor represents that it is an "accredited
investor" as such term is defined in Regulation D under the Act and has
such knowledge and experience in financial and business matters that it
is capable of evaluating the merits and risks of the transaction
contemplated hereby.
(f) The Assignor has not, and nor has anyone acting on the
Assignor's behalf, employed or engaged any agent, broker or finder or
incurred any liability for any brokerage fees, commission or finders'
fees in connection with the transactions contemplated hereby.
SECTION 7. Representations and Warranties of the Assignee.
The Assignee hereby represents and warrants to the Assignor as follows:
(a) The Assignee has full power and authority, and has
taken all action necessary to execute and deliver this Assignment
Agreement and any other documents required or permitted to be executed
and delivered by it in connection with this Assignment Agreement and to
fulfill its obligations under, and to consummate the transactions
contemplated by, this Assignment Agreement, and no governmental
authorizations or other authorizations are required in connection
therewith.
(b) This Assignment Agreement constitutes the legal, valid
and binding obligation of the Assignee, enforceable against the
Assignee in accordance with its terms, except as such enforceability
may be limited by (i) bankruptcy, insolvency, reorganization,
moratorium or similar laws of general applicability affecting the
enforcement of creditors' rights and (ii) the application of general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
SECTION 8. Further Assignments. Nothing contained herein
shall prohibit or otherwise restrict the rights of the Assignee to
further transfer or assign the Notes and other interests hereby
assigned to it hereunder.
SECTION 9. Further Assurances. The Assignor and the
Assignee hereby agree to execute and deliver such other instruments and
documents, and take such other action, as either party may reasonably
request in connection with the transactions contemplated by this
Assignment Agreement including, without limitation, the delivery of any
notices to the Owner Trustee or the Indenture Trustee which may be
required in connection with the Assignment contemplated hereby.
SECTION 10. Governing Law; Submission to Jurisdiction,
Etc.. This Assignment Agreement shall be deemed to be a contractual
obligation under, and shall be governed by and construed and
interpreted in accordance with, the law of the State of New York. Each
of the Assignor and the Assignee hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern
District of New York and of any New York state court sitting in New
York City for the purposes of all legal proceedings arising out of or
relating to this Assignment Agreement or the transactions contemplated
hereby. Each of the Assignor and the Assignee hereby waives, to the
fullest extent permitted by applicable law, any objection to the laying
of venue of any such proceeding brought in such a court and any claim
that any such proceeding brought in such a court has been brought in an
inconvenient forum.
SECTION 11. Binding Effect. This Assignment Agreement
shall be binding upon and inure to the benefit of each of the parties
hereto and their respective successors and assigns.
SECTION 12. Amendments. Any provision of this Assignment
Agreement may be modified or supplemented only by an instrument in
writing signed by each of the parties hereto.
SECTION 13. Interpretation. The headings of the various
sections hereof are for convenience of reference only and shall not
affect the meaning or construction of any provision hereof.
SECTION 14. Counterparts. This Assignment Agreement may
be executed in one or more counterparts, each of which shall be an
original but all of which, taken together, shall constitute one and the
same instrument and any of the parties hereto may execute this
Assignment Agreement by signing any such counterpart.
[Signature page to follow.]
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment Agreement to be executed and delivered by their duly
authorized officers as of the day and year first above written.
Assignor
Name:
By____________________________
Title:
Assignee
READING & BATES CORPORATION
By____________________________
Title:
<PAGE>
Exhibit A
[NAME OF ASSIGNOR]
[Address of Assignor]
[Effective Date]
State Street Bank and Trust
Company of Connecticut,
National Association, as
Indenture Trustee
750 Main Street
Hartford, Connecticut 06115
Attn: Corporate Trust Administration
Shawmut Bank Connecticut,
National Association, as
Owner Trustee
777 Main Street
Hartford, Connecticut 06103
Attn: Corporate Trust Administration
Re: Trust Indenture and Security Agreement dated June 21,
1985, as amended and restated as of March 27, 1991
(the "Indenture") between State Street Bank and Trust
Company, National Association, as Indenture Trustee
thereunder (the "Indenture Trustee") and Shawmut Bank
Connecticut, National Association (formerly known as
The Connecticut National Bank), as owner trustee (the
"Owner Trustee") and Assignment Agreement dated as of
[August __], 1994 (the "Assignment Agreement")
between the undersigned (the "Assignor") and Reading
& Bates Corporation (the "Assignee")
Ladies and Gentlemen:
We hereby give notice that, effective as of the date
hereof, the Assignor has sold, assigned and transferred to the
Assignee, among other things, its right, title and interest in and to
the Note[s] delivered herewith and the other Operative Documents as
more particularly described in Section 1 to the Assignment Agreement,
but expressly excluding therefrom all Excluded Rights (the foregoing
sale, assignment and transfer being herein collectively referred to as
the "Assignment"), and the Assignee has assumed all the obligations of
the Assignor thereunder with respect to the Assignment. Terms not
defined herein are used herein as defined in the Assignment Agreement.
The Assignor hereby delivers its Note[s] to the Indenture
Trustee pursuant to the terms of the Assignment Agreement and Section
2.07 of the Indenture. The Assignor requests that the Owner Trustee
execute, and the Indenture Trustee authenticate and deliver, a new Note
registered in the name of the Assignee in the same original principal
amount and dated the same date as each Note delivered hereunder. In
addition, the Assignor requests, pursuant to the terms of Section 2.07
of the Indenture, that the Indenture Trustee shall make a notation on
each new Note of the aggregate amount of all payments or prepayments of
principal previously made on the old Note delivered hereunder and with
respect to which such new Note is issued, the date on which such new
Note is issued and the date to which interest on such old Note has been
paid.
The address for notices and payments, and payment
instructions for the Assignee are as follows:
Address for notices in respect of payments and prepayments:
READING & BATES CORPORATION
901 Threadneedle
Houston, Texas 77079
Attn: Tim W. Nagle
Telephone Number: (713) 496-5000
Telecopy Number: (713) 496-0285
Address for all other notices:
READING & BATES CORPORATION
901 Threadneedle
Houston, Texas 77079
Attn: Wayne K. Hillin, Esq.
Telephone Number: (713) 496-5000
Telecopy Number: (713) 496-0285
Payment Instructions:
Bankers Trust Company
1 Bankers Trust Plaza
New York, New York 10006
For account of Reading & Bates Corporation
Account Number 00-132-716
ABA Number 0210-0103-3
Please sign and return the enclosed copy of this letter to
the Assignee at the above address to indicate your receipt hereof.
Very truly yours,
Name:____________________
By_______________________
Title: <PAGE>
ACKNOWLEDGED:
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
as Indenture Trustee
By______________________________
Title:
SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION, as
Owner Trustee
By______________________________
Title:
<PAGE>
EXHIBIT 11
READING & BATES CORPORATION
AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE, PRIMARY AND FULLY DILUTED
(in thousands except share and per share amounts)
<TABLE>
<CAPTION>
Years ended December 31,
-----------------------------------
1994 1993 1992
---------- ---------- -----------
PRIMARY EARNINGS (LOSS) PER SHARE:
<S> <C> <C> <C>
Weighted average number of
common shares outstanding 56,899,715 55,497,487 49,017,535
========== ========== ==========
Net income (loss) $ (17,146) $ 4,656 $ 3,402
Adjustments:
Less: Dividends paid on $1.625
Convertible Preferred Stock (4,859) (2,052) -
Accretion in redemption price
of redeemable stocks - - (5,275)
---------- ---------- ----------
Adjusted net income (loss) applicable
to common shares outstanding $ (22,005) $ 2,604 $ (1,873)
========== ========== ==========
Net earnings (loss) per
common share $ (.39) $ .05 $ (.04)
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Years ended December 31,
----------------------------------
1994 1993 1992
---------- ---------- ----------
FULLY DILUTED EARNINGS (LOSS) PER SHARE:
<S> <C> <C> <C>
Weighted average number of
common shares outstanding 56,899,715 55,497,487 49,017,535
Assume conversion of securities:
8% Senior Subordinated
Convertible Debentures 743,497 703,270 663,208
8% Convertible Subordinated
Debentures 16,661 16,661 16,661
1.625 Convertible Preferred Stock 8,668,010 3,704,684 -
---------- ---------- ----------
Adjusted common shares
outstanding - fully diluted 66,327,883 59,922,102 49,697,404
========== ========== ==========
Adjusted net income (loss) applicable
to common shares outstanding $ (22,005) $ 2,604 $ (1,873)
Adjustments:
Interest on 8% Senior Subordinated
Convertible Debentures 2,731 2,351 2,029
Interest on 8% Convertible
Subordinated Debentures 2,109 1,983 1,875
Dividends paid on $1.625
Convertible Preferred Stock 4,859 2,052 -
Accretion in redemption price
of redeemable stocks - - 5,275
---------- ---------- ----------
Adjusted net income (loss) applicable
to common shares outstanding -
assuming full dilution $ (12,306) $ 8,990 $ 7,306
========== ========== ==========
Net income (loss) per common share
- assuming full dilution $ (.19) $ .15 $ .15
========== ========== ==========
</TABLE>
EXHIBIT 21
READING & BATES CORPORATION
AND SUBSIDIARIES
SCHEDULE OF CONSOLIDATED SUBSIDIARIES OF THE COMPANY
AS OF DECEMBER 31, 1994
The following table and text sets forth the subsidiaries of the
Company and of such subsidiaries:
State or
Jurisdiction of
Name Incorporation
SUBSIDIARIES WHOLLY OWNED BY READING & BATES CORPORATION
Reading & Bates Coal Co. Nevada
Reading & Bates Development Co. Delaware
Reading & Bates Drilling Co. Oklahoma
Reading & Bates Petroleum Co. Texas
Reading & Bates Management Services, Inc. Delaware
SUBSIDIARIES WHOLLY OWNED BY READING & BATES DRILLING CO.
RB Drilling Services, Inc. Oklahoma
Reading & Bates (U.K.) Limited United Kingdom
RB Onshore Services, Inc. Texas
RB Offshore, Inc. Nevada
HRB Rig Corporation Oklahoma
Reading and Bates Borneo Drilling Co., Ltd. Oklahoma
Reading & Bates Drilling Contractors, Inc. Oklahoma
Reading & Bates Drilling Limited Oklahoma
Reading & Bates Enterprises Co. Texas
Reading & Bates Exploration Co. Oklahoma
Reading and Bates, Inc. Oklahoma
Reading & Bates International Energy Services B.V. Netherlands
Reading & Bates Offshore, Limited Oklahoma
Rig Logistics, Inc. Nevada
SUBSIDIARY WHOLLY OWNED BY READING AND BATES, INC.
Reading & Bates Energy Corporation N.V. Netherlands
Antilles
SUBSIDIARY WHOLLY OWNED BY READING & BATES DEVELOPMENT CO.
RB Drilling Co. Oklahoma
SUBSIDIARIES WHOLLY OWNED BY READING & BATES ENTERPRISES CO.
Shore Services, Inc. Texas
SUBSIDIARIES WHOLLY OWNED BY READING & BATES EXPLORATION CO.
Reading & Bates (A) PTY LTD Australia
SUBSIDIARIES WHOLLY OWNED BY READING & BATES INTERNATIONAL ENERGY SERVICES
B.V.
Reading & Bates, B.V. Netherlands
SUBSIDIARIES WHOLLY OWNED BY READING & BATES COAL CO.
Appalachian Permit Co. Kentucky
Bismarck Coal Inc. Kentucky
Caymen Coal Inc. West Virginia
SUBSIDIARIES WHOLLY OWNED BY BISMARCK COAL INC.
Certicoals, Incorporated West Virginia
SUBSIDIARIES WHOLLY OWNED BY READING & BATES (U.K.) LIMITED
Reading & Bates (Caledonia) Limited United Kingdom
Reading & Bates Corporation owns approximately 73.9% of Arcade Drilling
AS, incorporated in Norway.
Reading & Bates Drilling Co. owns 25% of China Nanhai-Reading & Bates
Drilling Co., Ltd., incorporated in the People's Republic of China.
Reading and Bates Borneo Drilling Co., Ltd. owns 49.99% of Reading &
Bates (M) Sdn. Berhad, incorporated in Malaysia.
All of the above companies are included in the consolidated
consolidated financial statements.
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report dated February 16, 1995, on the
consolidated financial statements of Reading & Bates
Corporation and subsidiaries as of December 31, 1994 and 1993,
and for the years ended December 31, 1994, 1993 and 1992
included in this Form 10-K, into the Company's previously filed
Registration Statements (file no.s 33-44237, 33-50828, 33-50565
and 33-56029).
/s/Arthur Andersen LLP
Houston, Texas
March 13, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Reading & Bates Corporation for the year ended December
31, 1994 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<CASH> 42,319
<SECURITIES> 0
<RECEIVABLES> 37,755
<ALLOWANCES> 373
<INVENTORY> 8,421
<CURRENT-ASSETS> 92,160
<PP&E> 781,459
<DEPRECIATION> 291,140
<TOTAL-ASSETS> 586,063
<CURRENT-LIABILITIES> 92,062
<BONDS> 0
<COMMON> 2,986
2,990
0
<OTHER-SE> 316,184
<TOTAL-LIABILITY-AND-EQUITY> 586,063
<SALES> 0
<TOTAL-REVENUES> 169,058
<CGS> 0
<TOTAL-COSTS> 122,981
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,694
<INCOME-PRETAX> (13,903)
<INCOME-TAX> 4,093
<INCOME-CONTINUING> (17,146)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,146)
<EPS-PRIMARY> (.39)
<EPS-DILUTED> (.19)
</TABLE>
