<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 5, 1998
REGISTRATION NO. 333-
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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CLIFFS DRILLING COMPANY
(Exact Name of Registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 76-0248934
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
1200 SMITH STREET, SUITE 300
HOUSTON, TEXAS 77002
(713) 651-9426
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
------------------------
<TABLE>
<S> <C>
EDWARD A. GUTHRIE Copy to:
VICE PRESIDENT -- FINANCE W. GARNEY GRIGGS, ESQ.
CLIFFS DRILLING COMPANY GRIGGS & HARRISON, P.C.
1200 SMITH STREET, SUITE 300 1301 MCKINNEY, SUITE 3200
HOUSTON, TEXAS 77002 HOUSTON, TEXAS 77010
(713) 651-9426 (713) 651-0600
(Name, address, including zip code, and telephone
number, including area code, of agent for
service)
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
TITLE OF EACH CLASS AMOUNT OFFERING PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO BE REGISTERED TO BE REGISTERED PRICE PER SHARE AGGREGATE OFFERING PRICE REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value per
share........................... 437,939 shares $44.00* $19,269,316* $5,685
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</TABLE>
* Estimated in accordance with Rule 457(c) solely for the purpose of calculating
the registration fee based upon the average of the high and low prices of the
Common Stock as reported by the New York Stock Exchange on February 4, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, PRELIMINARY PROSPECTUS DATED FEBRUARY 5, 1998
PROSPECTUS
437,939 SHARES
CLIFFS DRILLING COMPANY
COMMON STOCK
---------------------
This Prospectus relates to 437,939 shares (the "Shares") of Common Stock,
$.01 par value per share (the "Common Stock"), of Cliffs Drilling Company, a
Delaware corporation (the "Company"), which may be offered for sale by certain
stockholders of the Company (the "Selling Stockholders") from time to time
(collectively the "Offering"). See "Selling Stockholders." The Company will not
receive any part of the proceeds from the sale of the Shares by the Selling
Stockholders.
Sales of Shares by the Selling Stockholders may be effected from time to
time in one or more transactions through underwriters, dealers or agents or
directly to purchasers. The sales may be effected on the New York Stock Exchange
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices, at fixed prices or at negotiated prices. The Selling
Stockholders may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended ("Securities Act"). See "Plan of
Distribution."
SEE "RISK FACTORS" BEGINNING ON PAGE 4 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
COMMON STOCK.
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PROCEEDS TO
PRICE COMPANY
TO PUBLIC DISCOUNTS OR OTHER PERSONS
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<S> <C> <C> <C>
Per Share............................... (1) (2) (3)
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Total(4)................................ (1) (2) (3)
=========================================================================================================
</TABLE>
(1) The Selling Stockholders may from time to time effect the sale of their
Shares at prices and at terms then prevailing or at prices related to the
then-current market price. The Common Stock of the Company is traded on the
New York Stock Exchange ("NYSE") under the symbol "CDG." On February 4,
1998, the closing sale price of the Company's Common Stock, as reported by
the NYSE, was $45 1/8 per share.
(2) The Selling Stockholders may pay regular brokers' commissions in cash at the
time(s) of the sale of their Shares.
(3) The Company will not receive any proceeds from the sales of the Shares to
which this Prospectus relates. The Selling Stockholders will receive
proceeds based on the sale price of the Shares at the time(s) of sale.
(4) Without deduction of expenses for the offering, estimated to be
approximately $25,000 (of which $5,685 will be paid be the Selling
Shareholders and the balance will be paid by the Company).
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION ("COMMISSION"), NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this Prospectus is February 5, 1998
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company may be inspected and copied at the public reference facilities
maintained by the Commission, 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549; and at the following regional offices of the Commission:
7 World Trade Center, Suite 1300, New York, New York 10048; and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
material can also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549,
at prescribed rates. The Commission maintains a World Wide Web site on the
Internet at http://www.sec.gov that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission. The Company's Common Stock is traded on the New York Stock
Exchange. The Company's reports, proxy statements and other information
concerning the Company can be inspected and copied at the offices of the New
York Stock Exchange, Inc., at Eleven Wall Street, New York, New York, 10005.
This Prospectus constitutes part of a Registration Statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Commission under the
Securities Act. This Prospectus omits certain of the information set forth in
the Registration Statement. Reference is hereby made to the Registration
Statement and to the exhibits relating thereto for further information with
respect to the Company and the securities offered hereby. Statements contained
herein concerning the provisions of contracts or other documents are not
necessarily complete, and each such statement is qualified in its entirety by
reference to the copy of the applicable contract or other document filed with
the Commission. Copies of the Registration Statement and the exhibits thereto
are on file at the offices of the Commission and may be obtained upon payment of
the fee prescribed by the Commission, or may be examined without charge at the
public reference facilities of the Commission described above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents have been filed by the Company with the Commission
pursuant to the Exchange Act (File No. 0-16703) and are incorporated herein by
reference:
(1) The Company's Current Report on Form 8-K dated May 23, 1996;
(2) The Company's Annual Report on Form 10-K, as amended by Form
10-K/A (Amendment No. 3), for the fiscal year ended December 31,
1996;
(3) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997;
(4) The Company's Proxy Statement for the Annual Meeting of
Stockholders held on May 21, 1997;
(5) The Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997;
(6) The Company's Current Report on Form 8-K dated September 19,
1997;
(7) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1997;
(8) The Company's Current Report on Form 8-K dated October 16, 1997;
(9) The Company's Current Report on Form 8-K dated December 29, 1997;
and
(10) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed March 11,
1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering made by this Prospectus shall be deemed to be
incorporated by reference herein and to be a part hereof from the date of filing
thereof.
ii
<PAGE> 4
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein, or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, upon the written or oral request of such person, a copy of any or all
of the information that has been incorporated by reference in this Prospectus
(not including exhibits to the information that is incorporated by reference
herein unless such exhibits are specifically incorporated by reference in such
information). Requests for such copies should be directed to the Company at 1200
Smith Street, Suite 300, Houston, Texas 77002, Attention: Edward A. Guthrie,
Vice President -- Finance (telephone number (713) 651-9426).
DISCLOSURE REGARDING FORWARD-LOOKING INFORMATION
This Prospectus and the documents incorporated by reference herein include
"forward-looking statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. All statements other than statements of
historical facts included in this Prospectus and the documents incorporated by
reference herein, including without limitation, statements regarding the
Company's financial position, business strategy, budgets, plans and objectives
of management for future operations, are forward-looking statements. Although
the Company believes that the expectations reflected in such forward-looking
statements are reasonable, it can give no assurance that such expectations will
prove to have been correct. Important factors that could cause actual results to
differ materially from the Company's expectations ("Cautionary Statements") are
disclosed under "Risk Factors" and elsewhere in this Prospectus and in the
documents incorporated by reference herein, including without limitation, in
conjunction with the forward-looking statements included in this Prospectus.
iii
<PAGE> 5
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to, and
should be read in conjunction with, the more detailed information and
consolidated financial statements (including the notes thereto) incorporated by
reference into this Prospectus. Unless the context otherwise requires, "Company"
refers to Cliffs Drilling Company and its consolidated subsidiaries.
THE COMPANY
Cliffs Drilling Company is an international contract drilling and
engineering company. The Company is primarily engaged in daywork drilling,
engineering services, and to a lesser extent, the development and operation of
mobile offshore production units ("MOPUs"). The Company has historically
deployed its assets in areas where it can achieve long-term growth and generate
stable cash flows and net income. This strategy has led to six consecutive years
of positive net income. The Company's domestic operations are concentrated in
the Texas/Louisiana Gulf Coast region and its foreign operations are
concentrated in Venezuela and the Middle East. The Company owns 16 jack-up
drilling rigs, 11 land rigs, 4 MOPUs and 3 platform rigs.
The Company and its predecessors have been in the contract drilling
business since 1978. The Company entered the turnkey drilling business in 1982
in an effort to more fully utilize its existing fleet of rigs and complement its
daywork drilling operations. In response to the economic conditions which
adversely affected the domestic contract drilling business during the 1980s, the
Company undertook a strategic plan in 1989 to further diversify its scope of
operations and geographic concentration beyond the traditional domestic daywork
drilling market. The Company's management implemented a proactive approach to
identify, develop and exploit several market segments which provided higher
margins and more reliable operating income and cash flow. To achieve its
strategic objectives, the Company continued to emphasize its turnkey drilling
operations, expanded its well engineering and management services, became a
leader in the development and operation of MOPUs and deployed its drilling rigs
into selected international markets. With the implementation of this strategy,
the Company has positioned itself to benefit from increases in drilling and
production activities in several markets worldwide.
INDUSTRY CONDITIONS
Activity in the contract drilling industry and related oil service
businesses has improved over the last two years due to increased worldwide
demand for oil and natural gas. Over the past several years, the supply of
offshore drilling rigs has declined while the demand for such rigs has
increased, resulting in the highest utilization rates since 1985. In addition,
oil and gas companies have experienced decreases in exploration and production
costs from technological advances such as increased use of 3-D seismic surveys,
advances in drill bits and completion technologies and use of new production
techniques such as MOPUs and subsea completions. In an effort to more quickly
realize the significant gas revenues attainable from shallow water drilling in
the Gulf of Mexico, oil and gas companies are producing reserves at faster
rates. These enhanced production methods increase the net present value of the
reserves produced and significantly shorten the reserve life in the Gulf of
Mexico, thereby necessitating additional drilling. In addition, the U.S. natural
gas market has improved after experiencing weak market conditions throughout the
early 1990s. All of these factors have resulted in increased demand for offshore
drilling rigs and an increase in both utilization and dayrates for jack-up
drilling rigs. Management believes the current market dynamics in the Gulf of
Mexico, South America, the Middle East and other international areas will result
in high utilization of the Company's rigs and services.
RECENT DEVELOPMENTS
As part of its business strategy, the Company has sought to identify
business opportunities that would expand its asset base, increase profitability
and enhance shareholder value. The Company's acquisition criteria include, among
others, transactions designed to increase operating leverage and diversify
geographically.
1
<PAGE> 6
On December 29, 1997, the Company completed the acquisition of 2 offshore
platform drilling rigs, one self-propelled jack-up drilling/workover rig and
substantially all of the assets used in the offshore contract drilling business
in Trinidad previously operated by Well Services (Marine) Ltd. ("Well
Services"), pursuant to an Asset Purchase Agreement dated as of December 29,
1997, by and among Cliffs Drilling Trinidad Offshore Limited, a Trinidad and
Tobago private limited company ("Purchaser") which is wholly-owned by the
Company and one of its affiliates; Well Services; Charles A. Brash of San
Fernando, Trinidad, W.I.; and Phillip A. Pollonais of San Fernando, Trinidad,
W.I. The total cost of the acquisition included cash of $23.5 million and the
issuance by the Company of the Shares. An additional $3.0 million of contingent
cash consideration may be paid to Well Services if certain post-closing criteria
are met. The outcome of the contingency is not determinable at this time, and
relates to the ultimate valuation of the assets acquired. The Company agreed to
register the Shares for the Selling Stockholders pursuant to Rule 415 of the
Securities Act, which is the subject of this Registration Statement. The 2
platform rigs and the jack-up drilling/workover rig are currently operating
under contracts in Trinidad. Substantially all of the employees of Well Services
used in its offshore business have become employees of the Company.
OPERATIONS
The Company's management has adopted a proactive approach to identify,
develop and exploit 3 market segments which the Company believes provide higher
margins and reliable operating income and cash flow. The Company's major
business segments are daywork drilling, engineering services and MOPU
operations.
Daywork Drilling. The Company began operations as a daywork contract
driller in the Gulf of Mexico and the Texas/Louisiana Gulf Coast region. Because
of depressed conditions in the domestic oil and gas industry during the 1980s
and early 1990s, the Company sold certain drilling rigs and deployed its
remaining rigs into selected international markets. These strategic decisions
were made to enable the Company to stabilize cash flows during an extended
market downturn. The Company currently has an established base of term contracts
in both drilling and production operations. The Company currently operates 8
jack-up rigs in the Gulf of Mexico, 2 jack-up rigs in each of Venezuela, Qatar
and Trinidad, and one jack-up rig in Mexico. One jack-up drilling rig is
currently in the shipyard undergoing conversion from a MOPU. The rig is
contracted to work offshore Venezuela for a one-year term once the conversion is
completed. Of the 16 jack-up drilling rigs owned by the Company, 15 are
cantilevered, 7 have top drives and substantially all have been refurbished in
the last five years. The Company also operates 8 land rigs in Venezuela, 2
platform rigs in Trinidad and one platform rig in Brazil. The Company has 2 land
rigs which are currently being reactivated and one that is available for
contract in Venezuela.
Engineering Services. Turnkey drilling has been a key element in the
Company's long-term strategy since 1982. The Company believes that its downhole
engineering expertise, extensive operating experience, veteran personnel and
risk management capabilities have allowed the Company to reduce the risks
inherent in turnkey drilling operations. The Company also began providing well
engineering and management services during 1993 as an expansion of this business
segment. Under these arrangements, the Company is responsible for well design
and well site supervision.
MOPU Operations. Since 1989, the Company has pioneered the development and
operation of MOPUs, which allow the Company to participate in the more stable
oil and gas production market. MOPUs are offshore production systems, usually
converted jack-up rigs, from which the drilling equipment is removed and
production equipment is installed. MOPUs generally are contracted on a term
basis for several years and are characterized by relatively high operating
margins, with most of the costs assumed by the customer. The Company currently
owns 4 MOPUs capable of operating in both domestic and foreign waters. Of the 4
MOPUs owned by the Company, 2 are currently working in the Gulf of Mexico and 2
are working internationally.
The Company is a Delaware corporation with principal executive offices
located at 1200 Smith Street, Suite 300, Houston, Texas 77002 and its telephone
number is (713) 651-9426.
2
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THE OFFERING
Shares of Common Stock to be sold by
the Selling Stockholders............ 437,939
Shares to be sold by the Company.... None
Proceeds to the Company............. None
Common Stock Outstanding............ 15,907,929 shares of Common Stock were
outstanding at February 4, 1998. No
additional shares of Common Stock will
become outstanding as a result of the
sale of the shares offered hereby.
NYSE symbol......................... CDG
RISK FACTORS
An investment in Common Stock involves certain risks that a potential
investor should carefully evaluate prior to making an investment in Common
Stock. See "Risk Factors" immediately following this summary.
3
<PAGE> 8
RISK FACTORS
In addition to the other information set forth elsewhere in this Prospectus
and the documents incorporated herein by reference, the following factors should
be carefully evaluated prior to making an investment in the Company's Common
Stock:
RELIANCE ON OIL AND GAS INDUSTRY
Demand for the Company's services depends primarily upon the level of
spending by oil and gas companies for exploration, development and production
activities. Activity in the contract drilling industry and related oil service
businesses was severely depressed from 1982 until 1992 due to volatility in oil
prices and depressed natural gas prices. As demonstrated during this period, any
prolonged reduction in oil and natural gas prices will depress the level of
exploration, development and production activity and result in a corresponding
decline in the demand for the Company's services and, therefore, have a material
adverse effect on the Company's revenues and profitability. It is not possible
to predict whether contract drilling rig utilization and dayrates will maintain
levels sufficient to ensure acceptable operating results in future periods. The
Company's future success will depend in part upon general economic conditions in
the oil and gas industry, which cannot be predicted with certainty.
The contract drilling industry is a highly competitive and cyclical
business characterized by high capital and maintenance costs. The Company has
many competitors in all of the regions in which it operates, some of which have
substantially greater financial and other resources than the Company.
SUBSTANTIAL INDEBTEDNESS AND RESTRICTIONS
The Company has substantial indebtedness. At December 31, 1997, the Company
had $202.4 million of outstanding indebtedness, consisting of (i) $2.4 million
in outstanding letters of credit secured by liens on substantially all of the
assets of the Company, and (ii) $200 million in principal amount of 10.25%
Senior Notes due 2003 (the "Notes"). The Notes are senior unsecured obligations
of the Company, and are unconditionally guaranteed (the "Subsidiary Guarantees")
on a senior unsecured basis by the Company's principal subsidiaries (the
"Subsidiary Guarantors").
The Company's level of indebtedness will have several important effects on
its future operations, in that (i) a substantial portion of the Company's cash
flow from operations must be dedicated to the payment of interest on its
indebtedness and will not be available for other purposes, (ii) covenants
contained in the indentures relating to the Notes (collectively the "Indenture")
or the Revolving Credit Facility (as defined) will require the Company to meet
certain financial tests, and other restrictions will limit its ability to borrow
additional funds or to dispose of assets and may affect the Company's
flexibility in planning for, and reacting to, changes in its business, including
possible acquisition opportunities, and (iii) the Company's ability to obtain
additional financing in the future for working capital, capital expenditures,
acquisitions, general corporate or other purposes may be impaired. The Company's
ability to meet its debt service obligations and to reduce its total
indebtedness will be dependent upon the Company's future performance, which will
be subject to general economic conditions and to financial, business and other
factors affecting the operations of the Company, many of which are beyond its
control. There can be no assurance that the Company's business will continue to
generate cash flow at or above current levels. If the Company is unable to
generate sufficient cash flow from operations in the future to service its debt,
it may be required to refinance all or a portion of its indebtedness, including
the Notes, or to obtain additional financing. There can be no assurance that any
such refinancing would be possible or that any additional financing could be
obtained.
The Company has a revolving credit facility (the "Revolving Credit
Facility") pursuant to which it may currently borrow up to $35 million on a
revolving credit basis. The Revolving Credit Facility is secured by liens on
substantially all of the assets of the Company and the Subsidiary Guarantors.
The Notes and the Subsidiary Guarantees are effectively subordinated to claims
of the lender under the Revolving Credit Facility to the extent of such pledged
collateral. See "Description of Existing Indebtedness."
4
<PAGE> 9
REPURCHASE OF NOTES UPON A CHANGE OF CONTROL OR ASSET SALE
Upon the occurrence of a Change of Control (as defined in the Indenture),
the Company must offer to purchase all Notes then outstanding at a purchase
price equal to 101% of the principal amount thereof plus accrued and unpaid
interest to the date of purchase. In the event of certain sales or dispositions
of assets, the Company may be required under certain limited circumstances to
use the Excess Proceeds (as defined in the Indenture) to effect a Net Proceeds
Offer (as defined in the Indenture). The events that constitute a Change of
Control or require a Net Proceeds Offer under the Indenture may result in
lenders under the Revolving Credit Facility having the right to require the
Company to repay all indebtedness outstanding thereunder. There can be no
assurance that the Company will have available funds sufficient to repay all
indebtedness owing under the Revolving Credit Facility, to fund the purchase of
the Notes upon a Change of Control, or to make a Net Proceeds Offer. In the
event a Change of Control occurs at a time when the Company does not have
available funds sufficient to pay for all of the Notes delivered by holders
thereof seeking to accept the Company's repurchase offer, an event of default
would occur under the Indenture.
OPERATING HISTORY AND WORKING CAPITAL NEEDS
The Company was not profitable from 1988 through 1991 as a result of
depressed economic conditions in the oil and gas and oilfield service
industries. To the extent that cash in excess of cash on hand and cash generated
from operations is needed in the near term for working capital and capital
expenditures, it is expected that the Company would draw on the Revolving Credit
Facility or seek other debt or equity financing in the private or public
markets. Additional liquidity might also be generated through the sale of
operating assets or through the reduction of capital expenditures, although any
such sale or reduction may have an adverse effect on the Company's results of
operations. The ability of the Company to sell debt or equity securities or
assets would depend on conditions then prevailing in the relevant market and, in
the case of any offering of debt or equity securities, the Company's results of
operations, financial condition and business prospects. There can be no
assurance that the Company could, if the need arose, effect any such sale of
debt or equity securities or assets on terms that were acceptable to the
Company. In addition, the Indenture limits the ability of the Company to incur
additional indebtedness or to enter into mergers, asset sales or consolidations.
See "Description of Existing Indebtedness -- 10.25% Senior Notes."
RISKS ASSOCIATED WITH TURNKEY DRILLING
Under a turnkey drilling contract, the Company contracts to drill a well to
a contract depth under specified conditions for a fixed price. In addition, the
Company provides technical expertise and engineering services, as well as most
of the equipment required for the well, and is compensated when the contract
terms have been satisfied. On a turnkey well, the Company from time to time
operates rigs subcontracted from other drilling contractors on a dayrate basis.
The Company also subcontracts substantially all of the related services and
manages the drilling process. The risks to the Company on a turnkey drilling
contract are substantially greater than on a well drilled on a daywork basis
because the Company assumes most of the risks associated with drilling
operations generally assumed by the operator in a daywork contract, including
risk of blowout, loss of hole, stuck drill stem, lost production or damage to
the reservoir, machinery breakdowns, abnormal drilling conditions and risks
associated with subcontractors' services, supplies and personnel. The Company
has obtained insurance coverage in the past to reduce these risks inherent in
turnkey drilling operations. Should such coverage not be available in the
future, it would have a material adverse effect on the Company's turnkey
drilling operations. See "-- Risks and Insurance."
RISKS AND INSURANCE
The Company's operations are subject to the many hazards inherent in the
drilling business, including, for example, blowouts, cratering, fires,
explosions and adverse weather and seas. These hazards could cause personal
injury, suspend drilling operations or seriously damage or destroy the equipment
involved and could cause substantial damage to producing formations and
surrounding areas. Damage to the environment could also result from the
Company's operations, particularly through oil spillage and extensive,
uncontrolled fires. As a protection against operating hazards, the Company
maintains broad insurance coverage, including all
5
<PAGE> 10
risks physical damage, employer's liability, comprehensive general liability and
workers' compensation insurance. The Company's third party liability insurance
coverage is approximately $100 million per occurrence. The Company also
maintains insurance coverage on an annual basis to protect against certain
hazards inherent in its turnkey contract drilling and oil and gas operations.
This insurance was most recently renewed on October 1, 1997. The Company
believes that it is adequately insured for public liability and property damage
to others with respect to its operations. However, such insurance may not be
sufficient to protect the Company against liability for all consequences of well
disasters, extensive fire damage or damage to the environment. The Company also
carries insurance to cover physical damage to or loss of its drilling rigs and
MOPUs, as well as loss of hire insurance coverage. In view of difficulties that
may be encountered in renewing such insurance at reasonable rates, no assurance
can be given that the Company will be able to maintain the type and amount of
coverage that it considers adequate. The occurrence of a significant event for
which the Company is not fully insured could have a material adverse effect on
the Company's financial position and results of operations.
RISKS INHERENT IN FOREIGN OPERATIONS
A significant percentage of the Company's revenues is derived from foreign
sources or from services performed abroad. For the fiscal year ended December
31, 1997, approximately 63% of the Company's consolidated revenues were derived
from foreign operations, principally in Venezuela and the Middle East. Foreign
operations and export sales are subject in varying degrees to risks inherent in
doing business abroad. Such risks include the possibility of unfavorable changes
in tax or other laws; partial or total expropriation; currency exchange rate
fluctuations and restrictions on currency repatriation; the disruption of
operations from labor and political disturbances, insurrection or war; and the
requirements of partial local ownership of operations in certain countries.
Foreign governments may from time to time suspend or curtail drilling operations
or leasing activities when such operations are considered to be detrimental to
the environment or to jeopardize public safety.
RELIANCE ON SIGNIFICANT CUSTOMERS
The Company's largest customer for the years ended December 31, 1997 and
1996, Corpoven, S.A. ("Corpoven"), accounted for approximately 31% of the
Company's consolidated revenues during both years. The Company's 3 largest
customers for the year ended December 31, 1995, Corpoven, Maraven, S.A.
("Maraven") and Texaco Exploration & Production, Inc., accounted for
approximately 66% of the Company's consolidated revenues. The loss of any
significant customer could, at least on a short term basis, have a material
adverse impact on the Company's results of operations.
GOVERNMENT REGULATION
The drilling of oil and gas wells is subject to various federal, state,
local and foreign laws, rules and regulations. The Company, as an owner or
operator of domestic offshore facilities, may be liable for the costs of removal
and damages arising out of a pollution incident to the extent set forth in the
Federal Water Pollution Control Act, as amended by the U.S. Oil Pollution Act of
1990 ("OPA '90") and the Outer Continental Shelf Lands Act. In addition, the
Company may also be subject to other civil claims arising out of any such
incident. Certain of the Company's facilities are also subject to regulations of
the Environmental Protection Agency ("EPA") that require the preparation and
implementation of spill prevention control and countermeasure plans relating to
possible discharge of oil into navigable waters. The Company supplements its
activities in this regard by membership in the Clean Gulf Association, which
provides pollution control facilities to its members. Other regulations of the
EPA may require the Company to take certain precautions in storing, handling and
transporting certain hazardous wastes. State statutory provisions relating to
oil and natural gas generally include requirements as to well spacing, waste
prevention, production limitations, pollution prevention and clean-up, obtaining
drilling permits and similar matters. The Company believes that it is in
compliance in all material respects with such laws, rules and regulations and
that such compliance has not had any material adverse effect on its operations
or financial condition.
6
<PAGE> 11
The drilling industry is dependent on the demand for services from the oil
and gas exploration industry and, accordingly, is affected by changing tax laws,
price controls and other laws relating to the energy business. The Company's
business is affected generally by political developments and by federal, state,
local and foreign laws, rules and regulations which may relate directly to the
oil and gas industry. The adoption of laws, rules and regulations, both domestic
and foreign, which curtail exploration and development drilling for oil and gas
for economic, environmental and other policy reasons may adversely affect the
Company's operations by limiting available drilling and production
opportunities.
MOPUs and MOPU operations are subject to certain federal, state, local and
foreign laws, rules and regulations relating to engineering, design, structural,
safety, operational and inspection standards or requirements, and changes in
such standards or requirements could adversely affect the Company's MOPU
operations.
NO DIVIDENDS PAID OR EXPECTED TO BE PAID
The Company anticipates that any earnings will be retained for the
development of the Company's business, and that no cash dividends will be
declared on the Common Stock in the foreseeable future. Moreover, under the
Revolving Credit Facility and the Notes, the Company is restricted from
declaring, making or paying any cash dividends on the Common Stock. See
"Description of Existing Indebtedness."
DIFFICULTY TO EFFECT A CHANGE IN CONTROL
The Company's Certificate of Incorporation and Bylaws and the provisions of
the Delaware General Corporation Law limit the liability of directors and make
it more difficult to change control of the Company and replace incumbent
management. Also, the terms of the Notes require the Company to offer to redeem
the Notes upon a change of control. See "Description of Certain Provisions of
the Company's Certificate of Incorporation and Bylaws" and "Description of
Existing Indebtedness."
USE OF PROCEEDS
The Company will not receive any part of the proceeds from the sale of the
Shares offered hereby. All proceeds from the sale of the Shares will be received
by the Selling Stockholders.
COMMON STOCK PRICE RANGE AND DIVIDENDS
The Common Stock of the Company is traded on the New York Stock Exchange
under the symbol "CDG." The following table sets forth the range of high and low
sales prices per share of Common Stock for each calendar quarter as reported by
The Nasdaq stock market, for periods through April 2, 1997, and as reported by
the New York Stock Exchange for periods from and after April 3, 1997, when the
Common Stock began trading on the New York Stock Exchange:
<TABLE>
<CAPTION>
SALES PRICE*
----------------------
HIGH LOW
---- ---
<S> <C> <C>
1996
1st Quarter............................................... $ 7 7/8 $ 6 7/8
2nd Quarter............................................... $17 $ 7 5/8
3rd Quarter............................................... $18 3/8 $12 7/8
4th Quarter............................................... $34 5/8 $16 3/4
1997
1st Quarter............................................... $39 3/4 $20 5/8
2nd Quarter............................................... $37 1/8 $26 15/16
3rd Quarter............................................... $70 1/2 $36 3/8
4th Quarter............................................... $82 $42
</TABLE>
- ---------------
* Retroactively adjusted to reflect a two-for-one stock split effected in the
form of a 100% stock dividend effective May 22, 1997.
7
<PAGE> 12
On February 4, 1998, the closing sale price of the Company's Common Stock,
as reported by the New York Stock Exchange, was $45 1/8 per share.
The Company has never paid cash dividends on its Common Stock and it is not
anticipated that cash dividends will be paid to holders of Common Stock in the
foreseeable future. Under the Revolving Credit Facility and the Indenture, the
Company is restricted from declaring, making or paying any cash dividends on the
Common Stock. See "Description of Existing Indebtedness."
SELLING STOCKHOLDERS
The shares of Common Stock offered hereunder were acquired by Well
Services, a company in liquidation, as a result of the acquisition by the
Company of certain assets of Well Services. Charles A. Brash and Phillip A.
Pollonais collectively own all of the capital stock of Well Services. All of the
shares offered hereby (which are currently owned by Well Services, the sole
Selling Stockholder) may be transferred by Well Services to Charles A. Brash
and/or Phillip A. Pollonais in connection with the pending liquidation of Well
Services, whereupon Charles A. Brash and/or Phillip A. Pollonais will constitute
the Selling Stockholders. The following table sets forth the number and
percentage of shares of Common Stock owned by each Selling Stockholder at
February 4, 1998. Except as set forth below, the Shares shown below constitute
all of the shares of Common Stock known to the Company to be beneficially owned
by the Selling Stockholders.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING AFTER OFFERING
----------------------- SHARES TO ----------------------
NAME SHARES PERCENTAGE(1) BE SOLD SHARES PERCENTAGE(1)
---- ------- ------------- --------- ------ -------------
<S> <C> <C> <C> <C> <C>
Well Services (Marine) Ltd.(2).............. 437,939 2.75% 437,939 -- --
Otaheite Industrial Park
South Oropouche
P. O. Box 152
San Fernando
Trinidad, West Indies
Charles A. Brash............................ (2) (2) (2) -- --
Otaheite Industrial Park
South Oropouche
P. O. Box 152
San Fernando
Trinidad, West Indies
Phillip A. Pollonais........................ (2) (2) (2) -- --
Otaheite Industrial Park
South Oropouche
P. O. Box 152
San Fernando
Trinidad, West Indies
</TABLE>
- ---------------
(1) Based on 15,907,929 shares of Common Stock outstanding at February 4, 1998.
(2) All of the shares offered hereby (which are currently owned by Well
Services, the sole Selling Stockholder) may be transferred by Well Services
to Charles A. Brash and/or Phillip A. Pollonais in connection with the
pending liquidation of Well Services, whereupon Charles A. Brash and/or
Phillip A. Pollonais will constitute the Selling Stockholders.
8
<PAGE> 13
DESCRIPTION OF COMMON STOCK
The Company's Certificate of Incorporation authorizes the issuance of
30,000,000 shares of Common Stock, of which 16,320,932 shares are issued,
15,907,929 shares are outstanding, and 38,850 shares are reserved for issuance
pursuant to the Company's 1988 Incentive Equity Plan as of February 4, 1998. In
addition, the Company is authorized to issue 3,000,000 shares of Preferred
Stock, no par value (the "Preferred Stock"), of which no shares are issued and
outstanding. All outstanding shares of Common Stock are fully paid and
non-assessable.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share on all
matters upon which shareholders have the right to vote and, except as otherwise
required by law or provided in any resolution adopted by the Board with respect
to any series of Preferred Stock, the holders of such shares exclusively possess
all voting power. The Certificate of Incorporation does not provide for
cumulative voting for the election of directors. No holder of Common Stock has
any preemptive right to subscribe for any securities of the Company of any kind
or class. Subject to any preferential rights of any outstanding series of
Preferred Stock, the holders of Common Stock are entitled to receive such
dividends as the Board may from time to time declare out of funds legally
available therefor and, upon liquidation of the Company, are entitled to receive
pro rata all assets of the Company available for distribution to such holders.
However, under the Revolving Credit Facility and the Indenture, the Company is
restricted from declaring, making or paying any dividends on the Common Stock.
See "Description of Certain Provisions of the Company's Certificate of
Incorporation and Bylaws" and "Description of Existing Indebtedness."
The transfer agent and registrar for the Common Stock is Harris Trust and
Savings Bank, 700 Louisiana Street, Suite 3350, Houston, Texas 77002. The Common
Stock is traded on the New York Stock Exchange under the symbol "CDG."
REGISTRATION RIGHTS AGREEMENT
The Company, Well Services, Charles A. Brash and Phillip A. Pollonais
entered into a Registration Rights Agreement for the Shares issued in
consideration for the acquisition of the assets of Well Services. Under the
terms of this agreement, the Company agreed to provide Well Services, Brash and
Pollonais and qualified transferees of Well Services limited registration rights
which are the subject of this Prospectus and the Registration Statement.
DESCRIPTION OF CERTAIN PROVISIONS OF THE COMPANY'S
CERTIFICATE OF INCORPORATION AND BYLAWS
The Certificate of Incorporation and the Bylaws of the Company contain
several provisions that may make the acquisition of control of the Company by
means of a tender offer, open market purchases, proxy fight or otherwise more
difficult. These provisions are expected to discourage certain types of
transactions that may involve an actual or threatened change of control of the
Company and to encourage persons seeking to acquire control of the Company to
consult first with the Company's Board of Directors (the "Board") to negotiate
the terms of any proposed business combination or offer. Takeovers or changes in
the Board that might be proposed and effected without prior consultation and
negotiation with the Board or the Company's management would not necessarily be
detrimental to the Company and its shareholders. However, the Company
nonetheless believes that the benefits of increased protection of the Company's
potential ability to negotiate with the proponent of an unfriendly or
unsolicited proposal to take over or restructure the Company outweigh the
disadvantages of discouraging such proposal, because, among other things,
negotiation of such proposals could result in an improvement of their terms.
The Company's Certificate of Incorporation and Bylaws (i) provide that the
size of the Board will be fixed by resolution of the directors of the Company,
(ii) classify the Board into three classes, as nearly equal in number as
possible, each class to serve for three years, with one class elected each year,
(iii) provide that
9
<PAGE> 14
directors may be removed only for cause and only with the approval of the
holders of at least 80 percent of the combined voting power of the outstanding
shares of the Company capital stock entitled to vote generally in the election
of directors (the "Voting Stock"), (iv) provide that any vacancy on the Board
may be filled only by the remaining directors then in office, though less than a
quorum, (v) provide that no shareholder action may be taken by written consent,
(vi) provide that special meetings of the shareholders of the Company may be
called only pursuant to a resolution adopted by a majority of the total number
of directors that the Board would have if there were no vacancies or by the
Chairman of the Board, (vii) require advance notice of business to be brought
before, or nominations to be made at, a meeting of shareholders by a
shareholder, (viii) authorize the Board to issue one or more series of preferred
stock and to determine with respect to any such series the terms and rights
thereof, and (ix) provide that certain provisions of the Certificate of
Incorporation and of the Bylaws may not be amended or repealed or provisions
inconsistent therewith adopted, without the approval of the holders of at least
80 percent of the Voting Stock. In addition, Section 203 of the Delaware General
Corporation Law, requires (with certain exceptions) a vote of 66 2/3 percent of
the holders of the Voting Stock, excluding shares of Voting Stock held by an
"Interested Stockholder," as defined under Section 203, to approve certain
business combinations.
The foregoing is a summary of certain provisions in the Company's
Certificate of Incorporation and Bylaws, and is qualified in its entirety by
reference to the Certificate of Incorporation and Bylaws.
DESCRIPTION OF EXISTING INDEBTEDNESS
REVOLVING CREDIT FACILITY
The Company has established a Revolving Credit Facility with Internationale
Nederlanden (U.S.) Capital Corporation ("ING") to fund its working capital
requirements and other obligations and to support the issuance of letters of
credit. The Company may borrow from time to time up to $35 million under the
Revolving Credit Facility, subject to certain borrowing base limitations. All
advances to the Company under the Revolving Credit Facility bear interest at
1/4% per annum plus the greater of the prevailing Federal Funds Rate plus 1/2%
or a referenced average prime rate; or at the adjusted LIBOR rate plus 2% per
annum. The foregoing rates are subject to an increase of 1/2% in the event
certain financial criteria are not met. The Company is also obligated to pay ING
(i) a commitment fee equal to 1/2% per annum on the average daily unadvanced
portion of the commitments and (ii) a letter of credit fee of 2% per annum on
the average daily undrawn and unexpired amount of each issued and outstanding
letter of credit during the period that such letter of credit remains
outstanding. The Revolving Credit Facility expires on May 31, 1998.
The Revolving Credit Facility is secured by accounts receivable, rig
inventory, equipment, certain oil and gas properties and the stock of certain
subsidiaries of the Company, including certain of the Subsidiary Guarantors. The
Revolving Credit Facility requires the Company to comply with various covenants,
including but not limited to, the maintenance of various financial ratios, and
restricts the Company from declaring, making or paying any dividends on its
Common Stock.
At December 31, 1997, the Company had no outstanding borrowings under the
Revolving Credit Facility.
10.25% SENIOR NOTES
On May 23, 1996, the Company issued $150 million principal amount, and on
August 7, 1997, the Company issued an additional $50 million principal amount,
of 10.25% Senior Notes due 2003. Until their stated maturity on May 15, 2003,
the Notes bear interest at a rate of 10.25% per annum from the date of issuance
thereof payable semi-annually in cash in arrears on May 15 and November 15 of
each year.
The Notes are redeemable at the option of the Company, in whole or in part,
at any time on or after May 15, 2000, at the redemption prices set forth in the
Indenture, together with accrued and unpaid interest to the date of redemption.
In the event the Company consummates a public equity offering on or prior to May
15, 1999, the Company may at its option use all or a portion of the proceeds
from such offering to redeem up to $50 million in aggregate principal amount of
the Notes at a redemption price equal to 110% of the
10
<PAGE> 15
aggregate principal amount thereof, together with accrued and unpaid interest to
the date of redemption, provided that at least $150 million in aggregate
principal amount of Notes remain outstanding immediately after such redemption.
Upon the occurrence of a Change of Control (as defined in the Indenture),
the Company will be required to offer to purchase all the outstanding Notes at a
purchase price equal to 101% of the aggregate principal amount thereof, together
with accrued and unpaid interest to the date of purchase. Upon certain sales or
other dispositions of assets, the Company may be obligated to make offers to
purchase Notes with a portion of the net available proceeds of such sales or
other dispositions at a purchase price equal to 100% of the principal amount
thereof, together with accrued and unpaid interest, if any, to the date of
purchase.
Under the terms of the Indenture, the Company may not, and may not permit
any Restricted Subsidiary (as defined in the Indenture) to, make any Restricted
Payments (as defined in the Indenture), including dividends and other payments
with respect to the Common Stock, unless (1) no default shall have occurred and
be continuing or would result from such Restricted Payment, (2) for the 12-month
period ending on the last day of the Company's most recently completed fiscal
quarter, the Company's Consolidated EBITDA Coverage Ratio was greater than 2.25
to 1.0, and (3) after giving effect to such Restricted Payment, the aggregate
amount of all Restricted Payments declared or made after May 15, 1996 does not
exceed the sum of (A) 50% of the cumulative consolidated net income of the
Company since April 1, 1996 (or if such consolidated net income is a deficit,
100% of such deficit), (B) the aggregate net cash proceeds from sales of certain
capital stock, options, warrants or capital stock purchase rights of the Company
since May 15, 1996, (C) the aggregate net cash proceeds from the exercise of any
options, warrants or capital stock purchase rights, (D) the aggregate net cash
proceeds from the issuance or sale of indebtedness or certain redeemable capital
stock which has been converted into Common Stock, (E) to the extent not
otherwise included in consolidated net income, certain net reductions in
investments in Unrestricted Subsidiaries (as defined in the Indenture), and (F)
$10 million. Notwithstanding the foregoing, the Company may make certain
payments and investments under the terms of the Indenture.
The Indenture relating to the Notes also contains certain covenants,
including covenants which limit the following: (i) indebtedness; (ii) issuances
and sales of capital stock of Restricted Subsidiaries (as defined in the
Indenture); (iii) sale/leaseback transactions; (iv) transactions with
affiliates; (v) liens; (vi) asset sales; (vii) dividends and other payments
affecting Restricted Subsidiaries; (viii) conduct of business; and (ix) mergers,
consolidations and sales of assets.
The Notes are unconditionally guaranteed on a senior unsecured basis by the
Subsidiary Guarantors (and each of the Company's additional principal
subsidiaries), and such Subsidiary Guarantees rank pari passu in right of
payment with all senior indebtedness of the Subsidiary Guarantors and senior to
all Subordinated Indebtedness of the Subsidiary Guarantors. The Subsidiary
Guarantees may be released under certain circumstances.
The Notes are senior unsecured obligations of the Company, ranking pari
passu in right of payment with all senior indebtedness of the Company and senior
to all Subordinated Indebtedness of the Company. In addition to the $200 million
in principal amount of the Notes, at December 31, 1997, the Company and the
Subsidiary Guarantors had $2.4 million of outstanding Indebtedness. The Notes
and the Subsidiary Guarantees, however, will be effectively subordinated to
secured indebtedness of the Company and the Subsidiary Guarantors, respectively,
with respect to the assets securing such indebtedness, including any
indebtedness under the Revolving Credit Facility, which is secured by liens on
substantially all of the assets of the Company and the Subsidiary Guarantors.
Subject to certain limitations, the Company and its Subsidiaries may incur
additional indebtedness in the future.
The foregoing description of the Notes is qualified in its entirety by
reference to the Indenture. Capitalized terms used above shall have the meaning
attributed to such terms in the Indenture unless otherwise specifically noted.
11
<PAGE> 16
PLAN OF DISTRIBUTION
The Selling Stockholders may sell the Shares in any of the following ways:
(i) through underwriters or dealers; (ii) through agents; or (iii) directly to
one or more purchasers. The distribution of the Shares may be effected from time
to time in one or more transactions (which may involve block transactions) on
the New York Stock Exchange, and may be effected at market prices prevailing at
the time of sale, at prices related to such prevailing market prices, at fixed
prices or at negotiated prices. The Selling Stockholders or any underwriter for
the Shares may effect such transactions by selling Shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling Stockholders
or such underwriter and/or commissions from purchasers of Shares for whom they
may act as agent (which discounts, concessions or commissions will not exceed
those customary in the types of transactions involved). Any underwriter of the
Shares may also receive commissions from purchasers of Shares for whom it may
act as agent. The Selling Stockholders, the Company and any underwriters,
brokerdealers or agents that participate in the distribution of Shares might be
deemed to be underwriters, and any profit on such sale of Shares by them and any
discounts, commissions or concessions received by any such underwriters,
broker-dealers or agents might be deemed to be underwriting discounts and
commissions under the Securities Act.
Upon the Company being notified by any of the Selling Stockholders that any
material arrangement has been entered into with a broker-dealer for the sale of
shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplemental
prospectus will be filed, if required, pursuant to Rule 424 of the Securities
Act, disclosing where applicable: (a) the name of each such Selling Stockholder
and of the participating broker-dealer(s), (b) the number of shares involved,
(c) the price at which such shares were sold, (d) the commissions paid or
discounts or concessions allowed to such broker-dealer(s), where applicable, (e)
that such broker-dealer(s) did not conduct any investigation to verify the
information set forth or incorporated by reference in this Prospectus, and (f)
other facts material to the transaction.
The Company has agreed to indemnify in certain circumstances the Selling
Stockholders and certain persons related to the Selling Stockholders against
certain liabilities, including liabilities under the Securities Act. The Selling
Stockholders have agreed to indemnify in certain circumstances the Company and
certain persons related to the Company against certain liabilities, including
liabilities under the Securities Act. All of the expenses incident to the
registration of the Shares of Common Stock shall be paid by the Company;
provided, however, that the Selling Stockholders shall bear any underwriting
discounts and commissions attributable to the sale of the Shares.
EXPERTS
The validity of the issuance of the Company's Common Stock offered hereby
will be passed upon for the Company by Griggs & Harrison, P.C., Houston, Texas.
The Consolidated Financial Statements and schedule of the Company included
in the Company's Annual Report (Form 10-K/A (Amendment No. 3)) for the year
ended December 31, 1996, incorporated by reference in this Prospectus, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their report
thereon included therein and incorporated herein by reference. Such Consolidated
Financial Statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
The Consolidated Financial Statements of Southwestern Offshore Corporation
and Subsidiaries at December 31, 1995 and 1994 and for the years ended December
31, 1995 and 1994 and for the period from inception (July 19, 1993) through
December 31, 1993 included in the Company's Current Report on Form 8-K dated May
23, 1996, incorporated by reference in this Prospectus, have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and are incorporated herein by reference in
reliance upon the authority of said firm as experts in accounting and auditing
in giving said report.
12
<PAGE> 17
==============================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER CONTAINED
HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A
SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THOSE TO WHICH IT
RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN
OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. ii
Incorporation of Certain Documents by
Reference........................... ii
Disclosure Regarding Forward-Looking
Information......................... iii
Prospectus Summary.................... 1
Risk Factors.......................... 4
Use of Proceeds....................... 7
Common Stock Price Range and
Dividends........................... 7
Selling Stockholders.................. 8
Description of Common Stock........... 9
Description of Certain Provisions of
the Company's Certificate of
Incorporation and Bylaws............ 9
Description of Existing
Indebtedness........................ 10
Plan of Distribution.................. 12
Experts............................... 12
</TABLE>
==============================================================================
==============================================================================
437,939 SHARES
CLIFFS DRILLING COMPANY
COMMON STOCK
---------------------
PROSPECTUS
---------------------
February 5, 1998
==============================================================================
<PAGE> 18
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Estimated expenses in connection with the distribution of the securities to
be registered, other than underwriting discounts and commissions, are as
follows:
<TABLE>
<S> <C>
Commission Registration Fee................................. $ 5,685
Legal Fees and Expenses..................................... 14,000
Miscellaneous (including printing and engraving, accounting
and blue sky fees)........................................ 5,315
-------
Total............................................. $25,000
</TABLE>
The foregoing expenses incident to the registration of the Shares of Common
Stock shall be paid by the Company; provided, however, that the Selling
Stockholders are obligated to reimburse the Company for registration fees
payable to the Commission, and the Selling Stockholders shall bear any
underwriting discounts and commissions attributable to the sale of the Shares.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
GENERAL
Article Ninth of the Company's Certificate of Incorporation ("Article
Ninth") requires the Company to indemnify its directors, officers and certain
other individuals to the full extent permitted by the Delaware General
Corporation Law ("Delaware GCL") or other applicable laws and allows the Company
to enter into agreements with any person to provide greater or different
indemnification than that provided in Article Ninth or the Delaware GCL.
Article Tenth of the Company's Certificate of Incorporation ("Article
Tenth") limits the personal liability of the Company's directors to the Company
or its stockholders to the full extent permitted by the Delaware GCL, which
currently permits directors to be protected from monetary damages for breach of
their fiduciary duty of care. This limitation has no effect on claims arising
under the federal securities laws.
INDEMNIFICATION AND INSURANCE
Under the Delaware GCL, directors and officers as well as other employees
and individuals may be indemnified against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation such
as a derivative action) if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard of
care is applicable in the case of actions by or in the right of the corporation,
except that indemnification only extends to expenses (including attorneys' fees)
incurred in connection with defense or settlement of such an action and the
Delaware GCL requires court approval before there can be any indemnification
where the person seeking indemnification has been found liable to the
corporation.
Article Ninth provides that each person who is or was or had agreed to
become a director or officer of the Company, and each such person who is or was
serving or who had agreed to serve at the request of the Board of Directors or
an officer of the Company as an employee or agent of the Company, or as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise (including the heirs, executors,
administrators or estate of such person) shall be indemnified by the Company to
the full extent permitted by the Delaware GCL or any other applicable laws as
presently or hereafter in effect. Under Article Ninth, subject to the
limitations on indemnification imposed by the Delaware GCL, a large award
against an officer or director or other appropriate individual could be paid by
the Company, which could affect the assets of the Company.
II-1
<PAGE> 19
Article Ninth provides that, without limiting the generality or effect of
the foregoing, the Company may enter into one or more agreements with any person
which provide for indemnification greater or different than that provided in
Article Ninth. Finally, Article Ninth and Article Tenth each provide that any
repeal or modification of such article shall not adversely affect any right or
protection existing thereunder immediately prior to such repeal or modification.
The Company has entered into agreements with each of its directors and
certain officers providing for indemnification broader than that provided by
Article Ninth. Each of the directors and certain officers are entitled to
indemnification pursuant to the indemnification agreements whether his or her
acts, failures to act, neglect or breach of duty giving rise to the right to
indemnity thereunder occurred prior or subsequent to the date of such agreement.
Such right, however, would not be available with respect to acts, failures to
act, neglect or breaches of duty of a director or officer occurring prior to the
date such person became a director or officer of the Company.
One of the purposes of entering into such indemnification agreements was to
specify the extent to which the directors and certain officers may receive
indemnification under circumstances in which indemnity would not otherwise be
provided by Article Ninth. Such agreements entitle the directors and officers to
indemnification as expressly provided by Article Ninth and to indemnification
for any amount which a director or officer is or becomes legally obligated to
pay relating to or arising out of any claim made against such director or
officer because of any act, failure to act or neglect or breach of duty,
including, without limitation, any actual or alleged error, misstatement or
misleading statement, which such director or officer commits, suffers, permits
or acquiesces in while acting in the director's or officer's position with the
Company. The right to receive payments under the proposed indemnification
agreements in excess of those expressly provided in Article Ninth would not be
permitted, however, in connection with any claim against a director or officer:
(i) which results in a final, nonappealable order against the director
or officer to pay a fine or similar governmental imposition which the
Company is prohibited by applicable law from paying; or
(ii) to the extent based upon or attributable to the director or
officer gaining in fact a personal profit to which he or she was not
legally entitled, including, without limitation, profits made from the
purchase and sale of equity securities of the Company which are recoverable
by the Company pursuant to Section 16(b) of the Exchange Act and profits
arising from transactions in publicly traded securities of the Company
which were effected by the director or officer in violation of Section
10(b) of the Exchange Act, including rule 10b-5 promulgated thereunder.
Another purpose of the indemnification agreements is to provide the
directors or officers with increased assurance of indemnification by prohibiting
the Company from adopting any amendment to the Company's Certificate of
Incorporation or Bylaws which would have the effect of denying, diminishing or
encumbering their rights to indemnification pursuant thereto or to the Delaware
GCL or any other law as applied to any act or failure to act occurring in whole
or in part prior to the effective date of such amendment.
At present there is no pending litigation or proceeding involving a
director or officer of the Company in which indemnification would be required or
permitted by the proposed indemnification agreements. The Board of Directors is
not aware of any threatened litigation or proceeding which may result in a claim
for indemnification under any such indemnification agreement.
ELIMINATION OF LIABILITY IN CERTAIN CIRCUMSTANCES
Under the Delaware GCL, Article Tenth would protect the Company's directors
against monetary damages for breaches of their duty of care, except as set forth
below. The inclusion of Article Tenth in the Company's Certificate of
Incorporation means that the Company and its stockholders would forego the
ability to bring a cause of action against a director for monetary damages for
certain breaches of fiduciary duty, including actions in connection with
proposals for the acquisition of control of the Company. Directors remain liable
for breaches of their duty of loyalty to the Company and its stockholders as
well as acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law and transactions from which a director
derives improper personal benefit. Also, Article Tenth does not eliminate
director liability
II-2
<PAGE> 20
under Section 174 of the Delaware GCL, which makes directors personally liable
for unlawful dividends or unlawful stock repurchases or redemptions and
expressly sets forth a negligence standard with respect to such liability.
Although Article Tenth provides directors with protection from awards of
monetary damages for breaches of the duty of care, it does not eliminate the
directors' duty of care. Accordingly, Article Tenth will have no effect on the
availability of equitable remedies such as an injunction or rescission based
upon a director's breach of the duty of care. The provisions of Article Tenth
which eliminate liability as described above will apply to officers of the
Company only if they are directors of the Company and are acting in their
capacity as directors, and will not apply to officers of the Company who are not
directors.
ITEM 16. EXHIBITS
The following instruments and documents are included as Exhibits to this
Registration Statement. Exhibits incorporated by reference are so indicated by
parenthetical information.
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<C> <S>
2.1 -- Reorganization and Distribution Agreement dated as of
June 8, 1988 among Cleveland-Cliffs Inc, The
Cleveland-Cliffs Iron Company, Cliffs Drilling Company,
now Cliffs Resources, Inc., Cliffs Exploration Company,
now Cliffs Oil and Gas Company, Cliffs Drilling
International, Inc. and New Cliffs Drilling Company, now
Cliffs Drilling Company, the Registrant (the "Company")
(incorporated by reference to Exhibit 2.1 to the
Company's Registration Statement on Form S-1, No.
33-23508, filed under the Securities Act).
2.2 -- Acquisition Agreement dated as of May 13, 1996 by and
among Southwestern Offshore Corporation, Viking Supply
Ships A.S., Ocean Master III Inc., Production Partner
Inc., Trivium Investments Limited, Helge Ringdal, the
Company, Cliffs Drilling Asset Acquisition Company and
Cliffs Drilling Merger Company (incorporated by reference
to Exhibit 2.2 to the Company's Current Report on Form
8-K dated May 23, 1996).
2.3 -- Stock Purchase Agreement dated as of December 6, 1996 by
and among Delavney-Gestao E Consultadoria LDA.,
Construtora Andrade Gutierrez S.A., Andrade Gutierrez
Perfuracao LTDA., Driltech Inc. and the Company
(incorporated by reference to Exhibit 2.3 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1996).
2.3.1 -- Amendment No. 1 dated as of January 24, 1997 to Stock
Purchase Agreement dated as of December 6, 1996 by and
among Delavney-Gestao E Consultadoria LDA., Construtora
Andrade Gutierrez S.A., Andrade Gutierrez Perfuracao
LTDA., Driltech Inc. and the Company (incorporated by
reference to Exhibit 2.3.1 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1996).
2.3.2 -- Amendment No. 2 dated as of April 24, 1997 to Stock
Purchase Agreement dated as of December 6, 1996 by and
among Delavney-Gestao E Consultadoria LDA., Construtora
Andrade Gutierrez S.A., Andrade Gutierrez Perfuracao
LTDA., Driltech Inc. and the Company (incorporated by
reference to Exhibit 2.3.2 to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31,
1997).
2.4 -- Asset Purchase Agreement dated as of December 29, 1997 by
and among Cliffs Drilling Trinidad Offshore Limited, Well
Services (Marine) Ltd., Charles A. Brash and Philip A.
Pollonais (incorporated by reference to Exhibit 2.4 to
the Company's Current Report on Form 8-K dated December
29, 1997).
</TABLE>
II-3
<PAGE> 21
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<C> <S>
3.1.1 -- Certificate of Incorporation of New Cliffs Drilling
Company (incorporated by reference to Exhibit 3.1.1 to
the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997).
3.1.2 -- Certificate of Amendment of Certificate of Incorporation
(incorporated by reference to Exhibit 3.1.2 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997).
3.1.3 -- Certificate of Designations of $2.3125 Convertible
Exchangeable Preferred Stock of the Company (incorporated
by reference to Exhibit 3.1.3 to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997).
3.1.4 -- Certificate of Amendment of Certificate of Incorporation
(incorporated by reference to Exhibit 3.1.4 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997).
3.1.5 -- Certificate of Elimination of $2.3125 Convertible
Exchangeable Preferred Stock of the Company (incorporated
by reference to Exhibit 3.1.5 to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997).
3.1.6 -- Certificate of Designations of Series A Junior
Participating Preferred Stock of the Company
(incorporated by reference to Exhibit 3.1.6 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997).
4.1 -- Certificate of Incorporation of the Company, as amended
(included as Exhibits 3.1.1, 3.1.2, 3.1.3, 3.1.4, 3.1.5
and 3.1.6).
4.2 -- By-Laws of the Company (incorporated by reference to
Exhibit 3.2 to the Company's Registration Statement on
Form S-1, No. 33-23508, filed August 4, 1988).
4.3 -- Indenture dated as of May 15, 1996 among the Company, as
issuer, Cliffs Drilling Asset Acquisition Company, Cliffs
Drilling Merger Company, Cliffs Drilling International,
Inc. and Cliffs Oil and Gas Company, as subsidiary
guarantors, and Fleet National Bank, predecessor of State
Street Bank and Trust Company, as trustee, including a
Form of the Company's 10.25% Senior Notes due 2003
(incorporated by reference to Exhibit 4.3 to the
Company's Current Report on Form 8-K dated May 23, 1996).
4.3.1 -- First Supplemental Indenture dated as of July 11, 1996
among the Company, as issuer, Southwestern Offshore
Corporation (f/k/a Cliffs Drilling Asset Acquisition
Company), Cliffs Drilling Merger Company, Cliffs Drilling
International, Inc., Cliffs Oil and Gas Company, and DRL,
Inc., as subsidiary guarantors, and Fleet National Bank,
predecessor of State Street Bank and Trust Company, as
trustee (incorporated by reference to Exhibit 4.3.1 to
the Company's Registration Statement on Form S-4, No.
333-08273, filed July 17, 1996).
4.3.2 -- Second Supplemental Indenture dated as of January 24,
1997 among the Company, as issuer, Southwestern Offshore
Corporation (f/k/a Cliffs Drilling Asset Acquisition
Company), Cliffs Drilling Merger Company, Cliffs Drilling
International, Inc., Cliffs Oil and Gas Company, DRL,
Inc., and Greenbay Drilling Company Ltd., as subsidiary
guarantors, and Fleet National Bank, predecessor of State
Street Bank and Trust Company, as trustee (incorporated
by reference to Exhibit 4.6.2 to the Company's Annual
Report on Form 10-K for the fiscal year ended December
31, 1996).
</TABLE>
II-4
<PAGE> 22
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<C> <S>
4.3.3 -- Third Supplemental Indenture dated as of August 29, 1997
among the Company, as issuer, Southwestern Offshore
Corporation (f/k/a Cliffs Drilling Asset Acquisition
Company), Cliffs Drilling Merger Company, Cliffs Drilling
International, Inc., Cliffs Oil and Gas Company, DRL,
Inc., Cliffs Drilling Trinidad Limited and the West
Indies Drilling Joint Venture, as subsidiary guarantors,
and State Street Bank and Trust Company, successor to
Fleet National Bank, as trustee (incorporated by
reference to Exhibit 4.3.3 to the Company's Registration
Statement on Form S-4, Registration No. 333-36325, filed
September 24, 1997).
4.4 -- Registration Rights Agreement dated as of May 23, 1996 by
and among the Company, Cliffs Drilling Asset Acquisition
Company, Cliffs Drilling Merger Company, Cliffs Drilling
International, Inc., Cliffs Oil and Gas Company,
Jefferies & Company, Inc. and ING Baring (U.S.)
Securities, Inc. (incorporated by reference to Exhibit
4.4 to the Company's Current Report on Form 8-K dated May
23, 1996).
4.5 -- Registration Rights Agreement dated as of May 23, 1996 by
and among the Company, Viking Supply Ships A.S. and
Production Partner Inc. (incorporated by reference to
Exhibit 4.5 to the Company's Current Report on Form 8-K
dated May 23, 1996).
4.6 -- Rights Agreement dated effective June 17, 1997 between
the Company and Harris Trust and Savings Bank, which
includes as Exhibit B thereto the Form of Right
Certificate (incorporated by reference to Exhibit 4.3 to
the Company's Registration Statement on Form 8-A filed
June 6, 1997).
4.7 -- Indenture dated as of August 7, 1997 among the Company,
as issuer, Southwestern Offshore Corporation, Cliffs
Drilling Merger Company, Cliffs Drilling International,
Inc., Cliffs Oil and Gas Company and DRL, Inc., as
subsidiary guarantors, and State Street Bank and Trust
Company, as trustee, including a form of the Company's
10.25% Senior Notes due 2003 (incorporated by reference
to Exhibit 4.4 to the Company's Registration Statement on
Form S-4, Registration No. 333-36325, filed September 24,
1997).
4.7.1 -- First Supplemental Indenture dated as of August 29, 1997
among the Company, as issuer, Southwestern Offshore
Corporation, Cliffs Drilling Merger Company, Cliffs
Drilling International, Inc., Cliffs Oil and Gas Company,
DRL, Inc., Cliffs Drilling Trinidad Limited and the West
Indies Drilling Joint Venture, as subsidiary guarantors,
and State Street Bank and Trust Company, as trustee
(incorporated by reference to Exhibit 4.4.1 to the
Company's Registration Statement on Form S-4,
Registration No. 333-36325, filed September 24, 1997).
4.8 -- Registration Rights Agreement dated as of July 31, 1997
by and among the Company, Southwestern Offshore
Corporation, Cliffs Drilling Merger Company, Cliffs
Drilling International, Inc., Cliffs Oil and Gas Company,
DRL, Inc., Jefferies & Company, Inc. and ING Baring
(U.S.) Securities, Inc. (incorporated by reference to
Exhibit 4.5 to the Company's Registration Statement on
Form S-4, Registration No. 333-36325, filed September 24,
1997).
4.9 -- Registration Rights Agreement dated as of December 29,
1997 by and among the Company, Well Services (Marine)
Ltd., Charles A. Brash and Phillip A. Pollonais
(incorporated by reference to Exhibit 4.9 to the
Company's Current Report on Form 8-K dated December 29,
1997).
*5.1 -- Opinion of Griggs & Harrison, P.C.
*23.1 -- Consent of Ernst & Young LLP.
*23.2 -- Consent of Arthur Andersen LLP.
</TABLE>
II-5
<PAGE> 23
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<S> <C>
*23.3 -- Consent of Griggs & Harrison, P.C. (included in Exhibit
5.1).
*24.1 -- Powers of Attorney (included on the signature page of
this Registration Statement).
</TABLE>
- ---------------
* Filed herewith
ITEM 17. UNDERTAKINGS
The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to section 13(a) or section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
section 15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any Prospectus required by section 10(a)(3) of the
Securities Act;
(ii) To reflect in the Prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereto) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement;
provided, however, that paragraphs (i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Company pursuant to section 13 or section 15(d) of the
Exchange Act that are incorporated by reference in this Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the provisions described under Item 15 above, or otherwise, the
Company has been advised that, in the opinion of the Securities and Exchange
Commission,
II-6
<PAGE> 24
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless, in the opinion of its counsel, the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-7
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement or Amendment to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Houston, the State of Texas, on February 4,
1998.
CLIFFS DRILLING COMPANY
By: /s/ DOUGLAS E. SWANSON
----------------------------------
Douglas E. Swanson
Chairman of the Board, President,
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Douglas E. Swanson and Edward A. Guthrie, and
each of them (with full power to each of them to act alone), his or her true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign on his or her behalf individually and in each
capacity stated below any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents and either of them, or their substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or Amendment has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ DOUGLAS E. SWANSON Chairman of the Board, President February 4, 1998
- ----------------------------------------------------- and Chief Executive Officer
Douglas E. Swanson (Principal Executive Officer)
/s/ M. M. CONE Director February 4, 1998
- -----------------------------------------------------
M. M. Cone
/s/ H. ROBERT HIRSCH Director February 4, 1998
- -----------------------------------------------------
H. Robert Hirsch
/s/ DONALD W. KELLER Director February 4, 1998
- -----------------------------------------------------
Donald W. Keller
/s/ ROBERT M. MCINNES Director February 4, 1998
- -----------------------------------------------------
Robert M. McInnes
/s/ JOSEPH E. REID Director February 4, 1998
- -----------------------------------------------------
Joseph E. Reid
</TABLE>
II-8
<PAGE> 26
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ JOHN D. WEIL Director February 4, 1998
- -----------------------------------------------------
John D. Weil
/s/ EDWARD A. GUTHRIE Vice President -- Finance and February 4, 1998
- ----------------------------------------------------- Chief Financial Officer
Edward A. Guthrie (Principal Financial Officer)
/s/ CINDY B. TAYLOR Vice President -- Controller and February 4, 1998
- ----------------------------------------------------- Secretary (Principal Accounting
Cindy B. Taylor Officer)
</TABLE>
II-9
<PAGE> 27
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<C> <S>
2.1 -- Reorganization and Distribution Agreement dated as of
June 8, 1988 among Cleveland-Cliffs Inc, The
Cleveland-Cliffs Iron Company, Cliffs Drilling Company,
now Cliffs Resources, Inc., Cliffs Exploration Company,
now Cliffs Oil and Gas Company, Cliffs Drilling
International, Inc. and New Cliffs Drilling Company, now
Cliffs Drilling Company, the Registrant (the "Company")
(incorporated by reference to Exhibit 2.1 to the
Company's Registration Statement on Form S-1, No.
33-23508, filed under the Securities Act).
2.2 -- Acquisition Agreement dated as of May 13, 1996 by and
among Southwestern Offshore Corporation, Viking Supply
Ships A.S., Ocean Master III Inc., Production Partner
Inc., Trivium Investments Limited, Helge Ringdal, the
Company, Cliffs Drilling Asset Acquisition Company and
Cliffs Drilling Merger Company (incorporated by reference
to Exhibit 2.2 to the Company's Current Report on Form
8-K dated May 23, 1996).
2.3 -- Stock Purchase Agreement dated as of December 6, 1996 by
and among Delavney-Gestao E Consultadoria LDA.,
Construtora Andrade Gutierrez S.A., Andrade Gutierrez
Perfuracao LTDA., Driltech Inc. and the Company
(incorporated by reference to Exhibit 2.3 to the
Company's Annual Report on Form 10-K for the year ended
December 31, 1996).
2.3.1 -- Amendment No. 1 dated as of January 24, 1997 to Stock
Purchase Agreement dated as of December 6, 1996 by and
among Delavney-Gestao E Consultadoria LDA., Construtora
Andrade Gutierrez S.A., Andrade Gutierrez Perfuracao
LTDA., Driltech Inc. and the Company (incorporated by
reference to Exhibit 2.3.1 to the Company's Annual Report
on Form 10-K for the year ended December 31, 1996).
2.3.2 -- Amendment No. 2 dated as of April 24, 1997 to Stock
Purchase Agreement dated as of December 6, 1996 by and
among Delavney-Gestao E Consultadoria LDA., Construtora
Andrade Gutierrez S.A., Andrade Gutierrez Perfuracao
LTDA., Driltech Inc. and the Company (incorporated by
reference to Exhibit 2.3.2 to the Company's Quarterly
Report on Form 10-Q for the quarter ended March 31,
1997).
2.4 -- Asset Purchase Agreement dated as of December 29, 1997 by
and among Cliffs Drilling Trinidad Offshore Limited, Well
Services (Marine) Ltd., Charles A. Brash and Philip A.
Pollonais (incorporated by reference to Exhibit 2.4 to
the Company's Current Report on Form 8-K dated December
29, 1997).
3.1.1 -- Certificate of Incorporation of New Cliffs Drilling
Company (incorporated by reference to Exhibit 3.1.1 to
the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1997).
3.1.2 -- Certificate of Amendment of Certificate of Incorporation
(incorporated by reference to Exhibit 3.1.2 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997).
3.1.3 -- Certificate of Designations of $2.3125 Convertible
Exchangeable Preferred Stock of the Company (incorporated
by reference to Exhibit 3.1.3 to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997).
3.1.4 -- Certificate of Amendment of Certificate of Incorporation
(incorporated by reference to Exhibit 3.1.4 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997).
</TABLE>
<PAGE> 28
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<C> <S>
3.1.5 -- Certificate of Elimination of $2.3125 Convertible
Exchangeable Preferred Stock of the Company (incorporated
by reference to Exhibit 3.1.5 to the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997).
3.1.6 -- Certificate of Designations of Series A Junior
Participating Preferred Stock of the Company
(incorporated by reference to Exhibit 3.1.6 to the
Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1997).
4.1 -- Certificate of Incorporation of the Company, as amended
(included as Exhibits 3.1.1, 3.1.2, 3.1.3, 3.1.4, 3.1.5
and 3.1.6).
4.2 -- By-Laws of the Company (incorporated by reference to
Exhibit 3.2 to the Company's Registration Statement on
Form S-1, No. 33-23508, filed August 4, 1988).
4.3 -- Indenture dated as of May 15, 1996 among the Company, as
issuer, Cliffs Drilling Asset Acquisition Company, Cliffs
Drilling Merger Company, Cliffs Drilling International,
Inc. and Cliffs Oil and Gas Company, as subsidiary
guarantors, and Fleet National Bank, predecessor of State
Street Bank and Trust Company, as trustee, including a
Form of the Company's 10.25% Senior Notes due 2003
(incorporated by reference to Exhibit 4.3 to the
Company's Current Report on Form 8-K dated May 23, 1996).
4.3.1 -- First Supplemental Indenture dated as of July 11, 1996
among the Company, as issuer, Southwestern Offshore
Corporation (f/k/a Cliffs Drilling Asset Acquisition
Company), Cliffs Drilling Merger Company, Cliffs Drilling
International, Inc., Cliffs Oil and Gas Company, and DRL,
Inc., as subsidiary guarantors, and Fleet National Bank,
predecessor of State Street Bank and Trust Company, as
trustee (incorporated by reference to Exhibit 4.3.1 to
the Company's Registration Statement on Form S-4, No.
333-08273, filed July 17, 1996).
4.3.2 -- Second Supplemental Indenture dated as of January 24,
1997 among the Company, as issuer, Southwestern Offshore
Corporation (f/k/a Cliffs Drilling Asset Acquisition
Company), Cliffs Drilling Merger Company, Cliffs Drilling
International, Inc., Cliffs Oil and Gas Company, DRL,
Inc., and Greenbay Drilling Company Ltd., as subsidiary
guarantors, and Fleet National Bank, predecessor of State
Street Bank and Trust Company, as trustee (incorporated
by reference to Exhibit 4.6.2 to the Company's Annual
Report on Form 10-K for the fiscal year ended December
31, 1996).
4.3.3 -- Third Supplemental Indenture dated as of August 29, 1997
among the Company, as issuer, Southwestern Offshore
Corporation (f/k/a Cliffs Drilling Asset Acquisition
Company), Cliffs Drilling Merger Company, Cliffs Drilling
International, Inc., Cliffs Oil and Gas Company, DRL,
Inc., Cliffs Drilling Trinidad Limited and the West
Indies Drilling Joint Venture, as subsidiary guarantors,
and State Street Bank and Trust Company, successor to
Fleet National Bank, as trustee (incorporated by
reference to Exhibit 4.3.3 to the Company's Registration
Statement on Form S-4, Registration No. 333-36325, filed
September 24, 1997).
4.4 -- Registration Rights Agreement dated as of May 23, 1996 by
and among the Company, Cliffs Drilling Asset Acquisition
Company, Cliffs Drilling Merger Company, Cliffs Drilling
International, Inc., Cliffs Oil and Gas Company,
Jefferies & Company, Inc. and ING Baring (U.S.)
Securities, Inc. (incorporated by reference to Exhibit
4.4 to the Company's Current Report on Form 8-K dated May
23, 1996).
</TABLE>
<PAGE> 29
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<C> <S>
4.5 -- Registration Rights Agreement dated as of May 23, 1996 by
and among the Company, Viking Supply Ships A.S. and
Production Partner Inc. (incorporated by reference to
Exhibit 4.5 to the Company's Current Report on Form 8-K
dated May 23, 1996).
4.6 -- Rights Agreement dated effective June 17, 1997 between
the Company and Harris Trust and Savings Bank, which
includes as Exhibit B thereto the Form of Right
Certificate (incorporated by reference to Exhibit 4.3 to
the Company's Registration Statement on Form 8-A filed
June 6, 1997).
4.7 -- Indenture dated as of August 7, 1997 among the Company,
as issuer, Southwestern Offshore Corporation, Cliffs
Drilling Merger Company, Cliffs Drilling International,
Inc., Cliffs Oil and Gas Company and DRL, Inc., as
subsidiary guarantors, and State Street Bank and Trust
Company, as trustee, including a form of the Company's
10.25% Senior Notes due 2003 (incorporated by reference
to Exhibit 4.4 to the Company's Registration Statement on
Form S-4, Registration No. 333-36325, filed September 24,
1997).
4.7.1 -- First Supplemental Indenture dated as of August 29, 1997
among the Company, as issuer, Southwestern Offshore
Corporation, Cliffs Drilling Merger Company, Cliffs
Drilling International, Inc., Cliffs Oil and Gas Company,
DRL, Inc., Cliffs Drilling Trinidad Limited and the West
Indies Drilling Joint Venture, as subsidiary guarantors,
and State Street Bank and Trust Company, as trustee
(incorporated by reference to Exhibit 4.4.1 to the
Company's Registration Statement on Form S-4,
Registration No. 333-36325, filed September 24, 1997).
4.8 -- Registration Rights Agreement dated as of July 31, 1997
by and among the Company, Southwestern Offshore
Corporation, Cliffs Drilling Merger Company, Cliffs
Drilling International, Inc., Cliffs Oil and Gas Company,
DRL, Inc., Jefferies & Company, Inc. and ING Baring
(U.S.) Securities, Inc. (incorporated by reference to
Exhibit 4.5 to the Company's Registration Statement on
Form S-4, Registration No. 333-36325, filed September 24,
1997).
4.9 -- Registration Rights Agreement dated as of December 29,
1997 by and among the Company, Well Services (Marine)
Ltd., Charles A. Brash and Phillip A. Pollonais
(incorporated by reference to Exhibit 4.9 to the
Company's Current Report on Form 8-K dated December 29,
1997).
*5.1 -- Opinion of Griggs & Harrison, P.C.
*23.1 -- Consent of Ernst & Young LLP.
*23.2 -- Consent of Arthur Andersen LLP.
*23.3 -- Consent of Griggs & Harrison, P.C. (included in Exhibit
5.1).
*24.1 -- Powers of Attorney (included on the signature page of
this Registration Statement).
</TABLE>
- ---------------
* Filed herewith
<PAGE> 1
EXHIBIT 5.1
February 4, 1998
970487
Cliffs Drilling Company
1200 Smith Street, Suite 300
Houston, Texas 77002
Gentlemen:
As set forth in the Registration Statement on Form S-3 (the "Registration
Statement"), filed with the Securities and Exchange Commission by Cliffs
Drilling Company, a Delaware corporation (the "Company"), under the Securities
Act of 1933, as amended (the "Act"), relating to the offer and sale by Well
Services (Marine) Ltd., a private limited company organized under the laws of
Trinidad and Tobago ("Well Services"), and Charles A. Brash and Phillip A.
Pollonais of 437,939 shares (the "Shares") of common stock, $0.01 par value
per share (the "Common Stock"), of the Company from time to time pursuant to
Rule 415 under the Act, certain legal matters in connection with the Shares are
being passed upon for you by us. At your request, this opinion is being
furnished to you for filing as Exhibit 5.1 to the Registration Statement.
In our capacity as your counsel in the connection referred to above, we
have examined, as a basis for the opinions hereinafter expressed, (a) the
Certificate of Incorporation and Bylaws of the Company, each as amended to
date, (b) the Asset Purchase Agreement dated as of December 29, 1997 by and
among Cliffs Drilling Trinidad Offshore Limited, Well Services, Charles A.
Brash and Phillip A. Pollonais, (c) the Registration Rights Agreement dated as
of December 29, 1997 by and among the Company, Well Services, Charles A. Brash
and Phillip A. Pollonais, and (d) the originals, or copies certified or
otherwise identified, of corporate records of the Company, certificates of
public officials and of representatives of the Company, statutes and other
instruments and documents. In giving such opinions, we have relied upon
certificates of officers of the Company with respect to the accuracy of the
material factual matters contained in such certificates.
Based upon our examination as aforesaid, we are 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.
2. The Shares have been duly authorized and are validly issued, fully
paid and nonassessable shares of Common Stock of the Company.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to our Firm under "Experts" in the
prospectus forming a part of the Registration Statement.
Very truly yours,
/s/ GRIGGS & HARRISON, P.C.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3, No. 333-___________) and related Prospectus of
Cliffs Drilling Company for the registration of 437,939 shares of its common
stock and to the incorporation by reference therein of our report dated February
21, 1997, with respect to the consolidated financial statements and schedule of
Cliffs Drilling Company included in its Annual Report (Form 10-K/A (Amendment
No. 3)) for the year ended December 31, 1996, filed with the Securities and
Exchange Commission.
/s/ ERNST & YOUNG LLP
Houston, Texas
February 4, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated February 16,
1996 included in Southwestern Offshore Corporation's Consolidated Financial
Statements for the year ended December 31, 1995 and to all references to our
Firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
Houston, Texas
February 4, 1998
