AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 21, 2000
REGISTRATION NO. 333-92385
NO. 333-92385-01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________
AMENDMENT NO. 1
TO
FORMS F-4 AND S-4*
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
________________________
AMETHYST FINANCIAL COMPANY LTD.
PRIDE INTERNATIONAL, INC.
(Exact name of each Registrant as specified in its charter)
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BRITISH VIRGIN ISLANDS 1389 NONE
LOUISIANA 1389 76-0069030
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)
AMETHYST FINANCIAL COMPANY LTD. CT CORPORATION SYSTEM
C/O ARIAS FABREGA & FABREGA TRUST CO. BVI LIMITED 111 EIGHTH AVENUE
325 WATERFRONT DRIVE NEW YORK, NEW YORK 10011
OMAR HODGE BLDG., SECOND FLOOR (800) 624-0909
WICKHAM'S CAY, ROAD TOWN
TORTOLA, BRITISH VIRGIN ISLANDS
(284) 494-4977
PRIDE INTERNATIONAL, INC. ROBERT W. RANDALL, SECRETARY
5847 SAN FELIPE, SUITE 3300 PRIDE INTERNATIONAL, INC.
HOUSTON, TEXAS 77057 5847 SAN FELIPE, SUITE 3300
(713) 789-1400 HOUSTON, TEXAS 77057
(713) 789-1400
(Address, including zip code, and (Name, address, including zip code, and
telephone number, telephone number,
including area code, of Registrant's including area code, of each Registrant's
principal executive offices) agent for service)
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable following the effectiveness of this Registration
Statement.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, as amended (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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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. [ ]
________________________
THE CO-REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE CO-REGISTRANTS
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 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
________________________
*This Registration Statement constitutes a filing on Form F-4 by Amethyst
Financial Company Ltd. and a filing on Form S-4 by Pride International, Inc.
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The information in this prospectus is not complete and may be changed. We
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and we are not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to Completion, Dated March 21, 2000
PRELIMINARY PROSPECTUS
$53,000,000
AMETHYST FINANCIAL COMPANY LTD.
OFFER TO EXCHANGE
$53,000,000 11 3/4% OUTSTANDING SENIOR SECURED NOTES DUE 2001
FOR $53,000,000 REGISTERED 11 3/4% SENIOR SECURED NOTES DUE 2001
THE OLD AND NEW NOTES ARE
GUARANTEED IN AN AGGREGATE AMOUNT OF
$30,000,000 BY PRIDE INTERNATIONAL, INC.
AND
BACKED BY A $23,000,000 LETTER OF CREDIT
ISSUED BY HSBC BANK USA
THE NEW NOTES
o will be freely tradable and otherwise substantially identical to the old
notes
o will accrue interest at the same rate per annum as the old notes, payable
semi-annually in cash in arrears on June 30 and December 30 of each year,
commencing June 30, 2000
o will be our senior secured obligations which will rank equally with the old
notes and all our existing senior unsecured debt and will have priority over
our senior unsecured debt to the extent of the collateral securing the new
notes
o will not be listed on any securities exchange or on any automated dealer
quotation system
THE EXCHANGE OFFER
o expires at 5:00 p.m., New York City time, on , 2000, unless extended
o is not conditioned upon any minimum aggregate principal amount of old notes
being tendered
YOU SHOULD NOTE THAT
o we will exchange all old notes that are validly tendered and not validly
withdrawn for an equal principal amount of new notes that we have registered
under the Securities Act of 1933
o you may withdraw tenders of old notes at any time prior to the expiration of
the exchange offer
o the exchange of old notes for new notes in the exchange offer will not be a
taxable event for U.S. federal income tax purposes
YOU SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 10 OF THIS
PROSPECTUS BEFORE PARTICIPATING IN THE EXCHANGE OFFER.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE NEW NOTES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 2000
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TABLE OF CONTENTS
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About this Prospectus....................1 The Exchange Offer..............................63
Prospectus Summary.......................2 Description of New Notes........................71
Risk Factors............................10 Book Entry; Delivery, Form and Transfer
Forward-Looking Statements..............27 of the New Notes.............................106
Use of Proceeds.........................28 Tax Considerations.............................109
Capitalization..........................28 Plan of Distribution...........................110
Selected Historical Financial Data......29 Legal Matters..................................111
Management's Discussion and Analysis of Experts........................................111
Condition and Results of Operation....30 Where You Can Find More Information............111
Business................................35 Index to Consolidated Financial Statements.....F-1
Management..............................58 Appendix A--Pride International, Inc...........A-1
Executive and Board Compensation and Appendix B--HSBC Bank USA......................B-1
Compensation of Owner-Related Parties.59 Appendix C--Petroleo Brasileiro S.A.--
Certain Relationships and Related Petrobras....................................C-1
Transactions..........................60
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ABOUT THIS PROSPECTUS
THIS PROSPECTUS IS PART OF A REGISTRATION STATEMENT WE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. YOU SHOULD RELY ONLY ON THE INFORMATION WE
HAVE PROVIDED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH ADDITIONAL OR DIFFERENT INFORMATION. WE
ARE NOT MAKING AN OFFER OF THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER
IS NOT PERMITTED. YOU SHOULD ASSUME THAT THE INFORMATION IN THIS PROSPECTUS IS
ACCURATE ONLY AS OF THE DATE ON THE FRONT OF THIS PROSPECTUS AND THAT ANY
INFORMATION WE HAVE INCORPORATED BY REFERENCE IS ACCURATE ONLY AS OF THE DATE OF
THE DOCUMENT INCORPORATED BY REFERENCE.
In this prospectus, references to "U.S. dollars," "dollars" or "$" are to
United States dollars and references to a "REAL," "REAIS" or "R$" are to a
Brazilian REAL or Brazilian REAIS. For your convenience, we have translated some
amounts stated in this prospectus in U.S. dollars from Brazilian REAIS at the
commercial market rate in effect on December 31, 1999. On that date, the
commercial market rate reported by the Brazilian Central Bank was R$1.79 per
U.S. dollar. You should not construe these translations as a representation that
REAIS could have been converted at such rate on such date or any other date or
will be able to be converted at such rate on any future date. You should read
the risk factor relating to Brazilian exchange rate fluctuations on page 26 for
information regarding the effects of exchange rate fluctuations.
The following table sets forth information on the commercial market rate
for U.S. dollars for the periods and dates indicated. Amounts expressed in REAIS
have been translated from the predecessor currencies in effect during the
relevant period at the rates of exchange at the time the successor currency took
effect.
EXCHANGE RATES OF BRAZILIAN CURRENCY PER DOLLAR(1)
YEAR ENDED DECEMBER 31, PERIOD END AVERAGE(2) LOW HIGH
- ----------------------- ---------- ---------- --- ----
1995............................ 0.9725 0.9177 0.8332 0.9790
1996............................ 1.0394 1.0052 0.9712 1.0411
1997............................ 1.1164 1.0787 1.0391 1.1161
1998............................ 1.2087 1.1611 1.1160 1.2082
1999............................ 1.7890 1.8138 1.2072 2.1850
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(1) The information set forth above is based on information published by the
Brazilian Central Bank.
(2) Simple daily average for the period.
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PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS INFORMATION FROM THIS PROSPECTUS BUT DOES NOT
CONTAIN ALL THE INFORMATION THAT IS IMPORTANT TO YOU. THIS PROSPECTUS INCLUDES
SPECIFIC TERMS OF THE EXCHANGE OFFER, INFORMATION ABOUT OUR BUSINESS,
INFORMATION ABOUT THE BUSINESS OF PRIDE INTERNATIONAL, INC. AND DETAILED
FINANCIAL DATA. WE ENCOURAGE YOU TO READ THE DETAILED INFORMATION AND THE
FINANCIAL STATEMENTS AND RELATED NOTES APPEARING ELSEWHERE IN THIS PROSPECTUS IN
THEIR ENTIRETY.
ABOUT AMETHYST FINANCIAL COMPANY LTD.
We were formed in 1998 to construct, own and operate four dynamically
positioned, self-propelled, fourth-generation semi-submersible drilling rigs
capable of performing drilling and subsea well intervention and maintenance
services in water depths of up to 5,000 feet. We began construction of our rigs,
to be known as the AMETHYST 4, AMETHYST 5, AMETHYST 6 and AMETHYST 7, in the
second quarter of 1998 using the Amethyst design. The Amethyst design
incorporates state-of-the-art technology for deepwater drilling to create
compact, multi-functional rigs that we believe will offer a cost-effective
alternative to larger, more costly rigs and vessels. Once completed, each rig
will be owned by one of our four wholly owned subsidiaries. The subsidiaries
have entered into contracts denominated in U.S. dollars to charter the rigs to
Petroleo Brasileiro S.A.--Petrobras, the Brazilian national oil company, for
initial terms ranging from six to eight years. You should read the discussion
below under the headings "--Status of Construction of Our Rigs" and
"--Threatened Cancellation of Our Charters" for information regarding the
suspension of construction on the AMETHYST 4 and AMETHYST 5 and the threatened
cancellation of our charters and the discussion under the heading "Business--Our
Rigs" beginning on page 38 for further detail regarding the technical
capabilities of our rigs.
Our registered office is located at Amethyst Financial Company Ltd., c/o
Arias Fabrega & Fabrega Trust Co. BVI Limited, 325 Waterfront Drive, Omar Hodge
Building, 2nd Floor, Wickham's Cay, Road Town, Tortola, British Virgin Islands.
STATUS OF CONSTRUCTION OF OUR RIGS
As of March 17, 2000, the AMETHYST 6 is approximately 82% complete and the
AMETHYST 7 is approximately 86% complete. We expect that these rigs will be
delivered to Petrobras in September and October 2000. Of the total construction
contract price of $170.0 million for both rigs (excluding the cost of owner
furnished equipment), we have paid $136.0 million. Of the total $90.6 million
budgeted for owner-furnished equipment, we have paid approximately $73.0
million. As of March 17, 2000, we have funded our expenditures on the AMETHYST 6
and AMETHYST 7 (including financing costs) with approximately $207.8 million of
borrowings from third-party lenders and approximately $54.0 million of related
party advances and equity contributions from our owners.
Based on their construction contract delivery dates and an allowance for
mobilization, the AMETHYST 4 and AMETHYST 5 were to have been delivered to
Petrobras in July and September 2000. In early January 2000, however, Friede
Goldman Halter, Inc., the parent of TDI-Halter, L.P., the shipyard building the
AMETHYST 4 and AMETHYST 5, notified us that construction of our rigs was being
suspended because of alleged delays in receiving detailed engineering work and
our previous rejection of the shipyard's requests for extensions of the
construction contract delivery dates. Subsequently, TDI-Halter asserted claims
against our subsidiaries that will own the AMETHYST 4 and AMETHYST 5 for an
extension of the construction contract delivery dates on grounds of permissible
delay within the terms of the construction contracts and damages of $68.5
million for alleged breach of those contracts. We have denied TDI-Halter's
claims and, as required by the construction contracts, have initiated
proceedings in the Commercial Court in London seeking a determination of the
merits of those claims. Together with the United States Maritime Administration
(MARAD), which has guaranteed repayment of construction borrowings for the
AMETHYST 4 and AMETHYST 5, we have commenced negotiations with TDI-Halter and
Friede Goldman Halter to determine whether there is an acceptable basis for the
resumption by TDI-Halter of the construction of our rigs. We are also evaluating
other options that include rescinding the construction contracts for the
AMETHYST 4 and AMETHYST 5 and exercising our remedies under those contracts or
related performance bonds and performance guarantees to recover our costs.
When TDI-Halter suspended construction of the AMETHYST 4 and AMETHYST 5,
the AMETHYST 4 was approximately 60% complete and the AMETHYST 5 was
approximately 35% complete. Of the total construction contract price of $168.0
million for both rigs (excluding the cost of owner furnished equipment), we have
paid approximately $105.0 million. Of the total $90.6 million budgeted for
owner-furnished equipment, we have paid approximately $53.2 million. In the
event the AMETHYST 4 and AMETHYST 5 are not completed, our subsidiaries that
will own those rigs will continue to be liable for owner-furnished equipment in
the amount of $24.9 million in addition to the $53.2 million we have already
paid and would have continued liability under the service agreements for
construction management of our rigs. To date, we have funded our expenditures on
the AMETHYST 4 and AMETHYST 5 (including financing costs) with approximately
$133.7 million of MARAD-guaranteed borrowings and approximately $53.5 million of
related party advances and equity contributions from our owners. Based on the
developments with TDI-Halter, however, the lenders of the MARAD-guaranteed
borrowings could cease funding or accelerate the repayment of those borrowings.
If these
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lenders cease funding (which they have not yet indicated that they will do), we
would not be able to complete construction of the AMETHYST 4 and AMETHYST 5
unless we obtain new funding from other sources or an agreement of those lenders
to resume funding on terms acceptable to them. The acceleration of the repayment
of the MARAD-guaranteed borrowings would constitute an event of default under
the old and new notes. In this event or in any event, you will not be able to
rely on the AMETHYST 4 or the AMETHYST 5 or the amounts that we may be able to
recover under the construction contracts or related performance bonds and
performance guarantees as a source of repayment or security for the old or new
notes since the lenders of the MARAD-guaranteed borrowings and any other
creditor of our subsidiaries that will own those rigs will have priority over
you as to those rigs and any proceeds derived from those rigs.
THREATENED CANCELLATION OF OUR CHARTERS
Our charters with Petrobras specify delivery dates in June and July 1999
for the AMETHYST 4 and AMETHYST 5 and December 1999 for the AMETHYST 6 and
AMETHYST 7. We were unable to meet those delivery dates. While each charter
states that it may be canceled by Petrobras if the chartered rig is not
delivered within 180 days after the delivery date specified, Petrobras provided
a letter in May 1998 waiving its right to cancel the charters and related
service rendering contracts unless delay in delivery exceeds 540 days and, even
then, only if best endeavors to make delivery are not being made. In October
1999, however, Petrobras sent a letter stating that it intends to cancel the
charters and service rendering contracts for our rigs when delay in delivery
exceeds 180 days in accordance with its right originally specified in the
charters and reserving its right to seek compensation for damages. That 180-day
period expired in December 1999 in the case of the AMETHYST 4 and January 2000
in the case of the AMETHYST 5. Pending proceedings to determine the
enforceability of the extension granted by Petrobras in its May 1998 letter, we
have obtained a preliminary injunction in the Brazilian courts against
Petrobras' cancellation of our charters.
Given the current status of the AMETHYST 4 and AMETHYST 5 at TDI-Halter,
there is substantial uncertainty as to whether the AMETHYST 4 and AMETHYST 5
will be completed. Even if they are completed, we cannot deliver the AMETHYST 4
and AMETHYST 5 to Petrobras within the 540-day period permitted under the May
1998 Petrobras letter. We currently expect the AMETHYST 6 and AMETHYST 7 to be
delivered to Petrobras in September and October 2000. These delivery dates are
more than 180 days but less than 540 days after the delivery dates specified for
those rigs in the Petrobras charters. If we are unsuccessful in our litigation
with Petrobras in the Brazilian courts, therefore, Petrobras could cancel each
of our charters upon the lapse of 180 days of delay in delivery. Even if the
540-day extension granted by Petrobras in its May 1998 letter is determined to
be enforceable, however, the charters for the AMETHYST 4 and AMETHYST 5 could
become subject to cancellation at the end of the 540-day period. The
cancellation by Petrobras of the charter for one of our rigs could result in
acceleration of the repayment of borrowings under the credit facility providing
substantially all of the financing for the construction of that rig. The
acceleration of the repayment of those borrowings would constitute an event of
default under the old and new notes.
We currently are engaged in discussions with Petrobras to resolve the
matters relating to the threatened cancellation of our charters. Based on its
announced deepwater drilling program and the performance characteristics of the
Amethyst design, we believe Petrobras has significant needs for all of our rigs.
While we are optimistic that Petrobras will employ all of our rigs upon their
completion, we can give no assurance that any of our rigs will be chartered to
Petrobras or to any other customer on terms that are acceptable to us or to our
lenders. Whatever the outcome of our negotiations with Petrobras, you will not
be able to rely on the AMETHYST 4 or the AMETHYST 5 or the revenues from their
charters as a source of repayment or security for the old or new notes since the
lenders under credit facilities providing substantially all of the financing for
those rigs and any other creditor of our subsidiaries that will own those rigs
will have priority over you as to those rigs and any proceeds derived from those
rigs. You should read the discussion under the heading "Risk Factors--Petrobras
has threatened the cancellation of our charters" beginning on page 14 for more
detailed information regarding the effects of Petrobras' threatened cancellation
of our charters.
ABOUT OUR OWNERS
We are owned 61.7% by affiliates of Maritima Petroleo e Engenharia Ltda.,
a Brazilian privately held company with limited liability, 26.4% by an indirect
wholly owned subsidiary of Pride International, Inc., a publicly held Louisiana
corporation, and 11.9% by two investment partnerships managed by First Reserve
Corporation, a private equity firm. Maritima and Pride, directly or through
affiliates, have primary contractual responsibility for our operations.
Maritima, headquartered in Rio de Janeiro, Brazil, provides a range of
services and equipment to companies participating in the oil and gas exploration
and production sector in Brazil. Maritima currently provides shore-based
facilities and local logistical support for two of Pride's semi-submersible
drilling rigs, the AMETHYST 1 (the first rig built with the Amethyst design) and
the NYMPHEA. Both of those rigs are operating offshore Brazil under long-term
contracts with Petrobras.
Pride, headquartered in Houston, Texas and listed on the New York Stock
Exchange, is an international provider of contract drilling and related
services, operating both offshore and on land. Pride operates a global fleet of
291 rigs, including two drillships, three semi-submersible rigs and 48 other
offshore rigs.
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First Reserve specializes in the energy industry. Founded in 1980, the
firm has offices in Houston, Texas, Greenwich, Connecticut and Denver, Colorado
and manages a portfolio of energy holdings with a market value in excess of $1.5
billion.
SUMMARY OF TERMS OF THE NEW NOTES
Unlike the old notes, the new notes, with limited exceptions, will be
freely tradable and will not have registration rights or provisions for
additional interest. Otherwise, the new notes are substantially identical to the
old notes. The new notes will evidence the same debt as the old notes, and the
same indenture governs the old notes and the new notes.
We summarize the terms of the new notes below. You should read the
discussion under the heading "Description of New Notes" beginning on page 71 for
more detailed information regarding the terms of the new notes.
EXCEPT WHEN USED AS PART OF THE TERM "NEW NOTES" OR "OLD NOTES," THE TERM
"NOTES" IN THIS SUMMARY DESCRIPTION AND ELSEWHERE IN THIS PROSPECTUS REFERS TO
THE OLD NOTES THAT WILL BE OUTSTANDING UNTIL THE EXCHANGE OFFER IS CONSUMMATED
AND, AFTER GIVING EFFECT TO THE EXCHANGE OFFER, COLLECTIVELY TO THE OUTSTANDING
NEW NOTES AND ANY REMAINING UNEXCHANGED OLD NOTES.
Issuer........................................ Amethyst Financial Company Ltd.,
a company with limited liability
organized under the laws of the
British Virgin Islands.
Securities Offered............................ $53,000,000 principal amount of
registered Senior Secured Notes
due 2001.
Maturity Date................................. November 1, 2001.
Interest Payment Dates........................ June 30 and December 30 of each
year, commencing June 30, 2000,
and at maturity.
Pride Guarantee and Letter of Credit.......... Our obligation to repay the notes
is guaranteed by Pride on a
senior unsecured basis. Pride's
guarantee ranks equally with its
other unsecured debt and is
limited in amount to $30.0
million. Maritima has procured a
$23.0 million irrevocable standby
letter of credit issued by HSBC
Bank USA that may be drawn in the
event we default on our
obligations to repay the notes.
In the event we default on our
obligations to repay the notes,
the trustee has sole discretion
on whether to draw on the letter
of credit, enforce the Pride
guarantee or exercise both
remedies to the extent, in the
aggregate, of any amount required
to be repaid. The noteholders
will share the proceeds from the
enforcement of these remedies on
a pro-rata basis.
Security...................................... Our obligation to repay the notes
is secured by:
o an irrevocable assignment of a
53% undivided interest in $100
million of loans made under the
credit facilities that are
providing financing for the
construction of the AMETHYST 6
and AMETHYST 7. We purchased
those loans in November 1999
with the proceeds from the sale
of the old notes, cash on hand
and additional funds provided
by an affiliate of Maritima.
Those loans are themselves
secured by, among other things,
security interests in the
construction contracts, major
service contracts, charters and
related service rendering
contracts for the AMETHYST 6
and AMETHYST 7 and all other
business and assets of our
subsidiaries that will own
those rigs and, upon
completion, first priority ship
mortgages on those rigs.
o a reserve account for the
benefit of the holders of the
notes to be funded with 53% of
all principal payments made in
respect of the loans that we
purchased in November 1999 and
a portion of each interest
payment on such loans
sufficient to fund the next
succeeding scheduled payment of
interest on the notes.
The collateral agent may exercise
any or all remedies available
against the collateral upon
receipt of notice of an event of
default under the indenture for
the notes. You should read the
risk factors relating to the
enforcement of
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collateral beginning on page 15
for information regarding the
limitations on the collateral
agent's remedies against the
collateral.
Redemption Upon a Sale or Loss of a
Mortgaged Rig................................. Upon a sale or loss of either the
AMETHYST 6 or AMETHYST 7, we will
redeem one half of the then
outstanding notes on a pro-rata
basis at a redemption price equal
to 100% of the principal amount
plus accrued and unpaid interest
to the redemption date plus, in
the case of a sale, a make-whole
premium.
Optional Redemption........................... We may redeem the notes, in whole
or in part, at any time or from
time to time, at a price equal to
100% of the principal amount plus
accrued and unpaid interest to
the redemption date plus a
make-whole premium. In the event
of a partial redemption, the
trustee will select the notes to
be redeemed on a pro-rata basis,
by lot or by whatever method the
trustee, in its sole discretion,
deems fair and appropriate.
Subsidiary Guarantees......................... The indenture for the notes
requires any subsidiary that
guarantees any of our
indebtedness to guarantee the
notes. None of our subsidiaries
currently guarantee any of our
indebtedness.
Payment of Additional Amounts................. In the event that withholding or
deduction is required for taxes
or other governmental charges
imposed by the British Virgin
Islands, Brazil, the United
States or any other jurisdiction
from which we make payment on the
notes or in which we or our rigs
are located or in which we are
doing business, we will, subject
to specified exceptions, pay such
additional amounts as will result
in receipt by holders of the
notes of such amounts as would
have been received by them had no
such withholding or deduction
been required.
Redemption for Tax Reasons.................... Upon the occurrence of specified
changes in tax law requiring the
payment of additional amounts, we
may redeem the notes, in whole
but not in part, at 100% of the
principal amount plus accrued and
unpaid interest to the date of
redemption.
Change of Control............................. Upon a change of control, you
will have the right to require us
to purchase your notes at a
purchase price equal to 101% of
the principal amount plus accrued
and unpaid interest to the date
of purchase. The following
events, among other things,
constitute a change of control:
o Pride ceases to own at least
26.4% of our voting stock
o a change in control of Pride
occurs that results in a lower
credit rating for any
outstanding debt of Pride
o any person (other than our
current shareholders and their
affiliates) owns more than
26.4% of our voting stock
Ranking....................................... The notes rank equally with all
of our existing unsecured senior
debt and have priority over our
unsecured senior debt to the
extent of the collateral securing
the notes. Your claims as a
holder of a 53% undivided
interest in $100 million of the
loans made under the AMETHYST 6
and AMETHYST 7 credit facilities
will rank:
o equally with the claims of
creditors that hold
indebtedness or other
liabilities of our subsidiaries
that will own the AMETHYST 6
and AMETHYST 7 if that
indebtedness or those other
liabilities are not expressly
subordinated to the loans under
the AMETHYST 6 and AMETHYST 7
credit facilities
o ahead of the claims of those
creditors to the extent of the
value, priority
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and validity of the liens on
the collateral securing the
loans under the AMETHYST 6 and
AMETHYST 7 credit facilities
You will share the collateral
securing the loans made under the
AMETHYST 6 and AMETHYST 7 credit
facilities ratably with the
lenders under those credit
facilities to the extent of your
53% undivided interest in $100
million of those loans. Except to
the extent of your claims as a
holder of that 53% undivided
interest, your claims against the
assets of our subsidiaries are
effectively subordinated to the
claims of the creditors of those
subsidiaries.
Covenants..................................... The indenture, among other
things, restricts our ability,
and the ability of our
subsidiaries, to:
o borrow money
o pay dividends on stock or make
other restricted payments
o make investments
o incur liens
o engage in sale/leaseback
transactions
o sell substantially all of our
assets to, or merge or
consolidate with, other
companies
o sell assets
o enter into transactions with
affiliates
These limitations are subject to
important qualifications and
exceptions.
Absence of Market for the New Notes........... There is no existing market for
the new notes. We cannot provide
any assurance about:
o the liquidity of any markets
that may develop for the new
notes
o your ability to sell your new
notes
o the prices at which you will be
able to sell your new notes
Further, trading prices of the
new notes will depend on many
factors, including:
o prevailing interest rates
o our operating results
o ratings of the new notes
o the market for similar
securities
We do not intend to apply for
listing of the new notes on any
securities exchange or for
quotation of the new notes in any
automated dealer quotation
system.
Book-Entry System............................. The old notes initially offered
and sold in the United States to
qualified institutional buyers in
reliance on Rule144A under the
Securities Act are, and the new
notes will be, represented by one
or more global notes in
registered form and deposited
with a custodian for, and
registered in the name of, The
Depository Trust Company or its
nominee. Except in specified
limited circumstances, definitive
notes will not be issued in
exchange for beneficial interests
in a global note.
6
<PAGE>
SUMMARY OF THE EXCHANGE OFFER
On November 1, 1999, we completed a private offering of the old notes. In
connection with the private offering, we entered into an exchange and
registration rights agreement with the initial purchaser of the old notes. We
agreed to deliver to you this prospectus and to complete the exchange offer for
the old notes within 180 days after the date of the private offering. In the
exchange offer, you are entitled to exchange your old notes for new notes with
substantially identical terms.
We summarize the terms of the exchange offer below. You should read the
discussion under the heading "The Exchange Offer" beginning on page 63 for
further information about the exchange offer and the resale of the new notes.
Expiration Date............................... The exchange offer will expire at
5:00 p.m., New York City time, on
, 2000, or such later
date and time to which we extend
the expiration date.
Withdrawal of Tenders......................... You may withdraw your tender of
old notes at any time prior to
the expiration date. We will
return to you, without charge,
promptly after the expiration or
termination of the exchange
offer, any old notes that you
tendered but were not accepted
for exchange.
Conditions to the Exchange Offer.............. We will not be required to accept
old notes for exchange:
o if the exchange offer would be
unlawful or would violate any
interpretation of the staff of
the SEC
o if any legal action has been
instituted or threatened that
would impair our ability to
proceed with the exchange offer
The exchange offer is not
conditioned upon any minimum
aggregate principal amount of old
notes being tendered.
Procedures for Tendering
Old Notes................................... If your old notes are held
through The Depository Trust
Company (or DTC) and you wish to
participate in the exchange
offer, you may do so through
DTC's automated tender offer
program. If you tender under this
program, you will agree to be
bound by the letter of
transmittal that we are providing
with this prospectus as though
you had signed the letter of
transmittal. By signing or
agreeing to be bound by the
letter of transmittal, you will
represent to us that, among other
things:
o any new notes that you receive
will be acquired in the
ordinary course of your
business
o you have no arrangement or
understanding with any person
to participate in the
distribution of the old notes
or the new notes
o you are not our "affiliate," as
defined in Rule 405 of the
Securities Act of 1933, or, if
you are our affiliate, you will
comply with any applicable
registration and prospectus
delivery requirements of the
Securities Act of 1933
o if you are not a broker-dealer,
you are not engaged in and do
not intend to engage in the
distribution of the new notes
o if you are a broker-dealer that
will receive new notes for your
own account in exchange for old
notes that you acquired as a
result of market-making
activities or other trading
activities, you will deliver a
prospectus in connection with
any resale of such new notes
7
<PAGE>
Special Procedures for
Beneficial Owners.......................... If you own a beneficial interest
in old notes that are registered
in the name of a broker, dealer,
commercial bank, trust company or
other nominee and you wish to
tender the old notes in the
exchange offer, you should
contact the registered holder as
soon as possible and instruct the
registered holder to tender on
your behalf and to comply with
our instructions described in
this prospectus.
Guaranteed Delivery Procedures................ You must tender your old notes
according to the guaranteed
delivery procedures described in
"The Exchange Offer--Guaranteed
Delivery Procedures" beginning on
page 67 if any of the following
apply:
o you wish to tender your old
notes but they are not
immediately available
o you cannot deliver your old
notes, the letter of
transmittal or any other
required documents to the
exchange agent prior to the
expiration date
o you cannot comply with the
applicable procedures under
DTC's automated tender offer
program prior to the expiration
date
U.S. Federal Income
Tax Considerations.......................... The exchange of old notes for new
notes in the exchange offer will
not be a taxable event for U.S.
federal income tax purposes. You
should read the discussion under
the heading "Tax
Considerations-Material United
States Federal Income Tax
Considerations" beginning on page
109 for further information
regarding U.S. federal income tax
considerations.
Use of Proceeds............................... We will not receive any cash
proceeds from the issuance of new
notes in the exchange offer.
THE EXCHANGE AGENT
We have appointed Wilmington Trust Company as exchange agent for the
exchange offer. You should direct questions, requests for assistance, requests
for additional copies of this prospectus or the letter of transmittal and
requests for the notice of guaranteed delivery to the exchange agent. If you are
not tendering under DTC's automated tender offer program, you should send the
letter of transmittal and any other required documents to the exchange agent as
follows:
<TABLE>
<CAPTION>
WILMINGTON TRUST COMPANY
(302) 651-1562
<S> <C>
BY MAIL (REGISTERED OR CERTIFIED MAIL RECOMMENDED): BY COURIER OR BY HAND:
Wilmington Trust Company Wilmington Trust Company
Rodney Square North Rodney Square North
1100 North Market Street 1105 North Market Street
Wilmington, Delaware 19890-0001 Wilmington, Delaware 19890-0001
Attn: Corporate Trust Operations Attn: Corporate Trust Operations
BY FACSIMILE TRANSMISSION (ELIGIBLE INSTITUTIONS ONLY):
(302) 651-1079
Attn: Corporate Trust Administration
CONFIRM BY TELEPHONE:
(302) 651-1562
</TABLE>
8
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
The following table sets forth our summary historical consolidated
financial information as of the dates and for the periods indicated:
<TABLE>
<CAPTION>
INCEPTION YEAR
(MARCH 27, 1998) ENDED
TO DECEMBER 31, 1998 DECEMBER 31, 1999
--------------------- -------------------
(in thousands)
<S> <C> <C>
Consolidated Statement of Income Data:
Interest income ........................... $ 167 $ 1,402
Other income (expense) .................... (109) 29
--------- ---------
Net income ................................ $ 58 $ 1,431
========= =========
Other Data:
Capital expenditures ...................... $ 210,526 $ 220,067
Consolidated Balance Sheet Data
(at end of period):
Working capital ........................... $ 18,974 $ 16,317
Construction in progress .................. 220,666 456,270
Total assets .............................. 343,080 540,253
Long-term debt ............................ 94,738 310,075
Short-term obligations expected to be
refinanced............................... 27,099 40,335
Accrued contract penalties* ............... 77,885 48,394
Shareholders' equity ...................... 59 106,489
Consolidated Statement of Cash Flows Data:
Investing Activities ...................... $(210,526) $(220,067)
Financing Activities ...................... 228,640 216,068
</TABLE>
- --------------------
* In 1999, we transferred the ownership of two wholly owned subsidiaries to a
related party. This transfer included accrued contract penalties of $36.6
million and related construction costs of $18.7 million.
We have no operating history and no operating revenue and have been in the
development stage since formation. No ratio of earning to fixed charges has been
computed since it would not be meaningful.
9
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER MATTERS DESCRIBED IN THIS PROSPECTUS, YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AND THE RISK FACTORS RELATING TO
PRIDE PROVIDED IN APPENDIX A TO THIS PROSPECTUS. MANY OF THESE RISK FACTORS ARE
BASED ON OUR EXPECTATION THAT, DESPITE PETROBRAS' THREATENED CANCELLATION OF OUR
CHARTERS, OUR RIGS WILL OPERATE INITIALLY UNDER THOSE CHARTERS, UNDER
RENEGOTIATED CHARTERS WITH PETROBRAS OR OTHERWISE OFFSHORE BRAZIL. YOU SHOULD,
THEREFORE, PAY CLOSE ATTENTION TO THE SPECIAL FACTORS APPLICABLE TO PETROBRAS
AND TO BRAZIL. IN GENERAL, INVESTING IN SECURITIES DEPENDENT ON CASH FLOWS FROM
BRAZIL OR OTHER DEVELOPING COUNTRIES INVOLVES A HIGHER DEGREE OF RISK THAN
INVESTING IN SECURITIES OF ISSUERS IN THE UNITED STATES. IN ADDITION, YOU SHOULD
NOTE OUR LACK OF OPERATING HISTORY. FOR PURPOSES OF EVALUATING THE
CREDITWORTHINESS OF PRIDE'S SENIOR UNSECURED GUARANTEE OF THE REPAYMENT OF AN
AGGREGATE $30.0 MILLION OF THE OLD AND NEW NOTES, YOU SHOULD PAY CLOSE ATTENTION
TO THE RISK FACTORS AND OTHER INFORMATION RELATING TO PRIDE PROVIDED IN APPENDIX
A TO THIS PROSPECTUS.
IF YOU FAIL TO EXCHANGE YOUR OLD NOTES, THE EXISTING TRANSFER RESTRICTIONS WILL
REMAIN IN EFFECT; THE MARKET VALUE OF YOUR OLD NOTES MAY BE ADVERSELY AFFECTED
BECAUSE OF A SMALLER FLOAT.
If you do not exchange your old notes for new notes under the exchange
offer, you will continue to be subject to the existing transfer restrictions on
the old notes. In general, the old notes may not be offered or sold unless they
are registered or exempt from registration under the Securities Act of 1933 and
from applicable state securities laws. We do not intend to register resales of
the old notes.
The tender of old notes under the exchange offer will reduce the aggregate
principal amount of the old notes outstanding. This may have an adverse effect
upon, and increase the volatility of, the market price of any old notes that you
continue to hold due to a reduction in liquidity.
THERE IS NO PUBLIC MARKET FOR THE NEW NOTES, AND WE DO NOT INTEND TO LIST THEM
ON ANY SECURITIES EXCHANGE OR AUTOMATED QUOTATION SYSTEM; AN ACTIVE TRADING
MARKET FOR THE NEW NOTES MAY NOT DEVELOP.
There is no existing public market for the new notes. We cannot provide
any assurance about
o the liquidity of any markets that may develop for the new notes
o your ability to sell your new notes
o the prices at which you will be able to sell your new notes
The liquidity of any market for the new notes will depend on the number of
holders of the new notes, the interest of securities dealers in making a market
in the new notes and various other factors. Future trading prices of the new
notes will depend on many factors, including prevailing interest rates, our
operating results, ratings of the new notes and the market for similar
securities. Historically, the market for noninvestment grade debt (like the new
notes) has been subject to disruptions that have caused substantial volatility
in the prices of securities similar to the new notes. The market, if any, for
the new notes may be subject to disruptions that create price volatility. These
disruptions could adversely impact you.
We do not intend to apply for listing of the new notes on any securities
exchange or for quotation of the new notes in any automated dealer quotation
system.
RECENT DEVELOPMENTS AT DAEWOO COULD ADVERSELY AFFECT THE TIMELY COMPLETION OF
THE AMETHYST 6 AND AMETHYST 7.
The timely completion of the AMETHYST 6 and AMETHYST 7 in accordance with
specifications depends upon the ability of Daewoo Heavy Industries Ltd. to
perform under its construction contracts. The AMETHYST 6 is approximately 82%
complete and the AMETHYST 7 is approximately 86% complete. Recent developments
at Daewoo could adversely affect the final completion of the AMETHYST 6 and
AMETHYST 7 and, consequently, result in the cancellation of our charters or
otherwise adversely affect our ability to repay the old and new notes.
On January 20, 2000, Daewoo signed a memorandum of understanding on
corporate/debt restructuring with its creditors as part of the ongoing effort to
improve the Daewoo group's financial structure. As part of this restructuring,
Daewoo's shipbuilding business will be segregated into a separate company and
Daewoo will institute a debt buyout program for foreign creditors intended to
reduce Daewoo's debt level. If Daewoo's financial condition worsens after the
restructuring or if Daewoo is unable to complete the restructuring successfully,
Daewoo's ability to complete our rigs could be adversely affected. We currently
do not have an alternate building site to which we can shift construction of the
rigs if Daewoo cannot complete construction. Given that the AMETHYST 6 and
AMETHYST 7 are near completion, we do not foresee any immediate problems that
would delay or prevent delivery of our rigs. We can give no assurances, however,
that the continued efforts of the Daewoo group to improve its financial and
corporate structure will not distract management or otherwise disrupt the normal
business activities of Daewoo or that other
10
<PAGE>
problems will not arise in the future that may delay or prevent delivery of our
rigs. In the event that Daewoo is placed into receivership, goes into bankruptcy
or otherwise seeks protection from its creditors as a result of a failed
restructuring, Daewoo may be unable to complete our rigs, we may not be able to
remove our rigs from the shipyard to complete construction and, as a practical
matter, our remedies against Daewoo will be limited and recovery could be
subject to extensive delays.
A material delay or failure by Daewoo to complete construction of our rigs
could materially adversely affect our ability to repay the old and new notes.
During the period of any delay, we will continue to accrue financing costs while
delaying the commencement of operations and the receipt of revenues. The period
for delivery of the rigs under the charters may not be extended and delays may
result in penalties and possibly termination of the Petrobras charters. In
addition, delays could result in a default under one of the credit facilities
providing financing for the AMETHYST 6 or AMETHYST 7. Upon the occurrence of a
default, the lenders under those facilities could stop funding construction of
our rigs and could accelerate the repayment of the borrowings under those
facilities. If these lenders cease funding, we would not be able to complete
construction of the AMETHYST 6 and AMETHYST 7 unless we obtain new funding from
other sources or an agreement of those lenders to resume funding on terms
acceptable to them. If we are unable to complete our rigs, we will not have a
source of cash flow sufficient to repay the old and new notes. In addition, the
acceleration of the repayment of the borrowings under the AMETHYST 6 and
AMETHYST 7 credit facilities would constitute an event of default under the old
and new notes.
DAEWOO DEPENDS ON THE SOUTH KOREAN ECONOMY; CHANGES IN THE SOUTH KOREAN ECONOMY
COULD DISRUPT DAEWOO'S CONSTRUCTION OF THE AMETHYST 6 AND AMETHYST 7.
Daewoo forms part of a South Korean conglomerate that is substantially
dependent on the South Korean economy. Like any emerging market, the South
Korean economy is subject to the following:
o frequent and occasionally drastic government intervention
o extreme inflation
o changes in trade policy
o currency devaluations
o social instability
o interest rate fluctuations
o other political, economic or diplomatic developments
South Korea experienced an economic crisis following the December 1997
announcement of financial assistance by the International Monetary Fund (IMF) in
response to a severe foreign currency liquidity shortage. The Korean economy
suffered a 100% increase in the exchange rate in the first month following the
IMF announcement, along with increases during early and mid 1998 in interest
rates, unemployment and inflation. The Korean economy stabilized during 1998
with usable foreign currency reserves increasing from under $6 billion to over
$50 billion. In January 1999, Standard & Poor's Ratings Group raised its credit
rating for Korea's sovereign credit from "stable" to "positive." We cannot
assure, however, that another economic crisis in Korea will not occur that will
disrupt Daewoo's construction of our rigs.
RECOVERY UNDER THE EXPORT-IMPORT BANK OF KOREA'S REFUND GUARANTEES MAY NOT BE
AVAILABLE OR SUFFICIENT TO COMPENSATE US FOR, OR ENABLE US TO REDEEM A
SUFFICIENT PRINCIPAL AMOUNT OF THE OLD AND NEW NOTES IN THE EVENT OF, THE LATE
DELIVERY OR NON-DELIVERY OF THE AMETHYST 6 OR AMETHYST 7.
The Export-Import Bank of Korea has issued to us a refund guarantee under
each Daewoo construction contract. Pursuant to each refund guarantee, the
Export-Import Bank of Korea is obligated, upon termination of the corresponding
construction contract for any cause (including Daewoo being placed into
receivership, going into bankruptcy or otherwise becoming insolvent as a result
of a failed restructuring to the extent the enforcement of our contractual right
of termination is permitted by applicable law) or a total loss of the rig prior
to delivery, to repay to us the installments of the contract price (which
includes the cost of owner-furnished equipment) paid by us prior to such event,
plus interest on such installments at a fixed rate of 10% if Daewoo has not made
such repayment within 30 days after our demand. The refund guarantee, however,
does not provide us coverage beyond such repayment:
o for late delivery penalties or other amounts that we may owe Petrobras
o for additional financing costs that we may incur
o for lost revenues or cancellation of the Petrobras charters
o to enable us to redeem a sufficient principal amount of the old and new
notes
in the event the AMETHYST 6 or AMETHYST 7 is delivered late or not completed.
If, after termination for bankruptcy, receivership or other insolvency, Daewoo
is protected from our claims by applicable law, moreover, the Export-Import Bank
of Korea could claim
11
<PAGE>
the same protection from our claims and, whether or not successful, could delay
our recovery. In addition, the Export-Import Bank of Korea, being a South Korean
governmental agency, is subject to governmental control and influence and to the
South Korean economy. We cannot assure, therefore, that recovery under the
refund guarantees will be available, whether as a result of South Korean
governmental control and influence over the Export-Import Bank of Korea, the
effects of the South Korean economy, the limitations of the guarantee or another
reason, or sufficient to compensate us for the consequences of the delay or
failure of Daewoo to complete construction of the AMETHYST 6 or AMETHYST 7. Our
inability to recover fully from the refund guarantees in the event of default by
Daewoo would materially and adversely affect our ability to complete the
AMETHYST 6 or AMETHYST 7 on time or at all. Any recovery, moreover, may be
subject to substantial delay. Our delay or failure to complete construction of
those rigs as a result of our inability to recover fully from the refund
guarantees would materially adversely affect our ability to repay the old and
new notes.
RECENT DEVELOPMENTS AT TDI-HALTER RAISE SUBSTANTIAL UNCERTAINTY AS TO WHETHER
THE AMETHYST 4 AND AMETHYST 5 WILL BE COMPLETED AND, IF COMPLETED, WHETHER THOSE
RIGS WILL BE CHARTERED TO PETROBRAS.
The timely completion of the AMETHYST 4 and AMETHYST 5 in accordance with
specifications depends upon the ability of TDI-Halter, L.P. to perform under its
construction contracts. Recent developments at TDI-Halter raise substantial
uncertainty as to whether the AMETHYST 4 and AMETHYST 5 will be completed and,
if completed, whether those rigs will be chartered to Petrobras.
In November 1999, Halter Marine Group, Inc., then the parent company of
TDI-Halter, merged with Friede Goldman International Inc. to form Friede Goldman
Halter, Inc. In early January 2000, Friede Goldman Halter, Inc. notified us that
construction of the AMETHYST 4 and AMETHYST 5 was being suspended because of
alleged delays in receiving detailed engineering work and our previous rejection
of the shipyard's requests for extensions of the construction contract delivery
dates. Subsequently, TDI-Halter asserted claims against our subsidiaries that
will own the AMETHYST 4 and AMETHYST 5 for an extension of the construction
contract delivery dates on grounds of permissible delay within the terms of the
construction contracts and damages of $68.5 million for alleged breach of those
contracts. We have denied TDI-Halter's claims and, as required by the
construction contracts, have initiated proceedings in the Commercial Court in
London seeking a determination of the merits of those claims. Together with the
United States Maritime Administration (MARAD), which has guaranteed repayment of
construction borrowings for the AMETHYST 4 and AMETHYST 5, we have commenced
negotiations with TDI-Halter and Friede Goldman Halter to determine whether
there is an acceptable basis for the resumption by TDI-Halter of the
construction of our rigs. We are also evaluating other options that include
rescinding the construction contracts for the AMETHYST 4 and AMETHYST 5 and
exercising our remedies under those contracts or related performance bonds and
performance guarantees to recover our costs. We can provide no assurance,
therefore, that the AMETHYST 4 and AMETHYST 5 will be completed and, if
completed, whether those rigs will be chartered to Petrobras.
During the current suspension of work on the AMETHYST 4 and AMETHYST 5, we
continue to accrue financing costs on those rigs while commencement of
operations and receipt of revenues from those rigs is delayed. The period for
delivery of the rigs under the Petrobras charters may not be extended and delays
may result in penalties and possibly termination of the Petrobras charters. In
addition, these delays could result in a default under the credit facilities
providing financing for the AMETHYST 4 or AMETHYST 5. Upon the occurrence of a
default, the lenders under those facilities could stop funding construction of
our rigs and could accelerate the repayment of the borrowings under those
facilities. If these lenders cease funding, we would not be able to complete
construction of the Amethyst 4 and AMETHYST 5 unless we obtain new funding from
other sources or an agreement of those lenders to resume funding on terms
acceptable to them. The acceleration of the repayment of the borrowings under
those facilities would constitute an event of default under the old and new
notes. You will not be able to rely on the AMETHYST 4 or the AMETHYST 5 or the
amounts that we may be able to recover under the construction contracts or
related performance bonds and performance guarantees as a source of repayment or
security for the old or new notes since the lenders under the AMETHYST 4 or the
AMETHYST 5 credit facilities and any other creditor of our subsidiaries that
will own those rigs will have priority over you as to those rigs and any
proceeds derived from those rigs.
RECOVERY UNDER THE BONDS AND GUARANTEES WE OBTAINED TO SUPPORT TDI-HALTER'S
OBLIGATIONS UNDER THE CONSTRUCTION CONTRACTS FOR THE AMETHYST 4 AND AMETHYST 5
MAY NOT BE AVAILABLE OR SUFFICIENT TO COMPENSATE US FOR THE CONSEQUENCES OF
TDI-HALTER'S DEFAULT.
We have obtained the following bonds and guarantees to support
TDI-Halter's obligations under each TDI-Halter construction contract:
o a performance bond from Fireman's Fund Insurance Company issued on a
joint and several basis with TDI-Halter, pursuant to which Fireman's
Fund stands behind the obligations of TDI-Halter for up to 100% of the
contract price (which excludes the cost of owner-furnished equipment)
12
<PAGE>
o a labor and material payment bond from Fireman's Fund Insurance Company
issued on a joint and several basis with TDI-Halter, pursuant to which
Fireman's Fund covers us against suits for non-payment by TDI-Halter
filed by claimants having a direct contract with TDI-Halter or with a
subcontractor of TDI-Halter for labor, materials or both used or
reasonably required for use in the performance of the TDI-Halter
construction contract
o an unconditional and irrevocable performance guarantee from Friede
Goldman Halter, pursuant to which Friede Goldman Halter guaranteed to
us TDI-Halter's prompt and faithful performance of, and compliance
with, all obligations, covenants, terms, conditions and undertakings
under the TDI-Halter construction contract
These bonds and guarantees do not provide specific coverage for:
o late delivery penalties or other amounts that we may owe Petrobras
o additional financing costs that we may incur
o lost revenues or cancellation of the Petrobras charters
in the event our rigs are delivered late or not completed as a result of
non-performance by TDI-Halter. We cannot assure, therefore, that recovery under
these bonds and guarantees will be available, whether as a result of the
limitations of the bonds and guarantees or another reason, or sufficient to
compensate us for the consequences of the delay or failure of TDI-Halter to
complete construction of our rigs. Our inability to recover fully from the bonds
and guarantees in the event of default by TDI-Halter would materially and
adversely affect our ability to complete the AMETHYST 4 and AMETHYST 5. Any
recovery, moreover, may be subject to substantial delay. In any case, you will
not be able to rely on the amounts that we may be able to recover under the
construction contracts or related bonds and guarantees as a source of repayment
or security for the old or new notes since the lenders under the AMETHYST 4 or
the AMETHYST 5 credit facilities and any other creditor of our subsidiaries that
will own the AMETHYST 4 or the AMETHYST 5 will have priority over you as to any
proceeds derived from those rigs.
THE CONSTRUCTION OF OUR RIGS INVOLVES RISKS IN ADDITION TO THE DAEWOO AND
TDI-HALTER RISKS THAT COULD GIVE RISE TO DELAYS, COST OVERRUNS, PERFORMANCE
DEFICIENCIES OR OTHER CONDITIONS THAT COULD RESULT IN THE CANCELLATION OF OUR
CHARTERS OR OTHERWISE ADVERSELY AFFECT OUR ABILITY TO REPAY THE OLD AND NEW
NOTES.
We currently have no operational rigs. We have contracted to provide our
rigs to Petrobras as described in this prospectus. We began construction of our
rigs in the second quarter of 1998, but construction on the AMETHYST 4 and
AMETHYST 5 is currently suspended. We expect the AMETHYST 6 and AMETHYST 7 to be
completed in June and July 2000.
The construction of our rigs involves risks in addition to the Daewoo and
TDI-Halter risks that could give rise to delays, cost overruns, performance
deficiencies or other conditions that could result in the cancellation of our
charters or otherwise adversely affect our operations. If we are unable to
complete construction of our rigs successfully or on a timely basis, our ability
to repay the old and the new notes and our subsidiaries' ability to meet their
debt obligations could be adversely affected. Some of the risks involved in the
construction of our rigs are:
o shortages of equipment, materials and labor
o delays in delivery of equipment and materials
o labor disputes
o political events, including local or political opposition to our
construction efforts
o blockades or embargoes
o litigation
o adverse weather conditions
o unavailability of permits
o unanticipated increases in costs
o natural disasters and accidents
o unforeseen engineering, design or environmental problems
o other unforeseen circumstances beyond our control or the control of our
vendors and subcontractors
In particular, the construction of each rig requires a significant amount of
steel. In addition, we must coordinate the procurement of significant amounts of
sophisticated equipment with the progress of construction. Delays, cost overruns
or deficiencies in performance may result if deliveries of steel or equipment
are significantly delayed or fail to meet the required specifications or if
funding for construction under one of the credit facilities providing financing
for our four rigs is not available.
Delays, cost overruns or performance deficiencies for any of the causes
enumerated above or for any other cause may materially adversely affect our
ability to repay the old and new notes. During the period of any delay, we will
continue to accrue
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<PAGE>
financing costs while delaying the commencement of operations and the receipt of
revenues. The period for delivery of the rigs under the charters may not be
extended and delays may result in penalties and possibly termination of the
Petrobras charters. Delays, cost overruns or performance deficiencies could, in
addition, result in a default under the credit facilities providing financing
for our rigs.
Performance deficiencies could result in reduced income and cash flow.
Deficiencies in the actual performance of our rigs from the levels specified in
the construction contracts or the charters, whether caused by fault of the
shipyards, design deficiencies or otherwise, could result in any of the
following:
o reduced revenue as a consequence of reduced rates or increased rig down
time under the charters
o increased operating expenses as a consequence of reduced rig efficiency
or increased rig down time
o termination of one or more of the charters if the minimum performance
standards for acceptance of our rigs set forth in the charters are not
timely achieved
We cannot assure that our rigs will be successfully constructed, equipped
and completed on time. If our rigs are not completed on time or are not capable
of operating according to their respective design specifications, the
termination of the applicable construction contract may be our sole remedy for
such failure. The loss of, or any significant reduction in, the rates payable by
Petrobras under one or more of the charters, the incurrence of penalties under
the charters, delays in commencement of operations or a default under a credit
facility providing financing for one of our rigs could adversely affect our
ability to repay the old and new notes and our subsidiaries' ability to meet
their debt obligations.
We have attempted to mitigate any cost overruns, cash flow deficiencies
and late delivery penalties resulting from construction risks and delays by
budgeting a contingency amount of $46.8 million for the rigs and obtaining,
subject to exclusions and limitations, insurance to protect against various
casualty and completion risks during construction and mobilization to the extent
resulting from insured events. These risks include:
o failure of the shipyards to meet the agreed-upon delivery schedules
o failure of our rigs to meet the performance criteria established in the
charters
o certain other delays in completion and delivery of our rigs
Our insurance covers these risks only to the extent resulting from insured
events, such as traditional fire hazards and marine peril. There can be no
assurance that insurance proceeds will be available or that the contingency
funds or insurance will be sufficient to pay significant cost overruns,
compensate us for any penalties, lost revenues or cancellation of the charters
or to provide sufficient funds to make scheduled payments on the old and new
notes or our and our subsidiaries' other debt obligations.
PETROBRAS HAS THREATENED THE CANCELLATION OF OUR CHARTERS.
Petrobras has threatened the cancellation of our charters. We can give no
assurance, therefore, that our rigs will be chartered to Petrobras or to any
other customer on terms that are acceptable to us or to you. If we are unable to
charter our rigs on acceptable terms, our ability to repay the old and new notes
could be adversely affected.
Our charters with Petrobras specify delivery dates in June and July 1999
for the AMETHYST 4 and AMETHYST 5 and December 1999 for the AMETHYST 6 and
AMETHYST 7. We were unable to meet those delivery dates. While each charter
states that it may be canceled by Petrobras if the chartered rig is not
delivered within 180 days after the delivery date specified, Petrobras provided
a letter in May 1998 waiving its right to cancel the charters and related
service rendering contracts unless delay in delivery exceeds 540 days and, even
then, only if best endeavors to make delivery are not being made. In October
1999, however, Petrobras sent a letter stating that it intends to cancel the
charters and service rendering contracts for our rigs when delay in delivery
exceeds 180 days in accordance with its right originally specified in the
charters and reserving its right to seek compensation for damages. That 180-day
period expired in December 1999 in the case of the AMETHYST 4 and January 2000
in the case of the AMETHYST 5. Pending proceedings to determine the
enforceability of the extension granted by Petrobras in its May 1998 letter, we
have obtained a preliminary injunction in the Brazilian courts against
Petrobras' cancellation of our charters.
Given the current status of the AMETHYST 4 and AMETHYST 5 at TDI-Halter,
there is substantial uncertainty as to whether the AMETHYST 4 and AMETHYST 5
will be completed. Even if they are completed, we cannot deliver the AMETHYST 4
and AMETHYST 5 to Petrobras within the 540-day period permitted under the May
1998 Petrobras letter. We currently expect the AMETHYST 6 and AMETHYST 7 to be
delivered to Petrobras in September and October 2000. These delivery dates are
more than 180 days but less than 540 days after the delivery dates specified for
those rigs in the Petrobras charters. If we are unsuccessful in our litigation
with Petrobras in the Brazilian courts, therefore, Petrobras could cancel each
of our charters upon the lapse of 180 days of delay in delivery. Even if the
540-day extension granted by Petrobras in its May 1998 letter is determined to
be enforceable, however, the charters for the AMETHYST 4 and AMETHYST 5 could
become subject to cancellation at the end of the 540-day period. In any case,
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specific performance of Petrobras' obligations under any of our charters may, as
a practical matter, not be an available remedy, so our rights against Petrobras
could be limited to a lawsuit for damages. The result of any such lawsuit is
uncertain, the amount of damages may be limited and any recovery may be subject
to extensive delays.
Based on Petrobras' October 1999 letter, the lenders under the credit
facilities providing substantially all of the financing for our rigs may, at
their discretion, cease funding construction, in which event we would not be
able to complete construction of the rigs unless we obtain new funding from
other sources or an agreement of the credit facility lenders to resume funding
on terms acceptable to them. Since being informed of Petrobras' October 1999
letter, these lenders have continued to fund the construction of our rigs.
Neither our lenders' decision to cease funding construction of our rigs nor
Petrobras' cancellation of our charters, however, will relieve us of our
obligations to the shipyards constructing our rigs, the owner-furnished
equipment suppliers for our rigs or our other subcontractors. The cancellation
by Petrobras of the charter for one of our rigs, moreover, could result in
acceleration of the repayment of borrowings under the credit facility providing
substantially all of the financing for the construction of that rig. The
acceleration of the repayment of those borrowings would constitute an event of
default under the old and new notes. If we are unable to charter our rigs to
Petrobras or to another customer on sufficiently favorable terms, our ability to
repay the old and new notes could be adversely affected. Even if we are able to
charter our rigs to Petrobras or to another customer, we will not have
sufficient funds to repay the old and new notes unless and until adequate
refinancing is arranged.
We currently are engaged in discussions with Petrobras to resolve the
matters relating to the threatened cancellation of our charters. Based on its
announced deepwater drilling program and the performance characteristics of the
Amethyst design, we believe Petrobras has significant needs for all of our rigs.
While we are optimistic that Petrobras will employ all of our rigs upon their
completion, we can give no assurance that any of our rigs will be chartered to
Petrobras or to any other customer on terms that are acceptable to us or to our
lenders. Whatever the outcome of our negotiations with Petrobras, you will not
be able to rely on the AMETHYST 4 or the AMETHYST 5 or the revenues from their
charters as a source of repayment or security for the old or new notes since the
lenders under credit facilities providing substantially all of the financing for
those rigs and any other creditor of our subsidiaries that will own those rigs
will have priority over you as to those rigs and any proceeds derived from those
rigs.
THE REMEDIES AVAILABLE TO YOU FOLLOWING AN EVENT OF DEFAULT MAY NOT PRODUCE
PROCEEDS SUFFICIENT TO REPAY THE OLD AND NEW NOTES.
Our obligations in respect of the old and new notes will be secured solely
by the guarantee of Pride, the letter of credit from HSBC Bank USA and an
assignment of a 53% undivided interest in the $100 million of loans made under
the AMETHYST 6 and AMETHYST 7 credit facilities that we purchased in November
1999, including the right to receive payments of principal and interest on such
undivided interest that will be deposited as received in the note reserve
account. Pride's guarantee is senior and unsecured, ranks equally with Pride's
other unsecured debt and is limited in amount to $30.0 million. HSBC Bank USA's
letter of credit may be drawn if we default on our obligations to repay the
notes and is limited in amount to $23.0 million. If we default on our
obligations to repay the notes, the note trustee has sole discretion on whether
to draw on the letter of credit, enforce the Pride guarantee, foreclose on the
collateral securing our obligations under the old and new notes or exercise any
combination of these remedies to the extent, in the aggregate, of any amount
required to be repaid under the notes. Upon the enforcement of any of these
remedies, the resulting proceeds will be shared by the holders of old and new
notes. We cannot assure that a foreclosure or exercise of the other remedies
available to you will produce proceeds in an amount that will be sufficient to
repay you and the other holders of old and new notes in full.
EXCEPT TO THE EXTENT OF PRIDE'S GUARANTEE LIMITED IN AMOUNT TO $30 MILLION, YOU
WILL HAVE NO RIGHT TO RECOVER AGAINST OUR AFFILIATES FOR PAYMENTS OF PRINCIPAL
OR INTEREST ON THE OLD OR NEW NOTES.
Our subsidiaries have contracted with service providers, several of which
are affiliated special purpose entities, for construction management of our
rigs, supplies, technical services, staffing and operation of our rigs. You are
not a beneficiary of and have no right to enforce any of the arrangements
between our subsidiaries and their service providers. Except to the extent of
Pride's guarantee limited in amount to $30 million, you will have no right to
recover against any of our affiliates for payments of principal or interest on
the old or new notes.
WE WILL BE REQUIRED TO REFINANCE MOST OF THE OUTSTANDING PRINCIPAL AMOUNT OF THE
OLD AND NEW NOTES AT MATURITY; IF WE ARE UNABLE TO EFFECT SUCH REFINANCING, THE
REPAYMENT OF THE OLD AND NEW NOTES WILL BE DELAYED AND YOU COULD INCUR A LOSS.
We will not have sufficient cash from the scheduled payments on the loans
made under the AMETHYST 6 and AMETHYST 7 credit facilities that we purchased or
from any other source to repay the old and new notes in full at maturity
(including by acceleration or mandatory redemption), so we will be required to
refinance most of the outstanding principal amount of the old and new notes at
that time. Our ability to refinance the old and new notes at that time will
depend upon our financial condition and results of operations, our business
operation and prospects and conditions in the financial markets. Our ability to
raise funds may be adversely affected by many of the risk factors described in
this prospectus and there can be no assurance that we will be able to refinance
the old and new notes at maturity on satisfactory terms. If we are unable to
refinance the old and new notes, we may
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attempt to sell assets or seek equity investments or contributions for such
purpose, but there can be no assurance that these efforts will not be adversely
affected by the same risk factors or market conditions that affect our
refinancing efforts. If we are unsuccessful in these efforts, payments on the
old and new notes will be delayed and you could incur a loss.
WE MAY NOT BE ABLE TO REPURCHASE THE OLD AND NEW NOTES IN THE EVENT OF A CHANGE
OF CONTROL; OUR INABILITY TO MAKE SUCH REPURCHASE COULD ADVERSELY AFFECT THE
MARKET VALUE OF THE OLD AND NEW NOTES.
We currently have no source of cash to repurchase the old and new notes in
the event of a change of control. Our inability to repurchase the old and new
notes in the event of a change of control that adversely affects our capital
structure or credit rating could adversely affect the market value of the old
and new notes. In addition, our inability to repurchase the old and new notes in
the event of a change in control, if you require us to make such repurchase in
accordance with the note indenture, would constitute an event of default under
the note indenture and could, in turn, trigger a default under, and acceleration
of, indebtedness that we or our subsidiaries may incur in the future. In such
event, payments on the old and new notes could be delayed, the market value of
the old and new notes could be adversely affected and you could incur a loss.
OUR SALE OF LESS THAN ALL OF OUR ASSETS COULD ADVERSELY AFFECT THE MARKET VALUE
OF THE OLD AND NEW NOTES, YET, IN SUCH EVENT, WE MAY NOT BE REQUIRED TO MAKE AN
OFFER TO REPURCHASE THE OLD AND NEW NOTES AND YOU COULD INCUR A LOSS.
Our sale of a substantial portion of our assets could adversely affect our
financial position and, consequently, the market value of the old and new notes,
yet, in such event, we may not be required to make an offer to repurchase the
old and new notes. While the note indenture requires us to make an offer to
repurchase the old and new notes in the event of our sale of substantially all
of our assets, New York law, which governs the indenture, does not provide a
quantitative definition of "substantially all." Our sale of less than all of our
assets, therefore, leaves open to interpretation the question of whether we made
a sale of "substantially all" of our assets that requires us to make an offer to
repurchase the old and new notes. If, in such event, we are not required to
repurchase the old and new notes, you could incur a loss as a result of the
adverse effects such sale may have on the market value of the old and new notes
or on our financial position and, therefore, our ability to repay those notes.
OUR ABILITY AND, CONSEQUENTLY, THE ABILITY OF THE NOTE COLLATERAL AGENT ON YOUR
BEHALF TO AFFECT DETERMINATIONS MADE BY THE LENDERS UNDER THE AMETHYST 6 AND
AMETHYST 7 CREDIT FACILITIES ARE SEVERELY LIMITED.
The 53% undivided interest in the loans that we purchased under the
AMETHYST 6 and AMETHYST 7 credit facilities securing the old and new notes will
be the principal source of payment of interest on, and the principal collateral
for, the old and new notes. We own less than a majority of the loans outstanding
under the AMETHYST 6 and AMETHYST 7 credit facilities. The remainder of the
loans under these credit facilities are currently held by affiliates of
Mitsubishi Corporation. Under the AMETHYST 6 and AMETHYST 7 credit facilities,
the lenders holding two thirds of the loans have the right to control most
determinations to be made by the lenders under the credit facilities. The
Mitsubishi Corporation affiliates, which will, by completion, collectively hold
more than two thirds of the loans, will have the exclusive right to amend most
provisions of the credit facility documents, waive borrower defaults, declare an
event of default and direct the enforcement of rights against the borrowers.
OUR ABILITY AND, CONSEQUENTLY, THE ABILITY OF THE NOTE COLLATERAL AGENT ON YOUR
BEHALF TO TRANSFER THE LOANS THAT WE PURCHASED UNDER THE AMETHYST 6 AND AMETHYST
7 CREDIT FACILITIES ARE LIMITED.
The AMETHYST 6 and AMETHYST 7 credit facilities permit lenders to assign
their rights under the credit facilities only to a first class international
bank incorporated in an Organisation for Economic Co-operation and Development
(OECD) country or a person approved by an affiliate of Mitsubishi Corporation,
which approval will not be unreasonably withheld. This provision restricts our
ability to transfer the loans made under the AMETHYST 6 and AMETHYST 7 credit
facilities that we purchased and limits the note collateral agent's ability to
transfer those loans if there is an event of default and foreclosure under the
old or new notes. The inability of the note collateral agent to transfer those
loans in the event of our default under the old or new notes would significantly
limit the value of the collateral securing the old and new notes.
AN EVENT OF DEFAULT UNDER A CREDIT FACILITY PROVIDING FINANCING FOR OUR RIGS
THAT DOES NOT RESULT IN AN EVENT OF DEFAULT UNDER THE OLD AND NEW NOTES COULD
HAVE AN ADVERSE EFFECT ON THE MARKET FOR THOSE NOTES.
An event of default under a credit facility providing financing for our
rigs will not cause an event of default under the old or new notes unless it is
a payment default, results in an acceleration of such credit facility or, in the
case of the AMETHYST 6 and AMETHYST 7 credit facilities, persists for 120 days
without being cured or waived. Such a default under the AMETHYST 6 or AMETHYST 7
credit facilities, which provide the principal source of payment of interest on,
and the principal collateral for, the old and new notes, would likely have an
adverse effect on the market for the old and new notes and, if such default
occurred prior to completion of the AMETHYST 6 or AMETHYST 7, would result in an
inability to fund the completion of these rigs. Such a default under the
AMETHYST 4 and AMETHYST 5 credit facilities could have an adverse effect on the
market for the old and new notes even though
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neither the AMETHYST 4 and AMETHYST 5 credit facilities nor the rigs being
financed with them are a source of payment for the old or new notes. The
AMETHYST 4 and AMETHYST 5 credit facilities do not provide for funding of
owner-furnished equipment prior to delivery, so we have advanced approximately
$13.0 million and expect to advance an additional $9.0 million to fund
owner-furnished equipment for the AMETHYST 4 and AMETHYST 5 prior to delivery.
If an event of default occurs prior to delivery and the lenders under the
AMETHYST 4 and AMETHYST 5 credit facilities cease funding, we will not be
reimbursed for these amounts as currently anticipated. If we are not reimbursed,
we would have less cash available to make principal and interest payments on the
old and new notes and to complete our rigs. This reduction in our cash balance
could have an adverse effect on the market for the old and new notes.
IF THERE IS AN EVENT OF DEFAULT UNDER THE OLD OR NEW NOTES THAT DOES NOT CAUSE
AN EVENT OF DEFAULT UNDER THE AMETHYST 6 AND AMETHYST 7 CREDIT FACILITIES, THE
NOTE COLLATERAL AGENT WILL NOT BE ABLE TO PURSUE, ON YOUR BEHALF, REMEDIES
AGAINST THE COLLATERAL FOR THE AMETHYST 6 AND AMETHYST 7 CREDIT FACILITIES.
An event of default under the AMETHYST 4 and AMETHYST 5 credit facilities
or other event which causes an event of default under the old or new notes may
not cause an event of default under the AMETHYST 6 and AMETHYST 7 credit
facilities. In this event, the note trustee may enforce remedies on your behalf
against Pride's $30.0 million guarantee, the letter of credit from HSBC Bank USA
and the note reserve account, but neither it nor the note collateral agent nor
the lenders under the AMETHYST 6 and AMETHYST 7 credit facilities will have any
right to pursue remedies under the AMETHYST 6 and AMETHYST 7 credit facilities
against our subsidiaries that will own the AMETHYST 6 and AMETHYST 7 or the
collateral securing the loans (including the loans that we purchased) made under
the AMETHYST 6 and AMETHYST 7 credit facilities.
THE GUARANTEES PROVIDED BY US AND OUR AFFILIATES IN CONNECTION WITH THE AMETHYST
6 AND AMETHYST 7 CREDIT FACILITIES AND THE OLD AND NEW NOTES COULD BE
SUBORDINATED OR VOIDED IF DETERMINED TO BE FRAUDULENT; SUCH DETERMINATION WOULD
SIGNIFICANTLY LIMIT THE GUARANTEES SECURING THE AMETHYST 6 AND AMETHYST 7 CREDIT
FACILITIES AND, CONSEQUENTLY, THE COLLATERAL SECURING THE OLD AND NEW NOTES AND,
IF MADE IN RESPECT OF PRIDE, PRIDE'S LIMITED GUARANTEE OF THE OLD AND NEW NOTES.
The guarantees provided by us and our affiliates in connection with the
AMETHYST 6 and AMETHYST 7 credit facilities, which guarantees indirectly secure
the old and new notes, and Pride's $30.0 million guarantee of the old and new
notes could be subordinated or voided if determined to be fraudulent. The
subordination or cancellation of any of these guarantees would significantly
limit your ability to recover amounts payable by us under the old and the new
notes.
The obligations under the AMETHYST 6 and AMETHYST 7 credit facilities are
guaranteed by us and are cross-guaranteed by our subsidiaries that will own the
AMETHYST 6 and AMETHYST 7. In addition, Maritima and Pride have provided limited
guarantees on both a several and joint basis in connection with the AMETHYST 6
and AMETHYST 7 credit facilities and, in the case of Pride, the repayment of the
old and new notes. We believe that the indebtedness incurred and to be incurred
under the AMETHYST 6 and AMETHYST 7 credit facilities and the old and new notes,
whether directly or by virtue of these guarantees, was incurred and is being
incurred for proper purposes and in good faith, and that, based on present
forecasts, asset valuations and other financial information, each of the
guarantors will be solvent, will have sufficient capital for carrying on its
business and will be able to pay its debts as they mature. Notwithstanding our
belief, however, if a court of competent jurisdiction in a suit by an unpaid
creditor or a representative of creditors (such as a trustee in bankruptcy or a
debtor-in-possession) finds that, at the time of the incurrence of such
indebtedness, any of the following was true of any guarantor:
o the guarantor was insolvent
o the guarantor was rendered insolvent by reason of such incurrence
o the guarantor was engaged in a business or transaction for which their
remaining assets constituted unreasonably small capital
o the guarantor intended to incur, or believed that it would incur, debts
beyond its ability to pay such debts as they matured
o the guarantor intended to hinder, delay or defraud its creditors
and that the indebtedness was incurred for less than reasonably equivalent
value, then such court could, among other things:
o void all or a portion of such guarantor's obligations, the effect of
which would be that you and the lenders under the AMETHYST 6 and
AMETHYST 7 credit facilities may not be repaid in full
o subordinate such guarantor's obligations to other existing and future
indebtedness of such guarantor to a greater extent than would otherwise
be the case, the effect of which would be to entitle such other
creditors to be paid in full
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before any payment could be made on the loans outstanding under the
AMETHYST 6 and AMETHYST 7 credit facilities or on the old and new notes
A legal challenge to a guarantor on these grounds may focus on, among other
things, the benefits, if any, realized by such guarantor as a result of our
issuance of the old and new notes.
The measure of insolvency for purposes of the foregoing considerations
will vary depending on the law applied in any such proceeding. Generally,
however, an entity may be considered insolvent if the sum of its debts,
including contingent liabilities, is greater than the fair market value of all
its assets at a fair valuation or if the present fair market value of its assets
is less than the amount that would be required to pay its probable liability on
its existing debts, including contingent liabilities, as they become absolute
and mature. We do not believe that any of us, our subsidiaries, Pride or
Maritima was insolvent when it provided its guarantees or has become insolvent
as a result of its guarantees. We can provide no assurance, however, that a
court of competent jurisdiction will not determine that any of the guarantors
was insolvent when it provided its guarantees or have become insolvent or
incapable of paying their debts when due.
THE ENFORCEMENT OF THE MORTGAGES ON THE AMETHYST 6 AND AMETHYST 7 MAY BE
DIFFICULT AND EXPENSIVE; THE INABILITY TO REALIZE SIGNIFICANT VALUE UPON
ENFORCEMENT OF THOSE MORTGAGES WOULD SIGNIFICANTLY LIMIT THE COLLATERAL SECURING
THE AMETHYST 6 AND AMETHYST 7 CREDIT FACILITIES AND, CONSEQUENTLY, THE
COLLATERAL SECURING THE OLD AND NEW NOTES.
The principal collateral securing the AMETHYST 6 and AMETHYST 7 credit
facilities and, indirectly, the old and new notes will be, upon completion of
the AMETHYST 6 and AMETHYST 7, Bahamian first priority ship mortgages on those
rigs. The enforcement of those mortgages, however, could be difficult and
expensive as a result of priorities and procedures imposed by the laws of the
jurisdiction in which the enforcement proceeding must be brought. The inability,
as a result of difficulty or expense, to realize significant value upon
enforcement of those mortgages could significantly limit the collateral securing
the loans made under the AMETHYST 6 and AMETHYST 7 credit facilities and,
consequently, the collectibility of the $100.0 million of those loans that we
purchased and in which we have assigned a 53% interest to secure and fund
payments on the old and new notes.
The AMETHYST 6 and AMETHYST 7 will be flagged in the Bahamas and used and
operated initially in Brazil. The priority that rig mortgages have against the
claims of other lien creditors in an enforcement proceeding generally is
determined by, and will vary in accordance with, the laws of the country where
the proceeding is brought. In most jurisdictions, rig mortgages are subordinate
to maritime liens that arise by operation of law. In particular, Bahamian law
specifies an exclusive list of maritime liens that take priority over rig
mortgages and specific procedural remedies. We cannot assure, however, that, if
enforcement proceedings must be commenced against a particular rig, that rig
will be located in a jurisdiction having the same procedures and lien priorities
as the Bahamas or that the relative lien priority against other maritime liens
will be as favorable as in the Bahamas. For instance, the Brazilian courts,
which would accept jurisdiction over any action for possession of a rig while
located in Brazilian territorial waters and would have exclusive jurisdiction
over any action against Petrobras under the Petrobras contracts, will recognize
first priority ship mortgages on the AMETHYST 6 and AMETHYST 7 duly registered
in the Bahamas in accordance with their terms to the extent that they do not
offend Brazilian national sovereignty, public order or good morals. Proceedings
in the Brazilian courts to enforce a rig mortgage, however, would be subject to
a lengthy delay that could result in increased custodial costs, deterioration in
the condition of the rig and substantial reduction in the value of the rig.
Other jurisdictions in which we may operate our rigs may provide no legal remedy
for the enforcement of the mortgages securing the loans made under the AMETHYST
6 and AMETHYST 7 credit facilities, or a remedy dependent on court proceedings
may be so expensive and time consuming as to be impracticable. In addition, some
jurisdictions, unlike the Bahamas, may not permit a rig to be sold prior to
entry of a judgment, thereby causing lengthy delay in recovery that, like
proceedings in the Brazilian courts, could result in increased custodial costs,
deterioration in the condition of the rig and substantial reduction in the value
of the rig. In the event that Daewoo is placed into receivership, goes into
bankruptcy or otherwise seeks protection from its creditors as a result of a
failed restructuring, moreover, enforcement of the rig mortgages on the AMETHYST
6 or AMETHYST 7 could be prevented, limited or delayed. The delays and costs
resulting from enforcement of the rig mortgages would significantly limit the
ability of the lenders under the AMETHYST 6 and AMETHYST 7 credit facilities to
realize significant value from that enforcement and, consequently, would
significantly limit the funds available to them for repayment of the loans made
under the AMETHYST 6 and AMETHYST 7 credit facilities, including the $100.0
million of those loans that we purchased and in which we have assigned a 53%
interest to secure and fund payments on the old and new notes. You should read
the discussion under the heading "Description of New Notes--Ability to Realize
on Collateral" beginning on page 89 for more detailed information regarding the
enforcement of rig mortgages in the Bahamas and Brazil.
Since borrowings under the AMETHYST 6 and AMETHYST 7 credit facilities are
also secured by pledges of all the stock of owners of the AMETHYST 6 and
AMETHYST 7, enforcement of these pledges, including foreclosure, may provide, in
effect, an alternative method to realize upon the rig owned by the related
subsidiary and included in the collateral. However, enforcement by means of
foreclosure on the stock of such subsidiary will not affect the claims of
existing creditors of such subsidiary, which claims would survive any sale of
such stock and would adversely affect the value of such stock and, therefore,
limit the value of
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the collateral securing the loans made under the AMETHYST 6 and AMETHYST 7
credit facilities, including the $100.0 million of those loans that we purchased
and in which we have assigned a 53% interest to secure and fund payments on the
old and new notes.
THE MARKET VALUES OF THE AMETHYST 6 AND AMETHYST 7 WILL FLUCTUATE; THE
COLLATERAL SECURING THE OLD AND NEW NOTES MAY NOT BE SUFFICIENT TO REPAY THE OLD
AND NEW NOTES.
The market value of our rigs can be expected to fluctuate depending upon
general demand for various types of drilling rigs. We cannot assure that the
proceeds from the sale of either the AMETHYST 6 or AMETHYST 7 upon the exercise
of remedies following an event of default under either the AMETHYST 6 or
AMETHYST 7 credit facility will be sufficient to repay the loans outstanding
under that credit facility. We are not required under the AMETHYST 6 and
AMETHYST 7 credit facilities to maintain any minimum value of any rig, and we
cannot assure that the future value of a rig will not be considerably less than
its acquisition cost. Furthermore, in certain circumstances, the extent to which
the mortgage may be enforced and the extent to which the mortgage will have
priority over the claims of other creditors is limited. If your share of the
proceeds from foreclosure and sale of the collateral pledged to secure repayment
of borrowings under the AMETHYST 6 and AMETHYST 7 credit facilities, enforcement
of the Pride limited guarantee and draws on the HSBC Bank USA letter of credit,
together with accumulated cash and cash equivalents held by the note collateral
agent, are not sufficient to make all payments due on the old and new notes, you
will have only unsecured claims against our remaining assets, if any.
PETROBRAS COULD IMPOSE LATE DELIVERY PENALTIES THAT COULD ADVERSELY AFFECT OUR
ABILITY TO REPAY THE OLD AND NEW NOTES.
Our charters with Petrobras specify delivery dates in June and July 1999
for the AMETHYST 4 and AMETHYST 5 and December 1999 for the AMETHYST 6 and
AMETHYST 7. We were unable to meet those delivery dates. Under the existing
charters, Petrobras is entitled to impose daily penalties for late delivery of
up to 30% of a rig's operating rate (and, in addition, up to 30% of the
mobilization fee in the case of the AMETHYST 5). We do not currently anticipate
further delays with respect to the AMETHYST 6 or AMETHYST 7, but, given the
current status of the AMETHYST 4 and AMETHYST 5 at TDI-Halter, there is
substantial uncertainty as to whether the AMETHYST 4 and AMETHYST 5 will be
completed and, if completed, as to when those rigs will be available for
delivery to Petrobras or any other customer.
The charters permit Petrobras to impose the late delivery penalties at the
time of late delivery of our rigs. Prior to threatening to cancel our charters,
Petrobras indicated to us in writing that it has been its policy to negotiate
other forms of payment, such as an agreed installment plan or the discount of
the penalties from the end of the contract. This policy may not be applied,
however, given Petrobras' threatened cancellation of our charters and our
related litigation with Petrobras. We cannot assure, therefore, that Petrobras
will not impose such penalties at the time of delivery of our rigs. Even if
Petrobras cancels our existing charters for late delivery, moreover, Petrobras
could make a claim against us for damages that might include the value of the
late delivery penalties. We currently do not have a source of funds available to
pay the late delivery penalties at delivery or, if Petrobras cancels our
charters, at any other time unless we obtain replacement charters that have
sufficiently favorable terms, except that, in connection with the AMETHYST 4 and
AMETHYST 5 credit facilities, Maritima and Pride have each severally guaranteed
payment of up to $20.5 million (or a total of $41 million between them) for late
arrival penalties to Petrobras under the charters for, and Brazilian ad valorem
taxes pertaining to, the AMETHYST 4 and AMETHYST 5. If we are unable to pay the
penalties when imposed, Petrobras would have a claim against us and, if it has
not terminated the charters for late delivery, the right to terminate the
charters for non-payment. The imposition of the penalties at delivery or in
connection with a cancellation of the charters or the termination of our
charters for non-payment of the late delivery penalties could have a material
adverse effect on our ability to pay the old and new notes and other debt
obligations. You should read the discussion under the heading "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" on page 30 for more information
regarding late delivery penalties.
IF, DESPITE PETROBRAS' THREATENED CANCELLATION OF OUR CHARTERS, OUR RIGS OPERATE
INITIALLY UNDER THOSE CHARTERS OR UNDER RENEGOTIATED CHARTERS WITH PETROBRAS,
OUR REVENUES WILL BE DEPENDENT ON PAYMENTS BY PETROBRAS FOLLOWING CONSTRUCTION
AND DELIVERY OF OUR RIGS.
If, despite Petrobras' threatened cancellation of our charters, our rigs
operate initially under the existing charters or under renegotiated charters
with Petrobras, our source of revenue following construction and delivery of our
rigs for payment of interest on the old and new notes and for all payments on
our and our subsidiaries' other debt obligations will be the payments made by
Petrobras under those charters. The occurrence of any of the following events,
which would limit, suspend or terminate Petrobras' payments under those
charters, would have a material adverse effect on our or our subsidiaries'
ability to meet our respective debt service obligations:
o the material failure by Petrobras to fulfill its obligations under
those charters
o the suspension of Petrobras' obligations under those charters
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o termination of the charters upon the occurrence of events specified in
those charters, including delays in delivery and delays or
interruptions in operation of our rigs for specified periods as a
result of specified causes
Similarly, the ability of Petrobras to interpose defenses to, or avoid its
obligation to perform under, those charters could have a material adverse effect
on our ability to repay the old and new notes and our and our subsidiaries'
abilities to repay our respective other debt service obligations. Any action
brought against Petrobras under those charters would have to be filed in the
Brazilian courts. The charter rates of a renegotiated charter may be
substantially lower. You should read the discussion under the heading
"Business--The Petrobras Contracts" beginning on page 50 for further information
regarding Petrobras' rights and obligations under the existing charters.
PETROBRAS MAY SEEK TO CANCEL OR RENEGOTIATE CONTRACTS DURING DEPRESSED MARKET
CONDITIONS OR IF PETROBRAS IS UNABLE TO MEET ITS CAPITAL REQUIREMENTS.
During depressed market conditions like those the deepwater drilling
market is currently experiencing, a customer such as Petrobras may no longer
need a rig or may be able to obtain a comparable rig at a lower daily rate. In
addition, Petrobras, in particular, may be further constrained by the
significant amounts of cash required to service its outstanding indebtedness and
to fund its proposed capital expenditure budget. Because Petrobras' ability to
incur indebtedness to meet its funding needs is limited by the Brazilian
government's policy of limiting the debt of Brazilian state-controlled
companies, Petrobras is financing some of its activities through joint ventures
and other off-balance sheet arrangements. Petrobras may, as a result of
depressed market conditions or its inability to raise capital off the balance
sheet, pressure us to renegotiate the terms of existing contracts. In addition,
Petrobras may seek to avoid its obligations under existing contracts. Since
December 1998, a number of contracts have been canceled in the drilling
industry, including the Petrobras contracts for the AMETHYST 2 and AMETHYST 3,
two other rigs that were to be constructed using the Amethyst design for which
Petrobras awarded contracts to Maritima. In October 1999, moreover, Petrobras
threatened cancellation of our charters. Petrobras' cancellation of one or more
of our charters or renegotiation of one or more of our charters at lower daily
rates could have a material adverse effect on our financial condition and,
consequently, our ability to meet our obligations under the old and new notes
(particularly in the case of cancellation or renegotiation of the charters for
the AMETHYST 6 and AMETHYST 7) and our subsidiaries' ability to meet their debt
obligations. You should read the discussion under the heading
"Business--Threatened Cancellation of Our Charters" beginning on page 36 for
information relating to Petrobras' threatened cancellation of our charters.
WE HAVE NO OPERATING HISTORY AND ARE SUBJECT TO ALL OF THE RISKS INHERENT IN THE
ESTABLISHMENT OF A NEW BUSINESS ENTERPRISE.
We were organized in 1998 and have no operating history. We are subject to
all of the risks inherent in the establishment of a new business enterprise. The
development of our business, including construction of our rigs, requires
significant capital expenditures, virtually all of which has been or will be
incurred before the realization of revenue. In the event that we are unable to
realize revenue, whether as a result of our inability to complete our rigs,
Petrobras' cancellation of our charters and our inability to obtain suitable
replacement charters or any other reason, we will not be able to repay the old
and new notes or any other indebtedness that we incurred to fund our capital
expenditures.
WE ARE SUBJECT TO THE HAZARDS OF THE OFFSHORE DRILLING INDUSTRY; OUR INSURANCE
AND INDEMNIFICATIONS MAY NOT BE SUFFICIENT TO COVER ALL OF THESE HAZARDS.
The operation of our rigs involves many risks, including, among other
things, the following:
o loss, breakdown or failure of our rigs or other equipment
o problems of production, rig technology and drilling techniques
o deficiencies in the performance of our rigs
o labor disputes
o delays in obtaining or the inability to obtain necessary permits
o blowouts and well fires
o capsizing, sinking, grounding, collision and damage from severe weather
conditions
o other events, such as fires, hurricanes, storms, unforeseen
environmental or geological problems and changes in applicable laws
The occurrence of any of these events could significantly reduce or eliminate
revenues generated by a rig or significantly increase the expenses of operating
a rig or result in the termination of a rig's charter, thereby (particularly in
the case of the AMETHYST 6 and AMETHYST 7) adversely impacting our ability to
make payments of principal or interest on the old and new notes and our
subsidiaries' ability to meet their debt obligations. While we intend to
maintain insurance and the existing charters and related service rendering
contracts contain indemnifications from Petrobras to mitigate the effects of
various operating risks, not all risks are insured or indemnified, the proceeds
of our insurance or the amounts recovered under those indemnifications may not
be
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adequate to cover lost revenues or increased expenses and we may not be able to
obtain continued insurance coverage or indemnifications in the future on
commercially reasonable terms. In addition, we cannot assure that we would not,
despite indemnifications that we obtain, be held jointly liable for
environmental liabilities arising as a result of the operation of our rigs. The
occurrence of a significant environmental or other event against which we are
not fully insured or indemnified or a number of lesser events against which we
are insured but subject to substantial deductibles could materially and
adversely affect our ability to repay the old and new notes and our
subsidiaries' ability to meet their debt obligations. You should read the
discussion under the heading "Business--Environmental Matters" beginning on page
56 for a description of the indemnifications in the Petrobras contracts.
OUR OPERATIONS ARE DEPENDENT ON HIGHLY SOPHISTICATED, COMPLEX TECHNOLOGY THAT
HAS BEEN DEVELOPED RELATIVELY RECENTLY; THE AMETHYST DESIGN HAS NEVER BEEN
UTILIZED FOR DRILLING UNDER ACTUAL OPERATING CONDITIONS AND MAY NOT PERFORM AS
INTENDED.
Our rigs have been designed using the Amethyst design for ultra-deepwater
operations in water depths of up to 5,000 feet and will incorporate various
items of specialized drilling and subsea well intervention and maintenance
equipment. Drilling in ultra-deep waters involves highly sophisticated, complex
technology which has been developed relatively recently and accounts for a
relatively small percentage of worldwide petroleum production. We cannot assure
that ultra-deepwater drilling technology will be economic over time or that it
will receive broad application. In addition, the Amethyst design has never been
utilized for drilling under actual operating conditions. For this reason, we
cannot guarantee that the equipment on our rigs will function properly as a
whole, and we cannot fully predict the performance of each rig under actual
operating conditions. Our business and operating results could be materially and
adversely affected if any of our rigs do not perform as intended in accordance
with the Amethyst design under actual operating conditions.
WE DEPEND AND WILL CONTINUE TO DEPEND ON SERVICE PROVIDERS FOR THE CONSTRUCTION
MANAGEMENT, OPERATION AND MAINTENANCE OF OUR RIGS.
We will depend on Maritima and Pride, directly or through affiliates, and
Workships Contractors B.V., a third party, for the construction management,
operation and maintenance of our rigs. While we may terminate a service contract
in the event of substandard performance by a service provider, we cannot assure
that, upon termination, we will be able to obtain replacement services without
significant delays or at comparable prices. Under existing service rendering
contracts with Petrobras, Maritima will provide some services related to our
rigs and will be entitled to payment of a daily rate from Petrobras for those
services. We have no ability to replace Maritima as the service provider under
the service rendering contracts without the consent of Petrobras. A default by
Maritima under a service rendering contract triggers a default under, and a
right of termination of, at Petrobras' option, the corresponding charter. In
addition, the substandard performance by any service provider or the extended
unavailability of services could adversely impact performance of the charters
and entitle Petrobras to terminate the charters. While we will maintain
insurance to mitigate the effects of business interruption, such insurance may
not be sufficient to compensate for lost revenues, increased costs or loss of
hire. Any material breach by the service providers of their respective
obligations could adversely affect our ability to make payments on the old and
new notes and our subsidiaries' ability to make payment under their debt
obligations.
WE CANNOT ASSURE THAT THERE WILL BE AN ADEQUATE SOURCE OF TRAINED PERSONNEL
AVAILABLE TO MAN OUR RIGS.
We have no employees and do not expect to hire our own employees for the
foreseeable future. We have contracted with our service providers to provide
experienced construction management personnel, ship crews, base personnel and
oil drilling employees. Some but not all of the oil drilling employees, base
personnel and ship crews have been identified, assembled and hired. Once our
rigs become operational, the service providers expect to employ more than 350
people, including employees directly hired and contracted and, in the case of
service providers that are affiliates of Maritima and Pride, employees seconded
from Maritima and Pride. We cannot assure that there will be an adequate source
of trained personnel available to man our rigs.
LABOR CONFLICTS COULD ARISE AND HAVE A NEGATIVE IMPACT ON OUR RESULTS FROM
OPERATION.
All seconded and direct employees of our service providers are expected to
be exempt personnel and only contracted employees are expected to be covered by
one or more collective bargaining agreements. While there is currently no reason
to expect the labor relations of the service providers to be adverse to or
disruptive of our operations, labor conflicts could arise and have a negative
impact on our results from operation. This negative impact would adversely
affect our ability to meet our obligations under the old and new notes and our
subsidiaries' ability to meet their debt service obligations.
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OUR OPERATIONS ARE DEPENDENT ON THE OIL AND GAS INDUSTRY.
Despite Petrobras' threatened cancellation of our charters, we expect our
rigs to be initially operated under long-term charters with Petrobras.
Petrobras' ability to perform its obligations under the charters will depend
upon conditions in the oil and gas industry, including the following:
o oil and gas prices
o expectations about future prices
o the cost of producing and delivering oil and gas
o government regulations
o local and international political and economic conditions, including
the ability of the Organisation of Petroleum Exporting Countries (OPEC)
to set and maintain production levels and prices, the level of
production by non-OPEC countries and the policies of the various
governments regarding exploration and development of their oil and gas
reserves.
In the event of cancellation, termination or expiration of the charters, our
ability to obtain renewals or replacement charters and the daily rates received
under any renewal or replacement charters also depends upon conditions in the
oil and gas industry and, specifically, the exploration and production
expenditures of oil and gas companies, the level of offshore oil and gas
drilling activity and the supply of suitable offshore drilling rigs. Until
recently when OPEC imposed more restrictive production quotas on its members,
the offshore contract drilling industry was negatively impacted by lower
world-wide oil prices, the principal effects of which were reduced budgets for
exploration and development, lower utilization of offshore drilling rigs and
lower daily rates. Even with the increased prices that have accompanied OPEC's
action, oil and gas exploration and production activity and capital expenditures
for offshore drilling have not returned to the levels achieved in 1997 and 1998.
We anticipate prices for oil and natural gas will continue to be volatile and
affect the demand for and pricing of our services after the terms of the
charters. A material decline in oil or natural gas prices or activities could
materially adversely affect the demand for our services and, therefore, our
results of operations and financial condition.
BECAUSE WE ARE A SMALL DEVELOPING COMPANY IN THE OFFSHORE DRILLING INDUSTRY, WE
MAY NOT BE ABLE TO COMPETE WITH LARGER, WELL-ESTABLISHED PROVIDERS OF OFFSHORE
DRILLING SERVICES.
We are a small developing company in the offshore drilling industry formed
in 1998 to construct, own and operate four offshore drilling rigs. Our
competitors are larger, well-established providers of offshore drilling
services, like Transocean Sedco Forex, that own and operate fleets of up to over
70 offshore drilling rigs. Drilling contracts are usually awarded on a
competitive bid basis and, while a customer may consider factors such as quality
of service and the ability to provide ancillary services and type and location
of equipment, price is generally the primary factor in determining which
contractor is awarded a job. Given our size and youth, we may lack the financial
strength and resources to compete effectively against larger, well-established
competitors for new contracts on the basis of price. The greater financial
resources and lesser leverage of many of our competitors will enable them to
compete more effectively on this basis and to better withstand periods of low
rig utilization. Our rigs are being built pursuant to Petrobras' specifications,
but there can be no assurance that, upon the cancellation or termination of the
charters, Petrobras or any other customer will charter our rigs at sufficiently
high utilization rates and daily rates to permit us to service the old and new
notes and our and our subsidiaries' other debt. If Petrobras does not accept our
rigs under the existing or renegotiated charters or if Petrobras does not renew
our charters upon the expiration of their initial terms, there can be no
assurance our rigs will be competitive for the needs of any other customer or
that market conditions will be sufficiently favorable to enable us to charter
our rigs at sufficiently high utilization rates and daily rates to permit us to
service the old and new notes and our and our subsidiaries' other debt. Offshore
drilling rigs have few alternative uses and, because of their nature and the
environment in which they work, have relatively high costs, whether or not
operating. Because rig operating costs cannot be materially reduced, any
reduction in daily rates adversely affects a drilling contractor's results of
operations and, consequently, our ability to repay the old and new notes.
GOVERNMENTAL REGULATIONS AND ENVIRONMENTAL LIABILITIES MAY ADVERSELY AFFECT OUR
OPERATIONS.
We and our service providers must comply with the applicable laws,
regulations and statutory and regulatory standards of Brazil and other
jurisdictions relating to offshore oilfield services and will be subject to
their ongoing application and enforcement. The operation of our rigs will
routinely involve the handling of waste materials, some of which are classified
as hazardous substances. The operation of our rigs will be subject to various
requirements such as laws and regulations that:
o control the containment, disposal and discharge of hazardous oilfield
waste and other nonhazardous waste material into the environment
o require removal and cleanup relating to the protection of the
environment
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o mandate certification, licensing and other requirements imposed by
treaties, laws, regulations and conventions in the jurisdictions in
which our rigs operate
These laws, regulations and requirements potentially expose us to civil
penalties, criminal sanctions and closure orders for non-compliance. Some of
these laws impose joint and several liability, without regard to fault, upon
owners of the related mineral interests and the drilling operator for
environmental damage. We cannot assure that environmental costs will not have a
material adverse effect on our results of operations or financial condition.
Since environmental laws are becoming more stringent in Brazil and other
emerging-market countries, our environmental capital expenditures and costs for
environmental compliance may be significant in the future. Because of the
possibility of unanticipated regulatory or other developments, the amount and
timing of future environmental expenditures may vary widely. The application of
these laws, regulations and requirements or the adoption of new laws,
regulations and requirements could have a material adverse effect on our cash
flow and thus our ability to meet our debt service obligations.
WE REQUIRE MANY PERMITS AND REGULATORY APPROVALS FOR THE OPERATION OF OUR RIGS;
DELAY IN RECEIPT OF, OR FAILURE TO OBTAIN, THESE PERMITS OR APPROVALS OR FAILURE
TO SATISFY THE CONDITIONS OF ANY PERMIT COULD DELAY A RIG'S CONSTRUCTION,
RESTRICT ITS OPERATION OR RESULT IN ADDITIONAL COSTS OR ADDITIONAL TAXES.
We require many permits and regulatory approvals for the operation of our
rigs under applicable laws and regulations. Many of these permits are not now
required and have not yet been obtained. Of those permits and approvals which
have been obtained, some are subject to conditions. Permits and approvals that
are still outstanding may, when issued, similarly be subject to conditions. The
delay in receipt of, or failure to obtain, these permits or approvals or the
failure to satisfy the conditions of any permit could delay a rig's
construction, restrict its operation or result in additional costs or additional
taxes.
WE HAVE SIGNIFICANT DEBT LEVELS AND DEBT COVENANTS THAT LIMIT OUR ABILITY TO
OBTAIN ADDITIONAL FINANCING AND RESTRICT OUR OPERATIONS.
We are highly leveraged. We and our subsidiaries had, as of December 31,
1999, a total consolidated indebtedness of $339.7 million (including the old and
new notes and related party advances from our owners), of which $123.6 million
effectively ranked senior to the notes and $133.5 million of which effectively
ranked equal to the notes. Our high degree of leverage will have important
consequences, including:
o a substantial portion of net cash provided by operations will be
committed to the payment of our indebtedness, including the old and new
notes
o net cash flow after debt service will be more sensitive to fluctuations
in the prices of our services than a less leveraged company
o we will be more leveraged than most of our competitors in the offshore
contract drilling business
o our debt covenants restrict the scope of our business
o our ability to obtain additional financing is limited
You should read the discussions under the headings "Capitalization" on page 28
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" beginning on page 30 for
information regarding our capitalization and liquidity.
OUR OPERATIONS GENERALLY DEPEND ON TWO OF OUR OWNERS, MARITIMA AND PRIDE, EITHER
DIRECTLY OR THROUGH AFFILIATES; OUR CONTRACTUAL RELATIONSHIPS WITH MARITIMA,
PRIDE AND THEIR AFFILIATES MAY NOT BE AS FAVORABLE TO US AS THOSE THAT MIGHT BE
OBTAINED FROM UNAFFILIATED THIRD PARTIES.
We have numerous contractual relationships with two of our owners,
Maritima and Pride, directly or through affiliates. There can be no assurance
that any of these arrangements provide terms that are as favorable to us as
those that might be obtained from unaffiliated third parties. These arrangements
include but are not limited to the agreements described under "Executive and
Board Compensation and Benefits and Compensation of Owner-Related Parties"
beginning on page 59 and "Certain Relationships and Related Transactions"
beginning on page 60.
MARITIMA, PRIDE AND THEIR AFFILIATES MAY HAVE INTERESTS THAT CONFLICT WITH OUR
INTERESTS.
In addition to their investment in us, Maritima and Pride and their
affiliates currently participate in, and have significant investments in other
entities engaged in, the oil and gas services industry and may in the future
participate in, or invest in other
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entities engaged in, the oil and gas services industry or in related businesses
(including entities engaged in business in areas in which we operate). Maritima
and Pride, therefore, have, and may develop, relationships with businesses that
are or may be competitive with us. Maritima and Pride are under no obligation to
offer us any investment or business opportunities of which they become aware,
even if those opportunities are within our primary objectives, so there can be
no assurance that Maritima or Pride will not divert those opportunities to
businesses that are competitive with us. It is not, however, our present
intention to pursue any investment or business opportunities other than the
construction, equipping, mobilization and chartering of our four rigs.
WE ARE A HOLDING COMPANY, SO WE DERIVE ALL OF OUR OPERATING INCOME AND CASH FLOW
FROM PAYMENTS, ADVANCES AND DIVIDENDS FROM OUR SUBSIDIARIES; THE ABILITY OF OUR
SUBSIDIARIES TO MAKE SUCH PAYMENTS, ADVANCES AND DIVIDENDS TO PERMIT US TO
SERVICE THE OLD AND NEW NOTES MAY BE LIMITED, AND THE CLAIMS OF CREDITORS OF OUR
SUBSIDIARIES GENERALLY HAVE PRIORITY OVER YOUR CLAIMS ON THE ASSETS AND EARNINGS
OF OUR SUBSIDIARIES.
We are a holding company. We will derive substantially all of our
operating income and cash flow from payments, advances and dividends from our
subsidiaries. In servicing the old and new notes, we will rely principally on
payments made in respect of the loans that we purchased under the AMETHYST 6 and
AMETHYST 7 credit facilities. The ability of our subsidiaries that will own the
AMETHYST 6 and AMETHYST 7 to make those payments will be limited by their
financial condition and requirements for cash to conduct their operations. The
ability of any of our subsidiaries to pay dividends or make distributions is
restricted under the credit facilities providing financing for our rigs and may
be subject to, among other things, applicable laws and, under certain
circumstances, restrictions contained in joint venture agreements and debt
instruments to be entered into in the future. In the event of any insolvency,
liquidation or reorganization of any of our subsidiaries, any creditors of the
subsidiary, including trade creditors and tort claimants, would be entitled to
payment in full from the assets of the subsidiary before we, as a stockholder,
would be entitled to receive any dividends or other distributions. These
dividends and distributions, therefore, will not provide a significant source of
cash to service the old and new notes. The claims of all creditors of our
subsidiaries, including trade creditors and tort claimants, effectively have
priority over your claims on the assets and earnings of our subsidiaries except
to the extent of your claim to the assets securing the loans that we purchased
under the AMETHYST 6 and AMETHYST 7 credit facilities.
IN THE EVENT OF A LIMITED MARKET FOR OUR RIGS, WE MAY SUCCESSFULLY REMARKET THE
AMETHYST 4 AND AMETHYST 5 BUT MAY NOT BE ABLE TO REMARKET THE AMETHYST 6 AND
AMETHYST 7.
In the event of a limited market for our rigs following the cancellation,
termination or expiration of the Petrobras charters, we may not be able to
successfully remarket all of our rigs. We have no obligation to give preference
to the remarketing of the AMETHYST 6 and AMETHYST 7, which indirectly secure the
old and new notes, over the remarketing of the AMETHYST 4 and AMETHYST 5, on
which you will not be able to rely as a source of repayment of the old and new
notes because the creditors of our subsidiaries that will own the AMETHYST 4 and
AMETHYST 5 will have priority over you as to those rigs and the proceeds derived
from those rigs. If we successfully remarket either or both of the AMETHYST 4
and AMETHYST 5 but are not able to remarket either or both of the AMETHYST 6 and
AMETHYST 7, the value of the collateral securing the AMETHYST 6 and AMETHYST 7
credit facilities and, thus, the value of the collateral securing the old and
new notes could be materially diminished.
YOUR ABILITY TO ENFORCE CIVIL LIABILITIES IN BRAZIL, THE BAHAMAS AND THE BRITISH
VIRGIN ISLANDS MAY BE LIMITED.
We and our subsidiaries are incorporated under the laws of the British
Virgin Islands, and Petrobras is organized under the laws of Brazil. The
charters and certain other documents related to our rigs, including the service
rendering contracts with Maritima, are governed by the laws of Brazil. Our rigs
and the mortgages on our rigs will be registered in the Bahamas. Some of our
directors and officers, the directors and officers of Petrobras and some of the
advisors named in this prospectus reside outside of the United States.
Substantially all of the assets of these individuals and companies are located
outside of the United States. It may not be possible, therefore, for investors
to effect service of process within the United States upon these individuals or
companies or to enforce judgments against them in United States courts
predicated upon the federal securities laws of the United States. Bahamian
counsel, Higgs & Johnson, British Virgin Islands counsel, Dancia Penn & Co, and
Brazilian counsel, Pinheiro Neto - Advogados (Rio de Janeiro), have advised that
there is uncertainty as to the enforceability (1) in original actions in
Bahamian, British Virgin Islands and Brazilian courts, of liabilities predicated
solely upon the federal securities laws of the United States and (2) in
Bahamian, British Virgin Islands and Brazilian courts, of judgments of United
States courts obtained in actions predicated upon the civil liability provisions
of the federal securities laws of the United States. You should read the
discussion under the heading "Description of New Notes--Enforceability of
Judgments" beginning on page 93 for further information regarding the
enforceability of judgments not collectible in the United States.
THE BRAZILIAN GOVERNMENT CONTROLS AND REGULATES PETROBRAS AND THE BRAZILIAN
PETROLEUM INDUSTRY; THROUGH THIS INFLUENCE, THE BRAZILIAN GOVERNMENT COULD
MATERIALLY AFFECT OUR OPERATIONS.
If, despite Petrobras' threatened cancellation of our charters, our rigs
operate initially under the existing charters or under renegotiated charters
with Petrobras, the payments made by Petrobras under the charters for the
AMETHYST 6 and AMETHYST 7 will be
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the principal source of funds to pay interest on the old and new notes and to
repay the loans made under the AMETHYST 6 and AMETHYST 7 credit facilities.
Because the petroleum industry is important to the Brazilian economy, the
Brazilian government traditionally has exerted considerable influence over that
industry and particularly over Petrobras. We cannot assure that such influence
of the Brazilian government will not have a materially adverse effect on our
operations and our ability to repay the old and new notes if our rigs commence
operations for Petrobras. Specifically:
o The Brazilian federal government, as of January 31, 2000, owned 84.0%
of the voting shares and 49.1% of the total shares of Petrobras.
o The board of directors of Petrobras, which is responsible for the daily
management of Petrobras, is appointed by the President of Brazil.
o Petrobras' operations are subject to supervision and regulation by
Brazil's National Petroleum Agency, the government department that,
pursuant to the Brazilian Petroleum Law, is responsible for
implementing the Brazilian government's policies on oil and gas. The
National Petroleum Agency holds the power to award exploration,
development and production concessions in Brazil and regulates all
aspects of Petrobras' operations, including imports, exports, profit
margins, payment conditions and prices. In particular, the National
Petroleum Agency is implementing the Brazilian Petroleum Law's policy
of terminating Petrobras' monopoly on oil and gas exploration in Brazil
and opening the industry to foreign investors. This policy is expected
to decrease significantly the dependence of Brazil's offshore
exploration market on Petrobras.
o Petrobras submits its annual budget to the Minister of Mines and Energy
through the National Petroleum Agency and then to the Brazilian
National Congress for approval. In this way, the Brazilian government
regulates the total level of Petrobras' financing and investment but
leaves specific application of funds to Petrobras' discretion (subject
to the supervision of the Ministry of Planning over Petrobras'
strategic objectives and planning).
o The Brazilian government currently restricts the export of petroleum
from Brazil but announced in May 1999 that it expects to lift these
restrictions in the future.
OUR OPERATIONS WILL BE SUBJECT TO BRAZILIAN GOVERNMENTAL AND ECONOMIC
UNCERTAINTY; WE DO NOT INSURE AGAINST THOSE RISKS.
The Brazilian economy has been characterized by frequent and occasionally
drastic intervention by the Brazilian government. The Brazilian government often
has changed monetary, credit, tariff and other policies to influence Brazil's
economy and politics. The Brazilian government's actions to control inflation
and implement other policies have often involved wage and price controls and
other measures, such as freezing bank accounts and imposing capital controls.
Changes in policies affecting tariffs, foreign ownership or operation of
property, exchange controls, ownership of oil and gas interests, remittances and
other matters could adversely affect the ability of Petrobras to pay its
obligations under the charters which, in turn, would adversely affect our
ability to repay the old and new notes and the market value and liquidity of the
old and new notes. Similar effects could result from inflation, changes in trade
policy, devaluations of Brazilian currency, social instability, fluctuations in
interest rates and other political, economic or diplomatic developments and the
Brazilian government's response to such developments.
In particular, the rights of Petrobras to the mineral interests that our
rigs will be exploiting and, consequently, the utility of our charters to
Petrobras, are subject to political, economic and other uncertainties, including
expropriation, nationalization, renegotiation or nullification of existing
contracts, currency exchange restrictions and international monetary
fluctuations. Neither the indenture governing the old and new notes nor the
instruments governing the credit facilities providing financing for our rigs
require us or our subsidiaries, and we do not intend, to maintain insurance
against those risks.
EXTREME INFLATION IN BRAZIL COULD ADVERSELY AFFECT PETROBRAS' ABILITY TO MAKE
PAYMENTS UNDER THE CHARTERS AND, CONSEQUENTLY, OUR ABILITY TO REPAY THE OLD AND
NEW NOTES.
Brazil has historically experienced extremely high rates of inflation.
Inflation and governmental measures to combat inflation have in the past had
significant negative effects on the Brazilian economy. In addition, inflation,
actions taken to combat inflation and public speculation about possible future
actions have contributed significantly to economic uncertainty in Brazil and
heightened volatility in the Brazilian securities markets. The recurrence of
those events could adversely affect Petrobras' ability to make payments under
the charters and, in turn, our ability to repay the old and new notes.
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BRAZILIAN EXCHANGE RATE FLUCTUATIONS COULD ADVERSELY AFFECT PETROBRAS' FINANCIAL
CONDITION AND ITS ABILITY TO MAKE PAYMENTS UNDER THE CHARTERS AND, CONSEQUENTLY,
ADVERSELY AFFECT YOUR INVESTMENT IN THE OLD AND NEW NOTES.
The relationship of Brazil's currency to the U.S. dollar and of rates of
devaluation of Brazil's currency to prevailing rates of inflation in Brazil may
adversely affect Petrobras' financial condition and its ability to make payments
under the charters. If Petrobras is unable to make payments under the charters,
we will not be able to make payments under the old and new notes. The table
under the heading "About this Prospectus" on page 1 sets forth historical data
on the exchange rate of Brazilian currency to the U.S. dollar.
THE BRAZILIAN GOVERNMENT MAY RESTRICT THE REMITTANCE OF U.S. DOLLARS FROM BRAZIL
FOR THE PURPOSE OF MAKING PAYMENTS UNDER THE CHARTERS OR THE CONVERSION OF
BRAZILIAN CURRENCY INTO U.S. DOLLARS; THESE RESTRICTIONS WOULD ADVERSELY AFFECT
OUR ABILITY TO MAKE PAYMENTS ON THE OLD AND NEW NOTES.
Brazilian law provides that whenever there is a serious imbalance in
Brazil's balance of payments or reason to foresee a serious imbalance, the
Brazilian government may impose temporary restrictions on the remittance to
foreign investors of proceeds from their Brazilian investments (as it did for
approximately six months in 1989 and early 1990) and the conversion of Brazilian
currency into foreign currencies. These restrictions could hinder or prevent the
conversion of Brazilian currency into U.S. dollars or the remittance of U.S.
dollars from Brazil for the purpose of making payments under the charters.
Petrobras' inability to make payments under the charters in U.S. dollars would
adversely affect our ability to make payments on the old and new notes since the
payments made by Petrobras under the charters will be the principal source of
funds to pay interest on the old and new notes.
BRAZILIAN LAW REQUIRES THAT THE ISSUANCE OF A CERTIFICATE OF REGISTRATION FROM
THE BRAZILIAN CENTRAL BANK FOR THE REMITTANCES OUTSIDE BRAZIL OF U.S. DOLLARS TO
MAKE SCHEDULED PAYMENTS UNDER THE CHARTERS; OUR INABILITY TO OBTAIN THE
CERTIFICATE OF REGISTRATION FROM THE CENTRAL BANK OR THE UNAVAILABILITY OF
FOREIGN EXCHANGE FOR PETROBRAS TO MAKE PAYMENTS UNDER THE CHARTERS IN U.S.
DOLLARS WOULD ADVERSELY AFFECT OUR ABILITY TO MAKE PAYMENTS ON THE OLD AND NEW
NOTES.
Pursuant to Brazilian law, the charters must be approved by, and the
scheduled payments to be made under the charters must be registered with, the
Central Bank to permit the remittances outside Brazil of U.S. dollars. It will
thus be necessary for the Central Bank to issue a Certificate of Registration
authorizing each of the scheduled payments under the charters, pursuant to which
Petrobras will, assuming the availability of foreign exchange, be able to
convert Brazilian currency into U.S. dollars and remit such U.S. dollars to the
restricted accounts established under the credit facilities providing financing
for our rigs. There can be no assurance that we will be able to obtain such
Certificate of Registration from the Central Bank, or, if such Certificate of
Registration is obtained, that foreign exchange will be available for Petrobras
to make payments under the charters in U.S. dollars. In addition, there can be
no assurance that this procedure for converting Brazilian currency into U.S.
dollars will not be affected by future legislative changes or that additional
Brazilian restrictions adversely affecting you will not be imposed in the
future. If those restrictions are imposed, there can be no assessment of the
duration or impact of those restrictions. Petrobras' inability to make payments
under the charters in U.S. dollars would adversely affect our ability to make
payments on the old and new notes since the payments made by Petrobras under the
charters will be the principal source of funds to pay interest on the old and
new notes.
THE MARKET FOR THE OLD AND NEW NOTES AND OUR ABILITY TO REPAY THE OLD AND NEW
NOTES COULD BE ADVERSELY AFFECTED BY DEVELOPMENTS IN EMERGING-MARKET COUNTRIES.
The market for securities of issuers dependent on the Brazilian economy
is, to varying degrees, affected by economic and market conditions in other
emerging-market countries. Although economic conditions are different in each
country, investors' reactions to developments in one country can affect the
creditworthiness of other countries, including Brazil, or issuers relying on
payments from others that hold assets in such countries, such as us. For
example, in December 1994, the Mexican government sharply devalued the peso and
allowed its value to float, thereby setting off an economic crisis in Mexico.
The Mexican currency devaluation negatively affected the securities markets in
many Latin American countries, including Brazil. Similarly, the Brazilian
financial and securities markets also experienced significant disruptions, U.S.
dollar outflows and volatility as a result of the recent turmoil in the Asian
markets. The Brazilian government responded with a package of austerity measures
for fiscal adjustment, including public spending cuts and tax increases, and the
Central Bank increased domestic interest rates, which has substantially
increased the cost of credit to Brazilian companies. We cannot assure that
similar or other disruptions in other emerging markets will not cause a
recurrence of such volatility in Brazilian markets or that such volatility will
not be accompanied by adverse effects on the Brazilian economy, the ability of
Petrobras to pay its obligations under the charters, our subsidiaries' ability
to repay borrowings under the credit facilities providing financing for our rigs
and our ability to repay the old and new notes or the market value or liquidity
of the old and new notes.
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FORWARD-LOOKING STATEMENTS
This prospectus, including the information we incorporate by reference,
includes forward-looking statements. Because this Registration Statement is our
initial registration statement, our forward-looking statements, unlike those of
Pride and HSBC Bank USA, are not subject to the protection afforded by Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. You can identify our forward-looking statements by the words
"anticipate," "believe," "expect," "plan," "intend," "estimate," "project,"
"budget," "forecast," "will," "could," "should" and "may" and similar
expressions. These statements address activities, events or developments that we
expect, believe, anticipate or estimate will or may occur in the future and are
based on assumptions and analyses that we have made and believe are reasonable.
We caution you, however, that these assumptions and analyses are dependent on a
variety of uncertain factors, many of which are beyond our control, so our
actual results may differ materially from those anticipated or projected in our
forward-looking statements. These differences could result from various risks
and uncertainties, including the following:
o prices of and demand for crude oil and natural gas
o the level of petroleum industry exploration and production activity and
expenditures
o the level of drilling activity
o the effect of competition
o world economic conditions
o weather
o governmental policy in Brazil and other countries
o Petrobras
o Organisation of Petroleum Exporting Countries (OPEC) policy
o conflict in the Middle East and other major petroleum producing or
consuming regions
o the development of technology that affects overall finding and
development costs
o the condition of the capital and equity markets
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<PAGE>
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the new notes.
In consideration for issuing the new notes, we will receive in exchange an equal
principal amount of the old notes. The old notes surrendered in exchange for the
new notes will be retired and canceled and cannot be reissued. The issuance of
the new notes, therefore, will not result in any change in our capitalization.
We used the $50.9 million of net proceeds from the sale of the old notes,
cash on hand and additional funds provided by an affiliate of Maritima to
purchase an aggregate $100.0 million of loans made under the credit facilities
providing financing for the construction of the AMETHYST 6 and AMETHYST 7. These
loans consist of $47.0 million of loans made under the AMETHYST 6 credit
facility and $53.0 million of loans made under the AMETHYST 7 credit facility.
CAPITALIZATION
The following table sets forth our consolidated capitalization as of
December 31, 1999. The issuance of the new notes will not result in any change
in our capitalization.
You should read this table in conjunction with "Prospectus
Summary--Summary Consolidated Financial Data," "Use of Proceeds," "Selected
Historical Financial Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operation," the financial statements and related notes
and other financial and operating data included elsewhere in this prospectus.
AS OF DECEMBER 31, 1999
-----------------------
(in thousands)
Cash and Cash Equivalents ........................... $ 15,604
========
Related Party Advances .............................. $ 29,633*
--------
Long-Term Debt:
Senior Secured Notes ............................. 53,000
AMETHYST 6 and AMETHYST 7 Credit Facilities ...... 133,433
AMETHYST 4 and AMETHYST 5 Credit Facilities ...... 123,642
--------
Total Long-Term Debt ................................ 310,075
--------
Short-Term Obligations Expected to Be Refinanced .... 40,335
--------
Shareholders' Equity:
Common Stock, 10,500 shares, $1.00 par value ..... 11
Additional Paid-in Capital ....................... 104,989
Surplus Accumulated in the Development Stage ..... 1,489
--------
Total Shareholders' Equity .......................... 106,489
--------
Total Capitalization ................................ $486,532
========
- --------------------------
* Represents advances by our owners.
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SELECTED HISTORICAL FINANCIAL DATA
The following selected consolidated financial information as of the dates
and for the periods indicated has been derived from our December 31, 1999 and
December 31, 1998 consolidated financial statements included elsewhere in this
prospectus. It is not complete and may not contain all of the information that
you should consider. You should read this information in conjunction with the
entire prospectus, including the discussion under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the consolidated financial statements and related notes included elsewhere in
this prospectus. We have no operating history and no operating revenue, and we
have been in the development stage since our formation. No ratio of earnings to
fixed charges has been computed since it would not be meaningful.
<TABLE>
<CAPTION>
INCEPTION YEAR INCEPTION
(MARCH 27, 1998) ENDED (MARCH 27, 1998)
TO DECEMBER 31, 1998 DECEMBER 31, 1999 TO DECEMBER 31, 1999
-------------------- ----------------- --------------------
(in thousands)
<S> <C> <C> <C>
Consolidated Statement of Income Data:
Interest income .............................. $ 167 $ 1,402 $ 1,569
Other income (expense) ....................... (109) 29 (80)
--------- --------- ---------
Net income ................................... $ 58 $ 1,431 $ 1,489
========= ========= =========
Other Data:
Capital expenditures ......................... $ 210,526 $ 220,067 $ 430,593
Consolidated Balance Sheet Data
(at end of period):
Cash and cash equivalents .................... $ 18,172 $ 15,604 $ 15,604
Total assets ................................. 343,080 540,253 540,253
Long-term debt ............................... 94,738 310,075 310,075
Shareholders' equity ......................... 59 106,489 106,489
Consolidated Statement of Cash Flows Data:
Investing Activities ......................... $(210,526) $(220,067) $(430,593)
Financing Activities ......................... 228,640 216,068 444,708
</TABLE>
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis in conjunction with
the consolidated financial statements and related notes included elsewhere in
this prospectus.
OVERVIEW
We were organized in 1998 to construct, equip, own and charter our rigs.
Since inception, we have been in the development stage and have had no operating
revenues. An aggregate of approximately $430.6 million had been expended on
construction and equipping of our rigs through December 31, 1999. We estimate
that the total cost of constructing, equipping and mobilizing our rigs will be
approximately $719.7 million, including $47.2 million for contingencies and
$59.6 million for construction period interest but excluding increased costs
that may result from the current status of the AMETHYST 4 and AMETHYST 5 at
TDI-Halter and late delivery penalties. We had a consolidated net worth of
approximately $106.5 million as of December 31, 1999.
Each of our subsidiaries has been formed as a British Virgin Islands
company with limited liability to construct, equip, own and operate one of our
rigs. None of our subsidiaries has had any operating history.
We have entered into service agreements with Maritima and Pride, directly
or through their affiliates, and Workships Contractors B.V. for the construction
management, operation and maintenance of our rigs. You should read the
discussion under the headings "Business--Construction, Mobilization and Delivery
to Petrobras--Construction Management," "Business--Operating Management" and
"Certain Relationships and Related Transactions" for a description of these
agreements.
RESULTS OF OPERATIONS
Since our inception, we have engaged in no operations other than managing
construction of our rigs and related matters. To date, we have not generated any
operating revenues other than primarily interest income on unexpended cash.
Interest income amounted to $1.6 million for the period from inception (March
27, 1998) to December 31, 1999 and $1.4 million for the year ended December 31,
1999.
Owing to our lack of operating history, our historical results of
operations are not meaningful or indicative of future results. Our results of
operations in the future will depend on the construction of, and earnings from,
our rigs and our level of operating expenses.
During the last quarter of 1997 and all of 1998 and 1999, Maritima and
Pride, their affiliates and we have focused our efforts on the following:
o completing basic engineering and design for our rigs
o designing implementation strategies for constructing, equipping and
mobilizing our rigs
o obtaining financing for our rigs
o developing basic policies and operating procedures to govern the
start-up of operations
o structuring our organization and management
o selecting shipyards
o placing orders for owner-furnished equipment
o managing the construction of our rigs
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1999, we had cash on hand of $15.6 million. This cash
balance remained after we used $40.0 million, together with the $50.9 million
net proceeds from the sale of the old notes and an advance of $9.1 million
provided by an affiliate of Maritima, to purchase an aggregate $100.0 million of
loans made under the credit facilities providing financing for the AMETHYST 6
and AMETHYST 7. We repaid the $9.1 million advance in November 1999.
In December 1998, we entered into credit facilities to provide financing
for the AMETHYST 6 and AMETHYST 7 with affiliates of Mitsubishi Corporation. The
credit facility for the AMETHYST 6 permits drawings of up to $160.0 million, and
the credit facility for the AMETHYST 7 permits drawings of up to $180.0 million.
Drawings under each credit facility may be made to pay construction costs under
the construction contract for each respective rig, interest under that credit
facility and, subject to limitations, selected operating costs and other
construction and mobilization costs for that rig. In addition, pursuant to an
intercompany agreement, up to $10.0 million of borrowings under the AMETHYST 7
facility may be on-loaned, without interest, for the completion and
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<PAGE>
mobilization of the AMETHYST 6. As of February 29, 2000, $44.4 million remained
available under the AMETHYST 6 credit facility and $40.7 million remained
available under the AMETHYST 7 credit facility. The AMETHYST 6 and AMETHYST 7
credit facilities contain covenants that are customary for structured
financings. These covenants limit our ability to obtain additional financing and
restrict our operations. You should read the discussion under the heading
"Business--Financing of Our Rigs--AMETHYST 6 and AMETHYST 7 Financing" beginning
on page 45 for more detailed information regarding the AMETHYST 6 and AMETHYST 7
credit facilities.
In April 1999, we entered into credit facilities to provide financing for
the AMETHYST 4 and AMETHYST 5 with affiliates of Citibank, N.A. The credit
facility for the AMETHYST 4 permits drawings of up to $149.6 million, and the
credit facility for the AMETHYST 5 permits drawings of up to $150.2 million. The
United States of America (through the Maritime Administration or MARAD) has
guaranteed repayment of principal and non-penalty interest (subject to a cap of
9% for floating rate borrowings) under each credit facility for the AMETHYST 4
and AMETHYST 5 up to 87.5% of the actual cost of each rig provided that the
other 12.5% of the actual cost has been funded outside of such credit facility.
In satisfaction of the 12.5% outside funding condition of the MARAD guarantee,
we have already funded $52.9 million, or approximately 15%, of the estimated
actual cost of each rig with related party advances and equity contributions
from our owners. Drawings under each credit facility for the AMETHYST 4 and
AMETHYST 5 may be made to pay construction costs (including owner-furnished
equipment and construction management costs) for the corresponding rig, interest
under the credit facility and guarantee fees to the United States of America. As
of February 29, 2000, $75.8 million remained available under the AMETHYST 4
credit facility and $90.3 million remained available under the AMETHYST 5 credit
facility. The AMETHYST 4 and AMETHYST 5 financings include covenants that are
customary for MARAD financings. These covenants limit our ability to obtain
additional financing and restrict our operations. You should read the discussion
under the heading "Business-- Financing of Our Rigs--AMETHYST 4 and AMETHYST 5
Financing" beginning on page 48 for more detailed information regarding the
AMETHYST 4 and AMETHYST 5 credit facilities.
The indenture for the old and new notes and the credit facilities
providing financing for our rigs place significant limitations on the use of
funds that we now hold and that we may generate in the future. You should read
the discussion under the heading "Description of New Notes--Covenants--
Limitations on Indebtedness" beginning on page 79 for information regarding the
limitations under the old and new notes on our ability to incur additional debt.
As of December 31, 1999, we had expended an aggregate of $430.6 million on
construction and equipping of our rigs, including payments to shipyards
aggregating $224.0 million and payments to suppliers of owner-furnished
equipment aggregating $122.6 million. As of such date, $123.6 million had been
drawn on the AMETHYST 4 and AMETHYST 5 credit facilities and $233.5 million had
been drawn on the AMETHYST 6 and AMETHYST 7 credit facilities, leaving us
additional borrowing capacity of $176.2 million under the AMETHYST 4 and
AMETHYST 5 credit facilities and $106.5 million under the AMETHYST 6 and
AMETHYST 7 credit facilities. The total additional borrowing capacity under the
credit facilities providing financing for our rigs of $282.7 million, together
with the $430.6 million expended to date and cash on hand of $15.6 million,
yields a total of $728.9 million, representing an excess of $9.2 million over
the total estimated cost of constructing, equipping and mobilizing our rigs.
This excess may be applied toward our working capital needs.
We currently contemplate that our current sources of funds will be
sufficient to fund the remaining development, construction, equipment,
mobilization and financing costs of our rigs and any working capital needs
during the construction, mobilization and start-up periods based on the
following assumptions:
o there will be no delays at Daewoo that will delay or prevent delivery
of the AMETHYST 6 and AMETHYST 7
o at least 87.5% of any increased costs that may result from resolution
of the current dispute with the builder of the AMETHYST 4 and AMETHYST
5 will be funded through increases of the credit facilities providing
substantially all of the financing for our rigs
o our lenders will continue to fund the construction of our rigs despite
Petrobras' threatened cancellation of our charters and the suspension
of construction at TDI-Halter
o any penalties which may be imposed by Petrobras under the charters for
late delivery of our rigs will not be imposed at the time of delivery
of our rigs
We have not sought any financing for our rigs other than the credit facilities
described in the preceding two paragraphs and the notes. In the event we lack
sufficient funds to carry out our current operating plan as a result of the
contingencies described below or for any other reason, we may seek to raise
additional capital, either from our owners or other public or private capital
markets. We may also seek additional funding through strategic partnerships and
other financing mechanisms. We cannot assure that such funding will be available
on terms acceptable to us or allowable under the indenture. If adequate funds
are not available, we may be required to curtail significantly the construction
of one or more of our rigs or to obtain funds on terms which are not optimal.
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<PAGE>
We may, in the future, choose to raise additional capital due to advantageous
market conditions or strategic considerations even if we continue to have
sufficient funds for our current operating plan.
On January 20, 2000, Daewoo signed a memorandum of understanding on
corporate/debt restructuring with its creditors as part of the ongoing effort to
improve the Daewoo group's financial structure. If Daewoo's financial condition
worsens after the restructuring or if Daewoo is unable to complete the
restructuring successfully, Daewoo's ability to complete our rigs could be
adversely affected. We currently do not have an alternate building site to which
we can shift construction of the rigs if Daewoo cannot complete construction.
Given that the AMETHYST 6 and AMETHYST 7 are near completion, we do not foresee
any immediate problems that would delay or prevent delivery of our rigs. We can
give no assurances, however, that the continued efforts of the Daewoo group to
improve its financial and corporate structure will not distract management or
otherwise disrupt the normal business activities of Daewoo or that other
problems will not arise in the future that may delay or prevent delivery of our
rigs. You should read the risk factors relating to the performance of Daewoo
beginning on page 10 for more detailed information regarding contingencies
relating to the status of construction of the AMETHYST 6 and AMETHYST 7 and, in
particular, our limited ability to recover under the Export-Import Bank of
Korea's refund guarantees we obtained to support Daewoo's obligations under the
construction contracts for those rigs.
In early January 2000, Friede Goldman Halter, Inc., the parent of
TDI-Halter, notified us that construction of the AMETHYST 4 and AMETHYST 5 was
being suspended because of alleged delays in receiving detailed engineering work
and our previous rejection of the shipyard's requests for extensions of the
construction contract delivery dates. We have denied TDI-Halter's claims and,
together with MARAD, have commenced negotiations with TDI-Halter and Friede
Goldman Halter to determine whether there is an acceptable basis for the
resumption by TDI-Halter of the construction of our rigs. In addition, we are
evaluating other options that include rescinding the construction contracts for
the AMETHYST 4 and AMETHYST 5 and exercising our remedies under those contracts
or related performance bonds and performance guarantees to recover our costs.
Based on the developments with TDI-Halter, the lenders under the AMETHYST 4 and
AMETHYST 5 credit facilities could cease funding or accelerate the repayment of
those borrowings. If these lenders cease funding (which they have not yet
indicated that they will do), we would not be able to complete construction of
the AMETHYST 4 and AMETHYST 5 unless we obtain new funding from other sources or
an agreement of those lenders to resume funding on terms acceptable to them. In
this event, we would continue to be liable for owner-furnished equipment in the
amount of $24.9 million in addition to the $53.2 million we have already paid
and would have continued liability under the service agreements for construction
management of our rigs. In addition, the acceleration of the repayment of the
MARAD-guaranteed borrowings would constitute an event of default under the old
and new notes. You should read the risk factors relating to the performance of
TDI-Halter beginning on page 12 and the discussion under the heading
"Business--Status of Construction of Our Rigs" beginning on page 35 for more
detailed information regarding contingencies relating to the status of
construction of the Amethyst 4 and AMETHYST 5 and, in particular, our limited
ability to recover under the bonds and guarantees we obtained to support
TDI-Halter's obligations under the construction contracts for those rigs.
Our charters with Petrobras specify delivery dates in June and July 1999
for the AMETHYST 4 and AMETHYST 5 and December 1999 for the AMETHYST 6 and
AMETHYST 7. We were unable to meet those delivery dates. Under the existing
charters, Petrobras is entitled to impose daily penalties for late delivery of
up to 30% of a rig's operating rate (and, in addition, up to 30% of the
mobilization fee in the case of the AMETHYST 5). If Daewoo delivers the AMETHYST
6 and AMETHYST 7 on their construction contract delivery dates and our
mobilization time to Brazil does not exceed our allowance for mobilization,
Petrobras will be entitled to impose late delivery penalties of $8.9 million for
the AMETHYST 6 and $8.3 million for the AMETHYST 7. We currently anticipate that
the AMETHYST 6 and AMETHYST 7 will be delivered on or before their construction
contract delivery dates. Given the current status of the AMETHYST 4 and AMETHYST
5 at TDI-Halter, however, there is substantial uncertainty as to whether the
AMETHYST 4 and AMETHYST 5 will be completed. Even if they are completed and
chartered to Petrobras under the existing charters, we will deliver the AMETHYST
4 and AMETHYST 5 to Petrobras no earlier and probably later than 540 days beyond
the delivery dates specified in their existing charters. Based on late delivery
of 540 days, Petrobras would be entitled to impose late delivery penalties of
$16.2 million for the AMETHYST 4 and $15.6 million for the AMETHYST 5. For each
day of delay beyond 540 days, Petrobras would be entitled to impose additional
late delivery penalties of $36,389 for the AMETHYST 4 and $30,828 for the
AMETHYST 5 up to a maximum total penalty of $26.6 million for the AMETHYST 4 and
$30.0 million for the AMETHYST 5. The maximum penalty would be reached after 820
days of delay for the AMETHYST 4 and 1,000 days of delay for the AMETHYST 5.
Petrobras has threatened to cancel our charters. We can give no assurance,
therefore, that our rigs will be chartered to Petrobras or any other customer on
terms that are acceptable to us or lenders providing substantially all of the
financing for those rigs. If, despite Petrobras' threatened cancellation of our
charters, our rigs operate initially under those charters or renegotiated
charters with Petrobras, our subsidiaries will receive operating rates and other
amounts payable under those charters following delivery of our rigs to Petrobras
and commencement of operations. In addition, Maritima will, in that event,
receive and make available to us the operating rates and other amounts payable
under the service rendering contracts for our rigs, which amounts have been
committed entirely to pay local currency expenses incurred in operating our
rigs. Pending the resolution of our contingency with Petrobras, we have not
undertaken any remarketing efforts for any of our rigs. You should read the
discussion
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<PAGE>
under the heading "Business--Threatened Cancellation of Our Charters"
beginning on page 36 for more detailed information regarding the threatened
cancellation of our charters.
The charters permit Petrobras to impose the late delivery penalties at the
time of late delivery of our rigs. Prior to threatening to cancel our charters,
Petrobras indicated to us in writing that it has been its policy to negotiate
other forms of payment, such as an agreed installment plan or the discount of
the penalties from the end of the contract. This policy may not be applied,
however, given Petrobras' threatened cancellation of our charters and our
related litigation with Petrobras. We cannot assure, therefore, that Petrobras
will not impose such penalties at the time of delivery of our rigs. Even if
Petrobras cancels our existing charters for late delivery, moreover, Petrobras
could make a claim against us for damages that might include the value of the
late delivery penalties. We currently do not have a source of funds available to
pay the late delivery penalties at delivery or, if Petrobras cancels our
charters, at any other time unless we obtain replacement charters that have
sufficiently favorable terms, except that, in connection with the AMETHYST 4 and
AMETHYST 5 credit facilities, Maritima and Pride have each severally guaranteed
payment of up to $20.5 million (or a total of $41 million between them) for late
arrival penalties to Petrobras under the charters for, and Brazilian ad valorem
taxes pertaining to, the AMETHYST 4 and AMETHYST 5. If we are unable to pay the
penalties when imposed, Petrobras would have a claim against us and, if it has
not terminated the charters for late delivery, the right to terminate the
charters for non-payment. The imposition of the penalties at delivery or in
connection with a cancellation of the charters or the termination of our
charters for non-payment of the late delivery penalties could have a material
adverse effect on our ability to pay the old and new notes and other debt
obligations.
We have the following additional commitments and contingencies:
o OVERALL OPERATING MANAGEMENT. Our subsidiaries entered into agreements
with Formaritima Ltd., a company incorporated in the British Virgin
Islands owned equally by an affiliate of Maritima and by a wholly owned
subsidiary of Pride, to provide overall operating management services
to our rigs beginning upon delivery of the rigs by the shipyards and
continuing through the terms of the charters. In addition to
reimbursements for actual costs incurred, these agreements and related
subcontracts provide for daily management fees aggregating
approximately $5.5 million per year (excluding management fees to be
paid pursuant to the marine and nautical agreements described below).
If a rig is sold and the corresponding management agreement is
terminated, Formaritima will be entitled to a lump sum termination
payment equal to the net present value of its management fees ($1,250
per day) over the remaining term of such rig's charter, calculated
using a discount factor of 10% per annum.
o MARINE AND NAUTICAL SERVICES AGREEMENT. Our subsidiaries (either
directly or through Formaritima) entered into agreements with Workships
Contractors B.V. to provide marine and nautical services to our rigs
beginning upon delivery of the rigs by the shipyards and continuing
through the terms of the charters. These agreements provide for daily
management fees aggregating approximately $1.8 million per year. If a
rig is sold and the corresponding marine and nautical services
agreement is terminated, Workships will be entitled to a lump sum
termination payment equal to the net present value of its management
fees over the remaining term of the rig's charter, calculated using a
discount factor of 10% per annum.
o LICENSING AGREEMENTS AND CONTINGENCY PAYMENT. BiGem Holdings N.V., a
Netherlands Antilles corporation owned 70% by affiliates of Maritima
and 30% by an indirect subsidiary of Pride, purchased the rights to the
Amethyst design for $9.5 million in October 1997 from Scheepswerf de
Hoop Lobith B.V. BiGem is in dispute with de Hoop over the quality of
the documentation delivered by de Hoop with the Amethyst design. BiGem
has withheld payments of $2.3 million from de Hoop and does not intend
to make any further payments. This dispute is now in arbitration and
BiGem believes that no further payments will need to be made. We deem
the probability that BiGem will need to make additional payments to be
remote. BiGem has granted each of our four subsidiaries an irrevocable,
non-exclusive, perpetual license to construct one rig based on the
Amethyst design for a licensing fee of $1,583,333, payable in six
installments. The first and second installments have previously been
paid by each subsidiary with reduction to reflect the amount withheld
by BiGem from de Hoop. Each of the last four installments will become
due semi-annually beginning on delivery of the relevant rig. Our
subsidiaries are not required by their licensing agreements to pay more
than $1,583,333 for each license but, in the event that BiGem cannot
obtain relief from its payment obligations to de Hoop, our subsidiaries
will be required to pay BiGem the full $1,583,333 for each license.
o OTHER COMPENSATION TO AFFILIATES OF MARITIMA. Drillpetro Inc., a
special purpose affiliate of Maritima, is entitled to a lump-sum amount
of $2.5 million (payable in installments of $500,000, $1.0 million and
$1.0 million for the AMETHYST 5, AMETHYST 6 and AMETHYST 7,
respectively, within three days of receipt of the corresponding
mobilization payments under the relevant Petrobras charter or, in the
event of no mobilization fee, within 45 days of delivery and acceptance
of the relevant rig) for services rendered in connection with the
development of conceptual and design engineering, shipyard negotiations
and technical negotiations with Petrobras. In addition, Drillpetro will
be paid the following fees: (i) $4,000 in the case of AMETHYSTS 6 and
AMETHYST 7 and (ii) $2,000 in the case of AMETHYSTS 4 and
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AMETHYST 5, for each day the relevant rig works under its charter,
plus (i) in the case of the AMETHYST 4, 1% of the daily rate paid
under its charter (excluding bonuses) and (ii) in the case of the
AMETHYST 6 and AMETHYST 7, 2% of the daily rates paid under their
charters (excluding bonuses). Further, two other affiliates of
Maritima, U.K. Guaranty & Bonding Corp. Limited and Rapisardi
Investment Limited, will receive agency fees of 3% and 2% of the full
operating rates under the Petrobras contracts (excluding bonuses),
respectively, payable monthly upon receipt of payments from Petrobras,
for their assistance in negotiating the Petrobras contracts and
certain amendments to the Petrobras contracts.
We anticipate that we will be required to refinance the old and new notes
at maturity through the issuance of new indebtedness. We cannot assure that such
refinancing will be available on terms acceptable to us.
We have analyzed our year 2000 compliance and do not expect to suffer
significant business interruptions or incur material costs in this regard.
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BUSINESS
ABOUT AMETHYST FINANCIAL COMPANY LTD. AND SUBSIDIARIES
We were formed in 1998 to construct, own and operate four dynamically
positioned, self-propelled, fourth-generation semi-submersible drilling rigs
capable of performing drilling and subsea well intervention and maintenance
services in water depths of up to 5,000 feet. We began construction of our rigs,
to be known as the AMETHYST 4, AMETHYST 5, AMETHYST 6 and AMETHYST 7, in the
second quarter of 1998 using the Amethyst design. The Amethyst design
incorporates state-of-the-art technology for deepwater drilling to create
compact, multi-functional rigs that we believe will offer a cost-effective
alternative to larger, more costly rigs and vessels. Once completed, each rig
will be owned by one of our four wholly owned subsidiaries. The subsidiaries
have entered into contracts denominated in U.S. dollars to charter the rigs to
Petroleo Brasileiro S.A.--Petrobras, the Brazilian national oil company, for
initial terms ranging from six to eight years. You should read the discussion
below under the headings "--Status of Construction of Our Rigs" and
"--Threatened Cancellation of Our Charters" for information regarding the
suspension of construction on the AMETHYST 4 and AMETHYST 5 and the threatened
cancellation of our charters and the discussion under the heading "Business--Our
Rigs" beginning on page 38 for further detail regarding the technical
capabilities of our rigs.
Our registered office is located at Amethyst Financial Company Ltd., c/o
Arias Fabrega & Fabrega Trust Co. BVI Limited, 325 Waterfront Drive, Omar Hodge
Building, 2nd Floor, Wickham's Cay, Road Town, Tortola, British Virgin Islands.
STATUS OF CONSTRUCTION OF OUR RIGS
The AMETHYST 6 is approximately 82% complete and the AMETHYST 7 is
approximately 86% complete. We expect that these rigs will be delivered to
Petrobras in September and October 2000. Of the total construction contract
price of $170.0 million for both rigs (excluding the cost of owner furnished
equipment), we have paid $136.0 million. Of the total $90.6 million budgeted for
owner-furnished equipment, we have paid approximately $73.0 million. To date, we
have funded our expenditures on the AMETHYST 6 and AMETHYST 7 (including
financing costs) with approximately $207.8 million of borrowings from
third-party lenders and approximately $54.0 million of related party advances
and equity contributions from our owners.
Based on their construction contract delivery dates and an allowance for
mobilization, the AMETHYST 4 and AMETHYST 5 were to have been delivered to
Petrobras in July and September 2000. In early January 2000, however, Friede
Goldman Halter, Inc., the parent of TDI-Halter, L.P., the shipyard building the
AMETHYST 4 and AMETHYST 5, notified us that construction of our rigs was being
suspended because of alleged delays in receiving detailed engineering work and
our previous rejection of the shipyard's requests for extensions of the
construction contract delivery dates. Subsequently, TDI-Halter asserted claims
against our subsidiaries that will own the AMETHYST 4 and AMETHYST 5 for an
extension of the construction contract delivery dates on grounds of permissible
delay within the terms of the construction contracts and damages of $68.5
million for alleged breach of those contracts. We have denied TDI-Halter's
claims and, as required by the construction contracts, have initiated
proceedings in the Commercial Court in London seeking a determination of the
merits of those claims. Together with the United States Maritime Administration
(MARAD), which has guaranteed repayment of construction borrowings for the
AMETHYST 4 and AMETHYST 5, we have commenced negotiations with TDI-Halter and
Friede Goldman Halter to determine whether there is an acceptable basis for the
resumption by TDI-Halter of the construction of our rigs. We are also evaluating
other options that include rescinding the construction contracts for the
AMETHYST 4 and AMETHYST 5 and exercising our remedies under those contracts or
related performance bonds and performance guarantees to recover our costs.
When TDI-Halter suspended construction of the AMETHYST 4 and AMETHYST 5,
the AMETHYST 4 was approximately 60% complete and the AMETHYST 5 was
approximately 35% complete. Of the total construction contract price of $168.0
million for both rigs (excluding the cost of owner furnished equipment), we have
paid approximately $105.0 million. Of the total $90.6 million budgeted for
owner-furnished equipment, we have paid approximately $53.2 million. In the
event the AMETHYST 4 and AMETHYST 5 are not completed, our subsidiaries that
will own those rigs will continue to be liable for owner-furnished equipment in
the amount of $24.9 million in addition to the $53.2 million we have already
paid and would have continued liability under the service agreements for
construction management of our rigs. To date, we have funded our expenditures on
the AMETHYST 4 and AMETHYST 5 (including financing costs) with approximately
$133.7 million of MARAD-guaranteed borrowings and approximately $53.5 million of
related party advances and equity contributions from our owners. Based on the
developments with TDI-Halter, however, the lenders of the MARAD-guaranteed
borrowings could cease funding or accelerate the repayment of those borrowings.
If these lenders cease funding (which they have not yet indicated that they will
do), we would not be able to complete construction of the AMETHYST 4 and
AMETHYST 5 unless we obtain new funding from other sources or an agreement of
those lenders to resume funding on terms acceptable to them. The acceleration of
the repayment of the MARAD-guaranteed borrowings would constitute an event of
default under the old and new notes. In this event or in any event, you will not
be able to rely on the AMETHYST 4 or the AMETHYST 5 or the amounts that we may
be able to recover under the construction contracts or related performance bonds
and performance guarantees as a source of repayment or security for the old or
new notes since the lenders of the MARAD-guaranteed borrowings
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and any other creditor of our subsidiaries that will own those rigs will have
priority over you as to those rigs and any proceeds derived from those rigs.
THREATENED CANCELLATION OF OUR CHARTERS
Our charters with Petrobras specify delivery dates in June and July 1999
for the AMETHYST 4 and AMETHYST 5 and December 1999 for the AMETHYST 6 and
AMETHYST 7. We were unable to meet those delivery dates. While each charter
states that it may be canceled by Petrobras if the chartered rig is not
delivered within 180 days after the delivery date specified, Petrobras provided
a letter in May 1998 waiving its right to cancel the charters and related
service rendering contracts unless delay in delivery exceeds 540 days and, even
then, only if best endeavors to make delivery are not being made. In October
1999, however, Petrobras sent a letter stating that it intends to cancel the
charters and service rendering contracts for our rigs when delay in delivery
exceeds 180 days in accordance with its right originally specified in the
charters and reserving its right to seek compensation for damages. That 180-day
period expired in December 1999 in the case of the AMETHYST 4 and January 2000
in the case of the AMETHYST 5. Pending proceedings to determine the
enforceability of the extension granted by Petrobras in its May 1998 letter, we
have obtained a preliminary injunction in the Brazilian courts against
Petrobras' cancellation of our charters.
Given the current status of the AMETHYST 4 and AMETHYST 5 at TDI-Halter,
there is substantial uncertainty as to whether the AMETHYST 4 and AMETHYST 5
will be completed. Even if they are completed, we cannot deliver the AMETHYST 4
and AMETHYST 5 to Petrobras within the 540-day period permitted under the May
1998 Petrobras letter. We currently expect the AMETHYST 6 and AMETHYST 7 to be
delivered to Petrobras in September and October 2000. These delivery dates are
more than 180 days but less than 540 days after the delivery dates specified for
those rigs in the Petrobras charters. If we are unsuccessful in our litigation
with Petrobras in the Brazilian courts, therefore, Petrobras could cancel each
of our charters upon the lapse of 180 days of delay in delivery. Even if the
540-day extension granted by Petrobras in its May 1998 letter is determined to
be enforceable, however, the charters for the AMETHYST 4 and AMETHYST 5 could
become subject to cancellation at the end of the 540-day period. The
cancellation by Petrobras of the charter for one of our rigs could result in
acceleration of the repayment of borrowings under the credit facility providing
substantially all of the financing for the construction of that rig. The
acceleration of the repayment of those borrowings constitutes an event of
default under the old and new notes.
We currently are engaged in discussions with Petrobras to resolve the
matters relating to the threatened cancellation of our charters. Based on its
announced deepwater drilling program and the performance characteristics of the
Amethyst design, we believe Petrobras has significant needs for all of our rigs.
While we are optimistic that Petrobras will employ all of our rigs upon their
completion, we can give no assurance that any of our rigs will be chartered to
Petrobras or to any other customer on terms that are acceptable to us or to our
lenders. Whatever the outcome of our negotiations with Petrobras, you will not
be able to rely on the AMETHYST 4 or the AMETHYST 5 or the revenues from their
charters as a source of repayment or security for the old or new notes since the
lenders under credit facilities providing substantially all of the financing for
those rigs and any other creditor of our subsidiaries that will own those rigs
will have priority over you as to those rigs and any proceeds derived from those
rigs. You should read the discussion under the heading "Risk Factors--Petrobras
has threatened the cancellation of our charters" beginning on page 14 for more
detailed information regarding the effects of Petrobras' threatened cancellation
of our charters.
Petrobras' October 1999 letter threatening cancellation of the charters
for our rigs was received following the submission of claims by Maritima and our
construction manager, Petrodrill Engineering N.V., in connection with the
cancellation by Petrobras of the charters for two other rigs, the AMETHYST 2 and
AMETHYST 3, that were being constructed concurrently with our rigs. Petrobras
initially awarded Maritima charters for six rigs, the AMETHYST 2 and AMETHYST 3
and our four rigs. Our owners, Maritima Petroleo e Engenharia Ltda. and Pride
International, Inc., organized a joint venture company, Petrodrill Offshore
Inc., with six subsidiaries to own and charter the rigs to Petrobras. The
AMETHYST 2 and AMETHYST 3 were to have commenced operations in the Campos Basin
offshore Brazil in late 1999 and early 2000, but the construction contracts for
those two rigs were terminated in November 1998 after the shipyard at which the
rigs were to be constructed filed for protection from its creditors. In May
1999, Petrobras canceled the charters and service rendering contracts for the
AMETHYST 2 and AMETHYST 3 based on alleged late delivery. Maritima and
Petrodrill Engineering submitted letters to Petrobras alleging that Petrobras'
termination of the charters and service rendering contracts for the AMETHYST 2
and AMETHYST 3 was wrongful. Petrodrill Engineering's letter asserted that,
because of Petrobras' May 1998 letter, Petrobras had waived its right to cancel
the charters and service rendering contracts unless the delay in delivery
exceeded at least 540 days. In addition, Maritima's letter asserted that the
work stoppage resulting from the bankruptcy of the shipyard for the AMETHYST 2
and AMETHYST 3 was a force majeure event that did not permit termination and,
further, that the joint venture was prepared to fulfill the contracts by
contracting other available rigs to replace the AMETHYST 2 and AMETHYST 3. The
letters to Petrobras specified damages of approximately $95 million, none of
which involve claims made by us or on our behalf.
Following termination of the construction contracts for the AMETHYST 2 and
AMETHYST 3, Petrodrill Offshore transferred the shares of each of its six
subsidiaries to us for nominal consideration, and we transferred the shares of
the subsidiaries that held the charters for the AMETHYST 2 and AMETHYST 3 to a
separate joint venture company owned by Maritima and Pride. Petrodrill Offshore
has reached agreement with the prime contractor and its affiliates for the
settlement of all claims relating to the construction
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contracts for the AMETHYST 2 and AMETHYST 3 and their termination. Neither we
nor any of our subsidiaries were or are a party to any of the claims or disputes
relating to termination of these construction contracts.
ABOUT OUR OWNERS
We are owned 61.7% by affiliates of Maritima, a Brazilian privately held
company with limited liability, 26.4% by an indirect wholly owned subsidiary of
Pride, a publicly held Louisiana corporation, and 11.9% by two investment
partnerships managed by First Reserve Corporation, a private equity firm.
Maritima and Pride, directly or through affiliates, have primary contractual
responsibility for our operations.
The following chart depicts our ownership structure and the principal
agreements relating to the construction and operation of our rigs:
<TABLE>
<CAPTION>
<S> <C>
------------ ------------ ------------
| Maritima | | Pride | | First |
|Affiliates| |Affiliates| | Reserve |
------------ ------------ | Funds |
61.7% | | 26.4% ------------
| | | 11.9%
| | |
-----------------------------------------------
| Amethyst Financial |
| Company Limited |
-----------------------------------------------
| 4 Licensing Agreements ----------------
| --------------------------------------- |Maritima/Pride|--| 2 Marine
| 100% | 4 Construction Management Agreements |Affiliates | | and
| |-------------------------------------- ---------------- | Nautical
--------------------------| 4 Management Agreements ----------- |Agreements
| Four Special Purpose |-------------------------------------- |Workships|--------
| Companies |2 Marine & Nautical Service Agreements -----------
- ----------- 4 Construction Contracts |are constructing and will|-------------------------------------- ----------
|Shipyards|--------------------------| own and operate the rigs| 4 Charters |Petrobas|
- ----------- --------------------------|-------------------------------------- ----------
| 4 Service
|Rendering Contracts
-----------
| Maritima|
-----------
</TABLE>
MARITIMA
Maritima, headquartered in Rio de Janeiro, Brazil, provides a range of
services and equipment to companies participating in the oil and gas exploration
and production sector in Brazil. Since 1981, Maritima and its affiliates have
participated in projects for Petrobras that have ranged from rig and vessel
acquisitions, upgrades and conversions to providing local support services for
offshore rig operations. Maritima and its affiliates have typically participated
in these projects through joint ventures, consortiums and joint operating and
agency relationships with international drilling and marine construction
companies such as:
o Pride
o Diamond Offshore Drilling, Inc.
o Falcon Drilling Company, Inc. (now part of R&B Falcon Corporation)
o Stena Offshore Ltd.
o Mitsui Offshore Development and Engineering Company (MODEC) Inc.
o Astilleros Espanoles S.A.
Maritima currently provides shore-based facilities and local logistical
support for two of Pride's semi-submersible drilling rigs, the AMETHYST 1 (the
first rig built with the Amethyst design) and the NYMPHEA. Both of those rigs
are operating offshore Brazil under long-term contracts with Petrobras. In
addition, Maritima and its affiliates currently are managing or recently have
completed the conversion of four vessels or semi-submersible platforms for
Petrobras to be used as floating production and storage units offshore Brazil.
PRIDE
Pride, headquartered in Houston, Texas and listed on the New York Stock
Exchange, is an international provider of contract drilling and related
services, operating both offshore and on land. Pride has focused its growth
strategy on the higher margin offshore and international drilling markets. Pride
operates a global fleet of 291 rigs, including two drillships, three
semi-
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submersible rigs and 48 other offshore rigs. Pride's deepwater fleet includes
the semi-submersibles AMETHYST 1, NYMPHEA and SOUTH SEAS DRILLER and, through a
51%-owned joint venture, the PRIDE AFRICA and the PRIDE ANGOLA, each of which is
an ultra-deepwater dynamically positioned drillship. Through its subsidiary
Pride-Foramer S.A., Pride has participated in the design and construction of
four drillships and two semi-submersible rigs in addition to the PRIDE AFRICA,
PRIDE ANGOLA and our rigs and has drilled 47 wells in water depths greater than
1,300 feet. Pride-Foramer has extensive experience operating offshore Brazil,
having drilled at least 15 wells offshore Brazil in water depths ranging between
1,900 and 3,300 feet.
FIRST RESERVE
First Reserve specializes in the energy industry. Founded in 1980, the
firm has offices in Houston, Texas, Greenwich, Connecticut and Denver, Colorado
and manages a portfolio of energy holdings with a market value in excess of $1.5
billion. First Reserve's portfolio companies include Pride, CalDive
International, Weatherford International, Inc., and National Oilwell, Inc. Two
investment partnerships managed by First Reserve invested an aggregate $12.5
million in cash in our common equity in September 1999 in exchange for an 11.9%
interest. Such investment will be exchangeable after three years (or earlier in
certain events), at First Reserve's option, for shares of Pride common stock and
Pride, in turn, will have the option to acquire the First Reserve interest for
cash or Pride common stock once such interest becomes exchangeable for Pride
stock. If either of such options is exercised, Maritima will have the right to
purchase from Pride such portion of the First Reserve interest as will enable
Maritima to maintain ownership of 70% of the combined interests of Maritima and
Pride.
OUR RIGS
THE AMETHYST DESIGN
We began construction of our rigs in the second quarter of 1998 using the
Amethyst design. The Amethyst design incorporates state-of-the-art technology
for deepwater drilling to create a compact, multi-functional, self-propelled rig
that we believe offers a cost-effective alternative to larger, more costly rigs
and vessels. Our rigs will be enhanced versions of the AMETHYST 1, which, since
1996, has been conducting subsea well intervention and maintenance services for
Petrobras under a contract that expires in 2001. The Amethyst design, however,
has never been utilized for drilling under actual operating conditions. For this
reason, we cannot guarantee that the equipment on our rigs will function
properly as a whole, and we cannot fully predict the performance of each rig
under actual operating conditions. Our business and operating results could be
materially and adversely affected if any of our rigs do not perform as intended
in accordance with the Amethyst design under actual operating conditions.
BiGem Holdings N.V., a Netherlands Antilles corporation owned 70% by
affiliates of Maritima and 30% by an indirect subsidiary of Pride, purchased the
rights to the Amethyst design for $9.5 million in October 1997 from Scheepswerf
de Hoop Lobith B.V. BiGem is in dispute with de Hoop over the quality of the
documentation delivered by de Hoop with the Amethyst design. BiGem has withheld
payments of $2.3 million from de Hoop and does not intend to make any further
payments. This dispute is now in arbitration and BiGem believes that no further
payments will need to be made. We deem the probability that BiGem will need to
make additional payments to be remote.
BiGem has granted each of our four subsidiaries an irrevocable,
non-exclusive, perpetual license to construct or procure the construction of one
dynamically positioned, semi-submersible drilling rig based on the Amethyst
design. The licensing agreement provides that BiGem will furnish all necessary
documentation pertaining to the Amethyst design and requires each subsidiary to
pay BiGem $1,583,333 for its license, payable in six installments. The first and
second installments have previously been paid by each subsidiary with reduction
to reflect the amount withheld by BiGem from de Hoop. Each of the last four
installments will become due semi-annually beginning on delivery of the relevant
rig. Our subsidiaries are not required by their licensing agreements to pay more
than $1,583,333 for each license but, in the event that BiGem cannot obtain
relief from its payment obligations to de Hoop, our subsidiaries will be
required to pay BiGem the full $1,583,333 for each license.
SPECIFICATIONS
Our rigs will be dynamically positioned, self-propelled, fourth-generation
semi-submersible drilling rigs capable of performing drilling and subsea well
intervention and maintenance services in water depths of up to 5,000 feet. While
we have contracted with two different shipyards for the construction of our
rigs, all of our rigs (other than the AMETHYST 5, which will not initially be
outfitted for drilling) and their owner-furnished equipment will be
substantially identical.
Semi-submersible rigs are large floating platforms supported by a number
of columns. At the bottom of the columns, the rigs typically have two
ship-shaped hulls, or pontoons. When the rigs are in motion, the columns are
raised, so that only the hulls are in the water, thereby maximizing transit
speeds. Upon reaching their operating location, the hulls are filled with
ballast, and the rigs sink down, so approximately half the columns are in the
water. At this point, the rigs are said to be "semi-submerged," remaining afloat
in a position where the lower hull is below the water line, and the upper deck
protrudes well above the surface.
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This semi-submerged position provides stability to the rigs, allowing drilling
operations to be carried out in winds of significant force and wave heights of
significant magnitude. Semi-submersible rigs can be used in areas where weather
conditions are poor and water is too deep for jack-up rigs. While some larger
dynamically positioned semi-submersibles are capable of working in water depths
greater than 5,000 feet, the majority of existing semi-submersibles are
conventionally moored and are limited to a working water depth of no more than
3,000 feet.
Being "dynamically positioned," our rigs will not require a fixed mooring
system to stay in position while drilling in the seabed but will, instead, rely
on eight 2,100 horsepower omnidirectional thrusters mounted on the bottom of its
pontoons to remain in position. The dynamic positioning control system will be
fully redundant and will meet all current class requirements for dynamically
positioned operations. Our rigs are designed to be able to conduct drilling
operations in winds of up to 47 knots and wave heights of up to 42 feet when
semi-submersed. Our rigs' dynamic positioning capability will offer them an
advantage over moored rigs that require anchor chains and heavy anchors to
remain on location. The weight of anchors and anchor chains limits a moored
rig's water depth operating capability. In addition, in some areas, like
offshore Brazil, moored units may not be practical due to the presence of
extensive subsea production networks that could be damaged by anchors.
The main working platform of each rig will measure approximately 240 by
160 feet. When in operation, each rig's four columns will support the rig's
platform at approximately 23 feet above the water level. When the rig moves on
its twin pontoons, which will be approximately 250 feet long and 48 feet wide,
the rig's platform will remain approximately 60 feet above water. Each rig will
be self-propelled, capable of moving at speeds of up to 9 knots, and will weigh
approximately 11,000 tons. We believe that these characteristics will enable our
rigs to move between jobs more readily and efficiently than more typical larger,
heavier units that require a tow. In addition, we expect that the smaller size
and weight of our rigs will make them less costly to construct and operate than
traditional, large-displacement semi-submersible rigs.
We expect that our rigs' ability to stay on location and operate in
inclement wind and wave conditions despite their compact size and light weight
will enable them to operate in most offshore oil and gas producing regions in
the world.
The AMETHYST 4, AMETHYST 6 and AMETHYST 7 initially will be equipped to
conduct drilling and subsea well intervention and maintenance services while the
AMETHYST 5, in accordance with its existing charter, will be initially equipped
to conduct subsea well intervention and maintenance services only. We expect
that the cost of equipping the AMETHYST 5 for drilling services would total
approximately $2.5 million based on current costs. Our rigs will be equipped to
operate in up to 4,000 feet of water. We estimate that the cost of equipping our
rigs to operate in 5,000 feet rather than 4,000 feet would be approximately $2.0
million each based on current costs.
Each rig will be equipped with engines having approximately 28,000
aggregate horsepower to drive the thrusters and operate the drilling and other
equipment. This power will permit our rigs to conduct drilling and subsea well
intervention and maintenance operations at depths of up to approximately 20,000
feet. In addition, each rig will be able to carry a minimum of 3,200 tons of
equipment for drilling or subsea well intervention and maintenance operations in
its columns and on the main deck and will be able to accommodate an operating
crew of up to 115 people in one and two-man cabins.
CONSTRUCTION, MOBILIZATION AND DELIVERY TO PETROBRAS
We have contracted with Daewoo Heavy Industries Ltd. and TDI-Halter, L.P.
to construct our rigs pursuant to fixed-price construction contracts. In
addition, we have entered into firm fixed-price procurement contracts or letters
of intent with international suppliers to purchase all major high-specification
owner-furnished equipment that requires relatively long lead times for delivery.
We estimate that the total cost of constructing, equipping and mobilizing our
rigs, excluding increased costs that may result from the current status of the
AMETHYST 4 and AMETHYST 5 at TDI-Halter and late delivery penalties, will be
approximately $719.7 million, classified as follows:
ESTIMATED COST
--------------
(in millions)
Shipyard and Basic Design Engineering................... $346.6
Owner-Furnished Equipment............................... 181.2
Spare Parts, Manuals & Training......................... 17.4
Project Team, Reimbursables and Commission.............. 36.2
Contingencies........................................... 47.2
Construction Period Interest............................ 59.6
Construction Insurance/Transaction Costs................ 31.5
------
Total........................................... $719.7
======
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If the AMETHYST 4 and AMETHYST 5 are completed, the delays resulting from the
current suspension of construction on those rigs at TDI-Halter and any
settlement that we reach with TDI-Halter and its parent, Friede Goldman Halter,
Inc., could significantly increase the costs of constructing, equipping and
mobilizing our rigs.
THE SHIPYARDS
The AMETHYST 6 and AMETHYST 7 are under construction in Okpo, South Korea
by Daewoo. The AMETHYST 4 and AMETHYST 5 are under construction in the United
States by TDI-Halter, a wholly owned subsidiary of Friede Goldman Halter.
DAEWOO
GENERAL. Daewoo operates a 1,000-plus acre shipbuilding facility in Okpo,
South Korea. The Okpo site includes 86 acres of covered workshops, two drydocks,
one which can accommodate super tankers weighing up to one million tons, and two
floating docks. In addition, the Okpo site has state-of-the-art automated panel
lines, plasma cutters and paint shops which can accommodate 200-ton modules.
Daewoo's labor force exceeds 11,000. Since 1983, Daewoo has constructed over 30
offshore drilling structures and vessels.
RECENT DEVELOPMENTS. On January 20, 2000, Daewoo signed a memorandum of
understanding on corporate/debt restructuring with its creditors as part of the
ongoing effort to improve the Daewoo group's financial structure. As part of
this restructuring, Daewoo's shipbuilding business will be segregated into a
separate company and Daewoo will institute a debt buyout program for foreign
creditors intended to reduce Daewoo's debt level. If Daewoo's financial
condition worsens after the restructuring or if Daewoo is unable to complete the
restructuring successfully, Daewoo's ability to complete our rigs could be
adversely affected. We currently do not have an alternate building site to which
we can shift construction of the rigs if Daewoo cannot complete construction.
Given that the AMETHYST 6 and AMETHYST 7 are near completion, we do not foresee
any immediate problems that would delay or prevent delivery of our rigs. We can
give no assurances, however, that the continued efforts of the Daewoo group to
improve its financial and corporate structure will not distract management or
otherwise disrupt the normal business activities of Daewoo or that other
problems will not arise in the future that may delay or prevent delivery of our
rigs. In the event that Daewoo is placed in receivership, goes into bankruptcy
or otherwise seeks protection from its creditors as a result of a failed
restructuring, Daewoo may be unable to complete our rigs, we may not be able to
remove our rigs from the shipyard to complete construction and, as a practical
matter, our remedies against Daewoo will be limited and recovery could be
subject to extensive delays.
CONSTRUCTION CONTRACTS
Each Daewoo construction contract provides for the design,
construction, launching, equipping, completion, testing and loading out of a rig
for a contract price of $85.0 million, excluding the portion of the contract
price representing the cost of owner-furnished equipment and any credits for the
cost of builder's risk insurance. The contract price may be adjusted as agreed
by the parties or settled by an independent expert for any modifications to the
specifications of our rigs requested by us or required by law. The contract
price will be paid in five installments falling due at various times throughout
the construction period based on specified milestones, with approximately 20%
being due on delivery.
DELIVERY. The AMETHYST 6 has a contractual delivery date of July 30,
2000, and the AMETHYST 7 has a contractual delivery date of June 30, 2000, each
of which may be extended for permissible delays, including force majeure,
modifications to the rig specifications and delays in the delivery of and
defects in owner-furnished equipment. If a delay occurs in the delivery of a
rig, Daewoo will become obligated to pay $42,500 per day in liquidated damages
for the first 150 days after the delivery date.
TERMINATION. In the event that Daewoo has not delivered our rigs
prior to either 90 days from the contractual delivery date, as extended by
permissible delays, or 180 days from the contractual delivery date extended by
such days of permissible delay as are attributable to our fault, a construction
contract may be terminated at our option. We also have the right to terminate a
construction contract in the event that:
o Daewoo fails, without legal justification, to meet two
consecutive milestones within 90 days of the dates agreed for
those milestones
o Daewoo commits a material breach of the construction contract not
remedied within five business days of written notice thereof
o Daewoo is wound up, goes into receivership, becomes insolvent or
makes a special arrangement or composition with its creditors
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Daewoo has the right to terminate a construction contract in the event that:
o we fail to make the installment payments due under the
construction contract
o we fail, without legal justification, to take delivery of our
rigs in accordance with the construction contract
o we are wound up, go into receivership, become insolvent or make a
special arrangement or composition with our creditors
and any such default continues for 30 days.
DEVIATIONS FROM TARGET WEIGHT. The Daewoo construction contracts
have been structured to create incentives for Daewoo to meet established target
weights. In the event Daewoo fails to meet the target weight for any rig, Daewoo
will be required to pay liquidated damages up to a maximum amount of 5% of the
construction price. In the event that Daewoo builds a rig significantly below
its target weight, Daewoo will be entitled to a bonus.
SHIPYARD WARRANTY. Daewoo has guaranteed our rigs for twelve months
after delivery against all defects, whether attributable to materials,
workmanship, construction or detail design, and against all physical damage
caused to our rigs by such defects. Such guarantee does not extend to
owner-furnished equipment but does extend to defects in materials, workmanship
or design and physical damage caused by Daewoo's installation of owner-furnished
equipment.
REFUND GUARANTEES
The Export-Import Bank of Korea has issued to us a refund guarantee
under each Daewoo construction contract. Pursuant to each refund guarantee, the
Export-Import Bank of Korea is obligated, upon termination of the corresponding
construction contract for any cause (including Daewoo being placed into
receivership, going into bankruptcy or otherwise becoming insolvent as a result
of a failed restructuring to the extent the enforcement of our contractual right
of termination is permitted by applicable law) or a total loss of the rig prior
to delivery, to repay to us the installments of the contract price (which
includes the cost of owner-furnished equipment) paid by us prior to such event,
plus interest on such installments at a fixed rate of 10% if Daewoo has not made
such repayment within 30 days after our demand. The refund guarantee, however,
does not provide us coverage beyond such repayment for late delivery penalties
or other amounts that we may owe Petrobras or for additional financing costs
that we may incur, in each case, in the event either of our rigs is delivered
late or not completed. If, after termination for bankruptcy, receivership or
other insolvency, Daewoo is protected from our claims by applicable law,
moreover, the Export-Import Bank of Korea could claim the same protection from
our claims and, whether or not successful, could delay our recovery.
TDI-HALTER
GENERAL. TDI-Halter has based construction of our rigs in Friede Goldman
Halter's 88-acre site in Pascagoula, Mississippi. The Pascagoula site recently
underwent a $21.0 million improvement with the primary aim of upgrading
equipment for offshore rig construction. In addition to the Pascagoula site,
TDI-Halter expects to use six other sites in constructing our rigs. The
principal secondary site would be Friede Goldman Halter's Gulfport, Mississippi
site, which has over ten acres of covered facilities on its 113 acres. These
covered facilities include modern panel lines and paint shops. TDI-Halter, which
specializes in the construction and repair of offshore drilling units, has eight
shipyards.
RECENT DEVELOPMENTS. In November 1999, Halter Marine Group, Inc. merged
with Friede Goldman International Inc. to form Friede Goldman Halter, Inc. In
early January 2000, Friede Goldman Halter notified us that construction of our
rigs was being suspended because of alleged delays in receiving detailed
engineering work and our previous rejection of TDI-Halter's requests for
extensions of the construction contract delivery dates. You should read the
discussion under the heading "Business--Status of Construction of Our Rigs"
beginning on page 35 for further information regarding the effects of the
suspension of construction on the AMETHYST 4 and AMETHYST 5 and related claims
asserted by TDI-Halter.
CONSTRUCTION CONTRACTS
Each TDI-Halter construction contract provides for the engineering,
construction, launching, equipping, completion and testing of a rig for a
contract price of $84.0 million, excluding the cost of owner-furnished equipment
and any credits for the cost of builder's risk insurance. The contract price may
be adjusted as agreed by the parties or settled by an independent expert for any
modifications to the specifications of our rigs requested by us or required by
law. The contract price will be paid in eleven installments falling due at
various times throughout the construction period based on specified milestones,
with approximately 7.5% being due on delivery.
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DELIVERY. The AMETHYST 4 has a contractual delivery date of June 9,
2000, and the AMETHYST 5 has a contractual delivery date of August 9, 2000, each
of which may be extended for permissible delays, including force majeure,
modifications to the rig specifications and delays in the delivery of and
defects in owner-furnished equipment. TDI-Halter will not be able to meet the
contractual delivery dates but has claimed for an extension on the grounds of
permissible delay. We have denied TDI-Halter's claims. The TDI-Halter
construction contracts provide for up to $40,000 per day in liquidated damages
for late delivery, but this liability is limited to $2.0 million per rig. Even
if TDI-Halter resumes construction of our rigs within the next 90 days, we do
not expect TDI-Halter to be able to deliver the AMETHYST 4 and AMETHYST 5 until
late 2001.
TERMINATION. In the event that TDI-Halter does not deliver a rig
within 135 days after the contractual delivery date, as extended by permissible
delays, the applicable construction contract may be terminated at our option. We
also have the right to terminate a TDI-Halter construction contract in the event
that:
o TDI-Halter fails, without legal justification, to meet two
consecutive milestones within 135 days of the dates agreed for
those milestones, as extended by permissible delays
o TDI-Halter commits a material breach of the construction contract
not remedied within five business days of written notice thereof
o TDI-Halter is wound up, goes into receivership, becomes insolvent
or makes a special arrangement or composition with its creditors
TDI-Halter has the right to terminate a construction contract in the event that:
o we fail to make the installment payments due under the
construction contract
o we fail, without legal justification, to take delivery of our
rigs in accordance with the construction contract
o we are wound up, go into receivership, become insolvent or make a
special arrangement or composition with our creditors
and any such default continues for 30 days.
DEVIATIONS FROM TARGET WEIGHT. The TDI-Halter construction contracts
contain incentives for TDI-Halter to meet established target weights. In the
event TDI-Halter fails to meet the target weight for any rig, TDI-Halter will be
required to pay liquidated damages up to a maximum amount of $2.5 million. In
the event that TDI-Halter builds a rig significantly below its target weight,
TDI-Halter will be entitled to a bonus up to a maximum amount of $3.0 million.
SHIPYARD WARRANTY. Under the existing construction contracts,
TDI-Halter has guaranteed our rigs for twelve months after delivery against all
defects attributable to the labor and workmanship of TDI-Halter and its
subcontractors. Such guarantee does not extend to owner-furnished equipment but
does extend to defects caused by TDI-Halter's installation of owner-furnished
equipment (the approval of the installation by a supplier or manufacturer's
representative on-site being conclusive evidence of proper installation).
PERFORMANCE BONDS AND PERFORMANCE GUARANTEES
Fireman's Fund Insurance Company has issued a performance bond on a
joint and several basis with TDI-Halter for 100% of the contract price under
each TDI-Halter construction contract. Fireman's Fund also has issued a labor
and material payment bond, jointly and severally with TDI-Halter, which covers
suits for non-payment by TDI-Halter filed by claimants having a direct contract
with TDI-Halter or with a subcontractor of TDI-Halter for labor, material or
both used or reasonably required for use in the performance of the TDI-Halter
construction contracts. In addition, Friede Goldman Halter has unconditionally
and irrevocably guaranteed to us prompt and faithful performance of, and
compliance with, all obligations, covenants, terms, conditions and undertakings
of TDI-Halter under the TDI-Halter construction contracts.
You will not be able to rely on the AMETHYST 4 or the AMETHYST 5 or
the amounts that we may be able to recover under the TDI-Halter construction
contracts or related performance bonds and performance guarantees as a source of
repayment or security for the old or new notes since the lenders of the
MARAD-guaranteed borrowings and any other creditor of our subsidiaries that will
own those rigs will have priority over you as to those rigs and any proceeds
derived from those rigs.
OWNER-FURNISHED EQUIPMENT
We have been purchasing from numerous vendors and furnishing to the
shipyards various items of specialized drilling and subsea well intervention and
maintenance equipment for our rigs. This equipment includes for each rig, as
appropriate, a
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drilling derrick, mud pumps, drawworks, a rotary table, blowout preventers and
risers. We have also been providing to the shipyards certain marine and ship
system items, including cranes and electrical distribution units for the
drilling equipment. In addition, we will furnish some items outside of the
shipyard package, including drillpipe and handling tools. We estimate that all
of this owner-furnished equipment will represent approximately $181.2 million of
the aggregate $719.7 million budgeted to construct, equip and mobilize our rigs,
including $47.2 million for contingencies and $59.6 million for construction
period interest but excluding increased costs that may result from the current
status of the AMETHYST 4 and AMETHYST 5 at TDI-Halter and late delivery
penalties.
We have received, or obtained commitments from international suppliers to
provide, $166.4 million, or approximately 91.8%, of the budgeted owner-furnished
equipment. As of February 29, 2000, we had paid approximately $131.1 million to
such suppliers and had received delivery of approximately 61.7% of the
owner-furnished equipment for our rigs. These suppliers are providing all of the
major high-specification owner-furnished equipment that require relatively long
lead times for delivery. The remainder of the owner-furnished equipment consists
of standard, readily available items. Of the total budgeted owner-furnished
equipment, $122.8 million, or approximately 67.8%, is being provided by five
major suppliers. The following table lists these five suppliers, the equipment
that they have supplied or will be supplying pursuant to commitments with us and
the cost of such equipment:
<TABLE>
<CAPTION>
SUPPLIER EQUIPMENT COST
-------- --------- --------------
(in thousands)
<S> <C>
Maritime Hydraulics A/S Derrick Package $35,598
ABB Vetco Gray U.K. Ltd. Risers and Buoyancy System $28,679
Cooper Cameron Corporation Blowout Preventers and Multiplex Control Systems $23,148
Huisman Special Lifting Equipment B.V. Cranes and Substructures $22,134
Continental Emsco Company Drawworks, Mud Pumps and Rotary Table $13,206
</TABLE>
Timely completion of our rigs will depend, among other things, on timely
delivery of the owner-furnished equipment. We believe that our owner-furnished
equipment suppliers have the expertise and capacity to deliver owner-furnished
equipment on time and according to specifications. We have not experienced and
do not anticipate any significant delays in delivery of the owner-furnished
equipment.
CONSTRUCTION MANAGEMENT
We believe that active management of the construction process is an
important factor in reducing construction risks and avoiding delays. The
construction of our rigs is being managed by Petrodrill Engineering N.V., a
Netherlands Antilles corporation owned 70% by affiliates of Maritima and 30% by
an indirect subsidiary of Pride. Petrodrill Engineering is providing the
following construction management services, among others:
o coordinate with each subsidiary and its representatives regarding any
design modification
o obtain all necessary permits, consents and authorizations with respect
to the design drawings from the relevant classification society or
other relevant agencies
o coordinate with each shipyard throughout the construction period
o monitor each shipyard for compliance with the terms of its construction
contract
o inform each subsidiary of any change in existing laws, rules or
regulations that may require any alteration to the specifications or
drawings of its rig and assess the effects of such changes
o advise each subsidiary whether its rig has been completed in accordance
with the specifications provided in the construction contract and is
ready for delivery
o procure the owner-furnished equipment on behalf of each subsidiary
o prepare monthly budgets for each rig
o ensure that each rig is insured adequately throughout the construction
period
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Petrodrill Engineering has contracted to provide these services in an efficient
manner and to protect and promote the interests of each of our subsidiaries in
all matters relating to the construction of its rig. Petrodrill Engineering is
being paid by each subsidiary only for actual expenses incurred by it in
rendering the construction management services, including the full salaries of
its personnel and other overhead costs.
The construction management agreement with each subsidiary may be
terminated early in the event of a material breach by either party of its
obligations under such agreement. Each subsidiary and Petrodrill Engineering
have agreed to indemnify Petrodrill Engineering's subcontractors and their
personnel from all actions or liabilities that may be brought against or
incurred by them or their personnel for matters arising out of such subcontracts
unless such actions or liabilities arise from the gross negligence or willful
misconduct of such subcontractors or their personnel.
Petrodrill Engineering has procured the personnel necessary to manage the
construction of our rigs. For this purpose, Petrodrill Engineering has assembled
a central management team based in the Netherlands and separate project teams
that are present at each shipyard to supervise construction and ensure that our
rigs meet the specifications required by Petrobras and applicable classification
societies. A portion of Petrodrill Engineering's personnel has been, and until
completion of all of our rigs will be, seconded from Pride-Foramer S.A. (an
affiliate of Pride), Maritima and Workships Contractors B.V., an integrated
offshore vessel management company whose personnel were involved in the design
and construction of the AMETHYST 1. Such personnel have been provided to
Petrodrill Engineering by Pride-Foramer, Maritima and Workships at agreed-upon
fixed prices that approximate each such company's cost. In addition, Workships
receives a fee of $2,083.33 per month per rig.
Petrodrill Engineering's personnel consist of 50 professionals with highly
specialized experience in rig construction who are dedicated exclusively on a
full-time basis to the construction of our rigs. The members of the central
management team, consisting of a project director, deputy project director,
chief financial officer and central construction manager, have extensive
experience in most aspects of the oil and gas industry and, in particular, in
rig and vessel construction and repair. We believe that the experience of the
Petrodrill Engineering central management team, described below under the
heading "Management" beginning on page 58, combined with the experience of
specialists from Maritima, Pride-Foramer, Workships and other third parties,
provide a high level of specialized expertise for the construction of our rigs.
In addition, Lloyds, the classification society and representative of the
Bahamian Ship Registry, has been involved in the approval of the design and
detailed engineering for the rigs during its regular shipyard visits. Recently,
Petrobras contracted ModuSpec USA, Inc., an independent engineering and
construction consultant, to review the construction of our rigs at the Daewoo
and TDI-Halter shipyards as part of a more extensive review of all of Petrobras'
upcoming rig deliveries. Since receiving the audit report from ModuSpec,
Petrobras has made no comments to us about the report, except to state that
ModuSpec concluded, as we acknowledge, that our rigs have not been and will not
be delivered by the delivery dates specified in their respective charters.
INSURANCE
We have obtained insurance from a syndicate of international insurance
companies led by London underwriters to insure against specified risks related
to the construction of our rigs in accordance with their specifications and
design and the timely completion, mobilization and delivery of our rigs to
Petrobras pursuant to the charters. In general, the insurance covers:
o traditional fire, casualty and marine perils causing damage to our rigs
during construction and mobilization
o delays caused by damage to the shipyards or their facilities from those
perils
o delays caused by damage to our rigs, owner-furnished equipment or other
rig components from those perils
o physical loss or damage and delays caused by specified force majeure
events
In addition, the insurance provides coverage for physical loss or damage to each
rig as a result of faulty materials, parts, workmanship or design that is
discovered prior to or during a 24-month discovery period following delivery by
the shipyard and for delay in delivery resulting from that physical loss or
damage. The insurance, however, does not provide coverage for the failure of a
shipyard to apply the Amethyst design properly or to complete construction on
time and within budget.
In the event that there is a delay in the delivery of a rig from its
shipyard resulting from an insured event or events lasting more than an
aggregate of 21 days, the insurance will pay $100,000 per day, beginning after
the 21-day waiting period, for a maximum of 365 days. In the event Petrobras
terminates a charter in accordance with its terms as a result of an insured
event, loss of hire coverage entitles us to payment of the relevant rig's
operating rate for a maximum of 365 days, subject to a 21-day waiting period. In
the event of a successful remarketing of the relevant rig after cancellation of
a charter for an insured event, the loss of hire coverage will pay any daily
charter rate differential between the canceled charter and the replacement
charter and any mobilization, towing, reoutfitting or similar expenses incurred
in recontracting the rig. Total recovery under the loss of hire coverage is
limited to the value of the relevant rig's operating rate for 365 days. The late
delivery and loss of hire coverage does not contemplate any deductible other
than amounts foregone during the 21-day waiting periods.
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The insurance in respect of construction risks expires upon completion of
the construction of each rig, subject to a discovery period of 24 months after
delivery by the shipyard. The builder's risk property coverage generally is
limited in aggregate to the value of each rig, and a $100.0 million limit
applies per event in respect of third-party liabilities. In addition, a $100,000
deductible per event is generally applicable, except that no deductible applies
in the event of a total or constructive total loss.
All rights to insurance proceeds have been assigned to secure our
borrowings under the credit facilities providing substantially all of the
financing for our rigs. The insurers have waived their right of subrogation
against us, our owners, any of their affiliates, the shipyards and the credit
facility lenders.
FINANCING OF OUR RIGS
Amethyst 6 AND Amethyst 7 FINANCING
In December 1998, affiliates of Mitsubishi Corporation agreed to fund,
through two separate credit facilities, up to an aggregate $340.0 million of the
cost (including accrued interest) of constructing, equipping and mobilizing the
AMETHYST 6 and AMETHYST 7. The credit facility for the AMETHYST 6 permits
drawings of up to $160.0 million, and the credit facility for the AMETHYST 7
permits drawings of up to $180.0 million.
On November 1, 1999, we used the net proceeds from the sale of the old
notes, cash on hand and additional funds provided by an affiliate of Maritima to
purchase the fully drawn first tranches of the AMETHYST 6 and AMETHYST 7 credit
facilities (representing $47.0 million of loans in the case of the AMETHYST 6
facility and $53.0 million of loans in the case of the AMETHYST 7 facility). A
53% undivided interest in the loans that we purchased, including the right to
receive payments of principal and interest and all rights as a secured party in
respect of such interest in those loans, was irrevocably assigned to Wilmington
Trust Company as collateral agent to secure our obligation to repay the old and
new notes.
FUNDS AVAILABILITY. Drawings under each credit facility for the AMETHYST 6
and AMETHYST 7 may be made to pay construction costs under the construction
contract for each respective rig, interest under that credit facility and,
subject to limitations, selected operating costs and other construction and
mobilization costs for that rig. In addition, pursuant to an intercompany
agreement, up to $10.0 million of borrowings under the AMETHYST 7 facility may
be on-loaned, without interest, for the completion and mobilization of the
AMETHYST 6. The obligation of the lenders to make advances under each credit
facility for the AMETHYST 6 and AMETHYST 7 is subject to customary drawdown
conditions, including the condition that, as of the date of drawdown, no event
of default or potential event of default shall have occurred and be continuing
under the credit facility or any major project document related to the
corresponding rig and that all such project documents continue to be in full
force and effect. As of February 29, 2000, $44.4 million remained available
under the AMETHYST 6 credit facility and $40.7 million remained available under
the AMETHYST 7 credit facility.
INTEREST. Borrowings under each of the credit facilities bear interest at
12.5% per year until delivery of the rig at the shipyard and 11.0% per year
thereafter. Interest is accrued as principal until the rig has been accepted by
Petrobras to commence operation under its charter, except to the extent that
such interest would cause our total drawings to exceed the total facility amount
and provided that interest payable in respect of the loans that we purchased
will not be accrued but will be payable every six months in arrears until the
rig has been accepted by Petrobras to commence operation under its charter.
Until the rig has been accepted by Petrobras to commence operation under its
charter, drawings may be made on the unused portion of the relevant credit
facility in order to pay interest to us in respect of the loans that we
purchased.
REPAYMENT. Repayment of 85% of the borrowings under each credit facility
for the AMETHYST 6 and AMETHYST 7 is to be made in equal monthly installments
over a seven-year period beginning on the second month after the rig has been
accepted by Petrobras to commence operation under its charter. The remaining 15%
will be due and payable on the final day of such seven-year period. Repayments
in respect of the 53% undivided interest in the loans that we purchased will be
made directly to the collateral agent to be invested in short-term U.S.
government obligations that will be held as security for payments of interest on
and principal of the old and new notes. Scheduled repayments of principal on
such loans to the maturity date of the notes will be significantly less than the
principal amount of the notes that will then become due. We will thus be
required to rely on a partial refinancing of the notes or other sources of cash.
PREPAYMENTS; TOTAL LOSS. Either subsidiary may, by notice of at least 90
days, prepay all or any part of the loans made pursuant to its credit facility
by paying the principal and accrued and unpaid interest on such prepaid loans to
the date of prepayment, plus all other amounts that may be payable on such
prepaid loans and any further amount that may be necessary to indemnify the
lenders against all costs incurred as a result of the prepayment. If a rig
becomes a total loss, the insurance proceeds or other compensation received as a
result of such total loss will be applied toward prepayment of the loans made
under the credit facility corresponding to such rig in accordance with the
immediately preceding sentence and any excess will be paid to the subsidiary
that owns such rig. In the event the insurance proceeds and other compensation
received as a result of such total loss is
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less than the indebtedness outstanding under the lost rig's credit facility, the
subsidiary that owns such rig will be responsible for the shortfall.
PRIMARY OBLIGORS AND GUARANTORS. Petrodrill Six Limited, which will own
the AMETHYST 6, is the primary obligor under the credit facility covering the
AMETHYST 6. Petrodrill Seven Limited, which will own the AMETHYST 7, is the
primary obligor under the credit facility covering the AMETHYST 7. Both primary
obligors are British Virgin Islands companies with limited liability and are our
wholly owned subsidiaries. Petrodrill Six Limited and Petrodrill Seven Limited
have provided cross-guarantees in respect of each other's obligations, and we
have, in turn, guaranteed each of their obligations. Our guarantee and the
cross-guarantees provided by Petrodrill Six and Petrodrill Seven cover all
obligations of Petrodrill Six and Petrodrill Seven under the credit facilities,
including the obligation to pay penalty interest, if applicable, but do not
cover late delivery penalties under the Petrobras contracts. In addition,
Maritima and Pride have severally guaranteed:
o payments of construction, equipping and mobilization costs for each rig
to the extent that the funds available under such rig's credit facility
are insufficient for completion of such rig up to a total for both
credit facilities of $14.0 million by Maritima and $6.0 million by
Pride
o payments of 70% by Maritima and 30% by Pride of any amounts that are
required by Petrodrill Six Limited and Petrodrill Seven Limited to
perform their respective obligations under the Petrobras charters and
related service rendering contracts, including the payment of late
delivery penalties and other fines
Maritima and Pride have also jointly and severally guaranteed:
o repayment of the amounts by which the outstanding indebtedness under
either rig's credit facility (including penalty interest, if
applicable) exceeds amounts recoverable under such rig's construction
contract, refund guarantee and builder's risk insurance in the event
the construction contract is terminated or rescinded, payments under
the construction contract are otherwise refunded or there is a total
loss of the rig prior to completion
o payment of the deductibles under the delay-in-delivery insurance
policies and under the loss-of-hire insurance policies upon the
occurrence of an event that gives right to a claim under the applicable
policy
o payment or performance of certain other financial and operating
undertakings of Petrodrill Six Limited and Petrodrill Seven Limited
For the benefit of the Mitsubishi-affiliated lenders only, Maritima and Pride
have guaranteed, from the time each rig has been accepted by Petrobras to
commence operation under its charter, repayment of the total borrowings
(including penalty interest, if applicable, but excluding late delivery
penalties under the Petrobras contracts) under such rig's credit facility up to
a total for both credit facilities of $75.6 million by Maritima and $32.4
million by Pride. Neither we nor the holders of the old or new notes will share
in the benefit of this guarantee. You will share in the benefit of all of the
other guarantees provided by us, our subsidiaries and Pride and Maritima under
the AMETHYST 6 and AMETHYST 7 credit facilities ratably with the lenders under
those credit facilities to the extent of your 53% undivided interest in the
loans that we purchased.
The obligations of Petrodrill Six Limited and Petrodrill Seven Limited to
repay funds advanced pursuant to any of the foregoing guarantees are expressly
subordinated to their remaining repayment obligations as primary obligors under
their respective credit facilities.
COLLATERAL ACCOUNTS. Until repayment of outstanding amounts due under each
credit facility for the AMETHYST 6 and AMETHYST 7, all amounts paid pursuant to
the applicable rig's charter or otherwise in respect of such rig must be
deposited into a management account. The owner of each rig is also required to
fund outside of the credit facility, and to deposit into the management account,
the amount of any deductions from insurance claims made by the insurers for such
rig (such funding, in the case of deductibles for delay-in-delivery and
loss-of-hire, being jointly and severally guaranteed by Maritima and Pride). The
funds in the management account will be applied FIRST to pay the rig's operating
and administrative expenses (subject to certain limitations), SECOND to debt
service and to other amounts payable under the applicable credit facility, and
THIRD to fund a reserve account. Subject to prior withdrawals, the funds in the
reserve account will be used to cover cash shortages in the management account.
Funds may be withdrawn from the reserve account to the extent that, immediately
following such withdrawal, the combined reserve accounts under both credit
facilities contain an aggregate amount at least equal to the next six
installment payments due under both credit facilities.
SECURITY. In addition to the guarantees described above, repayment and
performance of all obligations under the AMETHYST 6 and AMETHYST 7 credit
facilities are secured by, among other things, security interests in:
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o the construction contracts, major service contracts, charters and
related service rendering contracts for the AMETHYST 6 and AMETHYST 7
o the shares of capital stock of Petrodrill Six Limited and Petrodrill
Seven Limited
o the business and assets of Petrodrill Six Limited and Petrodrill Seven
Limited
o guarantees issued by the Korean Export-Import Bank in respect of
Daewoo's obligations to refund installment payments made under the
construction contracts upon Daewoo's failure to perform
o insurance proceeds received in respect of either the AMETHYST 6 or
AMETHYST 7
o the intercompany agreement under which up to $10.0 million of
borrowings under the AMETHYST 7 facility may be on-loaned for purposes
of completing and mobilizing the AMETHYST 6
o any amounts payable in respect of the two rigs, including requisition
compensation, remuneration for salvage and towage services, demurrage
and detention compensation and damages for breach (or payments for
variation or termination) of any charter or other contract for the
employment of either rig
o the management accounts and reserve accounts created under each credit
facility
and, upon completion of each, a first priority ship mortgage on each rig.
COVENANTS. Each credit facility for the AMETHYST 6 and AMETHYST 7 contains
covenants that are customary for structured financings. Petrodrill Six and
Petrodrill Seven generally may not, among other things:
o incur liens
o enter into any business other than the ownership, operation and
chartering of its rig
o make loans and investments
o incur additional indebtedness or enter into deferred payment
arrangements or equipment leases
o assume, guarantee, endorse or otherwise become liable in respect of the
obligation of any person
o repurchase or otherwise acquire its capital stock
o make dividends and distributions to holders of its capital stock,
except to the extent of amounts permitted to be withdrawn from the
reserve account
EVENTS OF DEFAULT. Each credit facility for the AMETHYST 6 and AMETHYST 7
contains customary events of default, including, among others, failure to make
payments when due, breach by us or our affiliates of any term of the credit
facilities or related agreements, cross default to other indebtedness in excess
of $500,000, threatened or actual suspension of operation, threatened or actual
substantial disposition of business, property or assets, change in ownership of
either subsidiary and specified events of bankruptcy, insolvency and
reorganization. In addition, each credit facility for the AMETHYST 6 and
AMETHYST 7 contains the following events of default, among others:
o cross-default to a default by any party to the rig construction
contract, the refund guarantee issued by the Korean Export-Import Bank,
the charter and related service rendering contract and the major
service contracts and subcontracts for construction management and
operation of the rig
o failure to obtain, or revocation of, governmental permits or approvals
required for the operation of the rig, the performance by us or our
affiliates of our or their obligations under the credit facility and
related agreements or the performance by any party of its obligations
under any document listed in the immediately preceding paragraph
o non-delivery of the rig from the shipyard within 365 days after its
contractual delivery date under its construction contract
o non-delivery of the rig to Petrobras within 365 days after its
contractual delivery date under its charter
o termination of the rig construction contract, the refund guarantee
issued by the Korean Export-Import Bank, the charter or the related
service rendering contract
o failure to maintain required insurance (including for reason of
unavailability)
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o any default under the other subsidiary's credit facility
The occurrence of an event of default entitles the facility agent, acting
on behalf of the lender group (which includes us), to declare immediately due
and payable the entire amount outstanding under the applicable credit facility
and to apply the funds in the applicable management account and reserve account
toward the outstanding balance owing under such facility. In addition, the
lenders would not be obligated to fund during an event of default or potential
event of default. Since Petrobras' threatened cancellation of our charters, the
lenders under the AMETHYST 6 and AMETHYST 7 credit facilities have continued to
fund the construction of the AMETHYST 6 and AMETHYST 7.
GOVERNING LAW AND JURISDICTION. The AMETHYST 6 and AMETHYST 7 credit
facilities, including the security documents, are governed by English law and
the parties have agreed to submit any disputes to the courts of England.
Amethyst 4 AND Amethyst 5 FINANCING
In April 1999, Citibank, N.A. and its affiliate Govco Incorporated agreed
to fund, through two separate credit facilities, up to an aggregate $299.8
million of the cost (including interest payable on the two credit facilities
during the construction period) of constructing and equipping the AMETHYST 4 and
AMETHYST 5. The credit facility for the AMETHYST 4 permits drawings of up to
$149.6 million, and the credit facility for the AMETHYST 5 permits drawings of
up to $150.2 million.
PRIMARY OBLIGORS AND GUARANTORS. The United States of America (through the
Maritime Administration or MARAD) has guaranteed repayment of principal and
non-penalty interest (subject to a cap of 9% for floating rate borrowings) under
each credit facility for the AMETHYST 4 and AMETHYST 5 up to 87.5% of the
estimated actual cost of each rig provided that the other 12.5% of the estimated
actual cost has been funded outside of such credit facility. In satisfaction of
the 12.5% outside funding condition of the MARAD guarantee, we have already
funded $52.9 million, or approximately 15%, of the estimated actual cost of each
rig with related party advances and equity contributions from our owners. The
MARAD guarantee does not cover any obligations, under the credit facilities or
otherwise, other than the repayment of principal and non-penalty interest
(subject to the 9% cap) under the credit facilities. The MARAD guarantee does
not cover, for instance, penalty interest under the credit facilities or late
delivery penalties under the Petrobras contracts.
Petrodrill Four Limited, which will own, and is the primary obligor under
the credit facility for, the AMETHYST 4, and Petrodrill Five Limited, which will
own, and is the primary obligor under the credit facility for, the AMETHYST 5,
have provided cross-guarantees in respect of each other's obligations. The
cross-guarantees provided by Petrodrill Four and Petrodrill Five cover all
obligations of Petrodrill Four and Petrodrill Five under the credit facilities,
including the obligation to pay penalty interest, if applicable, but do not
cover late delivery penalties under the Petrobras contracts. Maritima and Pride
have each severally guaranteed payment of up to $20.5 million (or a total of $41
million between them) for late arrival penalties to Petrobras under the charters
for, and Brazilian ad valorem taxes pertaining to, the AMETHYST 4 and AMETHYST
5. The guarantees of Maritima and Pride do not cover any obligations (including
the obligation to pay penalty interest, if applicable) of Petrodrill Four or
Petrodrill Five under the credit facilities. Each of Petrodrill Four Limited and
Petrodrill Five Limited is a British Virgin Islands company with limited
liability and our wholly owned subsidiary.
You will not be able to rely on the MARAD guarantee or on the guarantees
provided by Pride, Maritima or our subsidiaries under the AMETHYST 4 and
AMETHYST 5 credit facilities as a source of repayment or security for the old or
new notes since the lenders under the AMETHYST 4 and AMETHYST 5 credit
facilities and any other creditor of Petrodrill Four Limited and Petrodrill Five
Limited will have priority over you as to those rigs and any proceeds derived
from those rigs.
FUNDS AVAILABILITY. Drawings under each credit facility for the AMETHYST 4
and AMETHYST 5 may be made to pay construction costs (including owner-furnished
equipment and construction management costs) for the corresponding rig, interest
under the credit facility and guarantee fees to the United States of America.
These drawings may be funded by Govco (at its option) through the issuance of
commercial paper or, if not funded by Govco, directly by Citibank. To date,
Govco has funded all drawings. The lenders are not obligated to advance funds
not covered by the MARAD guarantee. As of February 29, 2000, $75.8 million
remained available under the AMETHYST 4 credit facility and $90.3 million
remained available under the AMETHYST 5 credit facility.
INTEREST. Borrowings under each credit facility for the AMETHYST 4 and
AMETHYST 5 funded through the issuance of commercial paper bear interest at
Govco's weighted average cost of issuing such commercial paper plus 0.40% during
construction and plus 0.45% thereafter. Except as noted in the immediately
following sentence, borrowings under each credit facility for the AMETHYST 4 and
AMETHYST 5 funded directly by Citibank bear interest at the London interbank
rate plus 0.30%. In the event of specified circumstances where generally the
London interbank rate is unavailable, impractical or unlawful, those borrowings
bear interest at the higher of Citibank's base rate publicly announced in New
York or 0.50% per annum above the latest three-week moving average of secondary
market morning offering rates in the United States for three-month certificates
of
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deposit of major United States money market banks. Interest under each credit
facility for the AMETHYST 4 and AMETHYST 5 is accrued as principal until
February 15, 2001 in the case of the AMETHYST 4 credit facility or March 15,
2001 in the case of the AMETHYST 5 credit facility, except to the extent that
such interest and other drawings exceed the total facility amount. Prior to the
first to occur of August 15, 2002 in the case of the AMETHYST 4 or September 15,
2002 in the case of the AMETHYST 5 and completion of the second year after the
corresponding rig is delivered and accepted by its owner, the interest rate must
be fixed. On the last interest payment date, the interest rate applicable to
borrowings was approximately 5.93% under the AMETHYST 4 credit facility and
approximately 5.95% under the AMETHYST 5 credit facility.
REPAYMENT. The borrowings under each credit facility for the AMETHYST 4
and AMETHYST 5 are required to be repaid in semiannual installments representing
equal principal amounts plus accrued interest over a 12-year period beginning
February 15, 2001 in the case of the AMETHYST 4 credit facility and March 15,
2001 in the case of the AMETHYST 5 credit facility. In addition, the borrowings
may be prepaid with no premium on any semi-annual interest payment date prior to
conversion to a fixed rate or with a premium on any semi-annual interest payment
date after conversion to a fixed rate. The borrowings are required to be prepaid
under specified circumstances.
COLLATERAL ACCOUNT AND SECURITY. The repayment of any amounts advanced
under the guarantee of the United States of America in respect of each credit
facility for the AMETHYST 4 and AMETHYST 5 is secured by, among other things:
o security interests in the construction contract, major service
contracts and charter for the corresponding rig, any proceeds derived
from that rig and substantially all other assets relating to that rig
o upon completion of each, first priority ship mortgages on the AMETHYST
4 and AMETHYST 5
o a reserve fund created pursuant to the guarantee documentation
COVENANTS. The AMETHYST 4 and AMETHYST 5 financings include covenants that
are customary for MARAD financings. Unless it achieves specified financial
conditions, the primary obligor generally may not, among other things:
o incur liens
o make loans and investments
o incur additional indebtedness
o redeem its capital stock
o pay dividends, except in the form of capital stock
o pay late delivery penalties to Petrobras or Brazilian ad valorem taxes
In addition, the primary obligor may not enter into any business other than the
ownership, operation and chartering of its rig without MARAD's consent.
EVENTS OF DEFAULT. Each credit facility for the AMETHYST 4 and AMETHYST 5
contains customary events of default and additional events of default relating
to ownership, construction, operation, maintenance, insuring and chartering of
the corresponding rig, including default under such rig's construction contract
or charter. Upon the occurrence of an event of default under a credit facility,
the amounts outstanding under such credit facility may be declared immediately
due and payable. In addition, the lenders would not be obligated to fund during
an event of default. Since Petrobras' threatened cancellation of our charters
and TDI-Halter's suspension of construction on the AMETHYST 4 and AMETHYST 5,
the lenders under the AMETHYST 4 and AMETHYST 5 credit facilities have continued
to fund the construction of those rigs. Pending the outcome of our negotiations
with TDI-Halter and its parent, Friede Goldman Halter, on a mutually acceptable
basis for the resumption of construction of those rigs, we will have no further
drawings for payments under the construction contracts with TDI-Halter.
GOVERNING LAW. The AMETHYST 4 and AMETHYST 5 credit facilities are
governed by New York law, and the parties to such credit facilities have
consented to the jurisdiction of the federal courts in the State of New York.
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FINANCING STRUTURE
The following diagram depicts the financing structure of construction of
our rings as of February 29, 2000:
- -------------------------------------------------------------------------------
TYPE OF MEASUREMENT OCCASION FOR THE SUBMITTAL OF
MEASUREMENT DOCUMENT COLLECTION DOCUMENTS
INITIAL MB Up to the 8th working day following the
INTERMEDIATE last day of the chartering performance
AND FINAL period, and PETROBRAS' will make the
payment on the 30th consecutive day, as
of the final date of the measured period,
the provision in subitem 6.3.1.1 being
complied with..........................
MOBILIZATION MB After the receipt of the MB, and
OF THE Unit PETROBRAS will make the payment on the
30th consecutive day, as of the date the
Collection Document is submitted........
DETERMINATION RD In the first working day after the RD is
OF issued, and the payment will be made
REIMBURSABLE within 30 (thirty) days, as of the date
EXPENSES of its submittal........................
- -------------------------------------------------------------------------------
THE PETROBRAS CONTRACTS
OVERVIEW
Our subsidiaries have entered into U.S. dollar-denominated contracts to
charter our rigs to Petrobras for offshore drilling and subsea well intervention
and maintenance operations. Maritima has entered into related Brazilian
REAL-denominated service rendering contracts with Petrobras. Each subsidiary has
entered into a charter that applies exclusively to its rig, and Maritima has
entered into a separate service rendering contract for each rig. These
contracts, which are governed by Brazilian law, have initial terms ranging from
six to eight years from the date each rig has been delivered to and accepted by
Petrobras. Each contract may be renewed for successive periods by prior
agreement of the parties. The daily operating rate under each charter represents
over 90% of the sum of the operating rate under the charter and the operating
rate under the related service rendering contract. The amounts payable under the
service rendering contracts in Brazilian REAIS has been budgeted entirely to
defray Brazilian REAL-denominated operating expenses of our rigs. The amounts
payable under the charters have been budgeted to pay additional operating
expenses
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and to make payments on the credit facilities providing substantially all of the
financing for our rigs. Because Petrobras has threatened the cancellation of our
charters, we can give no assurance that our rigs will be chartered to Petrobras
pursuant to the Petrobras contracts. You should read the discussion under the
heading "Business--Threatened Cancellation of Our Charters" beginning on page 36
for information regarding the threatened cancellation of our charters.
The Petrobras contracts were awarded to Maritima following four separate
public offers to bid. Maritima assigned its rights and obligations under the
charters to our subsidiaries on July 10, 1998 with Petrobras' consent. In
addition, Petrobras consented to the collateral assignment of the charters by
our subsidiaries and the service rendering contracts by Maritima to secure the
credit facilities providing financing for our rigs.
The Petrobras contracts provide for the payment of operating rates, plus,
for AMETHYST 4, AMETHYST 6 and AMETHYST 7, bonuses based generally on
availability for operation, for each day our rigs operate. In addition, the
Petrobras contracts provide for payments of 95% of the operating rate, plus such
performance-based bonuses, for each day during specified periods when operations
are suspended. This 95% rate applies, for example, during time spent moving our
rigs to a new job location and during suspension of operations resulting from
force majeure, bad weather and other specified causes beyond our control. The
bonus, however, does not apply during force majeure events. There will be no
compensation during suspension of operations for other reasons, including
suspension for repairs or maintenance on a rig or due to unavailability of rig
crews or supplies. The charter for the AMETHYST 5 provides for payment of a flat
fee for mobilization.
The following table summarizes the principal financial and certain other
terms of the existing Petrobras charters and service rendering contracts:
<TABLE>
<CAPTION>
AMETHYST 4 AMETHYST 5 AMETHYST 6 AMETHYST 7
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Initial Term (years) .................................. 6 8 7 7
Daily Charter Operating Rate .......................... $ 114,600 $ 97,200 $ 120,000 $ 129,000
Daily Service Rendering Contract Operating Rate(1) .... $ 6,697 $ 5,599 $ 7,084 $ 7,649
Total Daily Rate ...................................... $ 121,297 $ 102,799 $ 127,084 $ 137,649
Maximum Bonus(2) ...................................... 10.0% 0.0% 10.0% 10.0%
Mobilization Fee ...................................... None $6,479,900 None None
Charter Delivery Date ................................. June 17, 1999 July 6, 1999 Dec 29, 1999 Dec 29, 1999
</TABLE>
(1) This rate has been translated into U.S. dollars but will be payable in
REAIS. You should read the discussion under the heading "About this
Prospectus" on page 1 for information regarding the translation of REAIS
into U.S. dollars.
(2) Percentage of total daily rate.
Subject to specified grace periods, Petrobras is entitled under the
existing charters to impose daily penalties for late delivery of up to 30% of a
rig's operating rate (and, in addition, up to 30% of the mobilization fee in the
case of the AMETHYST 5). If Daewoo delivers the AMETHYST 6 and AMETHYST 7 on
their construction contract delivery dates and our mobilization time to Brazil
does not exceed our allowance for mobilization, Petrobras will be entitled to
impose late delivery penalties of $8.9 million for the AMETHYST 6 and $8.3
million for the AMETHYST 7. We currently anticipate that the AMETHYST 6 or
AMETHYST 7 will be delivered on or before their construction contract delivery
dates. Given the current status of the AMETHYST 4 and AMETHYST 5 at TDI-Halter,
however, there is substantial uncertainty as to whether the AMETHYST 4 and
AMETHYST 5 will be completed. Even if they are completed and chartered to
Petrobras under the existing charters, we will deliver the AMETHYST 4 and
AMETHYST 5 to Petrobras no earlier and probably later than 540 days beyond the
delivery dates specified in their existing charters. Based on late delivery of
540 days, Petrobras would be entitled to impose late delivery penalties of $16.4
million for the AMETHYST 4 and $15.8 million for the AMETHYST 5. For each day of
delay beyond 540 days, Petrobras would be entitled to impose additional late
delivery penalties of $36,389 for the AMETHYST 4 and $30,828 for the AMETHYST 5
up to a maximum total penalty of $26.6 million for the AMETHYST 4 and $30.0
million for the AMETHYST 5. The maximum penalty would be reached after 820 days
for delay for the AMETHYST 4 and 1,000 days of delay for the AMETHYST 5. The
charters permit Petrobras to impose these penalties at the time of late delivery
of our rigs. Prior to threatening to cancel our charters, Petrobras indicated to
us in writing that it has been its policy to negotiate other forms of payment,
such as an agreed installment plan or the discount of the penalties from the end
of the contract. This policy may not be applied, however, given Petrobras'
threatened cancellation of our charters and our related litigation with
Petrobras. Even if Petrobras cancels our existing charters for late delivery,
Petrobras could make a claim against us for damages that might include the value
of the late delivery penalties.
The daily rates payable by Petrobras will be reduced or payment will be
excused in the case of specified events, including, among others:
o suspension of operations for various prescribed reasons, including
inspection or docking and measures imposed by insurers
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o a total or partial failure or malfunction of any equipment which delays
or hinders operations
o low efficiency of drilling operations, as determined in accordance with
preset parameters
o specified occurrences arising as a result of the gross negligence of
our subsidiary (in the case of a charter) or Maritima (in the case of a
service rendering contract)
Petrobras may also levy fines of up to 30% of the operating rate for
non-compliance with the contract.
Under current Brazilian tax law, the daily rate payments made to our
subsidiaries pursuant to the charters will be subject to Brazilian withholding
taxes; however, the Brazilian withholding tax rate that would be currently
applicable to such payments equals 0%. Changes to Brazilian tax law in the
future may increase such rate. If any Brazilian withholding tax is imposed upon
and must be deducted from such a payment because of such a change in law, there
are provisions in the charters that require Petrobras to adjust the amount of
such payments such that, after taking such withholding taxes into account, our
subsidiaries will receive the same net amount they would have received had no
Brazilian withholding tax been imposed upon or deducted from such payment.
PERFORMANCE TESTS
Prior to commencement of operations, each rig must pass a general
performance test, to be completed over three days, to ensure that its equipment
works properly. A rig may begin operations if the performance test demonstrates
the good operating condition of the rig's main systems, including those that
provide and control energy generation and distribution, dynamic positioning,
industrial safety, liquid and bulk storage, fluid circulation and processing,
safety and wellhead, column elevation, rotation and handling, columns,
instrumentation, formation test equipment and communications.
INSURANCE AND INDEMNIFICATION
The Petrobras contracts require each of our subsidiaries (in the case of
the charters) and Maritima (in the case of the service rendering contracts) to
maintain all-risk and civil liability insurance in amounts sufficient to cover
the risks inherent in the operation of our rigs. The terms and conditions of
such insurance must comply with applicable Brazilian law and certain standard
forms used in the London insurance market. Formaritima Ltd., our operating
manager, is responsible for the procurement of such insurance. In addition, each
charter and service rendering contract includes mutual indemnities for claims
arising out of the parties' respective gross negligence.
We have obtained all-risk insurance for physical loss and damage to each
rig due to insured events, such as traditional fire, casualty and marine perils,
force majeure, terrorism, confiscation, expropriation, nationalization and
deprivation. Specified limits and a $250,000 deductible per event apply.
In the event Petrobras terminates a Petrobras contract in accordance with
its terms as a result of an insured event, loss of hire coverage entitles us to
payment of the relevant rig's operating rate for a maximum of 365 days, subject
to a 21-day waiting period. In the event of a successful remarketing of the
relevant rig after cancellation of a charter for an insured event, the insurance
will pay any daily charter rate differential between the canceled charter and
the replacement charter and any mobilization, towing, reoutfitting or similar
expenses incurred in recontracting the rig. Total recovery under the loss of
hire coverage is limited to the value of the relevant rig's operating rate for
365 days. The loss of hire coverage does not contemplate any deductible other
than amounts foregone during the 21-day waiting periods.
TERMINATION
Petrobras may terminate a Petrobras contract as a result of any of the
following:
o non-performance or irregular performance of its terms and conditions
o the total or partial subcontracting of the responsibilities of our
subsidiary or Maritima, as the case may be, under such Petrobras
contract
o an interruption in operations without cause and notice to Petrobras for
more than 60 days
o the bankruptcy or dissolution of our subsidiary party to such Petrobras
contract or Maritima, as the case may be
o the ordering of a suspension of operations by applicable authorities
that lasts for more than 60 days
o the maximum amount of fines, being 10% of the total estimated contract
value, having been levied
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o delay in the performance of operations as a result of which Petrobras
can prove the impossibility of completing such operations within
established time limits
o non-compliance with the conclusions and instructions of a Petrobras
inspector
o a change in the corporate purposes or capital structure of our
subsidiary party to such Petrobras contract or Maritima, as the case
may be, either of which, in Petrobras' opinion, hinders such
subsidiary's or Maritima's ability to perform its obligations
o delay in delivery of the relevant rig or commencement of the initial
term exceeding 540 days unless our subsidiary party to such Petrobras
contract or Maritima, as the case may be, can demonstrate that it is
using its "best endeavors" to make delivery
o the termination of the corresponding service rendering contract or
charter, as applicable
o the interruption of operations for maintenance, repairs and certain
other work for a period totaling more than 30% of any six-month period
o other suspensions of operations for protracted periods
Petrobras may choose to suspend payment under the relevant contract until the
circumstances triggering a termination event have been cured.
SERVICES PROVIDED
The Petrobras contracts require our rigs to conduct offshore drilling and
subsea well intervention and maintenance operations. The AMETHYST 4, AMETHYST 6
and AMETHYST 7 are contracted and will be equipped to provide offshore drilling
services. The AMETHYST 5 is contracted and will be equipped initially to provide
only subsea well intervention and maintenance services. In order to perform
these services, we will provide our rigs, equipment and crews and generally will
be responsible for the payment of operating and maintenance expenses. Each of
our rigs will require crews of approximately 55 persons whom we will procure
through contracts with affiliates of our owners and Workships. You should read
the discussion under the heading "--Operating Management" beginning on page 54
for a description of these contracts.
OFFSHORE CONTRACT DRILLING SERVICES
Offshore contract drilling services involve the drilling of wells for oil
and gas located beneath the seabed. Such services are generally provided by
drillships, jack-ups or semi-submersible rigs. The level of demand for offshore
contract drilling services is highly cyclical and is influenced by many factors,
including the current and anticipated prices for oil and gas and the
availability of drilling units. Our rigs can carry out rotary drilling services
for exploratory and development wells in water depths of up to approximately
5,000 feet.
MAINTENANCE SERVICES
Maintenance services are required on producing oil and gas wells to ensure
efficient, continuous operation. These services consist of mechanical repairs
necessary to maintain production from the well, such as repairing parted sucker
rods and replacing defective downhole pumps in an oil well or replacing
defective tubing in a gas well. Maintenance services may be performed on both
oil and gas wells but are more often required on oil wells.
Maintenance services generally are required throughout the life of a well.
The need for these services does not depend on the level of drilling activity
and generally is independent of short-term fluctuations in oil and gas prices.
For these reasons, the demand for maintenance services generally is more stable
than for other well servicing activities. The general level of maintenance,
however, is affected by changes in the total number of producing oil and gas
wells in a region.
WELL INTERVENTION SERVICES
In addition to periodic maintenance, producing oil and gas wells
occasionally require major repairs or modifications called well interventions.
Well intervention services include the opening of new producing zones in an
existing well, recompletion of a well in which production has declined, drilling
out plugs and packers and conversion of a producing well to an injection well
during enhanced recovery operations. Well intervention operations normally are
performed by a well servicing rig with additional specialized accessory
equipment, which may include rotary drilling equipment, mud pumps, mud tanks and
blowout preventers,
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depending upon the particular type of well intervention operation. Our rigs are
designed and equipped to handle the more complex well intervention operations. A
well intervention may last from a few days to several weeks.
OPERATING MANAGEMENT
OVERALL MANAGEMENT
Formaritima Ltd., a British Virgin Islands company with limited liability
owned 50% by a subsidiary of Pride and 50% by an affiliate of Maritima, will
provide the overall management of our rigs. Formaritima has agreed to manage and
maintain our rigs in accordance with good oil industry practice, efficiently and
economically, to the best of its professional ability with respect to
performance, safety and shipshape appearance, and to arrange, at all times,
technical supervision to ensure that our rigs are kept in a seaworthy condition
and with valid certificates. Formaritima's services will include mobilization of
our rigs to Brazil, the operation and maintenance of our rigs under the
charters, the remarketing of our rigs upon termination of the charters, the
maintenance of adequate insurance on our rigs and related equipment at all times
and the preparation of budgets and reports and the performance of other
administrative tasks. Formaritima will maintain at all times all-risk hull and
machinery insurance in amounts equal to the full market value of each rig and
third-party liability insurance covering our subsidiaries and Formaritima.
Premiums for such insurance and deductibles will be paid by each subsidiary.
Formaritima will perform its responsibilities with the support of, and personnel
seconded from, Pride-Foramer and Maritima. A number of drilling employees, base
personnel and ship crews that will operate our rigs have been identified and are
currently being trained using simulation in Maritima's Macae operating base and
on Pride's NYMPHEA, a moored, third-generation semi-submersible drilling rig
currently operating offshore Brazil for Petrobras.
The management agreement of each subsidiary with Formaritima may be
terminated by such subsidiary if:
o it is dissatisfied for sound reasons with the performance of
Formaritima and Formaritima fails to remedy the matters complained of
within 90 days after receiving written notice thereof
o Formaritima is bankrupt
o Formaritima ceases or threatens to cease to carry on its business
Formaritima may terminate the management agreement with a subsidiary if
such subsidiary fails to pay the fees due Formaritima within 30 days after the
due date and Formaritima gives such subsidiary 30 days' prior notice. The
management agreement in respect of a rig terminates in the event of the total
loss of such rig. Each subsidiary has agreed to indemnify Formaritima for any
actions or liabilities brought by or incurred by Formaritima in connection with
its performance under such subsidiary's management agreement, except to the
extent such actions or liabilities result from the gross negligence or willful
misconduct of Formaritima, in which case Formaritima's liability is limited to
the aggregate amount of management fees received by Formaritima in the preceding
12 months with respect to each rig.
Pursuant to technical services agreements, Pride-Foramer will provide to
Formaritima certain personnel, including, among others, for each rig as
applicable, the general manager, rig manager, site manager, chief engineer,
chief electrician, chief mechanic, blowout preventer engineer, electronic
technician and hydraulic technician. In addition, Pride-Foramer has agreed to
furnish certain technical services to Formaritima, including but not limited to:
o support in provision of non-local insurance and settlement of non-local
insurance disputes
o international freight forwarding
o marketing advice and services
o international procurement services
o head office technical assistance and support for the operation of each
rig
o preparation of monthly budgets on a semi-annual basis
Pursuant to local services agreements, Maritima will provide to
Formaritima Brazilian personnel, including, among others, drill engineer,
driller, barge engineer, bosun and chief mechanic. In addition, Maritima has
agreed to provide certain Brazilian local services that include but are not
limited to the provision of:
o local rig and base personnel
o commercial services
o offices
o customs clearances for our rigs, equipment and spare parts
o local insurance
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o marketing advice and service
o visas and work permit applications
o legal assistance concerning rig and base operational health, safety and
environmental issues
o local freight forwarding
o assistance and advice to minimize the impact of customs duties and
import taxes
The technical services agreement and local services agreement in respect
of a rig terminates in the event of the total loss of such rig. Formaritima may
terminate a technical services agreement or local services agreement if
Formaritima is not satisfied for sound reasons with the performance of the
applicable service provider and such service provider fails to correct such
deficiencies within 15 days or such service provider is bankrupt. Formaritima
and each subsidiary have agreed to indemnify Pride-Foramer and Maritima for any
actions or liabilities brought by or incurred by them in connection with their
performance under the technical services agreement and local services agreement,
respectively, except to the extent such actions or liabilities arise from their
gross negligence or willful misconduct. You should read the discussion under the
heading "Executive and Board Compensation and Benefits and Compensation of
Owner-Related Parties--Compensation of Owner-Related Parties" beginning on page
59 for information regarding the compensation of Maritima and Pride-Foramer
pursuant to the technical services agreements and local services agreements.
MARINE AND NAUTICAL MANAGEMENT
Each subsidiary (directly or through Formaritima) has retained Workships
to manage the marine and nautical operations of its rig, including its
mobilization to Brazil. Workships has agreed to manage and maintain each rig in
accordance with good marine practice, efficiently and economically, to the best
of its professional ability in regard to performance, safety and shipshape
appearance, and to arrange, at all times, technical supervision to ensure that
each rig is kept in a seaworthy condition and with valid certificates. Workships
will:
o arrange for the marine operations of each rig and all marine equipment
used on or from each rig
o procure the supply of all equipment and materials required in
connection with the marine operation and maintenance of each rig
o provide for technical supervision, repairs, classification and
customary maintenance of each rig
o take out and maintain workmen's compensation insurance policies,
comprehensive general liability insurance policies and insurance
policies required to cover Workships' equipment and materials and those
belonging to any service companies for which Workships is responsible
o prepare and submit budgets and reports and perform other administrative
duties
As compensation for its services, Workships will be entitled to
reimbursement for any costs incurred by it plus a management fee of $1,250 per
day per rig. If a rig is sold and Workships' services are terminated with
respect to that rig, Workships will be entitled to a lump sum termination
payment equal to the net present value of its management fees over the remaining
term of such rig's charter, calculated using a discount factor of 10% per annum.
Each marine and nautical services agreement may be terminated by the
relevant subsidiary or Formaritima, as applicable, if such subsidiary or
Formaritima, as applicable, is dissatisfied for sound reasons with the
performance of Workships and Workships fails to remedy the matters complained of
within 30 days after receiving written notice thereof, Workships is bankrupt or
Workships ceases to carry on its business. Workships may terminate a marine and
nautical services agreement if the fees due Workships remain unpaid within 30
days after the due date. The marine and nautical services agreement in respect
of a rig terminates in the event of the total loss of such rig. Each subsidiary
or Formaritima, as applicable, has agreed to indemnify Workships for any actions
or liabilities brought by or incurred by Workships in connection with its
performance under the corresponding marine and nautical services agreement,
except to the extent such actions or liabilities result solely from the gross
negligence or willful misconduct of Workships, in which case Workships'
liability is limited to the aggregate of the management fees received by
Workships in the preceding 12 months.
Workships has significant experience in providing offshore vessel marine
management services that include vessel financing, purchasing, insurance and
maintenance, general management of hardware and software, vessel engineering and
the procurement of marine personnel. Since its inception in 1988, Workships has
managed vessels throughout the world and presently manages vessels operating
offshore Brazil, the Far East and Mexico and in the North Sea. Workships'
experience includes the marine management of the AMETHYST 1.
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REMARKETING
Formaritima will be the agent for each of our subsidiaries in remarketing
its rig after the expiration of its charter. Formaritima's duties will include,
among others, ensuring the best possible remarketing of each rig upon expiration
of its charter in order to keep it in suitable employment as long as possible
and presenting proposals and conducting negotiations for contracts for the
further employment of each rig. Formaritima will take advantage of the
significant experience of Maritima and Pride in remarketing our rigs.
PERMITS AND REGULATION
We must comply with the applicable laws, regulations and statutory and
regulatory standards of Brazil and other jurisdictions relating to offshore
oilfield services and will be subject to their ongoing application and
enforcement. In addition, many permits and regulatory approvals are required for
the operation of our rigs under applicable laws and regulations, although a few
of these permits are not currently required and have not yet been obtained. Of
those permits and approvals which have been obtained, some are subject to
certain conditions. Permits and approvals that are still outstanding may, when
issued, similarly be subject to conditions. Delay in receipt of, or failure to
obtain, required permits or approvals and/or failure to satisfy the conditions
of any permit could delay a rig's construction, restrict its operation or result
in additional costs or additional taxes.
Our rigs will be constructed in compliance with the rules and regulations
of Lloyds Registry of London. We expect that compliance with these rules and
regulations will allow our rigs to operate with unrestricted service on a
worldwide basis. In addition, our rigs are required under the charters to comply
with the Petrobras safety rules and will be outfitted accordingly.
Each rig will be registered in the Bahamas. The Bahamian Registry will be
responsible for carrying out the inspections that will allow our rigs to comply
with their class requirements. In this regard, the Bahamian Registry recognizes
a valid certificate from Lloyds Registry of London.
ENVIRONMENTAL MATTERS
The operation of our rigs will routinely involve the handling of waste
materials, some of which are classified as hazardous substances. The laws,
regulations and requirements that will be applicable to the operation of our
rigs include, but are not limited to, laws and regulations controlling the
containment, disposal and discharge of hazardous oilfield waste and other
nonhazardous waste material into the environment, laws and regulations requiring
removal and cleanup under certain circumstances or otherwise relating to the
protection of the environment, and certification, licensing and other
requirements imposed by treaties, laws, regulations and conventions. These laws,
regulations and requirements potentially expose us to civil penalties, criminal
sanctions and closure orders for non-compliance. Some of these laws impose joint
and several liability (without regard to fault) on owners of the related mineral
interests and drilling operators (like us) for environmental damage. We will
make substantial expenditures to comply with these environmental laws. We cannot
assure that future environmental costs will not have a material adverse effect
on our results of operations or financial condition. Since environmental laws
are becoming more stringent in Brazil and other emerging-market countries, our
environmental capital expenditures and costs for environmental compliance may be
significant in the future. In addition, due to the possibility of unanticipated
regulatory or other developments, the amount and timing of future environmental
expenditures may vary widely from those currently anticipated. Our management
does not believe that compliance with existing environmental laws will have a
material adverse effect on our financial condition or results of operations.
We are obligated under the documents relating to the old and new notes and
the credit facilities providing financing for our rigs and various other
documents to obtain and keep in full force and effect insurance providing
coverage for risks inherent in the operation of our rigs. Under the charters,
Petrobras has agreed, under specified circumstances, to hold our subsidiaries
harmless for any damages to reservoirs and any damages arising from pollution at
the well as a result of kick or blowout and to limit the liability of our
subsidiaries for spills of petroleum, oil and other residues, other than when
caused by events arising from kick, blowout, surgings or formation testing, and
direct losses and damages to the equipment of Petrobras and third parties and
damages to wells. We cannot assure that insurance coverages will be available in
the future on commercially reasonable terms or that the amounts for which we are
insured or indemnified or which we receive under such coverages or
indemnifications will cover all losses or increased expenses. The occurrence of
a significant event against which we are not fully insured or indemnified or a
number of lesser events against which we are insured but subject to substantial
deductibles could materially and adversely affect our ability to repay the old
and new notes.
EMPLOYEES
We have no employees and do not expect to hire our own employees for the
foreseeable future. Instead, each subsidiary has contracted with Petrodrill
Engineering, Formaritima and Workships to provide experienced construction
management personnel, ship crews, base personnel and oil drilling employees.
Maritima and Pride are undertaking to train the rig crews in
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advance of the completion of the construction of our rigs. Some but not all of
the oil drilling employees, base personnel and ship crews have been identified,
assembled and hired. The drilling employees, base personnel and ship crews that
have been identified currently are being trained in Maritima's Macae, Brazil
operating base and on Pride's NYMPHEA. Once our rigs become operational,
Formaritima and Workships will employ more than 350 people, including employees
directly hired and contracted in the case of Workships and employees seconded
from Maritima, Pride and their affiliates in the case of Formaritima. All
seconded and direct employees of Petrodrill Engineering, Formaritima and
Workships are expected to be exempt personnel and only contracted employees are
expected to be covered by one or more collective bargaining agreements. We do
not expect labor relations to be materially adverse or disruptive of our
operations. You should read the discussion under the headings "--Construction,
Mobilization and Delivery to Petrobras--Construction Management" and
"--Operating Management" for further information regarding these arrangements.
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MANAGEMENT
The following table sets forth the names, ages and positions of our
directors and executive officers and the executive officers of Petrodrill
Engineering and Formaritima. There are no family relations of first cousin or
closer among our directors or executive officers by blood, marriage or adoption,
except that Mr. Szpigel is Mr. Efromovich's nephew. Each of our directors will
serve until the earlier of his death, resignation or removal, and each of our
officers will serve until the earlier of his removal with or without cause by
the board of directors or the election of his successor by the board of
directors.
NAME AGE POSITION
- ---- --- --------
German Efromovich.... 49 Our Director and President
John O'Leary......... 43 Our Director and Vice President
Hamylton Padilha..... 39 Our Director and Vice President
Ricardo Szpigel...... 27 Our Director
Earl W. McNiel....... 41 Our Treasurer
Robert W. Randall.... 57 Our Secretary
Derek Leach.......... 49 Project Director of Petrodrill Engineering
Peter Hickson........ 50 Deputy Project Director of Petrodrill Engineering
Steve Assiter........ 42 Financial Director and Chief Financial Officer
Peter Jeffrey........ 52 Construction Manager of Petrodrill Engineering
Jacques Stokking..... 50 General Manager of Formaritima
German Efromovich has been our Director and President since March 1998 and
is a founder and has been President of Maritima since 1981. Mr. Efromovich has
been involved in the oil and gas business for over 20 years and holds
significant interests in various service companies, including Brasitest S.A.,
which provides inspection services and non-destructive testing.
John O'Leary has been our Director and Vice President since March 1998 and
Pride's Vice President--Worldwide Marketing since March 1997. Mr. O'Leary was
Manager, Marketing and Business Development of Forasol S.A. from June 1993 to
March 1997 (when Forasol S.A. was acquired by Pride), with primary
responsibility for worldwide business development. Mr. O'Leary joined Forasol
S.A. in August 1985.
Hamylton Padilha has been our Vice President since March 1998, our
Director since October 1999 and Maritima's Director--Drilling and Floating
Production Projects since January 1995. Mr. Padilha was Marketing Director for
the Drilling Division of Odebrecht Perfuracoes Ltda., one of Brazil's largest
drilling contractors, from 1990 to 1995.
Ricardo Szpigel has been our Director since October 1999 and Maritima's
Financial Manager since May 1996. Prior to joining Maritima, Mr. Szpigel had
been International Trade Manager for REM--Industria e Comercio Ltda., a supplier
of medical and industrial products and an affiliate of Maritima, since 1994. Mr.
Szpigel received his Masters degree in Business Administration from Universidade
Paulista in 1994.
Earl W. McNiel has been our Treasurer since March 1998 and Pride's Vice
President and Chief Financial Officer since February 1997. He joined Pride in
September 1994 as its Chief Accounting Officer. From 1990 to 1994, Mr. McNiel
served as Chief Financial Officer of several publicly owned waste management
companies.
Robert W. Randall has been our Secretary since March 1998 and Pride's Vice
President and General Counsel since May 1991. He was elected Secretary of Pride
in 1993. Prior to 1991, he was Senior Vice President, General Counsel and
Secretary for Tejas Gas Corporation, a natural gas transmission company.
Derek Leach has been Project Director of Petrodrill Engineering since
February 1998. Mr. Leach has 23 years of experience in the subsea construction
business during which time he has worked for Coflexip Stena Offshore, Wharton
Williams Taylor and Vickers Oceanics. From 1996 to 1998, Mr. Leach was the
Senior Executive Vice President of Coflexip Stena Offshore
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responsible for worldwide subsea construction activity and offshore vessel and
equipment operations. From 1995 to 1996, Mr. Leach was Coflexip Stena's Senior
Vice President--North Sea Operations and Offshore Resources. Prior to the merger
of Coflexip S.A. and Stena Offshore, Mr. Leach had been General Manager of Stena
Offshore N.V. in charge of western hemisphere and offshore resources since 1989.
Peter Hickson has been Deputy Project Director of Petrodrill Engineering
since February 1998. Mr. Hickson has 27 years of experience in the oil and gas
and contract drilling industry. From 1982 to 1990, Mr. Hickson was the Managing
Director of Houlder Offshore. During this period, Mr. Hickson negotiated and
managed the construction of seven offshore drilling rigs in five different
shipyards. Since 1990, Mr. Hickson has been an independent consultant for oil
and gas companies seeking to establish overseas operations or undertake rig
construction projects.
Steve Assiter has been Petrodrill Engineering's Financial Director and
Chief Financial Officer since March 30, 1998. Previously, Mr. Assiter spent
three years as Vice President and Group Controller for Coflexip Stena Offshore.
Prior to the merger of Coflexip S.A. and Stena Offshore, Mr. Assiter had been
Financial Director/CFO of Stena Offshore N.V. since 1986.
Peter Jeffrey has been the Construction Manager of Petrodrill Engineering
since April 1998. Prior to April 1998, Mr. Jeffrey was New Building and
Conversions Manager for Coflexip Stena Offshore. Mr. Jeffrey has 35 years
experience in the marine, shipbuilding, offshore exploration and construction
industries. This experience includes 21 years of construction, conversion and
technical and project management experience for dynamically positioned vessels
and semi-submersible drilling rigs with Coflexip Stena Offshore, Stena Offshore,
Houlder Offshore and Offshore International.
Jacques Stokking was appointed General Manager of Formaritima in August
1999. Mr. Stokking has 23 years of experience in the oil and gas industry. From
1994 to 1999, he was Human Resources Manager for Forasol S.A., which is based in
Paris and was acquired by Pride in March 1997. From 1986 to 1994 he was
Worldwide Operations Manager for Forasol S.A. From 1984 to 1986 he was District
Manager for Forasol's joint venture in Brazil operating dynamically positioned
drillships and semi-submersibles.
EXECUTIVE AND BOARD COMPENSATION AND BENEFITS
AND COMPENSATION OF OWNER-RELATED PARTIES
EXECUTIVE AND BOARD COMPENSATION AND BENEFITS
Our directors and officers receive no compensation from us. Mssrs.
Efromovich, Padilha and Szpigel receive compensation from Maritima for their
services to Maritima and its affiliates, but they receive no extra compensation
from Maritima for their services to us. Mssrs. O'Leary, McNiel and Randall
receive compensation from Pride for their services to Pride, but they receive no
extra compensation from Pride for their services to us.
COMPENSATION OF OWNER-RELATED PARTIES
Our operations are conducted through management agreements with Petrodrill
Engineering, Formaritima and Workships, and each of our subsidiaries has
licensed the Amethyst design from BiGem. Petrodrill Engineering and Formaritima
have, in turn, subcontracted Maritima, Pride-Foramer and Workships. In addition,
certain affiliates of Maritima are entitled to additional compensation for
services rendered in connection with our rigs and the Petrobras contracts. We
summarize below the compensation structure for Petrodrill Engineering,
Formaritima, Pride-Foramer, Maritima and its affiliates. You should read the
discussion under the headings "Business--Construction, Mobilization and Delivery
to Petrobras--Construction Management" beginning on page 43 and
"Business--Operating Management--Marine and Nautical Management" beginning on
page 55 for information regarding the compensation structure for Workships.
CONSTRUCTION AND OPERATING MANAGEMENT
The construction management services being provided to each of our
subsidiaries by Petrodrill Engineering and to Petrodrill Engineering by
Pride-Foramer and Maritima are being provided at agreed-upon fixed prices that
approximate each such service provider's cost, including the full salaries of
personnel engaged full time as employees of Petrodrill Engineering and a pro
rata share of the salaries and other overhead costs for personnel who are
seconded from Pride-Foramer and Maritima. You should read the discussion under
the heading "Business--Construction, Mobilization and Delivery to
Petrobras--Construction Management" beginning on page 43 for a description of
the construction management services being provided by Petrodrill Engineering,
Pride-Foramer and Maritima.
The operating management services that will be provided to each of our
subsidiaries by Formaritima and to Formaritima by Pride-Foramer and Maritima
will be provided for a management fee of $1,250 per day per rig, beginning on
the first day of sea
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trials, plus reimbursement of all costs. The reimbursables payable by each
subsidiary to Formaritima will include the management fees and reimbursables
payable by Formaritima to Pride-Foramer and Maritima. If a rig is sold and the
corresponding management agreement is terminated, Formaritima will be entitled
to a lump sum termination payment equal to the net present value of its
management fees over the remaining term of the rig's charter, calculated using a
discount factor of 10% per annum. You should read the discussion under the
heading "Business--Operating Management--Overall Management" beginning on page
54 for a description of the operating management services being provided by
Formaritima, Pride-Foramer and Maritima.
LICENSING AGREEMENT
BiGem purchased the rights to the Amethyst design for $9.5 million in
October 1997 from Scheepswerf de Hoop Lobith B.V. BiGem is in dispute with de
Hoop over the quality of the documentation delivered by de Hoop with the
Amethyst design. BiGem has withheld payments of $2.3 million from de Hoop and
does not intend to make any further payments. This dispute is now in arbitration
and BiGem believes that no further payments will need to be made. We deem the
probability that BiGem will need to make additional payments to be remote.
BiGem has granted each of our four subsidiaries an irrevocable,
non-exclusive, perpetual license to construct or procure the construction of one
dynamically positioned, semi-submersible drilling rig based on the Amethyst
design. The licensing agreement provides that BiGem will furnish all necessary
documentation pertaining to the Amethyst design and requires each subsidiary to
pay BiGem $1,583,333 for its license, payable in six installments. The first and
second installments have previously been paid by each subsidiary with reduction
to reflect the amount withheld by BiGem from de Hoop. Each of the last four
installments will become due semi-annually beginning on delivery of the relevant
rig. Our subsidiaries are not required by their licensing agreements to pay more
than $1,583,333 for each license but, in the event that BiGem cannot obtain
relief from its payment obligations to de Hoop, our subsidiaries will be
required to pay BiGem the full $1,583,333 for each license.
In connection with the AMETHYST 6 and AMETHYST 7 credit facilities,
Maritima and Pride have severally guaranteed payments of construction, equipping
and mobilization costs for each of the AMETHYST 6 and AMETHYST 7 to the extent
that the funds available under such rig's credit facility are insufficient for
completion of such rig up to a total for both credit facilities of $14.0 million
by Maritima and $6.0 million by Pride. This guarantee covers, among other
construction, equipping and mobilization costs, the payments under each of the
AMETHYST 6 and AMETHYST 7 licensing agreements with BiGem.
OTHER COMPENSATION PAYABLE TO AFFILIATES OF MARITIMA
Drillpetro Inc., a special purpose affiliate of Maritima incorporated in
the Bahamas and created by Maritima to contribute equity to us, is entitled to a
lump-sum amount of $2.5 million (payable in installments of $500,000, $1.0
million and $1.0 million for the AMETHYST 5, AMETHYST 6 and AMETHYST 7,
respectively, within three days of receipt of the corresponding mobilization
payments under the relevant Petrobras charter or, in the event of no
mobilization fee, within 45 days of delivery and acceptance of the relevant rig)
for services rendered in connection with the development of conceptual and
design engineering, shipyard negotiations and technical negotiations with
Petrobras. In addition, Drillpetro will be paid the following fees: (i) $4,000
in the case of AMETHYSTS 6 and AMETHYST 7 and (ii) $2,000 in the case of
AMETHYSTS 4 and AMETHYST 5, for each day the relevant rig works under its
charter, plus (i) in the case of the AMETHYST 4, 1% of the daily rate paid under
its charter (excluding bonuses) and (ii) in the case of the AMETHYST 6 and
AMETHYST 7, 2% of the daily rates paid under their charters (excluding bonuses).
Further, two other affiliates of Maritima, U.K. Guaranty & Bonding Corp. Limited
and Rapisardi Investment Limited, will receive agency fees of 3% and 2% of the
full operating rates under the Petrobras contracts (excluding bonuses),
respectively, payable monthly upon receipt of payments from Petrobras, for their
assistance in negotiating the Petrobras contracts and certain amendments to the
Petrobras contracts.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
OWNERSHIP OF THE AMETHYST GROUP
Maritima's interest in us is held by Drillpetro, which owns 48.5% of our
outstanding capital stock, and Techdrill Inc., which owns 13.2% of our
outstanding capital stock. Like Drillpetro, Techdrill is a special purpose
affiliate of Maritima incorporated in the Bahamas and created by Maritima to
contribute equity to us. Rainier Engineering Ltd., a company incorporated in the
Bahamas, owns all of the stock of Drillpetro and Techdrill and 40% of the stock
of Maritima. Rainier's shareholders directly own the remainder of the stock of
Maritima. Westville Management Corporation, a British Virgin Islands company
with limited liability and wholly owned subsidiary of Pride, owns 26.4 % of our
outstanding capital stock. The remainder of our outstanding capital stock is
held by two of First Reserve's investment partnerships, First Reserve Fund VII,
which owns 1.4% of our outstanding capital stock, and First Reserve Fund VIII,
which owns 10.5% of our outstanding capital stock. First Reserve owns
approximately 9.5% of the capital stock of Pride. You should read the discussion
under the heading "Business--About Our
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Owners--First Reserve" beginning on page 38 for information regarding the terms
of First Reserve's ownership of our outstanding capital stock.
The outstanding capital stock of each of Petrodrill Engineering and BiGem
is owned 55% by Drillpetro, 15% by Techdrill and 30% by Westville. The
outstanding capital stock of Formaritima is owned 50% by Drillpetro and 50% by
Westville. Petrodrill Engineering, Formaritima, BiGem and we and our
subsidiaries make up the Amethyst group. The members of the Amethyst group are
all special-purpose companies created by Maritima and Pride to construct, own
and operate our rigs. The chart that appears under the heading "Business--About
Our Owners" on page 37 depicts the relationships among the members of the
Amethyst group. In this chart, "Maritima/Pride Affiliates" refers to Petrodrill
Engineering, Formaritima and BiGem, "Maritima Affiliates" refers to Drillpetro
and Techdrill and "Pride Affiliates" refers to Westville.
We have been capitalized with initial equity contributions by our owners
aggregating approximately $105.0 million. Petrodrill Engineering, Formaritima
and BiGem have been capitalized with relatively modest equity contributions.
Drillpetro, Techdrill and Westville have agreed to contribute to each member of
the Amethyst group (except our subsidiaries, in which Drillpetro, Techdrill and
Westville own no direct interest), in proportion to their respective ownership
interests, the amounts needed to fund the agreed capital and operating budgets
of each such member and any cost overruns. Any amounts so contributed will be
treated as subordinated loans repayable only following amortization of any
amounts due and outstanding in respect of any outside financing obtained by the
relevant member of the Amethyst group, including the financing provided by the
old and new notes. Notwithstanding the foregoing, if any owner fails to comply
with its obligations to make such further contributions, make-up contributions
by the remaining owners will be treated as equity contributions entitling the
remaining owners to additional shares in the relevant Amethyst group member.
GOVERNANCE
The following discussion summarizes the shareholders' agreement among
Drillpetro, Techdrill and Westville relating to our governance:
RESTRICTIONS ON ASSIGNMENT OR TRANSFER
Except as described below under "Transfers to Third Parties," each
shareholder generally is prohibited from selling, mortgaging, charging,
assigning, transferring or otherwise disposing of its interest in us without the
approval of the other shareholders. A shareholder may transfer to an affiliate
all of its rights, duties and obligations under certain agreements, provided the
assigning shareholder remains primarily liable for performance by its affiliate.
EXIT MECHANISMS
There are four exit mechanisms by which the shareholders may monetize
their investments after September 2001, subject to the restriction under
"Description of New Notes--Change of Control." Such mechanisms are:
o the sale of our rigs and/or all of our outstanding shares to a third
party
o the purchase by Westville or its nominee of Maritima's beneficial
interests in any rig or in us
o a public offering of our stock
o the exchange of Maritima's beneficial interests in us for shares of
common stock of Pride on terms to be agreed and based on industry
practice
SHAREHOLDER MEETINGS
No business may be transacted at a meeting of our shareholders unless one
representative of each shareholder is present, provided that the representatives
present may reconvene the meeting at a later date and, at such date, transact
business noted on the agenda for such reconvened meeting by vote of a majority
of issued shares. In lieu of meeting, the shareholders may act by unanimous
written consent, which consent will have the same effect as an action duly taken
at a meeting.
BOARD OF DIRECTORS
Our board of directors consists of four directors. Two directors may be
appointed by Drillpetro and one each are appointed by Westville and Techdrill. A
quorum at a meeting of the board of directors requires the attendance of all
four directors or their alternates, but a director will not be eligible to vote
at a validly held meeting unless the shareholder whom he represents has complied
with all capital contribution requirements. Decisions of the board of directors
must be made by vote of directors representing a majority of the shares issued
and outstanding, subject to certain exceptions requiring unanimity. Our board of
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directors is required to meet at least once every two months during the
construction of our rigs and at least once every three months thereafter.
DEADLOCK AT BOARD LEVEL
In the event that our directors are unable to reach a unanimous decision
on a matter requiring unanimity or unable to establish a quorum for a meeting to
discuss such a matter within 10 days after such a meeting has initially been
called (either of these events constituting a deadlock), and senior management
cannot resolve such deadlock, any shareholder may initiate standard buy-sell
procedures.
MANAGEMENT COMMITTEE
The shareholders may form a management committee consisting of one
representative of each shareholder to supervise the construction of our rigs and
subsequent operations. Decisions of such management committee must be unanimous.
In the event deadlock exists in the management committee, the matter will be
referred to the board of directors for resolution.
TRANSFERS TO THIRD PARTIES
After September 2001 and subject to any restrictions imposed by the
instruments governing our indebtedness, a shareholder may transfer all, but not
part, of its interest in us (including any subordinated loans) to a
non-affiliate to the extent such non-affiliate agrees to be bound by all the
terms of the related governance agreements. Such transfer will be subject to the
rights of first refusal of the other shareholders allowing them to purchase the
interests of the selling shareholder under the same terms offered by the
non-affiliate, pro rata in proportion to their existing interests.
RELATED PARTY ADVANCES
Maritima and Pride, through Drillpetro, Techdrill and Westville, have
advanced us approximately $29.6 million. These advances are subordinated to the
old and new notes and, consequently, may not be repaid prior to repayment of the
old and new notes except to the extent repayment is permitted to be made as
restricted payments under the covenant described under the heading "Description
of New Notes--Covenants--Limitation on Restricted Payments" beginning on page
80.
RECEIVABLE FROM PETRODRILL OFFSHORE INC.
Petrobras initially awarded Maritima charters for six rigs, the AMETHYST 2
and AMETHYST 3 and our four rigs. Maritima and Pride organized a joint venture
company, Petrodrill Offshore Inc., with six subsidiaries to own and charter the
rigs to Petrobras. The AMETHYST 2 and AMETHYST 3 were to have commenced
operations in the Campos Basin offshore Brazil in late 1999 and early 2000, but
the construction contracts for those two rigs were terminated in November 1998
after the shipyard at which the rigs were to be constructed filed for protection
from its creditors. In May 1999, Petrobras canceled the charters and service
rendering contracts for the AMETHYST 2 and AMETHYST 3 based on alleged late
delivery. Following termination of the construction contracts for the AMETHYST 2
and AMETHYST 3, Petrodrill Offshore transferred the shares of each of its six
subsidiaries to us for nominal consideration, and we transferred the shares of
the subsidiaries that held the charters for the AMETHYST 2 and AMETHYST 3 to a
separate joint venture company owned by Maritima and Pride. In this process, we
assumed from Petrodrill Offshore related party advances from Drillpetro,
Techdrill and Westville that total a currently outstanding amount of $13.9
million and have a receivable from Petrodrill Offshore for that amount. To the
extent Petrodrill Offshore does not pay us the full $13.9 million in
satisfaction of our receivable, Drillpetro, Techdrill and Westville have agreed
to offset the deficiency against their related party advances.
SALE OF EQUIPMENT TO PRIDE
In December 1999, we sold to Pride selected owner-furnished equipment that
had been purchased for the AMETHYST 4. Pride reimbursed us the full cost
(approximately $8.5 million) of that owner-furnished equipment. We have placed
new orders with our owner-furnished equipment suppliers to replace the equipment
sold to Pride, and Pride has agreed to reimburse us for any increased costs that
we incur in replacing that equipment. This sale of owner-furnished equipment to
Pride will not affect the delivery of the AMETHYST 4.
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THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
In connection with the sale of the old notes, we entered into a
registration rights agreement with the initial purchaser of the old notes. In
that agreement, we agreed to file a registration statement relating to an offer
to exchange the old notes for new notes and to use our reasonable best efforts
to complete the exchange offer within 180 days after November 1, 1999. We are
offering the new notes under this prospectus to satisfy our obligations under
the registration rights agreement.
RESALE OF NEW NOTES
Based on interpretations of the SEC staff in "no action letters" issued to
third parties, we believe that each new note issued in the exchange offer may be
offered for resale, resold and otherwise transferred by you without compliance
with the registration and prospectus delivery provisions of the Securities Act
if all of the following are true:
o you are not our "affiliate" within the meaning of Rule 405 under the
Securities Act
o you acquire such new notes in the ordinary course of your business
o you do not intend to participate in the distribution of new notes
However, the SEC has not considered this exchange offer in the context of
a no-action letter, so there can be no assurance that the staff of the SEC would
make a similar determination with respect to this exchange offer. If you tender
your old notes in the exchange offer with the intention of participating in any
manner in a distribution of the new notes, you:
o cannot rely on such interpretations by the SEC staff
o must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with a secondary resale transaction
Unless an exemption from registration is otherwise available, the resale
by any securityholder intending to distribute new notes should be covered by an
effective registration statement under the Securities Act containing the selling
securityholder's information required by Item 507 or Item 508, as applicable, of
Regulation S-K under the Securities Act. This prospectus may be used for an
offer to resell, resale or other retransfer of new notes only as specifically
described in this prospectus. Only those broker-dealers that acquired the old
notes as a result of market-making activities or other trading activities may
participate in the exchange offer. Each broker-dealer that receives new notes
for its own account in exchange for old notes, where that broker-dealer acquired
such old notes as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such new notes. You should read the discussion under the
heading "Plan of Distribution" beginning on page 110 for more details regarding
the transfer of new notes.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions described in this prospectus
and in the letter of transmittal, we will accept for exchange any old notes
properly tendered and not withdrawn prior to the expiration date of the exchange
offer for new notes. We will issue $1,000 principal amount of new notes in
exchange for each $1,000 principal amount of old notes surrendered under this
exchange offer. Old notes may be tendered only in integral multiples of $1,000.
This exchange offer is not conditioned upon any minimum aggregate principal
amount of old notes being tendered for exchange.
As of this date, $53 million principal amount of 11 3/4% Senior Secured
Notes due 2001 are outstanding. This prospectus and the letter of transmittal
are being sent to all registered holders of old notes. There will be no fixed
record date for determining registered holders of old notes entitled to
participate in the exchange offer.
We intend to conduct the exchange offer in accordance with the provisions
of the registration rights agreement, the applicable requirements of the
Securities Act of 1933 and the Securities Exchange Act of 1934 and the rules and
regulations of the SEC. Old notes that are not tendered for exchange in the
exchange offer:
o will remain outstanding
o will continue to accrue interest
o will be entitled to the rights and benefits that holders have under the
indenture relating to the notes and the registration rights agreement
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We will be deemed to have accepted for exchange properly tendered old
notes when we have given oral or written notice of the acceptance to the
exchange agent and complied with the applicable provisions of the registration
rights agreement. The exchange agent will act as agent for the tendering holders
for the purposes of receiving the new notes from us.
If you tender old notes in the exchange offer, you will not be required to
pay brokerage commissions or fees or, subject to the instructions in the letter
of transmittal, transfer taxes with respect to the exchange of old notes. We
will pay all charges and expenses, other than certain applicable taxes described
below, in connection with the exchange offer. It is important that you read the
section entitled "--Fees and Expenses" for more details about fees and expenses
incurred in the exchange offer.
We will return any old notes that we do not accept for exchange for any
reason without expense to the tendering holder as promptly as practicable after
the expiration or termination of the applicable exchange offer.
EXPIRATION DATE
Each exchange offer will expire at 5:00 p.m., New York City time, on
,2000, unless, in our sole discretion, we extend the expiration date.
EXTENSIONS, DELAY IN ACCEPTANCE, TERMINATION OR AMENDMENT
We expressly reserve the right, at any time or at various times, to extend
the period of time during which this exchange offer is open. We may delay
acceptance of any old notes for exchange by giving oral or written notice of the
extension to holders of old notes. During any such extensions, all old notes you
have previously tendered will remain subject to the exchange offer, and we may
accept them for exchange.
To extend an exchange offer, we will notify the exchange agent orally or
in writing of any extension. We also will make a public announcement of the
extension no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date.
If any of the conditions described below under "--Conditions to the
Exchange Offer" have not been satisfied with respect to the exchange offer, we
reserve the right, in our sole discretion:
o to delay accepting for exchange any old notes
o to extend that exchange offer
o to terminate that exchange offer
by giving oral or written notice of such delay, extension or termination to the
exchange agent. Subject to the terms of the registration rights agreement, we
also reserve the right to amend the terms of that exchange offer in any manner.
Any delay in acceptance, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof to the
registered holders of old notes. If we amend the exchange offer in a manner that
we determine to constitute a material change, we will promptly disclose that
amendment by means of a prospectus supplement. We will distribute the supplement
to the registered holders of the old notes. Depending upon the significance of
the amendment and the manner of disclosure to the registered holders, we will
extend the exchange offer if the exchange offer would otherwise expire during
such period.
Without limiting the manner in which we may choose to make public
announcements of any delay in acceptance, extension, termination or amendment of
the exchange offer, we have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by making a timely release
to an appropriate news agency.
CONDITIONS TO THE EXCHANGE OFFER
Despite any other term of the exchange offer, we will not be required to
accept for exchange, or to exchange any new notes for any old notes, and we may
terminate the exchange offer as provided in this prospectus before accepting any
old notes for exchange, if, in our reasonable judgment, either of the following
is true:
o the exchange offer, or the making of any exchange by a holder of old
notes, would violate applicable law or any applicable interpretation of
the staff of the SEC
o any action or proceeding has been instituted or threatened in any court
or by or before any governmental agency with respect to the exchange
offer that, in our judgment, would reasonably be expected to impair our
ability to proceed with that exchange offer
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In addition, we will not be obligated to accept for exchange the old notes
of any holder that has not made to us both of the following:
o the representations described under "--Procedures for Tendering" and
"Plan of Distribution"
o such other representations as may be reasonably necessary under
applicable SEC rules, regulations or interpretations to make available
to us an appropriate form for registering the new notes under the
Securities Act
We expressly reserve the right to amend or terminate each exchange offer,
and to reject for exchange any old notes not previously accepted for exchange in
that exchange offer, upon the occurrence of any of the conditions to the
exchange offer specified above. We will give oral or written notice of any
extension, amendment, non-acceptance or termination to the holders of the old
notes affected as promptly as practicable.
These conditions are for our sole benefit, and we may assert them or waive
them in whole or in part at any time or at various times in our sole discretion.
Our failure at any time to exercise any of these rights will not mean that we
have waived our rights. Each right will be deemed an ongoing right that we may
assert at any time or at various times.
In addition, we will not accept for exchange any old notes tendered, and
will not issue new notes in exchange for any such old notes, if at such time any
stop order has been threatened or is in effect with respect to the registration
statement of which this prospectus constitutes a part or the qualification of
the indenture relating to the notes under the Trust Indenture Act of 1939.
PROCEDURES FOR TENDERING
HOW TO TENDER GENERALLY
Only a holder of old notes may tender such old notes in the exchange
offer. To tender in the exchange offer, a holder must either (1) comply with the
procedures for physical tender or (2) comply with the automated tender offer
program procedures of The Depository Trust Company, or DTC, described below.
To complete a physical tender, a holder must do all of the following:
o complete, sign and date the letter of transmittal or a facsimile of the
letter of transmittal
o have the signature on the letter of transmittal guaranteed if the
letter of transmittal so requires
o mail or deliver the letter of transmittal or facsimile to the exchange
agent prior to the expiration date
o deliver the old notes to the exchange agent prior to the expiration
date or comply with the guaranteed delivery procedures described below
To be tendered effectively, the exchange agent must receive any physical
delivery of the letter of transmittal and other required documents at its
address provided below under "--The Exchange Agent" prior to the expiration
date.
To complete a tender through DTC's automated tender offer program, the
exchange agent must receive, prior to the expiration date, a timely confirmation
of book-entry transfer of such old notes into the exchange agent's account at
DTC according to the procedure for book-entry transfer described below or a
properly transmitted agent's message.
The tender by a holder that is not withdrawn prior to the expiration date
and our acceptance of that tender will constitute an agreement between the
holder and us in accordance with the terms and subject to the conditions
described in this prospectus and in the letter of transmittal.
THE METHOD OF DELIVERY OF OLD NOTES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT YOUR ELECTION AND RISK.
RATHER THAN MAIL THESE ITEMS, WE RECOMMEND THAT YOU USE AN OVERNIGHT OR HAND
DELIVERY SERVICE. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO ASSURE
DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. YOU SHOULD NOT SEND
THE LETTER OF TRANSMITTAL OR OLD NOTES TO US. YOU MAY REQUEST YOUR BROKER,
DEALER, COMMERCIAL BANK, TRUST COMPANY OR OTHER NOMINEE TO EFFECT THE ABOVE
TRANSACTIONS FOR YOU.
HOW TO TENDER IF YOU ARE A BENEFICIAL OWNER
If you beneficially own old notes that are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and you wish to
tender those notes, you should contact the registered holder as soon as possible
and instruct the registered holder to tender on your behalf. If you are a
beneficial owner and wish to tender on your own behalf, you must, prior to
completing and executing the letter of transmittal and delivering your old
notes, do either of the following:
o make appropriate arrangements to register ownership of the old notes in
your name
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o obtain a properly completed bond power from the registered holder of
your old notes
The transfer of registered ownership may take considerable time and may
not be completed prior to the expiration date.
SIGNATURES AND SIGNATURE GUARANTEES
You must have signatures on a letter of transmittal or a notice of
withdrawal described below guaranteed by an "eligible institution" unless the
old notes are tendered:
o by a registered holder who has not completed the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" on the letter
of transmittal
o for the account of an eligible institution
An "eligible institution" is a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States, or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Securities Exchange Act of 1934, that is a member of one of
the recognized signature guarantee programs identified in the letter of
transmittal.
WHEN ENDORSEMENTS OR BOND POWERS ARE NEEDED
If a person other than the registered holder of any old notes signs the
letter of transmittal, the old notes must be endorsed or accompanied by a
properly completed bond power. The registered holder must sign the bond power as
the registered holder's name appears on the old notes. An eligible institution
must guarantee that signature.
If the letter of transmittal or any old notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, those
persons should so indicate when signing. Unless we waive this requirement, they
also must submit evidence satisfactory to us of their authority to deliver the
letter of transmittal.
TENDERING THROUGH DTC'S AUTOMATED TENDER OFFER PROGRAM
The exchange agent and DTC have confirmed that any financial institution
that is a participant in DTC's system may use DTC's automated tender offer
program to tender. Accordingly, participants in the program may, instead of
physically completing and signing the letter of transmittal and delivering it to
the exchange agent, transmit their acceptance of the exchange offer
electronically. They may do so by causing DTC to transfer the old notes to the
exchange agent in accordance with its procedures for transfer. DTC will then
send an agent's message to the exchange agent.
An "agent's message" is a message transmitted by DTC to and received by
the exchange agent and forming part of the book-entry confirmation, stating
that:
o DTC has received an express acknowledgment from a participant in DTC's
automated tender offer program that is tendering old notes that are the
subject of such book-entry confirmation
o the participant has received and agrees to be bound by the terms of the
letter of transmittal or, in the case of an agent's message relating to
guaranteed delivery, the participant has received and agrees to be
bound by the applicable notice of guaranteed delivery
o we may enforce the agreement against such participant
DETERMINATIONS UNDER THE EXCHANGE OFFER
We will determine in our sole discretion all questions as to the validity,
form, eligibility, time of receipt, acceptance of tendered old notes and
withdrawal of tendered old notes. Our determination will be final and binding.
We reserve the absolute right to reject any old notes not properly tendered or
any old notes our acceptance of which, in the opinion of our counsel, might be
unlawful. We also reserve the right to waive any defects, irregularities or
conditions of the exchange offer as to particular old notes. Our interpretation
of the terms and conditions of the exchange offer, including the instructions in
the letter of transmittal, will be final and binding on all parties.
Unless waived, any defects or irregularities in connection with tenders of
old notes must be cured within such time as we determine. Neither we, the
exchange agent nor any other person will be under any duty to give notification
of defects or
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irregularities with respect to tenders of old notes, nor will we or those
persons incur any liability for failure to give such notification. Tenders of
old notes will not be deemed made until such defects or irregularities have been
cured or waived. Any old notes received by the exchange agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned to the tendering holder, unless otherwise
provided in the letter of transmittal, as soon as practicable following the
expiration date.
WHEN WE WILL ISSUE NEW NOTES
In all cases, we will issue new notes for old notes that we have accepted
for exchange in the exchange offer only after the exchange agent timely receives
both of the following:
o old notes or a timely book-entry confirmation of such old notes into
the exchange agent's account at DTC
o a properly completed and duly executed letter of transmittal and all
other required documents or a properly transmitted agent's message
RETURN OF OLD NOTES NOT ACCEPTED OR EXCHANGED
If we do not accept any tendered old notes for exchange for any reason
described in the terms and conditions of the exchange offer or if old notes are
submitted for a greater principal amount than the holder desires to exchange, we
will return the unaccepted or non-exchanged old notes without expense to their
tendering holder. In the case of old notes tendered by book-entry transfer into
the exchange agent's account at DTC according to the procedures described below,
such non-exchanged old notes will be credited to an account maintained with DTC.
These actions will occur as promptly as practicable after the expiration or
termination of the exchange offer.
YOUR REPRESENTATIONS TO US
By signing or agreeing to be bound by the letter of transmittal, you will
represent to us that, among other things:
o any new note you receive will be acquired in the ordinary course of
your business
o you have no arrangement or understanding with any person to participate
in the distribution of the new notes or the old notes within the
meaning of the Securities Act
o you are not our "affiliate," as defined in Rule 405 under the
Securities Act or, if you are our affiliate, that you will comply with
the applicable registration and prospectus delivery requirements of the
Securities Act
o if you are not a broker-dealer, you are not engaged in and do not
intend to engage in the distribution of the new notes
o if you are a broker-dealer that will receive new notes for your own
account in exchange for old notes that you acquired as a result of
market-making activities, you will deliver a prospectus in connection
with any resale of such new notes
BOOK-ENTRY TRANSFER
The exchange agent will make a request to establish an account with
respect to the old notes at DTC for purposes of the exchange offer promptly
after the date of this prospectus. Any financial institution participating in
DTC's system may make book-entry delivery of old notes by causing DTC to
transfer such old notes into the exchange agent's account at DTC in accordance
with DTC's procedures for transfer. If you are unable to deliver confirmation of
the book-entry tender of your old notes into the exchange agent's account at DTC
or all other documents required by the letter of transmittal to the exchange
agent on or prior to the expiration date, you must tender your old notes
according to the guaranteed delivery procedures described below.
GUARANTEED DELIVERY PROCEDURES
If you wish to tender your old notes, but they are not immediately
available or if you cannot deliver your old notes, the letter of transmittal or
any other required documents to the exchange agent or comply with the applicable
procedures under DTC's automated tender offer program prior to the expiration
date, you may tender if:
o the tender is made through a member firm of a registered national
securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States, or an eligible guarantor
institution
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o prior to the expiration date, the exchange agent receives from such
member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc., commercial bank or
trust company having an office or correspondent in the United States,
or eligible guarantor institution either a properly completed and duly
executed notice of guaranteed delivery by facsimile transmission, mail
or hand delivery or a properly transmitted agent's message and notice
of guaranteed delivery:
- stating your name and address, the registered number(s) of your old
notes and the principal amount of old notes tendered
- stating that the tender is being made thereby
- guaranteeing that, within three New York Stock Exchange trading days
after the expiration date, the letter of transmittal or facsimile
thereof or agent's message in lieu thereof, together with the old
notes or a book-entry confirmation, and any other documents required
by the letter of transmittal will be deposited by the eligible
guarantor institution with the exchange agent
o the exchange agent receives such properly completed and executed letter
of transmittal or facsimile or agent's message, as well as all tendered
old notes in proper form for transfer or a book-entry confirmation, and
all other documents required by the letter of transmittal, within three
New York Stock Exchange trading days after the expiration date
Upon request to the exchange agent, the exchange agent will send a notice
of guaranteed delivery to you if you wish to tender your old notes according to
the guaranteed delivery procedures described above.
WITHDRAWAL OF TENDERS
Except as otherwise provided in this prospectus, you may withdraw your
tender at any time prior to 5:00 p.m., New York City time, on the expiration
date.
For a withdrawal to be effective, either of the following must occur:
o the exchange agent must receive a written notice of withdrawal at one
of the addresses listed below under "--The Exchange Agent"
o the withdrawing holder must comply with the appropriate procedures of
DTC's automated tender offer program
Any notice of withdrawal must:
o specify the name of the person who tendered the old notes to be
withdrawn
o identify the old notes to be withdrawn, including the registration
number or numbers and the principal amount of such old notes
o be signed by the person who tendered the old notes in the same manner
as the original signature on the letter of transmittal used to deposit
those old notes (or be accompanied by documents of transfer sufficient
to permit the trustee to register the transfer into the name of the
person withdrawing the tender)
o specify the name in which such old notes are to be registered, if
different from that of the person who tendered the old notes
If old notes have been tendered under the procedure for book-entry
transfer described above, any notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawn old notes and
otherwise comply with the procedures of DTC.
We will determine all questions as to the validity, form, eligibility and
time of receipt of notice of withdrawal, and our determination shall be final
and binding on all parties. We will deem any old notes so withdrawn not to have
been validly tendered for exchange for purposes of the exchange offer.
Any old notes that have been tendered for exchange but that are not
exchanged for any reason will be returned to their holder without cost to the
holder or, in the case of old notes tendered by book-entry transfer into the
exchange agent's account at DTC according to the procedures described above,
such old notes will be credited to an account maintained with DTC for the old
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notes. This return or crediting will take place as soon as practicable after
withdrawal, rejection of tender or termination of the exchange offer. You may
retender properly withdrawn old notes by following one of the procedures
described under "--Procedures for Tendering" above at any time on or prior to
the expiration date.
FEES AND EXPENSES
We will bear the expenses of soliciting tenders. The principal
solicitation is being made by mail; however, we may make additional solicitation
by facsimile, email, telephone or in person by our officers and regular
employees and those of our affiliates.
We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to broker-dealers or others soliciting
acceptances of the exchange offer. We will, however, pay the exchange agent
reasonable and customary fees for its services and reimburse it for its related
reasonable out-of-pocket expenses. We may also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this prospectus, letters of transmittal
and related documents to the beneficial owners of the old notes and in handling
or forwarding tenders for exchange.
We will pay the cash expenses to be incurred in connection with the
exchange offer. They include:
o SEC registration fees
o fees and expenses of the exchange agent and trustee
o accounting and legal fees and printing costs
o related fees and expenses
TRANSFER TAXES
If you tender your old notes for exchange, you will not be required to pay
any transfer taxes. We will pay all transfer taxes, if any, applicable to the
exchange of old notes in the exchange offer. The tendering holder will, however,
be required to pay any transfer taxes, whether imposed on the registered holder
or any other person, if any of the following are true:
o certificates representing new notes or old notes for principal amounts
not tendered or accepted for exchange are to be delivered to, or are to
be issued in the name of, any person other than the registered holder
of old notes tendered
o tendered old notes are registered in the name of any person other than
the person signing the letter of transmittal
o a transfer tax is imposed for any reason other than the exchange of old
notes in the exchange offer
If satisfactory evidence of payment of any transfer taxes payable by a
note holder is not submitted with the letter of transmittal, the amount of such
transfer taxes will be billed directly to that tendering holder. The exchange
agent will retain possession of new notes with a face amount equal to the amount
of the transfer taxes due until it receives payment of the taxes.
CONSEQUENCES OF FAILURE TO EXCHANGE
If you do not exchange your old notes for new notes in the exchange offer,
you will remain subject to the existing restrictions on transfer of the old
notes. In general, you may not offer or sell the old notes unless either they
are registered under the Securities Act or the offer or sale is exempt from or
not subject to registration under the Securities Act and applicable state
securities laws. Except as required by the registration rights agreement, we do
not intend to register resales of the old notes under the Securities Act.
The tender of old notes in the exchange offer will reduce the principal
amount of the old notes outstanding. The corresponding reduction in liquidity
may have an adverse effect upon, and increase the volatility of, the market
price of any old notes that you continue to hold.
ACCOUNTING TREATMENT
We will amortize our expenses of each exchange offer over the term of the
new notes under generally accepted accounting principles.
OTHER
Participation in the exchange offer is voluntary, and you should carefully
consider whether to accept. You are urged to consult your financial and tax
advisors in making your decision on what action to take.
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EXCHANGE AGENT
We have appointed Wilmington Trust Company as exchange agent for the
exchange offer. You should direct questions, requests for assistance, requests
for additional copies of this prospectus or the letter of transmittal and
requests for the notice of guaranteed delivery to the exchange agent. If you are
not tendering under DTC's automated tender offer program, you should send the
letter of transmittal and any other required documents to the exchange agent as
follows:
<TABLE>
<CAPTION>
WILMINGTON TRUST COMPANY
(302) 651-1562
<S> <C>
BY MAIL (REGISTERED OR CERTIFIED MAIL RECOMMENDED): BY COURIER OR BY HAND:
Wilmington Trust Company Wilmington Trust Company
Rodney Square North Rodney Square North
1100 North Market Street 1105 North Market Street
Wilmington, Delaware 19890-0001 Wilmington, Delaware 19890-0001
Attn: Corporate Trust Operations Attn: Corporate Trust Operations
BY FACSIMILE TRANSMISSION (ELIGIBLE INSTITUTIONS ONLY):
(302) 651-1079
Attn: Corporate Trust Administration
CONFIRM BY TELEPHONE:
(302) 651-1562
</TABLE>
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DESCRIPTION OF NEW NOTES
GENERAL
We will issue the new notes, and we have issued the old notes, pursuant to
an indenture dated as of November 1, 1999 entered into by us, Pride, Maritima
and Wilmington Trust Company, as Trustee.
The form and terms of the new notes are the same as the form and terms of
the old notes they will replace, except that, when the exchange offer is
consummated,
o we will have registered the new notes under the Securities Act of 1933
o the new notes generally will not be subject to transfer restrictions
The new notes will be issued solely in exchange for an equal principal amount of
old notes. As of the date of this prospectus, $53 million aggregate principal
amount of 11 3/4% Senior Secured Notes are outstanding. You should read the
discussion under the heading "The Exchange Offer" beginning on page 63 for
information regarding the exchange offer.
The old notes and the new notes will together constitute a single class of
debt securities under the indenture. If the exchange offer is consummated,
holders of old notes who do not exchange their old notes for new notes in the
exchange offer will vote together with holders of new notes for all relevant
purposes under the indenture. Accordingly, in determining whether the required
holders have given any notice, consent or waiver or taken any other action
permitted under the indenture, any old notes that remain outstanding after the
exchange offer will be aggregated with the new notes, and the holders of the old
notes and new notes will vote together as a single class. All references in this
summary description to specified percentages in aggregate principal amount of
the outstanding notes means, at any time after the exchange offer is
consummated, the percentages in aggregate principal amount of the applicable old
notes and new notes then outstanding. EXCEPT WHEN USED AS PART OF THE TERM "NEW
NOTES" OR "OLD NOTES," THE TERM "NOTES" IN THIS SUMMARY DESCRIPTION REFERS TO
THE OLD NOTES THAT WILL BE OUTSTANDING UNTIL THE EXCHANGE OFFER IS CONSUMMATED
AND, AFTER GIVING EFFECT TO THE EXCHANGE OFFER, COLLECTIVELY TO THE OUTSTANDING
NEW NOTES AND ANY REMAINING UNEXCHANGED OLD NOTES.
We have summarized below selected material provisions of the indenture,
the notes and the security documents. For a complete description, you should
read the indenture, the security documents and the notes because such documents,
and not this description, define your rights as holders of the notes. The
Trustee will furnish you copies of the indenture, the security documents and the
notes upon your request to its Corporate Trust Administration department by
telephone at (302) 651-1000 or by mail at Wilmington Trust Company, Rodney
Square North, 1100 N. Market Street, Wilmington, Delaware 19890, Attn: Corporate
Trust Administration. Capitalized terms used but not otherwise defined have the
meanings set forth below under "--Certain Definitions." Capitalized terms
defined in this section have the definitions ascribed to them in this section
for purposes of this section only. As used in this section, references to
"Amethyst" mean Amethyst itself, and does not include Amethyst's subsidiaries.
TERMS OF THE NOTES
The notes mature on November 1, 2001 and are senior secured obligations of
Amethyst.
The notes bear interest at the rate per annum shown on the cover page
hereof from the date of original issuance, or from the most recent date to which
interest has been paid or provided for, payable semiannually to holders of
record at the close of business on the June 15 or December 15 immediately
preceding the interest payment date on June 30 and December 30 of each year.
Interest will also be payable on maturity to holders of record as of October 15,
2001. Interest will be computed on the basis of a 360-day year of twelve 30-day
months.
The new notes will be issued only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiple of $1,000. No
service charge shall be made for any registration of transfer or exchange of
notes, but Amethyst may require payment of a sum sufficient to cover any
transfer tax or other similar governmental charge payable in connection
therewith.
Amethyst's subsidiaries have no direct obligation to pay amounts due on
the notes as of the date of this prospectus; however, if a Restricted Subsidiary
guarantees any Indebtedness of Amethyst, such Restricted Subsidiary will be
obligated to guarantee (a "subsidiary guarantee") the outstanding notes, if any.
Pride has guaranteed Amethyst's obligations to repay the notes in an
aggregate amount limited to $30.0 million (the "Pride Guarantee"). The Pride
Guarantee is on a senior unsecured basis and ranks equally with Pride's other
senior unsecured debt.
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In addition, Maritima has procured a $23.0 million irrevocable standby letter of
credit issued by HSBC Bank USA that may be drawn in the event Amethyst defaults
on its obligation to repay the notes (the "Letter of Credit").
REDEMPTIONS
REDEMPTION UPON LOSS OF A RIG
The indenture defines an "event of loss" to mean any of the following
events:
o the actual loss of a Mortgaged Rig;
o the agreed, arranged or constructive total loss of a Mortgaged Rig;
o requisition for title or other compulsory acquisition of title of a
Mortgaged Rig by any governmental or other competent authority, agency
or instrumentality otherwise than by requisition for hire; or
o capture, seizure, arrest, detention or confiscation of a Mortgaged Rig
by any government or person acting or purporting to act on behalf of
any government unless such Mortgaged Rig is released and restored to
the Mortgaged Rig Owner from such capture, seizure, arrest or detention
within six months after the occurrence thereof or such other period as
may be specified in the insurance policies taken out or entered into in
respect of the Mortgaged Rig.
If an event of loss occurs at any time with respect to a Mortgaged Rig,
Amethyst shall redeem 50% of the notes, or 100% of the notes in the case of an
event of loss with respect to both Mortgaged Rigs, on the earlier to occur of
o 30 days after the receipt of the related Event of Loss Proceeds by the
applicable Rig Owner; or
o 180 days after the date on which such event of loss occurred, at a
redemption price equal to 100% of their principal amount, plus accrued
and unpaid interest including Additional Amounts, if any, to the
redemption date, subject to the right of holders of record on the
relevant record date to receive interest due on an interest payment
date that is on or prior to the redemption date.
Partial redemptions resulting from loss of a rig will be applied to all
notes on a pro rata basis, although no note of $1,000 in then outstanding
principal amount shall be redeemed in part.
REDEMPTION UPON SALE OF A MORTGAGED RIG
If a Mortgaged Rig or the capital stock of a Restricted Subsidiary then
owning a Mortgaged Rig is sold in compliance with the terms of the indenture,
Amethyst shall redeem 50% of the notes , or 100% of the notes in the case of a
sale of both Mortgaged Rigs or the capital stock of both Restricted Subsidiaries
then owning Mortgaged Rigs, on the earlier to occur of (A) 30 days after the
receipt of the Net Available Cash from such sale and (B) 60 days after the date
of such sale, at a redemption price equal to 100% of their principal amount,
plus accrued and unpaid interest, including Additional Amounts, if any, to the
redemption date, subject to the right of holders of record on the relevant
record date to receive interest due on an interest payment date that is on or
prior to the redemption date, plus the Make-Whole Premium. In no event will the
redemption price ever be less than 100% of the principal amount of the notes
being redeemed plus accrued and unpaid interest including Additional Amounts, if
any, to the redemption date.
The amount of the Make-Whole Premium with respect to any notes or portion
thereof to be redeemed will be equal to the excess, if any, of
o the sum of the present values, calculated as of the redemption date,
of:
(a) each interest payment that, but for such redemption, would have
been payable on the notes or portion thereof being redeemed on each
interest payment date occurring after the redemption date excluding
any accrued and unpaid interest for the period prior to the
redemption date; and
(b) the principal amount that, but for such redemption, would have been
payable at the final maturity of the notes or portion thereof being
redeemed; over
o the principal amount of the notes or portion thereof being redeemed.
The present values of interest and principal payments referred to in clause (a)
above will be calculated by discounting the amount of each payment of interest
or principal from the date that each such payment would have been payable, but
for the redemption, to the redemption date at a discount rate equal to the
Treasury Rate (as defined below) plus 50 basis points.
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The Make-Whole Premium will be calculated by the Independent Investment
Banker. For purposes of determining the Make-Whole Premium, the following
definitions apply:
o "Treasury Rate" means, with respect to any redemption date, the rate
per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such redemption date.
o "Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity
comparable to the weighted average maturity of the remaining term of
the notes outstanding that would be utilized, at the time of selection
and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to such
weighted average maturity of such Notes. "Independent Investment
Banker" means the Reference Treasury Dealer appointed by the Trustee
after consultation with Amethyst.
o "Comparable Treasury Price" means, with respect to any redemption date,
the average of the Reference Treasury Dealer Quotations for such
redemption date. The "Reference Treasury Dealer Quotations" means, with
respect to the Reference Treasury Dealer and any redemption date, the
average, as determined by the Trustee, of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) quoted in writing to the Trustee by the
Reference Treasury Dealer at 5:00 p.m., New York City time, on the
third business day preceding such redemption date.
o "Reference Treasury Dealer" means Donaldson, Lufkin & Jenrette
Securities Corporation and its successors; provided, however, that if
Donaldson, Lufkin & Jenrette Securities Corporation shall cease to be a
primary U.S. Government securities dealer in New York City (a "Primary
Treasury Dealer"), Amethyst shall substitute therefor another Primary
Treasury Dealer.
Partial redemptions resulting from sale of a Mortgaged Rig will be applied
to all notes on a pro rata basis, although no note of $1,000 in then outstanding
principal amount shall be redeemed in part.
OTHER REDEMPTIONS
The notes will be redeemable, at Amethyst's option, in whole or in part,
at any time or from time to time, upon at least 30 days but no more than 60
days' prior notice mailed by first-class mail to each holder's registered
address, at a price equal to 100% of the principal amount thereof plus accrued
and unpaid interest including Additional Amounts, if any, to the redemption date
plus the Make-Whole Premium. In no event will the redemption price ever be less
than 100% of the principal amount of the notes being redeemed plus accrued and
unpaid interest, including Additional Amounts, if any, to the redemption date.
SELECTION OF NOTES FOR REDEMPTION
In the case of any partial redemption provided for in "Other Redemptions,"
selection of the notes for redemption will be made by the Trustee on a pro rata
basis, by lot or by such other method as the Trustee in its sole discretion
shall deem to be fair and appropriate, although no note of $1,000 in then
outstanding principal amount or less shall be redeemed in part. If any note is
to be redeemed in part only, the notice of redemption relating to such note
shall state the portion of the principal amount thereof to be redeemed. A
replacement note in principal amount equal to the unredeemed portion thereof
will be issued in the name of the holder thereof upon cancellation of the
original note. Partial Redemptions provided for in "--Redemptions--Redemption
Upon Loss of a Rig" and "--Redemptions--Redemption Upon Sale of a Mortgaged Rig"
will be applied to all notes on a pro rata basis, although no note of $1,000 in
then outstanding principal amount shall be redeemed in part.
PAYMENT OF ADDITIONAL AMOUNTS AND REDEMPTION
Except to the extent required by any applicable law, regulation or
governmental policy, any and all payments of, or in respect of, any note shall
be made free and clear of and without deduction for or on account of any and all
present or future taxes, levies, imposts, deduction, charges or withholdings and
all liabilities with respect thereto imposed by the British Virgin Islands,
Brazil, the United States of America or any other jurisdiction with which
Amethyst, Pride or any subsidiary guarantor has some connection including any
jurisdiction from or through which payments under the notes, the Pride Guarantee
or the subsidiary guarantees (if any) are made or in which the Mortgaged Rigs
are located, or any political subdivision of or any taxing authority in any such
jurisdiction (collectively, "Taxes" and any such jurisdiction or political
subdivision or taxing authority, a "Tax Jurisdiction"). If Amethyst, Pride or
any subsidiary guarantor shall be required by law to withhold or deduct any
Taxes, from or in respect of any sum payable under the notes, the Pride
Guarantee or a subsidiary guarantee, Amethyst shall pay the amount ("Additional
Amounts") necessary so that, after making all required withholdings and
deductions, the holder or beneficial owner of
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a note shall receive an amount equal to the sum that it would have received had
not such withholdings and deductions been made; provided that any such sum shall
not be paid to a holder (an "Excluded Holder"):
o in respect of any Taxes resulting from the beneficial owner of such
note carrying on business or being deemed to carry on business in or
through a permanent establishment or fixed base in the relevant taxing
jurisdiction or having any other connection with the relevant taxing
jurisdiction or any political subdivision thereof or any taxing
authority therein other than the mere holding or owning of such note,
being a beneficiary of the Pride Guarantee or any applicable subsidiary
guarantee, the receipt of any income or payments in respect of such
note, the Pride Guarantee or any applicable subsidiary guarantee or the
enforcement of such note, the Pride Guarantee or any applicable
subsidiary guarantee,
o in respect of any Taxes that would not have been imposed but for the
presentation, where presentation is required, of such note for payment
more than 180 days after the date such payment became due and payable
or was duly provided for, whichever occurs later, or
o in respect of U.S. federal income Taxes, if such holder fails to
provide to Amethyst, within 30 days of a request by Amethyst, a
complete and valid IRS Form W-8 or other form establishing an exemption
from U.S. withholding Taxes.
Amethyst, Pride or the subsidiary guarantors, as applicable, will also:
o make such withholding or deduction and
o remit the full amount deducted or withheld to the relevant authority in
accordance with applicable law, and, in any such case, Amethyst will
furnish to each holder on whose behalf an amount was so remitted,
within 30 calendar days after the date the payment of any Taxes is due
pursuant to applicable law, certified copies of tax receipts evidencing
such payment by Amethyst, Pride or the subsidiary guarantors, as
applicable.
Amethyst will, upon written request of each holder (other than an Excluded
Holder), reimburse each such holder for the amount of:
o any Taxes so levied or imposed and paid by such holder as a result of
payments made under or with respect to any Notes, and
o any Taxes so levied or imposed with respect to any reimbursement under
the foregoing clause so that the net amount received by such holder net
of payments made under or with respect to such Notes, the Pride
Guarantee or the applicable subsidiary guarantees after such
reimbursement will not be less than the net amount the holder would
have received if Taxes on such reimbursement had not been imposed.
At least 30 calendar days prior to each date on which any payment under or
with respect to the notes is due and payable, if Amethyst will be obligated to
pay Additional Amounts with respect to such payment, Amethyst will deliver to
the Trustee an Officer's Certificate stating the fact that such Additional
Amounts will be payable and the amounts so payable and will set forth such other
information necessary to enable the Trustee to pay such Additional Amounts to
holders on the payment date.
If any holder or beneficial owner of any note receives a refund of Taxes
after Amethyst, Pride or any subsidiary guarantor has paid any Additional
Amounts, such holder or beneficial owner shall reimburse Amethyst, Pride or such
subsidiary guarantor for any amount of such refund.
At the date of this prospectus, no Taxes are imposed, and therefore no
Additional Amounts would be payable in respect of such taxes, in respect of any
sum payable by Amethyst as principal of, premium or interest on the notes.
The notes may be redeemed, at the option of Amethyst, at any time as a
whole but not in part, upon at least 30 days but no more than 60 days' prior
notice, at a purchase price equal to 100% of the principal amount thereof plus
accrued and unpaid interest thereon to the date of redemption and all Additional
Amounts, if any, in the event Amethyst has become or would become obligated to
pay and cannot avoid such obligation by taking reasonable measures available to
it, on the next date on which any amount would be payable with respect to the
notes, any Additional Amounts as a result of a change in or an amendment to the
laws (including any regulations promulgated thereunder) of a Tax Jurisdiction or
any change in or amendment to any official position regarding the application or
interpretation of such laws or regulations which change or amendment is
announced or becomes effective on or after the issue date of the notes;
provided, however, that such redemption shall be conditioned upon Amethyst being
actually obligated to pay such Additional Amounts on the relevant payment date.
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Prior to the giving of the notice of redemption described in the preceding
paragraph, Amethyst shall deliver to the Trustee an Officer's Certificate
stating that Amethyst is entitled to effect such redemption in accordance with
the terms set forth in the indenture and setting forth in reasonable detail a
statement of the facts relating thereto together with a copy of an opinion of
counsel independent of Amethyst to the effect that Amethyst will be or will
become obligated to pay Additional Amounts.
In addition, Amethyst will pay any present or future stamp, issue,
registration, documentary or other similar taxes and duties, including interest
and penalties, in respect of the creation, issue and offering of the notes
payable in the United States, the British Virgin Islands, Brazil or any
political subdivision thereof or taxing authority of or in the foregoing.
Amethyst will also pay and indemnify the Trustee and the holders of the notes
from and against all court fees and taxes or other taxes and duties, including
interest and penalties, paid by any of them in any jurisdiction in connection
with any action permitted to be taken by the holders or the Trustee to create
Liens on the Collateral or to enforce the Obligations of Amethyst, Pride or the
subsidiary guarantors under the notes, the indenture, the Pride Guarantee, the
subsidiary guarantees, the Company Loans or the Security Documents.
Whenever there is mentioned, in any context, the payment of principal,
premium or interest in respect of any note or the net proceeds received on the
sale or exchange of any note, that mention shall be deemed to include the
payment of Additional Amounts provided for in the indenture to the extent that,
in such context, Additional Amounts are, were or would be payable in respect
thereof pursuant to the indenture.
THE SUBSIDIARY GUARANTEES
If a Restricted Subsidiary is required to become a subsidiary guarantor,
it will irrevocably and unconditionally guarantee on a joint and several, senior
unsecured basis Amethyst's obligations for payment of the principal of, and
premium, if any and interest (including Additional Amounts, if any) on the
notes, the other subsidiary guarantors' obligations for payment of all sums of
money payable under the subsidiary guarantees and/or Amethyst's and subsidiary
guarantor's respective obligations under the Security Documents and performance
of all other provisions contained in the indenture and the Security Documents
(collectively, the "Obligations"). See "--Covenants--Future Subsidiary
Guarantors." Each subsidiary guarantee will be limited in amount to an amount
not to exceed the maximum amount that can be guaranteed by the applicable
subsidiary guarantor without rendering the applicable subsidiary guarantee
voidable under applicable law relating to fraudulent conveyance or fraudulent
transfer or similar laws affecting the rights of creditors generally or
otherwise being void, voidable or unenforceable under any bankruptcy,
reorganization, insolvency, liquidation or other similar legislation or legal
principles under any applicable foreign law. Each subsidiary guarantor that
makes a payment or a distribution under its subsidiary guarantee shall be
entitled to a contribution from each other subsidiary guarantor in a pro rata
amount based upon the amount by which the fair value of the assets and property
of each such other subsidiary guarantor exceeds the total amount of liabilities,
including, without limitation, contingent liabilities (after giving affect to
all other fixed and contingent liabilities incurred or assumed on such date),
but excluding liabilities under its subsidiary guarantee, of such subsidiary
guarantor at such date. If a subsidiary guarantee were to be rendered voidable,
it could be subordinated by a court to all other indebtedness, including
guarantees and other contingent liabilities, of the applicable subsidiary
guarantor, and, depending on the amount of such indebtedness, a subsidiary
guarantor's liability on its subsidiary guarantee could be reduced to zero.
A subsidiary guarantor will be released and relieved from all its
obligations under its subsidiary guarantee upon the sale or other disposition,
by merger or otherwise, of all the capital stock of that subsidiary guarantor or
the sale or disposition of all or substantially all the assets of a subsidiary
guarantor, in each case other than to Amethyst or one of its affiliates,
permitted by the indenture and the redemption of notes as described under
"--Redemptions--Redemptions upon Sale of a Mortgaged Rig." An "affiliate" of any
specified person means any other person, directly or indirectly, controlling or
controlled by or under direct or indirect common control with such specified
person. For the purposes of this definition, "control" mean the power to direct
the management and policies of such person, directly or indirectly, whether
through the ownership of Voting Stock, by contract or otherwise. An "affiliate"
of a person shall also mean any beneficial owner of capital stock representing
5% or more of the total voting power of the Voting Stock on a fully diluted
basis of such a person or of rights or warrants to purchase such capital stock,
whether or not currently exercisable, and any person who would be an affiliate
of any such beneficial owner pursuant to the first sentence hereof.
Any subsidiary guarantee will be senior unsecured obligations of the
subsidiary guarantors and will rank
o equally in priority of payment with all other Indebtedness and other
liabilities of such subsidiary guarantor that are not subordinated by
their express terms to such subsidiary guarantee and
o senior in priority of payment to all other Indebtedness of such
subsidiary guarantor that by its terms is subordinated or junior in
right of payment to such subsidiary guarantee.
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The Rig Owners are highly leveraged. We set forth below the total
indebtedness of each Rig Owner as of December 31, 1999. The indebtedness of
Petrodrill Four Limited and Petrodrill Five Limited effectively ranks senior to
the notes, and the indebtedness of Petrodrill Six Limited and Petrodrill Seven
Limited effectively ranks equal to the notes. The Rig Owners are not currently
subsidiary guarantors.
RIG OWNER INDEBTEDNESS
------------------ --------------
(millions)
Petrodrill Four $69.9
Petrodrill Five $53.7
Petrodrill Six $49.4
Petrodrill Seven $84.1
PRIDE GUARANTEE AND LETTER OF CREDIT
The notes have the benefit of the Pride Guarantee and the Letter of Credit
as support for the payment obligations of Amethyst.
Pursuant to the indenture, Pride has irrevocably and unconditionally
guaranteed the due and punctual payment of the principal of, premium, if any,
and interest on, and all other amounts payable under, the notes (including any
Additional Amounts in respect thereof) when and as the same shall become due and
payable, whether at stated maturity, by declaration of acceleration or
otherwise, up to a maximum amount of $30.0 million.
Pursuant to the indenture, Pride may not consolidate or merge with any
person, or sell, lease or otherwise dispose of all or substantially all of the
assets of Pride and its subsidiaries, taken as a whole, to any person, unless
(i) Pride is the continuing person, or the surviving person (if other than
Pride) under any of the foregoing transactions expressly assumes the due and
punctual payment and performance of Pride's covenants and obligations under the
indenture, including the Pride Guarantee; and (ii) the surviving person is a
permitted successor to Pride under the Indenture dated as of May 1, 1997,
between Pride and The Chase Manhattan Bank, as amended and supplemented.
The Pride Guarantee is a senior unsecured obligation of Pride and ranks
o equally in priority of payment with all other Indebtedness and other
liabilities of Pride that are not subordinated by their express terms
to the Pride Guarantee and
o senior in priority of payment to all other Indebtedness of Pride that
by its terms is subordinated or junior in right of payment to the Pride
Guarantee.
Additionally, Maritima has procured a $23.0 million irrevocable standby
letter of credit in favor of the Trustee issued by HSBC Bank USA to support
Amethyst's obligations to repay the notes. If the Trustee presents to HSBC Bank
USA a drawing certificate certifying that the Trustee has not received
sufficient funds from Amethyst to make a payment on the notes when due, the
Trustee may draw on the letter of credit to make any such payments due, up to an
aggregate of $ 23.0 million.
It is within the discretion of the Trustee to determine whether first to
make draws under the letter of credit or to enforce the Pride Guarantee for
purposes of repayment of the notes. The Trustee shall distribute proceeds of
efforts to enforce the Pride Guarantee, to draw against the letter of credit, or
any enforcement action seeking to collect against the Collateral, to the holders
of the notes pro rata based on the principal amount of notes held.
OTHER COLLATERAL
In order to secure its obligations under the indenture, the notes and
applicable Security Documents, Amethyst has pledged in favor of the Trustee a
53% undivided interest in all the Company Loans together with a collateral
assignment of all Liens securing such undivided interest. Maritima and Pride
provided a guarantee for the benefit of the Mitsubishi-affiliated lenders only,
of repayment, from commencement of each Mortgaged Rig's Charter, of the total
borrowings under such Mortgaged Rig's Mitsubishi Credit Facility up to a total
for both Mitsubishi Credit Facilities of $75.6 million by Maritima and $32.4
million by Pride (the "Mitsubishi Floor Guarantee"). Neither Amethyst nor the
holders of the notes will share in the benefit of the Mitsubishi Floor
Guarantee.
In addition, as the principal of the Company Loans is amortized in
accordance with the Mitsubishi Credit Facilities, all amounts received by
Amethyst in respect of those principal and interest payments will be held in the
Reserve Account for the benefit of the holders of the notes, except that 47% of
all such payments in respect of principal shall be released to Amethyst
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immediately upon receipt and any such payments in respect of interest not
required to pay interest on the notes on the next succeeding interest payment
date will also be released to Amethyst.
RANKING
Our obligation to repay the notes is a senior secured obligation of
Amethyst, ranks equally in right of payment with all existing and future
Indebtedness and other liabilities of Amethyst that are not expressly
subordinated by their express terms to the notes and is senior in right of
payment to all Indebtedness of Amethyst that is so subordinated. The notes are
secured by Liens on a 53% undivided interest in the Company Loans including a
collateral assignment of the Liens securing such undivided interest, and Liens
on the other Collateral; thus, claims of the holders of the notes will rank
ahead of claims of creditors of Amethyst to the extent of the value, priority
and validity of the Liens securing the notes in such Collateral.
Amethyst's claims under the Company Loans will rank equally with claims of
the other creditors of the applicable Mortgaged Rig Owner holding indebtedness
or other liabilities that are not expressly subordinated by their express terms
to such Company Loans, but will rank ahead of such claims to the extent of the
value, priority and validity of the Liens on the Collateral securing the Company
Loans. Although Amethyst should be entitled to payment of the applicable Company
Loan out of the proceeds of the Mortgaged Rig and the other Collateral prior to
the holders of any general unsecured obligations of the Mortgaged Rig Owner, any
claim attributable to a Company Loan which is not paid out of the proceeds of
the Mortgaged Rig and the other Collateral will be an unsecured senior
obligation of the Mortgaged Rig Owner. To the extent that any Mortgaged Rig and
the other Collateral has a value in excess of the Company Loan secured thereby,
such additional value is not security for any obligations of the Mortgaged Rig
Owner, Amethyst or a subsidiary guarantor. In the event that the assets and cash
flow of the Mortgaged Rig Owner are insufficient to meet the obligations under
the Company Loans, Amethyst's claims will be effectively subordinated to the
claims of creditors, including trade creditors, tort claimants, taxing
authorities and other creditors, of all subsidiaries. Although the indenture
limits the incurrence of Indebtedness by Amethyst or any Restricted Subsidiary,
that limitation is subject to a number of significant qualifications. Moreover,
the indenture does not impose any limitation on the incurrence by Amethyst or
its Restricted Subsidiaries of liabilities that are not considered Indebtedness
under the indenture. Under certain circumstances, Amethyst will be able to
designate additional subsidiaries as Unrestricted Subsidiaries. Unrestricted
Subsidiaries will not be subject to many of the restrictive covenants set forth
in the indenture.
CHANGE OF CONTROL
Upon the occurrence of any of the following events (each a "Change of
Control"), Amethyst shall make an offer to repurchase all outstanding notes at a
purchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest and Additional Amounts, if any, to the date of
purchase:
(1) any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"), whether or not applicable) other than a Shareholder
(or any affiliate thereof) is or becomes the "beneficial owner" (as
defined in Section 13(d) of the Exchange Act, except that a person
will be deemed to have "beneficial ownership" of all shares that any
such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly
or indirectly, of more than 26.4% of the total voting power of the
Voting Stock of Amethyst, PROVIDED, HOWEVER, for purposes of this
clause (1) there shall not be a Change of Control with respect to
Pride International, Inc.'s "beneficial ownership" of the Voting
Stock of Amethyst unless
o any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not
applicable) is or becomes the "beneficial owner" (as defined in
Section 13(d) of the Exchange Act, except that a person will be
deemed to have "beneficial ownership" of all shares that any such
person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or
indirectly, of more than 50% of the total voting power of the
Voting Stock of Pride International, Inc. and
o within 25 days after the closing of any such transaction either
Moody's or S&P lowers the credit ratings for any outstanding debt
of Pride International, Inc., or in the event Pride International,
Inc. has no outstanding rated debt, the ratings of Pride
International, Inc.;
(2) individuals who on the Issue Date constituted the board of directors
of Amethyst cease for any reason to constitute a majority of the
board of directors of Amethyst then in office;
(3) the adoption of a plan relating to the liquidation or dissolution of
Amethyst;
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(4) the merger or consolidation of any Shareholder or Amethyst with or
into another person (other than in the case of a Shareholder, a
person controlled by a Permitted Holder) or the merger of another
person (other than in the case of a Shareholder, a person controlled
by a Permitted Holder) with or into any Shareholder or Amethyst, as
the case may be, or the sale of all or substantially all the assets
of any Shareholder or Amethyst to another person (other than in the
case of a Shareholder, a person controlled by a Permitted Holder),
and, in the case of any such merger or consolidation, the securities
of such Shareholder or Amethyst, as the case may be, that are
outstanding immediately prior to such transaction and which represent
100% of the aggregate voting power of the Voting Stock of such
Shareholder or Amethyst, as the case may be, are changed into or
exchanged for cash, securities or property, unless pursuant to such
transaction such securities are changed into or exchanged for, in
addition to any other consideration, securities of the surviving
corporation that represent immediately after such transaction, at
least a majority of the aggregate voting power of the Voting Stock of
the surviving corporation; or
(5) prior to any Public Equity Offering of Amethyst, Pride International,
Inc. or a Qualified Substitute Owner ceases for any reason for more
than 10 days to be the beneficial owner, directly or indirectly, of
at least 26.4% of the total voting power of Amethyst's voting stock.
Within 30 days following any Change of Control, the Trustee or Amethyst,
with a copy to the Trustee, shall mail a notice to each holder stating among
other things:
(1) that a Change of Control has occurred and that such holder has the
right to require Amethyst to purchase such holder's notes at a
purchase price in cash equal to 101% of the principal amount thereof
plus accrued and unpaid interest, and Additional Amounts, if any, to
the date of purchase;
(2) the circumstances and relevant facts regarding that Change of Control
including information with respect to pro forma historical income,
cash flow and capitalization after giving effect to that Change of
Control;
(3) the repurchase date which date shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed; and
(4) the instructions determined by Amethyst, consistent with the covenant
described hereunder, that a holder must follow in order to have its
notes purchased.
Amethyst shall comply, to the extent applicable, with the requirements of
Section 14(e) of the Exchange Act and any other securities laws or regulations
in connection with the repurchase of notes pursuant to this covenant described
hereunder. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of the covenant described hereunder,
Amethyst shall comply with the applicable securities laws and regulations and
shall not be deemed to have breached its obligations under the covenant
described hereunder by virtue thereof.
The Change of Control purchase feature is solely a result of negotiations
between Amethyst and the initial purchaser of the old notes. Amethyst does not
have any present intention to engage in a transaction involving a Change of
Control, although it is possible that Amethyst could decide to do so in the
future. Subject to the limitations discussed below, Amethyst could, in the
future, enter into certain transactions, including acquisitions, refinancings or
other recapitalizations, that would not constitute a Change of Control under the
indenture, but that could increase the amount of Indebtedness outstanding at
such time or otherwise affect its capital structure or credit ratings.
Restrictions on the ability of Amethyst and its Restricted Subsidiaries to incur
additional Indebtedness are contained in the covenants described under
"--Covenants--Limitation on Indebtedness," "--Covenants--Limitation on Liens"
and "--Covenants--Limitation on Sale/Leaseback Transactions." Those restrictions
can only be waived with the consent of the holders of a majority in aggregate
principal amount of the notes then outstanding. Those provisions may not
necessarily afford the holders of the notes protection in the event of a highly
leveraged transaction, including a reorganization, restructuring, merger or
other similar transaction involving Amethyst, that may adversely affect the
holders of the notes because such transactions may not involve a shift in voting
power or beneficial ownership or, even if they do, may not involve a shift of
the magnitude required under the definition of Change of Control to require
Amethyst to make a Change of Control offer. In addition, the existence of the
holder's right to require Amethyst to repurchase such holder's notes upon the
occurrence of a Change of Control may or may not deter a third party from
seeking to acquire Amethyst in a transaction that would constitute a Change of
Control.
Amethyst's ability to repurchase notes pursuant to a Change of Control
offer may be limited by a number of factors. Future Indebtedness of Amethyst or
its Restricted Subsidiaries may contain prohibitions on the occurrence of
certain events that would constitute a Change of Control or require such
Indebtedness to be repurchased upon a Change of Control. Moreover, the exercise
by the holders of the notes of their right to require Amethyst to repurchase the
notes could cause a default under such Indebtedness, even if the Change of
Control itself does not, due to the financial effect of such repurchase on
Amethyst and its
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subsidiaries. There can be no assurance that sufficient funds will be available
when necessary to make any required repurchases. In the event that a Change of
Control offer occurs at a time when Amethyst does not have sufficient available
funds to pay the purchase price for all notes validly tendered pursuant to such
an offer, an Event of Default would occur under the indenture. The failure by
Amethyst to purchase tendered notes would constitute a breach of the indenture
which could, in turn, constitute a default under other Indebtedness and could
lead to the acceleration of such other Indebtedness.
One of the events that constitutes a Change of Control under the indenture
is a sale, conveyance, lease or transfer of all or substantially all of the
assets of Amethyst. The indenture is governed by New York law, and there is no
established quantitative definition under New York law of "substantially all" of
the assets of a corporation. Accordingly, if Amethyst were to engage in a
transaction in which it disposed of less than all of its assets a question of
interpretation could arise as to whether such disposition was of "substantially
all" of its assets and whether Amethyst was required to make a Change of Control
offer.
COVENANTS
LIMITATION ON INDEBTEDNESS
(a) Amethyst will not, and will not permit any Restricted Subsidiary to,
Incur, directly or indirectly, any Indebtedness; provided, however,
that Amethyst may Incur Indebtedness if the Consolidated EBITDA
Coverage Ratio at the date of such Incurrence and after giving effect
thereto exceeds 2.25 to 1.0.
(b) Notwithstanding paragraph (a), the following Indebtedness may be
Incurred:
(1) Indebtedness of Amethyst or a Restricted Subsidiary owed to and
held by a Restricted Subsidiary or Indebtedness of a Restricted
Subsidiary owed to and held by Amethyst; provided, however, that
(a) any subsequent issuance or transfer of any capital stock that
results in such Restricted Subsidiary to whom Indebtedness is
owed ceasing to be a Restricted Subsidiary or any transfer of
such Indebtedness (other than to Amethyst or another Restricted
Subsidiary) shall be deemed, in each case, to constitute the
Incurrence of such Indebtedness and (b) if Amethyst is the
obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all
obligations with respect to the notes;
(2) the old notes and the new notes;
(3) the Company Loans, the subsidiary guarantees, if any, and
Indebtedness incurred in exchange for, or the proceeds of which
are used to refinance any Indebtedness permitted by this clause
(3); provided, however, that:
o the principal amount of the Indebtedness so Incurred shall not
exceed the principal amount of the Indebtedness so refinanced,
plus the amount of reasonable fees and expenses incurred in
connection therewith, including any premium or defeasance
costs, and
o the Indebtedness so Incurred
- shall not mature prior to the Stated Maturity of the
Indebtedness so refinanced and
- shall have an Average Life equal to or greater than the
remaining Average Life of the Indebtedness so Refinanced;
(4) Indebtedness of Amethyst or any Restricted Subsidiary (other than
Indebtedness described in clause (1), (2) or (3) above)
outstanding on the Issue Date and Indebtedness Incurred in
exchange for, or the proceeds of which are used to refinance, any
Indebtedness permitted by this clause (4) or permitted by clause
(a) above; provided, however, that:
o the principal amount of the Indebtedness so Incurred shall not
exceed the principal amount of the Indebtedness refinanced,
plus the amount of reasonable fees and expenses incurred in
connection therewith, including any premium or defeasance
costs; and
o the Indebtedness so Incurred
- shall not mature prior to the Stated Maturity of the
Indebtedness so refinanced and
- shall have an Average Life equal to or greater than the
remaining Average Life of the Indebtedness so Refinanced;
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(5) Obligations of Amethyst or a Restricted Subsidiary under
performance or surety bonds relating to building contracts for
the construction, repair or improvement of drilling rigs,
drillships or similar vessels or contracts for the installation
of related equipment;
(6) Hedging Obligations;
(7) Indebtedness of Amethyst or any Restricted Subsidiary under the
Mitsubishi Credit Facilities or the MARAD Documents; and
(8) Indebtedness of Amethyst or any Restricted Subsidiary in an
aggregate principal amount which, together with all other
Indebtedness of Amethyst then outstanding (other than
Indebtedness permitted by clauses (1) through (7) of this
paragraph (b) or paragraph (a)) does not exceed $20.0 million.
(c) Notwithstanding paragraphs (a) and (b), Amethyst shall not issue any
Indebtedness if the proceeds thereof are used, directly or
indirectly, to pay, prepay, redeem, defease, retire, refund or
refinance any Subordinated Obligations unless such Indebtedness shall
be subordinated to the notes to at least the same extent as such
Subordinated Obligations.
(d) For purposes of determining compliance with the foregoing covenant,
in the event that an item of Indebtedness meets the criteria of more
than one of the types of Indebtedness described above, Amethyst, in
its sole discretion, will classify such item of Indebtedness and only
be required to include the amount and type of such Indebtedness in
one of the above clauses and an item of Indebtedness may be divided
and classified in more than one of the types of Indebtedness
described above.
LIMITATION ON INDEBTEDNESS OWED TO SHAREHOLDERS
Amethyst shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, Incur or permit to exist any Indebtedness of Amethyst or
any Restricted Subsidiary owed to a Shareholder unless
o such Indebtedness is subordinated to the notes, in the case of
Amethyst, or the Company Loans, in the case of a Restricted Subsidiary,
and
o all payments of principal, premium, if any, and interest in respect of
the notes or the Company Loans, as applicable, is required to be paid
before any amounts shall be payable in respect of such Indebtedness
and, prior to such time, the holder of such Indebtedness shall not have any
claim against Amethyst or such Restricted Subsidiary in respect of such
Indebtedness, provided that payments and prepayments under such Indebtedness may
be made as Restricted Payments to the extent permitted by the covenant described
under "--Limitation on Restricted Payments."
LIMITATION ON LIENS
Amethyst shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, Incur or permit to exist any Lien of any nature
whatsoever on any of its properties (including capital stock of a Restricted
Subsidiary), whether owned at the Issue Date or thereafter acquired unless, in
the case of property or assets not consisting of Collateral, contemporaneously
therewith effective provision is made to secure the notes equally and ratably
with (or prior to) the obligations so secured for so long as such obligations
are so secured.
The foregoing restriction does not, however, apply to Permitted Liens.
LIMITATION ON RESTRICTED PAYMENTS
(a) Amethyst will not, and will not permit any Restricted Subsidiary,
directly or indirectly, to make a Restricted Payment defined as:
o declaring or paying any dividend or make any distribution on or in
respect of its capital stock (including any payment in connection
with any merger or consolidation involving Amethyst) or to the
direct or indirect holders of its capital stock, except:
- dividends or distributions payable solely in its Non-Convertible
Capital Stock or in options, warrants or other rights to purchase
its Non-Convertible Capital Stock,
- dividends or distributions payable to Amethyst or a Restricted
Subsidiary, and
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- pro rata dividends or distributions on the capital stock of a
Restricted Subsidiary held by minority stockholders;
o purchasing, redeeming or otherwise acquiring or retiring for value any
capital stock of Amethyst or of any direct or indirect parent of
Amethyst, or any Restricted Subsidiary (except capital stock held by
Amethyst or a Restricted Subsidiary);
o purchasing, repurchasing, redeeming, defeasing or otherwise acquiring
or retiring for value, prior to scheduled maturity, scheduled repayment
or scheduled sinking fund payment, any Subordinated Obligation other
than the purchase, repurchase or other acquisition of Subordinated
Obligations purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due
within one year of the date of acquisition; or
o making any Investment other than a Permitted Investment.
If at the time Amethyst or such Restricted Subsidiary makes such
Restricted Payment:
(1) a Default shall have occurred and be continuing, or would result
therefrom; or
(2) Amethyst would not be permitted to Incur an additional $1.00 of
Indebtedness pursuant to paragraph (a) under "--Limitation on
Indebtedness" after giving pro forma effect to such Restricted
Payment; or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments since the Issue Date would exceed the sum of:
(A) 50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) from the beginning of the
fiscal quarter during which the notes were originally issued to
the end of the most recent fiscal quarter ending at least 45 days
prior to the date of such Restricted Payment (or, in case such
Consolidated Net Income shall be a deficit, minus 100% of such
deficit);
(B) 100% of the aggregate net proceeds (including the fair market
value of non-cash proceeds, which shall be determined in good
faith by the Amethyst's board of directors) received by Amethyst
from the issue or sale of its capital stock (other than Redeemable
Stock or Exchangeable Stock) subsequent to the Issue Date (other
than an issuance or sale to a Restricted Subsidiary or an employee
stock ownership plan or similar trust);
(C) the amount by which Indebtedness of Amethyst is reduced on
Amethyst's balance sheet upon the conversion or exchange (other
than by a Restricted Subsidiary) subsequent to the Incurrence of
any Indebtedness of Amethyst convertible or exchangeable for its
capital stock (other than Redeemable Stock or Exchangeable Stock)
less the amount of any cash, or other property, distributed by
Amethyst upon such conversion or exchange; and
(D) to the extent not otherwise included in Consolidated Net Income,
the net reduction in Investments in Unrestricted Subsidiaries
resulting from dividends, repayments of loan or advances, or other
transfers of assets, in each case to Amethyst or any Restricted
Subsidiary after the Issue Date from any Unrestricted Subsidiary
or from the redesignation of an Unrestricted Subsidiary as a
Restricted Subsidiary (valued in each case as provided in the
definition of Investment), not to exceed in the case of any
Restricted Subsidiary the total amount of Investments (other than
Permitted Investments) in such Restricted Subsidiary made by
Amethyst and its Restricted Subsidiaries in such Unrestricted
Subsidiary after the Issue Date.
(b) The provisions of Section (a) shall not prohibit:
(1) any purchase or redemption of capital stock or Subordinated
Obligations of Amethyst made by exchange for, or out of the
proceeds of the substantially concurrent sale of, capital stock
of Amethyst (other than Redeemable Stock or Exchangeable Stock
and other capital stock issued or sold to a Restricted Subsidiary
or an employee stock ownership plan); provided, however, that
o such purchase or redemption shall be excluded in the
calculation of the amount of Restricted Payments and
o the Net Cash Proceeds from such sale shall be excluded from
clauses (3)(B) and (3)(C) of Section (a);
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(2) any purchase or redemption of Subordinated Obligations of
Amethyst made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Indebtedness of Amethyst which
is permitted to be issued pursuant to the provision of
"--Limitation on Indebtedness" above; provided, however, that
such purchase or redemption shall be excluded in the calculation
of the amount of Restricted Payments; and
(3) dividends paid within 60 days after the date of declaration if at
such date of declaration such dividend would have complied with
this provision; provided, however, that at the time of payment of
such dividend, no other Default shall have occurred and be
continuing (or would result therefrom); provided further,
however, that such dividend shall be included in the calculation
of the amount of Restricted Payments unless already included in
determining the amount of Restricted Payments previously made
upon the declaration of such dividend.
LIMITATION ON SALE/LEASEBACK TRANSACTIONS
Amethyst will not, and will not permit any Restricted Subsidiary to, enter
into any Sale/Leaseback Transaction with any person other than Amethyst or a
Restricted Subsidiary unless:
o Amethyst or such Restricted Subsidiary would be entitled to incur
Indebtedness, in a principal amount equal to the Attributable
Indebtedness with respect to such Sale/Leaseback Transaction, secured
by a Lien on the property subject to such Sale/Leaseback Transaction
pursuant to the covenant described under "--Limitation on Liens" above
without equally and ratably securing the notes pursuant to such
covenant;
o the net proceeds received by Amethyst or any Restricted Subsidiary in
connection with such Sale/Leaseback Transaction are at least equal to
the fair value of such property as determined by its board of
directors; and
o Amethyst applies the proceeds of such transaction in compliance with
the covenant described under "--Limitation on Asset Sales."
Notwithstanding the foregoing, Amethyst shall not, and shall not permit
any Restricted Subsidiary to, enter into or otherwise become liable with respect
to any Sale/Leaseback Transaction involving any Restricted Collateral.
LIMITATIONS ON MERGERS AND CONSOLIDATIONS
Neither Amethyst nor any subsidiary guarantor other than any subsidiary
guarantor that shall have been released from its subsidiary guarantee pursuant
to the provisions of the indenture will consolidate with or merge into any
person, continue in another jurisdiction, or sell, lease, convey, transfer or
otherwise dispose of all or substantially all of its assets to any person,
unless:
(1) the person formed by or surviving such consolidation or merger (if
other than Amethyst or such subsidiary guarantor, as the case may
be), or to which such sale, lease, conveyance, transfer or other
disposition shall be made (collectively, the "Successor"), is a
corporation organized and existing under the laws of the Bahamas, the
British Virgin Islands or Panama (such jurisdiction of organization,
the "Relevant Jurisdiction") and the Successor assumes by
supplemental indenture in a form satisfactory to the Trustee all of
the applicable Obligations of Amethyst or such subsidiary guarantor,
as the case may be, under the indenture, the subsidiary guarantees,
the notes and the Security Documents;
(2) immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing;
(3) in the case of Amethyst, immediately after giving effect to such
transactions, the resulting, surviving or transferee person would be
able to incur at least $1.00 of Indebtedness pursuant to paragraph
(a) of the "--Limitation on Indebtedness" covenant;
(4) immediately after giving effect to such transaction, the Successor
shall have Consolidated Net Worth in an amount that is not less than
the Consolidated Net Worth of Amethyst or subsidiary guarantor, as
the case may be, immediately prior to such transaction;
(5) Amethyst shall have delivered to the Trustee an Officer's Certificate
and an opinion of counsel, each stating that such consolidation,
merger or transfer and such supplemental indenture (if any) comply
with the indenture;
(6) Amethyst shall have delivered to the Trustee an opinion of counsel to
the effect that the holders of the notes will not recognize income,
gain or loss for U.S. Federal income tax purposes as a result of such
transaction and will be
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subject to U.S. Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
transaction had not occurred; and
(7) an opinion of counsel in the Relevant Jurisdiction to the effect that
any payment of interest, principal or premium (if any) on the notes
by Amethyst to a holder or by a subsidiary guarantor on its
subsidiary guarantee, as applicable, will, after the consolidation,
merger, conveyance, transfer or lease of assets, be exempt from
withholding tax in the Relevant Jurisdiction and no other taxes on
income, including taxable capital gains, will be payable under the
law of the Relevant Jurisdiction by a holder who is or who is deemed
to be a non-resident of the Relevant Jurisdiction in respect of the
acquisition, ownership or disposition of the notes, including the
receipt of interest, principal or premium thereon.
The Successor shall be the successor to Amethyst or the subsidiary
guarantor, as the case may be, and shall succeed to, and be substituted for, and
may exercise every right and power of, Amethyst or the subsidiary guarantor, as
the case may be, under the indenture, but the predecessor in the case of a
conveyance, transfer or lease shall not be released from the obligation to pay
the principal of and interest on the notes.
SEC REPORTS
Notwithstanding that Amethyst may not be required to remain subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, Amethyst
shall file with the SEC and provide the Trustee and holders of the notes with
such annual reports and such information, documents and other reports specified
in Sections 13 and 15(d) of the Exchange Act.
In addition, whether or not required by the rules and regulations of the
Commission, Amethyst will file a copy of all such information and reports with
the Commission for public availability unless the Commission will not accept
such filing. In addition, Amethyst shall furnish to the holders of the notes and
to prospective investors, upon the requests of such holders of the notes, any
information required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act so long as there are notes outstanding which are not freely
transferable under the Securities Act.
LIMITATION ON RESTRICTIONS ON DISTRIBUTIONS FROM RESTRICTED SUBSIDIARIES
Amethyst shall not, and shall not permit any Restricted Subsidiary to,
create or otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary to
o pay dividends or make any other distributions, in cash or otherwise, on
its capital stock to Amethyst or any Restricted Subsidiary or pay any
Indebtedness owed to Amethyst or any Restricted Subsidiary,
o make any loans or advances to Amethyst or any Restricted Subsidiary or
o transfer any of its property or assets to Amethyst or any Restricted
Subsidiary, except:
(1) any encumbrance or restriction pursuant to an agreement in effect
or entered into on the Issue Date;
(2) any encumbrance or restriction with respect to a Restricted
Subsidiary pursuant to an agreement relating to any Acquired
Indebtedness or Preferred Stock Incurred by such Restricted
Subsidiary on or prior to the date on which such Restricted
Subsidiary became a Restricted Subsidiary or was acquired by
Amethyst (other than Indebtedness or Preferred Stock Incurred as
consideration in, or to provide all or any portion of the funds or
credit support utilized to consummate, the transaction or series
of related transactions pursuant to which such Restricted
Subsidiary became a Restricted Subsidiary or was acquired by
Amethyst or other Incurred in anticipation of such acquisition)
and outstanding on such date;
(3) any encumbrance or restriction relating to any assets acquired
after the Issue Date, so long as such encumbrance or restriction
relates only to the assets so acquired and is not or was not
created in anticipation of such acquisition;
(4) any encumbrance or restriction pursuant to an agreement affecting
a Refinancing of Indebtedness or Preferred Stock Incurred pursuant
to an agreement referred to in clause (1), (2) or (3) of this
covenant or this clause (4) or contained in any amendment to an
agreement referred to in clause (1), (2) or (3) of this covenant
or this clause (4); provided, however, that the encumbrances and
restrictions with respect to such Restricted Subsidiary contained
in any such refinancing agreement or amendment are in the
aggregate no less favorable to the holders of the notes than the
encumbrances and restrictions with respect to such Restricted
Subsidiary contained in such predecessor agreements;
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(5) any such encumbrance or restriction consisting of customary
nonassignment provisions in leases governing leasehold interests
or in license agreements to the extent such provisions restrict
the assignment of such agreement and any rights granted or
property leased thereunder;
(6) in the case of clause (3) above, restrictions contained in
security agreements or mortgages securing Indebtedness of a
Restricted Subsidiary to the extent such restrictions restrict the
transfer of the property subject to such security agreements or
mortgages; and
(7) any temporary encumbrance or restriction with respect to a
Restricted Subsidiary imposed pursuant to an agreement entered
into for the sale or disposition of all or substantially all the
Common Stock or assets of such Restricted Subsidiary pending the
closing of such sale or disposition.
LIMITATION ON ASSET SALES
Amethyst shall not, and shall not permit any Restricted Subsidiary to,
sell, assign, convey, transfer or otherwise dispose of a Mortgaged Rig or any
other portion of the Collateral other than an Incidental Asset or Temporary Cash
Investments in the Reserve Account and other than a transfer of a Mortgaged Rig
to a Wholly Owned Restricted Subsidiary that becomes a subsidiary guarantor;
provided, however, that Amethyst or a Restricted Subsidiary may sell a Mortgaged
Rig or Amethyst may sell all the capital stock of a subsidiary owning a
Mortgaged Rig (we refer to any such asset proposed to be sold as a "Mortgaged
Rig Asset") if such sale of a Mortgaged Rig Asset shall be made in compliance
with each of the following conditions:
(1) no Default shall have occurred and be continuing;
(2) the sale shall be effected in a commercially reasonable manner as
determined by Amethyst's board of directors in a written board
resolution;
(3) the entire consideration for such sale shall be at least equal to the
fair market value of the Mortgaged Rig Asset (as determined in good
faith by Amethyst's board of directors);
(4) at least 85% of the consideration received should be in the form of
cash or Temporary Cash Equivalents; and
(5) Amethyst shall have complied with the other provisions of the
indenture applicable to such sale.
Amethyst shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in any Asset Sales (other than Asset Sales permitted by
the preceding paragraph and foreclosures, deeds-in-lieu of foreclosure or
similar transactions) unless Amethyst or the applicable Restricted Subsidiary,
as the case may be, receives consideration at the time of such Asset Sale at
least equal to the fair market value of the assets sold or otherwise disposed of
as determined in good faith by Amethyst's board of directors, and at least 85%
of the consideration received by Amethyst or the Restricted Subsidiary, as the
case may be, from such Asset Sale at the time of such disposition shall be in
the form of cash or Temporary Cash Equivalents. If Amethyst or a Restricted
Subsidiary engages in an Asset Sale in compliance with the previous sentence or
a foreclosure, deed-in-lieu-of-foreclosure or similar transaction, then Amethyst
shall or shall cause a Restricted Subsidiary to apply an amount equal to such
excess Net Available Cash within 360 days of the Asset Sale either
o to repay Senior Indebtedness of Amethyst or of a Restricted Subsidiary
other than in each case Indebtedness owed to an affiliate of Amethyst,
o to invest in Additional Assets or
o deposit such excess Net Available Cash, to the extent not applied
pursuant to the preceding clauses, into the Reserve Account no later
than the end of such 360-day period.
Pending application of Net Available Cash pursuant to this covenant, such Net
Available Cash shall be invested in Permitted Investments or to temporarily
reduce Indebtedness.
LIMITATION ON ASSET SWAPS
Amethyst will not, and will not permit any Restricted Subsidiary to,
engage in any Asset Swaps, unless:
o at the time of entering into the agreement with respect thereto and
immediately after giving effect to the proposed Asset Swap, no Default
shall have occurred and be continuing;
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o the aggregate fair market values of the Additional Assets and other
consideration to be received by Amethyst or the applicable Restricted
Subsidiary is, at the time the Asset Swap is agreed to, substantially
equal to the aggregate fair market value of the property being disposed
of by Amethyst or the applicable Restricted Subsidiary to be determined
in good faith by Amethyst's board of directors and to be set forth in a
written resolution of its board attached to an Officer's Certificate
delivered to the Trustee; and
o the cash payments, if any, received by Amethyst or such Restricted
Subsidiary in connection with that Asset Swap are treated as Net
Available Cash received from an Asset Sale.
LIMITATION ON AFFILIATE TRANSACTIONS
Amethyst shall not, and shall not permit any Restricted Subsidiary to,
enter into any transaction -- including the purchase, sale, lease or exchange of
any property, employee compensation arrangements or the rendering of any service
- -- with any affiliate of Amethyst (an "affiliate transaction") unless the terms
thereof:
o are no less favorable to Amethyst or such Restricted Subsidiary than
those that could be obtained at the time of such transaction in
arm's-length dealings with a person who is not such an affiliate;
o for affiliate transactions involving an amount in excess of $500,000,
are set forth in writing and have been approved by a majority of the
members of the board of directors of Amethyst having no personal stake
in such affiliate transaction; and
o for affiliate transactions involving an amount in excess of $10.0
million, have been determined by an investment banking firm of national
reputation or, in the case of the sale or transfer of assets subject to
valuation, an appropriate independent qualified appraiser of national
reputation, given the size and nature of the transaction, to be fair,
from a financial standpoint, to Amethyst and its Restricted
Subsidiaries.
The provisions of the preceding paragraph shall not prohibit:
o any Restricted Payment permitted to be paid pursuant to the covenant
described under "--Limitation on Restricted Payments,"
o any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of,
employment arrangements of Amethyst, stock options, stock ownership and
other employee benefit plans approved by Amethyst's board of directors,
o the grant of stock options or similar rights to employees, officers and
directors of Amethyst pursuant to plans approved by its board of
directors,
o the payment of reasonable fees to directors of Amethyst and in
Restricted Subsidiaries who are not employees of Amethyst or its
Restricted Subsidiaries,
o any affiliate transaction between Amethyst and a Wholly Owned
Restricted Subsidiary or between Wholly Owned Restricted Subsidiaries,
o the arrangements and transactions provided for in the Service
Agreements and other agreements described under "Executive and Board
Compensation and Benefits and Compensation of Owner-Related
Parties--Compensation of Owner-Related Parties" as in effect on the
Issue Date and
o transactions pursuant to agreements in effect on the Issue Date and
disclosed in the Offering Memorandum pursuant to which the old notes
were originally sold all of which are disclosed in this prospectus.
LIMITATION ON THE SALE OR ISSUANCE OF CAPITAL STOCK OF RESTRICTED SUBSIDIARIES
Amethyst shall not sell or otherwise dispose of any capital stock of a
Restricted Subsidiary, and shall not permit any such Restricted Subsidiary,
directly or indirectly, to issue or sell or otherwise dispose of any of its
capital stock except:
o to Amethyst or a Wholly Owned Restricted Subsidiary,
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o if, immediately after giving effect to such issuance, sale or other
disposition, neither Amethyst nor any of its subsidiaries owns any
capital stock of such Restricted Subsidiary,
o directors' qualifying shares or
o other than with respect to shares of capital stock of a Restricted
Subsidiary which owns a Mortgaged Rig, if, immediately after giving
effect to such issuance, sale or other disposition, such Restricted
Subsidiary would no longer constitute a Restricted Subsidiary and any
Investment in such person remaining after giving effect thereto would
have been permitted to be made under the covenant described under
"--Limitation on Restricted Payments" if made on the date of such
issuance, sale or other disposition.
FUTURE SUBSIDIARY GUARANTORS
The indenture provides that Amethyst may not permit any Restricted
Subsidiary, directly or indirectly, to guarantee any Indebtedness of Amethyst
("Guaranteed Indebtedness") or any other Obligor unless:
o such Restricted Subsidiary simultaneously executes and delivers a
supplemental indenture to the indenture providing for a subsidiary
guarantee of payment of the notes by that Restricted Subsidiary and
o such Restricted Subsidiary waives and will not in any manner whatsoever
claim or take the benefit or advantage of, any rights of reimbursement,
indemnity or subrogation or any other rights against Amethyst or any
other Restricted Subsidiary as a result of any payment by such
Restricted Subsidiary under its subsidiary guarantee.
IMPAIRMENT OF LIENS
Amethyst shall not, and it shall not permit any Restricted Subsidiary to,
take or omit to take, any action which action or omission might or would have
the result of materially impairing the security interest with respect to the
Collateral for the benefit of the Trustee and the holders of the notes, and
except as permitted by the indenture and the Security Documents, Amethyst shall
not, and shall not permit any Restricted Subsidiary to, grant to any person
other than the Trustee, for the benefit of the Trustee and the holders of the
notes, any interest whatsoever in any of the Collateral.
INSURANCE
Amethyst shall, or shall cause the Mortgaged Rig Owner owning a Mortgaged
Rig to, carry and maintain with respect to each Mortgaged Rig owned by it
insurance payable in United States Dollars in amounts, against risks and in a
form which is substantially equivalent to the coverage carried by other
responsible and experienced companies engaged in the operation of drilling rigs
similar to the Mortgaged Rigs and with insurance companies, underwriters, funds,
mutual insurance associations or clubs of recognized standing. Total property
insurance for the Mortgaged Rigs shall be in an aggregate amount not less than
the sum of the aggregate outstanding principal amount, subject to customary
deductibles, retentions or self-insurance, of the notes and other obligations
under the indenture.
AMENDMENTS TO SECURITY DOCUMENTS
Amethyst shall not, and it shall not permit any of its Restricted
Subsidiaries to, amend, modify or supplement, or permit or consent to any
amendment, modification or supplement of, the Security Documents in any way that
would be adverse to the holders of the relevant notes.
SEPARATE CORPORATE ENTITIES
Amethyst shall, and shall cause each of its subsidiaries to, and each
Shareholder shall, conduct its business in its own name so as to avoid the
appearance of conducting its business on behalf of any other person or that the
assets of Amethyst or any such subsidiaries or any Shareholder (the "Applicable
Entities") are available to pay the creditors of any of the other Applicable
Entities. Without limiting the generality of the foregoing, each Applicable
Entity shall:
o maintain corporate records and books of account separate from those of
the other Applicable Entities;
o comply with its constitutive documents, including by obtaining proper
authorization from its board of directors of all corporate action
requiring such authorization and holding meetings of its board of
directors as required by its constitutive documents;
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o refrain from paying the operating expenses and liabilities of other
Applicable Entities except to the extent such funds have been
contributed as equity or constitute loans and, in each case, documented
appropriately;
o maintain an arm's-length relationship with the other Applicable
Entities and shall not hold itself out as being liable for the debts of
the other Applicable Entities; and
o keep its assets and its liabilities wholly separate from the other
Applicable Entities except that operating assets may be pooled in the
ordinary course of the Applicable Entity's drilling business.
The indenture, the subsidiary guarantees or the Security Documents or any
permitted Indebtedness or permitted Lien under the indenture shall not be
considered violations of the above-listed provisions.
Amethyst shall cause each Unrestricted Subsidiary to provide in any
Indebtedness Incurred by such Unrestricted Subsidiary that the holder of such
Indebtedness will not have any recourse to Amethyst or any of its Restricted
Subsidiaries with respect to such Indebtedness.
DEFAULTS
An Event of Default is defined in the indenture as:
(1) a default in the payment of interest (including Additional Amounts,
if any) on the notes or a Company Loan when due, continued for 30
days;
(2) a default in the payment of principal of, or premium, if any, on any
note or Company Loan when due at its Stated Maturity, upon
redemption, required repurchase, declaration of acceleration or
otherwise, or the failure to redeem or purchase notes or the Company
Loans when required pursuant to the indenture or the Mitsubishi Loan
Agreements;
(3) the failure by Amethyst to comply with its obligations under
"--Covenants--Limitation on Mergers and Consolidations,"
"--Redemptions--Redemption upon Loss of a Rig," and
"--Redemptions--Redemption upon Sale of a Mortgaged Rig" or in the
covenants described above under "--Change of Control" or
"--Covenants--Limitation on Asset Sales";
(4) the failure by Amethyst and the subsidiary guarantors to comply with
its other agreements contained in the indenture or in the Security
Documents and such failure or event of default continues for 60 days
after notice;
(5) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any
Indebtedness by Amethyst or any of its Restricted Subsidiaries (or
the payment of which is guaranteed by Amethyst or any of its
Restricted Subsidiaries) whether such Indebtedness or guarantee now
exists, or is created after the date of the indenture, which default
o is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the
grace period provided in such Indebtedness on the date of such
default unless being contested in good faith by appropriate
proceedings (a "Payment Default"),
o results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any
such Indebtedness, together with the principal amount of any
other such Indebtedness under which there has been a Payment
Default or the maturity of which has been so accelerated,
aggregates $10.0 million or more or
o occurs under the Mitsubishi Credit Facilities or the Mitsubishi
Loan Collateral Documents, is not a Payment Default and is not
cured or waived within 120 days;
(6) failure by Amethyst or any of its Restricted Subsidiaries to pay
final judgments aggregating in excess of $10.0 million, which
judgments are not paid, discharged or stayed for a period of 30 days;
(7) bankruptcy or insolvency with respect to Amethyst, Pride, any
subsidiary guarantor of Amethyst, any other Restricted Subsidiary
that would be a "significant subsidiary" of Amethyst within the
meaning of Rule 1.02 under Regulation S-X promulgated by the SEC, or
any group of Restricted Subsidiaries that, taken together (as of the
latest audited consolidated financial statements for Amethyst and its
subsidiaries), would constitute a significant subsidiary of Amethyst
(Rule 1.02 under Regulation S-X generally defines a "significant
subsidiary" as a subsidiary whose assets or income exceeds ten
percent of the total assets or income of the parent and its other
subsidiaries);
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(8) any subsidiary guarantee ceases to be in full force and effect (other
than in accordance with the terms of the indenture and such
subsidiary guarantee) or a subsidiary guarantor denies or disaffirms
its obligations under its subsidiary guarantee; or
(9) the Pride Guarantee ceases to be in full force and effect (other than
in accordance with the terms of the indenture) or Pride denies or
disaffirms its obligations under the Pride Guarantee;
(10) the Letter of Credit ceases to be in full force and effect or the
issuer thereof denies or disaffirms its obligations under the Letter
of Credit; or
(11) the Liens under the Security Documents shall, at any time, cease to
be in full force and effect for any reason (other than by operation
of the provisions of the indenture and the Security Documents) other
than the satisfaction in full of all obligations under the indenture
and discharge of the indenture, or any Lien created thereunder shall
be declared invalid or unenforceable or Amethyst or any Mortgaged Rig
Owner shall assert, in any pleading in any court of competent
jurisdiction, that any such lien is invalid or unenforceable.
However, a default under clauses (4) and (5) will not constitute an Event of
Default until the Trustee provides a written notice to Amethyst, or the holders
of 25% in aggregate principal amount of any notes outstanding pursuant to the
indenture provide a written notice to Amethyst and the Trustee, of the default
and, in the case of a default under clause (4), Amethyst does not cure such
default within the time specified after receipt of such notice.
If an Event of Default occurs and is continuing with respect to the
indenture other than bankruptcy, insolvency, or reorganization, the Trustee or
the holders of not less than 25% in principal amount of any notes outstanding
pursuant to the indenture may declare the principal of and premium, if any, and
accrued but unpaid interest (including Additional Amounts, if any) on all the
notes to be due and payable. Upon such a declaration, such principal, premium,
if any, and interest (including Additional Amounts, if any) will be due and
payable immediately.
If an Event of Default relating to bankruptcy, insolvency or
reorganization occurs and is continuing, the principal of and premium, if any,
and interest (including Additional Amounts, if any) on the notes will become and
be immediately due and payable without any declaration or other act on the part
of the Trustee or any holders of the notes.
The amount due and payable on the acceleration of any note will be equal
to 100% of the principal amount of that note, plus accrued and unpaid interest
(including Additional Amounts, if any) to the date of payment.
Under certain circumstances, the holders of a majority in principal amount
of all outstanding notes pursuant to the indenture may rescind any such
acceleration with respect to the notes and its consequences.
A holder of a note may pursue any remedy under the indenture only if:
o the Trustee has received written notice of a continuing Event of
Default;
o the Trustee has received a request from holders of at least 25% in
principal amount of notes to pursue that remedy,
o the Trustee has been offered indemnity reasonably satisfactory to it
and
o the Trustee has failed to act for a period of 60 days after receipt of
such notice and offer of indemnity; however, such provision does not
affect the right of a holder of a note to sue for enforcement of any
overdue payment thereon.
The holders of a majority in aggregate principal amount of the outstanding
notes are given the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising any trust or
power conferred on the Trustee. The Trustee, however, may refuse to follow any
direction that conflicts with law or the indenture or that the Trustee
determines is unduly prejudicial to the rights of any other holder or that would
involve the Trustee in personal liability. Subject to the provisions of the
indenture relating to the duties of the Trustee in case an Event of Default
occurs and is continuing, the Trustee will be under no obligation to exercise
any of the rights or powers under the indenture at the request or direction of
any of the holders of the notes unless such holders have offered to the Trustee
reasonable indemnity or security against any loss, liability or expense.
The indenture provides that if a Default occurs and is continuing and is
known to the Trustee, the Trustee must mail to each holder notice of the Default
within 90 days after it occurs. Except in the case of a Default in the payment
of principal of or interest on any note, the Trustee may withhold notice if and
so long as a committee of its trust officers determines that withholding notice
is not opposed to the interest of the holders of the notes. In addition,
Amethyst is required to deliver to the Trustee, within
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120 days after the end of each fiscal year, a certificate indicating whether the
signers thereof know of any Default that occurred during the previous year.
Amethyst also is required to deliver to the Trustee, within five business days
after the occurrence thereof, written notice of any event which would constitute
a Default or an Event of Default, its status and what action Amethyst is taking
or proposes to take in respect thereof. A business day is defined in the
indenture as any day which is not a Saturday, Sunday or other day on which
commercial banks in The City of New York, Brazil, the Bahamas, the British
Virgin Islands or the city in which the corporate trust office of the Trustee is
located are authorized by law to close.
AMENDMENTS AND WAIVERS
Subject to certain exceptions, Amethyst and the Trustee may amend the
indenture and the Security Documents with the consent of the holders of a
majority in aggregate principal amount of the notes then outstanding including
consents obtained in connection with a tender offer or exchange for the notes.
Any past Default or Event of Default or compliance with any provisions may also
be waived with the consent of the holders of a majority in aggregate principal
amount of the notes then outstanding. However, without the consent of each
holder of an outstanding note affected thereby, no amendment may, among other
things,
(1) reduce the amount of notes whose holders must consent to an
amendment,
(2) reduce the rate of or extend the time for payment of interest on any
note or any Company Loan,
(3) reduce the principal of or extend the Stated Maturity of any note or
any Company Loan,
(4) modify the obligations of Company to make mandatory redemptions or
otherwise reduce the premium payable upon the redemption of any note
or change the time at which any note may be or is required to be
redeemed as described under "--Redemptions" above,
(5) modify the obligations of Pride to make payments under the Pride
Guarantee or modify the obligations of the issuer of the Letter of
Credit under the Letter of Credit,
(6) make any note payable in money other than that stated in the note,
(7) impair the right of any holder to receive payment of principal of and
interest on such holder's notes on or after the due date therefor or
to institute suit for the enforcement of any payment on or with
respect to such holder's notes,
(8) make any change in the amendment provisions which require each
holder's consent or in the waiver provisions,
(9) make any change in any Security Document or the Mitsubishi Credit
Facilities (in the case of the Mitsubishi Documents, if Amethyst has
the right to consent to any such change) that would materially
adversely affect the holders of the notes or terminate the Lien of
the indenture or any Security Document, other than in accordance with
the terms thereof, on any property at any time subject thereto or
deprive the holder of the security afforded by the Lien of the
indenture or the Security Documents or deprive Amethyst of the Liens
securing the Company Loans.
Without the consent of any holder, Amethyst and Trustee may amend the
indenture and the Security Documents to cure any ambiguity, omission, defect or
inconsistency, to provide for the assumption by a successor corporation of the
obligations of Amethyst under the indenture, the Mitsubishi Credit Facilities
and the Security Documents, to provide for uncertificated notes in addition to
or in place of certificated notes (provided that the uncertificated notes are
issued in registered form for purposes of Section 163(f) of the Internal Revenue
Code of 1986, as amended, or in a manner such that the uncertificated notes are
described in Section 163(f)(2)(B) of the Internal Revenue Code), to add
additional guarantees with respect to the notes, to provide additional security
for the notes, to add to the covenants of Amethyst for the benefit of a holder
or to surrender any right or power conferred upon Amethyst, to make any change
that does not adversely affect the rights of any holder of the notes or to
comply with any requirement of the SEC in connection with the qualification of
the indenture under the Trust Indenture Act.
The consent of the holders of the notes is not necessary under the
indenture to approve the particular form of any proposed amendment. It is
sufficient if such consent approves the substance of the proposed amendment.
After an amendment under the indenture or the Security Documents becomes
effective, Amethyst is required to mail to holders of the notes a notice briefly
describing such amendment. However, the failure to give such notice to all
holders of the notes, or any defect in the notice, will not impair or affect the
validity of the amendment.
ABILITY TO REALIZE ON COLLATERAL
The proceeds resulting from the enforcement of remedies available to the
holders of the notes, including the remedies afforded by the Pride Guarantee and
the Letter of Credit, the sale of the Collateral in whole pursuant to the
indenture, the
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Mitsubishi Credit Facilities and the Security Documents and the appropriation of
accumulated cash and cash equivalents from payments received by the collateral
agent under the Mitsubishi Credit Facilities, following an Event of Default
under the indenture will be shared by the holders of the notes and also, in the
case of the Mitsubishi Loan Collateral Documents, by the other lenders under the
Mitsubishi Credit Facilities. Such proceeds may not be in an amount that will be
sufficient to repay the notes in full. In addition, the ability of the holder to
realize upon the Collateral may be limited in the event of a bankruptcy or
Insolvency or pursuant to applicable laws, including securities laws.
Amethyst's portion of the Mitsubishi Credit Facilities will be the
principal source of payment of interest on, and the principal collateral for,
the notes. Amethyst will own less than a majority of the loans outstanding under
the Mitsubishi Credit Facilities. The remainder of the loans under the
Mitsubishi Credit Facilities are currently held by affiliates of the Mitsubishi
Corporation. The majority lenders have the right to control determinations to be
made by the lenders under the Mitsubishi Credit Facilities. Accordingly,
Mitsubishi, as the majority lender, will have the exclusive right to amend the
Mitsubishi Documents, waive borrower defaults under the Mitsubishi Credit
Facilities, declare an event of default under the Mitsubishi Credit Facilities
and direct the enforcement of rights against the borrowers.
The Mitsubishi Credit Facilities permit lenders to assign their rights
under the Mitsubishi Credit Facilities only to a first class international bank
incorporated in an OECD country or a person approved by an affiliate of
Mitsubishi Corporation, which approval will not be unreasonably withheld. This
provision restricts Amethyst's ability to transfer its portion of the Mitsubishi
Credit Facilities and limits the collateral agent's ability to transfer the
Company Loans if there is an Event of Default and foreclosure under the notes.
If an Event of Default occurs and is continuing and the Company Loans and
the notes become payable in full, the Trustee, on behalf of the holders of the
notes, in addition to any other rights or remedies available to it under the
indenture and the Security Documents, may take such action as it deems advisable
to protect and enforce its rights in the Collateral, including the institution
of sale or foreclosure proceedings. The proceeds received by the Trustee from
any such sale or foreclosure will be applied by the Trustee first to pay the
expenses of such sale or foreclosure and fees and other amounts then payable to
the Trustee under the indenture, and thereafter to pay amounts due and payable
with respect to the notes.
The right of the Trustee and/or Amethyst to repossess and dispose of the
Collateral upon acceleration of the notes and/or the Company Loans is likely to
be significantly impaired by applicable bankruptcy or insolvency law if a
bankruptcy or insolvency proceeding were to be commenced by or against a
Mortgaged Rig Owner, Amethyst or any subsidiary guarantor prior to or possibly
even after such Trustee has repossessed and disposed of the Collateral. Federal
law permits bankruptcy proceedings to be brought under the United States
Bankruptcy Code by or against any person that resides or has a domicile, place
of business, or property in the United States. Because Amethyst has assets in
New York and Mississippi, a reviewing court would probably view Amethyst as a
person able to invoke the United States Bankruptcy Code. Accordingly, the United
States Bankruptcy Code may apply to the Collateral. Under the United States
Bankruptcy Code, to the extent applicable, a secured creditor such as the
Trustee is prohibited from repossessing its security from a debtor in a
bankruptcy case, or from disposing of security repossessed from such debtor,
without bankruptcy court approval. Moreover, applicable U.S. bankruptcy law
generally permits the debtor to continue to retain and to use collateral and the
proceeds, products, offspring, rents or profits of such collateral even though
the debtor is in default under the applicable debt instruments, provided
generally that the secured creditor is given "adequate protection." The meaning
of the term "adequate protection" may vary according to circumstances, but it is
intended in general to protect the value of the secured creditor's interest in
the collateral and may include, if approved by the court, cash payments or the
granting of additional or replacement security for any diminution in the value
of the collateral as a result of the stay of repossession or disposition or any
use of the collateral by the debtor during the pendency of the bankruptcy case.
In view of the lack of a precise definition of the term "adequate protection"
and the broad discretionary powers of a bankruptcy court, it is impossible to
predict how long payments under the notes, the Mitsubishi Credit Facilities or
any subsidiary guarantees could be delayed following commencement of a
bankruptcy case, whether or when the Trustee would repossess or dispose of the
Collateral or whether or to what extent holders of the notes would be
compensated for any delay in payment or loss of value of the Collateral through
the requirements of "adequate protection." Furthermore, in the event that the
bankruptcy court determines that the value of the Collateral is not sufficient
to repay all amounts due on the Company Loans or the notes, Amethyst or holders
of the notes, as applicable, would have "undersecured claims." Applicable U.S.
bankruptcy laws do not permit the payment and/or accrual of interest, costs and
attorneys' fees for "undersecured claims" during the debtor's bankruptcy case.
The principal collateral securing the Mitsubishi Credit Facilities and,
indirectly, the notes will be, upon completion of the Mortgaged Rigs, Bahamian
first priority ship mortgages on the Mortgaged Rigs. In the event of default
under a Mitsubishi Credit Facility, the collateral agent under such credit
facility may enforce the corresponding mortgage for the benefit of the lenders
under such Mitsubishi Credit Facility. We have assigned to the Trustee, for your
benefit, a 53% undivided interest in the portion of the proceeds of such
enforcement to which we are entitled as a result of the Company Loans. The
enforcement of those mortgages, however, could be difficult and expensive as a
result of priorities and procedures imposed by the laws of the jurisdiction in
which the enforcement proceeding must be brought. The inability, as a result of
difficulty or expense, to realize significant value upon
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enforcement of those mortgages could significantly limit the collateral securing
the loans made under the Mitsubishi Credit Facilities and, consequently, the
collectibility of the Company Loans in which we have assigned a 53% undivided
interest to secure and fund payments on the notes.
The Mortgaged Rigs will be flagged in the Bahamas and used and operated
initially in Brazil. The priority that rig mortgages have against the claims of
other lien creditors in an enforcement proceeding generally is determined by,
and will vary in accordance with, the laws of the country where the proceeding
is brought. In most jurisdictions, rig mortgages are subordinate to maritime
liens that arise by operation of law. In particular, Bahamian law provides that
the following liens and claims shall take priority over rig mortgages registered
in the Bahamas and that no other claim shall take priority over such mortgages:
o any sum awarded by a court as costs arising out of any proceedings in
respect of the arrest of a rig or the subsequent sale thereof,
including such charges or expenses incurred in effecting the arrest or
sale
o wages and other sums due to the master, officers and other members of
the rig's complement in respect of their employment on the rig
o port, canal and other waterway dues and pilotage dues and any
outstanding fees payable under the Bahamian Merchant Shipping Act in
respect of the rig
o claims against the owner in respect of loss of life or personal injury
occurring, whether on land or on water, in direct connection with the
operation of the rig
o claims against the owner, based on tort and not capable of being based
on contract, in respect of loss of or damage to property occurring,
whether on land or on water, in direct connection with the operation of
the rig
o claims for salvage, wreck removal and contribution in general average
o any lien exercisable by a rig builder or repairer over a rig or the
appurtenance thereof in his possession shall take priority over all
claims arising after such possession was taken but shall be
subordinated to those claims which were created before the time of
taking such possession
In addition, Bahamian law provides specific procedural remedies. We cannot
assure, however, that, if enforcement proceedings must be commenced against a
Mortgaged Rig, that Mortgaged Rig will be located in a jurisdiction having the
same procedures and lien priorities as the Bahamas or that the relative lien
priority against other maritime liens will be as favorable as in the Bahamas.
For instance, the Brazilian courts, which would accept jurisdiction over any
action for possession of a rig while located in Brazilian territorial waters and
would have exclusive jurisdiction over any action against Petrobras under the
Petrobras contracts, will recognize first priority ship mortgages on the
AMETHYST 6 and AMETHYST 7 duly registered in the Bahamas in accordance with
their terms to the extent that they do not offend Brazilian national
sovereignty, public order or good morals. The Brazilian courts generally will
accept jurisdiction over any legal action where:
o the defendant, regardless of nationality, is domiciled in Brazil
o the obligation to be enforced must be performed in Brazil
o the lawsuit arises from an occurrence or action in Brazil
Proceedings in the Brazilian courts to enforce a rig mortgage, however, would be
subject to a lengthy delay that could result in increased custodial costs,
deterioration in the condition of the Mortgaged Rig and substantial reduction in
the value of the Mortgaged Rig. Other jurisdictions in which we may operate the
Mortgaged Rigs may provide no legal remedy for the enforcement of the mortgages
securing the loans made under the Mitsubishi Credit Facilities, or a remedy
dependent on court proceedings may be so expensive and time consuming as to be
impracticable. In addition, some jurisdictions, unlike the Bahamas, may not
permit a Mortgaged Rig to be sold prior to entry of a judgment, thereby causing
lengthy delay in recovery that, like in the case of proceedings in the Brazilian
courts, could result in increased custodial costs, deterioration in the
condition of the Mortgaged Rig and substantial reduction in the value of the
Mortgaged Rig. In the event that Daewoo is placed into receivership, goes into
bankruptcy or otherwise seeks protection from its creditors as a result of a
failed restructuring, moreover, enforcement of the rig mortgages on the
Mortgaged Rigs could be prevented, limited or delayed. The delays and costs
resulting from enforcement of the rig mortgages would significantly limit the
ability of the lenders under the Mitsubishi Credit Facilities to realize
significant value from that enforcement and, consequently, would significantly
limit the funds available to them for repayment of the loans made under the
Mitsubishi Credit Facilities, including the Company Loans in which we have
assigned a 53% undivided interest to secure and fund payments on the notes.
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Since borrowings under the Mitsubishi Credit Facilities are also secured
by pledges of all the stock of owners of the Mortgaged Rig Owners, enforcement
of these pledges, including foreclosure, may provide, in effect, an alternative
method to realize upon the Mortgaged Rig owned by the Mortgaged Rig Owner.
However, enforcement by means of foreclosure on the stock of the Mortgaged Rig
Owner will not affect the claims of existing creditors of such subsidiary, which
claims would survive any sale of such stock and would adversely affect the value
of such stock and, therefore, limit the value of the collateral securing the
loans made under the Mitsubishi Credit Facilities, including the Company Loans
in which we have assigned a 53% undivided interest to secure and fund payments
on the notes.
DEFEASANCE
Amethyst at any time may terminate all its obligations under the notes,
the indenture and the Security Documents ("legal defeasance"), except for
certain obligations, including those respecting the defeasance trust and
obligations, to register the transfer or exchange of the notes, to replace
mutilated, destroyed, lost or stolen notes and to maintain a registrar and
paying agent in respect of the notes and except for its optional redemption
rights. Amethyst at any time may terminate its mandatory redemption and
repurchase obligations under "--Redemptions" and "--Change of Control," its
obligations under the covenants described under "--Covenants" (other than the
covenant described under "--Covenants--Limitation on Mergers and
Consolidations"), the operation of the cross acceleration provision, the
bankruptcy provisions with respect to subsidiary guarantors and significant
subsidiaries and the judgment default provision described under "--Defaults"
above and the limitations contained in clause (3) of the first paragraph under
and the second paragraph under "--Covenants--Limitation on Mergers and
Consolidations" above ("covenant defeasance").
Amethyst may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option. If Amethyst exercises its
legal defeasance option, payment of the notes may not be accelerated because of
an Event of Default with respect thereto. If Amethyst exercises its covenant
defeasance option, payment of the notes may not be accelerated because of an
Event of Default specified in clause (3) (other than the covenant described
under "--Covenants--Limitation on Mergers and Consolidations") or (5) under
"--Defaults" above or because of Amethyst's failure to comply with clause (3) of
the first paragraph under and the second paragraph under
"--Covenants--Limitation on Mergers and Consolidations" above. If Amethyst
exercises its legal defeasance option, Amethyst and each subsidiary guarantor
will be released from all its obligations with respect to the subsidiary
guarantees and the Security Documents, as applicable.
In order to exercise either defeasance option, Amethyst must irrevocably
deposit in trust (the "defeasance trust") with the Trustee money or U.S.
Government Obligations for the payment of principal, premium, if any, and
interest (including Additional Amounts, if any) on the notes to redemption or
maturity, as the case may be, and must comply with certain other conditions,
including delivery to the Trustee of an opinion of counsel to the effect that
holders of the notes will not recognize income, gain or loss for federal income
tax purposes as a result of such deposit and defeasance and will be subject to
federal income tax on the same amounts and in the same manner and at the same
time as would have been the case if such deposit and defeasance had not occurred
and, in the case of legal defeasance only, such opinion of counsel must be based
on a ruling of the Internal Revenue Service or other change in applicable
federal income tax law.
CONCERNING THE TRUSTEE
Wilmington Trust Company is the Trustee under the indenture and the
collateral agent under certain Security Documents and has been appointed by
Amethyst as registrar and paying agent with regard to the notes.
The holders of a majority in aggregate principal amount of the outstanding
notes will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to the
exceptions listed under "--Defaults" above. The indenture provides that if an
Event of Default occurs and is not cured, the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent person in the
conduct of its own affairs. Subject to those provisions, the Trustee will be
under no obligation to exercise any of its rights or powers under the indenture
at the request of any holder, unless that holder shall have offered to the
Trustee, security and indemnity satisfactory to it against any loss, liability
or expense and then only to the extent required by the terms of the indenture.
GOVERNING LAW
The indenture provides that the indenture and the notes are governed by,
and construed in accordance with the laws of the State of New York without
giving effect to applicable principles of conflicts of law, except to the extent
that the application of the law of another jurisdiction would be required
thereby. The Mitsubishi Credit Facilities and the Mitsubishi Loan Collateral
Documents are governed by English law.
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CONSENT TO JURISDICTION AND SERVICE
Pursuant to the indenture, each of Amethyst, Pride, Maritima and each
subsidiary guarantor has appointed CT Corporation System, New York, New York as
its Agent for actions brought under federal or state securities laws brought in
any federal or state court located in the Borough of Manhattan in the City of
New York and will submit to such jurisdiction.
ENFORCEABILITY OF JUDGMENTS
Since all the operating assets of Amethyst and its subsidiaries are
outside the United States, any judgment obtained in the United States against
Amethyst, a Mortgaged Rig Owner or a subsidiary guarantor, including judgments
with respect to the payment of principal, interest, Additional Amounts,
redemption price and any purchase price with respect to the notes, may not be
collectible within the United States.
British Virgin Islands counsel, Dancia Penn & Co, has advised that, in
such counsel's opinion, the laws of the British Virgin Islands applicable
therein permit an action to be brought in a court of competent jurisdiction in
the British Virgin Islands on a final and conclusive judgment in personam of a
United States federal court or in a New York Court, respecting the enforcement
of the notes or the indenture (including the Security Documents), that is not
impeachable as void or voidable under the laws of the State of New York and that
is for a sum certain in money if
o the New York Court that rendered such judgment has jurisdiction over
the judgment debtor, as recognized by the courts of the British Virgin
Islands and in accordance with the conflict of laws rules of the
British Virgin Islands (and submission by Amethyst in the indenture to
the jurisdiction of the New York Court will be sufficient for this
purpose);
o such judgment was not obtained by fraud or in a manner contrary to
natural justice and the enforcement thereof would not be inconsistent
with public policy, as such term is understood under the laws of the
British Virgin Islands applicable therein;
o the enforcement of such judgment does not constitute, directly or
indirectly, the enforcement of foreign revenue, expropriator, public or
penal laws;
o no new admissible evidence relevant to the action is discovered prior
to the rendering of judgment by the court in the British Virgin
Islands; and
o the action to enforce such judgment is commenced within six years after
the date of such judgment.
In addition, such counsel has advised that a final and conclusive judgment for a
definite sum of money obtained against Amethyst or its subsidiaries in the
courts of England and/or the Bahamas in respect of any of the Mitsubishi
Documents that is governed by English or Bahamian law, as applicable, may be
registered and enforced as a judgment of the High Court of the British Virgin
Islands if application is made within twelve months of the date of the judgment
(or such longer period as the High Court may allow) and if the High Court
considers it just and convenient that the judgment be so enforced or, in the
alternative, such judgment may be treated as a separate cause of action and may
be sued upon in the High Court of the British Virgin Islands within six years of
the date of the judgment without re-examination or re-litigation of the matters
adjudicated upon so that no retrial of such matters would be necessary,
provided, in each case, that
o the English court or Bahamian court, as applicable, had jurisdiction in
the matter and the judgment debtor either submitted to such
jurisdiction or was a resident or carrying on business within such
jurisdiction and was duly served with process,
o the judgment given by the English court or Bahamian court, as
applicable, was not in respect of penalties, fines, taxes or similar
fiscal or revenue obligations of Amethyst or its subsidiaries,
o recognition or enforcement of such judgment in the British Virgin
Islands does not contravene British Virgin Islands public policy,
o the judgment was not obtained by fraud,
o the judgment is not inconsistent with a British Virgin Islands judgment
in respect of the same matter and
o the proceedings pursuant to which the judgment was obtained were not
contrary to the principles of natural justice.
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The courts of the British Virgin Islands may refuse to enforce obligations or
liabilities on any of the parties incorporated under the laws of the British
Virgin Islands otherwise than for payment of money by way of such equitable
remedies as injunction or specific performance.
Bahamian counsel, Higgs & Johnson, has advised that, in such counsel's
opinion, the laws of the Bahamas (where the first priority ship mortgages will
be registered) applicable therein permit an action to be brought in a court of
competent jurisdiction in the Bahamas on a final and conclusive judgment in
personam of a United States federal court or a court of the State of New York
sitting in the Borough of Manhattan in The City of New York (the "New York
Court") in respect of the enforcement of the notes or the indenture (including
the Security Documents) that is not impeachable as void or voidable under the
laws of the State of New York, or of a superior court of the United Kingdom in
respect of any of the Mitsubishi Documents that are governed by English law that
is not impeachable as void or voidable under the laws of England, or of a
superior court of the British Virgin Islands that is not impeachable as void or
voidable under the laws of the British Virgin Islands, and that, in each case,
is for a sum certain in money if:
o the New York Court, English court or British Virgin Islands court that
rendered such judgment has jurisdiction over the judgment debtor, as
recognized by the courts of the Bahamas and in accordance with the
conflict of laws rules of the Bahamas (and submission by Amethyst in
the indenture to the jurisdiction of the New York Court or by Amethyst
or its subsidiaries in the Mitsubishi Documents to the English court
will be sufficient for this purpose);
o such judgment was not obtained by fraud or in a manner contrary to
natural justice and the enforcement thereof would not be inconsistent
with public policy, as such term is understood under the laws of the
Bahamas applicable therein;
o the enforcement of such judgment does not constitute, directly or
indirectly, the enforcement of foreign revenue, expropriator, public or
penal laws;
o no new admissible evidence relevant to the action is discovered prior
to the rendering of judgment by the court in the Bahamas; and
o the action to enforce such judgment is commenced within six years after
the date of such judgment.
Brazilian counsel, Pinheiro Neto - Advogados (Rio de Janeiro), has advised
that, in such counsel's opinion, any judgment of a non-Brazilian court will be
enforceable in the courts of Brazil if previously confirmed by the Federal
Supreme Court of Brazil, without reconsideration of the merits, and such
confirmation is only given if such judgment
o fulfills all formalities required for its enforceability under the laws
of the country where it was issued;
o is issued by a competent court after service of process in the relevant
action was made personally on the Brazilian party, or on a properly
appointed agent for service for process;
o is not subject to appeal;
o is authenticated by a Brazilian Consulate in the country in which it
was issued and is accompanied by a public sworn translation into
Portuguese; and
o does not offend Brazilian national sovereignty, public policy or
morality.
In addition, the ability of a judgment creditor to satisfy a judgment by
attaching certain assets located in Brazil is limited by Brazilian law. A
plaintiff (whether Brazilian or non-Brazilian) who resides outside of Brazil
during the course of litigation in Brazil must provide a bond to guarantee court
costs and legal fees if the plaintiff owns no real property in Brazil that would
ensure such payment except if the plaintiff is seeking to enforce foreign
judgments that have been fully confirmed by the Brazilian Federal Supreme Court.
This bond must have a value sufficient to satisfy the payment of court fees and
the defendant's attorneys' fees, as determined by the Brazilian judge.
CERTAIN DEFINITIONS
The following is a summary of certain defined terms to be used in the
indenture. Reference is made to the indenture for the full definition of all
these terms and for the definitions of other capitalized terms used in this
description of the notes and not defined below.
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"Acquired Indebtedness" means, with respect to any specified person:
(1) Indebtedness of any other person existing at the time such other
person is merged with or into or became a subsidiary of such
specified person, whether or not such Indebtedness is incurred in
connection with, or in contemplation of, such other person merging
with or into, or becoming a subsidiary of, such specified person; and
(2) Indebtedness secured by a lien encumbering any asset acquired by such
specified person.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and capital stock) in a Related Business; (ii) the capital stock of
a person that becomes a Restricted Subsidiary as a result of the acquisition of
such capital stock by Amethyst or another Restricted Subsidiary or (iii) capital
stock constituting a minority interest in any person that at such time is a
Restricted Subsidiary; provided, however, that any such Restricted Subsidiary
described in clause (ii) or (iii) above is primarily engaged in a Related
Business.
"Asset Sale" means any direct or indirect sale, capital leases, transfer
or other disposition (or series of related sales, capital leases, transfers or
dispositions) by Amethyst or any Restricted Subsidiary, including any
disposition by means of a merger, consolidation or similar transaction (each
referred to for the purposes of this definition as a "disposition") in one
transaction or a series of related transactions, of (i) any shares of capital
stock of a Restricted Subsidiary (other than directors' qualifying shares or
shares required by applicable law to be held by a person other than Amethyst or
a Restricted Subsidiary), (ii) any drillship or drilling rig or all or
substantially all the assets of any division or line of business of Amethyst or
any Restricted Subsidiary or (iii) any other assets of Amethyst or any
Restricted Subsidiary outside of the ordinary course of business of Amethyst or
such Restricted Subsidiary (other than, in the case of (i), (ii) and (iii)
above, (u) a disposition by a Restricted Subsidiary to Amethyst or by Amethyst
or a Restricted Subsidiary to a Wholly Owned Restricted Subsidiary, (v) for
purposes of the covenant described under "--Covenants--Limitation on Asset
Sales" only, a disposition that constitutes a Restricted Payment permitted by
the covenant described under "--Covenants--Limitation on Restricted Payments,"
(w) Asset Swaps permitted under "--Covenants--Limitation on Asset Swaps," (x)
dispositions of Incidental Assets, (y) dispositions of Temporary Cash
Investments and (z) a disposition of assets with a fair market value of less
than $100,000).
"Asset Swap" means a substantially concurrent purchase and sale, or
exchange, of assets constituting Additional Assets described in clause (i) of
the definition thereof between Amethyst or any Restricted Subsidiary and another
person or group of persons; provided, however, that the cash and other assets to
be received by Amethyst or such Restricted Subsidiary which do not constitute
Additional Assets do not constitute more than 25% of the total consideration to
be received by Amethyst or such Restricted Subsidiary in such Asset Swap.
"Attributable Indebtedness," when used with respect to any Sale/Leaseback
Transaction, means, as at the time of determination, the present value
(discounted at the rate set forth or implicit in the terms of the lease included
in such transaction) of the total obligations of the lessee for rental payments
(other than amounts required to be paid on account of property taxes,
maintenance, repairs, insurance, assessments, utilities, operating and labor
costs and other items which do not constitute payments for property rights)
during the remaining term of the lease included in such Sale/Leaseback
Transaction (including any period for which such lease has been extended).
"Average Life" means, as of the date of determination, with respect to any
indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum
of the products of numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Capitalized Lease Obligation" of any person means any obligation of such
person to pay rent or other amounts under a lease of property, real or person,
that is required to be capitalized for financial reporting purposes in
accordance with generally accepted accounting principles and the amount of such
obligation shall be the capitalized amount thereof determined in accordance with
GAAP.
"Collateral" means all the collateral subject to the Security Documents.
"Company Loans" means loans under the Mitsubishi Credit Facilities
purchased by Amethyst.
"Consolidated EBITDA Coverage Ratio" as of any date of determination means
the ratio of (a) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters ending at least 45 days prior to the
date of such determination to (b) Consolidated Interest Expense for such four
fiscal quarters; provided, however, that:
(1) If Amethyst or any Restricted Subsidiary has incurred any
Indebtedness since the beginning of such period that remains
outstanding or if the transaction giving rise to the need to
calculate the Consolidated EBITDA Coverage
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Ratio is an issuance of Indebtedness, or both, EBITDA and
Consolidated Interest Expense for such period shall be calculated
after giving effect on a pro forma basis to such Indebtedness as if
such Indebtedness had been issued on the first day of such period and
the discharge of any other Indebtedness repaid, repurchased, defeased
or otherwise discharged with the proceeds of such new Indebtedness as
if such discharge had occurred on the first day of such period,
(2) if since the beginning of such period Amethyst or any Restricted
Subsidiary shall have made any asset disposition, the EBITDA for such
period shall be reduced by an amount equal to the EBITDA (if
positive) directly attributable to the assets which are the subject
of such asset disposition for such period, or increased by an amount
equal to the EBITDA (if negative), directly attributable thereto for
such period, and Consolidated Interest Expense for such period shall
be reduced by an amount equal to the Consolidated Interest Expense
directly attributable to any Indebtedness of Amethyst or any
Restricted Subsidiary repaid, repurchased, defeased or otherwise
discharged with respect to Amethyst and its continuing subsidiaries
in connection with such asset dispositions for such period (or, if
the capital stock of any Restricted Subsidiary is sold, the
Consolidated Interest Expense for such period directly attributable
to the Indebtedness of such Restricted Subsidiary to the extent
Amethyst and its continuing subsidiaries are no longer liable for
such Indebtedness after such sale),
(3) if since the beginning of such period Amethyst or any Restricted
Subsidiary (by merger or otherwise) shall have made an Investment in
any Restricted Subsidiary (or any person which becomes a Restricted
Subsidiary) or an acquisition of assets, including any acquisition of
assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or
substantially all of an operating unit of a business (which shall
include the acquisition or construction of a vessel or drilling rig,
provided Amethyst has paid 75% or more of the cost thereof and such
vessel or drilling rig is reasonably expected to be delivered within
90 days), EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving pro forma effect thereto (including
the issuance of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such period, and
(4) if since the beginning of such period any person (that subsequently
became a Restricted Subsidiary or was merged with or into Amethyst or
any Restricted Subsidiary since the beginning of such period) shall
have made any asset disposition or any Investment that would have
required an adjustment pursuant to clause (2) or (3) above if made by
Amethyst or a Restricted Subsidiary during such period, EBITDA and
Consolidated Interest Expense for such period shall be calculated
after giving pro forma effect thereto as if such asset disposition or
Investment occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given
to an acquisition of assets, the amount of income or earnings relating thereto,
and the amount of Consolidated Interest Expense associated with any Indebtedness
issued in connection therewith, the pro forma calculations shall be determined
in good faith by a responsible financial or accounting officer of Amethyst. If
any Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest of such Indebtedness shall be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire
period (taking into account any Interest Rate Protection Agreement applicable to
such Indebtedness if such Interest Rate Protection Agreement has a remaining
term in excess of 12 months).
For purposes of this definition, in the case of the acquisition since the
beginning of such period of a drilling rig or drillship (or of a Restricted
Subsidiary owning same) by Amethyst or by a Restricted Subsidiary pursuant to a
binding purchase agreement or the delivery at the beginning of such period of a
drilling rig or drillship to Amethyst or a Restricted Subsidiary pursuant to a
binding construction contract, which drilling rig or drillship has been subject
for at least one full fiscal quarter to a binding drilling contract constituting
a Qualifying Contract, then, for purposes of making the pro forma calculations
provided for in the first sentence of the preceding paragraph, the financial or
accounting officer of Amethyst shall give pro forma effect to the earnings
(losses) of such drilling rig or drillship as if such drilling rig or drillship
were acquired on the first day of such period, by basing such earnings (losses)
on the annualized (x) historical revenues actually earned from such Qualifying
Contract and (y) actual expenses related thereto, in each case for each quarter
during such period in which the Qualifying Contract is in effect.
"Consolidated Interest Expense" means, for any period, the total interest
expense of Amethyst and its consolidated Restricted Subsidiaries, plus, to the
extent not included in such interest expenses:
(1) interest expense attributable to Capitalized Lease Obligations,
(2) amortization of debt discount and debt issuance cost,
(3) capitalized interest,
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(4) non-cash interest payments,
(5) commissions, discounts and other fees and charges owed with respect
to letters of credit and bankers' acceptance financing,
(6) net costs under Interest Rate Protection Agreements (including
amortization of fees),
(7) dividends in respect of any Redeemable Stock held by persons other
than Amethyst or a Restricted Subsidiary,
(8) interest expense attributable to deferred payment obligations, and
(9) interest expense on Indebtedness of another person to the extent that
such Indebtedness is guaranteed by Amethyst or a Restricted
Subsidiary.
"Consolidated Net Income" means, for any period, the net income of
Amethyst and its consolidated subsidiaries; provided, however, that there shall
not be included in such Consolidated Net Income:
(a) any net income of any person if such person is not a Restricted
Subsidiary, except that (1) Amethyst's equity in the net income of
any such person for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash actually
distributed by such person during such period to Amethyst or a
Restricted Subsidiary as a dividend or other distribution (subject,
in the case of a dividend or other distribution to a Restricted
Subsidiary, to the limitations contained in clause (c) below) and (2)
Amethyst's equity in a net loss of any such person for such period
shall be included in determining such Consolidated Net Income;
(b) any net income of any person acquired by Amethyst or a Restricted
Subsidiary in a pooling of interests transaction for any period prior
to the date of such acquisition;
(c) any net income of any Restricted Subsidiary to the extent such
Restricted Subsidiary is subject to restrictions, directly or
indirectly, on the payment of dividends or the making of
distributions by such Restricted Subsidiary, directly or indirectly,
to Amethyst, except that (1) the net income of a Restricted
Subsidiary shall be included to the extent such net income could be
paid to Amethyst or a Restricted Subsidiary by loans, advances,
intercompany transfers, principal repayments or otherwise; (2)
Amethyst's equity in the net income of any such Restricted Subsidiary
for such period shall be included in such Consolidated Net Income up
to the aggregate amount of cash actually distributed by such
Restricted Subsidiary during such period to Amethyst or another
Restricted Subsidiary as a dividend or other distribution (subject,
in the case of a dividend or other distribution to another Restricted
Subsidiary, to the limitation contained in this clause) and (3)
Amethyst's equity in a net loss of any such Restricted Subsidiary for
such period shall be included in determining such Consolidated Net
Income;
(d) any gain (but not loss) realized upon the sale or other disposition
of any property, plant or equipment of Amethyst or its consolidated
subsidiaries (including pursuant to any sale/leaseback arrangement)
which is not sold or otherwise disposed of in the ordinary course of
business and any gain (but not loss) realized upon the sale or other
disposition of any capital stock of any person;
(e) extraordinary, unusual or nonrecurring charges; and
(f) the cumulative effect of a change in accounting principles.
"Consolidated Net Worth" of a person means the consolidated stockholders'
equity of such person and its subsidiaries, as determined in accordance with
GAAP.
"Default" means any act, event or condition which is, or after notice or
passage of time or both would be, an Event of Default.
"EBITDA" for any period means the Consolidated Net Income for such period,
plus the following (but without duplication) to the extent deducted in
calculating such Consolidated Net Income for such period: (a) income tax
expense, (b) Consolidated Interest Expense, (c) depreciation expense and (d)
amortization expense.
"Event of Loss Proceeds" is defined to mean all compensation, damages and
other payments (including insurance proceeds) received by the Mortgaged Rig
Owner, Amethyst, any Restricted Subsidiary, the Security Agent under the
Mitsubishi Loan Collateral Documents or the Trustee, jointly or severally, from
any person, including any governmental authority, with respect to or in
connection with an event of loss.
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"Exchangeable Stock" means any capital stock which is exchangeable or
convertible into another security (other than capital stock of Amethyst which is
neither Exchangeable nor Redeemable Stock).
"GAAP" means generally accepted accounting principles in the United States
set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, as in effect from time to time.
"guarantee" means any obligation, contingent or otherwise, of any person
directly or indirectly guaranteeing any Indebtedness of any other person and any
obligation, direct or indirect, contingent or otherwise, of such person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of such
Indebtedness or other obligation of such other person (whether arising by virtue
of partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise) or (ii) entered into for the purpose of assuring in any
other manner the obligee of such Indebtedness of the payment thereof or to
protect such obligee against loss in respect thereof (in whole or in part);
provided, however, that the term "guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "guarantee"
used as a verb has a corresponding meaning. The term "guarantor" shall mean any
person guaranteeing any obligation.
"Hedging Obligations" of any person means the net obligation (not the
notional amount) of such person pursuant to any interest rate swap agreement,
foreign currency exchange agreement, interest rate collar agreement, option or
futures contract or other similar agreement or arrangement relating to interest
rates or foreign exchange rates.
"Incidental Asset" is defined to mean any equipment, outfit, furniture,
furnishings, appliances, spare or replacement parts or stores owned by Amethyst
or a Restricted Subsidiary that have become obsolete or unfit for use or no
longer useful, necessary or profitable in the conduct of the business of
Amethyst or such Restricted Subsidiary, as the case may be. In no event shall
the term "Incidental Asset" include a drilling rig or a drillship or a Mortgaged
Rig.
"Incur" means issue, assume, guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or capital stock of a person
existing at the time such person becomes a subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
subsidiary at the time it becomes a subsidiary. The term "Incurrence" when used
as a noun shall have a correlative meaning.
"Indebtedness" of any person at any date means, without duplication:
(1) all indebtedness of such person for borrowed money (whether or not
the recourse of the lender is to the whole of the assets of such
person or only to a portion thereof),
(2) all obligations of such person evidenced by bonds, debentures, notes
or other similar instruments,
(3) all obligations of such person in respect of letters of credit or
other similar instruments (or reimbursement obligations with respect
thereto), other than standby letters of credit and performance bonds
issued by such person in the ordinary course of business, to the
extent not drawn or, to the extent drawn, if such drawing is
reimbursed not later than the third business day following demand for
reimbursement,
(4) all obligations of such person to pay the deferred and unpaid
purchase price of property or services, except trade payables and
accrued expenses incurred in the ordinary course of business,
(5) all Capitalized Lease Obligations of such person,
(6) all Indebtedness of others secured by a Lien on any asset of such
person, whether or not such Indebtedness is assumed by such person,
to the extent of the fair market value of all the assets of such
person subject to such Lien,
(7) all Indebtedness of others guaranteed by such person to the extent of
such guarantee,
(8) Redeemable Stock, and
(9) all Hedging Obligations of such person.
For purposes of clause (8) of the preceding sentence, Redeemable Stock shall be
valued at the maximum fixed redemption, repayment or repurchase price, which
shall be calculated in accordance with the terms of such Redeemable Stock as if
such Redeemable Stock were repurchased on any date on which Indebtedness shall
be required to be determined pursuant to the
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indenture; provided, however, that if such Redeemable Stock is not then
permitted to be redeemed, repaid or repurchased, the redemption, repayment or
repurchase price shall be the book value of such Redeemable Stock. The amount of
Indebtedness of any person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and the maximum
liability of any guarantees at such date; provided that for purposes of
calculating the amount of any non-interest bearing or other discount security,
such Indebtedness, shall be deemed to be the principal amount thereof that would
be shown on the balance sheet of the issuer thereof dated such date prepared in
accordance with GAAP but that such security shall be deemed to have been
Incurred only on the date of the original issuance thereof. The amount of
Indebtedness of any person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the obligation,
of any contingent obligations at such date.
"Interest Rate Protection Agreement" means any interest rate swap
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect Amethyst or any Restricted Subsidiary against
fluctuations in interest rates.
"Investment" in any person means any direct or indirect advance, loan
(other than advances to customers in the ordinary course of business that are
recorded as accounts receivable on the balance sheet of the lender) or other
extensions of credit (including by way of guarantee or similar arrangement) or
capital contribution to (by means of any transfer of cash or other property to
others or any payment for property or services for the account or use of
others), or any purchase or acquisition of capital stock, Indebtedness or other
similar instruments issued by such person. For purposes of the definition of
"Unrestricted Subsidiary," the definition of "Restricted Payment" and the
covenant described under the "Limitation on Restricted Payments" covenant (i)
"Investment" shall include the portion (proportionate to Amethyst's equity
interest in such subsidiary) of the fair market value of the net assets of any
subsidiary of Amethyst at the time that such subsidiary is designated an
Unrestricted Subsidiary; provided, however, that upon a redesignation of such
subsidiary as a Restricted Subsidiary, Amethyst shall be deemed to continue to
have a permanent "Investment" in such subsidiary at the time of such
redesignation in the amount of such Investment immediately prior to such
redesignation less (y) the portion (proportionate to Amethyst's equity interest
in such subsidiary) of the fair market value of the net assets of such
subsidiary at the time of such redesignation; and (ii) any property transferred
to or from an Unrestricted Subsidiary shall be valued at its fair market value
at the time of such transfer, in each case as determined in good faith by
Amethyst's board of directors.
"Investment Grade Rating" means BBB- or above, in the case of S&P (or its
equivalent under any successor rating categories of S&P), Baa3 or above, in the
case of Moody's (or its equivalent under any successor rating categories of
Moody's), and the equivalent in respect of the ratings categories of any Rating
Agencies substituted for S&P or Moody's.
"Issue Date" means November 1, 1999, the date on which the old notes were
originally issued.
"Lien" means any mortgage, pledge, hypothecation, charge, assignment,
deposit arrangement, encumbrance, security interest, lien (statutory or other),
or preference, priority or other security or similar agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
agreement to give or grant a Lien or any lease, conditional sale or other title
retention agreement having substantially the same economic effect as any of the
foregoing). For the purposes of the indenture, Amethyst or any of its
subsidiaries shall be deemed to own subject to a Lien any asset which Amethyst
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, Capitalized Lease Obligation or other title
retention agreement relating to such asset.
"MARAD Documents" means the credit facilities provided by Citibank, N.A.
and Govco Incorporated with respect to the AMETHYST 4 and AMETHYST 5.
"Mitsubishi Credit Facilities" means the loan agreements providing for the
AMETHYST 6 and AMETHYST 7 credit facilities.
"Mitsubishi Documents" means, collectively, the Mitsubishi Credit
Facilities and the Mitsubishi Loan Collateral Documents.
"Mitsubishi Floor Guarantee" means the guarantee provided by Maritima and
Pride, for the benefit of the Mitsubishi-affiliated lenders only, of repayment,
from commencement of each Mortgaged Rig's Charter, of the total borrowings under
such Mortgaged Rig's Mitsubishi Credit Facility up to a total for both
Mitsubishi Credit Facilities of $75.6 million by Maritima and $32.4 million by
Pride.
"Mitsubishi Loan Collateral Documents" means the security documents
relating to, and providing security for, the Mitsubishi Credit Facilities, but
excluding the Mitsubishi Floor Guarantee.
"Moody's" is defined to mean Moody's Investor Service, Inc. and its
successors.
"Mortgaged Rig" means any Rig subject to the Lien of the Security
Documents.
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"Net Available Cash" from an Asset Sale means cash payments or Temporary
Cash Equivalents received therefrom (including any cash payments received by way
of deferred payment of principal pursuant to a note or installment receivable or
otherwise and proceeds from the sale or other disposition of any securities
received as consideration, but only as and when received, but excluding any
other consideration received in the form of assumption by the acquiring person
of Indebtedness or other obligations relating to such properties or assets or
received in any other noncash form), in each case net of (i) all legal, title
and recording tax expenses, commissions and other fees and expenses incurred,
and all federal, state, provincial, foreign and local taxes required to be
accrued as a liability under GAAP, as a consequence of such Asset Sale, (ii) all
payments made on any Indebtedness which is secured by any assets subject to such
Asset Sale, in accordance with the terms of any Lien upon or other security
agreement of any Lien with respect to such assets, or which must by its terms,
or in order to obtain a necessary consent to such Asset Sale, or by Applicable
law, be repaid out of the proceeds from such Asset Sale, (iii) all distributions
and other payments required to be made to minority interest holders in
subsidiaries or joint ventures as a result of such Asset Sale and (iv) the
deduction of appropriate amounts provided by the seller as a reserve, in
accordance with GAAP, against any liabilities associated with the property or
other assets disposed in such Asset Sale and retained by Amethyst or any
Restricted Subsidiary after such Asset Sale.
"Net Cash Proceeds" means, with respect to any issuance or sale of capital
stock, the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Non-Convertible Capital Stock" means, with respect to any person, any
non-convertible capital stock of such person and any capital stock of such
person convertible solely into non-convertible common stock of such person;
provided, however, that Non-Convertible Capital Stock shall not include any
Redeemable Stock or Exchangeable Stock.
"Permitted Holder" means any Shareholder or any affiliate of a
Shareholder.
"Permitted Investments" means:
(a) certificates of deposit, bankers acceptances, time deposits,
Eurocurrency deposits and similar types of Investments routinely
offered by commercial banks with final maturities of one year or less
issued by commercial banks, having capital and surplus in excess of
$100.0 million;
(b) commercial paper issued by any corporation, if such commercial paper
has credit ratings of at least "A-1" by S&P and at least "P-1" by
Moody's;
(c) U.S. Government Obligations with a maturity of three years or less;
(d) repurchase obligations of instruments of the type described in clause
(c);
(e) shares of money market mutual or similar funds having assets in
excess of $100.0 million;
(f) payroll advances in the ordinary course of business;
(g) other advances and loans to officers and employees of Amethyst or any
Restricted Subsidiary, so long as the aggregate principal amount of
such advances and loans does not exceed $1.0 million at any one time
outstanding;
(h) Investments in any person in the form of a capital contribution of
Amethyst's common stock;
(i) Investments made by Amethyst in its Restricted Subsidiaries (or any
person that will be a Restricted Subsidiary as a result of such
Investment) or by a Restricted Subsidiary in Amethyst or in one or
more Restricted Subsidiaries (or any person that will be a Restricted
Subsidiary as a result of such Investment);
(j) Investments in stock, obligations or securities received in
settlement of debts owing to Amethyst or any Restricted Subsidiary as
a result of bankruptcy or insolvency proceedings or upon the
foreclosure, perfection or enforcement of any Lien in favor of
Amethyst or any Restricted Subsidiary, in each case as to debt owing
to Amethyst or any Restricted Subsidiary that arose in the ordinary
course of business of Amethyst or any such Restricted Subsidiary;
(k) Investments made in exchange for Indebtedness permitted by Section
(b)(4) of the "Limitation on Indebtedness" covenant;
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(l) Investments in a person other than a Restricted Subsidiary for the
purpose of financing the construction or upgrade of new drilling
rigs, drillships or similar vessels and related equipment, in an
aggregate amount not to exceed at any time outstanding $100 million;
provided, however, that at the time of such Investment; Amethyst or
such person has entered into a Qualifying Contract with respect
thereto; and
(m) Investments represented by that portion of the proceeds from Asset
Sales that is not required to be cash or Temporary Cash Equivalents
by the covenant described in "--Covenants--Limitation on Asset
Sales."
"Permitted Liens" means, with respect to any person,
(a) pledges or deposits by such person under worker's compensation laws,
unemployment insurance laws or similar legislation, or good faith
deposits in connection with bids, tenders, contracts (other than for
the payment of Indebtedness) or leases to which such person is a
party, or deposits to secure public or statutory obligations of such
person or deposits of cash or United States government bonds to
secure surety or appeal bonds to which such person is a party, or
deposits as security for contested taxes or import duties or for the
payment of rent, in each case Incurred in the ordinary course of
business;
(b) Liens imposed by law, such as maritime, carriers', warehousemen's and
mechanics' Liens, in each case for sums not yet due or being
contested in good faith by appropriate proceedings or other Liens
arising out of judgments or awards against such person with respect
to which such person shall then be proceeding with an appeal or other
proceedings for review;
(c) Liens for property taxes not yet subject to penalties for non-payment
or which are being contested in good faith and by appropriate
proceedings;
(d) Liens in favor of issuers of surety bonds or letters of credit issued
pursuant to the request of and for the account of such person in the
ordinary course of its business; PROVIDED, HOWEVER, that such letters
of credit do not constitute Indebtedness;
(e) minor survey exceptions, minor encumbrances, easements or
reservations of, or rights of others for, licenses, rights-of-way,
sewers, electric lines, telegraph and telephone lines and other
similar purposes, or zoning or other restrictions as to the use of
real property or Liens incidental to the conduct of the business of
such person or to the ownership of its properties which were not
Incurred in connection with Indebtedness and which do not in the
aggregate materially adversely affect the value of said properties or
materially impair their use in the operation of the business of such
person;
(f) Liens securing Indebtedness Incurred to finance the construction,
equipping, mobilization, transportation, installation, purchase or
lease of, or repairs, upgrades, improvements or additions to,
property of such person; PROVIDED, however, that the Lien may not
extend to any property owned by such person or any of its
subsidiaries at the time the Lien is Incurred (other than the
property affected), and the Indebtedness (other than any interest
thereon) secured by the Lien may not be Incurred more than 180 days
after the later of the purchase, acquisition, completion of
construction, equipping, mobilization, transportation, installation,
repair, improvement, addition or commencement of full operation of
the property subject to the Lien;
(g) Liens existing on the Issue Date;
(h) Liens on property or shares of capital stock of another person at the
time such other person becomes a subsidiary of such person; PROVIDED,
HOWEVER, that such Liens are not created, incurred or assumed in
connection with, or in contemplation of, such other person becoming
such a subsidiary; PROVIDED FURTHER, however, that such Lien may not
extend to any other property owned by such person or any of its
subsidiaries;
(i) Liens on property at the time such person or any of its subsidiaries
acquires the property, including any acquisition by means of a merger
or consolidation with or into such person or a subsidiary of such
person; PROVIDED, HOWEVER, that such Liens are not created, incurred
or assumed in connection with, or in contemplation of such
acquisition; PROVIDED FURTHER, however, that the Liens may not extend
to any other property owned by such person or any of its
subsidiaries;
(j) Liens securing Indebtedness or other obligations of a subsidiary of
such person owing to such person or a wholly owned subsidiary of such
person;
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(k) Liens securing Hedging Obligations so long as such Hedging
Obligations relate to Indebtedness that is, and is permitted to be
under the indenture, secured by a Lien on the same property securing
such Hedging Obligations;
(l) any charter or Qualifying Contract;
(m) judgment liens not giving rise to an Event of Default;
(n) rights of off-set of banks and other persons;
(o) deposits made to obtain insurance;
(p) Liens or equitable encumbrances deemed to exist by reason of a
negative pledge or other arrangements to refrain from permitting
Liens or fraudulent transfer law;
(q) Liens to secure any Refinancing (or successive Refinancings) as a
whole, or in part, of any Indebtedness secured by any Lien referred
to as in the foregoing clauses (f), (g), (h) and (i); PROVIDED,
HOWEVER, that
(x) such new Lien shall be limited to all or part of the same
property that secured the original Lien (plus improvements to or
on such property); and
(y) the Indebtedness secured by such Lien at such time is not
increased to any amount greater than the sum of (A) the
outstanding principal amount or, if greater, committed amount of
the Indebtedness described under clauses (f), (g), (h) and (i) at
the time the original Lien became a Permitted Lien and (B) an
amount necessary to pay any fees and expenses, including
premiums, related to such refinancing, refunding, extension,
renewal or replacement; and
(r) Liens created under the MARAD Documents or the Mitsubishi Documents.
Notwithstanding the foregoing, "Permitted Liens" will not include any Lien
described in clauses (f), (h) or (i) above to the extent such Lien applies to
any Additional Assets acquired directly or indirectly from Net Available Cash
pursuant to the covenant described under "--Covenants--Limitation on Asset
Sales." For purposes of this definition, the term "Indebtedness" shall be deemed
to include interest on such Indebtedness.
"person" means any individual, corporation, limited liability company,
limited or general partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Preferred Stock," as applied to the capital stock of any person, means
capital stock of any class or classes (however designated) which is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such person, over shares
of capital stock of any other class of such person.
"Public Equity Offering" means an underwritten primary public offering of
common stock of Amethyst or a Shareholder pursuant to an effective registration
statement under the Securities Act or pursuant to applicable laws of any
jurisdiction outside the United States but, in the case of a Shareholder, only
to the extent the net cash proceeds therefrom are contributed as equity capital
to Amethyst.
"Qualified Substitute Owner" means, as of the date of acquisition of
beneficial ownership, directly or indirectly, of at least 26.4% of the total
voting power of the Voting Stock of Amethyst, a corporation (x) whose long term
senior unsecured debt has an investment grade rating by either Moody's or S&P
and (y) which derived at least 50% of its revenue during the most recent 12-
month period for which financial statements are publicly available from offshore
drilling operations.
"Qualifying Contract" with respect to a Rig means the charters or any
other contract for the use of such Rig (i) between Amethyst or a Restricted
Subsidiary and a counterparty that, as certified in an Officer's Certificate
delivered to the Trustee in connection therewith, is, or has a performance
guarantee from a third party that is, (a) a company that is either generally
recognized as a major oil company, (b) an oil company, a gas producer or an oil
and gas service company, in each case at the time such contract is executed
having a Total Equity Market Capitalization of at least $1.0 billion if such
entity is a public company, or if such entity is not a public company, having a
consolidated net worth of $500.0 million or (c) a company that has an investment
grade rating on its long-term debt from Moody's or S&P, (ii) having a minimum
term of three years and (iii) containing a minimum day rate for such Rig.
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"Rating Agencies" means (a) S&P and Moody's or (b) if S&P or Moody's or
both of them are not making ratings of the notes publicly available, a
nationally recognized U.S. rating agency or agencies, as the cases may be,
selected by Amethyst, which will be substituted for S&P or Moody's or both, as
the case may be.
"Redeemable Stock" means, with respect to the notes, any capital stock
that, by its terms (or by the terms of any security into which it is
convertible, or for which it is exchangeable, in each case at the option of the
holder thereof), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
on which the notes mature. Notwithstanding the preceding sentence, any capital
stock that would constitute Redeemable Stock solely because the holders thereof
have the right to require Amethyst to repurchase such capital stock upon the
occurrence of a change of control or an asset sale shall not constitute
Redeemable Stock if the terms of such capital stock provide that Amethyst may
not repurchase or redeem any such capital stock pursuant to such provisions
unless such repurchase or redemption complies with the covenants described above
under the caption "--Change of Control," "--Covenants--Limitation on Asset
Sales," "Redemptions" and "--Covenants--Limitation on Restricted Payments."
"Related Business" means any business related, ancillary or complementary
to the businesses of Amethyst and the Restricted Subsidiaries on the Issue Date.
"Reserve Account" means the account established and designated as such
pursuant to the Reserve Account Agreement.
"Reserve Account Agreement" means the Reserve Account Agreement among
Amethyst, the Trustee and the Reserve Account Agent named therein.
"Restricted Collateral" means (1) any Rig made subject to the Lien of the
Security Documents, (2) the capital stock of each Restricted Subsidiary owning a
Mortgaged Rig, (3) each Qualifying Contract subject to the Lien of the Security
Documents and (4) the Reserve Account and the cash and investments credited
thereto.
"Restricted Subsidiary" means any subsidiaries other than an Unrestricted
Subsidiary.
"Rig Owner" means any of Petrodrill Four Limited, Petrodrill Five Limited,
Petrodrill Six Limited or Petrodrill Seven Limited.
"S&P" is defined to mean Standard & Poor's Ratings Group, a division of
McGraw-Hill Companies, Inc. and its successors.
"Sale/Leaseback Transaction" means any arrangement with any person
providing for the leasing by Amethyst of any of its Restricted Subsidiaries, for
a period of more than three years, of any real or tangible personal property,
which property has been or is to be sold or transferred by Amethyst or such
Restricted Subsidiary to such person in contemplation of such leasing.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Security Documents" means, collectively, the Mitsubishi Loan Collateral
Documents, the Reserve Account Agreement, and the Security Agreement between
Amethyst, the Trustee and the collateral agent named therein.
"Senior Indebtedness" of any person means (i) Indebtedness of such person,
whether outstanding on the Issue Date or thereafter Incurred, and (ii) accrued
and unpaid interest (including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to Amethyst to the extent
post-filing interest is allowed in such proceeding) in respect of (A)
indebtedness for money borrowed and (B) Indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which such
person is responsible or liable unless, in the case of (i) and (ii), in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such obligations are subordinate in right of
payment to the notes, the Company Loans or the subsidiary guarantees, as
applicable; provided, however, that Senior Indebtedness shall not include (1)
any obligation of such person to any subsidiary of such person, (2) any
liability for federal, state, local, foreign or other taxes owed or owing by
such person, (3) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including guarantees thereof or
instruments evidencing such liabilities), (4) any Indebtedness of such person
(and any accrued and unpaid interest in respect thereof) which is subordinate or
junior in any respect to any other Indebtedness or other obligation of such
person or (5) that portion of any Indebtedness which at the time of Incurrence
is Incurred in violation of the indenture.
"Shareholder" means any one of the Shareholders.
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"Shareholders" means Drillpetro Inc., a company organized under the laws
of the Bahamas, Techdrill Inc., a company organized under the laws of the
Bahamas (each of the foregoing an affiliate of Maritima Petroleo e Engenharia
Ltda., a company organized under the laws of Brazil), Westville Management
Corporation Inc., a company organized under the laws of the British Virgin
Islands (an indirect wholly owned subsidiary of Pride International, Inc., a
company organized under the laws of Louisiana), and First Reserve Corporation,
individually or collectively as the context requires.
"Stated Maturity" means, with respect to any security, the date specified
in such security as the fixed date on which the final payment of principal of
which security is due and payable, including pursuant to any mandatory
redemption provision (but excluding any provision providing for the repurchase
of such security at the option of the holder thereof upon the happening of any
contingency unless such contingency has occurred).
"Subordinated Obligation" means any Indebtedness of Amethyst or a
subsidiary guarantor, as the case may be (whether outstanding on the Issue Date
or thereafter Incurred) which is subordinate or junior in right of payment to
the notes, the Company Loans or the subsidiary guarantee, as applicable, whether
pursuant to a written agreement to that effect or by operation of law.
"subsidiary" means, with respect to any person:
(1) any corporation of which more than 50% of the total voting power of
all classes of the capital stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors
is owned by such person directly or through one or more other
subsidiaries of such person, and
(2) any entity other than a corporation of which at least a majority of
the capital stock or other equity interest (however designated)
entitled (without regard to the occurrence of any contingency) or
vote in the election of the governing body, partners, managers or
others that will control the management of such entity is owned by
such person directly or through one or more other subsidiaries of
such person.
"subsidiary guarantor" means each subsidiary of Amethyst, whether now
owned or hereafter formed, which shall be required to execute and deliver a
subsidiary guarantee as described under "--Covenants--Future Subsidiary
Guarantors."
"subsidiary guarantee" means a guarantee of Amethyst's obligations with
respect to the notes issued by a subsidiary of Amethyst.
"Tangible Property" means all land, buildings, machinery and equipment and
leasehold interests and improvements which would be reflected on a balance sheet
of Amethyst prepared in accordance with GAAP, excluding (a) all rights,
contracts and other intangible assets of any nature whatsoever and (b) all
inventories and other current assets.
"Temporary Cash Investments" means Investments described in clauses (a),
(b), (c) and (d) of the definition of "Permitted Investments."
"Total Equity Market Capitalization" of any person means, as of any day of
determination, the sum of (i) the product of (A) the aggregate number of
outstanding primary shares of common stock of such person on such day (which
shall not include any options or warrants on, or securities convertible or
exchangeable into, shares of common stock of such person) multiplied by (B) the
average closing price of such common stock over the 20 consecutive business days
immediately preceding such day, plus (ii) the liquidation value of any
outstanding shares of preferred stock of such person on such day.
"Unrestricted Subsidiary" means:
(a) any subsidiary of Amethyst that at the time of, determination will be
designated an Unrestricted Subsidiary by Amethyst's board of
directors as provided below and
(b) any subsidiary of an Unrestricted Subsidiary.
The board of directors of Amethyst may designate any subsidiary of
Amethyst as an Unrestricted Subsidiary unless such subsidiary or any of its
subsidiaries (x) owns any capital stock or Indebtedness of, or holds any Lien on
any property of, Amethyst or any other subsidiary of Amethyst that is not a
subsidiary of the subsidiary to be so designated or (y) owns any of the
Collateral; provided, however, that either (A) the subsidiary to be so
designated has total assets of $10,000 or less or (B) if such subsidiary has
assets greater than $10,000, such designation would be permitted under the
covenant described under "--Covenants--Limitation on Restricted Payments."
Any such designation by Amethyst's board of directors shall be evidenced
to the Trustee by filing a resolution of the board of directors with the Trustee
giving effect to such designation. Amethyst's board of directors may designate
any Unrestricted
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Subsidiary as a Restricted Subsidiary if, immediately after giving effect to
such designation, (A) no Default or Event of Default shall have occurred and be
continuing and (B) Amethyst could incur $1.00 of additional Indebtedness under
paragraph (a) of the "Limitation on Indebtedness" covenant.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.
"Voting Stock" of a person means all classes of capital stock or other
interests (including partnership interests) of such person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
"Wholly Owned Restricted Subsidiary" means a Restricted Subsidiary all the
capital stock of which (other than directors' qualifying shares) is owned by
Amethyst or one or more Wholly Owned Restricted Subsidiaries.
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BOOK-ENTRY; DELIVERY, FORM AND TRANSFER OF THE NEW NOTES
The new notes initially will be in the form of one or more registered
global notes without interest coupons (collectively, the "Global Notes")
deposited with the Trustee, as custodian for DTC, in New York, New York, and
registered in the name of DTC or its nominee, in each case for credit to the
accounts of DTC's Direct and Indirect Participants (as defined below).
Transfer of beneficial interests in any Global Notes will be subject to
the applicable rules and procedures of DTC and its Direct or Indirect
Participants (including, if applicable, those of Euroclear and Cedel), which may
change from time to time.
The Global Notes may be transferred, in whole and not in part, only to
another nominee of DTC or to a successor of DTC or its nominee in certain
limited circumstances. Beneficial interests in the Global Notes may be exchanged
for notes in certificated form in certain limited circumstances. See
"--Transfers of Interests in Global Notes for Certificated Notes."
Initially, the Trustee will act as Paying Agent and Registrar. The new
notes may be presented for registration of transfer and exchange at the offices
of the Registrar.
DEPOSITARY PROCEDURES
DTC has advised Amethyst that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Direct Participants") and to facilitate the clearance and settlement of
transactions in those securities between Direct Participants through electronic
book-entry changes in accounts of Participants. The Direct Participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations, including Euroclear and Cedel. Access to DTC's
system is also available to other entities that clear through or maintain a
direct or indirect custodial relationship with a Direct Participant
(collectively, the "Indirect Participants").
DTC has advised Amethyst that, pursuant to DTC's procedures:
(1) DTC will credit the accounts of the Direct Participants with portions
of the principal amount of the Global Notes allocated to such Direct
Participants, and
(2) DTC will maintain records of the ownership interests of Direct
Participants in the Global Notes and the transfer of ownership
interests by and between Direct Participants.
DTC will not maintain records of the ownership interests of, or the
transfer of ownership interests by and between, Indirect Participants or other
owners of beneficial interests in the Global Notes. Direct Participants and
Indirect Participants must maintain their own records of the ownership interests
of, and the transfer of ownership interests by and between, Indirect
Participants and other owners of beneficial interests in the Global Notes.
The laws of some states in the United States require that certain persons
take physical delivery, in definitive, certificated form, of securities that
they own. This may limit or curtail the ability to transfer beneficial interests
in a Global Note to such persons. Because DTC can act only on behalf of Direct
Participants, which in turn act on behalf of Indirect Participants and others,
the ability of a person having a beneficial interest in a Global Note to pledge
that interest to persons or entities that are not Direct Participants in DTC, or
to otherwise take actions in respect of those interests, may be affected by the
lack of physical certificates evidencing those interests. For certain other
restrictions on the transferability of the new notes, you should read the
discussion under the heading "--Transfers of Interests in Global Notes for
Certificated Notes."
Except as described in "--Transfers of Interests in Global Notes for
Certificated Notes," owners of beneficial interests in the Global Notes will not
have notes registered in their names, will not receive physical delivery of
notes in certificated form and will not be considered the registered owners or
holders thereof under the indenture for any purpose.
Under the terms of the indenture, Amethyst and the Trustee will treat the
persons in whose names the new notes are registered (including new notes
represented by Global Notes) as the owners thereof for the purpose of receiving
payments and for any and all other purposes whatsoever. Payments in respect of
the principal, premium, Additional Amounts, if any, and interest on Global Notes
registered in the name of DTC or its nominee will be payable by the Trustee to
DTC or its nominee as the registered holder under the indenture. Consequently,
neither Amethyst, the Trustee nor any agent of Amethyst or the Trustee has or
will have any responsibility or liability for:
(1) any aspect of DTC's records or any Direct Participant's or Indirect
Participant's records relating to or payments made on account of
beneficial ownership interests in the Global Notes or for
maintaining, supervising or reviewing any of DTC's records or any
Direct Participant's or Indirect Participant's records relating to
the beneficial ownership interests in any Global Note; or
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(2) any other matter relating to the actions and practices of DTC or any
of its Direct Participants or Indirect Participants.
DTC has advised Amethyst that its current payment practice (for payments
of principal, interest and the like) with respect to securities such as the
notes is to credit the accounts of the relevant Direct Participants with such
payment on the payment date in amounts proportionate to such Participant's
respective ownership interests in the Global Notes as shown on DTC's records.
Payments by Direct Participants and Indirect Participants to the beneficial
owners of the new notes will be governed by standing instructions and customary
practices between them and will not be the responsibility of DTC, the Trustee or
Amethyst. Neither Amethyst nor the Trustee will be liable for any delay by DTC
or its Direct Participants or Indirect Participants in identifying the
beneficial owners of the new notes and Amethyst and the Trustee may conclusively
rely on and will be protected in relying on instructions from DTC or its nominee
as the registered owner of the new notes for all purposes.
The Global Notes will trade in DTC's Same-Day Funds Settlement System and,
therefore, transfers between Direct Participants in DTC will be effected in
accordance with DTC's procedures, and will be settled in immediately available
funds. Transfers between Indirect Participants (other than Indirect Participants
who hold an interest in the notes through Euroclear or Cedel) who hold an
interest through a Direct Participant will be effected in accordance with the
procedures of that Direct Participant but generally will settle in immediately
available funds. Transfers between and among Indirect Participants who hold
interests in the new notes through Euroclear and Cedel will be effected in the
ordinary way in accordance with their respective rules and operating procedures.
Cross-market transfers between Direct Participants in DTC, on the one
hand, and Indirect Participants who hold interests in the new notes through
Euroclear or Cedel, on the other hand, will be effected by Euroclear's or
Cedel's respective nominee through DTC in accordance with DTC's rules on behalf
of Euroclear or Cedel; however, delivery of instructions relating to
cross-market transactions must be made directly to Euroclear or Cedel, as the
case may be, by the counterparty in accordance with the rules and procedures of
Euroclear or Cedel and within their established deadlines (Brussels time for
Euroclear and UK time for Cedel). Indirect Participants who hold interests in
the new notes through Euroclear and Cedel may not deliver instructions directly
to Euroclear's or Cedel's nominee. Euroclear or Cedel will, if the transaction
meets its settlement requirements, deliver instructions to its respective
nominee to deliver or receive interests on Euroclear's or Cedel's behalf in the
relevant Global Note in DTC, and make or receive payment in accordance with
normal procedures for same-day fund settlement applicable to DTC.
Because of time zone differences, the securities accounts of an Indirect
Participant who holds an interest in the new notes through Euroclear or Cedel
purchasing an interest in a Global Note from a Direct Participant in DTC will be
credited, and any such crediting will be reported to Euroclear or Cedel during
the European business day immediately following the settlement date of DTC in
New York. Although recorded in DTC's accounting records as of DTC's settlement
date in New York, Euroclear and Cedel customers will not have access to the cash
amount credited to their accounts as a result of a sale of an interest in a
Global Note to a DTC Participant until the European business day of Euroclear or
Cedel immediately following DTC's settlement date.
DTC has advised Amethyst that it will take any action permitted to be
taken by a holder only at the direction of one or more Direct Participants to
whose accounts interests in the Global Notes are credited and only in respect of
such portion of the aggregate principal amount of the notes as to which such
Direct Participant or Direct Participants has or have given direction. However,
if there is an Event of Default under the notes, DTC reserves the right to
exchange Global Notes (without the direction of one or more of its Direct
Participants) for notes in certificated form, and to distribute such
certificated notes to its Direct Participants. See "--Transfers of Interests in
Global Notes for Certificated Notes."
Although DTC, Euroclear and Cedel have agreed to the foregoing procedures
to facilitate transfers of interests in the U.S. Global Notes among Direct
Participants, Euroclear and Cedel, they are under no obligation to perform or to
continue to perform such procedures, and such procedures may be discontinued at
any time. Neither Amethyst nor the Trustee will have any responsibility for the
performance by DTC, Euroclear and Cedel or their respective Direct and Indirect
Participants of their respective obligations under the rules and procedures
governing any of their operations.
The information in this section concerning DTC, Euroclear and Cedel and
their book-entry systems has been obtained from sources Amethyst believes to be
reliable, but Amethyst takes no responsibility for the accuracy thereof.
TRANSFERS OF INTERESTS IN GLOBAL NOTES FOR CERTIFICATED NOTES
An entire Global Note may be exchanged for definitive notes in registered
certificated form without interest coupons ("Certificated Notes") if:
(1) DTC notifies Amethyst that it is unwilling or unable to continue as
depositary for the Global Notes and Amethyst thereupon fails to
appoint a successor depositary within 90 days or has ceased to be a
clearing agency registered under the Exchange Act;
107
<PAGE>
(2) Amethyst, at its option, notifies the Trustee in writing that it
elects to cause the issuance of Certificated Notes; or
(3) there shall have occurred and be continuing a Default or an Event of
Default with respect to the notes.
In any such case, Amethyst will notify the Trustee in writing that, upon
surrender by the Direct and Indirect Participants of their interest in such
Global Note, Certificated Notes will be issued to each person that such Direct
and Indirect Participants and the DTC identify as being the beneficial owner of
the related notes.
Beneficial interests in Global Notes held by any Direct or Indirect
Participant may be exchanged for Certificated Notes upon request to DTC, by such
Direct Participant (for itself or on behalf of an Indirect Participant), to the
Trustee in accordance with customary DTC procedures. Certificated Notes
delivered in exchange for any beneficial interest in any Global Note will be
registered in the names, and issued in any approved denominations, requested by
DTC on behalf of such Direct and Indirect Participate (in accordance with DTC's
customary procedures).
Neither Amethyst nor the Trustee will be liable for any delay by the
holder of the notes or the DTC in identifying the beneficial owner of notes, and
Amethyst and the Trustee may conclusively rely on, and will be protected in
relying on, instructions from the holder of the Global Note or DTC for all
purposes.
SAME DAY SETTLEMENT AND PAYMENT
The indenture will require that payments in respect of the notes
represented by the Global Notes (including principal, premium, if any, and
interest) be made by wire transfer of immediately available same day funds to
the accounts specified by the holder of interests in such Global Note. With
respect to Certificated Notes, Amethyst will make all payments of principal,
premium, if any, interest, and Additional Amounts, by wire transfer of
immediately available same day funds to the accounts specified by the holders
thereof or, if no such account is specified, by mailing a check to each such
holder's registered address. Amethyst expects that secondary trading in the
Certificated Notes will also be settled in immediately available funds.
CERTIFICATED NOTES
The notes represented by the Global Notes are exchangeable for
Certificated Notes in definitive form of like tenor as such notes in
denominations of $1,000 and integral multiples thereof if:
(1) the Depositary notifies Amethyst that it is unwilling or unable to
continue as Depositary for the Global Notes or if at any time the
Depositary ceases to be a clearing agency registered under the
Exchange Act, and Amethyst fails to appoint a successor Depository
within 90 days of such notice;
(2) Amethyst in its discretion at any time determines not to have all the
notes represented by the Global Notes; or
(3) an Event of Default entitling the holders of the notes to accelerate
the maturity thereof has occurred and is continuing.
Any Global Note that is exchangeable pursuant to the preceding sentence is
exchangeable for Certificated Notes issuable in authorized denominations and
registered in such names as the Depositary shall direct. Subject to the
foregoing, a Global Note is not exchangeable for Certificated Notes, except for
a Global Note of the same aggregate denomination to be registered in the name of
the Depositary or its nominee. Upon the transfer of a note in definitive form,
such note will, unless the Global Note has previously been exchanged for notes
in definitive form, be exchanged for an interest in the Global Note representing
the principal amount of notes being transferred.
SAME-DAY PAYMENT
The indenture requires that payments in respect of notes (including
principal, premium, if any, interest, and Additional Amounts, if any) be made by
wire transfer of immediately available funds to the accounts specified by the
holders thereof or, if no such account is specified, by mailing a check to each
such holder's registered address.
108
<PAGE>
TAX CONSIDERATIONS
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
Baker Botts L.L.P. is our special U.S. tax counsel. The following
discussion is Baker Botts L.L.P.'s opinion concerning all material U.S. federal
income tax consequences of the exchange of old notes for new notes pursuant to
the exchange offer. This discussion is based upon the provisions of the Internal
Revenue Code of 1986, as amended, Treasury Regulations promulgated under the
Code and judicial and administrative interpretations thereof, all as in effect
and available as of the date of this prospectus and all of which are subject to
change, possibly retroactively, or different interpretation. The opinion of
Baker Botts L.L.P. is not binding on the Internal Revenue Service. We cannot
assure you that the Internal Revenue Service will not challenge one or more of
the tax consequences described in this prospectus. We have not obtained, nor do
we intend to obtain, a ruling from the Internal Revenue Service with respect to
the U.S. federal income tax consequences of the exchange offer. This discussion
does not purport to address all aspects of U.S. federal income taxation that may
be relevant to particular holders in light of their specific circumstances or to
holders subject to special treatment under the Code. This discussion does not
address the effect of any applicable U.S. federal estate and gift tax laws or
state, local or foreign tax laws. INVESTORS ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM OF THE EXCHANGE
OFFER UNDER U.S. FEDERAL AND APPLICABLE STATE, LOCAL AND OTHER TAX LAWS.
The exchange of old notes for new notes pursuant to the exchange offer
will not be a taxable event for U.S. federal income tax purposes. A holder will
not recognize gain or loss upon the receipt of new notes in the exchange offer,
and a holder who is otherwise subject to U.S. federal income tax will be subject
to such tax on the same amount and in the same manner and at the same times as
such holder would have been under the old notes. A cash-basis exchanging holder
will not recognize in income any accrued and unpaid interest on the old notes by
reason of the exchange. The basis and holding period of a new note will be the
same as the basis and holding period of the corresponding old note.
YOU SHOULD CONSULT WITH YOUR OWN TAX ADVISOR CONCERNING THE U.S. FEDERAL
INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER WITH RESPECT TO YOUR PARTICULAR
SITUATION, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL AND FOREIGN
INCOME AND OTHER TAX LAWS.
MATERIAL BRITISH VIRGIN ISLANDS TAX CONSIDERATIONS
Dancia Penn & Co is our special British Virgin Islands tax counsel. The
following discussion is Dancia Penn & Co's opinion concerning all material
British Virgin Islands tax consequences of the exchange of old notes for new
notes pursuant to the exchange offer. This discussion is based upon the tax laws
of the British Virgin Islands and interpretations of such tax laws by the
relevant tax authorities that are in effect as of the date of this prospectus
and is subject to any changes therein that may occur after such date. HOLDERS OF
OLD NOTES ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE
BRITISH VIRGIN ISLANDS TAX CONSEQUENCES OF THE OWNERSHIP AND DISPOSITION OF
THOSE NOTES THAT ARE APPLICABLE IN THEIR PARTICULAR TAX SITUATIONS, INCLUDING
THE EFFECTS OF POSSIBLE FUTURE CHANGES IN THE APPLICABLE TAX LAWS.
The mere exchange of old notes for new notes in the exchange offer will
not be a taxable event for British Virgin Islands income tax purposes. A holder
will not recognize gain or loss upon the receipt of new notes in the exchange
offer. A holder who is subject to British Virgin Islands income tax will be
subject to such tax on the same amount, in the same manner and at the same times
as such holder would have been under the old notes.
109
<PAGE>
PLAN OF DISTRIBUTION
Based on interpretations by the staff of the SEC in no action letters
issued to third parties, we believe that you may transfer new notes issued under
the exchange offer in exchange for the old notes if you both
o acquire the new notes in the ordinary course of your business
o are not engaged in, and do not intend to engage in, and have no
arrangement or understanding with any person to participate in, a
distribution of new notes
Broker-dealers receiving new notes in the exchange offer will be subject to a
prospectus delivery requirement with respect to resales of the new notes. The
letter of transmittal states that by acknowledging and delivering a prospectus,
a broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker dealer in connection
with resales of new notes received in exchange for old notes where the old notes
were acquired by the broker-dealer as a result of market-making activities or
other trading activities.
We believe that you may not transfer new notes issued under the exchange
offer in exchange for the old notes if you are either
o our "affiliate" within the meaning of Rule 405 under the Securities Act
o a broker-dealer that acquired old notes directly from us
o a broker-dealer that acquired old notes as a result of market-making or
other trading activities without compliance with the registration and
prospectus delivery provisions of the Securities Act
To date, the staff of the SEC has taken the position that participating
broker-dealers may fulfill their prospectus delivery requirements with respect
to transactions involving an exchange of securities such as this exchange offer,
other than a resale of an unsold allotment from the original sale of the old
notes, with the prospectus contained in the exchange offer registration
statement. Broker-dealers who acquired the old notes from us may not rely on SEC
staff interpretations. They must comply with the registration and prospectus
delivery requirements of the Securities Act, including being named as selling
noteholders, in order to resell the old notes or the new notes. In the
registration rights agreement, we have agreed to permit participating
broker-dealers' use of this prospectus in connection with the resale of new
notes. We have agreed that, for a period up to 180 days after the expiration of
the exchange offer, we will make this prospectus, and any amendment or
supplement to this prospectus, available to any broker-dealer that requests
these documents in the letter of transmittal. In addition, until , 2000,
all dealers effecting transactions in the new notes may be required to deliver a
prospectus.
If you wish to exchange your old notes for new notes in the exchange
offer, you will be required to make representations to us as described in "The
Exchange Offer--Purpose of the Exchange Offer" and "The Exchange
Offer--Procedures for Tendering--Your Representations to Us" of this prospectus
and in the letter of transmittal. In addition, if you are a broker-dealer who
receives new notes for your own account in exchange for old notes that were
acquired by you as a result of market-making activities or other trading
activities, you will be required to acknowledge that you will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale by you of new notes.
We will not receive any proceeds from any sale of new notes by
broker-dealers. Broker-dealers who receive new notes for their own account in
the exchange offer may sell them from time to time in one or more transactions
either
o in the over-the-counter market
o in negotiated transactions
o through the writing of options on the new notes or a combination of
methods of resale
o at market prices prevailing at the time of resale
o at prices related to prevailing market prices or negotiated prices
Any resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any broker-dealer or the purchasers of any new notes. Any broker-dealer
that resells new notes it received for its own account in the exchange offer and
any broker or dealer that participates in a distribution of new notes may be
deemed to be an "underwriter" within the meaning of the Securities Act. Any
profit on any resale of new notes and any commissions or concessions received by
any persons may be deemed to be underwriting compensation under the Securities
Act. The letter of transmittal states that, by acknowledging that it will
deliver and by delivering a prospectus, a broker-dealer will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.
110
<PAGE>
We have agreed to pay all expenses incidental to the exchange offer other
than commissions and concessions of any brokers or dealers. As provided in the
registration rights agreement, we will indemnify holders of the old notes,
including any broker-dealers, against any and all losses:
o caused by any untrue statement or alleged untrue statement of material
fact contained in any registration statement or prospectus provided by
us to any holder of old notes or any prospective purchaser of new
notes, or
o caused by any omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading
including without limitation, legal fees or expenses incurred in connection with
investigating or defending any matter that could give rise to such losses.
However, we have no obligation to indemnify holders of old notes for losses
caused by an untrue statement or an omission or alleged untrue statement or
omission that is based upon information relating to any of the holders of old
notes furnished in writing to us by such holders.
LEGAL MATTERS
Baker Botts L.L.P., Houston, Texas, our special U.S. counsel and counsel
for Pride International, Inc., has issued an opinion about the legality of the
new notes and the Pride guarantee.
EXPERTS
Our financial statements as of December 31, 1999 and December 31, 1998 and
for the period from inception (March 27, 1998) to December 31, 1999, for the
year ended December 31, 1999 and for the period from inception (March 27, 1998)
to December 31, 1998 included in this prospectus have been so included in
reliance on the report (which contains an explanatory paragraph relating to our
ability to continue as a going concern as described in Notes 1, 4 and 9 to the
financial statements) of PricewaterhouseCoopers N.V., independent accountants,
given on the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
Neither we nor our subsidiaries are required to file reports with the SEC
under the Securities Exchange Act of 1934. In connection with the effectiveness
of the registration statement in which this prospectus is included, we will
become subject to the reporting requirements of the Securities Exchange Act of
1934 that apply to foreign private issuers. We will file reports, including
annual reports on Form 20-F, and other information with the SEC. Those reports
and other information may be obtained, upon written request, from Wilmington
Trust Company, as the note trustee. You can read and copy any materials we file
with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You can also obtain copies of filed documents, at
prescribed rates, by mail by writing the SEC Public Reference Section in
Washington D.C. at the address listed above or by calling the SEC at
1-800-SEC-0330 or electronically through the SEC's Web Site at
http://www.sec.gov.
111
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C>
Report of Independent Accountants ........................................................................................ F-2
Consolidated Balance Sheet as of December 31, 1999 and December 31, 1998 ................................................. F-3
Consolidated Statement of Income for the period from inception (March 27, 1998) to December 31, 1999, for the year
ended December 31, 1999 and for the period from inception (March 27, 1998) to December 31, 1998 ....................... F-4
Consolidated Statement of Shareholders' Equity for the period from inception (March 27, 1998) to December 31, 1999, for
the year ended December 31, 1999 and for the period from inception (March 27, 1998) to December 31, 1998 .............. F-5
Consolidated Statement of Cash Flows for the period from inception (March 27, 1998) to December 31, 1999, for the year
ended December 31, 1999 and for the period from inception (March 27, 1998) to December 31, 1998 ....................... F-6
Notes to Consolidated Financial Statements ............................................................................... F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Directors of Amethyst Financial Company Ltd.:
In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of income, shareholders' equity and cash flows
present fairly, in all material respects, the consolidated financial position of
Amethyst Financial Company Ltd. as of December 31, 1999 and December 31, 1998
and the consolidated results of its operations and cash flows for the period
from inception (March 27, 1998) to December 31, 1999, for the year ended
December 31, 1999 and for the period from inception (March 27, 1998) to December
31, 1998 in conformity with accounting principles generally accepted in the
United States of America. These financial statements are the responsibility of
the Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted in
the United States of America which require that we plan and perform the audits
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion expressed above.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company is currently constructing four offshore
drilling rigs pursuant to contracts with Petrobras. As discussed in Note 4 to
the financial statements, Petrobras has threatened to cancel the Charters for
the rigs should delay in delivery exceed 180 days. As discussed in Note 9 to the
financial statements, construction has been suspended on two of the rigs as a
result of disputes between the Company and the shipyard. If Petrobras cancels
the Charters, or the construction of the rigs is not completed, the Company
would be in default with the provisions of its credit facilities. The Company's
ability to realize the carrying value of its assets would then be dependent on
its ability to successfully complete construction of the offshore drilling rigs
and obtain contracts that provide cash flows sufficient to meet its obligations
as they become due. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans in regard to these
matters are described in Notes 1 and 4 to the financial statements. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
PricewaterhouseCoopers N.V.
Rotterdam, The Netherlands
March 16, 2000
F-2
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1999 1998
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents ............................................. $ 15,604 $ 18,172
Prepaid expenses ...................................................... 5,429 10,200
-------- --------
Total current assets ............................................ 21,033 28,372
RELATED PARTY RECEIVABLE .................................................... 13,945 16,157
CONSTRUCTION IN PROGRESS .................................................... 456,270 220,666
DEFERRED COSTS .............................................................. 49,005 77,885
-------- --------
Total Assets ................................................ $540,253 $343,080
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable ...................................................... $ 456 $ 5,737
Related party payable ................................................. 456 -
Accrued liabilities ................................................... 3,804 3,661
Accrued contract penalties ............................................ 611 -
-------- --------
Total current liabilities ....................................... 5,327 9,398
RELATED PARTY ADVANCES ...................................................... 29,633 133,901
LONG-TERM DEBT .............................................................. 310,075 94,738
SHORT-TERM OBLIGATIONS EXPECTED TO BE
REFINANCED ................................................................ 40,335 27,099
ACCRUED CONTRACT PENALTIES .................................................. 48,394 77,885
-------- --------
Total liabilities ............................................... 433,764 343,021
-------- --------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock, $1.00 par value; 15,000 shares authorized;
10,500 and 1,000 shares issued and outstanding, respectively ........ 11 1
Additional paid-in capital ............................................ 104,989 -
Surplus accumulated in the development stage .......................... 1,489 58
-------- --------
Total shareholders' equity ...................................... 106,489 59
-------- --------
Total Liabilities and Shareholders' Equity ................... $540,253 $343,080
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-3
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
INCEPTION YEAR INCEPTION
(MARCH 27, 1998) ENDED (MARCH 27, 1998)
TO DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1999 1999 1998
------------------ -------------- ----------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Interest income ........................ $ 1,569 $ 1,402 $ 167
Other income (expense) ................. (80) 29 (109)
------- ------- -------
Total income and expenses ........ 1,489 1,431 58
------- ------- -------
NET INCOME ................................... $ 1,489 $ 1,431 $ 58
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-4
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
SURPLUS
ADDITIONAL ACCUMULATED IN TOTAL
PAID-IN THE DEVELOPMENT SHAREHOLDERS'
SHARES CAPITAL STAGE EQUITY
----------------------- ------------ ---------------- -------------
NUMBER PAR VALUE
<S> <C> <C> <C>
Inception (March 27, 1998) to December 31, 1998:
Issuance of common stock at
inception ($1.00 per share) .......................... 1,000 $ 1 $ 1
Net income ............................................. - - $ 58 58
-------- -------- -------- -------- --------
BALANCE AS OF DECEMBER 31, 1998 ........................ 1,000 1 58 59
Twelve Months Ended December 31, 1999:
Conversion of related party
advances to capital ($11,212 per share) .......... 8,250 9 $ 92,490 - 92,499
Issuance of common stock ($10,000 per share) ........ 1,250 1 12,499 - 12,500
Net income ............................................. - - - 1,431 1,431
-------- -------- -------- -------- --------
BALANCE AS OF DECEMBER 31, 1999 ........................ 10,500 $ 11 $104,989 $ 1,489 $106,489
======== ======== ======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-5
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
INCEPTION YEAR INCEPTION
(MARCH 27, 1998) ENDED (MARCH 27, 1998)
TO DECEMBER DECEMBER 31, TO DECEMBER
31, 1999 1999 31, 1998
----------------- -------------- -----------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income ..................................... $ 1,489 $ 1,431 $ 58
--------- --------- ---------
Net cash provided by operating activities ...... 1,489 1,431 58
--------- --------- ---------
INVESTING ACTIVITIES
Capital expenditures for construction in
Progess ...................................... (430,593) (220,067) (210,526)
--------- --------- ---------
Net cash used in investing activities .......... (430,593) (220,067) (210,526)
--------- --------- ---------
FINANCING ACTIVITIES
Proceeds from long-term borrowings ............. 310,075 215,337 94,738
Issuance of common stock ....................... 12,501 12,500 1
Related party advances ......................... 122,132 (11,769) 133,901
--------- --------- ---------
Net cash provided by financing activities ...... 444,708 216,068 228,640
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS ............................... 15,604 (2,568) 18,172
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD ................................ - 18,604 -
--------- --------- ---------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD ..................................... $ 15,604 $ 15,604 $ 18,172
========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-6
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION
Amethyst Financial Company Ltd. ("AFCL" and together with its wholly owned
subsidiaries for purposes of these financial statements only, the "Company") was
incorporated in the British Virgin Islands on March 27, 1998 to construct, own
and operate offshore drilling rigs which, upon their completion, will be
contracted to Petroleo Brasileiro S.A. ("Petrobras"), a Brazilian oil and gas
company, pursuant to chartering agreements (the "Charters").
In December 1998, ownership of the six subsidiary companies (Petrodrill Two
through Seven) was acquired from an affiliated common-controlled company,
Petrodrill Offshore Inc. ("POINC"), at historical cost. The Charters between the
subsidiary companies and Petrobras set out the terms for the renting and
operating of the drilling rigs.
In May 1999, two of the subsidiaries (Petrodrill Two and Three) were transferred
to another affiliate company (see Note 3).
As of December 31, 1999, AFCL is owned 61.7% by affiliates of Maritima Petroleo
e Engenharia Ltda. ("Maritima"), 26.4% by a wholly-owned subsidiary of Pride
International, Inc. ("Pride"), and 11.9% by affiliates of First Reserve
Corporation ("First Reserve") (such owners of AFCL collectively, the
"Shareholders"). Maritima and Pride, either directly or through affiliates or
subsidiaries, have primary contractual responsibility for the operations of the
Company. During 1999, there were changes in the relative percentages of
ownership interests due to capital contributions and share purchases by First
Reserve (see Note 7).
The Company has operated as a development-stage company since its inception,
devoting substantially all of its efforts to designing, engineering and
contracting with shipyards and vendors for the offshore drilling rigs and in
raising financing. In order to exit the development stage, begin operations and
begin to realize the carrying value of its rigs under construction and deferred
costs, the Company must complete construction of its drilling rigs in a timely
manner, including procuring owner-furnished equipment and equipping the rigs in
a manner acceptable to Petrobras, mobilize the rigs to Brazilian waters and
successfully begin drilling operations. The Company does not expect to commence
commercial operations until the fourth quarter of 2000. Accordingly, it does not
expect to generate revenues until 2000, after the first two of its rigs have
been completed and are delivered to Petrobras.
The Company believes its current sources of funds will be sufficient to fund the
remaining development, construction, equipment, mobilization and financing costs
of our rigs and any working capital needs during the construction, mobilization
and start-up periods based on the following assumptions: 1) no shipyard delays
will occur that will delay or prevent delivery of the AMETHYST 6 and AMETHYST 7;
2) any increased costs that may result from the current status of the AMETHYST 4
and AMETHYST 5 will be funded through increases of the Company's existing credit
facilities; 3) the Company's lenders will continue to fund the construction of
the rigs despite Petrobras' threatened cancellation of the related charters and
the suspension of construction of the AMETHYST 4 and AMETHYST 5 by the shipyard;
and 4) any penalties which may be imposed by Petrobras under the charters for
late delivery of the rigs will not be imposed at the time of delivery of the
rigs.
2. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of AFCL and its
wholly owned subsidiaries and have been prepared in conformity with accounting
principles generally accepted in the United States of America using the U.S.
dollar as the reporting currency. All material intercompany balances and
transactions have been eliminated.
DEVELOPMENT-STAGE COMPANY
The Company is a development-stage company as defined in Statement of Financial
Accounting Standards No. 7, "Accounting and Reporting by Development Stage
Enterprises," and will continue to be so until it commences commercial
operations of the offshore drilling rigs, which is currently anticipated to
commence in the third quarter of 2000. Future operating results will be subject
to significant business, economic, regulatory, technical and competitive
uncertainties and contingencies. The construction of the offshore drilling rigs
is a complex undertaking and there can be no assurance that cost overruns or a
further delay in delivery of the rigs will not occur. Depending on their extent
and timing, these factors, individually or in the aggregate, could have an
adverse effect on the Company.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid financial instruments purchased with an
original maturity of three months or less to be cash equivalents.
PREPAID EXPENSES
Prepaid expenses consist of advances to vendors for future owner-furnished
equipment for which there are terms of repayment to the extent that such amounts
are not expended.
CONSTRUCTION IN PROGRESS
Construction in progress represents all costs incurred for the construction of
the dynamically positioned, self-propelled, fourth-generation semi-submersible
drilling rigs.
F-7
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
IMPAIRMENT of LONG-LIVED ASSETS
The Company assesses the impairment of long-lived assets in accordance with SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of". SFAS No. 121 prescribes that an impairment loss is
recognized in the event facts and circumstances indicate that the carrying
amount of an asset may not be recoverable. Management reviews long-lived assets
for impairment whenever events or changes in circumstances indicate the assets
may be impaired.
DEFERRED COSTS AND ACCRUED CONTRACT PENALTIES
Contract penalties represent amounts contractually required to be paid to
Petrobras and will be amortized on a straight-line basis over the term of the
applicable Charters.
SHORT-TERM OBLIGATIONS EXPECTED TO BE REFINANCED
The Company classifies certain outstanding current liabilities, which will be
refinanced through the Company's long-term debt facilities, as long-term
liabilities.
CAPITALIZED INTEREST
Interest costs related to debt incurred during the construction projects are
capitalized. Total interest costs capitalized amounted to $20.2 million at
December 31, 1999 and $0.2 million at December 31, 1998.
INCOME TAXES
The Company is not subject to income tax in the British Virgin Islands.
Accordingly, no income taxes are included in the consolidated statement of
income for the reported periods.
Under current Brazilian law, payments made to the Company after delivery of the
rigs will be subject to Brazilian withholding tax. Such withholding tax, as
provided in the Charters, will be covered by Petrobras, resulting in an
effective tax rate to the Company of 0%.
REPORTING CURRENCY
The functional currency of the Company is the U.S. dollar as the majority of its
transactions are denominated in U.S. dollars. When there are transactions in
foreign currencies, exchange gains and losses resulting from foreign currency
transactions are recognized in earnings.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities, if any, at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. While it is believed that such estimates are reasonable,
actual results could differ from these estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash and cash equivalents, trade receivables and payables
approximates fair values because of the short maturity of those instruments. The
carrying value of the Company's long-term debt is considered to approximate the
fair value of those instruments based on the borrowing rates currently available
to the Company for loans with similar terms and maturities.
COMPREHENSIVE INCOME
The Company has adopted Statement of Financial Accounting Standard No. 130,
"Reporting Comprehensive Income", which establishes standards for reporting and
display of comprehensive income and its components in a full set of financial
statements. Comprehensive income includes all changes in a company's equity,
except those resulting from investments by and distributions to owners. There
was no difference between comprehensive income and net income for the reported
periods.
F-8
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities," which
requires that companies recognize all derivatives as either assets or
liabilities in the balance sheet and measure those instruments at fair value.
The FASB has subsequently issued SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities--Deferral of the Effective Date of FASB
Statement No. 133," that defers the requirements of SFAS No. 133 to fiscal years
beginning after June 15, 2000. The Company did not hold any derivative or
hedging instruments during the reported periods. The adoption of SFAS No. 133 is
not expected to have a material effect on the Company's consolidated balance
sheet or statement of income.
RECLASSIFICATIONS
Certain amounts in the 1998 consolidated financial statements have been
reclassified to conform to current year presentation.
3. TRANSFER OF OWNERSHIP
Construction in progress as of December 31, 1998 included $18.7 million of costs
relating to the construction of the AMETHYST 2 and 3, the charters for which
were subsequently canceled by Petrobras. In May 1999, AFCL and its shareholders
transferred the ownership of the two wholly owned subsidiaries to a related
party which is not part of the Company. In connection with the transfer and
cancellation of the related charters, the Company transferred $36.6 million of
deferred costs and accrued contract penalties relating to the AMETHYST 2 and 3.
Noncash capital additions for the period from inception (March 27, 1998) to
December 31, 1999 amounted to $25.7 million consisting of capitalized interest,
accrued milestone bonuses and other expenses.
4. ACCRUED CONTRACT PENALTIES
The Charters have initial terms ranging from six to eight years from the date
the drilling rigs are accepted by Petrobras. The Charters are renewable
thereafter by agreement of both the Company and Petrobras. The Charters provide
for payment of daily operating or non-operating rates based on the terms. The
Charters also provide for penalties in the event of late delivery of the
drilling rigs to the operator and include cancellation and termination clauses.
The Charters specify delivery dates in June and July 1999 for the AMETHYST 4 and
AMETHYST 5 and December 1999 for the AMETHYST 6 and AMETHYST 7. The Company was
unable to meet those delivery dates. As a result of these delays, Petrobras, in
accordance with the Charters, is permitted to impose penalties of up to 30% of
the drilling rigs' operating rates (and, in addition, up to 30% of the
mobilization fee in the case of the AMETHYST 5), not to exceed 10% of the value
of the related Petrobras contract. After delivery of the rigs to Petrobras, and
if these penalties are imposed by Petrobras, they will be amortized on a
straight-line basis over the terms of the applicable Charters.
Subsequent to the year-end, there was a suspension of the construction of the
AMETHYST 4 and 5, and it can be expected that there will be further delays to
the deliveries of these rigs. If completed, each of the AMETHYST 4 and 5 will be
delivered to Petrobras no earlier than approximately 540 days beyond the dates
of delivery under their respective Charters. Based on a minimum late delivery of
540 days, penalties of $16.2 million and $15.6 million have been accrued for the
AMETHYST 4 and 5, respectively. If paid equally over the initial term of the
Charters, these penalties would aggregate approximately $4.7 million in each
year from 2001 to 2005, $4.5 million in 2006 and $1.9 million in each of 2007
and 2008. Given the status of the AMETHYST 4 and 5, it is likely that further
delays and related penalties beyond 540 days will occur. For each day of delay
beyond 540 days, a further penalty of $36,389 for the AMETHYST 4 and $30,828 for
the AMETHYST 5 would be payable. This maximum penalty amount, $26.6 million for
AMETHYST 4 and $30.0 million for AMETHYST 5, would be reached after delays of
820 days and 1,000 days, respectively. Maritima and Pride have each severally
guaranteed payment of up to $20.5 million (or a total of $41 million between
them) for late arrival penalties to Petrobras under the charters.
Based on the delivery dates specified in their construction contracts and the
current allowance for mobilization, the AMETHYST 6 and 7 will be delivered to
Petrobras approximately 293 and 263 days, respectively, beyond the delivery
dates specified under their respective Charters. On this basis, penalties of
$8.9 million and $8.3 million have been accrued for the AMETHYST 6 and 7,
respectively. If paid equally over the initial term of the Charters, the
penalties would aggregate approximately $0.6 million in 2000, $2.5 million in
each year from 2001 to 2006 and $1.9 million in 2007.
The Company expects to pay any penalties imposed by Petrobras over the life of
the Charters, but the timing of payment could be accelerated. There is no
assurance that further delays and related penalties will not occur.
While each Charter states that it may be canceled by Petrobras if the chartered
rig is not delivered within 180 days after the delivery date specified,
Petrobras provided a letter in May 1998 waiving its right to cancel the Charters
and related service rendering contracts unless delay in delivery exceeds 540
days and, even then, only if best endeavors to make delivery are not being
F-9
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
made. In October 1999, however, Petrobras sent a letter stating that it intends
to cancel the Charters and service rendering contracts for the rigs when delay
in delivery exceeds 180 days in accordance with its right originally specified
in the charters and reserving its right to seek compensation for damages. That
180-day period expired in December 1999 in the case of the AMETHYST 4 and
January 2000 in the case of the AMETHYST 5. Pending proceedings to determine the
enforceability of the extension granted by Petrobras in its May 1998 letter, the
Company has obtained a preliminary injunction in the Brazilian courts against
Petrobras' cancellation of its Charters.
Given the current status of the AMETHYST 4 and AMETHYST 5 at TDI-Halter, there
is substantial uncertainty as to whether the AMETHYST 4 and AMETHYST 5 will be
completed. Even if they are completed, the Company cannot deliver the AMETHYST 4
and AMETHYST 5 to Petrobras within the 540-day period permitted under the May
1998 Petrobras letter. The Company currently expects the AMETHYST 6 and AMETHYST
7 to be delivered to Petrobras in September and October 2000. These delivery
dates are more than 180 days but less than 540 days after the delivery dates
specified for those rigs in the Petrobras Charters. If the Company is
unsuccessful in its litigation with Petrobras in the Brazilian courts, Petrobras
could cancel each of its Charters upon the lapse of 180 days of delay in
delivery. Even if the 540-day extension granted by Petrobras in its May 1998
letter is determined to be enforceable, however, the Charters for the AMETHYST 4
and AMETHYST 5 could become subject to cancellation at the end of the 540-day
period. In any case, specific performance of Petrobras' obligations under any of
the Charters may, as a practical matter, not be an available remedy, so the
Company's rights against Petrobras could be limited to a lawsuit for damages.
The result of any such lawsuit is uncertain, the amount of damages may be
limited and any recovery may be subject to extensive delays.
Based on Petrobras' October 1999 letter, the lenders under the credit facilities
providing substantially all of the financing for the rigs may, at their
discretion, cease funding construction, in which event the Company would not be
able to complete construction of the rigs unless it obtains new funding from
other sources or an agreement of the credit facility lenders to resume funding
on terms acceptable to them. Since being informed of Petrobras' October 1999
letter, these lenders have continued to fund the construction of the rigs.
Neither the Company's lenders' decision to cease funding construction of the
rigs nor Petrobras' cancellation of its Charters, however, will relieve the
Company of its obligations to the shipyards constructing the rigs, the
owner-furnished equipment suppliers for the rigs or the Company's other
subcontractors. In order to continue as a going concern, the Company must
complete construction of the rigs on a timely basis with available capital and
either Petrobras must honor its present Charters or the Company must obtain
similar contracts for its rigs and remain in compliance with its debt
agreements. The financial statements do not contain any adjustments to the
carrying amounts of assets or the recorded amounts of liabilities as a result of
these uncertainties.
The Company currently is engaged in discussions with Petrobras to resolve the
matters relating to the threatened cancellation of its Charters. Based on its
announced deepwater drilling program and the performance characteristics of the
Amethyst design, the Company believes Petrobras has significant needs for all of
its rigs. While the Company is optimistic that Petrobras will employ all of its
rigs upon their completion, no assurance can be given that any of its rigs will
be chartered to Petrobras or to any other customer on terms that are acceptable
to the Company or to its lenders.
5. SHORT-TERM OBLIGATIONS EXPECTED TO BE REFINANCED
Short-term obligations expected to be refinanced as of December 31, 1999 and
December 31, 1998 consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1999 1998
-------------- -------------
<S> <C> <C>
Accounts payables ................................ $15,739 $26,834
Accrued interest ................................. 2,422 265
Accrued milestone bonuses ........................ 17,911 --
Other accrued expenses ........................... 4,263 --
------- -------
Total short-term obligations expected
to be refinanced ........................ $40,335 $27,099
======= =======
</TABLE>
F-10
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
6. LONG-TERM DEBT
On December 16, 1998, the Company completed two financing packages with
Mitsubishi Corporation, which provide financing in an aggregate amount of up to
$340.0 million for the construction of the drilling rigs AMETHYST 6 and 7. The
facilities allow the Company to draw down the required funds over the period of
the rigs' construction when the specified goals set out in the contract have
been reached. After delivery of the rigs, the loans will be paid in eighty-four
equal monthly installments totaling 85% of the outstanding loans. The payments
begin on the 5th day of the second month after the Charters with Petrobras
commence. A final balloon payment of 15% is payable with the 84th installment.
The AMETHYST 6 and 7 financing agreements include a stipulation that the Company
refinance the initial $100.0 million tranche by October 29, 1999 from another
source. On November 1, 1999, AFCL purchased the initial $100.0 million tranche
from Mitsubishi in satisfaction of this stipulation using net proceeds of $50.9
million from a private placement of notes and $49.1 million of cash.
The AMETHYST 6 and 7 credit facilities provide for interest, calculated at 12.5%
on a 360-day basis during the construction period. After delivery of the rigs,
interest is at 11%. Interest is payable monthly with the loan payments. The
facilities contain various debt covenants customary for such financings,
including limitations on the scope of the businesses of AFCL's subsidiaries that
will own the AMETHYST 6 and 7.
On April 9, 1999, the Company received two financing packages supported by
guarantees from the United States of America Maritime Administration or MARAD,
which provide financing for up to 87.5% of the actual costs, not to exceed an
aggregate amount of up to $299.8 million, for the construction of the drilling
rigs AMETHYST 4 and 5. The facilities allow the Company to draw down the
required funds over the period of the rigs' construction when the specified
goals set out in the contract have been reached.
On November 1, 1999, the Company issued senior secured notes of a principal
amount of $53.0 million, the net proceeds from which were used to fund partially
the purchase of $100.0 million of loans made under the AMETHYST 6 and 7 credit
facilities. The notes provide for interest at 11.75% payable semi annually on
June 30 and December 30. The notes mature on November 1, 2001.
The AMETHYST 6 and 7, AMETHYST 4 and 5 and note financings include security,
which provide the lenders, in certain cases, with an assignment over the rig
construction contracts, the Petrobras Charters, the insurance and a first
priority ship mortgage on the vessels.
The Company's long-term debt as of December 31, 1999 and December 31, 1998 is as
follows (in thousands):
DECEMBER 31, DECEMBER 31,
1999 1998
------------- -------------
Senior secured notes ................ $ 53,000
AMETHYST 6 and 7 financing .......... 133,433 $ 94,738
AMETHYST 4 and 5 financing .......... 123,642 -
-------- --------
Total long-term debt ..... $310,075 $ 94,738
======== ========
Remaining maturities of long-term debt as of December 31, 1999 are summarized as
follows (in thousands):
DECEMBER 31,
1999
-------------
2001................................................ $ 96,353
2002................................................ 46,699
2003................................................ 49,285
Thereafter.......................................... 117,738
---------
Total long-term debt..................... $ 310,075
=========
F-11
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
During 1999, and in accordance with the financing arrangements, the Company
converted $17.9 million of accrued interest to long-term debt.
As noted in Note 4, Petrobras has threatened to cancel the Charters, which if
followed through, would lead to an event of default under the Company's
financing arrangements.
7. SHAREHOLDERS' EQUITY
At inception, AFCL was owned 70% by affiliates of Maritima and 30% by an
indirect wholly owned subsidiary of Pride. Maritima and Pride, either directly
or through affiliates or subsidiaries, had primary contractual responsibility
for the operations of the Company.
In accordance with a shareholders' agreement, at inception the shareholders were
required to make initial equity contributions to the Company, in proportion to
their respective interests, of approximately 10% of the total construction
budget of the drilling rigs.
On September 14, 1999, the Company's existing shareholders entered into an
agreement with First Reserve Fund VII and First Reserve Fund VIII, whereby the
existing shareholders agreed to proportionally recapitalize the Company
(weighted average $10,000 per share) by converting $92.5 million of their
related party advances to the Company into additional equity consisting of 8,250
shares. On the same date, First Reserve Fund VII and First Reserve Fund VIII
agreed to pay $11.0 million for 1,100 shares ($10,000 per share) and $1.5
million for 150 shares ($10,000 per share), respectively. As a result of the
completion of the agreement, the Company's share capital increased to $105.0
million.
Based on the above transaction, the proportional ownership interest of the
shareholders changed to 61.7% - affiliates of Maritima, 26.4% - subsidiary of
Pride, and 11.9% - affiliates of First Reserve Corporation.
Pride has entered into a "Put and Exchange Agreement" with First Reserve, and
granted repurchase rights to Maritima, the consummation of which could result in
the original shareholders resuming their original percentage ownership
interests.
8. RELATED PARTIES
RECEIVABLES
As of December 31, 1999 and December 31, 1998, the Company has a receivable from
a related party, POINC, of $13.9 million and $16.3 million, respectively. The
shareholders of the Company have provided a letter that in the event that POINC
is unable to repay such amount, the shareholders would allow such amount to be
offset against amounts advanced by the related parties.
PAYABLES
Related party payables consist of monies due to an affiliate company, Petrodrill
Engineering N.V., which provides construction management services and is
reimbursed monthly.
ADVANCES
Related party advances are composed of advances received from the original
shareholders. In connection with the financing arrangements discussed in Note 6,
the advances have become subordinated to such financing arrangements.
CONTRACTS
In early 1998, POINC entered into contractual agreements with three shipyards
for the construction, sale and delivery of six drilling rigs for a total
estimated cost of approximately $489.0 million, payable in installments under
the terms set forth in the construction contracts. During August 1998,
construction contracts for two of the rigs were terminated as a result of the
yard and its parent company having filed for protection under bankruptcy laws
and being in breach of the contract. The operating companies associated with the
construction of these two rigs were transferred from AFCL to a related party
(see Note 3). The construction contracts for the four other rigs (the AMETHYST
4, 5, 6 and 7), for a total estimated cost of approximately $338 million, were
transferred by POINC to the Company under novation agreements during December
1998. It is estimated that the AMETHYST 6 and 7 will be delivered to the
F-12
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
Company in mid-2000 but, given the current status of the AMETHYST 4 and 5, there
is substantial uncertainty as to whether those rigs will be completed and, if
completed, as to when they will be completed. The construction contracts contain
penalties for late completion and delivery of the drilling rigs and, in certain
cases, incentives for early completion and delivery.
SALE OF EQUIPMENT
During the period, the Company sold certain owner-furnished equipment belonging
to AMETHYST 4 to an unrelated majority owned subsidiary of Pride in the amount
of $8.5 million. The Company has placed new orders with its vendors to replace
this equipment, which will not affect the delivery of the rig. Pride has agreed
to reimburse the Company for any increased costs it might incur.
MANAGEMENT AGREEMENT
In connection with the design, engineering, construction and management of the
drilling rigs, the subsidiaries have entered into various agreements for
services with related parties. Licensing of the Amethyst design and services
related to the design, engineering and construction of the drilling rigs are
provided under agreements with BiGem Holdings N.V. and Petrodrill Engineering
N.V., corporations incorporated in the Netherlands Antilles, owned 70% by
affiliates of Maritima and 30% by a wholly owned subsidiary of Pride. The
licensing agreement provides for a one-time licensing fee to BiGem Holdings of
approximately $1.6 million for each drilling rig. Engineering and construction
services provided under the construction management agreement are required to be
charged to the Company at actual cost incurred by Petrodrill Engineering N.V.
(which includes a management fee to a third party under a related subcontract
aggregating approximately $0.1 million per year).
Management services, including operation support and other technical services,
will be provided by Formaritima Ltd., a company incorporated in the British
Virgin Islands, owned equally by an affiliate of Maritima and by a wholly owned
subsidiary of Pride. In addition to reimbursements for actual costs incurred,
the operating management agreement and related subcontracts provide for daily
management fees (excluding management fees to be paid pursuant to the marine and
nautical agreements discussed in Note 9) aggregating approximately $5.5 million
per year, commencing upon the delivery of the drilling rigs to the Company by
the shipyards. If a rig is sold and the corresponding management agreement is
terminated, Formaritima will be entitled to a lump sum termination payment equal
to the net present value of its management fees ($1,250 per day) over the
remaining term of such rig's charter, calculated using a discount factor of 10%
per annum.
Unless otherwise provided by the terms of the agreements, the construction
management agreement remains in effect until the drilling rigs have been
delivered to the Company by the shipyards, and the operating management
agreements commence on delivery of the drilling rigs to the Company by the
shipyards and remain in effect through the terms of the applicable Charters. The
costs of certain of these services are being capitalized during the construction
period. As of December 31, 1999, rigs under construction include capitalized
cost of services from related parties as follows (in thousands):
Petrodrill Engineering N.V............................ $ 16,356
BiGem Holdings N.V.................................... 4,500
-------
$ 20,856
========
9. COMMITMENTS AND CONTINGENCIES
SUPPLIER COMMITMENTS
The Company has entered into purchase commitments and letters of intent with
various equipment vendors, to supply drilling equipment, for a total cost of
approximately $166.4 million.
MARINE AND NAUTICAL AGREEMENT
The Company (either directly or through Formaritima Ltd.) entered into
agreements with a third party to provide marine and nautical services to the
drilling rigs beginning upon delivery of the drilling rigs to the Company by the
shipyards and continuing through the terms of the Charters. Such agreements
provide for daily management fees aggregating approximately $1.8 million per
year. If a rig is sold and the corresponding marine and nautical services
agreement is terminated, the third party will be entitled to a lump sum
termination payment equal to the net present value of its management fees over
the remaining term of such rig's charter, calculated using a discount factor of
10% per annum.
F-13
<PAGE>
AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
LICENSING AGREEMENTS AND CONTINGENCY PAYMENT
The Company has entered into licensing agreements for the design of the drilling
rigs with BiGem Holdings N.V., which bought the design from De Hoop, a third
party Netherlands shipyard. BiGem Holdings N.V. is in dispute with De Hoop over
the contract deliverables and has withheld payments of $2.3 million and
furthermore does not intend to make further payments. This dispute is now in
arbitration and BiGem Holdings N.V. firmly believes that no further payments
will need to be made. In the event that BiGem Holdings N.V. cannot obtain relief
from its payment obligations, the Company may be required to pay the
obligations.
OTHER COMPENSATION
Affiliates of Maritima will be entitled to the fees and compensation from the
Company as follows. The Company will pay to an affiliate of Maritima a lump-sum
amount of $2.5 million (payable in three installments of $0.5 million, $1.0
million, $1.0 million for the AMETHYST 5, 6 and 7, respectively) within three
days of receipt of the corresponding mobilization payments under the relevant
Charter or, in the event of no mobilization fee, within 45 days of delivery to
and acceptance of the relevant drilling rigs, for services rendered in
connection with the development of conceptual and design engineering, shipyard
negotiations and technical negotiations with Petrobras. In addition, in
consideration of the assignment of the Charters to the Company, an affiliate of
Maritima will be paid the following fees: (a) $4,000 in the case of the AMETHYST
6 and 7 and (b) $2,000 in the case of the AMETHYST 4 and 5, for each day the
relevant drilling rig works under its Charter, plus (c) in the case of the
AMETHYST 4, 1% of the daily rate paid under its Charter and (d) in the case of
the AMETHYST 6 and 7, 2% of the daily rates under their Charters. In addition,
other affiliates of Maritima will receive agency fees of 3% and 2% of the full
operating rates under the Charters, respectively, payable monthly upon receipt
of payments from Petrobras, for their assistance to the Company in negotiating
the Charters and certain amendments thereto.
In the ordinary course of its business affairs and operations, the Company is
subject to possible loss contingencies arising from federal, state and local
environmental, health and safety laws and regulations and third party
litigation. There are no matters, which, in the opinion of management, will have
a material adverse effect on the financial position or results of operations of
the Company.
SUSPENSION OF CONSTRUCTION ON THE AMETHYST 4 AND AMETHYST 5
Based on their construction contract delivery dates and an allowance for
mobilization, the AMETHYST 4 and AMETHYST 5 were to have been delivered to
Petrobras in July and September 2000. In early January 2000, however, Friede
Goldman Halter, Inc., the parent of TDI-Halter, L.P., the shipyard building the
AMETHYST 4 and AMETHYST 5, notified the Company that construction of those rigs
was being suspended because of alleged delays in receiving detailed engineering
work and the Company's previous rejection of the shipyard's requests for
extensions of the construction contract delivery dates. Subsequently, TDI-Halter
asserted claims against the Company for an extension of the construction
contract delivery dates on grounds of permissible delay within the terms of the
construction contracts and damages of $68.5 million for alleged breach of those
contracts. The Company has denied TDI-Halter's claims and, as required by the
construction contracts, has initiated proceedings in the Commercial Court in
London seeking a determination of the merits of those claims. Together with the
United States Maritime Administration (MARAD), which has guaranteed repayment of
construction borrowings for the AMETHYST 4 and AMETHYST 5, the Company has
commenced negotiations with TDI-Halter and Friede Goldman Halter to determine
whether there is an acceptable basis for the resumption by TDI-Halter of the
construction of the rigs. The Company is also evaluating other options that
include rescinding the construction contracts for the AMETHYST 4 and AMETHYST 5
and exercising the remedies under those contracts or related performance bonds
and performance guarantees to recover its costs.
When TDI-Halter suspended construction of the AMETHYST 4 and AMETHYST 5, the
AMETHYST 4 was approximately 60% complete and the AMETHYST 5 was approximately
35% complete. Of the total construction contract price of $168.0 million for
both rigs (excluding the cost of owner furnished equipment), the Company has
paid approximately $105.0 million. Of the total $90.6 million budgeted for
owner-furnished equipment, the Company has paid approximately $53.2 million. In
the event the AMETHYST 4 and AMETHYST 5 are not completed, the Company will
continue to be liable for owner-furnished equipment in the amount of $24.9
million in addition to the $53.2 million the Company has already paid and would
have continued liability under the service agreements for construction
management of the rigs. To date, the Company has funded its expenditures on the
AMETHYST 4 and AMETHYST 5 (including financing costs) with approximately $133.7
million of MARAD-guaranteed borrowings and approximately $53.5 million of
related party advances and equity contributions from its owners. Based on the
developments with TDI-Halter, however, the lenders of the MARAD-guaranteed
borrowings could cease funding or accelerate the repayment of those borrowings.
If these lenders cease funding (which they have not yet indicated that they will
do), the Company would not be able to complete construction of the AMETHYST 4
and AMETHYST 5 unless it obtains new funding from other sources or an agreement
of those lenders to
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AMETHYST FINANCIAL COMPANY LTD.
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
resume funding on terms acceptable to them. The acceleration of the repayment of
the MARAD-guaranteed borrowings would constitute an event of default under
AFCL's senior notes.
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APPENDIX A
PRIDE INTERNATIONAL, INC.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus incorporates important business and financial information
about Pride International, Inc. that we have not included in or delivered with
this prospectus. This information is available without charge upon written or
oral request. You should make any request to Robert W. Randall, Vice President
and General Counsel, 5847 San Felipe, Suite 3300, Houston, Texas 77057,
telephone number (713) 789-1400. To ensure timely delivery, you should request
the information no later than , 2000.
Pride files annual, quarterly and special reports, proxy statements and
other information with the SEC. You can read and copy any materials Pride files
with the SEC at the SEC's Public Reference Room, 450 Fifth Street, N.W.,
Washington, D.C. 20549. You can obtain information about the operation of the
SEC's Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also
maintains a Web Site that contains information Pride files electronically with
the SEC. You can access the SEC's Web Site over the Internet at
HTTP://WWW.SEC.GOV. You can also obtain information about Pride at the offices
of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
We are "incorporating by reference" information Pride files with the SEC,
which means that we are disclosing important information to you by referring you
to those documents. The information we incorporate by reference is an important
part of this prospectus, and later information that Pride files with the SEC
automatically will update and supersede this information. We incorporate by
reference Pride's annual report on Form 10-K for the year ended December 31,
1998 and any future filings Pride makes with the SEC under Section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934 (file no. 1-13289) until the
offering made by this prospectus terminates.
You may request a copy of these filings (other than an exhibit to these
filings unless we have specifically incorporated that exhibit by reference into
this filing), at no cost, by writing or telephoning Pride at the following
address:
Pride International, Inc.
5847 San Felipe, Suite 3300
Houston, Texas 77057
Attn: Robert W. Randall
Vice President and General Counsel
Telephone (713) 789-1400
PricewaterhouseCoopers LLP has audited the consolidated financial
statements of Pride included in Pride's annual report on Form 10-K for the year
ended December 31, 1998, which we incorporate by reference in this prospectus.
We have incorporated by reference those financial statements in reliance upon
the opinion of PricewaterhouseCoopers LLP appearing in Pride's annual report,
which opinion was given upon the authority of that firm as experts in accounting
and auditing.
RISK FACTORS RELATED TO PRIDE
IN CONSIDERING THE CREDITWORTHINESS OF PRIDE'S SENIOR UNSECURED CORPORATE
GUARANTEE OF THE REPAYMENT OF $30.0 MILLION OF THE OLD NOTES AND NEW NOTES, YOU
SHOULD CAREFULLY CONSIDER THE RISK FACTORS DESCRIBED BELOW.
PRIDE'S $30.0 MILLION GUARANTEE OF OUR NOTES WILL BE EFFECTIVELY SUBORDINATED TO
ALL OF PRIDE'S EXISTING AND FUTURE SECURED DEBT AND ALL OF THE DEBT OF ITS
SUBSIDIARIES
Pride's $30.0 million guarantee of our notes will be effectively
subordinated in right of payment to all of its existing and future secured debt,
including debt Pride may incur under its revolving credit facilities. If Pride
is involved in any dissolution, liquidation or reorganization, its secured debt
holders would be paid before there are payments of any amounts due under Pride's
$30.0 million guarantee of our notes to the extent of the value of the assets
securing its debt. In that event, holders of our notes may not be able to
recover any amounts due under Pride's $30.0 million guarantee. As of December
31, 1999, Pride had approximately $444.5 million of secured debt and $55.3
million of borrowing availability under its revolving credit facilities.
In addition, Pride's $30.0 million guarantee of our notes is effectively
subordinated to all of the creditors, including trade creditors and tort
claimants, of its subsidiaries. Pride conducts substantially all of its
operations through both U.S. and foreign subsidiaries, and substantially all of
its assets consist of equity in such subsidiaries. Accordingly, Pride is and
will be dependent on its ability to obtain funds from its subsidiaries to
service its debt. Financing arrangements to which Pride's subsidiaries are
parties impose restrictions on Pride's ability to gain access to the cash flow
or assets of its subsidiaries. In addition, Pride's foreign
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subsidiaries may face governmentally imposed restrictions on their ability to
transfer funds to Pride. As of December 31, 1999, Pride's subsidiaries had
$540.4 million of debt and other liabilities outstanding to creditors other than
Pride.
PRIDE'S SIGNIFICANT DEBT LEVELS AND DEBT AGREEMENT RESTRICTIONS MAY LIMIT
PRIDE'S FLEXIBILITY IN OBTAINING ADDITIONAL FINANCING AND IN PURSUING OTHER
BUSINESS OPPORTUNITIES.
As of December 31, 1999, Pride had $1,210.3 million in long-term debt and
capital lease obligations, $547.5 million of which ranks equally with its $30.0
million guarantee of our notes and $446.4 million of which is secured or owed by
subsidiaries and therefore effectively senior to its $30.0 million guarantee of
our notes. Excluded from this amount are certain financial and other guarantees,
including the $30.0 million guarantee of our notes and other obligations
relating to Pride's equity interest in us. As of December 31, 1999, we and our
subsidiaries had $350.4 million of indebtedness, approximately $320.4 million of
which was nonrecourse to Pride and thus not reflected on Pride's balance sheet.
Our creditors, including you, will not have a right to recover against Pride for
any of the nonrecourse debt. You may enforce payment obligations against Pride
only to the extent of its $30.0 million guarantee of our notes. You should read
"Risk Factors--Except to the extent of Pride's limited guarantee, you will have
no right to recover against our affiliates for payments of principal or interest
on the old or new notes" beginning on page 15 of the prospectus for further
information.
The level of Pride's indebtedness will have several important effects on
future operations, including:
o a significant portion of Pride's cash flow from operations will be
dedicated to the payment of interest and principal on debt and will not
be available for other purposes
o covenants contained in some of Pride's existing debt arrangements
require Pride to meet certain financial tests, which may affect Pride's
flexibility in planning for, and reacting to, changes in its business
and may limit its ability to fund capital expenditures, dispose of
assets, withstand current or future economic or industry downturns and
compete with others in the industry for strategic opportunities
o Pride's ability to obtain additional financing for working capital,
capital expenditures, acquisitions, general corporate and other
purposes may be limited
Pride's ability to meet its debt service obligations and to reduce its
total indebtedness will be dependent upon its future performance, which will be
subject to general economic conditions, industry cycles and financial, business
and other factors affecting operations, many of which are beyond Pride's
control.
LOW OIL AND GAS PRICES NEGATIVELY AFFECTED PRIDE'S FINANCIAL RESULTS IN 1999,
RESULTING IN A LOSS FOR THAT YEAR; DEPRESSED MARKET CONDITIONS MAY CONTINUE TO
AFFECT PRIDE'S RESULTS IN 2000 AND BEYOND.
Depressed market conditions may adversely affect Pride's results of
operations and its liquidity and thus its ability to make payments on its
limited guarantee of the notes. The profitability of Pride's operations depends
significantly upon conditions in the oil and gas industry and, specifically, the
level of ongoing exploration and production expenditures of oil and gas company
customers. The demand for contract drilling and related services is directly
influenced by many factors beyond Pride's control, including:
o oil and gas prices and expectations about future prices
o the cost of producing and delivering oil and gas
o government regulations
o local and international political and economic conditions
o the ability of the Organisation of Petroleum Exporting Countries (OPEC)
to set and maintain production levels and prices
o the level of production by non-OPEC countries
o the policies of various governments regarding exploration and
development of their oil and gas reserves
Despite recent improvement in oil and gas prices, both offshore drilling
activity, particularly in the U.S. Gulf of Mexico, and international land-based
activity have been relatively depressed. During 1999, a significant number of
companies exploring for oil and gas curtailed or canceled some of their drilling
programs, thereby reducing demand for drilling services. This reduction in
demand significantly eroded daily rates and utilization of Pride's rigs,
particularly in offshore Gulf of Mexico and onshore South American operations.
This erosion in daily rates and utilization had a negative impact on Pride's
financial results in 1999. In addition, there are a number of deepwater rigs
currently under construction, some of which are not under contract. If demand
for deepwater drilling services does not increase to meet this increased
capacity, Pride could face competition from these and other rigs for future
deepwater contracts.
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Pride's EBITDA in 1999 was insufficient to cover its interest expense in
that year, and its earnings (consisting of earnings before income taxes plus
fixed charges less capitalized interest) were insufficient to cover its fixed
charges (consisting of interest expense, capitalized interest and that portion
of operating lease rental expense deemed to represent the interest factor) for
the year. Industry conditions will adversely affect results of operations for at
least the near term, substantially reducing revenues, cash flows, EBITDA and
earnings and may result in losses in future quarters. In addition, earnings in
future quarters may be insufficient to cover fixed charges in those quarters,
and further deterioration in market conditions may result in EBITDA being
insufficient to cover interest expense in those quarters.
INTERNATIONAL EVENTS MAY HURT PRIDE'S OPERATIONS.
Pride derives a significant portion of its revenues from operations in
high-risk international areas. In 1999, Pride derived approximately 67% of its
revenues from operations in South America and approximately 11% of its revenues
from operations in West Africa and the Middle East. Pride's operations in these
areas are most subject to the following risks:
o foreign currency fluctuations and devaluations
o restrictions on currency repatriation
o political instability
o war and civil disturbances
Pride limits the risks of currency fluctuation and restrictions on
currency repatriation by obtaining contracts providing for payment in U.S.
dollars or freely convertible foreign currency. To the extent possible, Pride
seeks to limit its exposure to potentially devaluating currencies by matching
its acceptance of those currencies to its expense requirements in the
currencies. Pride may not be able to continue to take these actions in the
future, thereby exposing it to foreign currency fluctuations that could have a
material adverse effect upon its results of operations and financial condition.
Although foreign exchange in the countries where Pride operates is carried out
on a free-market basis, local monetary authorities in these countries may
implement exchange controls in the future.
In addition, from time to time, certain of Pride's foreign subsidiaries
operate in Libya and Iran. These countries are subject to sanctions and
embargoes imposed by the U.S. Government. Although these sanctions and embargoes
do not prohibit those subsidiaries from completing existing contracts or from
entering into new contracts to provide drilling services in such countries, they
do prohibit Pride and its domestic subsidiaries, as well as employees of Pride's
foreign subsidiaries who are U.S. citizens, from participating in or approving
any aspect of the business activities in those countries. These constraints on
Pride's ability to have U.S. persons, including all of its senior management,
provide managerial oversight and supervision may adversely affect the financial
or operating performance of such business activities.
Pride's international operations are also subject to other risks,
including foreign monetary and tax policies, expropriation, nationalization and
nullification or modification of contracts. Additionally, Pride's ability to
compete in international contract drilling markets may be adversely affected by
foreign governmental regulations that favor or require the awarding of contracts
to local contractors or by regulations requiring foreign contractors to employ
citizens of, or purchase supplies from, a particular jurisdiction. Furthermore,
Pride's foreign subsidiaries may face governmentally imposed restrictions from
time to time on their ability to transfer funds to Pride.
PRIDE'S CUSTOMERS MAY SEEK TO CANCEL OR RENEGOTIATE SOME DRILLING CONTRACTS
DURING DEPRESSED MARKET CONDITIONS OR IF PRIDE EXPERIENCES OPERATIONAL
DIFFICULTIES.
During depressed market conditions, a customer may no longer need a rig
that is currently under contract or may be able to obtain a comparable rig at a
lower daily rate. As a result, customers may seek to renegotiate the terms of
their existing drilling contracts or avoid their obligations under those
contracts. In addition, customers may seek to terminate existing contracts if
Pride experiences operational problems. The deepwater markets in which Pride
operates require the use of floating rigs with sophisticated positioning, subsea
and related systems designed for drilling in deep water. If this equipment fails
to function properly, the rig cannot engage in drilling operations, and
customers may have the right to terminate the drilling contracts. The likelihood
that a customer may seek to terminate a contract for operational difficulties is
increased during market downturns. The cancellation of a number of Pride's
drilling contracts could adversely affect Pride's results of operations.
PRIDE IS SUBJECT TO HAZARDS CUSTOMARY IN THE OILFIELD SERVICE INDUSTRY AND TO
THOSE MORE SPECIFIC TO MARINE OPERATIONS. PRIDE MAY NOT HAVE INSURANCE TO COVER
ALL THESE HAZARDS.
Pride's operations are subject to the many hazards customary in the
oilfield services industry. Contract drilling and well servicing require the use
of heavy equipment and exposure to hazardous conditions, which may subject Pride
to liability claims by employees, customers and third parties. These hazards can
cause personal injury or loss of life, severe damage to or destruction of
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property and equipment, pollution or environmental damage and suspension of
operations. Pride's offshore fleet is also subject to hazards inherent in marine
operations, either while on site or during mobilization, such as capsizing,
sinking and damage from severe weather conditions. In certain instances,
contractual indemnification of customers or others is required of Pride.
Pride maintains workers' compensation insurance for its employees and
other insurance coverage for normal business risks, including general liability
insurance. Although Pride believes its insurance coverage to be adequate and in
accordance with industry practice against normal risks in its operations, any
insurance protection may not be sufficient or effective under all circumstances
or against all hazards to which Pride may be subject. The occurrence of a
significant event against which Pride is not fully insured, or of a number of
lesser events against which Pride is insured, but subject to substantial
deductibles, could materially and adversely affect Pride's operations and
financial condition. Moreover, Pride may not be able to maintain adequate
insurance in the future at rates or on terms Pride considers reasonable or
acceptable.
GOVERNMENTAL REGULATIONS AND ENVIRONMENTAL LIABILITIES MAY ADVERSELY AFFECT
PRIDE'S OPERATIONS.
Many aspects of Pride's operations are subject to numerous governmental
regulations that may relate directly or indirectly to the contract drilling and
well servicing industries, including those relating to the protection of the
environment. Pride has spent and could continue to spend material amounts to
comply with these regulations. Laws and regulations protecting the environment
have become more stringent in recent years and may impose strict liability,
rendering Pride liable for environmental damage without regard to negligence or
fault on Pride's part. These laws and regulations may expose Pride to liability
for the conduct of, or conditions caused by, others or for acts that were in
compliance with all applicable laws at the time the acts were preformed. The
application of these requirements or the adoption of new requirements could have
a material adverse effect on Pride. In addition, the modification of existing
laws or regulations or the adoption of new laws or regulations curtailing
exploratory or development drilling for oil and gas could have a material
adverse effect on Pride's operations by limiting future contract drilling
opportunities.
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APPENDIX B
HSBC BANK USA
THE INFORMATION CONTAINED IN THIS APPENDIX TO THIS PROSPECTUS HAS BEEN
OBTAINED FROM SOURCES MADE PUBLICLY AVAILABLE BY HSBC BANK USA AND HSBC USA INC.
AND IS NOT TO BE CONSTRUED AS A REPRESENTATION BY AMETHYST FINANCIAL COMPANY
LTD. OR ITS AFFILIATES.
HSBC Bank USA is a wholly owned subsidiary and the principal asset of HSBC
USA Inc., the New York-based bank holding company subsidiary of HSBC Holdings
plc. In December 1999, HSBC Holdings completed the acquisition of Republic New
York Corporation, the principal asset of which was Republic National Bank of New
York, and merged Republic New York Corporation into HSBC USA Inc. HSBC Holdings
merged Republic National Bank of New York into HSBC Bank USA.
Based on HSBC USA Inc.'s annual report on Form 10-K for the year ended
December 31, 1998, HSBC Bank USA and its consolidated subsidiaries had, at
December 31, 1998, total deposits of approximately $27.3 billion, total assets
of approximately $33.8 billion and stockholder's equity of approximately $2.4
billion.
Based on Republic New York Corporation's annual report on Form 10-K for
the year ended December 31, 1998, Republic National Bank and its consolidated
subsidiaries had, at December 31, 1998, total deposits of approximately $33.5
billion, total assets of approximately $46.5 billion and stockholder's equity of
approximately $3.1 billion and accounted for approximately 90% of the
consolidated assets, approximately 90% of the consolidated revenues and more
than 100% of the consolidated net income of Republic New York Corporation for
the year ended December 31, 1998.
WHERE YOU CAN FIND MORE INFORMATION
HSBC USA Inc. files reports and other information with the SEC. You can
read and copy any materials HSBC USA Inc. files with the SEC at the SEC's Public
Reference Room 450 Fifth Street, N.W., Washington, D.C. 20549. You can obtain
information about the operation of the SEC's Public Reference Room by calling
the SEC at 1-800-SEC-0330. The SEC also maintains a Web Site that contains
information HSBC USA Inc. files electronically with the SEC. You can access the
SEC's Web Site over the Internet at HTTP://WWW.SEC.GOV.
HSBC Bank USA files reports and other information with the Federal
Financial Institution Examination Council. You can obtain the publicly available
portions of those reports and other information by writing to the Federal
Deposit Insurance Corporation's Disclosure Group at FDIC, Department 0691,
Washington, D.C. 20073-0691 or by calling the Federal Deposit Insurance
Corporation at 1-800-945-2186. The Federal Financial Institution Examination
Council also maintains a Web Site that contains the publicly available portions
of those reports and other information. You can access the Federal Financial
Institution Examination Council's Web Site over the Internet at
HTTP://WWW.FFIEC.GOV.
We refer you to the documents listed below and any future filings HSBC USA
Inc. makes with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 (file no. 1-02940) or HSBC Bank USA makes with
the Federal Financial Institution Examination Council until the offering made by
this prospectus terminates:
o Republic New York Corporation's annual report on Form 10-K for the year
ended December 31, 1998, which includes, on page 61, the December 31,
1997 and 1998 audited Consolidated Statements of Condition of Republic
National Bank
o HSBC USA Inc.'s annual report on Form 10-K for the year ended December
31, 1998, which includes, on page 39, the December 31, 1997 and 1998
audited Consolidated Balance Sheet of HSBC Bank USA
o Republic New York Corporation's and HSBC USA Inc.'s quarterly reports
on Form 10-Q for the quarters ended March 31, 1999, June 30, 1999 and
September 30, 1999
o Republic New York Corporation's current reports on Form 8-K dated May
11, 1999 (as amended by Republic New York Corporation's current report
on Form 8-K/A May 14, 1999), August 5, 1999, September 3, 1999,
September 7, 1999, September 27, 1999, October 1, 1999, October 22,
1999, November 8, 1999 and January 10, 2000
o HSBC USA Inc.'s current reports on Form 8-K dated January 27, 1999,
January 28, 1999, March 29, 1999, June 28, 1999 and January 10, 2000
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o the publicly available portions of the Consolidated Reports of
Condition of Republic National Bank and HSBC Bank USA and the
Consolidated Reports of Income of Republic National Bank and HSBC Bank
USA as of and for the years ended December 31, 1997 and 1998 and for
each subsequent quarter for which such a report has been prepared, in
each case, as submitted to the Federal Financial Institution
Examination Council
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APPENDIX C
PETROLEO BRASILEIRO S.A.--PETROBRAS
THE INFORMATION CONTAINED IN THIS APPENDIX TO THIS PROSPECTUS HAS BEEN
OBTAINED FROM SOURCES MADE PUBLICLY AVAILABLE BY PETROLEO BRASILEIRO
S.A.--PETROBRAS AND IS NOT TO BE CONSTRUED AS A REPRESENTATION BY AMETHYST
FINANCIAL COMPANY LTD. OR ITS AFFILIATES.
Petrobras, the Brazilian national oil company, is a mixed-capital but
state-controlled integrated oil and gas corporation. Petrobras ranked 14th among
all oil and gas companies in the world based on 1997 data as measured by the
Petroleum Intelligence Weekly composite index (which includes reserves, output,
refinery capacity and product sales by volume). Petrobras estimated that its
proven oil reserves located in deep water (depths greater than 1,300 feet) and
ultra-deepwater (depths greater than 3,300 feet) represented approximately 77%
and 30%, respectively, of its approximately 7.4 million barrels of proven oil
reserves as of December 1998. In 1999, Petrobras produced an average of 1.3
million barrels of oil equivalent per day. The majority of this output was
produced from deep water reserves.
WHERE YOU CAN FIND MORE INFORMATION
Petrobras furnishes annual and quarterly reports to the SEC under Rule
12g3-2(b) of the Securities Exchange Act of 1934. You can read and copy any
materials Petrobras furnishes to the SEC at the SEC's Public Reference Room 450
Fifth Street, N.W., Washington, D.C. 20549. You can obtain information about the
operation of the SEC's Public Reference Room by calling the SEC at
1-800-SEC-0330.
We refer you to the documents listed below and any future reports
Petrobras furnishes to the SEC under Rule 12g3-2(b) of the Securities Exchange
Act of 1934 until the offering made by this prospectus terminates:
o Petrobras' annual report for the year ended December 31, 1998
o Petrobras' quarterly reports for the quarters ended March 31, 1999,
June 30, 1999 and September 30, 1999
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 57 of the British Virgin Islands International Business
Corporations Ordinance provides as follows:
1. Subject to Subsection 2 and any limitations in its memorandum or
articles, a company incorporated under this Ordinance may indemnify against all
expenses, including legal fees, and against all judgments, fines and amounts
paid in settlement and reasonably incurred in connection with legal,
administrative or investigative proceedings any person who:
a. is or was a party or is threatened to be made a party to any
threatened, pending or completed proceedings, whether civil, criminal,
administrative or investigative by reason of the fact that the person is
or was a director, an officer or a liquidator of the company; or
b. is or was, at the request of the company, serving as a director,
officer or liquidator of, or in any other capacity is or was acting for,
another company or a partnership, joint venture, trust or other
enterprise.
2. Subsection 1 only applies to a person referred to in that subsection if
the person acted honestly and in good faith with a view to the best interests of
the company and, in the case of criminal proceedings, the person has no
reasonable cause to believe that his conduct was unlawful.
3. The decision of the directors as to whether the person acted honestly
and in good faith and with a view to the best interests of the company and as to
whether the person had no reasonable cause to believe that his conduct was
unlawful is in the absence of fraud, sufficient for purposes of this section,
unless a question of law is involved.
4. The termination of any proceedings by any judgment, order, settlement,
conviction or the entering of a nolle prosequi does not, by itself, create a
presumption that the person did not act honestly and in good faith with a view
to the best interests of the company or that the person had no reasonable cause
to believe that his conduct was unlawful.
5. If the person referred to in Subsection 1 has been successful in
defense of any proceedings referred to in Subsection 1, the person is entitled
to be indemnified against all expenses, including legal fees, and against all
judgments, fines and amounts paid in settlement and reasonably incurred by the
person in connection with the proceedings.
In addition, Section 58 of the British Virgin Islands International
Business Corporations Ordinance provides as follows:
A company incorporated under this Ordinance may purchase and maintain
insurance in relation to any person who is or was a director, an officer or a
liquidator of the company, or who at the request of the company is or was
serving as a director, an officer or a liquidator of, or in any other capacity
is or was acting for, another company or a partnership, joint venture, trust or
other enterprise, against any liability asserted against the person and incurred
by the person in that capacity, whether or not the company has or would have had
the power to indemnify the person against the liability under Subsection 1 of
Section 57.
Regulations 90 through 95 of the Articles of Association of Amethyst
Financial Company Ltd. provide as follows:
90. Subject to Regulation 91 the Company shall indemnify against all
expenses, including legal fees, and against all judgments, fines and amounts
paid in settlement and reasonably incurred in connection with legal,
administrative or investigative proceedings any person who
(a) is or was a party or is threatened to be made a party to any
threatened, pending or completed proceedings, whether civil, criminal,
administrative or investigative by reason of the fact that the person is
or was a director, an officer or a liquidator of the Company; or
(b) is or was, at the request of the Company, serving as a director,
officer or liquidator of, or in any other capacity is or was acting for,
another company or a partnership, joint venture, trust or other
enterprise.
91. Regulation 90 only applies to a person referred to in that Regulation
if the person acted honestly and in good faith with a view to the best interests
of the Company and, in the case of criminal proceedings, the person has no
reasonable cause to believe that his conduct was unlawful.
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92. The decision of the directors as to whether the person acted honestly
and in good faith and with a view to the best interests of the Company and as to
whether the person had no reasonable cause to believe that his conduct was
unlawful is in the absence of fraud, sufficient for purposes of these Articles,
unless a question of law is involved.
93. The termination of any proceedings by any judgment, order, settlement,
conviction or the entering of a nolle prosequi does not, by itself, create a
presumption that the person did not act honestly and in good faith with a view
to the best interests of the Company or that the person had no reasonable cause
to believe that his conduct was unlawful.
94. If the person referred to in Regulation 90 has been successful in
defense of any proceedings referred to in that Regulation, the person is
entitled to be indemnified against all expenses, including legal fees, and
against all judgments, fines and amounts paid in settlement and reasonably
incurred by the person in connection with the proceedings.
95. The Company may purchase and maintain insurance in relation to any
person who is or was a director, an officer or a liquidator of the Company, or
who at the request of the Company is or was serving as a director, an officer or
a liquidator of, or in any other capacity is or was acting for, another company
or a partnership, joint venture, trust or other enterprise, against any
liability asserted against the person and incurred by the person in that
capacity, whether or not the Company has or would have had the power to
indemnify the person against the liability under Regulation 90.
Section 83 of the Business Corporation Law of the State of Louisiana gives
corporations the power to indemnify officers and directors under certain
circumstances. Article IX of Pride International's Amended and Restated Articles
of Incorporation and Section 13 of Pride International's Bylaws contain
provisions that provide for indemnification of certain persons (including
officers and directors).
ITEM 21. EXHIBITS AND FINANCIAL SCHEDULES
(a) EXHIBITS.
The following instruments and documents are included as Exhibits to
this Registration Statement. Exhibits incorporated by reference are so
indicated by parenthetical information.
EXHIBIT NO. EXHIBIT
----------- -------
+3.1 Memorandum of Association of Amethyst Financial Company Ltd.
+3.2 Articles of Association of Amethyst Financial Company Ltd.
+4.1 A/B Exchange Registration Rights Agreement dated October 28,
1999 among Amethyst Financial Company Ltd., Pride
International, Inc., Maritima Petroleo e Engenharia Ltda.
and Donaldson, Lufkin & Jenrette Securities Corporation.
+4.2 Purchase Agreement dated October 28, 1999 between Amethyst
Financial Company Ltd. and Donaldson, Lufkin & Jenrette
Securities Corporation relating to $53 million aggregate
principal amount of 11 3/4% Senior Secured Notes due 2001.
+4.3 Indenture dated November 1, 1999 among Amethyst Financial
Company Ltd., Pride International, Inc., Maritima Petroleo e
Engenharia Ltda. and Wilmington Trust Company.
*4.3(a) First Supplemental Indenture dated , 2000 among Amethyst
Financial Company Ltd., Pride International, Inc., Maritima
Petroleo e Engenharia Ltda. and Wilmington Trust Company.
*4.4 Form of New Note (attached to the Indenture dated November
1, 1999 among Amethyst Financial Company Ltd., Pride
International, Inc., Maritima Petroleo e Engenharia Ltda.
and Wilmington Trust Company filed as Exhibit 4.3 to this
Registration Statement and amended by the First Supplemental
Indenture dated , 2000 among Amethyst Financial
Company Ltd., Pride International, Inc., Maritima Petroleo e
Engenharia Ltda. and
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Wilmington Trust Company filed as Exhibit 4.3(a) to this
Registration Statement).
+4.5 Senior Secured Note Security and Pledge Agreement dated
November 1, 1999 between Amethyst Financial Company Ltd. and
Wilmington Trust Company.
+4.6 Reserve Account Agreement dated November 1, 1999 between
Amethyst Financial Company Ltd. and Wilmington Trust
Company.
+4.7 Deed of Consent dated November 1, 1999 among Amethyst
Financial Company Ltd., Petrodrill Six Limited, Petrodrill
Seven Limited, Pride International, Inc., Maritima Petroleo
e Engenharia Ltda., Petro Dia Three S.A., Petro Dia Four
S.A., Mitsubishi Corporation (UK) PLC and Wilmington Trust
Company.
+4.8 Loan Agreement dated December 1998 among Petrodrill Seven
Limited, Petro Dia Three S.A., Petro Dia Four S.A. and
Mitsubishi Corporation (UK) PLC.
+4.9 Loan Agreement dated December 19, 1998 among Petrodrill Six
Limited, Petro Dia Three S.A., Petro Dia Four S.A. and
Mitsubishi Corporation (UK) PLC.
+4.10 Deed of Guarantee and Undertaking dated December 19, 1998
among Petrodrill Seven Limited, Pride International, Inc.,
Maritima Petroleo e Engenharia Ltda., Petro Dia Three S.A.,
Petro Dia Four S.A. and Mitsubishi Corporation (UK) PLC.
+4.11 Deed of Guarantee and Undertaking dated December 19, 1998
among Petrodrill Six Limited, Pride International, Inc.,
Maritima Petroleo e Engenharia Ltda., Petro Dia Three S.A.,
Petro Dia Four S.A. and Mitsubishi Corporation (UK) PLC.
+4.12 Floor Guarantee dated December 19, 1998 among Pride
International, Inc., Maritima Petroleo e Engenharia Ltda.,
Petro Dia Three S.A. and Petro Dia Four S.A.
+4.13 Inter-Company Cross Guarantee dated December 19, 1998 among
Amethyst Financial Company Ltd., Petrodrill Six Limited,
Petrodrill Seven Limited and Mitsubishi Corporation (UK)
PLC.
+4.14 Transfer Certificate dated November 1, 1999 among Amethyst
Financial Company Ltd., Petro Dia Three S.A., Petro Dia Four
S.A. and Mitsubishi Corporation (UK) PLC, relating to the
Limited Loan Agreement dated December 19, 1998 among
Petrodrill Seven Limited, Petro Dia Three S.A., Petro Dia
Four S.A. and Mitsubishi Corporation (UK) PLC.
+4.15 Transfer Certificate dated November 1, 1999 among Amethyst
Financial Company Ltd., Petro Dia Three S.A., Petro Dia Four
S.A. and Mitsubishi Corporation (UK) PLC, relating to the
Loan Agreement dated December 19, 1998 among Petrodrill Six
Limited, Petro Dia Three S.A., Petro Dia Four S.A. and
Mitsubishi Corporation (UK) PLC.
+4.16 Commitment to Guarantee Obligation by the United States of
America accepted by Petrodrill Five Limited dated April 9,
1999.
+4.17 Commitment to Guarantee Obligation by the United States of
America accepted by Petrodrill Four Limited dated April 9,
1999.
II-3
<PAGE>
+4.18 Credit Agreement dated April 9, 1999 among Petrodrill Five
Limited, Govco Inc., Citibank, N.A., Citibank International
PLC and Citicorp North America, Inc.
+4.19 Credit Agreement dated April 9, 1999 among Petrodrill Four
Limited, Govco Inc., Citibank, N.A., Citibank International
PLC and Citicorp North America, Inc.
+4.20 Security Agreement dated April 9, 1999 between Petrodrill
Five Limited and the United States of America.
+4.21 Security Agreement dated April 9, 1999 between Petrodrill
Four Limited and the United States of America.
+4.22 Trust Indenture dated April 9, 1999 between Petrodrill Five
Limited and FMB Trust Company, National Association.
+4.23 Trust Indenture dated April 9, 1999 between Petrodrill Four
Limited and FMB Trust Company, National Association.
+4.24 Guaranty Agreement dated April 9, 1999 in favor of the
United States by Petrodrill Five Limited.
+4.25 Guaranty Agreement dated April 9, 1999 in favor of the
United States by Petrodrill Four Limited.
+4.26 Guaranty Agreement dated April 9, 1999 in favor of the
United States by Pride International, Inc.
+4.27 Payment Undertaking in Favor of the United States dated
April 9, 1999 by Maritima Petroleo e Engenharia Ltda.
+4.28 Interguarantor Agreement dated April 9, 1999 between Pride
International, Inc. and Maritima Petroleo e Engenharia Ltda.
+4.29 Title XI Reserve Fund and Financial Agreement dated April 9,
1999 between Petrodrill Five Limited and the United States
of America.
+4.30 Title XI Reserve Fund and Financial Agreement dated April 9,
1999 between Petrodrill Four Limited and the United States
of America.
++4.31 Amended and Restated Credit Agreement dated as of December
22, 1997 among Pride International, Inc., each of the banks
that are or may be a party thereto, Bank One, Louisiana,
N.A. (formerly named First National Bank of Commerce), as
arranger and syndication agent, and Wells Fargo Bank
(Texas), National Association, as administrative agent and
documentation agent (incorporated by reference to Exhibit
4.8 to Pride International, Inc.'s Annual Report on Form
10-K for the year ended December 31, 1997, File No.
1-13289).
++4.32 First Amendment to Credit Agreement dated as of April 24,
1998 among Pride International, Inc., certain of its
subsidiaries, Bank One, Louisiana, N.A. (formerly named
First National Bank of Commerce), as arranger and
syndication agent, Wells Fargo Bank (Texas), National
Association, as administrative and documentation agent, and
the lenders named therein (incorporated by reference to
Exhibit 4.2 to Pride International, Inc.'s Quarterly Report
on Form 10-Q for the quarterly period ended September 30,
1998, File No. 1-13289).
II-4
<PAGE>
++4.33 Second Amendment to Credit Agreement dated as of September
17, 1998 among Pride International, Inc., certain of its
subsidiaries, Bank One, Louisiana, N.A. (formerly named
First National Bank of Commerce), as arranger and
syndication agent, Wells Fargo Bank (Texas), National
Association, as administrative and documentation agent, and
the lenders named therein (incorporated by reference to
Exhibit 4.3 to Pride International, Inc.'s Quarterly Report
on Form 10-Q for the quarterly period ended September 30,
1998, File No. 1-13289).
++4.34 Third Amendment to Credit Agreement dated as of December 21,
1998 among Pride International, Inc., certain of its
subsidiaries, Bank One, Louisiana, N.A. (formerly named
First National Bank of Commerce), as arranger and
syndication agent, Wells Fargo Bank (Texas), National
Association, as administrative and documentation agent, and
the lenders named therein (incorporated by reference to
Exhibit 4.6 to Pride International, Inc.'s Annual Report on
Form 10-K for the year ended December 31, 1998, File No.
1-13289).
++4.35 Indenture, dated as of May 1, 1997, by and between Pride
International, Inc. and The Chase Manhattan Bank, as trustee
(incorporated by reference to Exhibit 4.1 to Pride
International, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997, File Nos. 0-16961 and
1-13289).
++4.36 First Supplemental Indenture, dated as of May 1, 1997, by
and between Pride International, Inc. and The Chase
Manhattan Bank, as trustee, relating to $325,000,000
principal amount of 9 3/8% Senior Notes due 2007
(incorporated by reference to Exhibit 4.2 to Pride
International, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997, File Nos. 0-16961 and
1-13289).
++4.37 Indenture, dated as of April 1, 1998, between Pride
International, Inc. and Marine Midland Bank, as trustee,
relating to subordinated debt securities (incorporated by
reference to Exhibit 4.1 to Pride International, Inc.'s
Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1998, File No. 1-13289).
++4.38 First Supplemental Indenture, dated as of April 24, 1998,
between Pride International, Inc. and Marine Midland Bank,
as trustee, relating to Zero Coupon Convertible Subordinated
Debentures Due 2018 (incorporated by reference to Exhibit
4.2 to Pride International, Inc.'s Quarterly Report on Form
10-Q for the quarterly period ended March 31, 1998, File No.
1-13289).
Pride International, Inc. is a party to several debt instruments under
which the total amount of securities authorized does not exceed 10% of the
total assets of Pride International, Inc. and its subsidiaries on a
consolidated basis. Pursuant to paragraph 4(iii)(A) of Item 601(b) of
Regulation S-K, Pride International, Inc. agrees to furnish a copy of such
instruments to the SEC upon request.
*5 Opinion of Baker Botts L.L.P. as to the legality of the new
notes and the Pride guarantee.
+8.1 Opinion of Baker Botts L.L.P. regarding U.S. tax matters.
+8.2 Opinion of Dancia Penn & Co. regarding British Virgin
Islands tax matters.
+10.1 Chartering Contract for the AMETHYST 7 (Contract No.
101.2.155.97-9) between Maritima Navegacao e Engenharia
Ltda. and Petroleo Brasileiro S.A.--Petrobras.
II-5
<PAGE>
+10.1(a) Rider No. 1 to the Chartering Contract for the AMETHYST 7
(Contract No. 101.2.155.97-9) dated July 10, 1998 among
Maritima Petroleo e Engenharia Ltda., Petroleo Brasileiro
S.A.--Petrobras and Petrodrill Seven Limited.
+10.2 Service Rendering Contract for the AMETHYST 7 (Contract No.
101.0.156.97-1) between Maritima Navegacao e Engenharia
Ltda. and Petroleo Brasileiro S.A.--Petrobras.
+10.2(a) Rider No. 1 to the Service Rendering Contract for the
AMETHYST 7 (Contract No. 101.2.156.97-1) dated August 21,
1998 among Maritima Petroleo e Engenharia Ltda., Petroleo
Brasileiro S.A.--Petrobras and Petrodrill Seven Limited.
+10.3 Letter Agreement dated January 15, 1998 between Maritima
Navegacao e Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras relating to the Chartering Contract for the
AMETHYST 7 (Contract No. 101.2.155.97-9) and the Service
Rendering Contract for the AMETHYST 7 (Contract No.
101.2.156.97-1).
+10.4 Letter Agreement dated January 15, 1998 between Maritima
Navegacao e Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras relating to the Chartering Contract for the
AMETHYST 7 (Contract No. 101.2.155.97-9) and the Service
Rendering Contract for the AMETHYST 7 (Contract No.
101.2.156.97-1).
+10.5 Chartering Contract for the AMETHYST 6 (Contract No.
101.2.159.97-1) dated January 12, 1998 between Maritima
Navegacao e Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras.
+10.5(a) Rider No. 1 to the Chartering Contract for the AMETHYST 6
(Contract No. 101.2.159.97-1) dated July 10, 1998 among
Maritima Petroleo e Engenharia Ltda., Petroleo Brasileiro
S.A.--Petrobras and Petrodrill Six Limited.
+10.6 Service Rendering Contract for the AMETHYST 6 (Contract No.
101.2.160.97-0) dated January 12, 1998 between Maritima
Navegacao e Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras.
+10.6(a) Rider No. 1 to the Service Rendering Contract for the
AMETHYST 6 (Contract No. 101.2.160.97-0) dated August 21,
1998 among Maritima Petroleo e Engenharia Ltda., Petroleo
Brasileiro S.A.--Petrobras and Petrodrill Six Limited.
+10.7 Letter Agreement dated January 15, 1998 between Maritima
Navegacao e Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras relating to the Chartering Contract for the
AMETHYST 6 (Contract No. 101.2.159.97-1) and the Service
Rendering Contract for the AMETHYST 6 (Contract No.
101.2.160.97-0).
+10.8 Letter Agreement dated January 15, 1998 between Maritima
Petroleo e Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras relating to the Chartering Contract for the
AMETHYST 6 (Contract No. 101.2.159.97-1) and the Service
Rendering Contract for the AMETHYST 6 (Contract No.
101.2.160.97-0).
+10.9 Chartering Contract for the AMETHYST 5 (Contract No.
101.2.100.97-8) dated December 5, 1997 between Maritima
Navegacao e Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras.
+10.9(a) Rider No. 1 to the Chartering Contract for the AMETHYST 5
(Contract No. 101.2.100.97-8) dated July 10, 1998 among
Maritima Petroleo e Engenharia
II-6
<PAGE>
Ltda., Petroleo Brasileiro S.A.--Petrobras and Petrodrill
Five Limited.
+10.10 Service Rendering Contract for the AMETHYST 5 (Contract No.
101.2.101.97-0) between Maritima Navegacao e Engenharia
Ltda. and Petroleo Brasileiro S.A.--Petrobras.
+10.10(a) Rider No. 1 to the Service Rendering Contract for the
AMETHYST 5 (Contract No. 101.2.101.97-0) dated August 21,
1998 among Maritima Petroleo e Engenharia Ltda., Petroleo
Brasileiro S.A.--Petrobras and Petrodrill Five Limited.
+10.11 Letter Agreement dated December 5, 1997 between Maritima
Navegacao e Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras relating to the Chartering Contract for the
AMETHYST 5 (Contract No. 101.2.100.97-8) and the Service
Rendering Contract for the AMETHYST 5 (Contract No.
101.2.101.97-0).
+10.12 Letter Agreement dated January 15, 1998 between Maritima
Petroleo e Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras relating to the Chartering Contract for the
AMETHYST 5 (Contract No. 101.2.100.97-8) and the Service
Rendering Contract for the AMETHYST 5 (Contract No.
101.2.101.97-0).
+10.13 Chartering Contract for the AMETHYST 4 (Invitation to Bid
No. 101.2.063.97-8) between Maritima Navegacao e Engenharia
Ltda. and Petroleo Brasileiro S.A.--Petrobras.
+10.13(a) Rider No. 1 to the Chartering Contract for the AMETHYST 4
(Invitation to Bid No. 101.2.063.97-8) dated July 10, 1998
among Maritima Petroleo e Engenharia Ltda., Petroleo
Brasileiro S.A.--Petrobras and Petrodrill Four Limited.
+10.14 Service Rendering Contract for the AMETHYST 4 (Invitation to
Bid No. 101.2.064.97-0) between Maritima Navegacao e
Engenharia Ltda. and Petroleo Brasileiro S.A.--Petrobras.
+10.14(a) Rider No. 1 to the Service Rendering Contract for the
AMETHYST 4 (Invitation to Bid No. 101.2.064.97-0) dated
August 21, 1998 among Maritima Petroleo e Engenharia Ltda.,
Petroleo Brasileiro S.A.--Petrobras and Petrodrill Four
Limited.
+10.15 Letter Agreement dated December 5, 1997 between Maritima
Navegacao e Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras relating to the Chartering Contract for the
AMETHYST 4 (Contract No. 101.2.063.97-2) and the Service
Rendering Contract for the AMETHYST 4 (Invitation to Bid No.
101.2.064.97-0).
+10.16 Letter dated May 28, 1998 from Petroleo Brasileiro
S.A.--Petrobras to Maritima Navegacao e Engenharia Ltda.
regarding the Chartering Contracts and Service Rendering
Contracts.
+10.17 Shipbuilding Contract dated April 9, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and Petrodrill
Construction Inc., for Hull No. 3015 (AMETHYST 7).
+10.17(a) Side Letter No. 1 dated April 9, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and Petrodrill
Construction Inc. for Hull No. 3015 (AMETHYST 7).
II-7
<PAGE>
+10.17(b) Side Letter No. 2 dated April 9, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and Petrodrill
Construction Inc. for Hull No. 3015 (AMETHYST 7).
+10.17(c) Novation Agreement dated December 4, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd., Petrodrill
Offshore Inc. and Petrodrill Seven Limited for Hull No. 3015
(AMETHYST 7).
+10.17(d) Main Contract Amendment dated December 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and Petrodrill
Seven Limited for Hull No. 3015 (AMETHYST 7).
+10.17(e) Main Contract Amendment II dated January 28, 1999 among
Daewoo Corporation, Daewoo Heavy Industries Ltd. and
Petrodrill Seven Limited for Hull No. 3015 (AMETHYST 7).
+10.18 Refund Guarantee issued by The Export-Import Bank of Korea
to Petrodrill Construction Inc. dated April 16, 1998 for
Hull No. 3015 (AMETHYST 7).
+10.18(a) Novation Agreement in respect of the Refund Guarantee dated
December 4, 1998 among The Export-Import Bank of Korea,
Petrodrill Offshore Inc. and Petrodrill Seven Limited for
Hull No. 3015 (AMETHYST 7).
+10.18(b) Letter of Amendment of Refund Guarantee issued by The
Export-Import Bank of Korea to Petrodrill Seven Limited
dated April 6, 1999 for Hull No. 3015 (AMETHYST 7).
+10.19 Shipbuilding Contract dated April 9, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and Petrodrill
Construction Inc. for Hull No. 3016 (AMETHYST 6).
+10.19(a) Side Letter No. 1 dated April 9, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and Petrodrill
Construction Inc. for Hull No. 3016 (AMETHYST 6).
+10.19(b) Side Letter No. 2 dated April 9, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and Petrodrill
Construction Inc. for Hull No. 3016 (AMETHYST 6).
+10.19(c) Novation Agreement dated December 4, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd., Petrodrill
Offshore Inc. and Petrodrill Six Limited for Hull No. 3016
(AMETHYST 6).
+10.19(d) Main Contract Amendment dated December 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and Petrodrill Six
Limited for Hull No. 3016 (AMETHYST 6).
+10.19(e) Main Contract Amendment II dated January 28, 1999 among
Daewoo Corporation, Daewoo Heavy Industries Ltd. and
Petrodrill Six Limited for Hull No. 3016 (AMETHYST 6).
+10.20 Refund Guarantee issued by The Export-Import Bank of Korea
to Petrodrill Construction Inc. dated April 16, 1998 for
Hull No. 3016 (AMETHYST 6).
+10.20(a) Novation Agreement in respect of the Refund Guarantee dated
December 4, 1998 among The Export-Import Bank of Korea,
Petrodrill Offshore Inc. and Petrodrill Six Limited for Hull
No. 3016 (AMETHYST 6).
+10.20(b) Letter of Amendment of Refund Guarantee issued by The
Export-Import Bank of Korea to Petrodrill Six Limited dated
April 6, 1999 for Hull No.
II-8
<PAGE>
3016 (AMETHYST 6).
+10.21 Shipbuilding Contract dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for Hull
No. 1829 (AMETHYST 5).
+10.21(a) Side Letter No. 1 dated April 9, 1998 between TDI-Halter,
L.P. and Petrodrill Construction Inc. for Hull No. 1829
(AMETHYST 5).
+10.21(b) Side Letter No. 2 dated April 9, 1998 between TDI-Halter,
L.P. and Petrodrill Construction Inc. for Hull No. 1829
(AMETHYST 5).
+10.21(c) Side Letter No. 3 dated April 9, 1998 between TDI-Halter,
L.P. and Petrodrill Construction Inc. for Hull No. 1829
(AMETHYST 5).
+10.21(d) Side Letter No. 4 dated April 9, 1998 between TDI-Halter,
L.P. and Petrodrill Construction Inc. for Hull No. 1829
(AMETHYST 5).
+10.21(e) Side Letter No. 5 dated April 9, 1998 between TDI-Halter,
L.P. and Petrodrill Construction Inc. for Hull No. 1829
(AMETHYST 5).
+10.21(f) Novation Agreement dated December 9, 1998 between
TDI-Halter, L.P., Petrodrill Offshore Inc. and Petrodrill
Five Limited for Hull No. 1829 (AMETHYST 5).
+10.21(g) Amendment No. 1 to Semi-Submersible Drilling Vessel
Construction Contract dated April 9, 1999 between
TDI-Halter, L.P. and Petrodrill Five Limited for Hull No.
1829 (AMETHYST 5).
+10.22 Performance Bond dated April 13, 1998 between TDI-Halter,
L.P. and Fireman's Fund Insurance Company in connection with
the construction of Hull No. 1829 (AMETHYST 5).
+10.23 Labor and Material Payment Bond dated April 13, 1998 between
TDI-Halter, L.P. and Fireman's Fund Insurance Company in
connection with the construction of Hull No. 1829 (AMETHYST
5).
+10.24 Parent Guarantee dated April 15, 1998 by Halter Marine
Group, Inc. in connection with the construction of Hull No.
1829 (AMETHYST 5).
+10.25 Shipbuilding Contract dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for Hull
No. 1828 (AMETHYST 4).
+10.25(a) Side Letter No. 1 dated April 9, 1998 between TDI-Halter,
L.P. and Petrodrill Construction Inc. for Hull No. 1828
(AMETHYST 4).
+10.25(b) Side Letter No. 2 dated April 9, 1998 between TDI-Halter,
L.P. and Petrodrill Construction Inc. for Hull No. 1828
(AMETHYST 4).
+10.25(c) Side Letter No. 3 dated April 9, 1998 between TDI-Halter,
L.P. and Petrodrill Construction Inc. for Hull No. 1828
(AMETHYST 4).
+10.25(d) Side Letter No. 4 dated April 9, 1998 between TDI-Halter,
L.P. and Petrodrill Construction Inc. for Hull No. 1828
(AMETHYST 4).
+10.25(e) Side Letter No. 5 dated April 9, 1998 between TDI-Halter,
L.P. and Petrodrill Construction Inc. for Hull No. 1828
(AMETHYST 4).
+10.25(f) Novation Agreement dated December 9, 1998 between
TDI-Halter, L.P., Petrodrill Offshore Inc. and Petrodrill
Four Limited for Hull No. 1828
II-9
<PAGE>
(AMETHYST 4).
+10.25(g) Amendment No. 1 to Semi-Submersible Drilling Vessel
Construction Contract dated April 9, 1999 between
TDI-Halter, L.P. and Petrodrill Four Limited for Hull No.
1828 (AMETHYST 4).
+10.26 Performance Bond dated April 13, 1998 between TDI-Halter,
L.P. and Fireman's Fund Insurance Company in connection with
the construction of Hull No. 1828 (AMETHYST 4).
+10.27 Labor and Material Payment Bond dated April 13, 1998 between
TDI-Halter, L.P. and Fireman's Fund Insurance Company in
connection with the construction of Hull No. 1828 (AMETHYST
4).
+10.28 Parent Guarantee dated April 15, 1998 by Halter Marine
Group, Inc. in connection with the construction of Hull No.
1828 (AMETHYST 4).
+10.29 Construction Management Agreement dated November 5, 1998
between Petrodrill Seven Limited and Petrodrill Engineering
N.V. for the AMETHYST 7.
**10.30 Construction Management Agreement dated November 5, 1998
between Petrodrill Six Limited and Petrodrill Engineering
N.V. for the AMETHYST 6.
**10.31 Construction Management Agreement dated January 25, 1999
between Petrodrill Five Limited and Petrodrill Engineering
N.V. for the AMETHYST 5.
**10.32 Construction Management Agreement dated January 25, 1999
between Petrodrill Four Limited and Petrodrill Engineering
N.V. for the AMETHYST 4.
+10.33 Supply Agreement for the AMETHYST 7 dated November 5, 1998
between Pride-Foramer S.A. and Petrodrill Engineering N.V.
***10.34 Supply Agreement for the AMETHYST 6 dated November 5, 1998
between Pride-Foramer S.A. and Petrodrill Engineering N.V.
***10.35 Supply Agreement for the AMETHYST 5 dated January 25, 1999
between Pride-Foramer S.A. and Petrodrill Engineering N.V.
***10.36 Supply Agreement for the AMETHYST 4 dated January 25, 1999
between Pride-Foramer S.A. and Petrodrill Engineering N.V.
+10.37 Supply Agreement for the AMETHYST 7 dated November 5, 1998
between Maritima Petroleo e Engenharia Ltda. and Petrodrill
Engineering N.V.
***10.38 Supply Agreement for the AMETHYST 6 dated November 5, 1998
between Maritima Petroleo e Engenharia Ltda. and Petrodrill
Engineering N.V.
***10.39 Supply Agreement for the AMETHYST 5 dated January 25, 1999
between Maritima Petroleo e Engenharia Ltda. and Petrodrill
Engineering N.V.
***10.40 Supply Agreement for the AMETHYST 4 dated January 25, 1999
between Maritima Petroleo e Engenharia Ltda. and Petrodrill
Engineering N.V.
+10.41 Supply Agreement for the AMETHYST 7 dated November 5, 1998
between Workships Contractors B.V. and Petrodrill
Engineering N.V.
***10.42 Supply Agreement for the AMETHYST 6 dated November 5, 1998
between Workships Contractors B.V. and Petrodrill
Engineering N.V.
II-10
<PAGE>
***10.43 Supply Agreement for the AMETHYST 5 between Workships
Contractors B.V. and Petrodrill Engineering N.V.
***10.44 Supply Agreement for the AMETHYST 4 between Workships
Contractors B.V. and Petrodrill Engineering N.V.
+10.45 Management Agreement for the AMETHYST 7 dated November 5,
1998 between Petrodrill Seven Limited and Formaritima Ltd.
**10.46 Management Agreement for the AMETHYST 6 dated November 5,
1998 between Petrodrill Six Limited and Formaritima Ltd.
**10.47 Management Agreement for the AMETHYST 5 dated January 25,
1999 between Petrodrill Five Limited and Formaritima Ltd.
**10.48 Management Agreement for the AMETHYST 4 dated January 25,
1999 between Petrodrill Four Limited and Formaritima Ltd.
+10.49 Technical Services Agreement for the AMETHYST 7 dated
November 5, 1998 between Formaritima Ltd. and Pride-Foramer
S.A.
***10.50 Technical Services Agreement for the AMETHYST 6 dated
November 5, 1998 between Formaritima Ltd. and Pride-Foramer
S.A.
***10.51 Technical Services Agreement for the AMETHYST 5 dated
January 25, 1999 between Formaritima Ltd. and Pride-Foramer
S.A.
***10.52 Technical Services Agreement for the AMETHYST 4 dated
January 25, 1999 between Formaritima Ltd. and Pride-Foramer
S.A.
+10.53 Local Services Agreement for the AMETHYST 7 dated November
5, 1998 between Formaritima Ltd. and Maritima Petroleo e
Engenharia Ltda.
***10.54 Local Services Agreement for the AMETHYST 6 dated November
5, 1998 between Formaritima Ltd. and Maritima Petroleo e
Engenharia Ltda.
***10.55 Local Services Agreement for the AMETHYST 5 dated January
25, 1999 between Formaritima Ltd. and Maritima Petroleo e
Engenharia Ltda.
***10.56 Local Services Agreement for the AMETHYST 4 dated January
25, 1999 between Formaritima Ltd. and Maritima Petroleo e
Engenharia Ltda.
+10.57 Marine and Nautical Services Agreement for the AMETHYST 7
dated November 5, 1998 between Formaritima Ltd. and
Workships Contractors B.V.
***10.58 Marine and Nautical Services Agreement for the AMETHYST 6
dated November 5, 1998 between Formaritima Ltd. and
Workships Contractors B.V.
**10.59 Marine and Nautical Services Agreement for the AMETHYST 5
dated November 5, 1998 between Petrodrill Five Limited and
Workships Contractors B.V.
**10.60 Marine and Nautical Services Agreement for the AMETHYST 4
dated November 5, 1998 between Petrodrill Four Limited and
Workships Contractors B.V.
+10.61 Licensing Agreement for the AMETHYST 7 dated November 5,
1998 between BiGem Holdings N.V. and Petrodrill Seven
Limited.
**10.62 Licensing Agreement for the AMETHYST 6 dated November 5,
1998 between
II-11
<PAGE>
BiGem Holdings N.V. and Petrodrill Six Limited.
**10.63 Licensing Agreement for the AMETHYST 5 dated January 25,
1999 between BiGem Holdings N.V. and Petrodrill Five
Limited.
**10.64 Licensing Agreement for the AMETHYST 4 dated January 25,
1999 between BiGem Holdings N.V. and Petrodrill Four
Limited.
+10.65 Amethyst Financial Company Ltd.'s Shareholders' Agreement
dated November 5, 1998 among Drillpetro Inc., Techdrill Inc.
and Westville Management Corporation.
+10.66 Agency and Brokerage Agreement for the AMETHYST 7 dated
April 30, 1998 among Petrodrill Seven Limited, U.K. Guaranty
& Bonding Corp. Limited and Rapisardi Investment Limited.
**10.67 Agency and Brokerage Agreement for the AMETHYST 6 dated
April 30, 1998 among Petrodrill Six Limited, U.K. Guaranty &
Bonding Corp. Limited and Rapisardi Investment Limited.
**10.68 Agency and Brokerage Agreement for the AMETHYST 5 dated
April 30, 1998 among Petrodrill Five Limited, U.K. Guaranty
& Bonding Corp. Limited and Rapisardi Investment Limited.
**10.69 Agency and Brokerage Agreement for the AMETHYST 4 dated
April 30, 1998 among Petrodrill Four Limited, U.K. Guaranty
& Bonding Corp. Limited and Rapisardi Investment Limited.
+10.70 Minutes of Agreement Relating to the Petrobras Contracts
dated July 2, 1998 among Drillpetro Inc., Techdrill Inc. and
Westville Management Corporation.
15 Awareness Letter of PricewaterhouseCoopers LLP.
+21 Subsidiaries of Amethyst Financial Company Ltd.
23.1 Consent of PricewaterhouseCoopers N.V.
23.2 Consent of PricewaterhouseCoopers LLP.
+23.3 Consent of Baker Botts L.L.P. (contained in Exhibit 8.1).
+23.4 Consent of Pedro Calmon Filho & Associados.
23.5 Consent of Pinheiro Neto - Advogados (Rio de Janeiro).
+23.6 Consent of Dancia Penn & Co. (contained in Exhibit 8.2).
+23.7 Consent of Higgs & Johnson.
+24.1 Power of Attorney for Amethyst Financial Company Ltd.
+24.2 Power of Attorney for Pride International, Inc.
25 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939, as amended, of Wilmington Trust
Company under the Indenture, on Form T-1.
+99.1 Form of Letter to Clients for Tender of Notes.
II-12
<PAGE>
+99.2 Form of Letter to The Depository Trust Company Participants
for Tender of Notes.
+99.3 Form of Notice of Guaranteed Delivery.
+99.4 Form of Transmittal Letter for Tender of Notes.
* To be filed by amendment.
** Substantially identical to the corresponding document for the AMETHYST 7
except as to the parties and the rig.
*** Substantially identical to the corresponding document for the AMETHYST 7
except as to the rig.
+ Previously filed.
++ Incorporated by reference from the filing indicated.
(b) FINANCIAL STATEMENT SCHEDULES
Not applicable.
(c) REPORTS OR APPRAISALS
Not applicable.
ITEM 22. UNDERTAKINGS
(a) Each of the undersigned registrants hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(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 thereof) 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) of the Securities Act if, in
the aggregate, the changes in volume and price represent no more than a
20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective Registration
Statement; and
(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 (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on Form S-3 or Form S-8 and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to section 13
or section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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.
(4) To file a post-effective amendment to the registration statement to
include any financial statements required by Rule 3-19 of Regulation S-X at
the start of any delayed offering or throughout a continuous offering.
II-13
<PAGE>
Financial statements and information otherwise required by Section 10(a)(3) of
the Securities Act need not be furnished, provided that the registrant
includes in the prospectus, by means of a post-effective amendment, financial
statements required pursuant to this paragraph (a)(4) and other information
necessary to ensure that all other information in the prospectus is at least
as current as the date of those financial statements. Notwithstanding the
foregoing, with respect to registration statements on Form F-3, a
post-effective amendment need not be filed to include financial statements and
information required by Section 10(a)(3) of the Securities Act or Rule 3-19 of
Regulation S-X if such financial statements and information are contained in
periodic reports filed with or furnished to the Commission by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the Form F-3.
(b) Each of the undersigned registrants hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrants' annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
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 registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(d) Each of the undersigned registrants hereby undertakes: (i) to respond to
requests for information that is incorporated by reference into the prospectus
pursuant to Item 4, 10(b), 11, or 13 of this Form, within one business day of
receipt of such request, and to send the incorporated documents by first class
mail or other equally prompt means; and (ii) to arrange or provide for a
facility in the U.S. for the purpose of responding to such requests. The
undertaking in subparagraph (i) above includes information contained in
documents filed subsequent to the effective date of the Registration Statement
through the date of responding to the request.
(e) Each of the undersigned registrants hereby undertakes to supply by means
of a post-effective amendment all information concerning the Exchange Offer that
was not the subject of and included in the Registration Statement when it became
effective.
II-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned registrant has duly caused this Registration Statement or amendment
thereto to be signed on its behalf by the undersigned, thereunto duly authorized
in the City of Rio de Janeiro, State of Rio de Janeiro, Federative Republic of
Brazil, on March 20, 2000.
AMETHYST FINANCIAL COMPANY LTD.
By */s/ GERMAN EFROMOVICH
---------------------------
German Efromovich
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment thereto has been signed by the following
persons in the capacities indicated on March 20, 2000.
SIGNATURE TITLE
------------------------------ ----------------------
*/s/ GERMAN EFROMOVICH President and Director
---------------------------- (Principal Executive Officer)
German Efromovich
*/s/ EARL W. MCNIEL Treasurer
---------------------------- (Principal Financial and
Earl W. McNiel Accounting Officer)
*/s/ JOHN C.G. O'LEARY Vice President and Director
----------------------------
John C.G. O'Leary
*/s/ HAMYLTON PADILHA Vice President and Director
----------------------------
Hamylton Padilha
/s/ ROBERT W. RANDALL Secretary
---------------------------- (Authorized Representative in
Robert W. Randall the United States)
*/s/ RICARDO SZPIGEL Director
----------------------------
Ricardo Szpigel
*By /s/ ROBERT W. RANDALL
----------------------------
Robert W. Randall
as Attorney-in-Fact
II-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
undersigned registrant has duly caused this Registration Statement or amendment
thereto to be signed on its behalf by the undersigned, thereunto duly authorized
in the City of Houston, State of Texas, on March 20, 2000.
PRIDE INTERNATIONAL, INC.
By */s/ PAUL A. BRAGG
-----------------------
Paul A. Bragg
Chief Executive Officer and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment thereto has been signed by the following
persons in the capacities indicated on March 20, 2000.
SIGNATURE TITLE
-------------------- ---------------------------
*/s/ PAUL A. BRAGG Chief Executive Officer, President
---------------------------- and Director
Paul A. Bragg (Principal Executive Officer)
*/s/ EARL W. MCNIEL Vice President, Chief Financial Officer
---------------------------- And Treasurer
Earl W. McNiel (Principal Financial Officer)
/s/ ROBERT W. RANDALL Vice President
---------------------------- and General Counsel
Robert W. Randall
*/s/ TERRY VANDAL Controller
---------------------------- (Principal Accounting Officer)
Terry Vandal
*/s/ JAMES B. CLEMENT Chairman of the Board
----------------------------
James B. Clement
*/s/ RALPH D. MCBRIDE Vice Chairman of the Board
----------------------------
Ralph D. McBride
Director
----------------------------
Christian J. Boon-Falleur
*/s/ REMI DORVAL Director
----------------------------
Remi Dorval
*/s/ JORGE E. ESTRADA MORA Director
----------------------------
Jorge E. Estrada Mora
*/s/ WILLIAM E. MACAULAY Director
----------------------------
William E. Macaulay
Director
----------------------------
James T. Sneed
*By /s/ ROBERT W. RANDALL
----------------------------
Robert W. Randall
as Attorney-in-Fact
II-16
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. EXHIBIT
- ----------------- -------------------
+3.1 Memorandum of Association of Amethyst Financial Company Ltd.
+3.2 Articles of Association of Amethyst Financial Company Ltd.
+4.1 A/B Exchange Registration Rights Agreement dated October 28,
1999 among Amethyst Financial Company Ltd., Pride
International, Inc., Maritima Petroleo e Engenharia Ltda.
and Donaldson, Lufkin & Jenrette Securities Corporation.
+4.2 Purchase Agreement dated October 28, 1999 between Amethyst
Financial Company Ltd. and Donaldson, Lufkin & Jenrette
Securities Corporation relating to $53 million aggregate
principal amount of 11 3/4% Senior Secured Notes due 2001.
+4.3 Indenture dated November 1, 1999 among Amethyst Financial
Company Ltd., Pride International, Inc., Maritima Petroleo e
Engenharia Ltda. and Wilmington Trust Company.
*4.3(a) First Supplemental Indenture dated , 2000 among
Amethyst Financial Company Ltd., Pride International, Inc.,
Maritima Petroleo e Engenharia Ltda. and Wilmington Trust
Company.
*4.4 Form of New Note (attached to the Indenture dated November
1, 1999 among Amethyst Financial Company Ltd., Pride
International, Inc., Maritima Petroleo e Engenharia Ltda.
and Wilmington Trust Company filed as Exhibit 4.3 to this
Registration Statement and amended by the First Supplemental
Indenture dated , 2000 among Amethyst Financial
Company Ltd., Pride International, Inc., Maritima Petroleo e
Engenharia Ltda. and Wilmington Trust Company filed as
Exhibit 4.3(a) to this Registration Statement).
+4.5 Senior Secured Note Security and Pledge Agreement dated
November 1, 1999 between Amethyst Financial Company Ltd. and
Wilmington Trust Company.
+4.6 Reserve Account Agreement dated November 1, 1999 between
Amethyst Financial Company Ltd. and Wilmington Trust
Company.
+4.7 Deed of Consent dated November 1, 1999 among Amethyst
Financial Company Ltd., Petrodrill Six Limited, Petrodrill
Seven Limited, Pride International, Inc., Maritima Petroleo
e Engenharia Ltda., Petro Dia Three S.A., Petro Dia Four
S.A., Mitsubishi Corporation (UK) PLC and Wilmington Trust
Company.
+4.8 Loan Agreement dated December 1998 among Petrodrill Seven
Limited, Petro Dia Three S.A., Petro Dia Four S.A. and
Mitsubishi Corporation (UK) PLC.
+4.9 Loan Agreement dated December 19, 1998 among Petrodrill Six
Limited, Petro Dia Three S.A., Petro Dia Four S.A. and
Mitsubishi Corporation (UK) PLC.
+4.10 Deed of Guarantee and Undertaking dated December 19, 1998
among Petrodrill Seven Limited, Pride International, Inc.,
Maritima Petroleo e Engenharia Ltda., Petro Dia Three S.A.,
Petro Dia Four S.A. and Mitsubishi
II-17
<PAGE>
Corporation (UK) PLC.
+4.11 Deed of Guarantee and Undertaking dated December 19, 1998
among Petrodrill Six Limited, Pride International, Inc.,
Maritima Petroleo e Engenharia Ltda., Petro Dia Three S.A.,
Petro Dia Four S.A. and Mitsubishi Corporation (UK) PLC.
+4.12 Floor Guarantee dated December 19, 1998 among Pride
International, Inc., Maritima Petroleo e Engenharia Ltda.,
Petro Dia Three S.A. and Petro Dia Four S.A.
+4.13 Inter-Company Cross Guarantee dated December 19, 1998 among
Amethyst Financial Company Ltd., Petrodrill Six Limited,
Petrodrill Seven Limited and Mitsubishi Corporation (UK)
PLC.
+4.14 Transfer Certificate dated November 1, 1999 among Amethyst
Financial Company Ltd., Petro Dia Three S.A., Petro Dia Four
S.A. and Mitsubishi Corporation (UK) PLC, relating to the
Limited Loan Agreement dated December 19, 1998 among
Petrodrill Seven Limited, Petro Dia Three S.A., Petro Dia
Four S.A. and Mitsubishi Corporation (UK) PLC.
+4.15 Transfer Certificate dated November 1, 1999 among Amethyst
Financial Company Ltd., Petro Dia Three S.A., Petro Dia Four
S.A. and Mitsubishi Corporation (UK) PLC, relating to the
Loan Agreement dated December 19, 1998 among Petrodrill Six
Limited, Petro Dia Three S.A., Petro Dia Four S.A. and
Mitsubishi Corporation (UK) PLC.
+4.16 Commitment to Guarantee Obligation by the United States of
America accepted by Petrodrill Five Limited dated April 9,
1999.
+4.17 Commitment to Guarantee Obligation by the United States of
America accepted by Petrodrill Four Limited dated April 9,
1999.
+4.18 Credit Agreement dated April 9, 1999 among Petrodrill Five
Limited, Govco Inc., Citibank, N.A., Citibank International
PLC and Citicorp North America, Inc.
+4.19 Credit Agreement dated April 9, 1999 among Petrodrill Four
Limited, Govco Inc., Citibank, N.A., Citibank International
PLC and Citicorp North America, Inc.
+4.20 Security Agreement dated April 9, 1999 between Petrodrill
Five Limited and the United States of America.
+4.21 Security Agreement dated April 9, 1999 between Petrodrill
Four Limited and the United States of America.
+4.22 Trust Indenture dated April 9, 1999 between Petrodrill Five
Limited and FMB Trust Company, National Association.
+4.23 Trust Indenture dated April 9, 1999 between Petrodrill Four
Limited and FMB Trust Company, National Association.
+4.24 Guaranty Agreement dated April 9, 1999 in favor of the
United States by Petrodrill Five Limited.
+4.25 Guaranty Agreement dated April 9, 1999 in favor of the
United States by Petrodrill Four Limited.
II-18
<PAGE>
+4.26 Guaranty Agreement dated April 9, 1999 in favor of the
United States by Pride International, Inc.
+4.27 Payment Undertaking in Favor of the United States dated
April 9, 1999 by Maritima Petroleo e Engenharia Ltda.
+4.28 Interguarantor Agreement dated April 9, 1999 between Pride
International, Inc. and Maritima Petroleo e Engenharia Ltda.
+4.29 Title XI Reserve Fund and Financial Agreement dated April 9,
1999 between Petrodrill Five Limited and the United States
of America.
+4.30 Title XI Reserve Fund and Financial Agreement dated April 9,
1999 between Petrodrill Four Limited and the United States
of America.
++4.31 Amended and Restated Credit Agreement dated as of December
22, 1997 among Pride International, Inc., each of the banks
that are or may be a party thereto, Bank One, Louisiana,
N.A. (formerly named First National Bank of Commerce), as
arranger and syndication agent, and Wells Fargo Bank
(Texas), National Association, as administrative agent and
documentation agent (incorporated by reference to Exhibit
4.8 to Pride International, Inc.'s Annual Report on Form
10-K for the year ended December 31, 1997, File No.
1-13289).
++4.32 First Amendment to Credit Agreement dated as of April 24,
1998 among Pride International, Inc., certain of its
subsidiaries, Bank One, Louisiana, N.A. (formerly named
First National Bank of Commerce), as arranger and
syndication agent, Wells Fargo Bank (Texas), National
Association, as administrative and documentation agent, and
the lenders named therein (incorporated by reference to
Exhibit 4.2 to Pride International, Inc.'s Quarterly Report
on Form 10-Q for the quarterly period ended September 30,
1998, File No. 1-13289).
++4.33 Second Amendment to Credit Agreement dated as of September
17, 1998 among Pride International, Inc., certain of its
subsidiaries, Bank One, Louisiana, N.A. (formerly named
First National Bank of Commerce), as arranger and
syndication agent, Wells Fargo Bank (Texas), National
Association, as administrative and documentation agent, and
the lenders named therein (incorporated by reference to
Exhibit 4.3 to Pride International, Inc.'s Quarterly Report
on Form 10-Q for the quarterly period ended September 30,
1998, File No. 1-13289).
++4.34 Third Amendment to Credit Agreement dated as of December 21,
1998 among Pride International, Inc., certain of its
subsidiaries, Bank One, Louisiana, N.A. (formerly named
First National Bank of Commerce), as arranger and
syndication agent, Wells Fargo Bank (Texas), National
Association, as administrative and documentation agent, and
the lenders named therein (incorporated by reference to
Exhibit 4.6 to Pride International, Inc.'s Annual Report on
Form 10-K for the year ended December 31, 1998, File No.
1-13289).
++4.35 Indenture, dated as of May 1, 1997, by and between Pride
International, Inc. and The Chase Manhattan Bank, as trustee
(incorporated by reference to Exhibit 4.1 to Pride
International, Inc.'s Quarterly Report on Form 10-Q for the
quarter ended March 31, 1997, File Nos. 0-16961 and
1-13289).
++4.36 First Supplemental Indenture, dated as of May 1, 1997, by
and between Pride International, Inc. and The Chase
Manhattan Bank, as trustee, relating to $325,000,000
principal amount of 9 3/8% Senior Notes due 2007
(incorporated by reference to Exhibit 4.2 to Pride
International, Inc.'s
II-19
<PAGE>
Quarterly Report on Form 10-Q for the quarter ended March
31, 1997, File Nos. 0-16961 and 1-13289).
++4.37 Indenture, dated as of April 1, 1998, between Pride
International, Inc. and Marine Midland Bank, as trustee,
relating to subordinated debt securities (incorporated by
reference to Exhibit 4.1 to Pride International, Inc.'s
Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1998, File No. 1-13289).
++4.38 First Supplemental Indenture, dated as of April 24, 1998,
between Pride International, Inc. and Marine Midland Bank,
as trustee, relating to Zero Coupon Convertible Subordinated
Debentures Due 2018 (incorporated by reference to Exhibit
4.2 to Pride International, Inc.'s Quarterly Report on Form
10-Q for the quarterly period ended March 31, 1998, File No.
1-13289).
Pride International, Inc. is a party to several debt instruments under
which the total amount of securities authorized does not exceed 10% of the
total assets of Pride International, Inc. and its subsidiaries on a
consolidated basis. Pursuant to paragraph 4(iii)(A) of Item 601(b) of
Regulation S-K, Pride International, Inc. agrees to furnish a copy of such
instruments to the SEC upon request.
*5 Opinion of Baker Botts L.L.P. as to the legality of the new
notes and the Pride guarantee.
+8.1 Opinion of Baker Botts L.L.P. regarding U.S. tax matters.
+8.2 Opinion of Dancia Penn & Co. regarding British Virgin
Islands tax matters.
+10.1 Chartering Contract for the AMETHYST 7 (Contract No.
101.2.155.97-9) between Maritima Navegacao e Engenharia
Ltda. and Petroleo Brasileiro S.A.--Petrobras.
+10.1(a) Rider No. 1 to the Chartering Contract for the AMETHYST 7
(Contract No. 101.2.155.97-9) dated July 10, 1998 among
Maritima Petroleo e Engenharia Ltda., Petroleo Brasileiro
S.A.--Petrobras and Petrodrill Seven Limited.
+10.2 Service Rendering Contract for the AMETHYST 7 (Contract No.
101.0.156.97-1) between Maritima Navegacao e Engenharia
Ltda. and Petroleo Brasileiro S.A.--Petrobras.
+10.2(a) Rider No. 1 to the Service Rendering Contract for the
AMETHYST 7 (Contract No. 101.2.156.97-1) dated August 21,
1998 among Maritima Petroleo e Engenharia Ltda., Petroleo
Brasileiro S.A.--Petrobras and Petrodrill Seven Limited.
+10.3 Letter Agreement dated January 15, 1998 between Maritima
Navegacao e Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras relating to the Chartering Contract for the
AMETHYST 7 (Contract No. 101.2.155.97-9) and the Service
Rendering Contract for the AMETHYST 7 (Contract No.
101.2.156.97-1).
+10.4 Letter Agreement dated January 15, 1998 between Maritima
Navegacao e Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras relating to the Chartering Contract for the
AMETHYST 7 (Contract No. 101.2.155.97-9) and the Service
Rendering Contract for the AMETHYST 7 (Contract No.
101.2.156.97-1).
+10.5 Chartering Contract for the AMETHYST 6 (Contract No.
101.2.159.97-1) dated January 12, 1998 between Maritima
Navegacao e Engenharia Ltda. and
II-20
<PAGE>
Petroleo Brasileiro S.A.--Petrobras.
+10.5(a) Rider No. 1 to the Chartering Contract for the AMETHYST 6
(Contract No. 101.2.159.97-1) dated July 10, 1998 among
Maritima Petroleo e Engenharia Ltda., Petroleo Brasileiro
S.A.--Petrobras and Petrodrill Six Limited.
+10.6 Service Rendering Contract for the AMETHYST 6 (Contract No.
101.2.160.97-0) dated January 12, 1998 between Maritima
Navegacao e Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras.
+10.6(a) Rider No. 1 to the Service Rendering Contract for the
AMETHYST 6 (Contract No. 101.2.160.97-0) dated August 21,
1998 among Maritima Petroleo e Engenharia Ltda., Petroleo
Brasileiro S.A.--Petrobras and Petrodrill Six Limited.
+10.7 Letter Agreement dated January 15, 1998 between Maritima
Navegacao e Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras relating to the Chartering Contract for the
AMETHYST 6 (Contract No. 101.2.159.97-1) and the Service
Rendering Contract for the AMETHYST 6 (Contract No.
101.2.160.97-0).
+10.8 Letter Agreement dated January 15, 1998 between Maritima
Petroleo e Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras relating to the Chartering Contract for the
AMETHYST 6 (Contract No. 101.2.159.97-1) and the Service
Rendering Contract for the AMETHYST 6 (Contract No.
101.2.160.97-0).
+10.9 Chartering Contract for the AMETHYST 5 (Contract No.
101.2.100.97-8) dated December 5, 1997 between Maritima
Navegacao e Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras.
+10.9(a) Rider No. 1 to the Chartering Contract for the AMETHYST 5
(Contract No. 101.2.100.97-8) dated July 10, 1998 among
Maritima Petroleo e Engenharia Ltda., Petroleo Brasileiro
S.A.--Petrobras and Petrodrill Five Limited.
+10.10 Service Rendering Contract for the AMETHYST 5 (Contract No.
101.2.101.97-0) between Maritima Navegacao e Engenharia
Ltda. and Petroleo Brasileiro S.A.--Petrobras.
+10.10(a) Rider No. 1 to the Service Rendering Contract for the
AMETHYST 5 (Contract No. 101.2.101.97-0) dated August 21,
1998 among Maritima Petroleo e Engenharia Ltda., Petroleo
Brasileiro S.A.--Petrobras and Petrodrill Five Limited.
+10.11 Letter Agreement dated December 5, 1997 between Maritima
Navegacao e Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras relating to the Chartering Contract for the
AMETHYST 5 (Contract No. 101.2.100.97-8) and the Service
Rendering Contract for the AMETHYST 5 (Contract No.
101.2.101.97-0).
+10.12 Letter Agreement dated January 15, 1998 between Maritima
Petroleo e Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras relating to the Chartering Contract for the
AMETHYST 5 (Contract No. 101.2.100.97-8) and the Service
Rendering Contract for the AMETHYST 5 (Contract No.
101.2.101.97-0).
+10.13 Chartering Contract for the AMETHYST 4 (Invitation to Bid
No. 101.2.063.97-8) between Maritima Navegacao e Engenharia
Ltda. and Petroleo Brasileiro S.A.--Petrobras.
II-21
<PAGE>
+10.13(a) Rider No. 1 to the Chartering Contract for the AMETHYST 4
(Invitation to Bid No. 101.2.063.97-8) dated July 10, 1998
among Maritima Petroleo e Engenharia Ltda., Petroleo
Brasileiro S.A.--Petrobras and Petrodrill Four Limited.
+10.14 Service Rendering Contract for the AMETHYST 4 (Invitation to
Bid No. 101.2.064.97-0) between Maritima Navegacao e
Engenharia Ltda. and Petroleo Brasileiro S.A.--Petrobras.
+10.14(a) Rider No. 1 to the Service Rendering Contract for the
AMETHYST 4 (Invitation to Bid No. 101.2.064.97-0) dated
August 21, 1998 among Maritima Petroleo e Engenharia Ltda.,
Petroleo Brasileiro S.A.--Petrobras and Petrodrill Four
Limited.
+10.15 Letter Agreement dated December 5, 1997 between Maritima
Navegacao e Engenharia Ltda. and Petroleo Brasileiro
S.A.--Petrobras relating to the Chartering Contract for the
AMETHYST 4 (Contract No. 101.2.063.97-2) and the Service
Rendering Contract for the AMETHYST 4 (Invitation to Bid No.
101.2.064.97-0).
+10.16 Letter dated May 28, 1998 from Petroleo Brasileiro
S.A.--Petrobras to Maritima Navegacao e Engenharia Ltda.
regarding the Chartering Contracts and Service Rendering
Contracts.
+10.17 Shipbuilding Contract dated April 9, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and Petrodrill
Construction Inc., for Hull No. 3015 (AMETHYST 7).
+10.17(a) Side Letter No. 1 dated April 9, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and Petrodrill
Construction Inc. for Hull No. 3015 (AMETHYST 7).
+10.17(b) Side Letter No. 2 dated April 9, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and Petrodrill
Construction Inc. for Hull No. 3015 (AMETHYST 7).
+10.17(c) Novation Agreement dated December 4, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd., Petrodrill
Offshore Inc. and Petrodrill Seven Limited for Hull No. 3015
(AMETHYST 7).
+10.17(d) Main Contract Amendment dated December 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and Petrodrill
Seven Limited for Hull No. 3015 (AMETHYST 7).
+10.17(e) Main Contract Amendment II dated January 28, 1999 among
Daewoo Corporation, Daewoo Heavy Industries Ltd. and
Petrodrill Seven Limited for Hull No. 3015 (AMETHYST 7).
+10.18 Refund Guarantee issued by The Export-Import Bank of Korea
to Petrodrill Construction Inc. dated April 16, 1998 for
Hull No. 3015 (AMETHYST 7).
+10.18(a) Novation Agreement in respect of the Refund Guarantee dated
December 4, 1998 among The Export-Import Bank of Korea,
Petrodrill Offshore Inc. and Petrodrill Seven Limited for
Hull No. 3015 (AMETHYST 7).
+10.18(b) Letter of Amendment of Refund Guarantee issued by The
Export-Import Bank of Korea to Petrodrill Seven Limited
dated April 6, 1999 for Hull No. 3015 (AMETHYST 7).
II-22
<PAGE>
+10.19 Shipbuilding Contract dated April 9, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and Petrodrill
Construction Inc. for Hull No. 3016 (AMETHYST 6).
+10.19(a) Side Letter No. 1 dated April 9, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and Petrodrill
Construction Inc. for Hull No. 3016 (AMETHYST 6).
+10.19(b) Side Letter No. 2 dated April 9, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and Petrodrill
Construction Inc. for Hull No. 3016 (AMETHYST 6).
+10.19(c) Novation Agreement dated December 4, 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd., Petrodrill
Offshore Inc. and Petrodrill Six Limited for Hull No. 3016
(AMETHYST 6).
+10.19(d) Main Contract Amendment dated December 1998 among Daewoo
Corporation, Daewoo Heavy Industries Ltd. and Petrodrill Six
Limited for Hull No. 3016 (AMETHYST 6).
+10.19(e) Main Contract Amendment II dated January 28, 1999 among
Daewoo Corporation, Daewoo Heavy Industries Ltd. and
Petrodrill Six Limited for Hull No. 3016 (AMETHYST 6).
+10.20 Refund Guarantee issued by The Export-Import Bank of Korea
to Petrodrill Construction Inc. dated April 16, 1998 for
Hull No. 3016 (AMETHYST 6).
+10.20(a) Novation Agreement in respect of the Refund Guarantee dated
December 4, 1998 among The Export-Import Bank of Korea,
Petrodrill Offshore Inc. and Petrodrill Six Limited for Hull
No. 3016 (AMETHYST 6).
+10.20(b) Letter of Amendment of Refund Guarantee issued by The
Export-Import Bank of Korea to Petrodrill Six Limited dated
April 6, 1999 for Hull No. 3016 (AMETHYST 6).
+10.21 Shipbuilding Contract dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for Hull
No. 1829 (AMETHYST 5).
+10.21(a) Side Letter No. 1 dated April 9, 1998 between TDI-Halter,
L.P. and Petrodrill Construction Inc. for Hull No. 1829
(AMETHYST 5).
+10.21(b) Side Letter No. 2 dated April 9, 1998 between TDI-Halter,
L.P. and Petrodrill Construction Inc. for Hull No. 1829
(AMETHYST 5).
+10.21(c) Side Letter No. 3 dated April 9, 1998 between TDI-Halter,
L.P. and Petrodrill Construction Inc. for Hull No. 1829
(AMETHYST 5).
+10.21(d) Side Letter No. 4 dated April 9, 1998 between TDI-Halter,
L.P. and Petrodrill Construction Inc. for Hull No. 1829
(AMETHYST 5).
+10.21(e) Side Letter No. 5 dated April 9, 1998 between TDI-Halter,
L.P. and Petrodrill Construction Inc. for Hull No. 1829
(AMETHYST 5).
+10.21(f) Novation Agreement dated December 9, 1998 between
TDI-Halter, L.P., Petrodrill Offshore Inc. and Petrodrill
Five Limited for Hull No. 1829 (AMETHYST 5).
+10.21(g) Amendment No. 1 to Semi-Submersible Drilling Vessel
Construction Contract dated April 9, 1999 between
TDI-Halter, L.P. and Petrodrill Five
II-23
<PAGE>
Limited for Hull No. 1829 (AMETHYST 5).
+10.22 Performance Bond dated April 13, 1998 between TDI-Halter,
L.P. and Fireman's Fund Insurance Company in connection with
the construction of Hull No. 1829 (AMETHYST 5).
+10.23 Labor and Material Payment Bond dated April 13, 1998 between
TDI-Halter, L.P. and Fireman's Fund Insurance Company in
connection with the construction of Hull No. 1829 (AMETHYST
5).
+10.24 Parent Guarantee dated April 15, 1998 by Halter Marine
Group, Inc. in connection with the construction of Hull No.
1829 (AMETHYST 5).
+10.25 Shipbuilding Contract dated April 9, 1998 between
TDI-Halter, L.P. and Petrodrill Construction Inc. for Hull
No. 1828 (AMETHYST 4).
+10.25(a) Side Letter No. 1 dated April 9, 1998 between TDI-Halter,
L.P. and Petrodrill Construction Inc. for Hull No. 1828
(AMETHYST 4).
+10.25(b) Side Letter No. 2 dated April 9, 1998 between TDI-Halter,
L.P. and Petrodrill Construction Inc. for Hull No. 1828
(AMETHYST 4).
+10.25(c) Side Letter No. 3 dated April 9, 1998 between TDI-Halter,
L.P. and Petrodrill Construction Inc. for Hull No. 1828
(AMETHYST 4).
+10.25(d) Side Letter No. 4 dated April 9, 1998 between TDI-Halter,
L.P. and Petrodrill Construction Inc. for Hull No. 1828
(AMETHYST 4).
+10.25(e) Side Letter No. 5 dated April 9, 1998 between TDI-Halter,
L.P. and Petrodrill Construction Inc. for Hull No. 1828
(AMETHYST 4).
+10.25(f) Novation Agreement dated December 9, 1998 between
TDI-Halter, L.P., Petrodrill Offshore Inc. and Petrodrill
Four Limited for Hull No. 1828 (AMETHYST 4).
+10.25(g) Amendment No. 1 to Semi-Submersible Drilling Vessel
Construction Contract dated April 9, 1999 between
TDI-Halter, L.P. and Petrodrill Four Limited for Hull No.
1828 (AMETHYST 4).
+10.26 Performance Bond dated April 13, 1998 between TDI-Halter,
L.P. and Fireman's Fund Insurance Company in connection with
the construction of Hull No. 1828 (AMETHYST 4).
+10.27 Labor and Material Payment Bond dated April 13, 1998 between
TDI-Halter, L.P. and Fireman's Fund Insurance Company in
connection with the construction of Hull No. 1828 (AMETHYST
4).
+10.28 Parent Guarantee dated April 15, 1998 by Halter Marine
Group, Inc. in connection with the construction of Hull No.
1828 (AMETHYST 4).
+10.29 Construction Management Agreement dated November 5, 1998
between Petrodrill Seven Limited and Petrodrill Engineering
N.V. for the AMETHYST 7.
**10.30 Construction Management Agreement dated November 5, 1998
between Petrodrill Six Limited and Petrodrill Engineering
N.V. for the AMETHYST 6.
**10.31 Construction Management Agreement dated January 25, 1999
between Petrodrill Five Limited and Petrodrill Engineering
N.V. for the AMETHYST 5.
II-24
<PAGE>
**10.32 Construction Management Agreement dated January 25, 1999
between Petrodrill Four Limited and Petrodrill Engineering
N.V. for the AMETHYST 4.
+10.33 Supply Agreement for the AMETHYST 7 dated November 5, 1998
between Pride-Foramer S.A. and Petrodrill Engineering N.V.
***10.34 Supply Agreement for the AMETHYST 6 dated November 5, 1998
between Pride-Foramer S.A. and Petrodrill Engineering N.V.
***10.35 Supply Agreement for the AMETHYST 5 dated January 25, 1999
between Pride-Foramer S.A. and Petrodrill Engineering N.V.
***10.36 Supply Agreement for the AMETHYST 4 dated January 25, 1999
between Pride-Foramer S.A. and Petrodrill Engineering N.V.
+10.37 Supply Agreement for the AMETHYST 7 dated November 5, 1998
between Maritima Petroleo e Engenharia Ltda. and Petrodrill
Engineering N.V.
***10.38 Supply Agreement for the AMETHYST 6 dated November 5, 1998
between Maritima Petroleo e Engenharia Ltda. and Petrodrill
Engineering N.V.
***10.39 Supply Agreement for the AMETHYST 5 dated January 25, 1999
between Maritima Petroleo e Engenharia Ltda. and Petrodrill
Engineering N.V.
***10.40 Supply Agreement for the AMETHYST 4 dated January 25, 1999
between Maritima Petroleo e Engenharia Ltda. and Petrodrill
Engineering N.V.
+10.41 Supply Agreement for the AMETHYST 7 dated November 5, 1998
between Workships Contractors B.V. and Petrodrill
Engineering N.V.
***10.42 Supply Agreement for the AMETHYST 6 dated November 5, 1998
between Workships Contractors B.V. and Petrodrill
Engineering N.V.
***10.43 Supply Agreement for the AMETHYST 5 between Workships
Contractors B.V. and Petrodrill Engineering N.V.
***10.44 Supply Agreement for the AMETHYST 4 between Workships
Contractors B.V. and Petrodrill Engineering N.V.
+10.45 Management Agreement for the AMETHYST 7 dated November 5,
1998 between Petrodrill Seven Limited and Formaritima Ltd.
**10.46 Management Agreement for the AMETHYST 6 dated November 5,
1998 between Petrodrill Six Limited and Formaritima Ltd.
**10.47 Management Agreement for the AMETHYST 5 dated January 25,
1999 between Petrodrill Five Limited and Formaritima Ltd.
**10.48 Management Agreement for the AMETHYST 4 dated January 25,
1999 between Petrodrill Four Limited and Formaritima Ltd.
+10.49 Technical Services Agreement for the AMETHYST 7 dated
November 5, 1998 between Formaritima Ltd. and Pride-Foramer
S.A.
***10.50 Technical Services Agreement for the AMETHYST 6 dated
November 5, 1998 between Formaritima Ltd. and Pride-Foramer
S.A.
***10.51 Technical Services Agreement for the AMETHYST 5 dated
January 25, 1999 between Formaritima Ltd. and Pride-Foramer
S.A.
II-25
<PAGE>
***10.52 Technical Services Agreement for the AMETHYST 4 dated
January 25, 1999 between Formaritima Ltd. and Pride-Foramer
S.A.
+10.53 Local Services Agreement for the AMETHYST 7 dated November
5, 1998 between Formaritima Ltd. and Maritima Petroleo e
Engenharia Ltda.
***10.54 Local Services Agreement for the AMETHYST 6 dated November
5, 1998 between Formaritima Ltd. and Maritima Petroleo e
Engenharia Ltda.
***10.55 Local Services Agreement for the AMETHYST 5 dated January
25, 1999 between Formaritima Ltd. and Maritima Petroleo e
Engenharia Ltda.
***10.56 Local Services Agreement for the AMETHYST 4 dated January
25, 1999 between Formaritima Ltd. and Maritima Petroleo e
Engenharia Ltda.
+10.57 Marine and Nautical Services Agreement for the AMETHYST 7
dated November 5, 1998 between Formaritima Ltd. and
Workships Contractors B.V.
***10.58 Marine and Nautical Services Agreement for the AMETHYST 6
dated November 5, 1998 between Formaritima Ltd. and
Workships Contractors B.V.
**10.59 Marine and Nautical Services Agreement for the AMETHYST 5
dated November 5, 1998 between Petrodrill Five Limited and
Workships Contractors B.V.
**10.60 Marine and Nautical Services Agreement for the AMETHYST 4
dated November 5, 1998 between Petrodrill Four Limited and
Workships Contractors B.V.
+10.61 Licensing Agreement for the AMETHYST 7 dated November 5,
1998 between BiGem Holdings N.V. and Petrodrill Seven
Limited.
**10.62 Licensing Agreement for the AMETHYST 6 dated November 5,
1998 between BiGem Holdings N.V. and Petrodrill Six Limited.
**10.63 Licensing Agreement for the AMETHYST 5 dated January 25,
1999 between BiGem Holdings N.V. and Petrodrill Five
Limited.
**10.64 Licensing Agreement for the AMETHYST 4 dated January 25,
1999 between BiGem Holdings N.V. and Petrodrill Four
Limited.
+10.65 Amethyst Financial Company Ltd.'s Shareholders' Agreement
dated November 5, 1998 among Drillpetro Inc., Techdrill Inc.
and Westville Management Corporation.
+10.66 Agency and Brokerage Agreement for the AMETHYST 7 dated
April 30, 1998 among Petrodrill Seven Limited, U.K. Guaranty
& Bonding Corp. Limited and Rapisardi Investment Limited.
**10.67 Agency and Brokerage Agreement for the AMETHYST 6 dated
April 30, 1998 among Petrodrill Six Limited, U.K. Guaranty &
Bonding Corp. Limited and Rapisardi Investment Limited.
**10.68 Agency and Brokerage Agreement for the AMETHYST 5 dated
April 30, 1998 among Petrodrill Five Limited, U.K. Guaranty
& Bonding Corp. Limited and Rapisardi Investment Limited.
**10.69 Agency and Brokerage Agreement for the AMETHYST 4 dated
April 30, 1998 among Petrodrill Four Limited, U.K. Guaranty
& Bonding Corp. Limited and Rapisardi Investment Limited.
II-26
<PAGE>
+10.70 Minutes of Agreement Relating to the Petrobras Contracts
dated July 2, 1998 among Drillpetro Inc., Techdrill Inc. and
Westville Management Corporation.
15 Awareness Letter of PricewaterhouseCoopers LLP.
+21 Subsidiaries of Amethyst Financial Company Ltd.
23.1 Consent of PricewaterhouseCoopers N.V.
23.2 Consent of PricewaterhouseCoopers LLP.
+23.3 Consent of Baker Botts L.L.P. (contained in Exhibit 8.1).
+23.4 Consent of Pedro Calmon Filho & Associados.
23.5 Consent of Pinheiro Neto - Advogados (Rio de Janeiro).
+23.6 Consent of Dancia Penn & Co. (contained in Exhibit 8.2).
+23.7 Consent of Higgs & Johnson.
+24.1 Power of Attorney for Amethyst Financial Company Ltd.
+24.2 Power of Attorney for Pride International, Inc.
25 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939, as amended, of Wilmington Trust
Company under the Indenture, on Form T-1.
+99.1 Form of Letter to Clients for Tender of Notes.
+99.2 Form of Letter to The Depository Trust Company Participants
for Tender of Notes.
+99.3 Form of Notice of Guaranteed Delivery.
+99.4 Form of Transmittal Letter for Tender of Notes.
* To be filed by amendment.
** Substantially identical to the corresponding document for the AMETHYST
7 except as to the parties and the rig.
*** Substantially identical to the corresponding document for the AMETHYST
7 except as to the rig.
+ Previously filed.
++ Incorporated by reference from the filing indicated.
EXHIBIT 15
AWARENESS LETTER OF INDEPENDENT ACCOUNTANTS
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: Pride International, Inc.
Quarterly Reports on Form 10-Q
We are aware that our reports dated May 14, 1999, August 13, 1999 and
November 12, 1999 on our reviews of interim financial information of Pride
International, Inc. for the three-month periods ended March 31, 1999 and 1998,
six-month periods ended June 30, 1999 and 1998 and nine-month periods ended
September 30, 1999 and 1998, respectively, and included in Pride International,
Inc.'s quarterly report on Forms 10-Q for the quarters ended March 31, 1999,
June 30, 1999 and September 30, 1999 are incorporated by reference in its
Registration Statement on Form S-4 filed on March 21, 2000.
Very truly yours,
PricewaterhouseCoopers LLP
Houston, Texas
March 21, 2000
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in this Registration Statement on Form F-4 of
Amethyst Financial Company Ltd. of our report (which contains an explanatory
paragraph relating to the Company's ability to continue as a going concern as
described in Notes 1, 4 and 9 to the financial statements) dated March 16, 2000
relating to the financial statements of Amethyst Financial Company Ltd., which
appears in this Registration Statement. We also consent to the reference to us
under the heading "Experts" in this Registration Statement.
PRICEWATERHOUSECOOPERS N.V.
Rotterdam, The Netherlands
March 20, 2000
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form F-4 of Amethyst Financial Company Ltd. and Form S-4 of Pride
International, Inc. of our report dated March 30, 1999 relating to the financial
statements of Pride International, Inc., which appears in Pride International,
Inc.'s 1998 Annual Report to Shareholders, which is incorporated by reference in
its Annual Report on Form 10-K for the year ended December 31, 1998. We also
consent to the reference to us as contained in Appendix A in this Registration
Statement.
PRICEWATERHOUSECOOPERS LLP
Houston, Texas
March 20, 2000
EXHIBIT 23.5
CONSENT OF PINHEIRO NETO - ADVOGADOS
We have acted as special Brazilian counsel to the initial purchaser of the
old notes. We have generally reviewed the statements contained in the prospectus
included in this Registration Statment on Forms F-4 and S-4 of Amethyst
Financial Company Ltd. and Pride International, Inc. and hereby consent to the
references to our firm under the captions "Risk Factors - Risk Factors Relating
to Our Business" and "Description of New Notes - Enforceability of Judgments" in
the aforementioned prospectus.
We have not independently verified, and we are not passing upon, and we do
not assume any responsibility for, the accuracy, completeness or fairness of the
statements contained in the prospectus included in this Registration Statement
on Forms F-4 and S-4 of Amethyst Financial Company Ltd. and Pride International,
Inc., except for the legal matters expressly described under the captions "Risk
Factors - Risk Factors Relating to Our Business" and "Description of New Notes -
Enforceability of Judgments" arising under Brazilian law as presently existing.
Rio de Janeiro, December 9, 1999
PINHEIRO NETO - ADVOGADOS
EXHIBIT 25
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) [ ]
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
AMETHYST FINANCIAL COMPANY LTD.
PRIDE INTERNATIONAL, INC.
(Exact name of obligor as specified in its charter)
British Virgin Islands None
Louisiana 76-0069030
(State of incorporation) (I.R.S. employer identification no.)
Amethyst Financial Company Ltd.
c/o Arias Fabrega & Fabrega Trust Co. BVI Limited
325 Waterfront Drive
Omar Hodge Bldg., Second Floor
Wickham's Cay, Road Town
Tortola, British Virgin Islands
(Address of principal executive offices) (Zip Code)
11 3/4% New Senior Secured Notes due 2001
(Title of the indenture securities)
================================================================================
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the trustee
and upon information furnished by the obligor, the obligor is not an
affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which includes the
certificate of authority of Wilmington Trust Company to commence
business and the authorization of Wilmington Trust Company to
exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b) of
Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 10th day
of December, 1999.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ JAMES P. LAWLER By: /s/ NORMA P. CLOSS
-------------------- -------------------
Assistant Secretary Name: Norma P. Closs
Title: Vice President
2
<PAGE>
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
<PAGE>
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name
of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks and
trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended shall
in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of Delaware
is at Rodney Square North, in the City of Wilmington, County of New
Castle; the name of its resident agent is WILMINGTON TRUST COMPANY whose
address is Rodney Square North, in said City. In addition to such
principal office, the said corporation maintains and operates branch
offices in the City of Newark, New Castle County, Delaware, the Town of
Newport, New Castle County, Delaware, at Claymont, New Castle County,
Delaware, at Greenville, New Castle County Delaware, and at Milford
Cross Roads, New Castle County, Delaware, and shall be empowered to
open, maintain and operate branch offices at Ninth and Shipley Streets,
418 Delaware Avenue, 2120 Market Street, and 3605 Market Street, all in
the City of Wilmington, New Castle County, Delaware, and such other
branch offices or places of business as may be authorized from time to
time by the agency or agencies of the government of the State of
Delaware empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation
are to do any or all of the things herein mentioned as fully and to the
same extent as natural persons might or could do and in any part of the
world, viz.:
(1) To sue and be sued, complain and defend in any Court of law or
equity and to make and use a common seal, and alter the seal at
pleasure, to hold, purchase, convey, mortgage or otherwise deal in
real and personal estate and property, and to appoint such officers
and agents as the business of the Corporation shall require, to
make by-laws not inconsistent with the Constitution or laws of the
United States or of this State, to discount bills, notes or other
evidences of debt, to receive deposits of money, or securities for
<PAGE>
money, to buy gold and silver bullion and foreign coins, to buy and
sell bills of exchange, and generally to use, exercise and enjoy
all the powers, rights, privileges and franchises incident to a
corporation which are proper or necessary for the transaction of
the business of the Corporation hereby created.
(2) To insure titles to real and personal property, or any estate
or interests therein, and to guarantee the holder of such property,
real or personal, against any claim or claims, adverse to his
interest therein, and to prepare and give certificates of title for
any lands or premises in the State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the receipt,
collection, custody, investment and management of funds, and the
purchase, sale, management and disposal of property of all
descriptions, and to prepare and execute all papers which may be
necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every
description, and to carry on the business of conveyancing in all
its branches.
(5) To receive upon deposit for safekeeping money, jewelry, plate,
deeds, bonds and any and all other personal property of every sort
and kind, from executors, administrators, guardians, public
officers, courts, receivers, assignees, trustees, and from all
fiduciaries, and from all other persons and individuals, and from
all corporations whether state, municipal, corporate or private,
and to rent boxes, safes, vaults and other receptacles for such
property.
(6) To act as agent or otherwise for the purpose of registering,
issuing, certificating, countersigning, transferring or
underwriting the stock, bonds or other obligations of any
corporation, association, state or municipality, and may receive
and manage any sinking fund therefor on such terms as may be agreed
upon between the two parties, and in like manner may act as
Treasurer of any corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond or
other instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in conjunction
with any other person or persons, corporation or corporations.
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding places
of responsibility or trust; to become surety for any person, or
persons, for the faithful performance of any trust, office, duty,
contract or agreement, either by itself or in conjunction with any
other person, or persons, corporation, or corporations, or in like
manner become surety upon any bond, recognizance, obligation,
judgment,
2
<PAGE>
suit, order, or decree to be entered in any court of record within
the State of Delaware or elsewhere, or which may now or hereafter
be required by any law, judge, officer or court in the State of
Delaware or elsewhere.
(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other trust
capacity in the receiving, holding, managing, and disposing of any
and all estates and property, real, personal or mixed, and to be
appointed as such trustee, trustee in bankruptcy, receiver,
assignee, assignee in bankruptcy, executor, administrator, guardian
or bailee by any persons, corporations, court, officer, or
authority, in the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation, court,
officer or authority such trustee, trustee in bankruptcy, receiver,
assignee, assignee in bankruptcy, executor, administrator,
guardian, bailee, or in any other trust capacity, it shall not be
required to give bond with surety, but its capital stock shall be
taken and held as security for the performance of the duties
devolving upon it by such appointment.
(10) And for its care, management and trouble, and the exercise of
any of its powers hereby given, or for the performance of any of
the duties which it may undertake or be called upon to perform, or
for the assumption of any responsibility the said Corporation may
be entitled to receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without the
State of Delaware, or of the Government of the United States, or of
any state, territory, colony, or possession thereof, or of any
foreign government or country; to receive, collect, receipt for,
and dispose of interest, dividends and income upon and from any of
the bonds, mortgages, debentures, notes, shares of capital stock,
securities, obligations, contracts, evidences of indebtedness and
other property held and owned by it, and to exercise in respect of
all such bonds, mortgages, debentures, notes, shares of capital
stock, securities, obligations, contracts, evidences of
indebtedness and other property, any and all the rights, powers and
privileges of individual owners thereof, including the right to
vote thereon; to invest and deal in and with any of the moneys of
the Corporation upon such securities and in such manner as it may
think fit and proper, and from time to time to vary or realize such
investments; to issue bonds and secure the same by pledges or deeds
of trust or mortgages of or upon the whole or any part of the
property held or owned by the Corporation, and to sell and pledge
such bonds, as and when the Board of Directors shall determine, and
in the promotion of its said corporate business of investment and
to the extent authorized by law, to lease, purchase, hold, sell,
assign, transfer, pledge, mortgage and convey real and personal
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property of any name and nature and any estate or interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred by
the laws of the State of Delaware, it is hereby expressly provided that
the said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the same
extent as natural persons might or could do, and in any part of the
world.
(2) To acquire the good will, rights, property and franchises and
to undertake the whole or any part of the assets and liabilities of
any person, firm, association or corporation, and to pay for the
same in cash, stock of this Corporation, bonds or otherwise; to
hold or in any manner to dispose of the whole or any part of the
property so purchased; to conduct in any lawful manner the whole or
any part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien, and to
lease, sell, exchange, transfer, or in any manner whatever dispose
of property, real, personal or mixed, wherever situated.
(4) To enter into, make, perform and carry out contracts of every
kind with any person, firm, association or corporation, and,
without limit as to amount, to draw, make, accept, endorse,
discount, execute and issue promissory notes, drafts, bills of
exchange, warrants, bonds, debentures, and other negotiable or
transferable instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same extent
as natural persons might or could do, to purchase or otherwise
acquire, to hold, own, to mortgage, sell, convey or otherwise
dispose of, real and personal property, of every class and
description, in any State, District, Territory or Colony of the
United States, and in any foreign country or place.
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall (except
where otherwise expressed in said paragraph) be nowise limited or
restricted by reference to or inference from the terms of any other
clause of this or any other paragraph in this charter, but that the
objects, purposes and powers specified in each of the clauses of
this paragraph shall be regarded as independent objects, purposes
and powers.
FOURTH: - (a) The total number of shares of all classes of stock which
the Corporation shall have authority to issue is forty-one million
(41,000,000) shares, consisting of:
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(1) One million (1,000,000) shares of Preferred stock, par value
$10.00 per share (hereinafter referred to as "Preferred Stock");
and
(2) Forty million (40,000,000) shares of Common Stock, par value
$1.00 per share (hereinafter referred to as "Common Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares of
any one series of Preferred Stock shall be alike in every particular,
except that there may be different dates from which dividends, if any,
thereon shall be cumulative, if made cumulative. The voting powers and
the preferences and relative, participating, optional and other special
rights of each such series, and the qualifications, limitations or
restrictions thereof, if any, may differ from those of any and all other
series at any time outstanding; and, subject to the provisions of
subparagraph 1 of Paragraph (c) of this Article FOURTH, the Board of
Directors of the Corporation is hereby expressly granted authority to
fix by resolution or resolutions adopted prior to the issuance of any
shares of a particular series of Preferred Stock, the voting powers and
the designations, preferences and relative, optional and other special
rights, and the qualifications, limitations and restrictions of such
series, including, but without limiting the generality of the foregoing,
the following:
(1) The distinctive designation of, and the number of shares of
Preferred Stock which shall constitute such series, which number
may be increased (except where otherwise provided by the Board of
Directors) or decreased (but not below the number of shares thereof
then outstanding) from time to time by like action of the Board of
Directors;
(2) The rate and times at which, and the terms and conditions on
which, dividends, if any, on Preferred Stock of such series shall
be paid, the extent of the preference or relation, if any, of such
dividends to the dividends payable on any other class or classes,
or series of the same or other class of stock and whether such
dividends shall be cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of such
series to convert the same into or exchange the same for, shares of
any other class or classes or of any series of the same or any
other class or classes of stock of the Corporation and the terms
and conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be subject
to redemption, and the redemption price or prices and the time or
times at which, and the terms and conditions on which, Preferred
Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of such
series upon the voluntary or involuntary liquidation, merger,
consolidation, distribution or
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sale of assets, dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of such
series; and
(7) The voting powers, if any, of the holders of such series of
Preferred Stock which may, without limiting the generality of the
foregoing include the right, voting as a series or by itself or
together with other series of Preferred Stock or all series of
Preferred Stock as a class, to elect one or more directors of the
Corporation if there shall have been a default in the payment of
dividends on any one or more series of Preferred Stock or under
such circumstances and on such conditions as the Board of Directors
may determine.
(c) (1) After the requirements with respect to preferential dividends on
the Preferred Stock (fixed in accordance with the provisions of section
(b) of this Article FOURTH), if any, shall have been met and after the
Corporation shall have complied with all the requirements, if any, with
respect to the setting aside of sums as sinking funds or redemption or
purchase accounts (fixed in accordance with the provisions of section
(b) of this Article FOURTH), and subject further to any conditions which
may be fixed in accordance with the provisions of section (b) of this
Article FOURTH, then and not otherwise the holders of Common Stock shall
be entitled to receive such dividends as may be declared from time to
time by the Board of Directors.
(2) After distribution in full of the preferential amount, if any,
(fixed in accordance with the provisions of section (b) of this
Article FOURTH), to be distributed to the holders of Preferred
Stock in the event of voluntary or involuntary liquidation,
distribution or sale of assets, dissolution or winding- up, of the
Corporation, the holders of the Common Stock shall be entitled to
receive all of the remaining assets of the Corporation, tangible
and intangible, of whatever kind available for distribution to
stockholders ratably in proportion to the number of shares of
Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the provisions
of such resolution or resolutions as may be adopted by the Board of
Directors pursuant to section (b) of this Article FOURTH, each
holder of Common Stock shall have one vote in respect of each share
of Common Stock held on all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or of
options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the Corporation shall have any
preemptive right to purchase or subscribe for any unissued stock of any
class or series or any additional shares of any class or series to be
issued by reason of any increase of the authorized capital stock of the
Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for
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stock of the Corporation of any class or series, or carrying any right
to purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of stock or
securities convertible into or exchangeable for stock, or carrying any
right to purchase stock, may be issued and disposed of pursuant to
resolution of the Board of Directors to such persons, firms,
corporations or associations, whether such holders or others, and upon
such terms as may be deemed advisable by the Board of Directors in the
exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case, be
as fixed from time to time by the Board of Directors in the resolution
or resolutions adopted pursuant to authority granted in section (b) of
this Article FOURTH and the consent, by class or series vote or
otherwise, of the holders of such of the series of Preferred Stock as
are from time to time outstanding shall not be required for the issuance
by the Board of Directors of any other series of Preferred Stock whether
or not the powers, preferences and rights of such other series shall be
fixed by the Board of Directors as senior to, or on a parity with, the
powers, preferences and rights of such outstanding series, or any of
them; provided, however, that the Board of Directors may provide in the
resolution or resolutions as to any series of Preferred Stock adopted
pursuant to section (b) of this Article FOURTH that the consent of the
holders of a majority (or such greater proportion as shall be therein
fixed) of the outstanding shares of such series voting thereon shall be
required for the issuance of any or all other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board
of Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased
from time to time by the affirmative vote of the holders of a majority
of the stock of the Corporation entitled to vote thereon.
FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shall be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the
whole Board, provided, however, that the number of directors shall not
be reduced so as to shorten the term of any director at the time in
office, and provided further, that the number of directors constituting
the whole Board shall be twenty-four until otherwise fixed by a majority
of the whole Board.
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(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in 1982,
directors of the first class shall be elected to hold office for a term
expiring at the next succeeding annual meeting, directors of the second
class shall be elected to hold office for a term expiring at the second
succeeding annual meeting and directors of the third class shall be
elected to hold office for a term expiring at the third succeeding
annual meeting. Any vacancies in the Board of Directors for any reason,
and any newly created directorships resulting from any increase in the
directors, may be filled by the Board of Directors, acting by a majority
of the directors then in office, although less than a quorum, and any
directors so chosen shall hold office until the next annual election of
directors. At such election, the stockholders shall elect a successor to
such director to hold office until the next election of the class for
which such director shall have been chosen and until his successor shall
be elected and qualified. No decrease in the number of directors shall
shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding the
fact that some lesser percentage may be specified by law, this Charter
or Act of Incorporation or the By- Laws of the Corporation), any
director or the entire Board of Directors of the Corporation may be
removed at any time without cause, but only by the affirmative vote of
the holders of two-thirds or more of the outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of
directors (considered for this purpose as one class) cast at a meeting
of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board
of Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing,
delivered or mailed by first class United States mail, postage prepaid,
to the Secretary of the Corporation not less than 14 days nor more than
50 days prior to any meeting of the stockholders called for the election
of directors; provided, however, that if less than 21 days' notice of
the meeting is given to stockholders, such written notice shall be
delivered or mailed, as prescribed, to the Secretary of the Corporation
not later than the close of the seventh day following the day on which
notice of the meeting was mailed to stockholders. Notice of nominations
which are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee
proposed in such notice, (ii) the principal occupation or employment of
such nominee and (iii) the number of shares of stock of the Corporation
which are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine and
declare to
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the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare
to the meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any annual
or special meeting of stockholders of the Corporation may be taken
without a meeting, and the power of stockholders to consent in writing,
without a meeting, to the taking of any action is specifically denied.
SIXTH: - The Directors shall choose such officers, agents and servants
as may be provided in the By-Laws as they may from time to time find
necessary or proper.
SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General Corporation
Law", approved March 10, 1899, as from time to time amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of
the whole Board, may designate any of their number to constitute an
Executive Committee, which Committee, to the extent provided in said
resolution, or in the By-Laws of the Company, shall have and may
exercise all of the powers of the Board of Directors in the management
of the business and affairs of the Corporation, and shall have power to
authorize the seal of the Corporation to be affixed to all papers which
may require it.
ELEVENTH: - The private property of the stockholders shall not be liable
for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make,
alter or repeal any By-Law whether or not adopted by them, provided
however, that any such additional By-Laws, alterations or repeal may be
adopted only by the affirmative vote of the holders of two-thirds or
more of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (considered for
this purpose as one class).
FOURTEENTH: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of the
Company outside of the
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State of Delaware at such places as may be from time to time designated
by them.
FIFTEENTH: - (a) (1) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and (c)
of this Article FIFTEENTH:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any Interested
Stockholder (as hereinafter defined) or (ii) any other corporation
(whether or not itself an Interested Stockholder), which, after
such merger or consolidation, would be an Affiliate (as hereinafter
defined) of an Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair market value
of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any Subsidiary
(in one transaction or a series of related transactions) of any
securities of the Corporation or any Subsidiary to any Interested
Stockholder or any Affiliate of any Interested Stockholder in
exchange for cash, securities or other property (or a combination
thereof) having an aggregate fair market value of $1,000,000 or
more, or
(D) the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse stock
split), or recapitalization of the Corporation, or any merger or
consolidation of the Corporation with any of its Subsidiaries or
any similar transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect, directly
or indirectly, of increasing the proportionate share of the
outstanding shares of any class of equity or convertible securities
of the Corporation or any Subsidiary which is directly or
indirectly owned by any Interested Stockholder, or any Affiliate of
any Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article FIFTEENTH as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
(2) The term "business combination" as used in this Article
FIFTEENTH shall mean any transaction which is referred to in any
one or more of clauses (A) through (E) of paragraph 1 of the
section (a).
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(b) The provisions of section (a) of this Article FIFTEENTH shall
not be applicable to any particular business combination and such
business combination shall require only such affirmative vote as is
required by law and any other provisions of the Charter or Act of
Incorporation or By-Laws if such business combination has been
approved by a majority of the whole Board.
(c) For the purposes of this Article FIFTEENTH:
(1) A "person" shall mean any individual, firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any Subsidiary)
who or which as of the record date for the determination of stockholders
entitled to notice of and to vote on such business combination, or
immediately prior to the consummation of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more than
10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time within two
years prior thereto was the beneficial owner, directly or
indirectly, of not less than 10% of the then outstanding voting
Shares, or
(C) is an assignee of or has otherwise succeeded in any share of
capital stock of the Corporation which were at any time within two
years prior thereto beneficially owned by any Interested
Stockholder, and such assignment or succession shall have occurred
in the course of a transaction or series of transactions not
involving a public offering within the meaning of the Securities
Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and Associates (as
hereafter defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates has
(i) the right to acquire (whether such right is exercisable
immediately or only after the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or options, or
otherwise, or (ii) the right to vote pursuant to any agreement,
arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by any
other person with which such first mentioned person or any of its
Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or
disposing of any shares of capital stock of the Corporation.
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(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include any
other Voting Shares which may be issuable pursuant to any agreement, or
upon exercise of conversion rights, warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings given
those terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on December 31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of any
class of equity security (as defined in Rule 3a11-1 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as in effect
on December 31, 1981) is owned, directly or indirectly, by the
Corporation; provided, however, that for the purposes of the definition
of Investment Stockholder set forth in paragraph (2) of this section
(c), the term "Subsidiary" shall mean only a corporation of which a
majority of each class of equity security is owned, directly or
indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article FIFTEENTH on the basis
of information known to them, (1) the number of Voting Shares
beneficially owned by any person (2) whether a person is an
Affiliate or Associate of another, (3) whether a person has an
agreement, arrangement or understanding with another as to the
matters referred to in paragraph (3) of section (c), or (4) whether
the assets subject to any business combination or the consideration
received for the issuance or transfer of securities by the
Corporation, or any Subsidiary has an aggregate fair market value
of $1,000,000 or more.
(e) Nothing contained in this Article FIFTEENTH shall be construed
to relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and in addition to any
other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of at
least two-thirds of the outstanding shares of the capital stock of the
Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles FIFTH, THIRTEENTH, FIFTEENTH
or SIXTEENTH of this Charter or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the Delaware
General Corporation Laws as the same exists or may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph shall not
adversely
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affect any right or protection of a Director of the Corporation
existing hereunder with respect to any act or omission occurring
prior to the time of such repeal or modification."
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EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON JANUARY 16, 1997
<PAGE>
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the third
Thursday in April each year at the principal office at the Company or at such
other date, time, or place as may be designated by resolution by the Board of
Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10) days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each share of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The number and classification of the Board of Directors shall
be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72) years
shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for three
years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
Section 6. Special meetings of the Board of Directors may be called at
any time by
<PAGE>
the Chairman of the Board of Directors or by the President, and shall be called
upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability to
act, or disqualification of any director, the Board of Directors, although less
than a quorum, shall have the right to elect the successor who shall hold office
for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or divisions of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section 1. Executive Committee
(A) The Executive Committee shall be composed of not more than
nine members who shall be selected by the Board of Directors from its own
members and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of the
Board of Directors when it is not in session to transact all business for and in
behalf of the Company that may be brought before it.
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(C) The Executive Committee shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members, or at the call of the Chairman of the Executive
Committee or at the call of the Chairman of the Board of Directors. The majority
of its members shall be necessary to constitute a quorum for the transaction of
business. Special meetings of the Executive Committee may be held at any time
when a quorum is present.
(D) Minutes of each meeting of the Executive Committee shall be
kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.
(F) In the event of a state of disaster of sufficient severity
to prevent the conduct and management of the affairs and business of the Company
by its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the Company in accordance with the
provisions of Article III of these By-Laws; and if less than three members of
the Trust Committee is constituted immediately prior to such disaster shall be
available for the transaction of its business, such Executive Committee shall
also be empowered to exercise all of the powers reserved to the Trust Committee
under Article III Section 2 hereof. In the event of the unavailability, at such
time, of a minimum of two members of such Executive Committee, any three
available directors shall constitute the Executive Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the foregoing provisions of this Section. This By-Law shall be subject to
implementation by Resolutions of the Board of Directors presently existing or
hereafter passed from time to time for that purpose, and any provisions of these
By-Laws (other than this Section) and any resolutions which are contrary to the
provisions of this Section or to the provisions of any such implementary
Resolutions shall be suspended during such a disaster period until it shall be
determined by any interim Executive Committee acting under this section that it
shall be to the advantage of the Company to resume the conduct and management of
its affairs and business under all of the other provisions of these By-Laws.
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Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more than
thirteen members who shall be selected by the Board of Directors, a majority of
whom shall be members of the Board of Directors and who shall hold office during
the pleasure of the Board.
(B) The Trust Committee shall have general supervision over the
Trust Department and the investment of trust funds, in all matters, however,
being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its members or at the call of its chairman. A majority of its
members shall be necessary to constitute a quorum for the transaction of
business.
(D) Minutes of each meeting of the Trust Committee shall be
kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five members who
shall be selected by the Board of Directors from its own members, none of whom
shall be an officer of the Company, and shall hold office at the pleasure of the
Board.
(B) The Audit Committee shall have general supervision over the
Audit Division in all matters however subject to the approval of the Board of
Directors; it shall consider all matters brought to its attention by the officer
in charge of the Audit Division, review all reports of examination of the
Company made by any governmental agency or such independent auditor employed for
that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever the
majority of its members shall deem it to be proper for the transaction of its
business, and a majority of its Committee shall constitute a quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not more
than five (5) members who shall be selected by the Board of Directors from its
own members who are not officers of the Company and who shall hold office during
the pleasure of the Board.
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(B) The Compensation Committee shall in general advise upon all
matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at any
time by the Chairman of the Compensation Committee, the Chairman of the Board of
Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be elected by
the Board of Directors as an associate director, to serve during the pleasure of
the Board.
(B) An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought to
the Board, with the exception that he would have no right to vote. An associate
director will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct. He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of the Company.
Section 2. THE VICE CHAIRMAN OF THE BOARD. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform such duties as the Board of Directors or
the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining to
the office of
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the President conferred or imposed upon him by statute or assigned to him by the
Board of Directors. In the absence of the Chairman of the Board the President
shall have the powers and duties of the Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however denominated
by the Board of Directors, who may at any time perform all the duties of the
Chairman of the Board of Directors and/or the President and such other powers
and duties as may from time to time be assigned to them by the Board of
Directors, the Executive Committee, the Chairman of the Board or the President
and by the officer in charge of the department or division to which they are
assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for all
monies, funds and valuables of the Company and for the keeping of proper records
of the evidence of property or indebtedness and of all the transactions of the
Company. He shall have general supervision of the expenditures of the Company
and shall report to the Board of Directors at each regular meeting of the
condition of the Company, and perform such other duties as may be assigned to
him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
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There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from time
to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificates of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of stock
shall be issued only upon giving such security as may be satisfactory to the
Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix in
advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent.
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ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the following
form:
Between two concentric circles the words
"Wilmington Trust Company" within the inner
circle the words "Wilmington, Delaware."
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.
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ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to the
fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, PROVIDED, HOWEVER,
that the payment of expenses incurred by a Director or officer in his capacity
as a Director or officer in advance of the final disposition of the proceeding
shall be made only upon receipt of an undertaking by the Director or officer to
repay all amounts advanced if it should be ultimately determined that the
Director or officer is not entitled to be indemnified under this Article or
otherwise.
(C) If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the expense of prosecuting such claim. In any
such action the Corporation shall have the burden of proving that the claimant
was not entitled to the requested indemnification of payment of expenses under
applicable law.
(D) The rights conferred on any person by this Article X shall
not be exclusive of any other rights which such person may have or hereafter
acquire under any statute, provision of the Charter or Act of Incorporation,
these By-Laws, agreement, vote of stockholders or disinterested Directors or
otherwise.
(E) Any repeal or modification of the foregoing provisions of
this Article X shall not adversely affect any right or protection hereunder of
any person in respect of any act or omission occurring prior to the time of such
repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in whole
or in part, and any new By-Law or By-Laws adopted at any regular or special
meeting of the Board
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of Directors by a vote of the majority of all the members of the Board of
Directors then in office.
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EXHIBIT C
SECTION 321(B) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: December 10, 1999 By: /s/ NORMA P. CLOSS
------------------
Name: Norma P. Closs
Title: Vice President
<PAGE>
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and savings
banks with state publication requirements. It has not been approved
by any state banking authorities. Refer to your appropriate state
banking authorities for your state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- ---------------------------------------------------------- --------------
Name of Bank
City
in the State of DELAWARE , at the close of business on September 30, 1999.
------------
ASSETS
Thousands of dollars
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins............182,666
Interest-bearing balances............................................0
Held-to-maturity securities............................................ 34,128
Available-for-sale securities........................................1,644,067
Federal funds sold and securities purchased under agreements
to resell............................................................259,962
Loans and lease financing receivables:
Loans and leases, net of unearned income.............4,251,934
LESS: Allowance for loan and lease losses..............71,014
LESS: Allocated transfer risk reserve.......................0
Loans and leases, net of unearned income,
allowance, and reserve.....................................4,180,920
Assets held in trading accounts..............................................0
Premises and fixed assets (including capitalized leases)...............138,196
Other real estate owned................................................. 976
Investments in unconsolidated subsidiaries and associated companies......1,452
Customers' liability to this bank on acceptances outstanding.................0
Intangible assets....................................................... 5,092
Other assets...........................................................142,444
Total assets.........................................................6,589,903
CONTINUED ON NEXT PAGE
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LIABILITIES
Deposits:
In domestic offices..................................................4,886,770
Noninterest-bearing........ 1,084,581
Interest-bearing........... 3,802,189
Federal funds purchased and Securities sold under agreements
to repurchase........................................................387,343
Demand notes issued to the U.S. Treasury................................69,491
Trading liabilities (from Schedule RC-D).....................................0
Other borrowed money:..................................................///////
With original maturity of one year or less.....................655,000
With original maturity of more than one year....................43,000
Bank's liability on acceptances executed and outstanding.....................0
Subordinated notes and debentures............................................0
Other liabilities (from Schedule RC-G)............................... 84,722
Total liabilities....................................................6,126,326
EQUITY CAPITAL
Perpetual preferred stock and related surplus................................0
Common Stock...............................................................500
Surplus (exclude all surplus related to preferred stock)................62,118
Undivided profits and capital reserves.................................417,321
Net unrealized holding gains (losses) on available-for-sale
securities...........................................................(16,362)
Total equity capital...................................................463,577
Total liabilities, limited-life preferred stock, and equity capital..6,589,903
2
