<PAGE>
Filed Pursuant to Rule 424B5
Registration No. 333-40014
P R O S P E C T U S S U P P L E M E N T
(To Prospectus Dated June 30, 2000)
$410,908,000
Pride International, Inc.
[PRIDE LOGO] Zero Coupon Convertible Senior Debentures Due 2021
------------
Holders may convert the debentures into shares of our common stock at any
time prior to maturity at a conversion rate of 21.729 shares per $1,000
principal amount at maturity. The conversion rate will not be adjusted for
accrued original issue discount, but will be subject to adjustment in certain
events.
We may redeem the debentures at any time on or after January 16, 2004 at the
redemption prices listed on page S-19. Holders may require us to repurchase the
debentures at the repurchase prices set forth in this prospectus supplement on
January 16, 2003, January 16, 2005, January 16, 2007, January 16, 2009 and
January 16, 2016. In addition, if we experience specific kinds of changes in
control on or prior to January 16, 2004, we must offer to repurchase the
debentures.
The debentures will be our senior obligations and will rank equally with all
our other senior debt. The debentures will be effectively subordinated to all
existing and future liabilities of our subsidiaries that do not become
guarantors of the debentures, to our secured debt and to any secured debt of a
subsidiary guarantor.
We also have granted the underwriter a 30-day option to purchase up to an
additional $20,546,000 principal amount at maturity of debentures under certain
circumstances.
------------
Investing in the debentures involves certain risks. See "Risk Factors"
beginning on page S-7.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
------------
<TABLE>
<CAPTION>
Per Debenture Total
------------- ------------
<S> <C> <C>
Public Offering Price 60.841% $250,000,536
Underwriting Discount 1.825% $ 7,500,016
Proceeds to Pride (before expenses) 59.016% $242,500,520
</TABLE>
Salomon Smith Barney Inc. is offering the debentures subject to various
conditions. Salomon Smith Barney Inc. expects to deliver the debentures to
purchasers on or about January 16, 2001.
------------
Salomon Smith Barney
January 9, 2001
<PAGE>
You should rely only on the information we have provided or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We
have not authorized any person (including any salesman or broker) 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 supplement or the
accompanying prospectus is accurate only as of the date on the front of the
document and that any information we have incorporated by reference is accurate
only as of the date of the document incorporated by reference.
------------
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary.................................................................... S-3
Risk Factors............................................................... S-7
Use of Proceeds............................................................ S-12
Capitalization............................................................. S-13
Ratio of Earnings to Fixed Charges......................................... S-14
Price Range of Common Stock................................................ S-14
Description of Debentures.................................................. S-14
Material U.S. Federal Income Tax Consequences.............................. S-50
Underwriting............................................................... S-53
Legal Matters.............................................................. S-54
Experts.................................................................... S-54
Independent Accountants.................................................... S-55
</TABLE>
Prospectus
<TABLE>
<S> <C>
About This Prospectus....................................................... 2
Forward-Looking Information................................................. 2
About Pride International, Inc.............................................. 3
Use of Proceeds............................................................. 3
Ratio of Earnings to Fixed Charges.......................................... 4
Description of Debt Securities.............................................. 4
Description of Capital Stock................................................ 11
Description of Warrants..................................................... 16
Plan of Distribution........................................................ 16
Legal Opinions.............................................................. 18
Experts..................................................................... 18
Independent Accountants..................................................... 18
Where You Can Find More Information......................................... 18
</TABLE>
S-2
<PAGE>
SUMMARY
The following summary should be read together with the information contained
in other parts of this prospectus supplement and in the accompanying prospectus
and the documents we incorporate by reference. You should carefully read this
prospectus supplement, the accompanying prospectus and the documents we
incorporate by reference to fully understand the terms of the debentures as
well as the tax and other considerations that are important to you in making a
decision about whether to invest in the debentures. You should pay special
attention to the "Risk Factors" section beginning on page S-7 to determine
whether an investment in the debentures is appropriate for you. In this
prospectus supplement, we assume no exercise of the underwriter's over-
allotment option and refer to Pride International, Inc. and its subsidiaries as
"we" or "Pride," unless we specifically indicate otherwise or the context
clearly indicates otherwise.
About Pride
Pride is a leading international provider of contract drilling and related
services, operating both offshore and on land. As of December 31, 2000, we
operated a global fleet of 294 rigs, including two ultra-deepwater drillships,
three semisubmersible rigs, 19 jackup rigs, five tender-assisted rigs, three
barge rigs, 21 offshore platform rigs and 241 land-based drilling and workover
rigs. We operate in more than 20 countries and marine provinces. The
significant diversity of our rig fleet and areas of operation enables us to
provide a broad range of services and to take advantage of market upturns while
reducing our exposure to sharp downturns in any particular market sector or
geographic region.
Recent Developments
Amethyst Joint Venture. We have a 26.4% equity interest in a joint venture
company organized to construct, own and operate four dynamically positioned,
Amethyst-class semisubmersible drilling rigs. Two of the rigs, the Pride Carlos
Walter and the Pride Brazil, have been constructed in South Korea. The Pride
Carlos Walter has been delivered by the shipyard and has begun mobilization.
The Pride Brazil is undergoing equipment commissioning and testing and is
expected to be delivered by the shipyard in late February 2001. The other two
rigs, the Amethyst 4 and Amethyst 5, are under construction in the United
States. Although the project has experienced delays, we currently expect that
the Amethyst 4 and Amethyst 5 will be delivered by the shipyard in late 2001.
The joint venture was formed to build, own and operate its four rigs under
charter and service contracts with Petroleo Brasilerio S.A. ("Petrobras")
having initial terms of six to eight years. Petrobras gave notice in October
1999 of its intention to cancel those contracts for late delivery of the rigs,
while the joint venture has asserted that the contracts with respect to the
Pride Brazil and the Pride Carlos Walter remain in effect. We are currently in
discussions with Petrobras regarding a settlement of the dispute, which would
involve either modification of the existing charter and service contracts for
the Pride Brazil and the Pride Carlos Walter or substitution of new charter and
services contracts for the existing contracts for those rigs. From time to
time, we have had discussions with our joint venture partner regarding a
possible change in the ownership structure of the joint venture, including a
purchase by us of all or part of that partner's interest in the venture for
cash and the assumption of debt. At present, the discussions focus on our
purchasing the partner's interest in the Pride Carlos Walter and the Pride
Brazil. If our equity interest in the venture increased above 50%, the joint
venture company would become one of our consolidated subsidiaries, and our
consolidated indebtedness would increase by the amount of the indebtedness of
the joint venture company. The joint venture company has financing for up to
$340 million to complete the Pride Carlos Walter and the Pride Brazil. We can
give you no assurance that our discussions with Petrobras will successfully
resolve the dispute, that any of the four rigs will be chartered to Petrobras
or to any other customer or that our discussions with our joint venture partner
will result in any change in the ownership structure of the venture.
S-3
<PAGE>
Purchase of Semisubmersible Rigs. In September 2000, we entered into an
agreement to buy two semisubmersible drilling rigs located in the North Sea for
$42 million in cash, 3.0 million shares of our common stock and a warrant to
purchase 400,000 shares of our common stock. The transaction is subject to
negotiation of a definitive purchase agreement and certain other conditions,
including delivery by the seller of a five-year special periodic survey for one
of the rigs. We currently expect the transaction to be completed during the
first quarter of 2001.
Litigation Matters. We and a number of other offshore drilling contractors
with operations in the Gulf of Mexico are defendants in a lawsuit entitled
Verdin v. R&B Falcon Drilling USA, Inc. The plaintiff in this suit, who
purports to be an "offshore worker" previously employed by R&B Falcon Drilling
USA, alleges that the defendants have engaged in a conspiracy to depress wages
and benefits paid to the defendants' offshore employees. Plaintiff contends
that this alleged conduct violates federal and state antitrust laws. Plaintiff
seeks treble damages, attorneys' fees and costs on behalf of himself and an
alleged class of offshore workers. We vigorously deny these allegations and do
not expect that the outcome of this matter will have a material adverse effect
on our business or financial position.
The Offering
Securities Offered.............. $410,908,000 aggregate principal amount at
maturity of Zero Coupon Convertible Senior
Debentures Due 2021, plus an additional
$20,546,000 aggregate principal amount at
maturity if the underwriter's over-allotment
option is exercised in full. Each debenture
will have an issue price of $608.41 per
$1,000 principal amount at maturity. We will
not pay periodic interest payments on the
debentures, except as described under
"Description of Debentures--Optional
Conversion to Semiannual Coupon Note upon Tax
Event." See "Description of Debentures--
General."
Maturity Date................... January 16, 2021.
Yield to Maturity............... 2.50% per annum (computed on a semiannual
bond equivalent basis) calculated from
January 16, 2001.
Conversion Rights............... You have the option to convert the debentures
into shares of our common stock at any time
on or prior to maturity or earlier redemption
or purchase by us. The debentures are
convertible at a rate of 21.729 shares of our
common stock per $1,000 principal amount at
maturity (initially representing a conversion
price of $28.00 per share of common stock).
See "Description of Debentures--Conversion
Rights."
We will not adjust the conversion rate for
accrued original issue discount, which is the
difference between the issue price and the
principal amount at maturity of a debenture.
We will, however, adjust the conversion rate
upon the occurrence of certain events
affecting the common stock. You will not
receive any cash payment representing accrued
original issue discount upon conversion of
the debentures; such accrued original issue
discount will be deemed paid by the common
stock you receive upon conversion.
You will not be advised of the amount of
accrued original issue discount at the time
of conversion. No fractional
S-4
<PAGE>
interests in shares of common stock will be
delivered upon conversion. If you are
otherwise entitled to a fractional share of
common stock, you will receive cash equal to
the then current market value of such
fractional share based on the closing Sale
Price on the Trading Day immediately
preceding the conversion date.
Ranking......................... The debentures will rank senior in right of
payment to any of our subordinated
indebtedness and will rank equal in right of
payment to all of our existing and future
senior indebtedness.
Original Issue Discount......... We are offering each debenture at an original
issue discount for United States federal
income tax purposes equal to the excess of
the principal amount at maturity of the
debenture over the amount of the issue price.
We will not make periodic cash payments of
interest on the debentures, except as
described under "Description of Debentures--
Optional Conversion to Semiannual Coupon Note
upon Tax Event." Nonetheless, you should be
aware that accrued original issue discount
will be included periodically in your gross
income for United States federal income tax
purposes. See "Material U.S. Federal Income
Tax Consequences."
Sinking Fund.................... None.
Optional Redemption at Our We may not redeem the debentures prior to
Option......................... January 16, 2004. On and after that date,
however, we will have the option to redeem
the debentures, in whole or in part, for cash
at any time at a redemption price equal to
the issue price plus accrued original issue
discount to the date of redemption. See
"Description of Debentures--Redemption at the
Option of Pride."
Purchase of Debentures at
Your Option.................... You have the right to require us to
repurchase the debentures, for cash, on
January 16, 2003, January 16, 2005, January
16, 2007, January 16, 2009 and January 16,
2016 for a purchase price per debenture of
$639.41, $671.98, $706.22, $742.20 and
$883.18 (equal to the issue price plus
accrued original issue discount to the
relevant purchase date), respectively. See
"Description of Debentures--Purchase of
Debentures at the Option of the Holder."
Mandatory Offer to Purchase..... You may require us to repurchase the
debentures if we experience a change in
control on or prior to January 16, 2004. The
purchase price will be equal to the issue
price plus accrued original issue discount to
the date of purchase. See "Description of
Debentures--Purchase of Debentures at the
Option of the Holder upon a Change in
Control."
S-5
<PAGE>
Covenants....................... The debentures will be issued under an
Indenture supplement which will limit our
ability and the ability of our subsidiaries
to:
. pay dividends or make other restricted
payments,
. incur more debt or issue preferred
stock,
. create or permit to exist liens,
. incur dividend and other payment
restrictions affecting our
subsidiaries,
. consolidate, merge or transfer all or
substantially all of our assets,
. sell assets,
. enter into transactions with
affiliates, and
. engage in sale and leaseback
transactions.
Some of these restrictions will be suspended
during periods when the debentures are rated
investment grade by both Standard & Poor's
Ratings Services and Moody's Investor
Services, Inc.
Use of Proceeds................. The net proceeds from the sale of the
debentures offered hereby will be used to
repay approximately $113.6 million of
outstanding indebtedness and accrued interest
and for general corporate purposes.
Listing......................... The debentures will not be listed on any
national securities exchange. The common
stock is currently listed on the New York
Stock Exchange under the symbol "PDE."
Book-Entry Form................. The debentures will be issued in book-entry
form and will be delivered to purchasers
through the facilities of The Depository
Trust Company.
S-6
<PAGE>
RISK FACTORS
In considering whether to purchase the debentures, you should carefully
consider all the information we have included or incorporated by reference in
this prospectus supplement and the accompanying prospectus. In particular, you
should carefully consider the risk factors described below. In addition, please
read "Forward-Looking Information" beginning on page 2 of the accompanying
prospectus and in our most recent annual and quarterly reports we have filed
with the SEC, where we describe additional uncertainties associated with our
business and the forward-looking statements in this prospectus supplement and
the accompanying prospectus.
Our business depends on the level of activity in the oil and gas industry,
which is significantly affected by volatile oil and gas prices.
The profitability of our 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 our control, including:
. oil and gas prices and expectations about future prices
. the cost of producing and delivering oil and gas
. government regulations
. local and international political and economic conditions
. the ability of the Organization of Petroleum Exporting Countries (OPEC)
to set and maintain production levels and prices
. the level of production by non-OPEC countries
. the policies of various governments regarding exploration and
development of their oil and gas reserves
The level of activity in the oil and gas drilling industry has been low
recently, which has adversely affected our results of operations.
Despite improvement in oil and gas prices, both offshore drilling activity,
particularly in the U.S. Gulf of Mexico, and international land-based activity
were relatively depressed during 1999 and early 2000. During that time, 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
our rigs, particularly in our offshore Gulf of Mexico and onshore South
American operations. This erosion in daily rates and utilization had a negative
impact on our financial results in those periods. In addition, there are a
number of deepwater rigs currently under construction, a few of which are not
under contract. If demand for deepwater drilling services does not increase to
meet this increased capacity, we could face competition from these and other
rigs for future deepwater contracts.
Our EBITDA (consisting of earnings before interest, taxes, depreciation and
amortization) in 1999 was insufficient to cover our interest expense in that
year, and our earnings (consisting of earnings before income taxes plus fixed
charges less capitalized interest) were insufficient to cover our fixed charges
(consisting of interest expense, capitalized interest and that portion of
operation lease rental expense deemed to represent the interest factor) for the
year and for the nine months ended September 30, 2000.
International events may hurt our operations.
We derive a significant portion of our revenues from international
operations. In the first nine months of 2000, we derived approximately 64% of
our revenues from operations in South America and approximately
S-7
<PAGE>
17% of our revenues from operations in West Africa and the Middle East. Our
operations in these areas are most subject to the following risks:
. foreign currency fluctuations and devaluations
. restrictions on currency repatriation
. political instability
. war and civil disturbances
We seek to limit 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, we seek
to limit our exposure to potentially devaluating currencies by matching our
acceptance of local currencies to our expense requirements in those currencies.
We may not be able to continue to take these actions in the future, thereby
exposing us to foreign currency fluctuations that could have a material adverse
effect upon our results of operations and financial condition. Although foreign
exchange in the countries where we operate is currently carried out on a free-
market basis, we can give no assurance that local monetary authorities in these
countries will not implement exchange controls in the future.
In addition, from time to time, certain of our 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 us and our domestic subsidiaries, as well as employees of our foreign
subsidiaries who are U.S. citizens, from participating in or approving any
aspect of the business activities in those countries. These constraints on our
ability to have U.S. persons, including all of our senior management, provide
managerial oversight and supervision may adversely affect the financial or
operating performance of such business activities.
Our international operations are also subject to other risks, including
foreign monetary and tax policies, expropriation, nationalization and
nullification or modification of contracts. Additionally, our 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, our foreign subsidiaries may face governmentally imposed
restrictions from time to time on their ability to transfer funds to us.
Our customers may seek to cancel or renegotiate some of our drilling contracts
during depressed market conditions or if we experience 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, our customers may seek to terminate existing contracts
if we experience operational problems. The deepwater markets in which we
operate 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 our drilling contracts could adversely affect our results of operations.
Our significant debt levels and debt agreement restrictions may limit our
flexibility in obtaining additional financing and in pursuing other business
opportunities.
As of September 30, 2000, as adjusted to give effect to the offering of the
debentures and the application of the net proceeds, we would have had
approximately $1.4 billion in debt and capital lease obligations. At that date
we also had provided direct guarantees of the repayment of up to $68.4 million
of the obligations of
S-8
<PAGE>
our unconsolidated subsidiaries. If, as described under "Summary--Recent
Developments--Amethyst Joint Venture," our equity interest in the Amethyst
joint venture increased above 50%, the joint venture company would become one
of our consolidated subsidiaries, and our consolidated indebtedness would
increase by the amount of the indebtedness of the joint venture company. The
level of our indebtedness will have several important effects on our future
operations, including:
. a significant portion of our cash flow from operations will be dedicated
to the payment of interest and principal on such debt and will not be
available for other purposes
. covenants contained in our debt arrangements require us to meet certain
financial tests, which may affect our flexibility in planning for, and
reacting to, changes in our business and may limit our ability to
dispose of assets, withstand current or future economic or industry
downturns and compete with others in our industry for strategic
opportunities
. our ability to obtain additional financing for working capital, capital
expenditures, acquisitions, general corporate and other purposes may be
limited
Our ability to meet our debt service obligations and to reduce our total
indebtedness will be dependent upon our future performance, which will be
subject to general economic conditions, industry cycles and financial, business
and other factors affecting our operations, many of which are beyond our
control.
The debentures will be our senior unsecured obligations. As such, the
debentures will be effectively subordinated to all our existing and future
secured debt and to all debt of our subsidiaries.
The debentures will be effectively subordinated in right of payment to all
of our existing and future secured debt, including debt we may incur under our
credit facilities. If we are involved in any dissolution, liquidation or
reorganization, our secured debt holders would be paid before you receive any
amounts due under the debentures to the extent of the value of the assets
securing their debt. In that event, you may not be able to recover any
principal you are due under the debentures.
In addition, the debentures are effectively subordinated to all the
creditors, including trade creditors and tort claimants, of our subsidiaries
that do not become subsidiary guarantors of the debentures as described under
"Description of Debentures--Subsidiary Guarantees of Debentures," as well as to
any secured creditors of the subsidiary guarantors. Initially, we expect that
there will be no subsidiary guarantors. We conduct substantially all our
operations through both U.S. and foreign subsidiaries, and substantially all
our assets consist of equity in such subsidiaries. Accordingly, we are and will
be dependent on our ability to obtain funds from our subsidiaries to service
our debt, including the debentures. Financing arrangements that our
subsidiaries are party to impose restrictions on our ability to gain access to
the cash flow or assets of our subsidiaries. In addition, our foreign
subsidiaries may face governmentally imposed restrictions on their ability to
transfer funds to us.
As of September 30, 2000, as adjusted to give effect to the offering of the
debentures and the application of the net proceeds, Pride would have had $60.5
million of secured debt and our subsidiaries would have had $339.1 million of
debt and other liabilities outstanding to creditors other than Pride. In
addition, Pride's subsidiaries would have had $194.5 million of borrowing
availability under other bank credit facilities.
We may not be able to repurchase debentures when we are required to do so.
On January 16, 2003, January 16, 2005, January 16, 2007, January 16, 2009
and January 16, 2016 or if specified change in control events occur on or prior
to January 16, 2004, each holder of the debentures will have the right to
require us, subject to certain conditions, to purchase all or any part of that
holder's debentures. Please read "Description of Debentures--Purchase of
Debentures at the Option of the Holder" and "--Purchase of Debentures at the
Option of the Holder upon a Change in Control." In addition, each holder of our
Zero Coupon Convertible Subordinated Debentures Due 2018 has the right, subject
to certain conditions, to
S-9
<PAGE>
require us to purchase those debentures on April 24, 2003, April 24, 2008 and
April 24, 2013 and upon the occurrence on or prior to April 24, 2003 of
specified change in control events. We will have the option to pay the purchase
price of those debentures in cash or common stock, except that we must pay cash
if our purchase obligation results from a change in control. In connection with
specified change in control events, we may be required to purchase
approximately $525.0 million of our senior notes and all outstanding Zero
Coupon Convertible Subordinated Debentures Due 2018 in addition to the
debentures offered by this prospectus, and, prior to purchasing these
debentures on the dates specified above, we may be required to obtain consents
from the lenders under our other debt arrangements to permit the repurchase. If
we cannot purchase that debt or obtain the consents necessary under those debt
arrangements, we may not be able to purchase the debentures. Also, we may not
have sufficient funds available or be able to obtain the financing necessary to
make any of the debt payments, including purchases of the debentures, described
above.
If we are required to purchase the debentures and we did not have the funds
or financing available to make the debt payments, including purchases of the
debentures, an event of default would be triggered under the indenture
governing the debentures and certain other debt instruments. Each of these
defaults could have a material adverse effect on us and the holders of the
debentures.
Federal and state statutes allow courts, under specific circumstances, to void
subsidiary guarantees.
The indenture governing the debentures does not require any subsidiary to
guarantee the debentures unless that subsidiary guarantees any of our other
debt. Initially, we expect that there will be no subsidiary guarantors. Various
fraudulent conveyance laws have been enacted for the protection of creditors,
and a court may use these laws to subordinate or avoid any subsidiary guarantee
that may be delivered in the future. A court could avoid or subordinate a
subsidiary guarantee in favor of that subsidiary guarantor's other creditors if
the court found that either:
. the guarantee was incurred with the intent to hinder, delay or defraud
any present or future creditor or the subsidiary guarantor contemplated
insolvency with a design to favor one or more creditors to the exclusion
in whole or in part of others or
. the subsidiary guarantor did not receive fair consideration or
reasonably equivalent value for issuing its subsidiary guarantee
and, in either case, the subsidiary guarantor, at the time it issued the
subsidiary guarantee:
. was insolvent or rendered insolvent by reason of the issuance of the
subsidiary guarantee
. was engaged or about to engage in a business or transaction for which
its remaining assets constituted unreasonably small capital or
. intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they matured
Among other things, a legal challenge of the subsidiary guarantee on
fraudulent conveyance grounds may focus on the benefits, if any, realized by
the subsidiary guarantor as a result of our issuance of the debentures or the
delivery of the subsidiary guarantee. To the extent the subsidiary guarantee
was avoided as a fraudulent conveyance or held unenforceable for any other
reason, the holders of the debentures would cease to have any claim against
that subsidiary guarantor and would be solely creditors of the parent company
and of any subsidiary guarantors whose subsidiary guarantees were not avoided
or held unenforceable. In that event, the claims of the holders of the
debentures against the issuer of an invalid subsidiary guarantee would be
subject to the prior payment of all liabilities of that subsidiary guarantor.
S-10
<PAGE>
We are subject to hazards customary in the oilfield services industry and to
those more specific to marine operations. We may not have insurance to cover
all these hazards.
Our 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 us 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
property and equipment, pollution or environmental damage and suspension of
operations. Our 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 us.
We maintain workers' compensation insurance for our employees and other
insurance coverage for normal business risks, including general liability
insurance. Although we believe our insurance coverage to be adequate and in
accordance with industry practice against normal risks in our operations, any
insurance protection may not be sufficient or effective under all circumstances
or against all hazards to which we may be subject. The occurrence of a
significant event against which we are not fully insured, or of a number of
lesser events against which we are insured, but subject to substantial
deductibles, could materially and adversely affect our operations and financial
condition. Moreover, we may not be able to maintain adequate insurance in the
future at rates or on terms we consider reasonable or acceptable.
Governmental regulations and environmental liabilities may adversely affect our
operations.
Many aspects of our 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. We have 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 in certain circumstances
impose strict liability, rendering us liable for environmental damage without
regard to negligence or fault on our part. These laws and regulations may
expose us 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 performed. The application of these requirements or the adoption of new
requirements could have a material adverse effect on us. 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 our operations by limiting future
contract drilling opportunities.
There is no public market for the debentures, and we do not intend to list them
on any securities exchange or dealer quotation system.
The debentures will be a new issue of securities for which there currently
is no public market, and we do not intend to list the debentures on any
securities exchange or dealer quotation system. Although the underwriter has
informed us that it currently intends to make a market in the debentures, it is
not obligated to do so and may discontinue any market-making at any time
without notice. Accordingly, we cannot provide you any assurance about the
development or liquidity of any market for the debentures, your ability to sell
your debentures or the prices at which you will be able to sell your
debentures.
S-11
<PAGE>
USE OF PROCEEDS
We expect the net proceeds from the offering of the debentures to be
approximately $242.4 million, after deducting discounts to the underwriter and
estimated net expenses of the offering that we will pay. We expect to use the
net proceeds as follows:
. approximately $95.8 million to repay short-term debt and current
maturities of long-term debt, including accrued interest, which debt
bears interest at rates ranging from 6.0% to 9.2% per year, with a
weighted average interest rate of 7.5% per year at September 30, 2000,
and having maturities ranging from August 2001 to April 2003
. approximately $17.8 million to repay long-term debt, including accrued
interest, which debt bears interest at rates ranging from 7.6% to 8.8%
per year, with a weighted average interest rate of 7.8% per year at
September 30, 2000, and having maturities ranging from April 2001 to
March 2003
We expect to use the remaining net proceeds for general corporate purposes.
S-12
<PAGE>
CAPITALIZATION
We have provided in the table below our consolidated cash and cash
equivalents, short-term debt and capitalization as of September 30, 2000 and as
adjusted to give effect to the issuance of the debentures and the application
of the net proceeds as described in "Use of Proceeds." You should read this
table in conjunction with our consolidated financial statements and the related
notes incorporated by reference in the accompanying prospectus.
<TABLE>
<CAPTION>
As of
September 30, 2000
----------------------
As
Actual Adjusted
---------- ----------
(Dollars in
thousands)
<S> <C> <C>
Cash and Cash Equivalents(1)........................... $ 129,507 $ 258,250
========== ==========
Short-Term Debt and Current Maturities of Long-Term
Debt and Capital Lease Obligations.................... $ 152,845 $ 58,846
========== ==========
Long-Term Debt and Capital Lease Obligations (excluding
current maturities):
Bank credit facilities(2).............................. -- --
9 3/8% Senior Notes due 2007........................... $ 325,000 $ 325,000
10% Senior Notes due 2009.............................. 200,000 200,000
Drillship loans........................................ 294,399 294,399
Limited-recourse collateralized term loans............. 17,689 17,689
Collateralized term loans.............................. 3,752 --
Note payable to seller................................. 13,722 --
Other notes payable.................................... 1,538 1,538
Capital lease obligations.............................. 28,911 28,911
Zero Coupon Convertible Subordinated Debentures Due
2018(3)............................................... 224,213 224,213
Zero Coupon Convertible Senior Debentures Due 2021(4).. -- 250,001
---------- ----------
Total long-term debt and capital lease
obligations....................................... 1,109,224 1,341,751
---------- ----------
Shareholders' Equity:
Preferred Stock, no par value, 5,000,000 shares
authorized; no shares issued or outstanding........... -- --
Common Stock, no par value, 100,000,000 shares
authorized; 66,844,561 shares issued and 66,790,341
shares outstanding, actual and as adjusted(1)(5)...... 1 1
Paid-in capital........................................ 748,532 748,532
Treasury stock......................................... (191) (191)
Retained earnings...................................... 180,240 180,240
---------- ----------
Total shareholders' equity......................... 928,582 928,582
---------- ----------
Total capitalization............................... $2,037,806 $2,270,333
========== ==========
</TABLE>
--------
(1) Does not give effect to the payment of $42 million in cash and the
issuance of 3.0 million shares of common stock and warrants to purchase
400,000 shares of common stock in connection with the pending purchase of
the semisubmersible drilling rigs described under "Summary--Recent
Developments--Purchase of Semisubmersible Rigs."
(2) At September 30, 2000, as adjusted to give effect to the issuance of the
debentures and the application of the net proceeds, we would have had
borrowing availability of $194.5 million under our bank credit facilities.
(3) Each holder of the debentures has the right, subject to certain
conditions, to require us to purchase the debentures on April 24, 2003,
April 24, 2008 and April 24, 2013. We have the option to pay the purchase
price of the debentures in cash or common stock.
(4) Each holder of the debentures has the right, subject to certain
conditions, to require us to purchase the debentures for cash on January
16, 2003, January 16, 2005, January 16, 2007, January 16, 2009 and January
16, 2016.
(5) Does not include 13.3 million shares of common stock initially issuable
upon conversion of our convertible debt, including the debentures, or
reserved for issuance upon exercise of outstanding stock options and
warrants.
S-13
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
For the nine months ended September 30, 2000, our earnings were inadequate
to cover fixed charges by $15.9 million. On a pro forma basis after giving
effect to the issuance of the debentures and the application of the net
proceeds as described in "Use of Proceeds," for the year ended December 31,
1999, our earnings would have been inadequate to cover fixed charges by $100.3
million. For this purpose, "earnings" consist of earnings before income taxes
plus fixed charges less capitalized interest. "Fixed charges" consist of
interest expense, capitalized interest and that portion of operating lease
rental expense we have deemed to represent the interest factor. For our
consolidated ratios of earnings to fixed charges for prior periods, please read
"Ratio of Earnings to Fixed Charges" in the accompanying prospectus.
PRICE RANGE OF COMMON STOCK
Our common stock is listed on the New York Stock Exchange under the symbol
"PDE." As of December 31, 2000, there were 1,540 shareholders of record. On
January 9, 2001, the last reported sales price of our common stock on the New
York Stock Exchange was $21.25. The following table presents the range of high
and low quarterly sales prices of our common stock since January 1, 2000.
<TABLE>
<CAPTION>
Price
-------------
High Low
------ ------
<S> <C> <C>
2000:
First Quarter................................................ $22.94 $13.25
Second Quarter............................................... 26.75 19.69
Third Quarter................................................ 29.63 19.06
Fourth Quarter............................................... 28.88 18.06
2001:
First Quarter (through January 9)............................ 25.31 20.38
</TABLE>
DESCRIPTION OF DEBENTURES
General
We will issue the debentures under an Indenture dated as of May 1, 1997
between us and The Chase Manhattan Bank, as trustee, as supplemented by the
Third Supplemental Indenture. We have summarized selected provisions of the
Indenture and the debentures below. The debentures are a separate series of
"senior debt securities" described in the accompanying prospectus, and this
summary supplements that description. We encourage you to read that description
for provisions that may be important to you.
In this summary description of the debentures, all references to "we," "us,"
"Pride," or "our company" are to Pride International, Inc., excluding its
subsidiaries, unless the context clearly indicates otherwise. We have used in
this summary description capitalized terms that we have defined below under "--
Glossary."
The debentures will be our unsecured general obligations limited to
$410,908,000 aggregate principal amount at maturity ($431,454,000 aggregate
principal amount at maturity if the underwriter's over-allotment option is
exercised in full) and will mature on January 16, 2021. The principal amount at
maturity of each debenture will be $1,000 (except as may be adjusted upon
conversion of the debentures to semiannual coupon notes following a Tax Event)
and will be payable at the office of the paying agent, which initially will be
the trustee, or an office or agency maintained by us for such purpose in the
Borough of Manhattan, The City of
S-14
<PAGE>
New York. For purposes of this description of debentures, "Issue Date" means
January 16, 2001, and "Issue Price" means $608.41 per $1,000 principal amount
at maturity of the debentures.
The debentures will be issued at a substantial discount from their
principal amount at maturity. See "Material U.S. Federal Income Tax
Considerations--Original Issue Discount." Except as discussed below under "--
Optional Conversion to Semiannual Coupon Note upon Tax Event," there will be
no periodic payments of interest. The calculation of the accrual of original
issue discount (the difference between the Issue Price and the principal
amount at maturity of a debenture, which we call "Original Issue Discount") in
the period during which a debenture remains outstanding will be on a
semiannual bond equivalent basis using a 360-day year comprising twelve 30-day
months; such accrual will commence on the Issue Date. In the event of the
maturity, conversion, purchase by us at the option of a holder or redemption
of a debenture, Original Issue Discount or interest, if any, will cease to
accrue on such debenture, under the terms and subject to the conditions of the
Indenture. We may not reissue a debenture that has matured or been converted,
purchased by us at the option of a holder, redeemed or otherwise cancelled
(except for registration of transfer, exchange or replacement thereof).
The debentures will be issued in fully registered form, without coupons, in
denominations of $1,000 of principal amount at maturity or integral multiples
thereof. See "--Book-Entry, Delivery and Form" and "Certificated Debentures."
Holders of debentures in certificated form may present debentures for
conversion at the office of the conversion agent and for exchange or
registration of transfer at the office of the security registrar. Each such
agent initially will be the trustee. We will not charge a service charge for
any registration of transfer or exchange of debentures, but we may require
payment by a holder of a sum sufficient to cover any tax, assessment or other
governmental charge payable in connection therewith.
Suspension of Covenants during Achievement of Investment Grade Status
If during any period the debentures achieve and continue to maintain
Investment Grade Status and no Event of Default has occurred and is
continuing, which period we call an "Investment Grade Status Period," then
certain covenants described below under "--Restrictive Covenants" will be
suspended and will not during the Investment Grade Status Period apply to us
and our Subsidiaries. See "--Restrictive Covenants." As a result, during any
Investment Grade Status Period, the debentures will lose the full covenant
protection initially provided under the Indenture. No action taken during an
Investment Grade Status Period in compliance with the covenants then
applicable to us and our Subsidiaries will constitute a Default or Event of
Default should the suspended covenants be subsequently reinstated.
Subsidiary Guarantees of Debentures
Under the circumstances described below, our payment obligations under the
debentures may in the future be jointly and severally guaranteed by our
existing or future Subsidiaries as subsidiary guarantors. Initially, we expect
that there will be no subsidiary guarantors. Although the Indenture does not
contain any requirement that any Subsidiary initially execute and deliver a
subsidiary guarantee, covenants described below may require a Subsidiary in
the future to execute and deliver a subsidiary guarantee prior to its
guarantee of our other Indebtedness. See "--Restrictive Covenants--Limitation
on Non-Guarantor Subsidiaries."
Under its subsidiary guarantee, each subsidiary guarantor will guarantee,
jointly and severally, to each holder and the trustee, the full and prompt
performance of our obligations under the Indenture and the debentures,
including the payment of principal of (or premium, if any, on) and interest,
if any, on the debentures.
The subsidiary guarantees will be unsecured senior obligations of each
subsidiary guarantor and will rank:
. equally in right of payment with all senior Indebtedness of that
subsidiary guarantor,
. senior in right of payment to all Subordinated Indebtedness of that
subsidiary guarantor, and
S-15
<PAGE>
. effectively subordinated to secured Indebtedness of the subsidiary
guarantor with respect to the assets securing that Indebtedness.
The obligations of each subsidiary guarantor will be limited to the maximum
amount that will not render that subsidiary guarantor insolvent or leave it
with unreasonably small capital under federal or state law, after giving effect
to the following:
. all other Indebtedness of that subsidiary guarantor,
. the right of the subsidiary guarantor to contribution from other
subsidiary guarantors and
. any other rights the subsidiary guarantor may have.
Each subsidiary guarantor that makes a payment or distribution under a
subsidiary guarantee will be entitled to a contribution from each other
subsidiary guarantor in a pro rata amount based on the Adjusted Net Assets of
each subsidiary guarantor.
Each subsidiary guarantor may consolidate with or merge into or sell or
otherwise dispose of all or substantially all of its assets to us or another
subsidiary guarantor without limitation, except to the extent any transaction
is subject to the covenants described below under "--Restrictive Covenants" or
the "Consolidation, Merger and Sale of Assets" covenant described below. Each
subsidiary guarantor may consolidate with or merge with or into another entity
(whether or not affiliated with the subsidiary guarantor) only if:
. the surviving entity, if not the subsidiary guarantor, agrees to assume
the subsidiary guarantor's subsidiary guarantee and all its obligations
under the Indenture, except to the extent the subsidiary guarantee and
obligations are released as described below and
. the transaction does not either violate any of the covenants described
below under "--Restrictive Covenants" or result in a Default or Event of
Default that is continuing.
A subsidiary guarantor will be released from its subsidiary guarantee and
all of its obligations under the Indenture upon:
. the sale or other disposition, by merger or otherwise, of the subsidiary
guarantor or all or substantially all of its assets to a person other
than us or another subsidiary and in a transaction that is otherwise in
compliance with the Indenture,
. the release of all guarantees by the subsidiary guarantor of our
Indebtedness or
. the designation of the subsidiary guarantor as a Non-Recourse
Subsidiary.
Any such release will occur, however, only to the extent that all
obligations of the subsidiary guarantor under all of its guarantees of, and
under all of its pledges of assets or other security interests that secure, our
other Indebtedness or other Indebtedness of any other Subsidiary also terminate
or are released upon the sale or other disposition.
Conversion Rights
A holder of a debenture may convert it into Pride common stock at any time
before the close of business on January 16, 2021; provided, however, that if a
debenture is called for redemption, the holder may convert it at any time
before the close of business on the Redemption Date. A debenture in respect of
which a holder has delivered a written Purchase Notice or a Change in Control
Purchase Notice exercising the option of such holder to require the Company to
purchase such debenture may be converted only if such notice is withdrawn in
accordance with the terms of the Indenture.
The initial Conversion Rate for the debentures is 21.729 shares of Pride
common stock per $1,000 principal amount at maturity of debentures, subject to
adjustment upon the occurrence of certain events
S-16
<PAGE>
described below. A holder otherwise entitled to a fractional share of common
stock will receive cash equal to the then current market value of such
fractional share based on the Sale Price on the Trading Day immediately
preceding the Conversion Date. A holder may convert a portion of such holder's
debentures so long as such portion is $1,000 principal amount at maturity of
debentures or an integral multiple thereof.
To convert a debenture into common stock, a holder must:
. complete and manually sign the conversion notice on the back of the
debenture (or complete and manually sign a facsimile thereof) and
deliver such notice to the conversion agent,
. surrender the debenture to the conversion agent,
. if required, furnish appropriate endorsements and transfer documents,
and
. if required, pay all transfer or similar taxes.
The date on which all of the foregoing requirements have been satisfied is the
Conversion Date.
Upon conversion of a debenture, a holder will not receive any cash payment
representing accrued Original Issue Discount. Our delivery to the holder of the
fixed number of shares of common stock into which the debenture is convertible
(together with the cash payment, if any, in lieu of a fractional share of
common stock) will be deemed to satisfy our obligation to pay the principal
amount of the debenture, including the accrued Original Issue Discount
attributable to the period from the Issue Date through the Conversion Date.
Thus, the accrued Original Issue Discount will be deemed to be paid in full
rather than cancelled, extinguished or forfeited. The Conversion Rate will not
be adjusted at any time during the term of the debentures for such accrued
Original Issue Discount. We do not undertake to advise holders of the amount of
such accrued Original Issue Discount at the time of conversion. A certificate
for the number of full shares of common stock into which any debenture is
converted (and cash in lieu of any fractional share of common stock) will be
delivered through the conversion agent as soon as practicable following the
Conversion Date. For a discussion of the federal income tax treatment of a
holder receiving common stock upon conversion, see "Material U.S. Federal
Income Tax Consequences--Conversion."
The Conversion Rate will be adjusted for:
. dividends or distributions on common stock payable in common stock or
other capital stock of Pride; subdivisions, combinations or certain
reclassifications of common stock,
. distributions to all holders of common stock of certain rights, warrants
or options to purchase common stock or securities convertible into
common stock for a period expiring within 60 days after the applicable
record date for such distribution at a price per share less than the
Sale Price at the time of determination, and
. distributions to all holders of common stock of assets or debt
securities of Pride or rights, warrants or options to purchase
securities of Pride (excluding cash dividends or other cash
distributions from consolidated current net income or retained earnings
other than any Extraordinary Cash Dividend (as defined in the
Indenture)).
No adjustment need be made, however,
. if holders may participate in the transactions otherwise giving rise to
an adjustment on a basis and with notice that our Board of Directors
determines to be fair and appropriate,
. for rights to purchase common stock pursuant to a dividend or interest
reinvestment plan sponsored by us,
. for changes in the par value of the common stock, or
. unless such adjustment, together with any other adjustments similarly
deferred, equals at least 1% of the then current Conversion Rate.
S-17
<PAGE>
In addition, if as a result of an adjustment the debentures become convertible
solely into cash, no subsequent adjustment will be made. In cases where the
fair market value (per share of common stock) of the portion of assets, debt
securities or rights, warrants or options to purchase securities of Pride
distributed to shareholders exceeds the Average Sale Price (as defined in the
Indenture) of a share of common stock, or such Average Sale Price exceeds the
fair market value (per share of common stock) of such portion of assets, debt
securities or rights, warrants or options so distributed by less than $1.00,
rather than being entitled to an adjustment in the Conversion Rate, the holder
of a debenture upon conversion thereof will be entitled to receive, in addition
to the shares of common stock into which such debenture is convertible, the
kind and amounts of assets, debt securities or rights, options or warrants
constituting the distribution that such holder would have received if such
holder had converted such debenture immediately prior to the record date for
determining the shareholders entitled to receive the distribution. The
Indenture permits us to increase the Conversion Rate from time to time at our
discretion.
If we are party to a consolidation, merger, binding share exchange or
transfer of all or substantially all of our assets otherwise permitted under
the terms of the Indenture, the right to convert a debenture into common stock
may be changed into a right to convert it into the kind and amount of
securities, cash or other assets that the holder would have received if the
holder had converted such holder's debentures immediately prior to the
transaction.
In the event of a taxable distribution to holders of common stock that
results in an adjustment of the Conversion Rate (or in which holders otherwise
participate) or in the event we increase the Conversion Rate, the holders of
the debentures may, in certain circumstances, be deemed to have received a
distribution subject to United States federal income tax as a dividend. See
"Material U.S. Federal Income Tax Consequences--Constructive Dividend."
In the event we exercise our option to have interest in lieu of Original
Issue Discount accrue on a debenture following a Tax Event, the holder will be
entitled on conversion to receive the same number of shares of common stock
such holder would have received if we had not exercised such option. If we
exercise such option, debentures surrendered for conversion during the period
from the close of business on any Regular Record Date next preceding any
Interest Payment Date to the opening of business of such Interest Payment Date
(except debentures to be redeemed on a date within such period) must be
accompanied by payment of an amount equal to the interest thereon that the
registered holder is to receive. Except where debentures surrendered for
conversion must be accompanied by payment as described above, no interest on
converted debentures will be payable by us on any Interest Payment Date
subsequent to the date of conversion. See "--Optional Conversion to Semiannual
Coupon Note upon Tax Event."
Redemption of Debentures at the Option of Pride
No sinking fund is provided for the debentures. Prior to January 16, 2004,
we will not have the option to redeem the debentures. On and after such date,
we may redeem the debentures for cash as a whole at any time, or from time to
time in part, upon not less than 30 days' nor more than 60 days' notice of
redemption given by mail to holders of debentures. Any such redemption must be
in integral multiples of $1,000 principal amount at maturity of debentures.
S-18
<PAGE>
The table below shows Redemption Prices of a debenture per $1,000 principal
amount at maturity on January 16, 2004, at each January 16 thereafter prior to
maturity and at maturity on January 16, 2021, which prices reflect the accrued
Original Issue Discount calculated through each such date. The Redemption Price
of a debenture redeemed between such dates would include an additional amount
reflecting the additional Original Issue Discount accrued from and including
the next preceding date in the table to and including the actual Redemption
Date.
<TABLE>
<CAPTION>
Debenture Accrued Original
Issue Issue Discount Redemption
Price at 2.50% Price
Redemption Date (1) (2) (1)+(2)
--------------- --------- ---------------- ----------
<S> <C> <C> <C>
January 16, 2004.......................... $608.41 $ 47.08 $ 655.49
January 16, 2005.......................... 608.41 63.57 671.98
January 16, 2006.......................... 608.41 80.48 688.89
January 16, 2007.......................... 608.41 97.81 706.22
January 16, 2008.......................... 608.41 115.57 723.98
January 16, 2009.......................... 608.41 133.78 742.20
January 16, 2010.......................... 608.41 152.45 760.87
January 16, 2011.......................... 608.41 171.60 780.01
January 16, 2012.......................... 608.41 191.22 799.63
January 16, 2013.......................... 608.41 211.33 819.75
January 16, 2014.......................... 608.41 231.95 840.37
January 16, 2015.......................... 608.41 253.10 861.51
January 16, 2016.......................... 608.41 274.77 883.18
January 16, 2017.......................... 608.41 296.99 905.40
January 16, 2018.......................... 608.41 319.76 928.17
January 16, 2019.......................... 608.41 343.11 951.52
January 16, 2020.......................... 608.41 367.05 975.46
At Maturity............................... 608.41 391.59 1,000.00
</TABLE>
If prior to the Redemption Date the debentures have been converted to
semiannual coupon notes following the occurrence of a Tax Event, the Redemption
Price will be equal to the Restated Principal Amount plus accrued and unpaid
interest from the date of such conversion to, but excluding, the Redemption
Date. See "--Optional Conversion to Semiannual Coupon Note upon Tax Event."
If fewer than all outstanding debentures are to be redeemed, the trustee
shall select the debentures to be redeemed in principal amounts at maturity of
debentures of $1,000 or integral multiples thereof by such method as the
trustee shall deem fair and appropriate. If a portion of a holder's debentures
is selected for partial redemption and such holder converts a portion of such
debentures prior to such redemption, such converted portion shall be deemed (so
far as may be) to be the portion selected for redemption.
Purchase of Debentures at the Option of the Holder
On January 16, 2003, January 16, 2005, January 16, 2007, January 16, 2009
and January 16, 2016, each of which we refer to as a "Purchase Date," we will
become obligated to purchase, at the option of the holder, any outstanding
debenture for which a written Purchase Notice has been delivered by the holder
to the paying agent at any time from the opening of business on the date that
is 20 Business Days preceding such Purchase Date until the close of business on
such Purchase Date and for which such Purchase Notice has not been withdrawn,
subject to certain additional conditions.
S-19
<PAGE>
The table below shows the Purchase Prices of a debenture as of the specified
Purchase Dates:
<TABLE>
<CAPTION>
Purchase
Purchase Date Price
------------- --------
<S> <C>
January 16, 2003....................................................... $639.41
January 16, 2005....................................................... 671.98
January 16, 2007....................................................... 706.22
January 16, 2009....................................................... 742.20
January 16, 2016....................................................... 883.18
</TABLE>
The Purchase Price payable in respect of a debenture will be equal to the
Issue Price plus accrued Original Issue Discount through the Purchase Date,
with respect to each Purchase Date. If prior to the Purchase Date the
debentures have been converted to semiannual coupon notes following the
occurrence of a Tax Event, the Purchase Price will be equal to the Restated
Principal Amount plus accrued and unpaid interest from the date of such
conversion to, but excluding, the Purchase Date. See "--Optional Conversion to
Semiannual Coupon Note upon Tax Event."
We will be required to give notice, which we refer to as the "Company
Notice," not less than 20 Business Days prior to each Purchase Date, which we
refer to as the "Company Notice Date," to all holders at their addresses shown
in the security register of the security registrar (and to beneficial owners as
required by applicable law) stating, among other things, the procedures that
holders must follow to require us to purchase debentures from such holders.
The Purchase Notice given by any holder electing to require us to purchase
debentures must state:
. the certificate numbers of the debentures to be delivered by such holder
for purchase by us;
. the portion of the principal amount at maturity of debentures to be
purchased, which portion must be $1,000 or an integral multiple thereof;
and
. that such debentures are to be purchased by us pursuant to the
applicable provisions of the debentures.
Any Purchase Notice may be withdrawn by the holder by a written notice of
withdrawal delivered to the paying agent prior to the close of business on the
Purchase Date. The notice of withdrawal shall state the principal amount at
maturity and the certificate numbers of the debentures as to which the
withdrawal notice relates and the principal amount at maturity of debentures,
if any, that remains subject to the Purchase Notice.
We will comply with the provisions of Rule 13e-4, Rule 14e-1 and any other
rules under the Securities Exchange Act of 1934 that may then be applicable to
the Company's offer to purchase debentures at the option of the holders
thereof, and will file Schedule TO or any other required schedule.
Payment of the Purchase Price for a debenture for which a Purchase Notice
has been delivered and not validly withdrawn is conditioned upon delivery of
such debenture (together with necessary endorsements) to the paying agent at
any time (whether prior to, on or after the Purchase Date) after delivery of
such Purchase Notice. Payment of the Purchase Price for such debenture will be
made promptly following the later of the Business Day following the Purchase
Date and the time of delivery of such debenture. If the paying agent holds, in
accordance with the terms of the Indenture, money sufficient to pay the
Purchase Price of such debenture on the Business Day following the Purchase
Date, then, on and after the Purchase Date, such debenture will cease to be
outstanding and Original Issue Discount on such debenture will cease to accrue
and will be deemed paid, whether or not such debenture is delivered to the
paying agent, and all other rights of the holder shall terminate (other than
the right to receive the Purchase Price upon delivery of such debenture).
S-20
<PAGE>
Purchase of Debentures at the Option of the Holder upon a Change in Control
In the event of any Change in Control of Pride occurring on or prior to
January 16, 2004, each holder of debentures will have the right, at the
holder's option, subject to the terms and conditions of the Indenture, to
require us to purchase all or any portion (provided that the principal amount
at maturity must be $1,000 or an integral multiple thereof) of the holder's
debentures as of the date that is 35 Business Days after the occurrence of such
Change in Control, which we refer to as the "Change in Control Purchase Date,"
at a cash price equal to the Issue Price plus accrued Original Issue Discount
through and including the Change in Control Purchase Date, which we refer to as
the "Change in Control Purchase Price." If prior to a Change in Control
Purchase Date the debentures have been converted to semiannual coupon notes
following the occurrence of a Tax Event, we will be required to purchase the
debentures at a cash price equal to the Restated Principal Amount plus accrued
and unpaid interest from the date of such conversion to, but excluding, the
Change in Control Purchase Date. Holders will not have any right to require us
to purchase debentures in the event of any Change in Control of Pride occurring
after January 16, 2004.
Within 15 Business Days after the Change in Control, Pride will mail to the
trustee and to each holder (and to beneficial owners as required by applicable
law) a notice regarding the Change in Control, which notice will state, among
other things:
. the date of such Change in Control and, briefly, the events causing such
Change in Control,
. the date by which the Change in Control Purchase Notice must be given,
. the Change in Control Purchase Date,
. the Change in Control Purchase Price,
. the name and address of the paying agent and the conversion agent,
. the Conversion Rate and any adjustments thereto,
. that debentures with respect to which a Change in Control Purchase
Notice is given by the holder may be converted into shares of common
stock only if the Change in Control Purchase Notice has been withdrawn
by the holder in accordance with the terms of the Indenture,
. the procedures that holders must follow to exercise these rights,
. the procedures for withdrawing a Change in Control Purchase Notice, and
. that holders who want to convert debentures must satisfy the
requirements set forth in the debentures.
We will cause a copy of such notice to be published in a daily newspaper of
national circulation.
To exercise the purchase right, the holder must deliver written notice of
the exercise of such right, which we refer to as a "Change in Control Purchase
Notice," to the paying agent prior to the close of business on the Change in
Control Purchase Date. The Change in Control Purchase Notice must state:
. the certificate numbers of the debentures to be delivered by the holder
thereof for purchase by Pride,
. the portion of the principal amount at maturity of debentures to be
purchased, which portion must be $1,000 or an integral multiple thereof,
and
. that such debentures are to be purchased by Pride pursuant to the
applicable provisions of the debentures.
Any Change in Control Purchase Notice may be withdrawn by the holder by a
written notice of withdrawal delivered to the paying agent prior to the close
of business on the Change in Control Purchase Date. The notice of withdrawal
must state the principal amount at maturity and the certificate numbers of the
debentures as to which the withdrawal notice relates and the principal amount
at maturity, if any, which remains subject to a Change in Control Purchase
Notice.
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Payment of the Change in Control Purchase Price for a debenture for which a
Change in Control Purchase Notice has been delivered and not validly withdrawn
is conditioned upon delivery of such debenture (together with necessary
endorsements) to the paying agent at any time (whether prior to, on or after
the Change in Control Purchase Date) after the delivery of such Change in
Control Purchase Notice. Payment of the Change in Control Purchase Price for
such debenture will be made promptly following the later of the Business Day
following the Change in Control Purchase Date and the time of delivery of such
debenture. If the paying agent holds, in accordance with the terms of the
Indenture, money sufficient to pay the Change in Control Purchase Price of such
debenture on the Business Day following the Change in Control Purchase Date,
then, on and after the Change in Control Purchase Date, such debenture will
cease to be outstanding and Original Issue Discount on such debenture will
cease to accrue and will be deemed paid, whether or not such debenture is
delivered to the paying agent, and all other rights of the holder shall
terminate (other than the right to receive the Change in Control Purchase Price
upon delivery of such debenture).
One of the events that constitutes a Change in Control under the Indenture
is a sale, conveyance, transfer or lease of all or substantially all of the
assets of Pride and its Subsidiaries, taken as a whole. New York law will
govern the Indenture and the debentures, and there is no established
quantitative definition under New York law of "substantially all" of the assets
of a corporation. Accordingly, if we engaged in a transaction in which we
disposed of less than all of our assets, a question of interpretation could
arise as to whether that disposition was of "substantially all" of our assets
and whether we were required to purchase debentures at the option of the
holders.
We will comply with the provisions of Rule 13e-4, Rule 14e-1 and any other
rules under the Securities Exchange Act of 1934 that may then be applicable to
our offer to purchase debentures at the option of the holders thereof upon a
Change in Control of Pride, and will file Schedule TO or any other required
schedule.
The Change in Control purchase feature of the debentures may, in certain
circumstances, make more difficult or discourage a takeover of Pride and, thus,
the removal of incumbent management. The Change in Control purchase feature,
however, is not the result of management's knowledge of any specific effort to
accumulate shares of common stock or to obtain control of Pride by means of a
merger, tender offer, solicitation or otherwise, or part of a plan by
management to adopt a series of antitakeover provisions. The terms of such
feature result from negotiations between Pride and the underwriter.
The provisions of the Indenture relating to a Change in Control may not
afford the holders protection in the event of a highly leveraged transaction,
reorganization, restructuring, merger, spin-off or similar transaction that may
adversely affect holders, if such transaction does not constitute a Change in
Control.
If a Change in Control were to occur, there can be no assurance that we
would have funds sufficient to pay the Change in Control Purchase Price for all
of the debentures that might be delivered by holders seeking to exercise the
purchase right, because we might also be required to prepay certain other
Indebtedness having change of control provisions in favor of the holders
thereof. In addition, our ability to purchase debentures with cash may be
limited by the terms of our then-existing borrowing agreements.
Optional Conversion to Semiannual Coupon Note upon Tax Event
From and after the date, which we refer to as the "Tax Event Date," of the
occurrence of a Tax Event, we will have the option to elect to have interest in
lieu of future Original Issue Discount accrue at 2.50% per annum on a principal
amount per debenture, which we refer to as the "Restated Principal Amount,"
equal to the Issue Price plus Original Issue Discount accrued to the date
immediately prior to the Tax Event Date or the date on which we exercise the
option described herein, whichever is later, which we refer to as the "Option
Exercise Date." Such interest will accrue from the Option Exercise Date and
will be payable semiannually on January 16 and July 16 of each year, which we
refer to as an "Interest Payment Date," to holders of record at the close of
business on January 1 or July 1, which we refer to as a "Regular Record Date,"
immediately preceding such Interest Payment Date. Interest will be computed on
the basis of a 360-day year comprised
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of twelve 30-day months and will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the Option
Exercise Date.
A "Tax Event" means that we have received an opinion from independent tax
counsel experienced in such matters to the effect that, on or after the date of
this prospectus supplement, as a result of (a) any amendment to, or change
(including any prospective change) in, the laws (or any regulations thereunder)
of the United States or any political subdivision or taxing authority thereof
or therein or (b) any amendment to, or change in, an interpretation or
application of such laws or regulations by any legislative body, court,
governmental agency or regulatory authority, in each case which amendment or
change is enacted, promulgated, issued or announced or which interpretation is
issued or announced or which action is taken, on or after the date of this
prospectus supplement, there is more than an insubstantial risk that interest
(including Original Issue Discount) payable on the debentures either (1) would
not be deductible on a current accrual basis or (2) would not be deductible
under any other method, in either case in whole or in part, by us (by reason of
deferral, disallowance or otherwise) for United States federal income tax
purposes.
Restrictive Covenants
The Indenture will provide that the following covenants will be suspended
during any Investment Grade Status Period, except for the covenants described
under the captions "Transactions with Affiliates" and "Limitation on Liens."
See "--Suspension of Covenants during Achievement of Investment Grade Status."
In addition, during any Investment Grade Status Period, the second bullet point
in clause (2) and clause (3) of the covenant described under "--Consolidation,
Merger and Sale of Assets" will also be suspended.
The Indenture will contain, among others, the following covenants:
Transactions with Affiliates. We will, and will permit any Subsidiary to,
conduct any business, enter into or permit to exist any transaction or series
of related transactions, including the purchase, sale or exchange of Property,
the making of any Investment, the giving of any guarantee or the rendering of
any service with any of our Affiliates (other than transactions among Pride and
any Wholly Owned Subsidiaries) only if:
(1) the transaction or series of related transactions is on terms set
forth in writing which are no less favorable to us or the Subsidiary than
those that could be obtained in a comparable arm's length transaction with
a person that is not such an Affiliate and
(2) either:
. with respect to a transaction or series of related transactions
that has a Fair Market Value in excess of $2 million but less than
$5 million, we certify to the trustee that the transaction or
series of related transactions complies with clause (1) above or
. with respect to a transaction or series of related transactions
that has a Fair Market Value equal to or in excess of $5 million,
the transaction or series of related transactions is approved by a
majority of our Board of Directors, including a majority of the
disinterested directors, which approval is evidenced by a board
resolution that the transaction or series of related transactions
complies with clause (1) above.
These provisions will not apply to the following:
. reasonable compensation (including amounts paid pursuant to employee
benefit plans) and indemnification paid or made available to an officer,
director or employee of Pride or a Subsidiary for services rendered in
that person's capacity as an officer, director or employee or
. the making of any Restricted Payment otherwise permitted by the
Indenture.
Limitation on Restricted Payments. We will, and will permit any Subsidiary
to, make any Restricted Payment only if, at the time of and after giving effect
to the proposed Restricted Payment:
(1) no Default or Event of Default has occurred and is continuing or
would result from the Restricted Payment,
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(2) we could incur at least $1.00 of additional Indebtedness under the
tests described in the first sentence under the caption "--Limitation on
Indebtedness," and
(3) the aggregate amount of such Restricted Payment and all Restricted
Payments (the amount of any Restricted Payment not made in cash will be
based on Fair Market Value) declared or made on or after the Issue Date by
us or any Subsidiary does not exceed the sum of:
. 50% of the aggregate Consolidated Net Income accrued during the
period beginning on the first day of the fiscal quarter in which
the Issue Date falls and ending on the last day of the fiscal
quarter ending immediately prior to the date of such proposed
Restricted Payment (or if such Consolidated Net Income is a
deficit, minus 100% of the deficit), plus
. an amount equal to the aggregate net cash proceeds we receive,
after the Issue Date, from the issuance or sale (other than to a
Subsidiary or an employee stock ownership plan or trust
established by us for the benefit of our employees) of shares of
our Capital Stock, excluding Redeemable Stock but including the
Capital Stock issued upon the exercise of options, warrants or
rights to purchase our Capital Stock (other than Redeemable
Stock), and the liability (expressed as a positive number) in
accordance with GAAP for any of our Indebtedness or carrying value
of Redeemable Stock, which has been converted into, exchanged for
or satisfied by the issuance of shares of our Capital Stock (other
than Redeemable Stock), after the Issue Date, plus
. to the extent not otherwise included in Consolidated Net Income,
the net reduction in Investments in Non-Recourse Subsidiaries or
joint ventures resulting from dividends, repayments of loans or
advances, releases or discharges of guarantees or other
obligations, or other transfers of assets, in each case to us or a
Subsidiary after the Issue Date from any Non-Recourse Subsidiary
or joint venture or from the redesignation of a Non-Recourse
Subsidiary as a Subsidiary (valued in each case as provided in the
definition of Investment), not to exceed, in the case of any Non-
Recourse Subsidiary or joint venture, the total amount of
Investments (other than Permitted Investments) in such Non-
Recourse Subsidiary or joint venture made by us and our
Subsidiaries in such Non-Recourse Subsidiary or joint venture
existing on or made after the Issue Date, plus
. to the extent not otherwise included in Consolidated Net Income or
in the previous bullet point, the total amount of Investments in
joint ventures (calculated as of the Issue Date) which have become
Wholly Owned Subsidiaries subsequent to the Issue Date, plus
. $90 million.
These provisions will not prevent:
(A) the payment of any dividend on the Capital Stock of any class
within 60 days after the date of its declaration if at the date of
declaration the payment would be permitted by the Indenture; provided that
at the time of the declaration of such dividend, no Default shall have
occurred and be continuing,
(B) any repurchase or redemption of our Capital Stock or Subordinated
Indebtedness made by exchange for our Capital Stock (other than Redeemable
Stock), or out of the net cash proceeds from the substantially concurrent
issuance or sale (other than to a Subsidiary) of our Capital Stock (other
than Redeemable Stock), if the net cash proceeds from the sale are excluded
from computations under the second bullet point under (3) above to the
extent such proceeds are applied to purchase or redeem such Capital Stock
or Subordinated Indebtedness, and
(C) any repurchase or redemption of our Subordinated Indebtedness solely
in exchange for, or out of the net cash proceeds from the substantially
concurrent sale of, our new Subordinated Indebtedness, so long as the
Subordinated Indebtedness:
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. is subordinated to the debentures at least to the same extent as
the Subordinated Indebtedness so exchanged, purchased or redeemed,
. has a stated maturity later than the stated maturity of the
Subordinated Indebtedness so exchanged, purchased or redeemed, and
. has an Average Life at the time incurred that is greater than the
remaining Average Life of the Subordinated Indebtedness so
exchanged, purchased or redeemed.
Restricted Payments permitted to be made as described in (B) and (C) above will
be excluded in calculating the amount of Restricted Payments thereafter;
Restricted Payments made as described in (A) above will be included.
Limitation on Indebtedness. We will, and will permit any Subsidiary to,
create, incur, assume, suffer to exist, guarantee or otherwise become liable
with respect to the payment of (collectively, "incur") any Indebtedness (other
than Non-Recourse Indebtedness) only if, after giving effect to the incurrence
of that Indebtedness, no Default or Event of Default would occur and the
Consolidated Interest Coverage Ratio for the Determination Period preceding the
applicable transaction date is at least 2.5 to 1.0. We or any Subsidiary may,
however, incur Permitted Indebtedness. Any Indebtedness of a person existing at
the time that person becomes a Subsidiary will be deemed to be incurred by that
Subsidiary at the time it becomes a Subsidiary.
Limitation on Subsidiary Indebtedness and Preferred Stock. We will not
permit any Subsidiary to incur any Indebtedness (other than Indebtedness of
Non-Recourse Subsidiaries) or issue any preferred stock except:
(a) Indebtedness or preferred stock issued to and held by us or a Wholly
Owned Subsidiary, so long as any transfer of such Indebtedness or preferred
stock to a person other than us or a Wholly owned Subsidiary will be deemed
to constitute the issuance of such Indebtedness or preferred stock by the
issuer,
(b) Indebtedness or preferred stock of a Subsidiary issued and
outstanding prior to the date on which we acquire that Subsidiary (other
than Indebtedness or preferred stock issued in connection with or in
anticipation of the acquisition),
(c) Indebtedness or preferred stock outstanding on the Issue Date,
(d) Indebtedness described in clauses (2), (3), (4), (6) and (7) under
the definition of "Permitted Indebtedness,"
(e) Permitted Subsidiary Refinancing Indebtedness of that Subsidiary,
(f) preferred stock issued in exchange for, or the proceeds of which are
used to refinance, repurchase or redeem, Indebtedness or preferred stock
described in clauses (b) and (c) of this paragraph (the "Retired
Indebtedness or Stock"), if the preferred stock so issued has
. a liquidation value not in excess of the principal amount or
liquidation value of the Retired Indebtedness or Stock plus
related expenses for redemption and issuance, and
. a redemption date later than the stated maturity or redemption
date (if any) of the Retired Indebtedness or Stock,
(g) Indebtedness of a Subsidiary that represents the assumption by that
Subsidiary of Indebtedness of another Subsidiary (other than Non-Recourse
Indebtedness) in connection with a merger of those Subsidiaries, if no
Subsidiary or any successor existing on the Issue Date assumes or otherwise
becomes responsible for any Indebtedness of an entity that is not a
Subsidiary on the Issue Date, except to the extent that a Subsidiary would
be permitted to incur such Indebtedness under this paragraph,
(h) Indebtedness to finance the construction and operation of the
drillships Pride Africa and Pride Angola pursuant to the credit agreements
among Pride, certain of its Subsidiaries, and lenders thereunder, as in
effect on the Issue Date, and any refinancings or replacements thereof, and
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(i) Indebtedness or preferred stock of any Subsidiary, which when taken
together with all other Indebtedness and preferred stock of the
Subsidiaries (except Indebtedness or preferred stock incurred pursuant to
clauses (a), (b), (d) and (h) of this covenant and clauses (e) and (f) of
this covenant to the extent relating to Indebtedness incurred pursuant to
clauses (a), (b) and (d) of this covenant), does not exceed at any one time
outstanding the greater of:
. $100 million and
. 15% of Consolidated Net Tangible Assets determined as of the date
of incurrence of such Indebtedness.
Limitations on Dividends and Other Payment Restrictions Affecting
Subsidiaries. We will not, and will not permit any Subsidiary to, create, enter
into any agreement with any person or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind that by
its terms restricts the ability of any Subsidiary to:
. pay dividends or make any other distributions on its Capital Stock to us
or any Subsidiary,
. pay any Indebtedness owed to us or any Subsidiary,
. make loans or advances to us or any Subsidiary, or
. transfer any of its Property to us or any Subsidiary.
This restriction will not apply to any encumbrance or restriction contained in
any agreement or instrument:
(1) existing on the Issue Date,
(2) relating to any Property acquired after the Issue Date, so long as
the encumbrance or restriction relates only to the Property so acquired,
(3) relating to any Indebtedness of any Subsidiary at the date on which
the Subsidiary was acquired by us or any Subsidiary (other than
Indebtedness incurred in connection with or in anticipation of the
acquisition),
(4) effecting a refinancing of Indebtedness issued under an agreement
referred to in clauses (1) through (3) above, so long as the encumbrances
and restrictions contained in any such refinancing agreement, taken as a
whole, are no more restrictive than the encumbrances and restrictions
contained in the agreements,
(5) constituting customary provisions restricting subletting or
assignment of any of our leases or any Subsidiary's leases or provisions in
agreements that restrict the assignment of such agreement or any rights
thereunder,
(6) constituting restrictions on the sale or other disposition of any
Property securing Indebtedness as a result of a Permitted Lien on such
Property,
(7) constituting any temporary encumbrance or restriction with respect
to a Subsidiary under an agreement that has been entered into for the sale
or disposition of all or substantially all of the outstanding Capital Stock
of or assets of each Subsidiary, provided that such sale or disposition is
otherwise permitted under the Indenture,
(8) constituting customary restrictions on cash, other deposits or
assets imposed by customers and other persons under contracts entered into
in the ordinary course of business, or
(9) constituting provisions contained in agreements or instruments
relating to Indebtedness that prohibit the transfer of all or substantially
all of the assets of the obligor under that agreement or instrument unless
the transferee assumes the obligations of the obligor under such agreement
or instrument or such assets may be transferred subject to such
prohibition.
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Limitation on Asset Sales. We will engage in, and will permit any Subsidiary
to engage in, any Asset Sale only if:
(1) we or the Subsidiary, as the case may be, receives consideration at
the time of the Asset Sale at least equal to the Fair Market Value of the
Property subject to such Asset Sale, except in the case of:
. an Asset Sale resulting from the requisition of title to, seizure
or forfeiture of any Property or any actual or constructive total
loss or an agreed or compromised total loss, or
. a Bargain Purchase Contract,
(2) except in the case of an Asset Sale described in the two bullet
points in clause (1), at least 75% of the consideration consists of Cash
Proceeds or the assumption of our Indebtedness (other than Subordinated
Indebtedness) or of the Subsidiary relating to the Property that was the
subject of such Asset Sale and our release or the release of the Subsidiary
from such Indebtedness, and
(3) we certify to the trustee that such Asset Sale complies with (1) and
(2) above.
The requirements described in (2) do not, however, apply to an Asset Sale in
which we exchange assets for assets that constitute Replacement Assets. We or
such Subsidiary, as the case may be, may apply the Net Available Proceeds from
each Asset Sale:
. to the acquisition of one or more Replacement Assets, or
. to repurchase or repay Senior Debt (other than Indebtedness owed to us
or our Affiliate) (with a permanent reduction of availability in the
case of revolving credit borrowings).
Such acquisition or such repurchase or repayment must, however, be made within
365 days after the consummation of the relevant Asset Sale. The following
amounts will be deemed to be cash for purposes of this provision:
. any of our liabilities or of any Subsidiary (as shown on our or such
Subsidiary's most recent balance sheet or in the notes thereto), other
than liabilities that by their terms are subordinated to the debentures
or the applicable subsidiary guarantee that are assumed by the
transferee of any such Property as a result of which we and our
Subsidiaries are no longer obligated with respect to such liabilities,
and
. any Indebtedness or other obligations received by us or any such
Subsidiary from such transferee that are converted by us or such
Subsidiary into cash (to the extent of the cash received) within 120
days of such Asset Sale.
Any Net Available Proceeds from any Asset Sale that are not used to acquire
Replacement Assets or to repurchase or repay Senior Debt within 365 days after
consummation of the relevant Asset Sale constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $10 million, we will, or at any
time after receipt of Excess Proceeds, we may, at our option, make a pro rata
offer to all holders of debentures and other Indebtedness (excluding our 9 3/8%
Senior Notes due 2007 and our 10% Senior Notes due 2009; provided that we may
make an offer to purchase such Senior Notes in accordance with their terms)
that ranks by its terms equally in right of payment with the debentures and the
terms of which contain substantially similar requirements with respect to the
application of net proceeds from asset sales as are contained in the Indenture,
which we refer to as an "Asset Sale Offer," to purchase on a pro rata basis the
maximum principal amount at maturity of the debentures and other such
Indebtedness in integral multiples of $1,000 that may be purchased out of the
Excess Proceeds, at an offer price in cash equal to (a) the Issue Price plus
accrued Original Issue Discount through the purchase date, in the case of the
debentures, and (b) 100% of the outstanding principal amount thereof plus any
accrued and unpaid interest to the purchase date, in the case of such other
Indebtedness. Upon completion of any Asset Sale Offer, the amount of Excess
Proceeds will be reset to zero and we may use any remaining amount for general
corporate purposes.
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Within five Business Days after we are obligated to make an Asset Sale
Offer, we will send a written notice to holders, accompanied by such
information we in good faith believe will enable holders to make an informed
decision with respect to the Asset Sale Offer.
We will comply with any applicable tender offer rules, including any
applicable requirements of Rule 14e-1 under the Securities Exchange Act of
1934, in the event that an Asset Sale Offer is required under the circumstances
described above, and we will file Schedule TO or any other required schedule.
Limitation on Sale and Lease-Back Transactions. We will, and will permit any
Subsidiary to, enter into, assume, guarantee or otherwise become liable with
respect to any Sale and Lease-Back Transaction only if:
. the proceeds from the Sale and Lease-Back Transaction are at least equal
to the Fair Market Value of the Property being transferred, and
. we or the Subsidiary would have been permitted to enter into the
transaction under the covenants described under the captions "--
Limitation on Indebtedness" and "--Limitation on Subsidiary Indebtedness
and Preferred Stock" (if the Sale and Lease-Back Transaction is a
Capital Lease Obligation) and "--Limitation on Liens."
Limitation on Liens. We will not, and will not permit any Subsidiary to,
create, affirm, incur, assume or suffer to exist any Liens on or with respect
to any Property or ourself or that Subsidiary or any interest in that Property
or any income or profits from that Property, without effectively securing the
debentures equally and ratably with (or prior to) any Indebtedness so secured.
This restriction will not apply to Permitted Liens.
Limitation on Non-Guarantor Subsidiaries. We will permit any Subsidiary that
is not a subsidiary guarantor to guarantee the payment of any of our
Indebtedness only if:
(1) both
. such Subsidiary simultaneously executes and delivers a
supplemental indenture providing for a subsidiary guarantee of the
debentures by such Subsidiary and
. with respect to any guarantee of Subordinated Indebtedness by a
Subsidiary, any such guarantee will be subordinated to that
Subsidiary's guarantee of the debentures at least to the same
extent as such Subordinated Indebtedness is subordinated to the
debentures,
(2) such Subsidiary waives, and agrees not in any manner whatsoever to
exercise any right or claim or take the benefit or advantage of, any rights
of reimbursement, indemnity or subrogation or any other rights against us
or any other Subsidiary as a result of any payment by such Subsidiary under
its subsidiary guarantee of the debentures until such time as the
obligations guaranteed thereby are paid in full and
(3) such Subsidiary delivers to the trustee an opinion of independent
legal counsel to the effect that such subsidiary guarantee of the
debentures has been duly executed and authorized and constitutes a valid,
binding and enforceable obligation of the Subsidiary, except insofar as
enforcement may be:
. limited by bankruptcy, insolvency or similar laws (including all
laws relating to fraudulent transfers), and
. subject to general principles of equity.
This covenant will not, however, apply to any guarantee of any Subsidiary that
either:
. existed at the time such person became one of our Subsidiaries and
. was not incurred in connection with, or in contemplation of, that person
becoming one of our Subsidiaries.
In addition, a pledge of assets to secure any Indebtedness for which the
pledgor is not otherwise liable will not be considered a guarantee.
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Consolidation, Merger and Sale of Assets
We will consolidate with or merge into any other entity (other than a merger
of a Subsidiary into us in which we are the continuing corporation), or sell,
convey, assign, transfer, lease or otherwise dispose of all or substantially
all of our assets and our Subsidiaries, taken as a whole, to any person, only
if:
(1) either
. we are the continuing entity or
. the resulting entity is organized under the laws of the United
States of America or any State thereof or the District of
Columbia, the Bahamas, Barbados, Bermuda, the British Virgin
Islands, the Cayman Islands, any of the Channel Islands, France,
the Netherlands, or the Netherlands Antilles, and assumes by a
supplemental indenture the due and punctual payments on the
debentures and the performance of our covenants and obligations
under the Indenture,
(2) immediately after giving effect to the transaction on a pro forma
basis (including any Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction):
. no Default or Event of Default under the Indenture has occurred
and is continuing or would result from the transaction; and
. we or the resulting entity will have a Consolidated Net Worth
equal to or greater than our Consolidated Net Worth immediately
prior to the transaction,
(3) immediately after giving effect to the transaction on a pro forma
basis as if the transaction had occurred on the first day of the
Determination Period, we or the resulting entity would be permitted to
incur $1.00 of additional Indebtedness under the tests described in the
first sentence under the caption "--Restrictive Covenants--Limitation on
Indebtedness" and
(4) in the event that we or the resulting entity is organized in a
jurisdiction other than the United States that is different from the
jurisdiction in which the obligor on the debentures was organized
immediately before giving effect to the transaction:
. such continuing entity delivers to the trustee an opinion of
counsel stating that (a) the obligations of the continuing entity
under the Indenture are enforceable under the laws of the new
jurisdiction of its formation subject to customary exceptions and
(b) the holders will not recognize any income, gain or loss for
U.S. federal income tax purposes as a result of the transaction
and will be subject to U.S. federal income tax on the same amount
and in the same manner and at the same times as would have been
the case if such transaction had not occurred,
. the continuing entity agrees in writing to submit to jurisdiction
and appoints an agent for the service of process, each under terms
satisfactory to the trustee, and
. the board of directors of the continuing entity determines in good
faith that such transaction will have no material adverse effect
on any holder and a board resolution to that effect is delivered
to the trustee.
The provision with respect to Consolidated Net Worth described in clause (2)
above and the provision described in clause (3) above will not apply to any
merger into or consolidation with, or any transfer of all or substantially all
of our and our Subsidiaries assets taken as a whole to, Pride or a Wholly Owned
Subsidiary. Further, the entire covenant will not apply to any merger of
another entity into Pride.
In connection with any consolidation, merger, asset transfer or other
transaction contemplated by this restriction, we will deliver or cause to be
delivered to the trustee an officers' certificate and an opinion of counsel,
each stating that such consolidation, merger, asset transfer or transaction and
the supplemental
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indenture in respect thereto comply with the provisions of the Indenture and
that all conditions precedent in the Indenture relating to such transactions
have been complied with.
Upon any transaction of the type described in and effected in accordance
with this section, the resulting entity will succeed to and be substituted for
and may exercise every right and power of Pride under the Indenture and the
debentures with the same effect as if the resulting entity had been named as
Pride in the Indenture. When the resulting entity assumes all the obligations
and covenants of Pride under the Indenture and the debentures, except in the
case of a lease, we will be relieved of all such obligations.
Events of Default; Notice and Waiver
The Indenture will provide that, if an Event of Default occurs and is
continuing, either the trustee or the holders of at least 25% in aggregate
principal amount of the outstanding debentures may declare the Issue Price of
the debentures plus accrued Original Issue Discount (or if the debentures have
been converted to semiannual coupon notes following a Tax Event, the Restated
Principal Amount, plus accrued and unpaid interest) on the debentures to and
including the date of default (in the case of an Event of Default specified in
subparagraph (a) or (b) of the following paragraph) or to the date of such
declaration (in the case of any other Event of Default), to be due and payable
immediately. In the case of certain events of bankruptcy or insolvency, the
Issue Price plus the accrued Original Issue Discount thereon (or if the
debentures have been converted to semiannual coupon notes following a Tax
Event, the Restated Principal Amount, plus accrued and unpaid interest) to and
including the occurrence of such event ipso facto shall become immediately due
and payable without any declaration or other act on the part of either the
trustee or any holder. At any time after a declaration of acceleration has been
made, but before a judgment has been obtained, the holders of a majority in
aggregate principal amount of the outstanding debentures may, under certain
circumstances, rescind or annul any such acceleration. Interest shall, to the
extent permitted by law, accrue and be payable on demand upon a default in the
payment of principal amount at maturity, Issue Price, accrued Original Issue
Discount, or any Redemption Price, Purchase Price, Change in Control Purchase
Price or shares of common stock to be delivered upon conversion of the
debentures, and such interest shall be compounded semiannually. The accrual of
such interest on overdue amounts shall be in lieu of, and not in addition to,
the continued accrual of Original Issue Discount.
In addition to the Events of Default described in the accompanying
prospectus, an Event of Default with respect to the debentures includes any of
the following:
(a) our failure to pay the principal amount at maturity, Issue Price,
accrued Original Issue Discount, Redemption Price, Purchase Price or Change
in Control Purchase Price with respect to any debenture when the same
becomes due and payable,
(b) our failure to deliver shares of common stock within 10 days when
such common stock is required to be delivered upon conversion of a
debenture as provided in the Indenture,
(c) our failure to comply with any of our covenants or agreements
contained in "--Consolidation, Merger or Sale of Assets", "--Purchase of
Debentures at the Option of the Holder upon a Change in Control" and "--
Restrictive Covenants--Limitation on Asset Sales,"
(d) the failure in the performance or breach of any covenant or
agreement by Pride or any subsidiary guarantor contained in the debentures,
any subsidiary guarantee of the debentures or the Indenture (other than a
covenant or agreement a default in performance or breach of which is
specifically dealt with) for 30 days after written notice has been mailed
to Pride or such subsidiary guarantor by the trustee or to Pride and the
trustee by the holders of at least 25% of the aggregate principal amount of
the outstanding debentures,
(e) the failure by Pride or any Subsidiary to pay its Indebtedness
(other than Non-Recourse Indebtedness or Limited Recourse Indebtedness)
when due within the applicable grace period or the acceleration of such
Indebtedness by the holders thereof and, in either case, the aggregate
principal amount of the due and unpaid or accelerated Indebtedness exceeds
$10 million,
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(f) the entry by a court of competent jurisdiction of one or more
judgments or orders against Pride or any Subsidiary in an uninsured or
unindemnified aggregate amount in excess of $10 million that remain
undischarged or unsatisfied for 30 consecutive days after the right to
appeal them has expired,
(g) any subsidiary guarantee for any reason ceases to be, or is asserted
by Pride or any subsidiary guarantor, as applicable, not to be, in full
force and effect (except pursuant to the release of any such subsidiary
guarantee in accordance with the Indenture) and
(h) events of bankruptcy, insolvency or reorganization involving any
Subsidiary that constitutes a Significant Subsidiary.
The holders of a majority in aggregate principal amount of the outstanding
debentures have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the trustee or exercising any trust
or power conferred on the trustee with respect to the debentures, subject to
certain limitations specified in the Indenture.
Notwithstanding the provisions described in the accompanying prospectus
under "Description of Debt Securities--Events of Default," and "--Modification
and Waiver," the right of any holder:
. to receive payment of the principal amount at maturity, Issue Price,
accrued Original Issue Discount, Redemption Price, Purchase Price,
Change in Control Purchase Price or interest, if any, in respect of the
debentures held by such holder on or after the respective due dates
expressed in the debentures,
. to convert such debentures, or
. to institute suit for the enforcement of any such payment on or after
such respective dates or the right to convert,
shall not be impaired or adversely affected without such holder's consent.
The holders of a majority in aggregate principal amount of outstanding
debentures may on behalf of all holders of debentures waive any past default
under the Indenture, except:
. any default in any payment on the debentures or
. any default in respect of certain covenants or provisions in the
Indenture (including the conversion rights of the debentures) that may
not be modified or amended without the consent of the holder of each
outstanding debenture affected.
Modification
For a description of provisions relating to modification or amendment of the
Indenture, see "Description of Debt Securities--Modification and Waiver" in the
accompanying prospectus. In addition to those provisions, with respect to the
debentures no modification or amendment may, without the consent of the holder
of each outstanding debenture affected thereby, reduce the principal amount at
maturity, Issue Price, Purchase Price, Conversion Rate, Change in Control
Purchase Price or Redemption Price of any debenture, or extend the stated
maturity of any debenture or alter the manner or rate of accrual of Original
Issue Discount or interest, or subordinate in right of payment, or otherwise
subordinate, the debentures or any subsidiary guarantee to any other
Indebtedness, or make any change that materially and adversely affects the
conversion rights associated with any debenture or the right to require Pride
to purchase a debenture.
Defeasance
The debentures will be subject to both legal defeasance and discharge and
covenant defeasance at our option as described in the accompanying prospectus
under "Description of Debt Securities--Defeasance." However, our obligations
with respect to the convertibility of the debentures will survive any such
action by us.
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Limitations of Claims in Bankruptcy
If we commence a bankruptcy proceeding under Title 11 of the United States
Code, the claim of the holder of a debenture may be limited to the Issue Price
of the debenture plus that portion of the Original Issue Discount deemed to
have accrued from the Issue Date to the commencement of such proceeding.
Taxation of Debentures
See "Material U.S. Federal Income Tax Considerations" for a discussion of
certain United States federal income tax aspects that may apply to holders of
debentures.
Information Concerning the Trustee
The Chase Manhattan Bank is the trustee, security registrar, paying agent
and conversion agent under the Indenture with respect to the debentures. The
Chase Manhattan Bank also serves as trustee under the Indenture with respect to
our 10% Senior Notes due 2009 and our 9 3/8% Senior Notes due 2007.
Glossary
"Adjusted Net Assets" of a subsidiary guarantor at any date means the amount
by which the Fair Value of the properties and assets of such subsidiary
guarantor exceeds the total amount of liabilities, including contingent
liabilities (after giving effect 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.
"Affiliate" of any specified person means another person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of that person, whether through the
ownership of voting securities, by agreement or otherwise. Beneficial ownership
of 10% or more of the Voting Stock of a person will, however, be deemed to be
control.
"Asset Sale" means any direct or indirect sale, conveyance, transfer, lease
or other disposition (including any disposition by means of a merger,
consolidation or Sale and Lease-Back Transaction described in the next
sentence) by us or any of our Subsidiaries to any person other than us or a
Wholly Owned Subsidiary, in one transaction or a series of related
transactions, of
(1) any Capital Stock of any Subsidiary, except for directors'
qualifying shares or certain minority interests sold to other persons
solely due to local law requirements that there be more than one
stockholder, but which are not in excess of what is required for such
purpose, or
(2) any of our or our Subsidiaries' other Property other than:
(A) sales of drill-string components or obsolete or worn out
equipment in the ordinary course of business or other assets that, in
our reasonable judgment, are no longer used or useful in the conduct of
our or our Subsidiaries' business,
(B) any drilling contract, charter (bareboat or otherwise) or other
lease of Property entered into by us or any of our Subsidiaries in the
ordinary course of business, other than any Bargain Purchase Contract,
(C) a Permitted Investment or Restricted Payment permitted under "--
Restrictive Covenants--Limitation on Restricted Payments,"
(D) a Change in Control,
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(E) a consolidation, merger or disposition of all or substantially
all of our assets in compliance with the provision of the Indenture
described in "--Consolidation, Merger and Sale of Assets,"
(F) any trade or exchange by us or any of our Subsidiaries of one or
more drilling rigs or other vessels or equipment for one or more other
Replacement Assets owned or held by another person, if:
. the Fair Value of the Property traded or exchanged by us or
such Subsidiary (including cash or cash equivalents to be
delivered by us or such Subsidiary) is reasonably equivalent
to the Fair Value of the asset (together with cash or cash
equivalents to be received by us or such Subsidiary) acquired,
as determined by written appraisal by a nationally (or
industry) recognized investment banking firm or appraisal firm
and
. such exchange is approved by a majority of our disinterested
directors and
(G) any transfers that, but for this clause (G), would be Asset
Sales, if:
. we elect to designate such transfers as not constituting Asset
Sales and
. after giving effect to such transfers, the aggregate Fair
Market Value of the Property transferred in such transaction
or any such series of related transactions so designated does
not exceed $1,000,000.
An Asset Sale includes dispositions by way of merger or consolidation or by
means of a Sale and Lease-Back Transaction other than a Sale and Lease-Back
Transaction that results in the creation or incurrence of:
. a Capital Lease Obligation of Pride or any of our Subsidiaries or
. a lease of newly acquired, improved, upgraded or constructed assets,
which lease is treated as an operating lease in accordance with GAAP and
entered into within 180 days of the later of commencement of commercial
operations of such assets and completion of such acquisition,
improvement, upgrade or construction.
An Asset Sale also includes the requisition of title to, seizure of or
forfeiture of any Property, or any actual or constructive total loss or an
agreed or compromised total loss of any Property.
"Average Life" means, as of any date, the quotient obtained by dividing:
(1) the sum of the products of
. the number of years from such date to the date of each scheduled
principal payment (including any sinking fund or mandatory
redemption payment requirements) of the applicable debt security
or preferred stock multiplied in each case by
. the amount of such principal payment by
(2) the sum of all such principal payments.
"Bargain Purchase Contract" means a drilling contract, charter (bareboat or
otherwise) or lease that provides for acquisition of Property by the other
party to the agreement during or at the end of its term for less than Fair
Market Value of the Property at the time such right to acquire the Property is
granted.
"Business Day," when used with respect to any place where a payment on the
debentures may be made, means each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in that place, or the
city in which the trustee's principal office is located, are authorized or
obligated by law or executive order to close.
"Capital Lease Obligation" means, at any time as to any person with respect
to any Property leased by that person as lessee, the amount of the liability
with respect to the lease that would be required at such time to
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be capitalized and accounted for as a capital lease on the balance sheet of
such person prepared in accordance with GAAP. For purposes of "--Certain
Covenants--Limitation on Liens," a Capital Lease Obligation shall be deemed
secured by a Lien on the Property being leased.
"Capital Stock" in any entity means any and all shares, interests,
partnership interests, participations or other equivalents in the equity
interest (however designated) in such entity and any rights (other than debt
securities convertible into an equity interest), warrants or options to acquire
an equity interest in such entity.
"Cash Proceeds" means, with respect to any Asset Sale by any person, the
aggregate consideration received for such Asset Sale by such person in the form
of cash or cash equivalents (including any amounts of insurance or other
proceeds received in connection with an Asset Sale of the type described in the
last sentence of the definition of Asset Sale), including payments for deferred
payment obligations when received in the form of cash or cash equivalents
(except to the extent that such obligations are financed or sold with recourse
to such person or any subsidiary thereof). For purposes of this definition,
"cash or cash equivalents" are deemed to include, for a period not to exceed 12
months from the related Asset Sale, noncash consideration received with respect
to an Asset Sale to the extent that such noncash consideration consists of:
(1) publicly traded debt securities rated as "BBB-" or higher by
Standard & Poor's Ratings Services and "Baa3" or higher by Moody's
Investors Service, Inc.; or
(2) other Indebtedness of a person if:
. the lowest rated long-term, unsecured debt obligation issued by
such person is rated "BBB-" or higher by S&P and "Baa3" or higher
by Moody's; or
. in the case of other Indebtedness, the payment of such other
Indebtedness is secured by an irrevocable letter of credit issued
by a commercial bank having capital and surplus in excess of $100
million and long-term, unsecured debt obligations rated at least
"A-" by S&P and "A3" by Moody's.
"Change in Control" means:
(1) a determination by us that any person or group (as defined in
Section 13(d)(3) or 14(d)(2) of the Exchange Act) has become the direct or
indirect beneficial owner (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of more than 50% of our Voting Stock;
(2) we are merged with or into or consolidated with another entity and,
immediately after giving effect to the merger or consolidation, less than
50% of the outstanding voting securities entitled to vote generally in the
election of directors or persons who serve similar functions of the
surviving or resulting entity are then beneficially owned (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934) in the
aggregate by:
. our stockholders immediately prior to such merger or consolidation
or
. if the record date has been set to determine our stockholders
entitled to vote on such merger or consolidation, our stockholders
as of such record date;
(3) we, either individually or in conjunction with one or more
Subsidiaries, sell, convey, transfer or lease, or the Subsidiaries sell,
convey, transfer or lease, all or substantially all of our and our
Subsidiaries' assets, taken as a whole (either in one transaction or a
series of related transactions), including Capital
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Stock of the Subsidiaries, to any person or entity (other than a Wholly
Owned Subsidiary or a newly formed entity having substantially the same
stockholders, directly or indirectly, as our company with holdings in
substantially the same proportion as such stockholders' holdings in our
company);
(4) the liquidation or dissolution of our company; or
(5) the first day on which a majority of the individuals who constitute
the Board of Directors are not Continuing Directors.
The term "common stock" means common stock, no par value, of Pride as it
exists on the Issue Date or any other Capital Stock of Pride into which such
common stock shall be reclassified or changed.
"Consolidated Current Liabilities" of any entity means, as of any date, the
total liabilities (including tax and other proper accruals) of such entity and
its subsidiaries (other than Non-Recourse Subsidiaries) on a consolidated basis
at such date which may properly be classified as current liabilities in
accordance with GAAP, after eliminating (1) all intercompany items between such
entity and its subsidiaries or between subsidiaries and (2) all current
maturities of long-term Indebtedness.
"Consolidated Interest Coverage Ratio" means, as of the date of the
transaction giving rise to the need to calculate the Consolidated Interest
Coverage Ratio, the ratio of:
(1) our aggregate amount of EBITDA for the latest four fiscal quarters
for which financial information is available immediately prior to the
applicable transaction date (the "Determination Period") to
(2) our aggregate Consolidated Interest Expense that is anticipated to
accrue during a period consisting of the fiscal quarter in which the
transaction date occurs and the three subsequent fiscal quarters (based
upon the pro forma amount and maturity of, and interest payments on,
Indebtedness of ourself and our consolidated Subsidiaries expected by us to
be outstanding on the transaction date and reasonably anticipated by us to
be outstanding from time to time during such period), assuming for the
purposes of this measurement the continuation of market interest rates
prevailing on the transaction date and base interest rates on floating
interest rate obligations equal to the base interest rates on such
obligations in effect as of the transaction date.
This calculation is subject to the following qualifications:
. if Pride or any of its consolidated Subsidiaries is a party to any
Interest Swap Obligation that would have the effect of changing the
interest rate on any Indebtedness of Pride or any of its consolidated
Subsidiaries for such four-quarter period (or a portion thereof), the
resulting rate will be used for such four-quarter period or portion
thereof;
. any Consolidated Interest Expense of Pride with respect to Indebtedness
incurred or retired by Pride or any of its Subsidiaries during the
fiscal quarter in which the transaction date occurs will be calculated
as if such Indebtedness was so incurred or retired on the first day of
the fiscal quarter in which the transaction date occurs;
. if the transaction giving rise to the need to calculate the Consolidated
Interest Coverage Ratio would have the effect of increasing or
decreasing EBITDA in the future and if such increase or decrease is
readily quantifiable and is directly attributable to such transaction,
EBITDA will be calculated on a pro forma basis as if the transaction had
occurred on the first day of the four fiscal quarters referred to in
clause (1) of this definition, and if, during the same four fiscal
quarters:
. Pride or any of its consolidated Subsidiaries engaged in any Asset Sale,
EBITDA for such period will be reduced by an amount equal to the EBITDA
(if positive), or increased by an amount equal to the EBITDA (if
negative), directly attributable to the assets that are the subject of
the Asset Sale for such period calculated on a pro forma basis as if
such Asset Sale and any related retirement of Indebtedness had occurred
on the first day of such period or
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. Pride or any of its consolidated Subsidiaries acquires any material
assets other than in the ordinary course of business, EBITDA and
Consolidated Interest Expense (if Indebtedness is incurred or assumed in
connection with such acquisition) will be calculated on a pro forma
basis as if such acquisition and related financing had occurred on the
first day of the period.
"Consolidated Interest Expense" means, with respect to any person for any
period, without duplication, the sum of:
(1) the aggregate amount of cash and noncash interest expense (including
capitalized interest) of such person and its subsidiaries (other than Non-
Recourse Subsidiaries) for such period as determined on a consolidated
basis in accordance with GAAP for Indebtedness, including, without
limitation:
. any amortization of debt discount;
. net costs associated with Interest Swap Obligations (including any
amortization of discounts);
. the interest portion of any deferred payment obligation;
. all accrued interest; and
. all commissions, discounts and other fees and charges owed with
respect to letters of credit, bankers acceptances or similar
facilities paid or accrued, or scheduled to be paid or accrued,
during such period other than for Non-Recourse Indebtedness;
(2) dividends on preferred stock of such person (and preferred stock of
its subsidiaries (other than Non-Recourse Subsidiaries) if paid to a person
other than such person or its subsidiaries) declared and payable in cash;
(3) the portion of any rental obligation of such person or its
subsidiaries (other than Non-Recourse Subsidiaries) for any Capital Lease
Obligation allocable to interest expense in accordance with GAAP;
(4) the portion of any rental obligation of such person or its
subsidiaries (other than Non-Recourse Subsidiaries) in respect of any Sale
and Lease-Back Transaction allocable to interest expense (determined as if
such were treated as a Capital Lease Obligation); and
(5) to the extent any debt of any other person is guaranteed by such
person or any of its subsidiaries (other than Non-Recourse Subsidiaries),
the aggregate amount of interest paid, accrued or scheduled to be paid or
accrued, by such other person during such period attributable to any such
debt.
We will exclude from the calculation of Consolidated Interest Expense, to the
extent included above, amortization or writeoff of deferred financing costs of
such person and its subsidiaries during such period and any charge related or
any premium or penalty paid in connection with redeeming or retiring any
Indebtedness of such person and its subsidiaries prior to its stated maturity.
In each case, we will calculate Consolidated Interest Expense after elimination
of intercompany accounts among such person and its subsidiaries and as
determined in accordance with GAAP.
"Consolidated Net Income" of any person means, for any period, the aggregate
net income (or net loss, as the case may be) of such person and its
subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP. We will exclude from the calculation the following, without
duplication:
(1) any net income of any Non-Recourse Subsidiary, except that Pride's
or any Subsidiary's equity in the net income of such Non-Recourse
Subsidiary for such period will be included in such Consolidated Net Income
up to the aggregate amount of cash or cash equivalents actually distributed
by such Non-Recourse Subsidiary during such period to Pride or such
Subsidiary as a dividend or other distribution;
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(2) gains and losses from Asset Sales or reserves relating thereto;
(3) items classified as extraordinary (other than the tax benefit, if
any, of the utilization of net operating loss carryforwards or alternative
minimum tax credits);
(4) in the case of any computation of Consolidated Net Income for
purposes of determining compliance with the covenants described under the
caption "--Restrictive Covenants--Limitation on Restricted Payments," the
net income of any person acquired by such specified person (other than a
Non-Recourse Subsidiary) or any of its subsidiaries in a pooling-of-
interests transaction for any period prior to the date of such acquisition;
(5) any gain or loss, net of taxes, realized on the termination of any
employee pension benefit plan;
(6) the net income of any subsidiary of such specified person to the
extent that the transfer to that person of that income is not at the time
permitted, directly or indirectly, by any means (including by dividend,
distribution, advance or loan or otherwise), by operation of the terms of
its charter or any agreement with a person other than with such specified
person, instrument held by a person other than by such specified person,
judgment, decree, order, statute, law, rule or governmental regulations
applicable to such subsidiary or its stockholders, except for any dividends
or distributions actually paid during such period by such subsidiary to
such person;
(7) the cumulative effect of changes in accounting principles; and
(8) non-cash compensation expense for management stock options and other
incentive or benefit plans.
"Consolidated Net Tangible Assets" of any person means, as of any date,
Consolidated Tangible Assets of such person at such date, after deducting
(without duplication of deductions) all Consolidated Current Liabilities of
such person at such date.
"Consolidated Net Worth" of any person means, as of any date, the sum of
the Capital Stock and additional paid-in capital plus retained earnings (or
minus accumulated deficit) of such person and its subsidiaries on a
consolidated basis at such date, each item determined in accordance with GAAP,
less amounts attributable to Redeemable Stock of such person or any of its
subsidiaries.
"Consolidated Tangible Assets" of any person means, as of any date, the
consolidated assets of such person and its Subsidiaries at such date, after
eliminating intercompany items and after deducting
(1) the net book value of all assets that would be classified as
intangibles under GAAP (including, without limitation, goodwill,
organizational expenses, trademarks, trade names, copyrights, patents,
licenses and any rights in any thereof) and
(2) any prepaid expenses, deferred charges and unamortized debt discount
and expense, each such item determined in accordance with GAAP.
"Continuing Director" means an individual who is a member of the Board of
Directors of Pride and either:
(1) who was a member of the Board of Directors on the Issue Date or
(2) whose nomination for election or election to the Board of Directors
was approved by vote of at least 66 2/3% of the directors then still in
office who were either directors on the Issue Date or whose election or
nomination for election was previously so approved.
"Currency Hedge Obligations" means, at any time as to any person, the
obligations of such person at such time incurred in the ordinary course of
business pursuant to any foreign currency exchange agreement, option or future
contract or other similar agreement or arrangement designed to protect against
or manage such person's or any of its subsidiaries' exposure to fluctuations
in foreign currency exchange rates.
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"Default" means any event, act or condition that is, or after notice or the
passage of time or both would be, an Event of Default.
"Determination Period" has the meaning specified under clause (1) of the
definition of "Consolidated Interest Coverage Ratio."
"EBITDA" means, with respect to any person for any period, the Consolidated
Net Income of such person, for such period, plus to the extent reflected in
the income statement of such person for such period from which Consolidated
Net Income is determined, without duplication:
(1) Consolidated Interest Expense,
(2) income tax expense,
(3) depreciation expense,
(4) amortization expense and
(5) any other non-cash charges.
"Fair Market Value" means the fair market value as determined in good faith
by the Board of Directors of Pride.
"Fair Value" means the price that could be negotiated in an arm's-length
free market transaction, for cash, between a willing seller and a willing
buyer, neither of whom is under undue pressure or compulsion to complete the
transaction.
"GAAP" means United States generally accepted accounting principles,
consistently applied, as set forth in the opinions of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
statements of the Financial Accounting Standards Board, or in such other
statements by such other entity as may be designated by the AICPA, that are
applicable to the circumstances as of the date of determination. All
calculations made for purposes of determining compliance with the provisions
set forth in "Consolidation, Merger and Sale of Assets" and with the terms of
the covenants set forth in "Restrictive Covenants" will, however, use GAAP in
effect at the Issue Date.
A "holder," when used with respect to any debenture, means the person in
whose name the debenture is registered in the security registrar.
"Indebtedness" as applied to any person means, at any time, without
duplication:
(1) any obligation of such person, contingent or otherwise, for borrowed
money;
(2) any obligation of such person evidenced by bonds, debentures, notes
or other similar instruments;
(3) any obligation of such person for all or any part of the purchase
price of Property or for the cost of Property constructed or of
improvements thereto (including any obligation under or in connection with
any letter of credit related thereto), other than accounts payable included
in current liabilities incurred in respect of Property and services
purchased in the ordinary course of business;
(4) any obligation of such person upon which interest charges are
customarily paid (other than accounts payable incurred in the ordinary
course of business);
(5) any obligation of such person under conditional sale or other title
retention agreements relating to purchased Property (other than accounts
payable incurred in the ordinary course of business);
(6) any obligation of such person issued or assumed as the deferred
purchase price of Property (other than accounts payable incurred in the
ordinary course of business);
(7) any Capital Lease Obligation;
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(8) any obligation of any other person secured by (or for which the
obligee thereof has an existing right, contingent or otherwise, to be
secured by) any Lien on Property owned or acquired, whether or not any
obligation secured thereby has been assumed, by such person, the amount of
such obligation being deemed to be the lesser of the value of such Property
or the amount of the obligation so secured;
(9) any obligation of such person in respect of any letter of credit
supporting any obligation of any other person;
(10) the maximum fixed repurchase price of any Redeemable Stock of such
person (or if such person is a subsidiary, any preferred stock of such
person);
(11) any Interest Swap Obligation or Currency Hedge Obligation of such
person; and
(12) any obligation that is in economic effect a guarantee, regardless
of its characterization (other than an endorsement in the ordinary course
of business or any performance guarantee), with respect to any Indebtedness
of another person, to the extent guaranteed.
For purposes of this definition, the maximum fixed repurchase price of any
Redeemable Stock or subsidiary preferred stock that does not have a fixed
repurchase price will be calculated in accordance with the terms of such
Redeemable Stock or subsidiary preferred stock as if such Redeemable Stock or
subsidiary preferred stock were repurchased on any date on which Indebtedness
will be required to be determined pursuant to the Indenture. If, however, such
Redeemable Stock or subsidiary preferred stock is not then permitted to be
repurchased, the repurchase price will be the book value of such Redeemable
Stock or subsidiary preferred stock. The amount of Indebtedness of any person
at any date will be:
(1) the outstanding book value at such date of all unconditional
obligations as described above and
(2) the maximum liability of any such contingent obligation at such
date.
"Interest Swap Obligation" means the obligation pursuant to any interest
rate swap agreement, interest rate cap, collar or floor agreement or other
similar agreement or arrangement designed to protect against or manage
exposure to fluctuations in interest rates.
"Investment" means, with respect to any person, any investment in another
person, whether by means of:
. a share purchase;
. a capital contribution;
. a loan;
. an advance (other than advances to employees for moving and travel
expenses, drawing accounts and similar expenditures or prepayments or
deposits in the ordinary course of business) or similar credit extension
constituting Indebtedness of such other person; or
. any guarantee of Indebtedness of any other person.
The term "Investment" will not, however, include any transaction involving the
purchase or other acquisition (including by way of merger) of Property
(including Capital Stock) by Pride or any Subsidiary in exchange for Capital
Stock (other than Redeemable Stock) of Pride. The amount of any person's
Investment will be the original cost of such Investment to such person, plus
the cost of all additions thereto paid by such person, minus the amount of any
portion of such Investment repaid to such person in cash as a repayment of
principal or a return of capital, as the case may be, but without any other
adjustments for increases or decreases in value, or writeups, writedowns or
writeoffs with respect to such Investment in determining the amount of any
investment involving a transfer of any Property other than cash, such Property
to be valued at its Fair Value at the time of such transfer as determined in
good faith by the board of directors (or comparable body) of the person making
such transfer.
"Investment Grade Status" exists as of any time if at such time:
. the rating assigned to the debentures by Moody's is Baa3 (or the
equivalent) or higher and
. the rating assigned to the debentures by S&P is BBB- (or the equivalent)
or higher.
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"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.
The definition of "Lien" includes 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 above.
"Limited Recourse Indebtedness" means
(1) Indebtedness with respect to the two drilling/workover barge rigs
owned by Pride's Venezuelan Subsidiary as in effect on the Issue Date (the
"Venezuelan Barge Financing"),
(2) Indebtedness with respect to two drillships owned by Andre Maritime
Ltd. and Martin Maritime Ltd. as in effect on the Issue Date (the
"Angola/Africa Drillship Financing") and
(3) Indebtedness incurred to finance the purchase, acquisition,
renovation or construction of capital assets and related items (including
interest added to principal), or refinancings thereof,
. for which the recourse of the holder of such Indebtedness is
effectively limited to such capital assets and related items or
. in which the recourse and security are similar to (or more
favorable to Pride and its Subsidiaries than) the Venezuelan Barge
Financing or the Angola/Africa Drillship Financing.
"Net Available Proceeds" means
(1) as to any Asset Sale (other than a Bargain Purchase Contract), the
Cash Proceeds from that sale, net of:
. all legal and title expenses, commissions and other fees and
expenses incurred;
. all taxes payable as a consequence of such Asset Sale;
. all payments made to any person other than Pride or a Subsidiary
on any Indebtedness secured by the Property subject to the Asset
Sale, in accordance with the terms of any Lien upon or with
respect to such Property, 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;
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. with respect to any Asset Sale by a Subsidiary, the equity interest
in such Cash Proceeds of any holder of Capital Stock of such
Subsidiary (other than Pride or any other Subsidiary);
. appropriate amounts to be provided by Pride or any Subsidiary, as
the case may be, as a reserve required in accordance with GAAP
against any liabilities associated with such Asset Sale and
retained by Pride or any Subsidiary, as the case may be, after such
Asset Sale including pension and other post-employment benefit
liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with
such Asset Sale; and
(2) as to any Bargain Purchase Contract, an amount equal to:
. that portion of the rental or other payment stream arising under a
Bargain Purchase Contract that represents an amount in excess of
the Fair Market Value of the rental or other payments with respect
to the pertinent Property and
. the Cash Proceeds from the sale of such Property, net of the
amounts set forth in clause (1) above, in each case as and when
received.
"Non-Recourse Indebtedness" means Indebtedness or that portion of
Indebtedness of a Non-Recourse Subsidiary as to which:
(1) neither Pride nor any Subsidiary
. provides credit support constituting Indebtedness of Pride or any
Subsidiary (other than Indebtedness permitted to be incurred under
the definition of Non-Recourse Subsidiary) or
. is directly or indirectly liable for such Indebtedness and
(2) no default with respect to such Indebtedness (including any rights
which the holders thereof may have to take enforcement action against a
Non-Recourse Subsidiary) would permit any holder of any other Indebtedness
of Pride or its Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity.
"Non-Recourse Subsidiary" means:
. any subsidiary of Pride that at the time of determination will be
designated a Non-Recourse Subsidiary by the Board of Directors of Pride
as provided below and
. any subsidiary of a Non-Recourse Subsidiary.
The Board of Directors of Pride may designate any subsidiary of Pride as a Non-
Recourse Subsidiary so long as:
(1) neither Pride nor any Subsidiary is directly or indirectly liable
pursuant to the terms of any Indebtedness of such Subsidiary, subject to
the proviso described below;
(2) no default with respect to any Indebtedness of such Subsidiary would
permit any holder of any other Indebtedness of Pride or any Subsidiary to
declare a default on such other Indebtedness or cause the payment thereof
to be accelerated or payable prior to its stated maturity;
(3) neither Pride nor any Subsidiary has made an Investment in such
Subsidiary unless such Investment was made pursuant to, and in accordance
with, the "Limitation on Restricted Payments" covenant (other than
Investments of the type described in clause (9) of the definition of
"Permitted Investments"); and
(4) such designation does not result in the creation or imposition of
any Lien on any Property of Pride or any Subsidiary (other than any
Permitted Lien or any Lien the creation or imposition of which is in
compliance with the "Limitation on Liens" covenant).
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With respect to clause (1), however, Pride or a Subsidiary may be liable for
Indebtedness of a Non-Recourse Subsidiary if:
. such liability constituted a Permitted Investment or a Restricted Payment
permitted by the "Limitation on Restricted Payments" covenant, in each
case at the time of incurrence, or
. the liability would be a Permitted Investment at the time of designation
of such Subsidiary as a Non-Recourse Subsidiary.
The Board of Directors of Pride may designate any Non-Recourse Subsidiary as a
Subsidiary if, immediately after giving effect to such designation:
. no Default or Event of Default has occurred and is continuing,
. Pride could incur $1.00 of additional Indebtedness (not including the
incurrence of Permitted Indebtedness) under the first paragraph of the
"Limitation on Indebtedness" covenant and
. if any Property of Pride or any of its Subsidiaries would upon such
designation become subject to any Lien (other than a Permitted Lien), the
creation or imposition of such Lien is in compliance with the "Limitation
on Liens" covenant.
"Permitted Indebtedness" means
(1) Indebtedness of Pride under the debentures,
(2) Indebtedness (and any guarantee or pledge) under one or more credit
facilities, in an aggregate principal amount at any one time outstanding
not to exceed the greater of
. $100 million and
. an amount equal to 10% of Consolidated Net Tangible Assets
determined as of the date of the incurrence of such Indebtedness
(plus interest and fees under such facilities), less
any amounts derived from Asset Sales and applied to the permanent reduction
of Indebtedness thereunder (and a permanent reduction of the related
commitment to lend thereunder) as contemplated by the "Limitation on Asset
Sales" covenant,
(3) Indebtedness of Pride or any Subsidiary under Interest Swap
Obligations if:
. such Interest Swap Obligations are related to payment obligations
on Indebtedness otherwise permitted under the covenants described
in "--Restrictive Covenants--Limitation on Indebtedness" and
. the notional principal amount of such Interest Swap Obligations
does not exceed the principal amount of the Indebtedness to which
such Interest Swap Obligations relate,
(4) Indebtedness of Pride or any Subsidiary under Currency Hedge
Obligations if
. such Currency Hedge Obligations are related to payment obligations
on Indebtedness otherwise permitted under the covenants described
in "--Restrictive Covenants--Limitation on Indebtedness" or to the
foreign currency cash flows reasonably expected to be generated by
Pride and the Subsidiaries, and
. the notional principal amount of such Currency Hedge Obligations
does not exceed the principal amount of the Indebtedness and the
amount of the foreign currency cash flows to which such Currency
Hedge Obligations relate,
(5) Indebtedness of Pride or any Subsidiary outstanding on the Issue
Date,
(6) any subsidiary guarantees of the debentures or of Pride's 9 3/8%
Senior Notes due 2007 or its 10% Senior Notes due 2009 (if required by the
indenture governing such Senior Notes), and any assumption of the
obligations guaranteed thereby,
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(7) Indebtedness of Pride or any Subsidiary for bid performance bonds,
surety bonds, appeal bonds and letters of credit or similar arrangement
issued for the account of Pride or any Subsidiary, in each case in the
ordinary course of business,
(8) Indebtedness of Pride to any Wholly Owned Subsidiary, but only so
long as it remains a Wholly Owned Subsidiary,
(9) Indebtedness of any Subsidiary to Pride or any Wholly Owned
Subsidiary, but only so long as it remains a Wholly Owned Subsidiary,
(10) Indebtedness of Pride in connection with a purchase of the
debentures as a result of a Change in Control if:
. the aggregate principal amount of such Indebtedness does not exceed
101% of the aggregate Change in Control Purchase Price plus the
related expenses of such purchase, and
. such Indebtedness has an Average Life equal to or greater than the
remaining Average Life of the debentures and does not mature prior
to one year following the stated maturity of the debentures,
(11) Permitted Refinancing Indebtedness incurred with respect to debt
incurred pursuant to clause (1), (2), (5), (6) or (10) above or the first
sentence under the caption "Limitation on Indebtedness" and
(12) Permitted Subsidiary Refinancing Indebtedness incurred with respect
to Indebtedness incurred pursuant to clause (1), (2), (5), (6) or (10)
above or the first sentence under the caption "Limitation on Indebtedness."
To avoid duplication in determining the amount of Permitted Indebtedness under
any clause of this definition, guarantees of, or obligations for letters of
credit supporting, Indebtedness otherwise included in the determination of such
amount will not also be included.
"Permitted Investments" means
(1) 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 million,
(2) 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,
(3) U.S. Government Obligations with a maturity of four years or less,
(4) repurchase obligations for instruments of the type described in
clause (3),
(5) shares of money market mutual or similar funds having assets in
excess of $100 million,
(6) payroll advances in the ordinary course of business,
(7) other advances and loans to officers and employees of Pride or any
Subsidiary, so long as the aggregate principal amount of such advances and
loans does not exceed $500,000 at any one time outstanding,
(8) Investments represented by that portion of the proceeds from Asset
Sales that is:
. not Cash Proceeds or
. deemed to be Cash Proceeds pursuant to the second sentence of the
definition of Cash Proceeds,
(9) Investments made by Pride in its Subsidiaries (or any person that
will be a Subsidiary as a result of such Investment) or by a Subsidiary in
Pride or in one or more Subsidiaries (or any person that will be a
Subsidiary as a result of such Investment), and
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(10) Investments in stock, obligations or securities received in
settlement of debts owing to Pride or any Subsidiary as a result of
bankruptcy or insolvency proceedings or upon the foreclosure, perfection or
enforcement of any Lien in favor of Pride or any Subsidiary, in each case
as to debt owing to Pride or any Subsidiary that arose in the ordinary
course of business of Pride or any such Subsidiary; for these purposes, any
stocks, obligations or securities received in settlement of debts that
arose in the ordinary course of business (and received other than as a
result of bankruptcy or insolvency proceedings or upon foreclosure,
perfection or enforcement of any Lien) that are, within 30 days of receipt,
converted into cash or cash equivalents will be treated as having been cash
or cash equivalents at the time received.
"Permitted Liens" means
(1) Liens in existence on the Issue Date,
(2) Liens created for the benefit of the debentures,
(3) Liens on Property of a person existing at the time such person is
merged or consolidated with or into, or otherwise acquired by, Pride or a
Subsidiary (and not incurred as a result of, or in anticipation of, such
transaction), if such Lien relates solely to such Property and the proceeds
thereof and accessories and upgrades thereto,
(4) Liens on Property existing at the time of the acquisition thereof
(and not incurred as a result of, or in anticipation of, such transaction),
if such Liens relate solely to such Property and the proceeds thereof and
accessories and upgrades thereto,
(5) Liens incurred or pledges and deposits made in connection with
worker's compensation, unemployment insurance and other social security
benefits, statutory obligations, bid, surety or appeal bonds, performance
bonds or other obligations of a like nature incurred in the ordinary course
of business,
(6) Liens imposed by law or arising by operation of law and incurred in
the ordinary course of business,
(7) zoning restrictions, easements, licenses, covenants, reservations,
restrictions on the use of property and defects, irregularities and
deficiencies in title to property that do not, individually or in the
aggregate, materially affect the ability of Pride and its Subsidiaries,
taken as a whole, to conduct the business presently conducted,
(8) Liens for taxes or assessments or other governmental charges or
levies not yet due and payable, or the validity of which is being contested
by Pride or a Subsidiary in good faith appropriate proceedings upon stay of
execution or the enforcement thereof and for which adequate reserves in
accordance with GAAP or other appropriate provision has been made,
(9) Liens to secure Indebtedness incurred for the purpose of financing
all or a part of the purchase price or construction cost of Property
(including the cost of upgrading or refurbishing rigs or drillships)
acquired or constructed after the Issue Date, if:
. the principal amount of Indebtedness secured by such Liens does not
exceed 100% of the lesser of cost or Fair Market Value of the
Property so acquired, upgraded or constructed plus transaction
costs related thereto,
. such Liens do not encumber any other Property of Pride or any
Subsidiary (other than the proceeds thereof and improvements,
accessions and upgrades thereto) and
. such Liens attach to such Property within 180 days of the later of
commencement of commercial operations of such assets and completion
of the construction, acquisition, upgrade or improvement of such
Property,
(10) Liens securing Capital Lease Obligations and other obligations, if
such Liens secure Capital Lease Obligations and other obligations that do
not exceed 10% of Pride's Consolidated Net Tangible Assets when combined
with
. the outstanding secured Indebtedness of Pride and its Subsidiaries
(other than Indebtedness secured by Liens described under clauses
(2) and (9) of this definition) and
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. the aggregate amount of all other Capital Lease Obligations and
other obligations of Pride and Subsidiaries,
(11) Liens to secure any extension, renewal, refinancing or refunding
(or successive extensions, renewals, refinancings or refundings), in whole
or in part, of any Indebtedness secured by Liens referred to in the
foregoing clauses (1), (2), (3), (4) and (9) if such Liens do not extend to
any other Property of Pride or any Subsidiary (other than the proceeds
thereof and accessions and upgrades thereto) and the principal amount of
the Indebtedness secured by such Liens is not increased,
(12) any charter or lease of drilling rigs in the ordinary of course of
business,
(13) leases or subleases of property to other persons in the ordinary
course of business,
(14) Liens securing Non-Recourse Indebtedness,
(15) Liens securing Permitted Indebtedness described in clause (2) of
the definition of Permitted Indebtedness,
(16) judgment liens not giving rise to an Event of Default so long as
any appropriate legal proceedings which may have been only initiated for
the review of such judgment shall not have been finally terminated or the
period within which such proceedings may be initiated shall not have
expired,
(17) rights of set-off of banks and other persons,
(18) other deposits made in the ordinary course of business to secure
liability to insurance carriers under insurance or self-insurance
arrangements,
(19) Liens securing reimbursement obligations under letters of credit,
entered into in the ordinary course of business if in each case such Liens
cover only the title documents and related goods (and any proceeds thereof)
covered by the related letter of credit, and
(20) Liens or equitable encumbrances deemed to exist by reason of
fraudulent conveyance or transfer laws or negative pledge or similar
agreements to refrain from permitting Liens.
"Permitted Refinancing Indebtedness" means Indebtedness of Pride incurred in
exchange for, or the net proceeds of which are used to renew, extend,
refinance, refund or repurchase, outstanding Indebtedness of Pride, which
outstanding Indebtedness was incurred in accordance with, or is otherwise
permitted by, the terms of the Indenture, if:
(1) if the Indebtedness being renewed, extended, refinanced, refunded or
repurchased is equal or subordinated in right of payment to the debentures,
then such new Indebtedness is equal or subordinated, as the case may be, in
right of payment (without regard to its being secured) to the debentures at
least to the same extent as the Indebtedness being renewed, extended,
refinanced, refunded or repurchased,
(2) such new Indebtedness is scheduled to mature later than the
Indebtedness being renewed, extended, refinanced, refunded or repurchased,
(3) such new Indebtedness has an Average Life at the time such
Indebtedness is incurred that is greater than the Average Life of the
Indebtedness being renewed, extended, refinanced, refunded or repurchased,
and
(4) such new Indebtedness is in an aggregate principal amount (or, if
such Indebtedness is issued at a price less than the principal amount
thereof, the aggregate amount of gross proceeds therefrom is) not in excess
of the aggregate principal amount then outstanding of the Indebtedness
being renewed, extended, refinanced, refunded or repurchased (or if the
Indebtedness being renewed, extended, refinanced, refunded or repurchased
was issued at a price less than the principal amount thereof, then not in
excess of the amount of liability in respect thereof determined in
accordance with GAAP) plus the amount of reasonable fees, expenses and any
premium incurred by Pride or any Subsidiary in connection therewith.
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"Permitted Subsidiary Refinancing Indebtedness" means Indebtedness of any
Subsidiary incurred in exchange for, or the net proceeds of which are used to
renew, extend, refinance, refund or repurchase, outstanding Indebtedness of
such Subsidiary, which outstanding Indebtedness was incurred in accordance with
or is otherwise permitted by the terms of the Indenture, if:
(1) if the Indebtedness being renewed, extended, refinanced, refunded or
repurchased is equal or subordinated in right of payment to the subsidiary
guarantees of the debentures, then such new Indebtedness is equal or
subordinated, as the case may be, in right of payment (without regard to
its being secured) to the subsidiary guarantees of the debentures at least
to the same extent as the Indebtedness being renewed, extended, refinanced,
refunded or repurchased,
(2) such new Indebtedness is scheduled to mature later than the
Indebtedness being renewed, extended, refinanced, refunded or repurchased,
(3) such new Indebtedness has an Average Life at the time such
Indebtedness is incurred that is greater than the Average Life of the
Indebtedness being renewed, extended, refinanced, refunded or repurchased,
and
(4) such new Indebtedness is in an aggregate principal amount (or, if
such Indebtedness is issued at a price less than the principal amount
thereof, the aggregate amount of gross proceeds therefrom is) not in excess
of the aggregate principal amount then outstanding of the Indebtedness
being renewed, extended, refinanced, refunded or repurchased (or if the
Indebtedness being renewed, extended, refinanced, refunded or repurchased
was issued at a price less than the principal amount thereof, then not in
excess of the amount of liability in respect thereof determined in
accordance with GAAP) plus the amount of reasonable fees, expenses and any
premium incurred by Pride or such Subsidiary in connection therewith.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Redeemable Stock" means, with respect to any person, any equity security
that by its terms or otherwise is required to be redeemed, or is redeemable at
the option of the holder thereof, at any time prior to one year following the
stated maturity of the debentures or is exchangeable into Indebtedness of such
person or any of its subsidiaries.
"Related Business" means any business related, ancillary or complementary to
the business of Pride and its Subsidiaries on the Issue Date.
"Replacement Asset" means any Property that, as determined by the Board of
Directors of Pride evidenced by a board resolution, is used or is useful in a
Related Business.
"Restricted Investment" means any Investment other than a Permitted
Investment.
"Restricted Payment" means to
(1) declare or pay any dividend on, or make any distribution in respect
of, or purchase, redeem, retire or otherwise acquire for value any Capital
Stock of Pride or any Affiliate of Pride, or warrants, rights or options to
acquire such Capital Stock, other than:
. dividends payable solely in the Capital Stock (other than
Redeemable Stock) of Pride, or in warrants, rights or options to
acquire such Capital Stock and
. dividends or distributions by a Subsidiary to Pride or to a Wholly
Owned Subsidiary,
(2) make any principal payment on, or redeem, repurchase, defease or
otherwise acquire or retire for value, prior to any scheduled principal
payment, scheduled sinking fund payment or other stated maturity,
Indebtedness of Pride or any Subsidiary that is subordinated in right of
payment to the debentures or such Subsidiary's guarantee of the debentures
or
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(3) make any Restricted Investment in any person.
"Sale and Lease-Back Transaction" means, with respect to any person, any
direct or indirect arrangement pursuant to which Property is sold or
transferred by such person or a subsidiary of such person and is thereafter
leased back from the purchaser or transferee thereof by such person or one of
its subsidiaries.
"Sale Price" means, on any Trading Day, the closing per share sale price for
the common stock (or, if no closing sale price is reported, the average of the
bid and ask prices or, if more than one in either case, the average of the
average bid and average ask prices) on such Trading Day as reported in
composite transactions for the principal United States securities exchange on
which the common stock is traded or, if the common stock is not listed on a
United States national or regional securities exchange, as reported by the
National Association of Securities Dealers Automated Quotation System.
"Senior Debt" means any Indebtedness incurred by Pride, unless the
instrument under which such Indebtedness is incurred expressly provides that it
is subordinate in right of payment to the debentures. Senior Debt will not
include:
(1) any liability for taxes owed or owing by Pride,
(2) any Indebtedness owing to any Subsidiaries of Pride,
(3) any obligations with respect to Capital Stock of Pride,
(4) any trade payables, or
(5) any Indebtedness that is incurred in violation of the Indenture.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Rule 1-02 of Regulation S-X promulgated by the SEC,
as such Regulation is in effect on the Issue Date.
"Subordinated Indebtedness" means any Indebtedness of Pride or any
subsidiary guarantor that is subordinated in right of payment to the debentures
or the subsidiary guarantees of the debentures, as the case may be, pursuant to
a written agreement to that effect and does not mature prior to one year
following the stated maturity of the debentures.
The term "subsidiary" means, with respect to any person:
(1) any corporation more than 50% of the outstanding Voting Stock of
which is owned, directly or indirectly, by such person, or by one or more
other subsidiaries of such person, or by such person and one or more other
subsidiaries of such person,
(2) any general partnership, joint venture or similar entity more than
50% of the outstanding partnership or similar interests of which is owned,
directly or indirectly, by such person, or by one or more other
subsidiaries of such person, or by such person and one or more other
subsidiaries of such person, and
(3) any limited partnership of which such person or any subsidiary of
such person is a general partner.
The term "Subsidiary" means a subsidiary of Pride other than a Non-Recourse
Subsidiary.
"Trading Day" means each day on which the securities exchange or quotation
system used to determine the Sale Price is open for trading or quotation.
"U.S. Government Obligations" means securities that are:
(1) direct obligations of the United States of America the payment of
which its full faith and credit is pledged,
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(2) obligations of a person controlled or supervised by and acting as an
agency or instrumentality of the United States of America the payment of
which is unconditionally guaranteed as a full faith and credit obligation
by the United States of America, or
(3) depository receipts issued by a bank or trust company as custodian
with respect to any such U.S. Government Obligations or a specific payment
of interest on or principal of any such U.S. Government Obligation held by
such custodian for the account of the holder of a depository receipt, if
(except as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depository receipt
from any amount received by the custodian in respect of the U.S. Government
Obligation evidenced by such depository receipt.
In either case under clause (1) or (2) above, "U.S. Government Obligations"
includes only those obligations that are not callable or redeemable at the
option of the issuer thereof.
"Voting Stock" means, with respect to any person, securities of any class or
classes of Capital Stock or other interests (including partnership interests)
in such person entitling the holders thereof (whether at all times or at the
times that such class of Capital Stock has voting power by reason of the
happening of any contingency) to vote in the election of members of the board
of directors or comparable body of such person.
"Wholly Owned Subsidiary" means any Subsidiary to the extent
(1) all of the Voting Stock or other ownership interests in such
Subsidiary, other than any director's qualifying shares mandated by
applicable law, is owned directly or indirectly by Pride or
(2) such Subsidiary is organized in a foreign jurisdiction and is
required by the applicable laws and regulations of such foreign
jurisdiction to be partially owned by the government of such foreign
jurisdiction or individual or corporate citizens of such foreign
jurisdiction in order for such Subsidiary to transact business in such
foreign jurisdiction, if Pride:
. directly or indirectly owns the remaining Capital Stock or
ownership interest in such Subsidiary and
. by contract or otherwise, controls the management and business of
such Subsidiary and derives the economic benefits of ownership of
such Subsidiary to substantially the same extent as if such
Subsidiary were a wholly owned Subsidiary.
Book-Entry, Delivery and Form
The debentures will be issued initially in the form of one or more
debentures in global form. Each global debenture will be deposited on or about
the Issue Date with, or on behalf of, The Depository Trust Company and
registered in the name of Cede & Co., as nominee of DTC. Beneficial interests
in the global debentures will be represented through financial institutions
acting on their behalf as direct or indirect participants in DTC.
DTC has advised us as follows:
. DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code
and a "clearing agency" registered under Section 17A of the Securities
Exchange Act of 1934;
. DTC holds securities that its participants deposit with DTC and
facilitates the settlement among participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in participants' accounts, thereby
eliminating the need for physical movement of securities certificates;
. direct participants include securities brokers and dealers, banks, trust
companies, clearing corporations and other organizations;
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. access to the DTC system is also available to others such as securities
brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a direct participant, either
directly or indirectly; and
. the rules applicable to DTC and its participants are on file with the
SEC.
Ownership of beneficial interests in a global debenture will be limited to
direct participants or persons who hold interests through direct participants.
We expect that pursuant to procedures established by DTC:
. upon deposit of a global debenture, DTC will credit the accounts of
direct participants designated by the underwriter of the debentures with
portions of the principal amount at maturity of the global debenture and
. ownership of the debentures evidenced by the global debenture will be
shown on, and the transfers of ownership will be effected only through,
records maintained by DTC (with respect to the interests of direct
participants) and the direct and indirect participants.
The laws of some states require that certain persons take physical delivery
in definitive form of securities that they own and that security interests in
negotiable instruments can only be perfected by delivery of certificates
representing the instruments. Accordingly, the ability to transfer debentures
evidenced by a global debenture will be limited to such extent.
As long as DTC or its nominee is the registered owner or holder of a global
debenture, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the debentures represented by the global debenture for all
purposes under the Indenture and the debentures, subject to limited exceptions
set forth in the Indenture. Except as provided below, owners of beneficial
interests in a global debenture:
. will not be entitled to have debentures represented by such global
debenture registered in their names,
. will not receive or be entitled to receive physical delivery of
certificated debentures and
. will not be considered the owners or holders thereof under the Indenture
for any purpose, including with respect to the giving of any directions,
instructions or approvals to the trustee.
In addition, no beneficial owner of an interest in a global debenture will be
able to transfer that interest except in accordance with the applicable
procedures of DTC. As a result, the ability of a person having a beneficial
interest in debentures represented by a global debenture to pledge such
interest to persons or entities that do not participate in the DTC's system, or
to otherwise take actions with respect to such interest, may be affected by the
lack of a physical certificate evidencing such interest.
Neither we nor the trustee will have any responsibility or liability for any
aspect of the records relating to or payments made on account of debentures by
DTC, or for maintaining, supervising or reviewing any records of DTC relating
to such debentures.
Payments with respect to the principal of and any premium and interest on
any debenture represented by a global debenture registered in the name of DTC
or its nominee on the applicable record date will be payable by the trustee to
or at the direction of DTC or its nominee in its capacity as the registered
holder of the global debenture representing such debentures. We expect,
however, that DTC or its nominee, upon receipt of any payment in respect of a
global debenture, will immediately credit its participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such global debenture as shown on the records of DTC or
its nominee. We also expect that payments by participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in the names of
nominees for such customers. The participants will be responsible for those
payments.
As long as the debentures are represented by a global debenture, DTC's
nominee will be the holder of the debentures and therefore will be the only
entity that can exercise a right to purchase or conversion of the
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debentures. Notice by direct or indirect participants or by owners of
beneficial interests in a global debenture held through such participants of
the exercise of the option to elect purchase or conversion of beneficial
interests in debentures represented by a global debenture must be transmitted
to DTC in accordance with its procedures on a form required by DTC and provided
to participants. To ensure that DTC's nominee will timely exercise a right to
purchase or conversion with respect to a particular debenture, the beneficial
owner of such debenture must instruct the broker or the direct or indirect
participant through which it holds an interest in such debenture to notify DTC
of its desire to exercise such right. Different firms have cut-off times for
accepting instructions from their customers and, accordingly, each beneficial
owner should consult the broker or other participant through which it holds an
interest in a debenture in order to ascertain the cut-off time by which such an
instruction must be given for timely notice to be delivered to DTC. We will not
be liable for any delay in delivery of notices of the exercise of an option to
elect purchase or conversion.
Certificated Debentures
Debentures represented by certificates in definitive form registered in the
names of their beneficial owners or their nominees will be transferred to all
beneficial owners in exchange for their beneficial interests in a global
debenture if either (i) DTC or any successor depositary notifies us that it is
unwilling or unable to continue as depositary for such global debenture and a
successor depositary is not appointed by us within 90 days of such notice, (ii)
an Event of Default has occurred and is continuing with respect to the
debentures and the security registrar has received a request from the
depositary to issue certificated debentures in lieu of all or a portion of the
global debenture (in which case we will deliver certificated debentures within
30 days of such request) or (iii) we determine not to have the debentures
represented by a global debenture.
Neither we nor the trustee will be liable for any delay by the related
depositary or its nominee in identifying the beneficial owners of the related
debentures, and each such person may conclusively rely on, and will be
protected in relying on, instructions from such depositary or nominee for all
purposes (including with respect to the registration and delivery, and the
respective principal amounts at maturity, of the debentures to be issued).
Same-Day Funds Payment
The Indenture will require that payments in respect of the debentures
represented by the global debentures (including principal and any premium and
interest) be made by wire transfer of immediately available funds to the
accounts specified by DTC or its nominee. With respect to debentures
represented by certificated debentures, we will make all payments of principal
and any premium and interest by mailing a check to each such holder's
registered address.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
The following summary of United States federal income tax considerations is
based on current law, regulations and judicial and administrative
interpretations thereof, all of which are subject to change, which may or may
not be applied retroactively, or different interpretations by the Internal
Revenue Service or the courts. The tax treatment of a holder of a debenture may
vary depending upon his particular situation. Certain holders (including
insurance companies, tax-exempt organizations, individual retirement and other
tax-deferred accounts, financial institutions, broker-dealers, foreign
corporations and individuals who are not citizens or residents of the United
States) may be subject to special rules not discussed below. This summary does
not discuss the tax considerations of subsequent purchasers of debentures and
is limited to investors who hold debentures as capital assets. Each purchaser
of debentures should consult his tax advisor as to the particular tax
consequences to him of acquiring, holding, converting or otherwise disposing of
the debentures, including the applicability and the effect of any state, local
or foreign tax laws and recent changes in applicable tax laws.
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We have been advised by our counsel, Baker Botts L.L.P. ("Counsel"), that,
on the basis of current laws, regulations and administrative and judicial
standards, all of which are subject to change, the debentures will be treated
as indebtedness for United States federal income tax purposes. Counsel has
further advised us that, while the following does not purport to discuss all
tax matters relating to the debentures, on the assumption that the debentures
will be treated as indebtedness, the following are the material federal income
tax consequences of the ownership and disposition of the debentures, subject to
the qualifications set forth above. In providing this advice, Counsel has
relied upon the accuracy of the information in this prospectus supplement and
other public filings by us and upon certain representations of our company.
Original Issue Discount
The debentures will be issued at a substantial discount from their principal
amount at maturity. For United States federal income tax purposes, the
difference between the issue price (the initial price at which a debenture is
sold as set forth on the cover page of this prospectus supplement) and the
stated Redemption Price at maturity of the debenture constitutes original issue
discount ("Original Issue Discount"). Holders of the debentures will be
required to include Original Issue Discount in income periodically over the
term of the debentures before receipt of the cash or other payment attributable
to such income.
For United States federal income tax purposes, each holder of a debenture
generally must include in gross income a portion of the Original Issue Discount
in each taxable year during which the debenture is held in an amount equal to
the Original Issue Discount that accrues on the debenture during such period,
determined by using a constant yield to maturity method. The Original Issue
Discount included in income for each year will be calculated under a
compounding formula that will result in the allocation of less Original Issue
Discount to the earlier years of the term of the debenture and more Original
Issue Discount to later years. For the approximate cumulative total amount of
the Original Issue Discount accrued annually, see the chart under "Description
of Debentures--Redemption of Debentures at the Option of Pride." Any amount
included in income as Original Issue Discount will increase a holder's tax
basis in the debenture.
Conversion
A holder's conversion of a debenture into common stock is not a taxable
event (except with respect to cash received in lieu of a fractional share of
common stock). The holder's tax basis in the common stock received on
conversion of a debenture will be the same as the holder's adjusted tax basis
in the debenture at the time of conversion (exclusive of any basis allocable to
a fractional share of common stock), and the holding period of the common stock
received on conversion will include the holding period of the debenture
converted, except that it is possible that the holding period of the common
stock allocable to accrued Original Issue Discount will commence on the day
following the date of the conversion.
Other Disposition
If a holder elects to exercise his option to tender a debenture to us on a
Purchase Date or a Change in Control Purchase Date for cash, such a tender will
be a taxable sale. The holder will recognize gain or loss upon the sale, to the
extent that the cash received in satisfaction of the Purchase Price or the
Change in Control Purchase Price is more or less than the holder's adjusted tax
basis in the tendered debenture.
If a holder sells a debenture in the market, it will be a taxable sale with
the same results as a tender to the Company with a payment in cash.
Net capital gain (i.e., generally, capital gain in excess of capital loss)
recognized by a holder who is an individual upon the disposition of a debenture
that has been held for more than one year will generally be subject to tax at a
rate not to exceed 20%. Capital gain recognized by a corporate taxpayer will be
subject to tax at the ordinary income tax rates applicable to corporations.
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Constructive Dividend
If at any time we make a distribution of property to our shareholders that
would be taxable to such shareholders as a dividend for United States federal
income tax purposes and, in accordance with the antidilution provisions of the
debentures, the Conversion Rate of the debentures is increased, such increase
may be deemed to be the payment of a taxable dividend to holders of the
debentures. For example, an increase in the Conversion Rate in the event of
distributions of evidences of our indebtedness or assets or an increase in the
event of an Extraordinary Cash Dividend will generally result in deemed
dividend treatment to holders of the debentures, but generally an increase in
the event of stock dividends or the distribution of rights to subscribe for
common stock will not. In addition, if the Conversion Rate is increased at our
discretion, such increase may result in deemed dividend treatment to holders of
the debentures. See "Description of Debentures--Conversion Rights."
Tax Event
The modification of the terms of the debentures by us upon a Tax Event as
described in "Description of Debentures--Optional Conversion to Semiannual
Coupon Note upon Tax Event" will not be a taxable event to holders of the
debentures. However, such modification could affect the timing of income
recognition by the holders thereafter with respect to the semiannual payments
of interest due on the debentures after the Option Exercise Date.
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UNDERWRITING
Salomon Smith Barney Inc. is acting as sole book running manager of the
offering. Subject to the terms and conditions stated in the underwriting
agreement dated the date hereof, Salomon Smith Barney has agreed to purchase,
and we have agreed to sell to Salomon Smith Barney, all of the debentures
offered by this prospectus supplement.
The underwriting agreement provides that the obligations of Salomon Smith
Barney to purchase the debentures included in this offering are subject to
approval of certain legal matters by counsel and to certain other conditions.
Salomon Smith Barney is obligated to purchase all the debentures if it
purchases any of the debentures.
Salomon Smith Barney proposes initially to offer some of the debentures
directly to the public at the public offering price set forth on the cover page
of this prospectus supplement and to offer some of the debentures to certain
dealers at the public offering price less a concession not in excess of 1.095%
of the principal amount at maturity of the debentures. After the initial
offering of the debentures to the public, the public offering price and such
concession may be changed by Salomon Smith Barney at any time without notice.
The following table shows the underwriting discounts and commissions that we
are to pay to Salomon Smith Barney in connection with this offering (expressed
as a percentage of the principal amount at maturity of the debentures).
<TABLE>
<CAPTION>
Paid by Pride
-------------
<S> <C>
Per debenture.............................................. 1.825%
</TABLE>
The debentures are a new issue of securities with no established trading
market. We do not currently intend to list the debentures on any national
securities exchange. Salomon Smith Barney has advised us that it intends to
make a market in the debentures. It is not obligated to do so, however, and may
discontinue any market-making activities at any time without notice. We can
give no assurance as to the liquidity of the trading market for the debentures.
The underwriting discounts to be paid by us to Salomon Smith Barney in
connection with this offering will be 1.825% per debenture, for a total of
$7,500,016 (or $7,875,028 if Salomon Smith Barney exercises the over-allotment
option in full). In addition, we estimate that our total expenses of the
offering, excluding underwriting discounts, will be approximately $500,000. The
underwriting agreement provides that Salomon Smith Barney will reimburse us for
up to $375,000 of these expenses.
We have granted to Salomon Smith Barney a 30-day option to purchase up to an
additional $20,546,000 principal amount at maturity of debentures at the public
offering price less the underwriting discount, plus accrued original issue
discount, if any, from the issue date, computed on a semiannual bond equivalent
basis. Salomon Smith Barney may exercise its option only to cover over-
allotments in connection with the sale of the debentures. To the extent that
Salomon Smith Barney exercises the option, it will have a firm commitment,
subject to certain conditions, to purchase the principal amount at maturity of
debentures subject to the option.
We have agreed not to offer, sell or contract to sell, or otherwise dispose
of, or announce the offering of, any shares of common stock, or any securities
convertible into, or exchangeable for, shares of common stock for a period of
90 days from the date of this prospectus supplement without the prior written
consent of Salomon Smith Barney, subject to certain exceptions.
Our executive officers and directors have agreed not to offer, sell or
contract to sell, or otherwise dispose of, any shares of common stock, or any
securities convertible into, or exchangeable for, or warrants, rights or
options to acquire common stock, or enter into any agreement to do any of the
foregoing, for a period of 90 days from the date of this prospectus supplement
without the prior written consent of Salomon Smith Barney, subject to certain
exceptions.
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In connection with the offering, Salomon Smith Barney may purchase and sell
debentures in the open market. These transactions may include over-allotment,
syndicate covering transactions and stabilizing transactions. Over-allotment
involves syndicate sales of debentures in excess of the principal amount at
maturity of debentures to be purchased by Salomon Smith Barney in the offering,
which creates a syndicate short position. Syndicate covering transactions
involve purchases of the debentures in the open market after the distribution
has been completed in order to cover syndicate short positions. Stabilizing
transactions consist of certain bids or purchases of debentures made for the
purpose of preventing or retarding a decline in the market price of the
debentures while the offering is in progress.
Salomon Smith Barney also may impose a penalty bid. Penalty bids permit
Salomon Smith Barney to reclaim a selling concession from a syndicate member
when Salomon Smith Barney, in covering syndicate short positions or making
stabilizing purchases, repurchases debentures originally sold by that syndicate
member.
Any of these activities may have the effect of preventing or retarding a
decline in the market price of the debentures. They may also cause the price of
the debentures to be higher than the price that otherwise would exist in the
open market in the absence of these transactions. Salomon Smith Barney may
conduct these transactions in the over-the-counter market or otherwise. If
Salomon Smith Barney commences any of these transactions, it may discontinue
them at any time.
We have agreed to indemnify Salomon Smith Barney against certain
liabilities, including liabilities under the Securities Act of 1933, or to
contribute to payments Salomon Smith Barney may be required to make in respect
of any of those liabilities.
Salomon Smith Barney or its affiliates have performed and may in the future
perform various financial advisory, commercial banking and investment banking
services for us from time to time, for which they have received or will receive
customary fees. An affiliate of Salomon Smith Barney is the arranger for the
construction period financing guaranteed by the United States Maritime
Administration for the Amethyst joint venture company.
LEGAL MATTERS
Robert W. Randall, our Vice President and General Counsel, and Baker Botts
L.L.P., Houston, Texas, our outside counsel, will issue opinions about certain
legal matters in connection with the offering of the debentures for us. Vinson
& Elkins L.L.P., Houston, Texas, will issue an opinion about certain legal
matters in connection with the offering for the underwriter. Sher Garner Cahill
Richter Klein McAlister & Hilbert, L.L.P., New Orleans, Louisiana, will issue
an opinion on all matters of Louisiana law in this connection. Vinson & Elkins
L.L.P. represents us in connection with matters unrelated to the offering.
EXPERTS
The financial statements of Pride incorporated in the accompanying
prospectus by reference to the annual report on Form 10-K for the year ended
December 31, 1999 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
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INDEPENDENT ACCOUNTANTS
With respect to the unaudited consolidated financial information of Pride
for the nine-month periods ended September 30, 2000 and 1999 incorporated by
reference in the accompanying prospectus, PricewaterhouseCoopers LLP reported
that they have applied limited procedures in accordance with professional
standards for a review of such information. However, their separate report
dated November 13, 2000 incorporated by reference in the accompanying
prospectus states that they did not audit and they do not express an opinion on
that unaudited consolidated financial information. Accordingly, the degree of
reliance on their report on such information should be restricted in light of
the limited nature of the review procedures applied. PricewaterhouseCoopers LLP
is not subject to the liability provisions of Section 11 of the Securities Act
of 1933 for their report on the unaudited consolidated financial information
because that report is not a "report" or a "part" of the registration statement
prepared or certified by PricewaterhouseCoopers LLP within the meaning of
Sections 7 and 11 of the Securities Act of 1933.
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<PAGE>
Prospectus
[PRIDE LOGO]
Pride International, Inc.
5847 San Felipe, Suite 3300
Houston, Texas 77057
(713) 789-1400
$500,000,000
Debt Securities
Preferred Stock
Common Stock
Warrants
---------------------------------------------------------------
We will provide the specific terms of the securities in supplements to this
prospectus.
You should read this prospectus and any supplement carefully before you invest.
---------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined
whether this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
The date of this prospectus is June 30, 2000.
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
About This Prospectus...................................................... 2
Forward-Looking Information................................................ 2
About Pride International, Inc............................................. 3
Use of Proceeds............................................................ 3
Ratio of Earnings to Fixed Charges......................................... 4
Description of Debt Securities............................................. 4
Description of Capital Stock............................................... 11
Description of Warrants.................................................... 16
Plan of Distribution....................................................... 16
Legal Opinions............................................................. 18
Experts.................................................................... 18
Independent Accountants.................................................... 18
Where You Can Find More Information........................................ 18
</TABLE>
About This Prospectus
This prospectus is part of a registration statement that we have filed with
the Securities and Exchange Commission using a "shelf" registration process.
Using this process, we may offer any combination of the securities described in
this prospectus in one or more offerings with a total initial offering price of
up to $500,000,000. This prospectus provides you with a general description of
the securities we may offer. Each time we use this prospectus to offer
securities, we will provide a prospectus supplement and, if applicable, a
pricing supplement that will describe the specific terms of that offering. The
prospectus supplement and any pricing supplement may also add, update or change
the information in this prospectus. Please carefully read this prospectus, the
prospectus supplement and any pricing supplement together with the information
contained in the documents we refer to under the heading "Where You Can Find
More Information."
You should rely only on the information we have provided or incorporated by
reference in this prospectus and the accompanying prospectus supplement. We
have not authorized any person (including any salesman or broker) 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 or the accompanying
prospectus supplement is accurate only as of the date on the front of the
document and that any information we have incorporated by reference is accurate
only as of the date of the document incorporated by reference.
Forward-Looking Information
This prospectus, including the information we incorporate by reference,
includes "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
All statements, other than statements of historical facts, included in this
prospectus or the documents we incorporate by reference that address
activities, events or developments that we expect, project, believe or
anticipate will or may occur in the future are forward-looking statements.
These include such matters as:
. future capital expenditures and investments in the construction,
acquisition and refurbishment of rigs (including the amount and nature
thereof and the timing of completion thereof)
. repayment of debt
2
<PAGE>
. expansion and other development trends in the contract drilling industry
. business strategies
. expansion and growth of operations
. utilization rates and contract rates for rigs
. future operating results and financial condition
We have based these statements on assumptions and analyses made by our
management in light of its experience and its perception of historical trends,
current conditions, expected future developments and other factors it believes
were appropriate in the circumstances when the statements were made. These
statements are subject to a number of assumptions, risks and uncertainties,
including:
. general economic and business conditions
. prices of oil and gas and industry expectations about future prices
. foreign exchange controls and currency fluctuations
. the business opportunities (or lack thereof) that may be presented to
and pursued by us
. changes in laws or regulations
Most of these factors are beyond our control. We caution you that forward-
looking statements are not guarantees of future performance and that actual
results or developments may differ materially from those projected in these
statements. We will not update these statements unless the securities laws
require us to do so.
About Pride International, Inc.
We are a leading international provider of contract drilling and related
services, operating both offshore and on land. We operate a global fleet of 291
rigs, including two ultra-deepwater drillships, three semisubmersible rigs, 18
jackup rigs, six tender-assisted rigs, three barge rigs, 21 offshore platform
rigs and 238 land-based drilling and workover rigs. We operate in more than 20
countries and marine provinces. We are a Louisiana corporation with our
principal executive offices located at 5847 San Felipe, Suite 3300, Houston,
Texas 77057. Our telephone number at such address is (713) 789-1400.
Use of Proceeds
Unless we inform you otherwise in the prospectus supplement, we expect to
use the net proceeds from the sale of securities for general corporate
purposes. These purposes may include:
. acquisitions
. working capital
. capital expenditures
. repayment or refinancing of debt and
. repurchases and redemptions of securities
Pending any specific application, we may initially invest funds in short-term
marketable securities or apply them to the reduction of short-term
indebtedness.
3
<PAGE>
Ratio of Earnings to Fixed Charges
We have presented in the table below our historical consolidated ratio of
earnings to fixed charges for the periods shown.
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
Three Months Ended
March 31, 2000 1999 1998 1997 1996 1995
------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
-- -- 2.2x 4.5x 2.7x 4.0x
</TABLE>
We have computed the ratios of earnings to fixed charges by dividing
earnings by fixed charges. For this purpose, "earnings" consist of earnings
before income taxes plus fixed charges less capitalized interest. "Fixed
charges" consist of interest expense, capitalized interest and that portion of
operating lease rental expense we have deemed to represent the interest factor.
For the year ended December 31, 1999, earnings were inadequate to cover fixed
charges by $108.6 million. For the three months ended March 31, 2000, earnings
were inadequate to cover fixed charges by $14.8 million.
We had no preferred stock outstanding for any period presented, and
accordingly, the ratio of earnings to combined fixed charges and preferred
stock dividends is the same as the ratio of earnings to fixed charges.
Description of Debt Securities
The debt securities covered by this prospectus will be our general unsecured
obligations. The debt securities will be either senior debt securities or
subordinated debt securities. We will issue senior debt securities under an
indenture dated as of May 1, 1997 between us and The Chase Manhattan Bank, as
trustee. We will issue subordinated debt securities under an indenture dated as
of April 1, 1998 between us and HSBC Bank USA (formerly Marine Midland Bank),
as trustee. The indenture for the senior debt securities and the indenture for
the subordinated debt securities are substantially identical, except for
provisions relating to subordination. We sometimes call the senior indenture
and the subordinated indenture the indentures.
We have summarized material provisions of the indentures and the debt
securities below. This summary is not complete. We have filed the senior
indenture and the subordinated indenture with the SEC as exhibits to the
registration statement of which this prospectus is a part, and you should read
the indentures for provisions that may be important to you. Please read "Where
You Can Find More Information."
In this summary description of the debt securities, all references to us
mean Pride International, Inc. only, unless we state otherwise or the context
clearly indicates otherwise.
Ranking
The senior debt securities will constitute senior debt and will rank equally
with all of our unsecured and unsubordinated debt and senior to our
subordinated debt. The subordinated debt securities will be subordinated to,
and thus have a junior position to, the senior debt securities and all of our
other senior debt. Neither indenture limits the amount of debt that we may
issue under that indenture or the amount of other debt or securities that we or
any of our subsidiaries may issue. We may issue debt securities under either
indenture from time to time in one or more series, each in an amount we
authorize prior to issuance. Our 9 3/8% Senior Notes due 2007 and our 10%
Senior Notes due 2009 are outstanding under the senior indenture, and our Zero
Coupon Convertible Subordinated Debentures Due 2018 are outstanding under the
subordinated indenture.
We currently conduct our operations through both U.S. and foreign
subsidiaries, and our operating income and cash flow are generated by our
subsidiaries. As a result, distributions or advances from our subsidiaries are
the principal source of funds necessary to meet our debt service obligations.
Contractual provisions or laws, as well as our subsidiaries' financial
condition and operating requirements, may limit our ability to obtain cash from
our subsidiaries that we require to pay our debt service obligations, including
payments on the debt
4
<PAGE>
securities. In addition, holders of the debt securities will have a junior
position to the claims of creditors of our subsidiaries on their assets and
earnings.
The indentures do not contain any covenants or other provisions designed to
protect holders of the debt securities in the event of a highly leveraged
transaction. The indentures also do not contain provisions that give holders of
the debt securities the right to require us to repurchase their securities in
the event of a decline in our credit rating resulting from a takeover,
recapitalization or similar restructuring or otherwise.
Terms
The prospectus supplement relating to any series of debt securities we are
offering will include specific terms relating to that offering. These terms
will include some or all of the following:
. whether the debt securities are senior or subordinated debt securities
. the title of the debt securities
. the total principal amount of the debt securities
. whether we will issue the debt securities in individual certificates to
each holder or in the form of temporary or permanent global securities
held by a depository on behalf of holders
. the prices at which we will issue the debt securities
. the date or dates on which the principal of and any premium on the debt
securities will be payable
. any interest rate, the date from which interest will accrue, interest
payment dates, record dates for interest payments and the manner of
paying interest
. whether and under what circumstances we will pay any additional amounts
on the debt securities
. the place or places where payments on the debt securities will be
payable
. any optional redemption provisions
. any sinking fund or other provisions that would obligate us to redeem,
purchase or repay debt securities
. the denominations in which we will issue the debt securities
. whether payments on the debt securities will be payable in foreign
currency or currencies, including composite currencies or another form,
whether payments will be payable by reference to any index or formula,
and any provisions relating to payment in a form other than that stated
in the debt securities
. the portion of the principal amount of debt securities that will be
payable if the maturity is accelerated, if other than the entire
principal amount
. any additional means of defeasance of the debt securities, any
additional conditions or limitations to defeasance of the debt
securities or any changes to those conditions or limitations
. any changes or additions to events of default or covenants
. any restrictions or other provisions relating to the transfer or
exchange of debt securities
. any terms for the conversion or exchange of the debt securities for
other securities of us or any other entity
We may sell the debt securities at a discount, which may be substantial,
below their stated principal amount. These debt securities may bear no interest
or interest at a rate that at the time of issuance is below market rates. We
will describe in the prospectus supplement any material U.S. federal income tax
consequences applicable to those securities.
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If we sell any of the debt securities for any foreign currency or currency
unit or if payments on the debt securities are payable in any foreign currency
or currency unit, we will describe in the prospectus supplement the
restrictions, elections, tax consequences, specific terms and other information
relating to those debt securities and the foreign currency or currency unit.
Subordination
Under the subordinated indenture, payment of the principal, interest, any
premium and any additional amounts on the subordinated debt securities will
generally be subordinated and junior in right of payment to the prior payment
in full of all Senior Debt. Unless we inform you otherwise in the prospectus
supplement, we may not make any payment of principal of, interest on, any
premium on or any additional amounts with respect to the subordinated debt
securities if:
. we fail to pay the principal, interest, premium or any other amounts on
any Senior Debt when due or
. we default in performing any other covenant (a "covenant default") on
any Senior Debt that we have designated if the covenant default allows
the holders of that Senior Debt to accelerate the maturity of the Senior
Debt they hold
Unless we inform you otherwise in the prospectus supplement, a covenant
default will prevent us from paying the subordinated debt securities only for
up to 179 days after holders of the designated Senior Debt give the trustee for
the subordinated debt securities notice of the covenant default.
The subordination does not affect our obligation, which is absolute and
unconditional, to pay, when due, the principal of, any premium and interest on
and any additional amounts with respect to the subordinated debt securities. In
addition, the subordination does not prevent the occurrence of any default
under the subordinated indenture.
The subordinated indenture does not limit the amount of Senior Debt that we
may incur. As a result of the subordination of the subordinated debt
securities, if we became insolvent, holders of subordinated debt securities may
receive less on a proportionate basis than other creditors.
Unless we inform you otherwise in the prospectus supplement, "Senior Debt"
will mean all indebtedness, including guarantees, of Pride International, Inc.,
unless the indebtedness states that it is not senior to the subordinated debt
securities or our other junior debt.
Consolidation, Merger and Sale of Assets
The indentures generally permit a consolidation or merger between us and
another entity. They also permit the sale by us of all or substantially all of
our assets. We have agreed, however, that we will consolidate with or merge
into any entity or transfer or dispose of all or substantially all of our
assets to any entity only if all of the following are satisfied:
(a) the resulting entity assumes the due and punctual payments on the
debt securities and the performance of our covenants under the indentures
(b) immediately after giving effect to the transaction, no event of
default, and no event that, after notice or lapse of time, would become an
event of default, would occur and be continuing
Events of Default
Unless we inform you otherwise in the prospectus supplement, the following
events are events of default with respect to a series of debt securities:
. our failure to pay interest or additional amounts on any debt security
of that series for 30 days
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. our failure to pay principal of or any premium on any debt security of
that series when due
. our failure to make any sinking fund payment for any debt security of
that series for 30 days
. our failure to perform any of our other covenants in that indenture,
other than a covenant included in the indenture solely for the benefit
of another series of debt securities, continued for 90 days after
written notice by the trustee or by the holders of at least 25% in
principal amount of the outstanding debt securities issued under the
indenture
. events involving bankruptcy, insolvency or reorganization of Pride
A default under one series of debt securities will not necessarily be a
default under another series. If a default or event of default for any series
of debt securities occurs, is continuing and is known to the trustee, the
trustee will notify the holders of those debt securities within 90 days after
it occurs. The trustee may withhold notice to the holders of the debt
securities of any default or event of default, except in any payment on the
debt securities, if the trustee in good faith determines that withholding
notice is in the interest of the holders of the debt securities.
If an event of default, other than an event of default described in the
fourth bullet point above, for any series of debt securities occurs and is
continuing, the trustee or the holders of at least 25% in principal amount of
the outstanding debt securities of that series may declare the principal of
those debt securities to be due and payable. If an event of default described
in the fourth bullet point above occurs and is continuing, the trustee or the
holders of at least 25% in principal amount of all outstanding debt securities
issued under the indenture may declare the principal of those debt securities
to be due and payable. The principal of all the debt securities issued under
the indenture will become immediately due and payable without any action on the
part of the trustee or any holder in the case of defaults relating to
bankruptcy, insolvency or reorganization. The holders of a majority in
principal amount of the outstanding debt securities of the series affected by
the default (or of all the debt securities issued under the indenture, as
applicable) may in some cases rescind the accelerated payment requirement.
A holder of a debt security of any series may pursue any remedy under the
indenture only if:
. the holder has previously given written notice to the trustee of a
continuing event of default with respect to that series of debt
securities
. the holders of at least 25% in principal amount of the outstanding debt
securities of that series have made written request to the trustee to
institute proceedings in the trustee's own name
. the holder has offered the trustee reasonable indemnity
. the trustee has failed to act within 60 days after receipt of the notice
and indemnity and
. during that 60-day period, the holders of a majority in principal amount
of the outstanding debt securities of that series have given no
direction inconsistent with the request
This provision does not, however, affect the right of a holder of any debt
security to sue for the enforcement of any overdue payment.
In most cases, the trustee will be under no obligation to exercise any of
its rights or powers under the indenture at the request or direction of any of
the holders unless those holders have offered to the trustee reasonable
indemnity. Subject to this provision for indemnification, the holders of a
majority in principal amount of the outstanding debt securities of any series
(or, in some cases, all debt securities issued under the indenture) may direct
the time, method and place of:
. conducting any proceeding for any remedy available to the trustee
. exercising any trust or power conferred on the trustee with respect to
those debt securities
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Each indenture requires us to furnish to the trustee annually a statement as
to our performance of certain of our obligations under the indenture and as to
any default in performance.
Defeasance
When we use the term defeasance, we mean discharge from some or all of our
obligations under an indenture. Unless we inform you otherwise in the
prospectus supplement, if we deposit with the trustee funds or U.S. government
securities sufficient to make payments on the debt securities of a series on
the dates those payments are due and payable, then, at our option, either of
the following will occur:
. we will be discharged from our obligations with respect to the debt
securities of that series ("legal defeasance and discharge") or
. we will no longer have any obligations under the indenture and the debt
securities of that series ("covenant defeasance"), except for our
obligations relating to, among other things:
. making payments on the debt securities of that series
. registration of transfer or exchange of debt securities of that
series
. replacement of stolen, lost or mutilated debt securities of that
series
. maintenance of paying agencies and
. holding of monies for payment in trust
Unless we inform you otherwise in the prospectus supplement, we will be
required to deliver to the trustee an opinion of counsel that the deposit and
related defeasance would not cause the holders of the debt securities to
recognize income, gain or loss for federal income tax purposes and that the
holders would be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if the deposit and
related defeasance had not occurred. If we elect legal defeasance and
discharge, that opinion of counsel must be based upon a ruling from the United
States Internal Revenue Service or a change in law to that effect.
Under current United States federal income tax law, legal defeasance and
discharge would likely be treated as a taxable exchange of debt securities to
be defeased for interests in the defeasance trust. As a consequence, a United
States holder would recognize gain or loss equal to the difference between the
holder's cost or other tax basis for the debt securities and the value of the
holder's interest in the defeasance trust, and thereafter would be required to
include in income a share of the income, gain or loss of the defeasance trust.
Under current United States federal income tax law, covenant defeasance would
not be treated as a taxable exchange of such debt securities.
Payment and Paying Agents
Unless we inform you otherwise in the prospectus supplement, we will make
payments on the debt securities in the designated currency or currency unit at
the office of the paying agents we designate from time to time. We may make, at
our option, interest payments by check mailed to the person entitled to the
payment as its name appears on the security register. We will make interest
payments to the person in whose name the debt security is registered at the
close of business on the record date for the interest payment.
Unless we inform you otherwise in the prospectus supplement, the corporate
trust office of the trustee in New York, New York will be designated as a
paying agent for payments on the debt securities. We may at any time designate
additional paying agents, rescind the designation of any paying agent or
approve a change in the office through which any paying agent acts. We will,
however, be required to maintain a paying agent in each place of payment for a
series of debt securities.
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All monies we pay to a paying agent for payments on any debt security that
remain unclaimed for three years after the payments become due and payable will
be repaid to us, subject to applicable escheat laws. After repayment to us, the
holder of that debt security must look only to us for payment.
Modification and Waiver
We may modify or amend each indenture if the holders of a majority in
principal amount of the outstanding debt securities of all series issued under
the indenture affected by the modification or amendment consent to it. Without
the consent of each outstanding debt security affected, however, no
modification may:
. change the stated maturity of the principal of or any installment of
principal of or interest on any debt security
. reduce the principal amount of, the interest rate on, any additional
amounts with respect to or the premium payable upon redemption of any
debt security
. change our obligation, if any, to pay additional amounts
. reduce the amount of the principal of an original issue discount
security that would be due and payable upon a declaration of
acceleration of the maturity of that debt security
. change any place of payment where or the coin or currency in which any
debt security or any payments on any debt security are payable
. impair the right to institute suit for the enforcement of any payment on
any debt security
. reduce the percentage in principal amount of outstanding debt securities
necessary to modify the indenture, to waive compliance with certain
provisions of the indenture or to waive certain defaults
. make any change in the provisions for modification of the indenture or
for certain waivers, except to increase the principal amount of debt
securities necessary to consent to any such change
. with respect to the subordinated indenture, modify the provisions
relating to the subordination of any subordinated debt security in a
manner adverse to the holder of that security
We may modify or amend the indenture without the consent of any holders of
the debt securities in certain circumstances, including:
. to add covenants and events of default or to surrender any rights we
have under the indenture
. to provide any security for any series of debt securities
. to provide for the assumption of our obligations under the indenture and
the debt securities by a successor upon any merger, consolidation or
asset transfer
. to make any change that does not adversely affect any outstanding debt
security of any series in any material respect
. to facilitate the defeasance or discharge of any series of debt
securities if that change does not adversely affect the holders of debt
securities of that series or any other series under the indenture in any
material respect
. to provide for the acceptance of a successor or another trustee
. to establish the form or terms of debt securities
. to cure any ambiguity, omission, defect or inconsistency that does not
adversely affect any outstanding debt securities of a series in any
material respect
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Form, Exchange, Registration and Transfer
We will issue the debt securities in registered form. Debt securities of any
series will be exchangeable for other debt securities of the same series, the
same total principal amount and the same terms but in different authorized
denominations in accordance with the indenture. Holders may present debt
securities for registration of transfer at the office of the security registrar
or any transfer agent we designate. The security registrar or transfer agent
will effect the transfer or exchange when it is satisfied with the documents of
title and identity of the person making the request. We will not charge a
service charge for any registration of transfer or exchange of the debt
securities. We may, however, require the payment of any tax or other
governmental charge payable for that registration.
We will appoint the trustee under each indenture as security registrar for
the debt securities issued under that indenture. We are required to maintain an
office or agency for transfers and exchanges in each place of payment. We may
at any time designate additional transfer agents for any series of debt
securities.
In the case of any redemption, we will not be required:
. to issue, register the transfer of or exchange debt securities of a
series either during a period beginning 15 days prior to the mailing of
the redemption notice and ending on the day of mailing or
. to register the transfer of or exchange any debt security, or portion of
any debt security, called for redemption, except the unredeemed portion
of any debt security we are redeeming in part
Book-Entry Debt Securities
We may issue the debt securities of a series in the form of one or more
global debt securities that would be deposited with a depositary or its nominee
identified in the prospectus supplement. We may issue global debt securities in
either temporary or permanent form. We will describe in the prospectus
supplement the terms of any depositary arrangement and the rights and
limitations of owners of beneficial interests in any global debt security.
Replacement of Debt Securities
We will replace any mutilated debt security at the holder's expense upon
surrender of the debt security to the trustee. We will replace debt securities
that become destroyed, stolen or lost at the holder's expense upon delivery to
the trustee of the debt security or evidence of destruction, loss or theft
satisfactory to us and the trustee. In the case of a destroyed, lost or stolen
debt security, we may require an indemnity that is satisfactory to the trustee
and to us at the holder's expense before we issue a replacement debt security.
If any mutilated, destroyed, lost or stolen debt security has become or is
about to become due and payable, we may pay that debt security instead of
issuing a new security.
Governing Law
New York law will govern each indenture and the debt securities.
The Trustees
The Chase Manhattan Bank is the trustee under the senior indenture. HSBC
Bank USA is the subordinated trustee under the subordinated indenture. We
maintain banking relationships in the ordinary course of business with the
trustees and their affiliates.
If an event of default occurs and is continuing, the trustee will be
required to use the degree of care and skill of a prudent person in the conduct
of his own affairs. The trustee will become obligated to exercise any of its
powers under the indenture at the request of the holders of any debt securities
only after those holders have offered the trustee indemnity reasonably
satisfactory to it.
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If the trustee becomes one of our creditors, it will be subject to
limitations in the indenture on its rights to obtain payment of claims or to
realize on certain property received for any claim, as security or otherwise.
The trustee is permitted to engage in other transactions with us. If, however,
it acquires any conflicting interest, it must eliminate that conflict or resign
within 90 days after ascertaining that it has a conflicting interest and after
the occurrence of a default under the indenture, unless the default has been
cured, waived or otherwise eliminated within the 90-day period.
Description of Capital Stock
Our authorized capital stock consists of:
. 100,000,000 shares of common stock, no par value
. 5,000,000 shares of preferred stock, no par value, issuable in series
We have summarized selected aspects of our capital stock below. The summary
is not complete. For a complete description, you should refer to our restated
articles of incorporation, bylaws and the Rights Agreement, dated as of
September 9, 1998, between us and American Stock Transfer and Trust Company, as
rights agent, all of which are exhibits to the registration statement of which
this prospectus is part.
Common Stock
Common stockholders are entitled to one vote for each share held on all
matters submitted to them. The common stock does not have cumulative voting
rights, meaning that the holders of a majority of the shares of common stock
voting for the election of directors can elect all the directors if they choose
to do so.
Each share of common stock is entitled to participate equally in dividends
when, as and if declared by our board of directors. The payment of dividends on
our common stock may be limited by obligations we may have to holders of any
preferred stock.
If we liquidate or dissolve our business, the holders of common stock will
share ratably in the distribution of assets available for distribution to
stockholders after creditors are paid and preferred stockholders receive their
distributions. The shares of common stock have no preemptive rights and are not
convertible, redeemable or assessable or entitled to the benefits of any
sinking fund.
All issued and outstanding shares of common stock are fully paid and
nonassessable. Any shares of common stock we offer under this prospectus will
be fully paid and nonassessable.
The common stock is listed on the New York Stock Exchange and trades under
the symbol "PDE."
Preferred Stock
Our board of directors can, without action by stockholders, issue one or
more series of preferred stock. The board can determine for each series the
number of shares, designation, relative voting rights, dividend rates,
liquidation and other rights, preferences and limitations. In some cases, the
issuance of preferred stock could delay or discourage a change in control of
us.
The prospectus supplement relating to any series of preferred stock we are
offering will include specific terms relating to the offering. We will file the
form of the preferred stock with the SEC before we issue any of it, and you
should read it for provisions that may be important to you. The prospectus
supplement will include some or all of the following terms:
. the title of the preferred stock
. the maximum number of shares of the series
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. the dividend rate or the method of calculating the dividend, the date
from which dividends will accrue and whether dividends will be
cumulative
. any liquidation preference
. any optional redemption provisions
. any sinking fund or other provisions that would obligate us to redeem or
purchase the preferred stock
. any terms for the conversion or exchange of the preferred stock for
other securities of us or any other entity
. any voting rights
. any other preferences and relative, participating, optional or other
special rights or any qualifications, limitations or restrictions on the
rights of the shares
Any shares of preferred stock we issue will be fully paid and nonassessable.
Our board of directors has reserved a total of 1,000,000 shares of Series A
Junior Participating Preferred Stock for issuance under our shareholder rights
plan described below. We have not issued any shares of preferred stock at the
date of this prospectus.
Anti-takeover Provisions
The provisions of Louisiana law and our restated articles of incorporation
and bylaws summarized below may have an anti-takeover effect and may delay,
defer or prevent a tender offer or takeover attempt that a shareholder might
consider in his or her best interest, including those attempts that might
result in a premium over the market price for the common stock.
Director Terms
Our articles provide that directors are elected for five-year terms and
serve until their successors are elected and qualified. Although the number of
directors is designated in our bylaws, no change to the bylaws to decrease the
number of directors may shorten the term of an incumbent director. Our bylaws
may be amended by shareholders with 80% of the total voting power of our voting
stock. Our articles provide that a vacancy on the board may be filled by a vote
of at least two-thirds of the directors in office, and a director elected to
fill a vacancy serves until the next shareholder meeting held for the election
of directors. Our shareholders can fill a vacancy on the board at a special
meeting called to do so. Directors can be removed by the shareholders only for
cause and only by a vote of not less than 80% of the voting power. Such removal
may be made only at a shareholder meeting called to do so.
Shareholder Meetings
Our articles and bylaws provide that special meetings of shareholders may be
called by the chairman of the board, the president, the board of directors or
shareholders holding 80% of the total voting power. A majority of the total
voting power is a quorum for a shareholder meeting. In general, a majority of
votes cast decides a matter brought before a meeting.
Shareholder Nominations of Directors
Our articles provide that only persons nominated by or at the direction of
the board or by a shareholder who has given timely notice to the secretary
prior to the meeting where directors are to be elected are eligible for
election as directors. To be timely, we must receive notice between 45 and 90
days before the meeting. If less than 55 days' notice or prior public
disclosure of the meeting date is given or made to shareholders, we
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must receive the notice not later than the tenth day after the day on which
the notice was mailed or the disclosure was made. The notice from a
shareholder nominating a person for election as a director must give specified
information about the person.
Supermajority Vote for Business Combinations
Our articles provide that certain business combinations between us and a
person that beneficially owns 30% of the total voting power of our voting
stock require approval at a shareholder meeting called for that purpose by 80%
of the total voting power, excluding securities owned by the acquiring entity
and its affiliates. A 30% beneficial owner is referred to as an "acquiring
entity" under our articles and bylaws. In addition, these business
combinations must meet conditions relating to:
. form and quantity of consideration to be received by shareholders
. restrictions on the acquiring entity purchasing additional voting
securities
. dividends paid on our outstanding stock
. restrictions on the acquiring entity receiving our financial assistance
or making changes to our business or capital structure without unanimous
board approval
. distribution of a proxy statement containing the directors'
recommendation and opinion of a reputable investment bank
Business combinations that are approved by "continuing directors" or that
involve a transfer of our assets to a wholly owned subsidiary or a merger that
does not change the percentages of shareholder ownership are exempt from these
restrictions. A "continuing director" is any member of our board of directors
who was a member of the board prior to the time a person becomes an acquiring
entity and any person who is subsequently elected to the board if the person
is recommended or approved by a majority of the continuing directors. The
"continuing directors" do not include an acquiring entity, or an affiliate or
associate of an acquiring entity.
Interested Shareholder Transactions
Louisiana law requires that mergers, consolidations or share exchanges with
a shareholder owning 10% or more of the voting power be recommended by the
board and approved by:
. 80% of the votes entitled to be cast by outstanding shares of voting
stock and
. two-thirds of votes entitled to be cast by voting stock other than the
interested shareholder
Transactions that do not alter the contract rights of the stock or convert
our shares and satisfy certain consideration and procedural requirements are
exempt from these requirements.
Business Combinations under Louisiana Law
As permitted by Louisiana law, our articles of incorporation expressly
authorize the board of directors, when considering a tender offer, exchange
offer, merger or consolidation, to consider, among other factors, the social
and economic effects of the proposals on the company, our subsidiaries and our
employees, customers, creditors and communities.
Limitation of Liability of Officers and Directors
Section 24 of the Louisiana Business Corporation Law authorizes
corporations to limit or eliminate the
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personal liability of officers and directors to corporations and their
shareholders for monetary damages for breach of officers' and directors'
fiduciary duties, except for:
. any breach of the officer's or director's duty of loyalty to our company
or our shareholders
. acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law
. unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 92D of the Louisiana Business
Corporation Law or
. any transaction from which the officer or director derived an improper
personal benefit
Our articles of incorporation limit the liability of our officers and
directors to our company and our shareholders to the fullest extent permitted
by Louisiana law. The inclusion of these provisions in our articles of
incorporation may reduce the likelihood of derivative litigation against our
officers and directors, and may discourage or deter shareholders or management
from bringing a lawsuit against our officers and directors for breach of their
duty of care, even though such an action, if successful, might have otherwise
benefitted our company and our shareholders. Both our articles of incorporation
and bylaws provide indemnification to our officers and directors and certain
other persons.
Amendment of Certain Provisions of the Articles and Bylaws
Our articles generally provide that if either a majority of the directors,
at a time when there is no acquiring entity, or a majority of the continuing
directors, at a time when there is an acquiring entity, recommends an amendment
to the articles, the holders of a majority of the total voting power present at
a shareholder meeting are required to amend certain provisions of the articles.
The exceptions relate generally to:
. the authority of the board of directors to issue preferred stock
. the antitakeover provisions and limitations on director liability
In these cases, an amendment requires approval of holders of 80% of the total
voting power. Our bylaws may be amended or repealed only by:
. a majority of the entire board of directors at any time when there is no
acquiring entity
. both a majority of the entire board of directors and a majority of the
continuing directors at any time when there is an acquiring entity or
. the affirmative vote of the holders of at least 80% of the total voting
power
Shareholder Rights Plan
On September 9, 1998, our board of directors adopted a preferred share
purchase rights plan. Under the plan, each share of common stock currently
includes one right to purchase preferred stock. We have summarized selected
provisions of the rights below. This summary is not complete. We have filed the
rights agreement with the SEC as an exhibit to the registration statement of
which this prospectus is a part, and you should read it for provisions that may
be important to you.
Currently, the rights are not exercisable and are attached to all
outstanding shares of common stock. The rights will separate from the common
stock and become exercisable:
. ten days after public announcement that a person or group of affiliated
or associated persons has acquired, or obtained the right to acquire,
beneficial ownership of 15% of the outstanding common stock or
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. ten business days following the start of a tender offer or exchange
offer that would result in a person's acquiring beneficial ownership of
15% of the outstanding common stock
Our board of directors can elect to delay the separation of the rights from the
common stock beyond the ten business days referred to above. A 15% beneficial
owner is referred to as an "acquiring person" under the plan. Until the rights
are separately distributed, the rights will be evidenced by the common stock
certificates and will be transferred with and only with the common stock
certificates.
After the rights are separately distributed, each right will entitle the
holder to purchase from us one one-hundredth of a share of Series A Junior
Participating Preferred Stock for a purchase price of $50. The rights will
expire at the close of business on September 9, 2008, unless we redeem or
exchange them earlier as described below.
If a person becomes an acquiring person, the rights will become rights to
purchase shares of common stock for one-half the current market price (as
defined in the rights agreement) of the common stock. This occurrence is
referred to as a "flip-in event" under the plan. After any flip-in event, all
rights that are beneficially owned by an acquiring person, or by certain
related parties, will be null and void. Our board of directors has the power to
decide that a particular tender or exchange offer for all outstanding shares of
our common stock is fair to and otherwise in the best interests of our
shareholders. If our board makes this determination, the purchase of shares
under the offer will not be a flip-in event.
If, after there is an acquiring person, we are acquired in a merger or other
business combination transaction or 50% or more of our assets or earning power
are sold or transferred, each holder of a right will have the right to purchase
shares of common stock of the acquiring company at a price of one-half the
current market price of that stock. This occurrence is referred to as a "flip-
over event" under the plan. An acquiring person will not be entitled to
exercise its rights, which will have become void.
Until ten days after the announcement that a person has become an acquiring
person, our board may decide to redeem the rights at a price of $.01 per right,
payable in cash, shares of common stock or other consideration. The rights will
not be exercisable after a flip-in event until the rights are no longer
redeemable.
At any time either after a flip-in event and prior to a person's becoming
the beneficial owner of 50% or more of the shares of common stock, or after a
flip-over event, our board may decide to exchange the rights for shares of
common stock on a one-for-one basis. Rights owned by an acquiring person, which
will have become void, will not be exchanged.
Other than provisions relating to the redemption price of the rights, the
rights agreement may be amended by our board of directors prior to the
distribution of the rights. After the distribution of the rights, the
provisions of the rights agreement other than the redemption price may be
amended by our board of directors to cure any ambiguity, defect or
inconsistency, to make changes that do not materially adversely affect the
interests of holders of rights (excluding the interests of any acquiring
person), or to shorten or lengthen any time period under the rights agreement.
No amendment to lengthen the time period for redemption may be made if the
rights are not redeemable at that time.
Various actions under the rights agreement, including redeeming and
exchanging the rights or amending the rights agreement, will require the
approval of our "continuing directors." A "continuing director" is any member
of our board of directors who is a member of the board prior to the time a
person becomes an acquiring person and any person who is subsequently elected
to the board if the person is recommended or approved by a majority of the
continuing directors. The "continuing directors" do not include an acquiring
person, or an affiliate or associate of an acquiring person, or any
representative or nominee of them.
The rights have certain anti-takeover effects. The rights will cause
substantial dilution to any person or group that attempts to acquire us without
the approval of our board of directors. As a result, the overall effect
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of the rights may be to render more difficult or discourage any attempt to
acquire us even if the acquisition may be favorable to the interests of our
shareholders. Because our board of directors can redeem the rights or approve a
tender or exchange offer, the rights should not interfere with a merger or
other business combination approved by the board.
Transfer Agent and Registrar
American Stock Transfer & Trust Company is our transfer agent and registrar.
Description of Warrants
We may issue warrants to purchase debt securities, common stock, preferred
stock or other securities. We may issue warrants independently or together with
other securities. Warrants sold with other securities may be attached to or
separate from the other securities. We will issue warrants under one or more
warrant agreements between us and a warrant agent that we will name in the
prospectus supplement.
The prospectus supplement relating to any warrants we are offering will
include specific terms relating to the offering. We will file the form of any
warrant agreement with the SEC, and you should read the warrant agreement for
provisions that may be important to you. The prospectus supplement will include
some or all of the following terms:
. the title of the warrants
. the aggregate number of warrants offered
. the designation, number and terms of the debt securities, common stock,
preferred stock or other securities purchasable upon exercise of the
warrants, and procedures by which those numbers may be adjusted
. the exercise price of the warrants
. the dates or periods during which the warrants are exercisable
. the designation and terms of any securities with which the warrants are
issued
. if the warrants are issued as a unit with another security, the date on
and after which the warrants and the other security will be separately
transferable
. if the exercise price is not payable in U.S. dollars, the foreign
currency, currency unit or composite currency in which the exercise
price is denominated
. any minimum or maximum amount of warrants that may be exercised at any
one time
. any terms, procedures and limitations relating to the transferability,
exchange or exercise of the warrants
Plan of Distribution
We may sell the offered securities in and outside the United States (a)
through underwriters or dealers, (b) directly to purchasers or (c) through
agents. The prospectus supplement will include the following information:
. the terms of the offering
. the names of any underwriters or agents
. the purchase price of the securities from us
. the net proceeds to us from the sale of securities
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. any delayed delivery arrangements
. any underwriting discounts, commissions and other items constituting
underwriters' compensation
. any initial public offering price
. any discounts or concessions allowed or reallowed or paid to dealers
. any commissions paid to agents
Sale Through Underwriters or Dealers
If we use underwriters in the sale, the underwriters will acquire the
securities for their own account. The underwriters may resell the securities
from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Underwriters may offer securities to the public either
through underwriting syndicates represented by one or more managing
underwriters or directly by one or more firms acting as underwriters. Unless we
inform you otherwise in the prospectus supplement, the obligations of the
underwriters to purchase the securities will be subject to certain conditions,
and the underwriters will be obligated to purchase all the offered securities
if they purchase any of them. The underwriters may change from time to time any
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers.
During and after an offering through underwriters, the underwriters may
purchase and sell the securities in the open market. These transactions may
include overallotment and stabilizing transactions and purchases to cover
syndicate short positions created in connection with the offering. The
underwriters also may impose a penalty bid, which means that selling
concessions allowed to syndicate members or other broker-dealers for the
offered securities sold for their account may be reclaimed by the syndicate if
the offered securities are repurchased by the syndicate in stabilizing or
covering transactions. These activities may stabilize, maintain or otherwise
affect the market price of the offered securities, which may be higher than the
price that might otherwise prevail in the open market. If commenced, the
underwriters may discontinue these activities at any time.
If we use dealers in the sale of securities, we will sell the securities to
them as principals. They may then resell those securities to the public at
varying prices determined by the dealers at the time of resale. We will include
in the prospectus supplement the names of the dealers and the terms of the
transaction.
Direct Sales and Sales Through Agents
We may sell the securities directly. In this case, no underwriters or agents
would be involved. We may also sell the securities through agents we designate
from time to time. In the prospectus supplement, we will name any agent
involved in the offer or sale of the offered securities, and we will describe
any commissions payable by us to the agent. Unless we inform you otherwise in
the prospectus supplement, any agent will agree to use its reasonable best
efforts to solicit purchases for the period of its appointment.
We may sell the securities directly to institutional investors or others who
may be deemed to be underwriters within the meaning of the Securities Act of
1933 with respect to any sale of those securities. We will describe the terms
of any such sales in the prospectus supplement.
Delayed Delivery Contracts
If we so indicate in the prospectus supplement, we may authorize agents,
underwriters or dealers to solicit offers from certain types of institutions to
purchase securities from us at the public offering price under delayed delivery
contracts. These contracts would provide for payment and delivery on a
specified date in the future. The contracts would be subject only to those
conditions described in the prospectus supplement. The prospectus supplement
will describe the commission payable for solicitation of those contracts.
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General Information
We may have agreements with the agents, dealers and underwriters to
indemnify them against certain civil liabilities, including liabilities under
the Securities Act of 1933, or to contribute with respect to payments that the
agents, dealers or underwriters may be required to make. Agents, dealers and
underwriters may be customers of, engage in transactions with or perform
services for us in the ordinary course of their businesses.
Legal Opinions
Certain legal matters in connection with the preferred stock and common
stock we are offering will be passed upon for us by Sher Garner Cahill Richter
Klein McAlister & Hilbert, L.L.P., New Orleans, Louisiana. Certain legal
matters in connection with the debt securities and warrants we are offering
will be passed upon for us by Baker Botts L.L.P., Houston, Texas. Sher Garner
Cahill Richter Klein McAlister & Hilbert, L.L.P. will pass on all matters of
Louisiana law in this connection. Any underwriters will be advised about other
issues relating to any offering by their own legal counsel.
Experts
The financial statements of Pride incorporated in this prospectus by
reference to the annual report on Form 10-K for the year ended
December 31, 1999 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
Independent Accountants
With respect to the unaudited consolidated financial information of Pride
for the three-month periods ended March 31, 2000 and 1999 incorporated by
reference in this prospectus, PricewaterhouseCoopers LLP reported that they
have applied limited procedures in accordance with professional standards for a
review of such information. However, their separate report dated May 12, 2000
incorporated by reference in this prospectus states that they did not audit and
they do not express an opinion on that unaudited consolidated financial
information. Accordingly, the degree of reliance on their report on such
information should be restricted in light of the limited nature of the review
procedures applied. PricewaterhouseCoopers LLP is not subject to the liability
provisions of Section 11 of the Securities Act of 1933 for their report on the
unaudited consolidated financial information because that report is not a
"report" or a "part" of the registration statement prepared or certified by
PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the
Securities Act of 1933.
Where You Can Find More Information
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. 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 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 we file electronically with the SEC, which
you can access over the Internet at http://www.sec.gov. You can obtain
information about us at the offices of the New York Stock Exchange, 20 Broad
Street, New York, New York 10005.
This prospectus is part of a registration statement we have filed with the
SEC relating to the securities we may offer. As permitted by SEC rules, this
prospectus does not contain all of the information we have included
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in the registration statement and the accompanying exhibits and schedules we
file with the SEC. You may refer to the registration statement, the exhibits
and the schedules for more information about us and our securities. The
registration statement, exhibits and schedules are available at the SEC's
public reference room or through its Web site.
We are incorporating by reference information we file 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 we file with the SEC
automatically will update and supersede this information. We incorporate by
reference the documents listed below and any future filings we make with the
SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934 until we sell all the securities:
. our annual report on Form 10-K for the year ended December 31, 1999, as
amended by our annual report on Form 10-K/A dated June 16, 2000
. our quarterly report on Form 10-Q for the quarterly period ended March
31, 2000
. the description of our common stock contained in our registration
statement on Form 8-A filed on August 19, 1997, as we may update that
description from time to time
. the description of our preferred share purchase rights contained in our
registration statement on Form 8-A filed on September 14, 1998, as we
may update that description from time to time
You may request a copy of these filings (other than an exhibit to those
filings unless we have specifically incorporated that exhibit by reference into
the filing), at no cost, by writing or telephoning us at the following address:
Pride International, Inc.
5847 San Felipe, Suite 3300
Houston, Texas 77057
Attention: Robert W. Randall
Secretary
Telephone: (713) 789-1400
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$410,908,000
[PRIDE LOGO]
Pride International, Inc.
Zero Coupon Convertible Senior Debentures Due 2021
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PROSPECTUS SUPPLEMENT
January 9, 2001
(including Prospectus dated June 30, 2000)
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Salomon Smith Barney
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