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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.
Date of Report (Date of earliest event reported): November 4, 1994 (November 2, 1994)
Commission File Number: 0-18309
________________________
MARINE DRILLING COMPANIES, INC.
(Exact name of registrant as specified in its charter)
TEXAS 74-2558926
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
14141 SOUTHWEST FREEWAY, SUITE 2500, SUGAR LAND, TEXAS 77478-3435
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 491-2002
______________________________________________________________________________________
(Former name if changed since last report)
______________________________________________________________________________________
(Former address if changed since last report)
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ITEM 5. OTHER EVENTS
A. On November 3, 1994, the Company issued a press release
announcing that Falcon Drilling Company, Inc. and the
Company entered into a letter of intent to merge the
two companies.
ITEM 7(c). EXHIBITS
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Exhibit
Number Description
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99.3 Press release dated November 3, 1994
99.4 Letter of Intent dated November 2, 1994
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
MARINE DRILLING COMPANIES, INC.
(Registrant)
Date: November 4, 1994 By: /s/ WILLIAM H. FLORES
-----------------------------------------
William H. Flores
Senior Vice President -
Chief Financial Officer and Director
(Principal Financial Officer)
Date: November 4, 1994 By: /s/ JOAN R. SMITH
-----------------------------------------
Joan R. Smith
Vice President, Controller and Secretary
(Principal Accounting Officer)
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INDEX TO EXHIBITS
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EXHIBIT
NUMBER EXHIBITS
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99.3 Press release dated November 3, 1994
99.4 Letter of Intent dated November 2, 1994
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EXHIBIT 99.3
NEWS RELEASE
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FALCON DRILLING COMPANY, INC. MARINE DRILLING COMPANIES, INC.
- - -------------------------------- -----------------------------------
1900 West Loop South, Suite 1910 14141 Southwest Freeway, Suite 2500
Houston, Texas 77027 Sugar Land, Texas 77478-3435
[LOGO] [LOGO]
DATE: November 3, 1994
CONTACT: Steven A. Webster, Chairman & CEO, Falcon Drilling Company, Inc.
(713) 623-8984
William O. Keyes, President & CEO, Marine Drilling Companies, Inc.
William H. Flores, Sr. Vice President & CFO, Marine Drilling Companies, Inc.
(713) 491-2002
*************************************************************************************
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MERGER OF FALCON DRILLING COMPANY, INC.
AND MARINE DRILLING COMPANIES, INC.
HOUSTON, TEXAS (November 3, 1994) -- Falcon Drilling Company, Inc. and
Marine Drilling Companies, Inc. (NSM-MDCO) announced today that they have
entered into a letter of intent to merge the two companies. The merger will
result in the world's largest fleet of marine based drilling rigs and the
largest fleet of jack-up units in the Gulf of Mexico.
Under the proposed merger, each share of Marine or Falcon would be
converted into one share of the surviving corporation so that after the merger
takes effect there will be 133.0 million shares of the combined company
outstanding, of which 43.9 million shares will be held by Marine's
stockholders. The stock of the surviving corporation will be publicly traded
and listed on the NASDAQ stock market or one of the principal U.S. stock
exchanges.
Following the merger, the combined entity will be renamed Falcon
Marine, Inc. Steven A. Webster, Chairman and CEO of Falcon, will retain such
responsibilities following the merger, and William O. Keyes, currently
Chairman, President and CEO of Marine, will become President and COO. The
merger is expected to be tax-free to stockholders and is expected to take
effect in early 1995. The merger is conditioned upon the negotiation and
execution of a definitive agreement, approval of stockholders of each company,
required regulatory approvals and other conditions.
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Falcon Drilling is a leading provider of contract drilling and workover
services to the oil and gas industry in the U.S. Gulf of Mexico and in
international markets. Its 42 rig barge drilling fleet is the largest in the
world and its 13 rig offshore fleet is one of the largest in the U.S. Gulf of
Mexico. It also participates in the inland water workover business through its
Blake Workover joint venture with a fleet of seven barge workover rigs. The
Company recently signed contracts to place three reconstructed barge rigs in
service for Maraven, S.A. under long-term contracts for work in Lake Maracaibo.
These rigs will join three rigs already in Venezuela operating for British
Petroleum and through a joint venture company for Maraven. Falcon is currently
a privately held company with publicly traded debt.
Marine Drilling is one of the largest operators of jack-up drilling
rigs in the Gulf of Mexico and operates a fleet of 12 jack-up drilling rigs, 11
in the U.S. Gulf of Mexico and one in the Bay of Campeche, offshore Mexico.
Marine's fleet is comprised of eight mat supported and four independent leg
rigs.
Mr. Webster said, ''This transaction combines two of the largest and
lowest cost drilling contractors in the Gulf of Mexico. Having built strong
positions in the barge drilling and workover segments, Falcon views the merger
as being consistent with Falcon's strategy to participate in the consolidation
of attractive market segments. Falcon Marine will be the largest operator of
marine drilling rigs in the Gulf of Mexico. The combined company will also
have a strong balance sheet with the capacity to consider attractive
complementary growth opportunities.''
Mr. Keyes said, ''This merger will create a company that will operate
the largest fleet of jack-up drilling rigs in the Gulf of Mexico and is a
continuation of our strategy to enhance shareholder value. We believe that the
addition of Falcon's barge business through the merger will also allow Marine
to diversify internationally into a profitable niche market with long term
contracts.''
Kidder, Peabody & Co. Incorporated is serving as financial advisor to
Falcon on the merger and Jefferies & Company is serving as financial advisor to
Marine.
# # #
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EXHIBIT 99.4
November 2, 1994
Marine Drilling Companies, Inc.
14141 Southwest Freeway, Suite 2500
Sugar Land, Texas 77478-3435
Gentlemen:
This letter, when countersigned by you, will confirm our tentative
agreement for a merger of Marine Drilling Companies, Inc., a Texas corporation
("Marine"), and Falcon Drilling Company, Inc., a Delaware corporation
("Falcon"), on the terms described below. Except for items number 8 through 11
below, however, this letter represents only our current mutual good faith
intention to negotiate and enter into a definitive merger agreement and is
subject to negotiation of such a definitive merger agreement in form acceptable
to each of us. It is not, and is not intended to be, a binding agreement
between us (except as to those specified items), and neither of us shall have
any liability to the other (except as to those specified items) if we fail to
execute a definitive agreement for any reason. Statements below as to what we,
or you, will do, or agree to do, or the like, are so expressed for convenience
only, and are understood in all instances (except for the items enumerated
above) to be subject to our mutual continued willingness to proceed with any
transaction as our negotiations take place. It is the intention of the parties
that each shall proceed as expeditiously as practicable toward the execution of
a definitive agreement and the consummation of the merger contemplated hereby.
1. Merger. Marine and Falcon will merge in a statutory merger
pursuant to the Texas Business Corporation Act and the Delaware General
Corporation Law (the "Merger"). As a consequence of the Merger, the name of the
surviving corporation shall be changed to Falcon Marine, Inc. Marine represents
that it currently has 43,865,203 shares of common stock, par value $.01 per
share (the "Marine Common Stock"), outstanding and that, prior to the effective
time of the Merger, it may issue 1,056,000 additional shares of Marine Common
Stock to acquire an additional drilling rig (the "Additional Marine Shares") for
a total of 44,921,203 shares of Marine Common Stock. Marine represents that
there are no convertible securities, warrants or other rights that are
exercisable for Marine Common Stock, other than the options set forth in
Schedule A hereto. Falcon represents that it has currently 27,543,036 shares of
Falcon Common Stock and Falcon Common Stock Equivalents (as defined below)
outstanding, including 400,000 shares it has commitments to issue at the
effective time of the Merger to acquire 50% of its Blake Workover joint venture
(the "Additional Falcon Shares"), and that there are no convertible securities,
warrants, options or other rights that are exercisable for Falcon Common Stock,
except as set forth on Schedule B hereto. Falcon, prior to the effective time of
the Merger, will subdivide the existing Falcon Common Stock and Falcon Common
Stock Equivalents by means of a 3.2379-for-one share or share equivalent stock
split such that Falcon will have 89,181,596 shares of Common Stock and Common
Stock Equivalents outstanding immediately before the
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effective time of the Merger. In the Merger the surviving corporation will
issue one share of surviving corporation common stock for each share of the
merged corporation Common Stock outstanding (the "Merger Exchange Ratio").
Shares of Falcon Common Stock issuable upon conversion of the outstanding
preferred stock and exercise of the outstanding warrants (but not
management stock options) and the Additional Falcon Shares are considered to be
Falcon Common Stock Equivalents outstanding for purposes of determining the
Merger Exchange Ratio. The parties acknowledge that the foregoing
representations have formed the basis for determining the Merger Exchange Ratio
expressed above. In connection with the Merger, the Falcon Series A
Convertible Preferred Stock will be converted into an equivalent convertible
preferred stock of the surviving corporation in accordance with the Merger
Exchange Ratio, and the Falcon Series B Redeemable Preferred Stock shall be
converted into an equivalent redeemable preferred stock of the surviving
corporation. It is the parties intent to simplify the capital structure of the
surviving corporation in connection with the Merger, including eliminating
Falcon's two outstanding classes of preferred stock. Holders of warrants and
options exercisable prior to the effective time of the Merger for shares of
Falcon Common Stock or Marine Common Stock will be entitled to receive upon
exercise of such warrants and options after such effective time common stock of
the surviving corporation in accordance with the Merger Exchange Ratio.
Notwithstanding the foregoing, the parties shall evaluate tax, securities and
other applicable considerations to determine which of Falcon or Marine shall be
the surviving corporation in the Merger, whether an alternative structure would
be advisable and, if an alternative structure is advisable, then such
alternative structure shall be utilized as long as the same economic effect is
accomplished as outlined above.
2. Definitive Agreement. Falcon and Marine mutually agree to proceed
in good faith toward negotiation and execution of a definitive agreement (the
"Agreement"), which shall provide for the Merger, and shall contain
representations, conditions, covenants and the like typical in transactions of
this type.
3. Options. Employee stock options of Falcon or Marine, as the case
may be, shall, effective upon the consummation of the Merger, be converted into
comparable options to purchase common stock of the surviving corporation as
permitted by the plans in effect providing for such options. All outstanding
options of the surviving corporation shall remain in effect and in addition
Falcon shall be entitled to grant additional options for up to 100,000 shares
of Falcon Common Stock (on a pre-split basis) prior to the Merger to key Falcon
management employees.
4. Conditions. This letter of intent is and, to the extent
applicable, the Agreement will (except as specified below) be, subject to the
following conditions.
A. A complete review by each of us of the books, records,
business and affairs of the other, the results of which are satisfactory to the
reviewing party. Marine and Falcon each agrees to provide to the other and its
agents complete access to all of its books, records and personnel (excluding
only information protected by the attorney-client privilege, but including such
information to the extent that the disclosure thereof would not waive such
privilege) for purposes of conducting such investigation. Each party agrees
that all information so provided by
2
<PAGE> 3
the other that is identified as "confidential" will be subject to the terms of
those certain Confidentiality Agreements dated as of July 11, 1994 executed by
Marine and Falcon.
B. Negotiation and execution of the Agreement with terms,
provisions and conditions mutually acceptable to each of us.
C. Approval of the Agreement by the Boards of Directors of
Marine and Falcon, which approval in the case of Marine shall be sufficient to
render any anti-takeover provisions under Texas law or under Marine's charter
or by-laws inapplicable.
D. Approval of the Agreement by shareholders of Marine and
Falcon, with holders of no more than 10% of the outstanding stock of
either Falcon or Marine having taken the requisite action to exercise the right
of dissent provided under applicable law.
E. Approval of the Merger by third parties whose consent is
required.
F. Appropriate filings under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, and the expiration of the applicable waiting period
thereunder.
G. Satisfactory confirmation from Jefferies &
Company, Inc., for Marine, and Kidder, Peabody & Co. Incorporated, for Falcon,
to the effect that the Merger is fair to the stockholders of Marine and Falcon,
respectively, from a financial point of view.
H. Appropriate confirmations by each party as to
compliance with representations, warranties and covenants, and opinions of
counsel, at the Closing of the Merger as is customary in similar agreements.
5. Covenants. Pending execution of the Agreement (or termination of
this letter of intent, as herein provided), each party agrees that it and its
subsidiaries will:
A. Conduct their business only in the ordinary course, and
not engage in any extraordinary transactions without the other's prior consent,
except that Marine may issue the Additional Marine Shares and Falcon shall
effect the stock split as provided in Item 1 above and issue the Additional
Falcon Shares, and each party may enter into those transactions disclosed prior
to the execution of this letter of intent to the other party by letter dated of
even date herewith.
B. Not dispose of any material amount of its assets, except in
the ordinary course of business.
C. Not materially increase the annual level of compensation
of any employee and not grant any unusual or extraordinary bonuses, benefits
or other forms of direct or indirect compensation to any employee, officer,
director or consultant, except in amounts in keeping with past practices
by formula or otherwise.
3
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D. Not increase, terminate, amend or otherwise modify any
plan for the benefit of employees except as provided in item 3 above.
E. Not issue any equity securities or convertible securities,
options, warrants or other rights to purchase equity securities, except
as provided in A and item 3 above and pursuant to the conversion of convertible
securities or the exercise of options or warrants outstanding as of the date
hereof and additional shares as required in the form of matching contributions
pursuant to the Marine Drilling Employees 401(k) Profit Sharing Plan.
F. Not pay any dividends, redeem any securities, other than the
Falcon Series B Redeemable Preferred Stock, or otherwise cause its assets or
the assets of any of its subsidiaries to be distributed to any of its
stockholders.
G. Not borrow any funds, under existing lines of credit or
otherwise, except as reasonably necessary for the ordinary operation of
its business and the business of its subsidiaries in a manner, and in amounts,
in keeping with historical practices or in accordance with previously disclosed
cash requirements or as disclosed prior to the execution of this letter of
intent to the other party by letter dated of even date herewith.
H. Not engage in any new interested party transaction not
previously described in a party's SEC filings or modify to the material
detriment of Falcon or Marine, as the case may be, any such existing interested
party transactions.
I. Not engage in any "road show" or similar marketing
activities relating to the issuance of equity securities except that in
the case of Falcon, Falcon may recommence such activities and other actions in
connection with its proposed public offering of common stock if Marine solicits
offers from or commences negotiations with third parties with respect to an
Acquisition Transaction (as defined in item 8).
6. Board Representation and Principal Officers. Each of
Aeneas Venture Corporation, Capricorn Investors, L.P. and Warburg Pincus
Capital Company, L.P. (the "Marine Principal Stockholders"), Purnendu
Chatterjee and the stockholders of Falcon affiliated with him (the "S-C
Interests"), Douglas A.P. Hamilton (the "Hamilton Interests") and Steven A.
Webster, D. Glenn Richardson, William R. Ziegler, Lucky Star Shipping S.A. and
stockholders of Falcon affiliated with any of them (the "Management Interests")
and, together with the S-C Interests and the Hamilton Interests, the "Falcon
Principal Stockholders") shall enter into an agreement that will provide that
the Board of Directors of the surviving corporation shall consist of four
persons designated by the Falcon Principal Stockholders, two persons designated
by the Marine Principal Stockholders (one of whom shall be William O. Keyes)
and three independent directors to be agreed upon jointly prior to the mailing
of proxy material to the stockholders of Falcon and Marine. Such agreement
shall also contain such other provisions to which Marine, Falcon and such
parties mutually agree. Steven A. Webster will serve as Chairman of the Board
and Chief Executive Officer of the surviving corporation following the Merger
and William O. Keyes will serve as President and Chief Operating Officer.
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7. Registration of Shares. The Falcon Principal Stockholders and the
Marine Principal Stockholders shall enter into an agreement with the surviving
corporation granting such parties registration rights to which Falcon, Marine
and such parties mutually agree. Such registration rights shall supersede and
replace any registration rights of such parties under existing agreements.
8. Inquiries and Negotiations. From the date hereof and until the
earlier of the termination of this letter of intent or the execution of the
Agreement, neither party, its directors or officers shall, nor shall either
party authorize or direct its employees, representatives or agents to, directly
or indirectly, solicit or initiate any inquiries or the making of any proposal
with respect to, or (except to the extent determined by its Board of Directors
to be required by its fiduciary obligations under applicable law after
consulting with counsel) engage in negotiations with, or provide any
information to, any person, excluding its affiliates, officers, directors,
employees, representatives and agents in the ordinary course of their
respective duties and other than the other party, or its affiliates or any
group in which the other party or its affiliate participate, in connection with
(i) the possible disposition of shares of capital stock of it (other than as
contemplated in 5A above or in an underwritten public offering) or any
subsidiary of it or of such portion of its assets or the assets of any
subsidiary of it as would have a material adverse effect on its value or (ii)
any business combination involving it, any subsidiary of it or any division of
it or any subsidiary of it (all such transactions described in clause (i) or
(ii) being referred to herein as "Acquisition Transactions") or, (except to the
extent determined by its Board of Directors to be required by its fiduciary
duties under applicable law after consulting with counsel) otherwise facilitate
any effort or attempt to do or seek any of the foregoing. Neither party nor
any of its directors, officers, employees, representatives or agents shall be
deemed to engage in such negotiations if it discusses the terms of any such
Acquisition Transaction with any person who makes an unsolicited proposal in
order to clarify the terms thereof. Each party shall promptly notify the other
of any Acquisition Transaction proposed to it or to any subsidiary and if it
decides to provide requested information or to engage in negotiations with
respect thereto, but neither party shall have any duty to disclose any details
of such negotiations, inquiry or proposal to the other. If, as permitted
above, either party engages in negotiations or other discussions with any third
party regarding any Acquisition Transaction or any third party receives from or
through such party, any subsidiary of it or any officer, director, employee,
agent or representative of it or of any subsidiary of it, any information in
connection with an Acquisition Transaction, such party will have no duty to
disclose any details of any negotiations, inquiry or proposal of any other
person to such third party. Notwithstanding the foregoing, the Board of
Directors of Marine shall be free to take any position pursuant to Rules 14d-9
and 14e-2 under the Securities Exchange Act of 1934, as amended, that is
consistent with the advice of counsel concerning its fiduciary duties under
applicable laws with respect to a tender offer commenced by a third party
(other than by public announcement alone).
9. Break-up Fee. If (A) (i) Marine terminates this letter of intent
pursuant to item 12C below or (ii) Marine receives prior to the termination of
this letter of intent a bona fide proposal or offer from a third party relating
to an Acquisition Transaction or (iii) Marine shall engage in negotiations
prior to the termination of this letter of intent with any entity or group
(other than Falcon ) that has proposed an Acquisition Transaction or (iv)
Marine directly or
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indirectly through representatives or agents prior to the termination
of this letter of intent solicits or initiates any inquiries or the making of
any proposal from or with any entity or group with respect to an Acquisition
Transaction or (v) the Board of Directors of Marine prior to the termination of
this letter of intent shall recommend or approve an Acquisition Transaction
with a third party with respect to which a proposal or offer was received prior
to the execution of this letter of intent; and (B) in any of such cases, Marine
enters into a written definitive agreement with respect to an Acquisition
Transaction with such third party or its affiliates prior to the 90th day
following the termination of this letter of intent, then Marine shall within
two business days of the occurrence of such event, pay Falcon $6,000,000. If
(A) (i) Falcon terminates this letter of intent pursuant to item 12C below or
(ii) Falcon receives prior to the termination of this letter of intent a bona
fide proposal or offer from a third party relating to an Acquisition
Transaction or (iii) Falcon shall engage in negotiations prior to the
termination of this letter of intent with any entity or group (other than
Marine) that has proposed an Acquisition Transaction or (iv) Falcon directly or
indirectly through representatives or agents, prior to the termination of this
letter of intent, solicits or initiates any inquiries or the making of any
proposal from or with any entity or group with respect to an Acquisition
Transaction or (v) the Board of Directors of Falcon prior to the termination of
this letter of intent shall recommend or approve an Acquisition Transaction
with a third party with respect to which a proposal or offer was received prior
to the execution of this letter of intent and (B) in any of such cases, Falcon
enters into a written definitive agreement with respect to an Acquisition
Transaction with such third party or its affiliates prior to the 90th day
following the termination of this letter of intent, then Falcon shall within
two business days of occurrence of such event, pay Marine $6,000,000. It is
specifically agreed that such amount in each case represents liquidated damages
(inclusive of expenses) and not a penalty.
10. Expenses. Each party to this letter of intent shall bear its own
expenses, except as specifically provided to the contrary above or in the
Agreement.
11. Press Releases and Disclosure. Each party agrees that it will not
issue any press release or other disclosure of this letter of intent or of the
Merger without the prior approval of the other, which shall not be unreasonably
withheld, unless, in the good faith opinion of counsel, such disclosure is
required by law and time does not permit the obtaining of such consent, or such
consent is withheld.
12. Termination. This letter of intent may be terminated:
A. By mutual consent of Falcon and Marine; or
B. By either party by written notice if the Agreement has not
been executed by 5:00p.m. Central Standard Time on November 22, 1994.
C. By either party if such party desires to enter into a
definitive agreement with a third party concerning an Acquisition Transaction.
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In the event of such termination, all provisions hereof shall terminate
except as provided in the initial paragraph preceding item 1 above, and except
that if a party is in breach of its obligations hereunder, such termination
shall not relieve such party of liability for such breach.
Very truly yours,
FALCON DRILLING COMPANY, INC.
By /s/ STEVEN A. WEBSTER
-----------------------------------
Its Chairman & CEO
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Confirmed and Agreed:
MARINE DRILLING COMPANIES, INC.
By /s/ WILLIAM H. FLORES
-----------------------------
Its Senior Vice President
8
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Schedule A
Outstanding Capital Stock, Convertible Securities
Options, Warrants or Other Rights to
Acquire Capital Stock of Marine
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Common Stock Subject to Options
granted November 3, 1992 (pg 4x6) 1,320,650
Common Stock Subject to Options
granted June 29, 1993 (pg 5x6) 190,000
Common Stock Subject to Options
granted October 12, 1994 (pg 6x6) 75,000
Common Stock Subject to Options
grants pending at November 2, 1994 261,440
---------
Total 1,847,090
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</TABLE>
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Schedule B
Calculation of Falcon Common Shares on a Fully-Diluted Basis:
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15,922,500 -- Common Shares Issued and Outstanding
7,796,700 -- Common Shares Issuable on Conversion of Series A Preferred
420,000 -- Common Shares issuable on Exercise of Class A Warrants
1,560,000 -- Common Shares issuable on Exercise of Class B Warrants
120,000 -- Common Shares Issuable on Exercise of Mullen/Oliver Warrants
2,262 -- Common Shares Issuable on Exercise of Bonus Warrants
1,321,574 -- Common Shares issuable on Exercise of Shadow Warrant
495,000 -- Common Shares Issuable Under 1992 Stock Option Plan
285,000 -- Common Shares Issuable Under 1994 Stock Option Plan
----------
27,923,036 -- Total Common Shares on fully-diluted basis
400,000 -- Common Shares to be issued to Blake Holding Company
----------
28,323,036 -- Total Common Shares issued and to be issued on a fully-diluted basis
780,000 -- Less Common Shares issuable pursuant to 1992 Stock Option Plan and 1994 Stock Plan
----------
27,543,036
</TABLE>
10
