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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): December 13, 1996 (December
4, 1996)
Commission File Number: 0-18309
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MARINE DRILLING COMPANIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
TEXAS 74-2558926
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
ONE SUGAR CREEK CENTER BLVD. -- SUITE 600, SUGAR LAND, TEXAS 77478-3556
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (281) 243-3000
________________________________________________________________________________
(Former name if changed since last report)
________________________________________________________________________________
(Former address if changed since last report)
________________________________________________________________________________
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ITEM 5. ACQUISITION OR DISPOSITION OF ASSETS.
On December 2, 1996, the Company entered into a commitment
letter with Bankers Trust Company for financing of up to
$100,000,000 for the Company on and subject to the terms and
conditions set forth in the letter and the term sheet attached
thereto.
ITEM 7(c). EXHIBITS
Exhibit
Number Description
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99.1 Commitment Letter dated December 4, 1996
between Bankers Trust Company and Marine
Drilling Companies, Inc.
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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: December 12, 1996 By: /s/ William H. Flores
-------------------------------------
William H. Flores
Executive Vice President,
Chief Financial Officer and Director
(Principal Financial Officer)
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBITS
- ------ --------
<S> <C>
99.1 Commitment Letter dated
December 4, 1996 between
Bankers Trust Company and
Marine Drilling Companies, Inc.
</TABLE>
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EXHIBIT 99.1
BANKERS TRUST COMPANY
ONE BANKERS TRUST PLAZA
NEW YORK, NEW YORK 10006
December 2, 1996
Marine Drilling Companies, Inc.
One Sugar Creek Center Boulevard
Suite 600
Sugar Land, Texas 77478
Attention: William H. Flores
Gentlemen:
Bankers Trust Company ("BTCo") is pleased to provide financing
of up to $100,000,000 (the "Financing") for Marine Drilling Companies, Inc.
(the "Company") on the terms and conditions set forth in this letter and the
Summary of Terms and Conditions attached hereto (the "Term Sheet"), which is an
integral part of this letter (this "Commitment Letter").
BTCo's agreement to provide the Financing is specifically
contingent upon (i) the execution and delivery of this Commitment Letter and
the related fee letter by the Company prior to the expiration date of this
letter referred to below, (ii) the absence of a material adverse change in the
business, operations, properties or financial condition of the Company and its
subsidiaries, (iii) satisfaction of the terms and conditions of this Commitment
Letter (including the Term Sheet), (iv) satisfactory completion of BTCo's due
diligence review of the business, operations, properties and financial
condition of the Company and its subsidiaries, and (v) the negotiation,
execution and delivery of an appropriate credit agreement, guaranties, security
documents and other definitive loan documents (collectively, the "Loan
Documents") in form and substance satisfactory to BTCo and its counsel.
The Term Sheet is intended for discussion purposes and as a
general outline only and does not purport to summarize all of the terms,
conditions, covenants, representations, warranties and other provisions which
would be contained in the Loan Documents. The Financing would be provided
pursuant to definitive Loan Documents which would incorporate provisions
customarily included by BTCo in transactions of this nature. Certain of those
terms and conditions are specified in the Term Sheet. These terms and
conditions would be further developed and additional terms would be added
during the course of preparing the definitive Loan Documents and as a result of
the completion of BTCo's due diligence review.
BTCo reserves the right, prior to or after execution of the
definitive Loan Documents, to syndicate all or part of its commitment hereunder
to one or more financial institutions that will become parties to such
definitive Loan Documents. The Company agrees to actively assist in achieving a
syndication that is satisfactory to BTCo and the Company. Such syndication will
be accomplished by a variety of means, including direct contact during the
syndication between your
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senior management and advisors and the proposed syndicate members. To assist
BTCo in its syndication efforts, the Company hereby agrees (a) to provide and
cause your advisors to provide BTCo and the other potential syndicate members
upon request with all reasonable information deemed necessary by BTCo to
complete syndication, including but not limited to information and evaluations
prepared by the Company or its advisors relating to the proposed Financing and
(b) to assist BTCo upon request in the preparation of an information memorandum
to be used in connection with the syndication of the proposed Financing.
To induce BTCo to issue this Commitment Letter, continue its
due diligence and the commencement of documenting the proposed Financing, and
whether or not the Financing is consummated or the Loan Documents are executed,
the Company agrees as follows:
(a) to reimburse BTCo promptly for all reasonable costs
and expenses incurred by BTCo or any of its affiliates, including, without
limitation, (i) the reasonable fees, disbursements and other charges of
attorneys and paralegals, (ii) out-of-pocket expenses of BTCo personnel, (iii)
other reasonable appraisal, valuation, environmental, title, audit, consulting,
search and filing fees and expenses and (iv) all fees, taxes, assessments and
duties in connection with the due diligence, negotiation, preparation, review,
execution, delivery, performance, collection and enforcement of this Commitment
Letter, the related fee letter and the other documentation contemplated hereby
and in connection with any other aspect of the Financing; and
(b) to indemnify and hold harmless BTCo, its affiliates,
and their respective directors, officers, agents, counsel, controlling persons
and employees ("Indemnified Persons") from and against all losses, claims,
damages, out-of-pocket costs, expenses and liabilities ("Losses") incurred by
any of them arising out of or relating to this Commitment Letter, the related
fee letter, the Financing, or any other transaction contemplated hereby or
thereby (except to the extent any such Losses are determined in a final,
non-appealable judgment by a court of competent jurisdiction to have been
caused by the gross negligence or willful misconduct of such Indemnified
Person) and to reimburse BTCo and each other Indemnified Person for any
out-of-pocket expenses (including the reasonable fees, disbursements and other
charges of attorneys and paralegals), incurred in connection with the
foregoing, including, without limitation (i) the investigation of, preparation
for or defense of any actual or threatened claim, action or proceeding arising
therefrom (including any such costs of responding to discovery requests or
subpoenas), regardless of whether BTCo or such Indemnified Person is a party
thereto or (ii) any dispute, controversy or enforcement between any Indemnified
Person and the Company or any of its affiliates, shareholders or partners.
WITHOUT LIMITING THE FOREGOING, IT IS THE EXPRESS INTENT OF THE PARTIES HERETO
THAT EACH INDEMNIFIED PERSON SHALL BE INDEMNIFIED FROM LOSSES CAUSED BY THE
ORDINARY NEGLIGENCE, WHETHER SOLE OR CONTRIBUTORY, OF SUCH INDEMNIFIED PERSON.
No Indemnified Person shall be responsible or liable to the Company or any
other person or entity for consequential, special or punitive damages which may
be alleged as a result of this Commitment Letter or the proposed Financing.
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The contents of this Commitment Letter and the related fee
letter are confidential and no disclosure of the obligations of BTCo or the
terms and conditions hereof shall be made without the prior written consent of
BTCo, except to your legal counsel, who shall, by their receipt and acceptance
hereof, agree to maintain the confidential nature hereof, and to the extent
that such disclosure may be required by securities laws or be legally compelled
(by court order, proper discovery request, subpoena, criminal or civil
investigative demand or similar process), in which event the Company will
provide BTCo with prompt written notice thereof.
BTCo reserves the right to employ the services of its
affiliates in providing services contemplated by this Commitment Letter and to
allocate, in whole or in part, to each such affiliate certain fees payable to
BTCo in such manner as BTCo and such affiliate may agree in their sole
discretion. The Company acknowledges that BTCo may share with any of its
affiliates, and such affiliates may share with BTCo, any information related to
the Company or any of the matters contemplated hereby. BTCo agrees to treat,
and cause any such affiliate to treat, all non-public information provided to
it by the Company, as confidential information in accordance with customary
banking industry practices.
BTCo's agreement to provide financing pursuant to the terms of
this Commitment Letter will expire at 5:00 p.m., (Houston time) on December 4,
1996 unless on or before that time BTCo has received a duly executed
counterpart of this Commitment Letter and the related fee letter. In addition,
this Commitment Letter shall terminate automatically if the Company or any
affiliate shall become subject to any bankruptcy proceedings. The compensation,
reimbursement and indemnification provisions contained herein and the related
fee letter shall survive any termination hereof.
This Commitment Letter shall be governed by and construed in
accordance with the laws of the State of New York. Each of the Company and BTCo
hereby waives any right it may have to a trial by jury in respect of any suit,
action, or proceeding relating to this Commitment Letter or the proposed
Financing. This Commitment Letter shall not be assignable by the Company or its
affiliates without the consent of BTCo.
Please sign the enclosed copy of this letter in the space
provided below and return the signed copy to the undersigned.
Very truly yours,
BANKERS TRUST COMPANY
By: /s/ KALLI S. HAYES
----------------------
Name: Kalli S. Hayes
Title: Vice President
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Accepted and agreed to as of December 4, 1996:
MARINE DRILLING COMPANIES, INC.
By: /s/ WILLIAM H. FLORES
---------------------------------------
Name: William H. Flores
Title: Executive Vice President
and Chief Financial Officer
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DECEMBER 2, 1996
CONFIDENTIAL
SUMMARY OF TERMS AND CONDITIONS
MARINE DRILLING COMPANIES, INC.
$100 MILLION SENIOR SECURED REVOLVING CREDIT/TERM LOAN FACILITY
BORROWER: Marine Drilling Companies, Inc. and/or
appropriate rig owning subsidiaries
GUARANTORS: All material subsidiaries of the Borrower.
AGENT: Bankers Trust Company
FACILITY: $100 million revolving credit/term loan
facility (the "Facility"). There will be a
$20 million sublimit for performance and
documentary letters of credit during the
revolving period.
The revolving period of the Facility shall
terminate on December 31, 1999. At the end of
the revolving period all outstanding loans
shall be converted into a four year
amortizing term loan, due and payable in
sixteen equal quarterly installments
beginning March 31, 2000. No letter of credit
shall remain outstanding beyond the end of
the revolving period.
USE OF PROCEEDS: Refinance $10 million of existing debt,
finance the acquisition and upgrade of
offshore drilling rigs, and for general
corporate purposes.
LENDERS: The Agent and a syndicate of financial
institutions acceptable to the Agent and the
Borrower.
FINAL MATURITY: December 31, 2003.
AVAILABLE COMMITMENT: During the revolving period, the full amount
of the Facility may be borrowed, repaid and
reborrowed in minimum amounts to be
negotiated, subject to satisfaction of
conditions precedent, covenant compliance and
notice requirements.
OPTIONAL COMMITMENT
REDUCTIONS: Upon at least three days business notice, the
Borrower may irrevocably either terminate the
Facility or permanently reduce the Facility
in integral multiples of $5 million.
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DECEMBER 2, 1996
CONFIDENTIAL
OPTIONAL PREPAYMENT: At any time and without premium or penalty,
other than breakage fees for LIBOR loans.
MANDATORY PREPAYMENTS/
COMMITMENT REDUCTIONS: All net cash proceeds from the sale of
Collateral and all cash proceeds from
insurance claims that are not reinvested in
like-kind assets pledged to secure the
Facility shall be used to repay outstanding
amounts, if any, under the Facility. In
addition, the commitment shall be permanently
reduced by an amount equal to all such net
cash proceeds and insurance proceeds.
At any time that the then current appraised
value of the Collateral is less than 2.00
times the commitment under the Facility, the
Borrower shall provide new Collateral
acceptable to the Agent or the commitment
shall be permanently reduced by an amount
necessary to result in a Collateral to
commitment ratio of at least 2.00 to 1.00,
and the Company shall repay any amounts
outstanding in excess of such reduced
commitment amount.
INTEREST RATES: Outstanding amounts shall accrue interest
according to the following pricing
alternatives, as selected by the Borrower.
BASE RATE OPTION: Interest shall be at the Base Rate plus the
Applicable Margin.
LIBOR OPTION: Interest shall be determined for periods of
1, 2, 3 or 6 months and shall be at an annual
rate equal to the London Interbank Offered
Rate plus the Applicable Margin.
APPLICABLE MARGIN: Interest rates on the Facility shall be tied
to the following ratio calculated at the end
of each calendar quarter, as follows:
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TOTAL DEBT TO BASE RATE
TOTAL CAPITALIZATION LIBOR MARGIN MARGIN
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<S> <C> <C>
Less than .15 75 basis points 0 basis points
.15 to .25 100 basis points 25 basis points
Greater than .25 125 basis points 50 basis points
</TABLE>
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DECEMBER 2, 1996
CONFIDENTIAL
For purposes of this calculation an amount
equal to all cash and cash equivalents of the
Borrower in excess of $15 million shall be
deducted from Total Debt and from Total
Capitalization.
FEES: Letter of Credit Fee: LIBOR Applicable Margin
on the face amount of each letter of credit
issued, plus 10 basis points facing fee for
issuing bank.
Commitment Fee: 30.0 basis points payable
from acceptance of commitment.
SECURITY: Perfected first priority security interest on
certain offshore drilling rigs acceptable to
the Agent with an appraised value aggregating
at least 2 times the total commitments under
the Facility (the "Collateral"). The
appraised value of any single rig that is
part of the Collateral shall not exceed 25%
of the total commitment amount.
CONDITIONS PRECEDENT: Usual and customary for transactions of this
type, including but not limited to 1) the
negotiation, execution and delivery of the
definitive credit agreement, guaranties,
security documents and other loan documents
outlined herein, mutually acceptable to the
Borrower and the Agent, 2) the creation and
perfection of valid first priority security
interest in the Collateral, 3) the delivery
of an appraisal of the Collateral
satisfactory to the Agent, 4) the
consummation of a common stock equity
offering by the Company of at least $50
million, 5) the repayment of all existing
indebtedness except for certain permitted
indebtedness to be negotiated, and 6) the
absence of material adverse change to the
Company and its subsidiaries.
REPRESENTATIONS AND
WARRANTIES: Usual and customary for facilities of this
type, including, but not limited to, legality
and enforceability of loan documentation,
existence, accuracy of financial statements
and other information, compliance with
Regulation U and other regulations, no
material litigation, title to assets,
compliance with ERISA, solvency of the
Borrower and its material subsidiaries, and
no Material Adverse Change.
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DECEMBER 2, 1996
CONFIDENTIAL
COVENANTS: Usual and customary covenants by the Borrower
and its subsidiaries for transactions of this
type, including, but not limited to, the
following:
Maintain existence and qualifications, and
comply with all applicable legal
requirements, maintain, comply with and
enforce all franchises, permits, licenses,
contracts and other rights necessary to
conduct business as presently conducted.
Deliver quarterly and annually consolidated
financial statements, prepared in accordance
with GAAP, for the Borrower and its
subsidiaries, together with an officer's
certificate demonstrating compliance with the
financial covenants, and a certificate of no
default.
Deliver periodic auditor's reports, budgets,
projections, rig status reports and other
financial information and, promptly upon
request, such additional information as may
from time to time be reasonably requested by
the Agent.
Deliver within ten days all material filings
made with the Securities and Exchange
Commission or any similar governmental
authority and other customarily provided
public communications from the Borrower, and
its subsidiaries to their stockholders.
Financial covenants shown below to be
calculated on a rolling four-quarter basis:
1) Minimum interest coverage: Interest
coverage shall be equal to or greater
than 2.00x.
2) Minimum EBITDA of $25 million. Failure to
meet this covenant terminates the unused
availability, but does not create an
event of default.
3) Maximum Debt-to-Capitalization Ratio: 40%
4) Positive Working Capital
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DECEMBER 2, 1996
CONFIDENTIAL
5) Collateral Maintenance: Maintain
Collateral coverage of at least 2.00
times the total commitments under the
Facility.
Maintain insurance with responsible insurance
companies with respect to their properties
and business as may be required by law and
such other insurance in such amounts and
types and with such deductibles as is
customarily maintained by comparable
companies in the industry.
Limitations on additional indebtedness,
mergers, consolidations and asset
dispositions; investments, advances,
dividends, and extensions of credit, all of
which to be negotiated.
The Borrower and its subsidiaries shall not
create, assume or suffer to exist any lien or
encumbrance on any assets now owned or
hereafter acquired, except: liens given in
connection with customary permitted
exceptions to be negotiated.
No transactions with related parties other
than on an arm's-length basis on terms no
less favorable to the Borrower or any of its
subsidiaries than those available from third
parties.
Provide appraisals, on an annual basis, from
an independent appraiser acceptable to the
Agent, with respect to the market value of
the Collateral. Lenders may request one
additional appraisal per year at the
Borrower's expense and an unlimited number of
additional appraisals at the Lenders'
expense.
No material change in the nature of the
business conducted by the Borrower or any of
its subsidiaries.
EVENTS OF DEFAULT: Usual and customary for transactions of this
type.
ASSIGNMENTS AND
PARTICIPATIONS: Usual and customary for transactions of this
type.
EXPENSES: All reasonable out-of-pocket expenses of the
Agent, including accounting due diligence,
appraisals and field audits and the
reasonable fees and expenses of the Agent's
counsel will be for the account of the
Borrower.
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DECEMBER 2, 1996
CONFIDENTIAL
CAPITAL ADEQUACY &
YIELD PROTECTION: Usual and customary for transactions of this
type.
INDEMNITY: Usual and customary for transactions of this
type.
COUNSEL FOR AGENT: Andrews & Kurth L.L.P.
GOVERNING LAW: State of New York
THIS IS A SUMMARY OF TERMS ONLY AND IS NOT A COMMITMENT TO LEND. THE TERMS
HEREIN ARE SUBJECT TO MORE DEFINITIVE DESCRIPTION IN THE DOCUMENTATION OF THE
FACILITY. CERTAIN TERMS REMAIN TO BE NEGOTIATED. ADDITIONAL TERMS WILL BE
SPECIFIED IN THE DOCUMENTATION OF THE FACILITY.
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