HOUSTON, April 22 /PRNewswire/ -- R&B Falcon Corporation (NYSE: FLC)
announced today that it has completed the placement of $300 million of new
Senior Cumulative Redeemable Preferred Stock. These securities carry a
dividend of 13 7/8% per annum and are subject to mandatory redemption by the
company on May 1, 2009. For the first five years, the company has the option
to pay dividends in kind with additional shares of preferred stock.
Purchasers of the new preferred stock also receive warrants to acquire, in the
aggregate, 10,500,000 shares of the company's common stock at a price of $9.50
per share prior to May 1, 2009. When the preferred issue was priced, the
common stock was trading at a price of $8.50 per share.
Proceeds from the offering are being used to increase the cash balance in
the Company and may be used for general corporate purposes, including capital
expenditures associated with its deepwater construction program.
Steven A. Webster, the Company's President and Chief Executive Officer,
commented, "We are pleased to complete this equity financing. In combination
with the senior debt placement in late March, this equity financing provides
further assurance that we can finish our deepwater construction program while
maintaining substantial liquidity reserves even if current weak market
conditions persist longer than expected.
"Numerous factors, including the recent OPEC production agreement, as well
as positive non-OPEC supply and demand fundamentals, point to improving
industry conditions beyond the current budget cycle. While we are confident
the long term trends will be positive, we recognize the cyclical nature of our
industry and the resulting need to carry a substantial liquidity reserve,
particularly as we are moving to the completion of our deepwater construction
program. With completion of this program, our capital spending will fall
dramatically.
"After review of several equity alternatives, we settled on this structure
for two reasons: first, maximum flexibility in maintaining liquidity through
the payment-in-kind option, and second, our desire to minimize dilution of our
common shareholders. The execution of our overall financing plan has exceeded
our original expectations, resulting in an enhanced liquidity reserve and less
common share dilution."
R&B Falcon Corporation operates the world's largest fleet of marine-based
drilling rigs servicing the international oil and gas industry. Its fleet is
composed of 136 marine-based drilling units including the industry's largest
fleets of barge and jackup rigs, and a fleet of semisubmersibles and
drillships which is among the most capable in the world. R&B Falcon also
provides turnkey and integrated services and operates mobile production units,
internationally-based land drilling rigs and an inland and offshore towing
business.
SOURCE R&B Falcon Corporation
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Related links:
http://www.rbfalcon.com
Company News On-Call:
http://www.prnewswire.com/comp/118988.html or fax,
800-758-5804, ext. 118988
CONTACT:
Charles R. Ofner of R&B Falcon Corporation,
281-496-5000
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