HOUSTON, Oct. 4 /PRNewswire-FirstCall/ -- Deep Down, Inc. (OTC Bulletin Board: DPDW) ("Deep Down" or the "Company"), an oilfield services company specializing in products and services for the deepwater and ultra-deepwater oil and gas industry, today announced that it has entered into an amendment to the purchase agreement, by and among Deep Down, Cuming Corporation ("Cuming") and the selling stockholders (the "Amendment") dated effective as of July 31, 2010, to provide for an extension of the exclusivity period and the date on which Deep Down or the selling stockholders may terminate the purchase agreement. The Amendment extended the date for which either of Deep Down or the selling stockholders may terminate the purchase agreement if the Acquisition is not completed to October 31, 2010, provided that the party wishing to terminate is not in breach of the purchase agreement. The Amendment also revised the components of the purchase price from (a) approximately $37 million in the form of a combination of cash and shares of Deep Down and the assumption of approximately $13 million of net customer deposit liabilities based upon Cuming's balance sheet as of December 31, 2009 to (b) a cash payment of $48.25 million plus or less an amount for net customer deposit assets or net customer deposit liabilities, respectively. Currently Cuming estimates this additional adjustment amount to be a net customer deposit asset of approximately $1.9 million as of October 31, 2010. Additionally, the Amendment increased the target net working capital from $9.1 million to $17.35 million.
The Company plans to finance the acquisition with a combination of debt and equity and is actively engaged in negotiating final terms with a private equity firm and a commercial bank. Nevertheless, consummation of the transaction remains subject to several conditions including Deep Down's obtaining adequate external financing to fund the purchase price.
Previously on May 3, 2010, the Company announced entry into the conditional purchase agreement to acquire Cuming. Privately-held Cuming was founded in 1980 and is a leading manufacturer of buoyancy and insulation products with a wide range of deepwater oil and gas industry applications. Cuming's operations are highly complementary with those of Deep Down's Flotation Technologies subsidiary, which produces syntactic foam products for customers in the oil and gas, defense, scientific and industrial sectors. At the closing of the transaction, Deep Down expects to acquire 100% of the stock of Cuming.
About Deep Down, Inc.
Deep Down, Inc. is an oilfield services company serving the worldwide offshore exploration and production industry. Deep Down's proven services and technological solutions include distribution system installation support and engineering services, umbilical terminations, loose-tube steel flying leads, distributed and drill riser buoyancy, ROVs and tooling, marine vessel automation, control, and ballast systems. Deep Down supports subsea engineering, installation, commissioning, and maintenance projects through specialized, highly experienced service teams and engineered technological solutions. The company's primary focus is on more complex deepwater and ultra-deepwater oil production distribution system support services and technologies, used between the platform and the wellhead. More information about Deep Down is available at http://www.deepdowncorp.com/.
Forward-Looking Statements
Information set forth in this document contain "forward-looking statements" (as defined in Section 21E of the Securities Exchange Act of 1934, as amended), which reflect Deep Down's expectations regarding future events. The forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those contained in the forward-looking statements. Such forward-looking statements include, but are not limited to, statements about the estimated cost to Deep Down for the Acquisition and the benefits of the business combination transaction involving Deep Down and Cuming, including future financial and operating results, whether and when the transactions will be consummated, the new combined company's plans, market and other expectations, objectives, intentions and other statements that are not historical facts.
The following additional factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: the ability to obtain financing and approvals for the transaction; the failure of current estimates as to the purchase costs to Deep Down for the Acquisition; the risk that any synergies from the transaction may not be realized or may take longer to realize than expected; disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; the ability to successfully integrate the businesses, unexpected costs or unexpected liabilities that may arise from the transaction, whether or not consummated; the inability to retain key personnel; continuation or deterioration of current market conditions; future regulatory or legislative actions that could adversely affect the companies; and the business plans of the customers of the respective parties. Additional factors that may affect future results are contained in Deep Down's filings with the Securities and Exchange Commission ("SEC"), which are available at the SEC's web site http://www.sec.gov/. Deep Down disclaims any obligation to update and revise statements contained in these materials based on new information or otherwise.
Deep Down, Inc.
CONTACT: Gay Stanley Mayeux, CFO of Deep Down, Inc., +1-281-517-5000,
ir@deepdowninc.com
Web Site: http://www.deepdowncorp.com/
