Superior Offshore cancels $80 million term loan, expects to repay existing loan with asset sale

By Sara Rosenberg

New York, Dec. 20 - Superior Offshore International Inc. will not be getting its previously announced $80 million term loan; however, it will still be able to repay its existing $55 million term loan using proceeds from a proposed asset sale, according to a news release.

The $80 million five-year term loan was going to be provided by AIG Equipment Finance Co., but AIG notified the company that it elected not to proceed with the transaction.

Pricing on the canceled term loan was going to be Libor plus 400 basis points, with a scheduled rate reduction upon the delivery of the Superior Achiever, the company's DP-III vessel that is under construction and is expected to go into service in the second half of 2008.

Proceeds from the term loan were going to be used to refinance the company's existing $55 million term loan with Fortis Capital Corp. and provide additional flexibility to fund future capital expenditures associated with the Superior Achiever.

The term loan was expected to close on or before Dec. 21, in accordance with the terms of the company's waiver from Fortis Capital.

In connection with entering into a letter of intent with a strategic partner for the sale of the Superior Achiever, Superior Offshore received an extension of the waiver from Fortis Bank until Jan. 21.

Superior Offshore expects to realize proceeds of over $70 million from the sale of the Superior Achiever, which would be used to repay in full the Fortis term loan and for general corporate purposes.

Upon completion of the sale, the company expects to have no outstanding term loan debt.

In addition, the company expects that its previously projected capital expenditures for 2008 will be reduced by over $30 million as a result of selling the Superior Achiever.

The sale is expected to close on or before Jan. 21.

Superior Offshore is a Houston-based provider of subsea construction and commercial diving services to the offshore oil and gas industry.

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