Deep Down Executes Definitive Agreement to Acquire ElectroWave USA
HOUSTON, April 3: Deep Down, Inc. announced today it has completed due diligence and executed a definitive purchase agreement for the acquisition of substantially all of the assets of ElectroWave USA, Inc., a Texas corporation, an electronic monitoring and control systems development company operating in the energy, military, and commercial business sectors. Deep Down formed a wholly-owned subsidiary, ElectroWave USA, Inc., a Nevada Corporation, to complete the acquisition.
ElectroWave offers products and services in the electronic monitoring and control system markets for the energy, military, and commercial industries. ElectroWave designs, manufactures, installs, and commissions integrated PLC and SCADA based instrumentation and control systems, including ballast control and monitoring, drilling instrumentation, vessel management systems, marine advisory systems, machinery plant control and monitoring systems, and closed circuit television systems. ElectroWave's customers include Transocean Offshore, Diamond Offshore, Marinette Marine Corporation, VT Halter, Atlantic Marine, New York City Department of Transportation, and others. ElectroWave's equipment is installed on some of the latest generation United States Coast Guard and United States Navy vessels. Current systems are in operation in the following areas: United States Gulf of Mexico, the North Sea, Baku, Vietnam, Singapore, Nigeria, Equatorial Guinea, Cameroon, Angola, India, Egypt, the United Kingdom, Russia, Brazil, Australia, Indonesia, and the Middle East.
"We are pleased to have completed the acquisition of ElectroWave, and believe this non-dilutive transaction is extremely beneficial for the company and our shareholders. As part of the acquisition, Deep Down paid-off $356,463.50 in bank debt and $43,815.00 in current debt of ElectroWave USA (Texas), along with ongoing accounts payable and received substantially all of the assets, including inventory, fixed assets, and accounts receivable. In addition, Deep Down may issue up to an aggregate of $517,000 in Convertible Preferred Stock over the next three years, as an additional contingent purchase cost, if the operations of ElectroWave reach certain financial milestones based on net income for the fiscal years ending December 31, 2007, 2008, and 2009. Such Convertible Preferred Stock, if issued in the future, would have a conversion price equal to the greater of (a) $0.50 per share, or (b) 120% of the volume weighted average price of the last reported trades for the 20 consecutive trading days immediately prior to December 31 of the respective year for which the Convertible Preferred shares are issued," commented Robert E. Chamberlain, Jr., Deep Down's chairman.
"ElectroWave's unaudited revenue for fiscal year 2006 was approximately $3.2 million," commented Martin Kershman, ElectroWave's President. "With the support of Deep Down, our backlog is growing, and we look forward to expanding revenue in 2007."
"Deep Down's acquisition of ElectroWave completes one element of our overall corporate growth strategy to consolidate offshore industry service providers, designers, and manufacturers of subsea, surface, and offshore rig equipment in oil and petrochemical markets throughout the world", commented Ron Smith, Deep Down's chief executive officer. "ElectroWave's operation is now in the process of relocating to Deep Down's 8-acre campus, in close proximity to its 60,000-square-foot manufacturing facility, in Channelview, Texas. We believe this consolidation will maximize our collective manufacturing, service, and administrative assets into an efficient operational environment."
About Deep Down, Inc.
Deep Down specializes in the provision of innovative solutions, installation management, engineering services, support services, and storage management services for the offshore subsea control, umbilical, and pipeline industries. The company fabricates component parts for subsea distribution systems and assemblies that specialize in the development of offshore subsea fields and tie backs. These items include umbilicals, flow lines, distribution systems, pipeline terminations, controls, winches, and launch and retrieval systems, among others. Deep Down provides these services from the initial field conception phase, through manufacturing, site integration testing, installation, topside connections, and the final commissioning of a project. The Company's ElectroWave subsidiary offers products and services in the fields of electronic monitoring and control systems for the energy, military, and commercial business sectors. ElectroWave designs, manufactures, installs, and commissions integrated PLC and SCADA based instrumentation and control systems, including ballast control and monitoring, drilling instrumentation, vessel management systems, marine advisory systems, machinery plant control and monitoring systems, and closed circuit television systems. The Company's strategy is to consolidate service providers to the offshore industry, and designers and manufacturers of subsea, surface, and offshore rig equipment used by major integrated, large independent, and foreign national oil and gas companies in deep-water exploration and production of oil and gas throughout the world. Deep Down's customers include BP Petroleum, Royal Dutch Shell, Exxon Mobil Corporation, Devon Energy Corporation, Chevron Corporation, Anadarko Petroleum Corporation, Marathon Oil Corporation, Kerr-McGee Corporation, Nexen Inc., BHP, Amerada Hess, Helix, Oceaneering International, Inc., Subsea 7, Inc., Transocean Offshore, Diamond Offshore, Marinette Marine Corporation, Acergy, Veolia Environmental Services, Noble Energy Inc., Aker Kvaerner, Cameron, Oil States, Dril-Quip, Inc., Nexans, Cabett, JDR, and Duco, among others. For further company information, please visit www.deepdowninc.com and www.electrowaveusa.com
One of our most important responsibilities is to communicate with shareholders in an open and direct manner. Comments are based on current management expectations, and are considered "forward-looking statements," generally preceded by words such as "plans," "expects," "believes," "anticipates," or "intends." We cannot promise future returns. Our statements reflect our best judgment at the time they are issued, and we disclaim any obligation to update or alter forward-looking statements as the result of new information or future events. Deep Down urges investors to review the risks and uncertainties contained within its filings with the Securities and Exchange Commission.
Source: Deep Down, Inc.
CONTACT: Steven Haag, Investor Relations, +1-281-862-2201 (O),
+1-281-862-2522 (F), ir@deepdowninc.com
Web site: www.deepdowninc.com/
http://www.electrowaveusa.com/
