History
Pride International grew through its 2001 Marine Drilling merger, weathered restatements, sold its Latin America business and spun off Seahawk, then was acquired by Ensco in May 2011.
2001-2004: The Marine Drilling merger
Pride's record opens in May 2001, when it signed a merger agreement with Marine Drilling Companies. Marine shares were to convert one-for-one into Pride shares, and Pride would move its incorporation from Louisiana to Delaware. Pride holders were to own about 56% of the combined company and Marine holders about 44%. The two sides also granted each other options over 19.9% of their shares, with profit from the option plus any termination fee capped at $50.0 million.
The deal closed on September 13, 2001. The new Delaware company kept the Pride International name, with 400 million authorized common shares and a new rights plan (a takeover defence) that triggers at 15% ownership. About 132.8 million New Pride shares were issued in exchange for Pride Louisiana shares, about 58.7 million of them for shares issued in the Marine merger. The record is quiet from late 2001 until early 2005.
2005-2006: Restatements and rebuilding
In March 2005 Pride said it would restate its financial statements for 2000-2003 and the 2003 and 2004 quarters to correct errors, mostly from transactions recorded in 1999-2002. These included the valuation of debt assumed when it bought the rest of the Pride Carlos Walter and Pride Brazil rigs, and incorrect depreciation of rigs. The effects on net income were small, but Pride expected to report a material weakness in its internal controls.
Also in March, Pride called its 2 1/2% Convertible Senior Notes due 2007 for redemption. Holders converted about $299,969,000 of them into 18,168,903 new shares, and Pride redeemed the remaining $31,000. The debt was gone, but existing shareholders were diluted. In May Pride sold 5,976,251 shares through Lehman Brothers and bought back the same number from three First Reserve funds, so total shares outstanding did not change. On May 27 the audit committee replaced PricewaterhouseCoopers, whose 2004 report carried an adverse opinion on internal controls, with KPMG. There were no disagreements over accounting.
In November 2005 a second restatement followed, because interest rate swaps and caps on its drillship and semisubmersible loans should have been treated as derivatives. The Q3 report was late, and revolving credit lenders granted a waiver. In December Pride revised its estimates and moved its filing target to the week of December 19, 2005.
In November 2006 Pride bought Synergy Group's 70% stake in the venture owning the semisubmersibles Pride Rio de Janeiro and Pride Portland, taking its ownership to 100%. It paid $215 million in cash plus possible earn-outs tied to future dayrates. The purchase added about $283 million of U.S. Maritime Administration-guaranteed debt maturing in 2016. Pride also paid $15 million to cancel obligations under agency relationships on five Brazil rigs.
2007-2009: Selling Latin America and spinning off Seahawk
In August 2007 Pride agreed to sell its Latin America Land and E&P Services businesses to GP Investments for $1.0 billion in cash, and completed the sale on August 31, 2007. Pride agreed not to compete in Mexico, Central America and South America for three years.
In December 2008 it replaced a secured credit agreement from 2004 with a new unsecured revolver of up to $300 million, maturing December 2011, with nothing drawn. In May 2009 it agreed to sell $500 million of 8 1/2% Senior Notes due 2019. The same filing disclosed that the Pride Venezuela semisubmersible had hull corrosion, and its contract ended by mutual agreement, removing about $130 million of backlog. It also updated a long-running investigation into possible improper payments to foreign officials, where Pride had begun settlement talks with the DOJ and SEC and had accrued nothing.
On August 24, 2009 Pride spun off Seahawk Drilling, holding its mat-supported jackup rigs. Shareholders received about 11.6 million Seahawk shares, one per 15 Pride shares, and Pride put in about $47.3 million in cash. Shares on issue at year end rose modestly from 173.1 million in 2008 to 174.6 million in 2009; the beats do not explain the change.
2010-2011: Deepwater drillships and the Ensco sale
In 2010 Pride's focus was its new drillships. Deep Ocean Ascension was delivered on February 28, 2010, and Deep Ocean Clarion was expected in August. Each had a five-year BP E&P contract. In June Pride warned that the US moratorium on new deepwater drilling in the Gulf of Mexico after the Deepwater Horizon spill could delay those contracts. BP could operate elsewhere, pay a standby rate, or terminate with a make-whole payment, and Pride said it could not predict BP's actions.
In July Pride raised its revolver from $320 million to $720 million, extending maturity to July 2013. In August it agreed to sell $900 million of 6 7/8% Senior Notes due 2020 and $300 million of 7 7/8% Senior Notes due 2040. The filing did not state how the proceeds would be used.
On February 6, 2011 Pride agreed to be acquired by Ensco plc. Each Pride share would become $15.60 in cash plus 0.4778 Ensco ADSs. In May, to settle stockholder lawsuits in Delaware, Pride agreed to cut its termination fee from $260 million to $195 million.
The merger closed on May 31, 2011, with 139,142,195 shares voted for and 102,247 against. The consideration was valued at about $7.5 billion, about $2.8 billion in cash and about $4.7 billion in ADSs. Former Pride holders owned about 38% of the combined company. Pride repaid and ended its revolver, and Ensco guaranteed the 2019, 2020 and 2040 notes. As of that date Pride was an indirect wholly owned Ensco subsidiary, with its shares being delisted and deregistered. The class action settlement still needed court approval.
Written from the 26 story beats below (2001 to 1 June 2011), which come from the company's own announcements and filings.