Deep Down Inc. (OTC: DPDW) entered into definitive agreements with a number of new and existing institutional investors in connection with a private placement of 4.1 million shares of its common stock at $1.80 per share, for total gross proceeds of $7.4 million.
The price was calculated at a slight discount to the 30-day moving average, based on the date agreed upon in mid-August.
Net proceeds will be used to reduce debt, expand its production capacity, and increase available working capital for future growth.
"Bringing in additional capital allows our company to significantly improve the manufacturing process on our core product line, resulting in greater production capacity and increased gross margins. The demand for our services and products has never been stronger. We are bidding on more work and much bigger jobs and our backlog is at a record high. We are now well-positioned to address our multi-billion dollar industry," Ron Smith, CEO, said in the release.
"We welcome our new institutional investors for their participation in helping shape the future of our company. We are now in the position to accomplish several key objectives, which include further strengthening our balance sheet and improving our working capital position to bid on future projects. Additionally, this financing will significantly improve our overall capital structure and liquidity in our stock by increasing our institutional ownership to over 30% and places Deep Down in a better position to upgrade to a national stock exchange in the future. I am very pleased with the quality of our investor group and our company's position to address the rapidly growing deepwater offshore oil industry," Gene Butler, executive chairman and chief financial officer, said in the release.
Deep Down Inc. provides specialized services to the offshore energy industry to support deepwater and ultra-deepwater exploration, development and production of oil and gas, and other maritime operations. The company is headquartered in Houston.