UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

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Trico Marine Services, Inc.

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Trico Marine Services, Inc.

3200 Southwest Freeway, Suite 2950

Houston, Texas 77027

July 3, 2008

 

Dear Stockholders:

 

On behalf of the Board of Directors, it is my pleasure to invite you to attend a Special Meeting of Stockholders of Trico Marine Services, Inc. (the “Company”), to be held on Tuesday, August 12, 2008 at the offices of Lazard Freres & Co. LLC, 600 Travis Street, Suite 2300, Houston, Texas 77002 at 9:00 am, local time.

 

Our indirect subsidiary, Trico Shipping AS, has acquired 99.74% of the outstanding capital stock of DeepOcean ASA, a Norwegian limited company listed on the Oslo Børs, for 32 Norwegian Kroner (NOK) per share (at the time of purchase, approximately $6.31 per share). DeepOcean offers comprehensive expertise and equipment capabilities in the area of subsea services. Specifically, DeepOcean provides IMR (Inspection, Maintenance & Repair), survey and construction support, subsea intervention, and decommissioning services and supplies marine trenching and cable laying services.

 

On May 16, 2008, we issued $300 million of our 6.50% senior convertible debentures due 2028 to institutional investors to finance a portion of the DeepOcean acquisition. We also paid certain members of DeepOcean management and another DeepOcean shareholder a combination of cash and phantom stock units to purchase their DeepOcean shares. The debentures are convertible into, at our election, cash, shares of our common stock or a combination of cash and shares of our common stock, and the phantom stock units are exercisable for shares of our common stock, and in certain cases at our election, for the cash equivalent of such shares.

 

At the special meeting, you will be asked to approve, for purposes of Nasdaq Marketplace Rule 4350(i)(1)(C), the issuance of all shares of the Company’s common stock that may be issuable upon the conversion and exercise of these convertible securities issued in connection with the acquisition of DeepOcean shares. Our board of directors recommends that you approve this proposal.

 

In addition, at the special meeting you will be asked to approve an increase in the authorized number of shares of common stock which we may issue from 25,000,000 to 50,000,000. This increase in the number of shares of common stock will facilitate the issuance of the shares underlying the debentures and other convertible securities issued by the Company and will provide the Company with a sufficient reserve of shares to raise future capital, fund growth, complete potential future acquisitions and for general corporate purposes. Our board of directors recommends that you approve this proposal.

 

The enclosed proxy statement explains the items of business to come formally before the special meeting. Details regarding admission to the meeting and the business to be conducted are more fully described in the accompanying notice of special meeting and proxy statement.

 

Your vote is important. We urge you to read this proxy statement carefully, and to vote by proxy for the proposals described therein, by marking, signing, dating, and returning the enclosed proxy card in the postage-paid envelope. Instructions are on the proxy card.

 

The proxy statement and the accompanying proxy card are being mailed to our stockholders on or about July 3, 2008. Whether you plan to attend the meeting or not, I encourage you to vote promptly so your shares will be represented at the meeting.

 

Thank you for your cooperation and continued support.

 

Sincerely,

 

Joseph S. Compofelice

Chairman of the Board

 

Trico Marine Services, Inc.
3200 Southwest Freeway, Suite 2950
Houston, Texas 77027

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To be held on August 12, 2008

 

To Our Stockholders:

 

A special meeting of stockholders of Trico Marine Services, Inc. (the “Company”) will be held on Tuesday, August 12, 2008 at the offices of Lazard Freres & Co. LLC, 600 Travis Street, Suite 2300, Houston, Texas 77002 at 9:00 am, local time. At the special meeting, stockholders will be asked to:

 

1. Approve, for purposes of Nasdaq Marketplace Rule 4350(i)(1)(C), the issuance of all shares of the Company’s common stock, that may be issued upon the conversion and exercise of convertible securities issued by the Company in connection with the acquisition by Trico Shipping AS of shares of DeepOcean ASA, a Norwegian limited company;

 

2. Approve an amendment to the Company’s Second Amended and Restated Certificate of Incorporation to increase the total number of authorized shares of the Company’s common stock from 25,000,000 shares to 50,000,000 shares; and

 

3. Consider any other business properly brought before the special meeting.

 

Our Board of Directors has fixed the close of business on June 27, 2008 as the record date for the determination of stockholders entitled to notice of and to vote at the special meeting or any postponement or adjournment thereof. A list of stockholders will be available for examination at the special meeting and at our corporate office for the ten days prior to the special meeting.

 

STOCKHOLDERS ARE INVITED TO ATTEND THE SPECIAL MEETING IN PERSON. IF YOU ARE UNABLE TO ATTEND, IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE SPECIAL MEETING REGARDLESS OF THE NUMBER OF SHARES YOU OWN. IT IS IMPORTANT THAT YOU READ THE PROXY STATEMENT AND FOLLOW THE INSTRUCTIONS ON YOUR PROXY CARD TO VOTE BY MAIL, TELEPHONE OR THE INTERNET. THIS WILL ENSURE THAT YOUR SHARES ARE REPRESENTED.

 

THE PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS USE AS PROVIDED IN THE PROXY STATEMENT.

 

By Order of the Board of Directors,

 

Rishi A. Varma

Corporate Secretary

 

Houston, Texas

July 3, 2008

 

 

 

TABLE OF CONTENTS

 

 

SUMMARY TERM SHEET

	•	Background on DeepOcean ASA (page 37).  Headquartered in Haugesund, Norway, DeepOcean ASA is a market leader in the provision of high quality subsea inspection, maintenance and repair, survey and construction support, and subsea intervention and decommissioning services. DeepOcean is also a leading supplier of marine trenching and cable laying services. DeepOcean controls a fleet of 14 vessels equipped with dynamic positioning systems and together with its owners has driven the development of a new type of dynamic positioning support vessel equipped with heavy weather launch and recovery systems. DeepOcean operates a fleet of modern remotely operated vehicles and trenching equipment and has pioneered the development of deepwater module handling systems used to place and install sophisticated equipment on the ocean seabed. DeepOcean supports its overseas operations through facilities in Aberdeen, Darlington and Norwich (United Kingdom), Den Helder (The Netherlands), Ciudad del Carmen (Mexico) and Singapore. DeepOcean employs over 835 people worldwide.

	•	Acquisition of DeepOcean Shares (page 27).  Trico Marine Services, Inc. (referred to in this proxy statement as the “Company” or “we”), through its indirect subsidiary Trico Shipping AS, has acquired 99.74% of the outstanding capital stock of DeepOcean for 32 Norwegian Kroner (NOK) per share (at the time of purchase, approximately $6.31 per share). Trico Shipping acquired the DeepOcean Shares as follows:

	•	Subscription to purchase 20,000,000 newly issued DeepOcean shares, representing 18.5% of the fully diluted capital stock of DeepOcean, directly from DeepOcean for a price of 32 NOK per share (approximately $6.31 per share based on the NOK/U.S. dollar exchange rate as of May 15, 2008);

	•	The acquisition of 17,495,055 DeepOcean shares, representing 16.2% of the fully diluted capital stock of DeepOcean, in the open market at a price of NOK 32 per share; and

	•	Agreements between the Company, Trico Shipping and certain members of DeepOcean’s management and another DeepOcean shareholder, pursuant to which Trico Shipping purchased 18,233,900 DeepOcean shares, representing 16.9% of the fully diluted capital stock of DeepOcean. Trico Shipping acquired these DeepOcean shares in exchange for a combination of cash and phantom stock units issued by the Company with a value of NOK 32 per share.

	•	Mandatory Offer for Remaining DeepOcean Shares (page 29).  As a result of the transactions described above, and in accordance with the Norwegian Securities Trading Act, on May 30, 2008 Trico Shipping made a mandatory cash offer for all remaining DeepOcean shares it did not own, thereby completing the acquisition of control of DeepOcean. The mandatory offer closed on June 30, 2008 and the settlement of the purchase of the tendered shares is expected to occur in the second week of July 2008. The aggregate value of the offer price plus DeepOcean’s announced dividend amount (NOK 0.50 per share) was NOK 32 per DeepOcean share.

	•	Debenture Financing (page 30).  On May 16, 2008, the Company issued $300 million aggregate principal amount of its 6.50% senior convertible debentures due 2028 to certain institutional investors. The debentures are convertible into, at our election, cash, shares of our common stock, or a combination of cash and shares of our common stock. The indenture governing the debentures provides that we have no obligation to issue shares of our common stock upon conversion of the debentures if the issuance of such shares would exceed the number of shares we may issue without stockholder approval under the applicable Nasdaq Marketplace Rules. Throughout this proxy statement, we generally refer to this restriction on the issuance of shares underlying the debentures as the “exchange cap.” Upon conversion of the debentures, holders will receive, at our election, cash, shares of our common stock or a combination thereof. Holders may convert their debentures at their option prior to the close of business on the business day immediately preceding the maturity date. Upon any conversion prior to May 15, 2013, we will pay the holder the present value of the remaining coupons owed on the principal amount of the debentures converted through and including May 15, 2013. The debentures will bear interest at a rate of 6.50% per year payable semiannually in arrears on May 15 and November 15 of each year beginning November 15, 2008. The debentures will mature on May 15, 2028, unless earlier converted, redeemed or repurchased. In this proxy statement, we refer to the debentures and the phantom stock units together as the “convertible securities,” and to the issuance of common stock upon conversion of the convertible securities as the “share issuance.”

	•	Registration Rights Agreement (page 31).  In connection with the sale of the debentures, we entered into a registration rights agreement with the purchasers of the debentures. Under the registration rights agreement, we generally have agreed to file a shelf registration statement with respect to the resale of the debentures and our common stock issuable upon conversion of the debentures and use our reasonable best efforts to cause the shelf registration statement to become effective, by specified deadlines. If the shelf registration statement is not filed with the SEC or is not declared effective by the SEC on or before these deadlines, or if it ceases to be effective or fails to be usable for its intended purpose, or it is suspended for certain defined periods of time, we will be required to pay additional interest equal to one-half of one percent (0.50%) per each 30 day period, during certain periods and subject to certain limitations. We filed the shelf registration statement with the SEC on June 16, 2008.

	•	Additional Acquisition Financing (page 32).  In connection with financing the acquisition, Trico Shipping and other subsidiaries of the Company entered into a credit agreement with Nordea Bank Finland PLC, New York Branch, as Administrative Agent and various other lenders. The credit agreement provides Trico Shipping with a $200 million revolving credit facility, is guaranteed by certain of the Company’s subsidiaries, and is collateralized by vessel mortgages and other security documents. The revolving credit facility under this credit agreement provides the Company with additional capacity to draw funds as required to finance a portion of the acquisition. The facility matures in May 2013.

	•	The Charter Amendment (page 58).  Our Second Amended and Restated Certificate of Incorporation currently authorizes the issuance of up to 25,000,000 shares of common stock and 5,000,000 shares of preferred stock. Our Board has approved, subject to stockholder approval, an amendment to our charter to increase the number of authorized shares of common stock to 50,000,000. The number of authorized shares

		of preferred stock would not change. The additional authorized shares of common stock, if and when issued, would have the same rights and privileges as the shares of common stock previously authorized. A copy of the proposed charter amendment is attached to this proxy statement as Annex A. Throughout this proxy statement, we generally refer to the proposal to increase the authorized shares of our common stock as the “charter amendment.”

	•	No Appraisal Rights (page 38 and 59).  No appraisal rights are available under the Delaware General Corporation Law for our stockholders in connection with the proposal to approve the share issuance or the charter amendment proposal.

	•	Our Board of Directors’ Recommendation (page 39 and 59).  Our board of directors has determined unanimously that the share issuance (Proposal 1) and the charter amendment (Proposal 2) are advisable and in the best interests of our stockholders. Accordingly, the board of directors recommends that stockholders vote “FOR” the proposal to approve the share issuance and “FOR” the proposal to approve the charter amendment.

	•	Regulatory Matters (page 39).  The acquisition and share issuance are not subject to the Hart Scott Rodino Act of 1976, as amended, or any other material federal or state regulatory requirement or approval, other than stockholder approval under the Nasdaq Marketplace Rules related to the share issuance that is described elsewhere in this proxy statement. The mandatory offer document that Trico furnished to DeepOcean’s shareholders was subject to review and approval by the Oslo Børs (the Oslo Stock Exchange). In addition, a notification of the acquisition was made with the Norwegian Competition Authority.

	•	Accounting Treatment (page 39).  The acquisition will be accounted for as a purchase business combination by the Company under accounting principles generally accepted in the United States.

	•	Tax Treatment (page 39).  Our security holders will continue to hold their Company securities and, as a result will not recognize any gain or loss as a result of the acquisition.

	•	Exemption from Registration (page 38).  The phantom stock units issued to certain members of DeepOcean’s management and another DeepOcean shareholder, and shares of our common stock issuable in certain circumstances upon the exercise of the phantom stock units, have not been registered under the Securities Act of 1933, as amended, in reliance on the exemptions from registration provided by Section 4(2) of the Securities Act, and Regulation S promulgated under the Securities Act. The debentures and shares of our common stock issuable in certain circumstances upon the conversion of the debentures have not been registered under the Securities Act, in reliance on the exemption from registration provided by Section 4(2) of the Securities Act and Regulation D promulgated under the Securities Act.

	•	the creation of what we believe is one of the world’s largest providers of “one-stop” integrated subsea services;
	•	the expansion of the Company’s presence in the growing subsea services market with the Company’s global platform which may provide a stage for additional organic growth and acquisitions;
	•	the entry into the subsea services business with a better competitive profile for the combined company than the towing and supply market;
	•	the synergies expected to arise from an acquisition that is complementary with the November 2007 acquisition of Active Subsea;
	•	the ability to leverage the Company’s existing infrastructure, vessels and resources to provide specialized service offerings to new customers;
	•	the addition of earnings and cash flow stability to the Company;
	•	DeepOcean’s proven operational track record and subsea engineering expertise;
	•	the addition of a seasoned management team with specialized knowledge of the subsea industry;
	•	DeepOcean’s fleet of modern subsea capable equipment and vessels; and
	•	the further improvement in the Company’s international diversification which improves growth prospects.

										Combined Pro Forma				Combined Pro Forma
										with 54% Ownership of				with 100% Ownership of
		The Company				DeepOcean				DeepOcean				DeepOcean
Fiscal Year Ended December 31, 2007:
Net income (loss)		$	62,931			$	18,855			$	(2,812	)		$	(5,750	)
Diluted earnings per share(1)		$	4.16			$	0.21			$	(0.19	)		$	(0.39	)
Three months ended March 31, 2008:
Net Income		$	10,901			$	1,822			$	2,485			$	170
Diluted earnings per share(1)		$	0.73			$	0.02			$	0.15			$	0.01
Historical book value per share(1)(2)		$	29.64			$	2.54			$	29.46			$	29.46

(1)		Historical diluted earning per share is calculated by dividing net income from continuing operations for the period by the weighted average shares of the Company’s common stock outstanding for the period. DeepOcean does not have any other equity instruments that could effect its diluted earnings per share calculation. The Company’s diluted shares outstanding for the periods presented is as follows:

						Three Months
		Year Ended				Ended
		December 31,				March 31,
		2007				2008
		(Share amounts in thousands)
Basic shares outstanding			14,558				14,411
Add incremental shares for:
Assumed exercise of outstanding options and vesting of nonvested shares			188				133
Assumed exercise of stock warrants			391				375
Total number of diluted shares outstanding			15,137				14,919

		For the combined pro forma calculations, there is no assumed dilutive effect for the year ended December 31, 2007 because of the inclusion the assumed conversion of additional shares would make the calculation anti-dilutive (increase the earnings per share amount) considering the net loss from continuing operations for the period.

(2)		Historical book value per share is computed by dividing stockholders equity by outstanding common shares on each December 31, 2007 and March 31, 2008. The combined pro forma for the Company with 54% ownership of DeepOcean includes the approximate 1.5 million shares of the Company’s common stock issued in the acquisition. The combined pro forma for the Company with 100% ownership of DeepOcean is the same as the amount for 54% ownership as the tender offer for the remaining 46% of shares is for cash.

(3)		The Company did not pay any dividends during the year ended December 31, 2007 or during the three months ended March 31, 2008. DeepOcean did not pay any dividends during the three months ended March 31, 2008. DeepOcean did pay a cash dividend the equivalent of NOK 0.30 per share or $0.05 per share for the year ended December 31, 2007.

		Sales Price per Share
		High				Low
2008
First quarter		$	42.50				30.37
Second quarter (through June 27, 2008)			43.42				32.26
2007
First quarter		$	39.23			$	29.56
Second quarter			43.41				37.02
Third quarter			42.37				29.04
Fourth quarter			40.34				29.65
2006
First quarter		$	34.15			$	25.25
Second quarter			36.26				28.16
Third quarter			38.94				31.80
Fourth quarter			40.15				31.10

		Market Prices per Share								Market Prices per Share
		(NOK)								(USD)
Year Ended December 31,		High				Low				High				Low
2007			NOK 30.4				NOK 22.0			$	5.3			$	4.0
2006			29.5				18.2				4.7				2.8
2005			16.6				18.9				2.8				2.5
2004			N.A				N.A				N.A				N.A
2003			N.A				N.A				N.A				N.A

		Market Prices per Share								Market Prices per Share
		(NOK)								(USD)
		High				Low				High				Low
2008
First quarter			NOK 28.5				NOK 21.3			$	5.3			$	3.8
Second quarter (through June 27, 2008)			32.3				22.5				6.4				4.3
2007
First quarter			NOK 29.8				NOK 26.8			$	4.8			$	4.2
Second quarter			30.4				26.2				5.1				4.4
Third quarter			29.5				24.6				5.2				4.1
Fourth quarter			29.0				22.0				5.3				4.0
2006
First quarter			NOK 20.6				NOK 18.6			$	3.1			$	2.8
Second quarter			22.5				18.2				3.7				2.9
Third quarter			27.0				19.0				4.2				3.0
Fourth quarter			29.5				22.4				4.7				3.3

		Market Prices per Share								Market Prices per Share
		(NOK)								(USD)
		High				Low				High				Low
June 2008 (through June 27, 2008)			NOK 32.3				NOK 31.3			$	6.4			$	6.0
May 2008			32.2				25.0				6.4				4.9
April 2008			26.0				22.5				5.1				4.3
March 2008			26.0				23.0				5.0				4.4
February 2008			26.0				23.5				5.0				4.2
January 2008			28.5				21.3				5.3				3.8
December 2007			29.0				22.0				5.3				4.0

		Successor Company												Predecessor Company(1)
										Period from				Period from
										March 15, 2005				January 1, 2005
		Years Ended								through				through				Years Ended
		December 31,								December 31,				March 14,				December 31,
		2007				2006				2005				2005				2004				2003
		(Dollars in thousands, except per share data)
Statement of Operations Data:
Revenues		$	256,108			$	248,717			$	152,399			$	29,886			$	112,510			$	123,521
Operating income (loss)			66,630				88,390				41,816				879				(48,719	)			(135,501	)
Reorganization costs			—				—				—				(6,659	)			(8,617	)			—
Fresh-start adjustments			—				—				—				(219,008	)			—				—
Interest expense			(3,258	)			(1,286	)			(6,430	)			(1,940	)			(33,405	)(4)			(30,159	)
Interest income			14,132				4,198				615				—				423				323
Net income (loss)			62,931	(6)			58,724				20,100				(61,361	)			(95,952	)(4)(5)			(164,398	)
Earnings (loss) per common share:
Basic		$	4.32			$	4.01			$	1.78			$	(1.66	)		$	(2.60	)		$	(4.51	)
Diluted		$	4.16			$	3.86			$	1.74			$	(1.66	)		$	(2.60	)		$	(4.51	)
Balance Sheet Data:
Working capital (deficit)		$	140,004			$	151,068	(2)		$	46,259	(2)		$	NA	(3)		$	(26,660	)(2)		$	(27,740	)(2)
Property and equipment, net			473,614				231,848				225,646				NA	(3)			459,211				487,019
Total assets			681,744	(7)			435,322				344,222				NA	(3)			550,755				585,191
Debt, including current portion			160,545				9,863				46,538				NA	(3)			147,131				380,166
Liabilities subject to compromise			—				—				—				NA	(3)			275,179				—
Stockholders’ equity		$	390,222			$	312,338				222,432				NA	(3)			63,841				142,031
Cash Flows Data:
Cash flows from operations		$	112,476			$	101,731			$	27,174			$	9,168			$	(14,761	)		$	(9,265	)
Cash flows from investing activities			(235,269	)			(23,227	)			4,292				(650	)			(5,144	)			28,215
Cash flows from financing activities			130,361				(16,261	)			1,299				(2,596	)			7,048				(3,340	)
Effect of exchange rates on cash			9,722				712				(701	)			62				135				117
Net increase (decrease) in cash		$	17,290			$	62,955			$	32,064			$	5,984			$	(12,722	)		$	15,727

(1)		We exited bankruptcy protection on March 15, 2005. In accordance with Statement of Position 90-7, Financial Reporting by Entities in Reorganization Under the Bankruptcy Code, we adopted “fresh-start” accounting as of March 15, 2005. Fresh-start accounting is required upon a substantive change in control and requires that the reporting entity allocate the reorganization value to our assets and liabilities in a manner similar to that which is required under Statement of Financial Accounting Standards No. 141, Business Combinations. Under the provisions of fresh-start accounting, a new entity has been deemed created for financial reporting purposes.

(2)		Includes amounts outstanding under our Norwegian kroner (“NOK”) revolving credit facility (the “NOK Revolver”), which are classified as current liabilities.

(3)		Not applicable due to fresh-start accounting, which was applied at an interim date that was not the end of a required reporting period.

(4)		Includes a charge of $2.8 million for accelerated amortization of debt discounts.

(5)		Includes a charge of $7.2 million for the accelerated amortization of deferred financing costs.

(6)		As more fully described in Note 9 to our Consolidated Financial Statements incorporated herein by reference, a recent Norwegian tax legislation provides for a tax exemption on certain profits earned after January 1, 2007.

(7)		Includes working capital and construction in progress of $247.6 million in connection with the acquisition of Active Subsea ASA in Norway.

		Three Months Ended March 31,
		2008				2007
		(Dollars in thousands, except per share data)
		Unaudited
Statement of Operations Data:
Revenues		$	59,175			$	61,969
Operating income			11,504				20,783
Interest expense, net			—				(783	)
Interest income			1,578				2,718
Net income			10,901				14,584
Earnings per common share:
Basic		$	0.76			$	0.99
Diluted		$	0.73			$	0.95
Balance Sheet Data:
Working capital		$	157,897			$	323,583
Property and equipment, net			520,969				233,408
Total assets			742,501				610,043
Debt, including current portion			172,531				159,849
Liabilities subject to compromise			—				—
Stockholders equity			442,417				335,314
Cash Flow Data:
Cash flows from operations		$	5,608			$	26,308
Cash flows from investing activities			(23,108	)			(27,008	)
Cash flows from financing activities			23,628				145,226
Effect of exchange rates on cash			5,562				1,301
Net increase (decrease) in cash			11,690				145,827

		Three Months Ended
		March 31,								Years Ended December 31,
		2008				2007				2007				2006				2005				2004				2003
		(NOK in thousands, except per share data )								(NOK in thousands, except per share data )
Statement of Operations Data:
Revenues			455,689				501,683				1,938,074				1,479,605				549,129				324,153				228,522
Operating income			31,262				42,586				214,948				182,232				62,624				14,926				4,010
Financial costs			(25,171	)			(25,450	)			(108,091	)			(38,684	)			(13,793	)			(4,247	)			1,246
Financial income			4,673				863				18,294				18,539				16,879				2,685				1,116
Net income			9,688				15,383				110,546				115,079				47,356				9,720				572
Earnings per common share:
Basic			0.11				0.17				1.25				1.56				1.27				0.43				0.03
Diluted			0.11				0.17				1.25				1.56				1.27				0.43				0.03
Balance Sheet Data:
Working capital (deficit)			129,642				(50,533	)			138,391				(8,102	)			241,130				15,128				11,977
Property and equipment, net			1,467,701				1,486,137				1,457,732				1,166,670				350,529				101,541				69,622
Total assets			3,047,237				2,965,074				3,136,067				2,706,673				955,887				184,412				141,300
Debt, including current portion			1,415,860				1,196,675				1,567,483				1,001,056				174,882				68,819				42,488
Stockholders equity			1,094,753				1,148,589				1,178,910				1,141,938				652,839				61,170				40,998
Cash Flow Data:
Cash flows from operations			40,833				111,470				161,520				63,993				93,247				27,687				(3,086	)
Cash flows from investing activities			(140,969	)			(359,600	)			(685,686	)			(1,206,267	)			(32,952	)			(21,807	)			(11,994	)
Cash flows from financing activities			(27,445	)			284,130				695,244				976,542				187,924				8,643				1,682
Effect of exchange rates on cash			5,501				(2,452	)			(20,647	)			(3,614	)			(16	)			—				—
Net increase (decrease) in cash			(122,080	)			33,548				150,431				(169,347	)			248,202				14,343				(13,398	)
NOK/USD currency			0.196398				0.164034				0.184809				0.159870				0.147739				0.164449				0.149813

		Three Months Ended				Year Ended
		March 31, 2008				December 31, 2007
		(Dollars in thousands, except per share data)
Statement of Operations Data:
Revenues		$	144,834			$	586,657
Operating income (loss)			11,837				49,485
Interest expense, net			(11,963	)			(47,250	)
Interest income			1,949				16,627
Net income (loss)			170				(5,750	)
Earnings (loss) per common share:
Basic		$	0.01			$	(0.39	)
Diluted		$	0.01			$	(0.39	)
Balance Sheet Data at March 31, 2008:
Working capital deficit		$	(27,152	)			N/A	(a)
Property and equipment, net			913,969				N/A
Total assets			1,704,435				N/A
Debt,including current portion			975,373				N/A
Liabilities subject to compromise			—				N/A
Stockholders equity			486,476				N/A

(a)		Amounts not applicable as pro forma balance sheet requirement is for the most recent reporting period only.

 

QUESTIONS AND ANSWERS ABOUT THE MATTERS SUBJECT TO VOTE

Q:		WHY AM I RECEIVING THIS PROXY STATEMENT?

A:		Our board of directors is soliciting your proxy to vote at the special meeting because you owned shares of our common stock at the close of business on June 27, 2008, the record date for the meeting, and are entitled to vote at the meeting. This proxy statement, along with a proxy card or a voting instruction form, is being mailed to stockholders beginning July 3, 2008. This proxy statement contains information relating to your vote at the special meeting. You do not need to attend the special meeting to vote your shares if you submit a proxy.

Q:		WHEN AND WHERE WILL THE MEETING BE HELD?

A:		The meeting will be held on Tuesday, August 12, 2008 at the offices of Lazard Freres & Co. LLC, 600 Travis Street, Suite 2300, Houston Texas 77002 at 9:00 am, local time.

Q:		WHAT PROPOSALS ARE BEING VOTED ON AT THE SPECIAL MEETING?
A:		You are being asked to approve, for purposes of Nasdaq Marketplace Rule 4350(i)(1)(C), the issuance of all shares of our common stock that may be issued upon the conversion and exercise of certain convertible securities, as further described in this proxy statement.
		In addition, you are also being asked to approve an amendment to our Second Amended and Restated Certificate of Incorporation to increase the total number of authorized shares of our common stock from 25,000,000 shares to 50,000,000 shares.
		There is no other business currently planned to be brought before the special meeting.
Q:		WHY DID WE ISSUE THESE CONVERTIBLE SECURITIES?

A:		Our indirect subsidiary, Trico Shipping AS, has acquired 99.74% of the outstanding capital stock of DeepOcean ASA, a Norwegian limited company listed on the Oslo Børs, for 32 Norwegian Kroner (NOK) per share (at the time of purchase, approximately $6.31 per share). Trico Shipping acquired the shares through the direct purchase of newly issued shares from DeepOcean, the purchase of DeepOcean shares from certain DeepOcean shareholders, including certain members of DeepOcean’s management and the purchase of shares pursuant to a mandatory cash offer pursuant to Norwegian law.

		In order to raise capital to fund a portion of Trico Shipping’s purchase of these shares and to make a mandatory offer in accordance with Norwegian law to acquire the remaining issued and outstanding shares of DeepOcean, we issued $300 million of debentures to certain institutional investors. We also paid certain members of DeepOcean management, and another DeepOcean shareholder, a combination of cash and phantom stock units to purchase their DeepOcean shares.

		The debentures are convertible into, at our election, cash, shares of our common stock, or a combination of cash and shares of our common stock, and the phantom stock units are exercisable for shares of our common stock, and in certain cases at our election, for the cash equivalent of such shares.
Q:		WHY DID WE ACQUIRE CONTROL OF DEEPOCEAN?
A:		We intend to expand our presence in the subsea services market. In November 2007, we acquired Active Subsea ASA, a Norwegian offshore services company with a fleet of eight medium-sized multi-purpose platform supply vessels under construction. Our board of directors and management believe that our acquisition of DeepOcean will create what we believe is one of the world’s largest providers of integrated, “one-stop” subsea services. We expect to leverage our existing and new build vessels, infrastructure, and resources to bring DeepOcean’s specialized service offering to customers throughout our operating regions, accelerating DeepOcean’s growth across our global platform. We believe that the acquisition of DeepOcean will provide our stockholders with an opportunity to participate in, a vertically integrated company with significant growth potential.
Q:		HOW DID WE ACQUIRE A MAJORITY INTEREST IN DEEPOCEAN?
A:		In May 2008, Trico Shipping acquired 58,428,955 shares of DeepOcean’s capital stock, representing approximately 54% of the total capital stock of DeepOcean on a fully diluted basis as follows:

		• DeepOcean issued 20,000,000 new shares to Trico Shipping by DeepOcean at a price of 32 Norwegian Kroner (NOK) per share (approximately $6.31 per share based on the NOK/USD exchange rate on May 15, 2008, the date the DeepOcean shares were issued);
		• Trico Shipping purchased 18,233,900 DeepOcean shares from certain members of DeepOcean’s management and West Supply IV AS (a DeepOcean shareholder), in exchange for a combination of cash and our phantom stock units with a combined total value of NOK 32 per share; and
		• Trico Shipping purchased 20,195,055 DeepOcean shares in the open market at a price of NOK 32 per share.
		The total purchase price to acquire these 58,428,955 shares of DeepOcean capital stock was approximately NOK 1,869,726,560, or approximately $372,455,000 based on the NOK/USD exchange rate in effect on the date of each such payment.

		In addition, subsequent to May 15, 2008, Trico Shipping purchased an additional 6,750,000 DeepOcean shares in open market purchases at a price of NOK 32 per share.

		On June 13, 2008, Trico Shipping purchased approximately 32.6% of the outstanding shares of DeepOcean from DOF ASA, the second largest DeepOcean shareholder at the time, for NOK 32 per share in cash. The total purchase price to acquire these 35,220,000 shares of DeepOcean capital stock from DOF was approximately NOK 1,127,040,000, or approximately $216,322,500 based on the NOK/USD exchange rate in effect on June 12, 2008 of NOK 5.21 to $1.

Q:		ARE YOU ATTEMPTING TO ACQUIRE THE REMAINING DEEPOCEAN SHARES?

A:		Yes. On May 30, 2008 Trico Shipping launched a mandatory offer to acquire the remaining shares of DeepOcean, for a consideration of NOK 32 per share in cash (reduced by any dividend a tendering shareholder is entitled to receive), in accordance with Norwegian law. The offer closed on June 30, 2008 and the purchase of the tendered shares is expected to be settled in the second week of July 2008. DeepOcean’s board of directors recommended that DeepOcean’s shareholders accept the offer. Pursuant to Norwegian law, since Trico Shipping acquired more than 90% of the outstanding DeepOcean shares in the mandatory offer, it has the right to require that the remaining shareholders of DeepOcean sell their DeepOcean shares to Trico Shipping. As of June 27, 2008, Trico Shipping has acquired 99.74% of DeepOcean’s shares, and Trico Shipping intends to make a compulsory acquisition of the remaining DeepOcean shares.

		If, in the mandatory offer and any compulsory acquisition, Trico Shipping acquires all of the remaining DeepOcean shares that it does not currently own for NOK 32 per share, the total purchase price that Trico Shipping would have paid for DeepOcean would be approximately NOK 3,460,706,976, or approximately $689,384,000 based on the NOK/USD exchange rate in effect on the date of each payment of the purchase price, and assuming a NOK/USD exchange rate of 5.02 to 1 on the settlement date of the mandatory offer.
Q:		HOW ARE YOU PAYING FOR THE ACQUISITION?
A:		We obtained financing for the acquisition through a combination of our cash on hand, borrowings under our new and existing credit facilities and the issuance of the $300 million of debentures. In addition, we issued phantom stock units to certain members of management and West Supply in exchange for their DeepOcean shares.
Q:		WHY ARE YOU SEEKING STOCKHOLDER APPROVAL FOR THE ISSUANCE OF COMMON STOCK UNDERLYING THE CONVERTIBLE SECURITIES?
A:		We are seeking stockholder approval for this issuance under the Nasdaq Marketplace Rules. Because our common stock is listed for trading on the Nasdaq Global Market, we are subject to these rules. Under Nasdaq Rule 4350(i)(1)(C), we must seek stockholder approval if we issue common stock or convertible securities (other than a public offering for cash) in connection with an acquisition of another company’s stock or assets, and the number of shares issued will be greater than or equal to 20% of our shares outstanding before the issuance.

		Pursuant to the debentures and phantom stock units, we could, but would not be obliged to, issue up to 9,003,971 shares of our common stock. This number assumes the conversion of the debentures entirely into shares of our common stock at their initial conversion rate (which could increase upon any adjustment in the conversion rate pursuant to the terms of the debentures), and the settlement of all phantom stock units in shares of our common stock. Under the indenture governing the debentures, we have the right, at our sole discretion, to settle the conversion in cash, shares or a combination of cash and shares. The issuance of 9,003,971 shares would represent approximately 60% of the 15,105,358 shares outstanding at the time of the issuance of the convertible securities. Under Rule 4350(i)(1)(C), because the issuance of these shares of our common stock upon conversion and exercise of the convertible securities is in connection with the financing of the acquisition of the DeepOcean shares, Nasdaq requires stockholder approval if the issuance of the shares is greater than 20% of our outstanding shares before the issuance.
		Currently, the indenture governing the debentures provides that we have no obligation to issue shares of our common stock upon conversion of the debentures if the issuance of such shares would exceed the number of shares we may issue without stockholder approval under the applicable Nasdaq Marketplace Rules. Pursuant to a securities purchase agreement entered into with the purchasers of the debentures, we have agreed to seek stockholder approval of the issuance of all shares of our common stock upon conversion of the debentures.
Q:		WHY ARE YOU SEEKING TO INCREASE THE AUTHORIZED COMMON STOCK?
A:		Our charter permits us to issue up to 25,000,000 shares of common stock and 5,000,000 shares of preferred stock. Based on the current number of issued and outstanding shares of our common stock, and the shares that are issuable under a variety of warrants, options, and that may be issuable under our convertible securities in certain circumstances, it will be necessary to increase the authorized number of shares of our common stock.
		In addition, when our current charter was adopted in 2005, we were emerging out of bankruptcy and were a smaller company with fewer shareholders. Since that time, our operations have expanded and we are now a larger, more diverse company with more avenues to expand our business through strategic acquisitions and to raise capital to fund these acquisitions and our operations. The board of directors believes that an increase in the authorized shares will provide it with flexibility to issue shares without delay for proper business purposes, including other potential strategic acquisitions or to raise funds for necessary capital expenditures. The board believes that these benefits outweigh any possible disadvantages of dilution to existing stockholders.
Q:		WILL I RECEIVE ANYTHING PURSUANT TO THE ACQUISITION?
A:		Holders of our securities will continue to hold our securities they currently own, and will not receive any consideration in connection with the acquisition.
Q:		WHAT HAPPENS IF EITHER PROPOSAL IS NOT APPROVED?
A:		If the stockholders do not approve the share issuance proposal, then the convertible securities issued in connection with the acquisition would remain outstanding and (i) the phantom stock units would still be exercisable for shares of our common stock, or in some instances cash, subject to their terms, and (ii) the debentures would still be convertible into cash, shares of our common stock, or a combination of cash and shares of our common stock, subject to their terms, including the exchange cap. However, in that event, it is possible that certain of the phantom stock units issued to members of DeepOcean’s management could be exercised only for cash and a portion of the indebtedness under the debentures could not be converted into our common stock and would be convertible only into cash. If stockholders approved the share issuance proposal, then, all phantom stock units could be exercised for shares of our common stock, and all debenture holders would be able (at our election) to convert all of their debentures into our common stock, or, at our election, into cash or a combination of cash and shares of our common stock. If such debenture holders chose to do so, and we elected to allow conversion on such terms, then we could eliminate the entire $300 million of indebtedness upon full conversion of the debentures, and the Company would have the flexibility to use more of its cash flow for general working capital purposes, rather than to service this indebtedness.
		If stockholders do not approve the share issuance proposal, it will not affect the DeepOcean acquisition.

		If the stockholders do not approve the charter amendment, then we may be unable to issue, upon conversion or exercise, all shares underlying convertible securities that are currently outstanding in certain circumstances, including shares issuable upon exercise of stock options awarded to our employees. We might also be required to find alternative means to finance future acquisitions or other capital needs, or may be unable to consummate such acquisitions at all. If these other alternatives were available, they might require additional borrowing and may not be available on favorable terms.
Q:		WHO IS SOLICITING MY PROXY?
A:		Our board of directors is soliciting your proxy to vote at the special meeting of stockholders. By completing and returning the proxy card or voting instruction card, you are authorizing the proxy holders to vote your shares at our special meeting as you have instructed them on the card.
Q:		HOW MANY VOTES DO I HAVE?
A:		You have one vote for every share of our common stock that you owned on the record date.
Q:		HOW MANY VOTES CAN BE CAST BY ALL STOCKHOLDERS?

A:		As of the record date, we had 15,165,595 shares of common stock issued and outstanding. Accordingly, a total of 15,165,595 votes, in the aggregate, are entitled to be voted at the meeting.

Q:		HOW MANY SHARES MUST BE PRESENT TO HOLD THE MEETING?

A:		Our Bylaws provide that a majority of the outstanding shares of stock entitled to vote, present in person or represented by proxy, constitutes a quorum at a meeting of our stockholders. As of the record date, 7,582,798 shares of common stock constitute a majority of our outstanding stock entitled to vote at the meeting.

Q:		HOW DO YOU DETERMINE WHETHER A SHARE IS PRESENT AT THE MEETING?
A:		A share is present at the special meeting if the record holder of that share either votes it in person at the meeting or has properly submitted a proxy in accordance with this proxy statement authorizing the proxy holders to vote such share. In addition, abstentions will be counted for purposes of determining whether a quorum is present at the meeting. If you hold your shares in street name and do not give voting instructions to your broker with respect to the proposals, your shares will not be considered present at the special meeting for purposes of determining whether a quorum is present.
		We urge you to provide instructions to your broker to ensure that your votes will be counted on these important matters.
Q:		WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A STOCKHOLDER OF RECORD AND AS A BENEFICIAL OWNER?
A:		If your shares are registered directly in your name with our transfer agent, then you are considered, with respect to those shares, the “stockholder of record.” The proxy statement and proxy card have been directly mailed to you by us.
		If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial owner” of shares held in “street name.” The proxy statement has been forwarded to you by your broker, bank or nominee who is considered, with respect to those shares, the stockholder of record. As the beneficial owner, you have the right to direct your broker, bank or nominee how to vote your shares by mailing the voting instruction form included in the mailing to your custodian; you may also vote your proxy by telephone or internet or by following their instructions for voting on the voting instruction form.
Q:		WHAT VOTE IS REQUIRED TO APPROVE EACH ITEM?
A:		Approval of the share issuance (Proposal 1) requires the affirmative vote of a majority of the shares present in person or by proxy at the special meeting. Absentions will effectively count as votes “against” this proposal.

		Approval of the charter amendment (Proposal 2) requires the affirmative vote of a majority of the outstanding shares entitled to vote at the special meeting. Absentions or a failure to return a proxy will effectively count as votes “against” this proposal.

		If you are a record holder and you sign a proxy card, return it to us but give no direction regarding a voting matter, the shares will be voted “FOR” Proposal 1 in this proxy statement and “FOR” Proposal 2 in this proxy statement.

Q:		HOW DO I VOTE?
A:		Voting in Person at the Meeting.  If you are a stockholder of record as of June 27, 2008 and attend the special meeting, you may vote in person at the meeting. If your shares are held by a broker, bank or other nominee (i.e., in “street name”) and you wish to vote in person at the meeting, you will need to contact your broker, bank or other nominee that holds your shares of record to obtain a legal proxy allowing attendance and voting at the special meeting.
		Voting by Proxy for Shares Registered Directly in the Name of the Stockholder.  If you hold your shares in your own name as a holder of record, you may vote your shares by signing, dating and mailing the enclosed proxy card in the pre-paid envelope we have provided.
		Voting by Proxy for Shares Registered in Street Name.  If your shares are held in street name, you will receive instructions from your broker, bank or other nominee which you must follow in order to have your shares of common stock voted by mail, telephone or internet.
Q:		CAN I REVOKE MY PROXY?
A:		If you give a proxy, you may revoke it in one of three ways:
		• submit a valid new proxy card with a later date to our Corporate Secretary, Trico Marine Services, Inc., 3200 Southwest Freeway, Suite 2950, Houston, Texas 77027;
		• notify our Corporate Secretary in writing before the special meeting that you have revoked your proxy; or
		• vote in person at the special meeting, in which case your previously submitted proxy will not be used.
Q:		WHO PAYS FOR SOLICITING PROXIES?
A:		We bear the cost of preparing, assembling and mailing the notice, proxy statement and proxy card for the special meeting. Proxies may be solicited by mail, personal interview, telephone and other means of communication. We may also solicit by means of press releases and advertisements in periodicals. Banks, brokerage houses and other nominees or fiduciaries will be requested to forward the soliciting material to their principals and to obtain authorization for the execution of proxies and we will reimburse their reasonable out-of-pocket expenses.

		We have retained Mackenzie Partners, Inc. to solicit proxies as well as for other shareholder services. We have paid Mackenzie Partners, Inc. a fee of approximately $8,500 and will reimburse them for reasonable out-of-pocket expenses. We have also agreed to indemnify Mackenzie against certain liabilities including liabilities arising under the federal securities laws. Mackenzie has informed us that it intends to employ approximately 25 persons to solicit proxies. We will, at our expense, request banks, brokers and other custodians, nominees and fiduciaries to forward proxy soliciting material to the beneficial owners of shares held of record by such persons. Our expenses related to the solicitation are currently expected to be approximately $75,000, of which $0 has been spent to date.

		The Securities and Exchange Commission (“SEC”) permits a single set of proxy statements to be sent to any household at which two or more stockholders reside if they appear to be members of the same family. Each stockholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information stockholders receive and reduces mailing and printing expenses.
		A number of brokerage firms have instituted householding. As a result, if you hold your shares through a broker and you reside at an address at which two or more stockholders reside, you will likely be receiving only one proxy statement unless any stockholder at that address has given the broker contrary instructions. However, if

		any such beneficial stockholder residing at such an address wishes to receive a separate proxy statement in the future, or if any such beneficial stockholder that elected to continue to receive separate proxy statements wishes to receive a single proxy statement in the future, that stockholder should contact his broker or send a request to our Corporate Secretary at: Trico Marine Services, Inc., 3200 Southwest Freeway, Suite 2950, Houston, TX 77027, telephone number (713) 780-9926. We will deliver, promptly upon written or oral request to the Corporate Secretary, a separate copy of this proxy statement to a beneficial stockholder at a shared address to which a single copy of the documents was delivered.
Q:		COULD OTHER MATTERS BE DECIDED AT THE MEETING?
A:		Under our Bylaws, the business to be transacted at a special meeting shall be confined to the purposes stated in the notice of the meeting. Our board of directors does not expect to bring any other matter before the special meeting, and our board is not aware of any other matter that may be considered at the meeting. However, if any other matter does properly come before the meeting, the proxy holder will vote the proxies in his discretion.
Q:		WHAT HAPPENS IF THE MEETING IS POSTPONED OR ADJOURNED?
A:		Your proxy will still be good and may be voted at the postponed or adjourned meeting. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting will be given to each stockholder of record entitled to vote at the meeting. You will still be able to change or revoke your proxy until it is voted.
Q:		DO I NEED TO BRING ANY DOCUMENTATION TO ATTEND THE SPECIAL MEETING?
A:		If you plan to attend the meeting in person, please bring proper identification and proof of ownership of your shares. If your shares are held in street name, you will need to bring a letter from your broker stating that you owned our stock on the record date or an account statement showing that you owned our stock on the record date.
Q:		WHERE CAN I FIND THE VOTING RESULTS OF THE MEETING?
A:		We intend to announce preliminary voting results at the special meeting. We will publish the final results in our Quarterly Report on Form 10-Q for the third quarter of 2008, which we expect to file on or before November 10, 2008. You can obtain a copy of the Form 10-Q by logging on to our website at www.tricomarine.com, by calling the SEC at (800) SEC-0330 for the location of the nearest public reference room, or through the EDGAR system at www.sec.gov. Our website does not constitute part of this document.
Q:		WHEN ARE DIRECTOR NOMINATIONS AND STOCKHOLDER PROPOSALS DUE FOR THE 2009 ANNUAL MEETING?
A:		If you want to nominate candidates for election as director at the 2009 annual meeting, you must submit written notice of your director nomination(s) to our Corporate Secretary at 3200 Southwest Freeway, Houston Texas 77027. Your notice must be delivered to or mailed and received by our Corporate Secretary by March 30, 2009, and must otherwise comply with the notice procedures and other requirements of the SEC’s rules governing stockholder proposals.
		If you want us to include a proposal in our proxy statement and form of proxy for the 2009 annual meeting, you must submit written notice of your proposal to our Corporate Secretary. Your notice must be delivered to or mailed and received by our Corporate Secretary no later than December 30, 2008 and must otherwise comply with the notice procedures and other requirements set forth in our Bylaws. We will include in our proxy statement and form of proxy only proposals meeting the requirements of applicable SEC rules.
		If you want to present a proposal at the 2009 annual meeting but do not wish to have it included in our proxy statement and form of proxy, you must submit written notice to our Corporate Secretary. Your notice must be delivered to or mailed and received by our Corporate Secretary no later than March 30, 2009 and must otherwise comply with the notice and other requirements set forth in our Bylaws.

		If you would like a copy of our Company’s bylaws, please contact our Corporate Secretary. Failure to comply with our applicable procedures and deadlines set forth in the Bylaws or the SEC rules may preclude your proposed director nominees and your proposal from being considered at the next annual meeting.
Q:		WHO CAN HELP ANSWER MY QUESTIONS?
A:		If you have questions about the acquisition, the share issuance, the charter amendment or any of the other matters discussed in this proxy statement, you may write or call Trico Marine Services, Inc., 3200 Southwest Freeway, Suite 2950, Houston, TX 77027, telephone number (713) 780-9926, Attention: Corporate Secretary or you may contact our proxy solicitor, MacKenzie Partners, Inc., at 1-800-322-2885 or proxy@mackenziepartners.com.

 

FORWARD-LOOKING STATEMENTS

	•	our objectives, business plans or strategies, and projected or anticipated benefits or other consequences of such plans or strategies;
	•	projected or anticipated benefits from acquisitions, including the DeepOcean acquisition;
	•	the results, timing, outcome or effect of pending or potential litigation and our intentions or expectations with respect thereto and the availability of insurance coverage in connection therewith;
	•	our ability to repatriate cash from foreign operations if and when needed; and
	•	projections involving revenues, operating results or cash provided from operations, or our anticipated capital expenditures or other capital projects.

 

RISK FACTORS
RELATING TO THE DEEPOCEAN ACQUISITION AND RELATED FINANCING

 

All phases of our operations are subject to a number of uncertainties, risks and other influences, many of which are beyond our ability to control or predict. Any one of such influences, or a combination, could materially affect the results of our operations and the accuracy of forward-looking statements made by us. In considering whether to vote or instruct your vote to be cast on the proposals described in this proxy statement, you should carefully consider the risk factors described in our Registration Statement on Form S-3 filed on June 16, 2008, and the additional risks described below, together with all of the other information included in this proxy statement.

 

A substantial number of shares of our common stock will be eligible for future sale upon conversion of the debentures and exercise of the phantom stock units, and the sale of those shares could adversely affect our stock price.

 

Pursuant to the terms of the registration rights agreement that we entered into with the purchasers of the debentures on May 16, 2008, the form of which is attached as Exhibit 4.3 to the Report on Form 8-K we filed with the Commission on May 16, 2008, we will use our reasonable best efforts to register for resale 7,422,069 shares of common stock which are issuable, in certain circumstances (and assuming conversion at the initial conversion rate), to such purchasers upon conversion of the debentures. The debentures are convertible into, at our election, cash, shares of our common stock, or a combination of cash and shares of our common stock. In addition, pursuant to the terms of the registration rights agreement that we entered into with West Supply IV on May 22, 2008, filed as Exhibit 10.4 to our Current Report on Form 8-K/A filed on June 16, 2008, we agreed to use commercially reasonable efforts to register 1,352,558 shares of our common stock issuable, in certain circumstances, to West Supply IV upon the exercise of the phantom stock units for resale on certain registration statements that the Company may file (including the registration statement to register the shares underlying the debentures). A substantial number of shares of our common stock may be eligible for public sale upon conversion of the debentures and exercise of the phantom stock units once the registration statement to register the resale of shares of our common stock underlying such convertible securities become effective. If a significant portion of these shares were to be offered for sale at any given time, the public market for our common stock and the value of our common stock owned by our stockholders could be adversely affected.

 

You will experience substantial dilution if the convertible debentures are converted and the phantom stock units are exercised, for shares of our common stock.

 

The convertible debentures issued in connection with the DeepOcean acquisition are convertible into, at our election, cash, shares of our common stock, or a combination of cash and shares of our common stock, at an initial conversion rate of 24.74023 shares per $1,000 principal amount of debentures, subject to adjustment. If converted, the holders will receive, at our election, cash, shares or a combination thereof. In addition, the phantom stock units issued to West Supply IV and certain members of DeepOcean management represent the right to receive an aggregate of up to 1,581,902 shares of our common stock. If shares of our common stock are issued upon conversion of the debentures and exercise of the phantom stock units the result would be a substantial dilution to our existing stockholders of both their ownership percentages and voting power.

 

The mandatory offer for outstanding shares of DeepOcean will go forward even if DeepOcean experiences a material adverse change.

 

Trico Shipping has acquired 99.74% of the fully diluted capital stock of DeepOcean. In accordance with Norwegian law, Trico Shipping made a mandatory cash offer for all shares of DeepOcean that remain outstanding. As required under Norwegian law, the offer is not conditional and we do not have the right to terminate the offer if we or DeepOcean experience a material adverse change in our or its financial condition, results of operations or otherwise prior to the settlement of the purchases under the mandatory offer.

Our acquisition of shares of DeepOcean and our mandatory offer to acquire the remaining outstanding shares of DeepOcean will result in significant costs to us which could reduce our near term cash flows and our future operating results.

 

We are required to pay our costs related to the acquisition of shares of DeepOcean and the mandatory offer to acquire the remaining shares of DeepOcean, such as amounts payable to legal and financial advisors and independent accountants, and such costs are significant. Incurring these expenses will reduce our near term cash flows and future operating results.

 

If we and DeepOcean are not able to integrate our combined operations into a cohesive operating unit in a timely manner, or at all, the anticipated benefits of the acquisition may not be realized in a timely fashion, or at all, and our existing businesses may be adversely affected.

 

The success of our acquisition of DeepOcean will depend, in part, on our ability to realize the anticipated revenue enhancements, growth opportunities and synergies of combining the operations of DeepOcean with our operations and our ability to effectively utilize the additional resources we will have following the acquisition. The acquisition involves risks related to the integration and management of acquired technology and operations and personnel. The integration of our and DeepOcean’s operations will be a complex, time-consuming and potentially expensive process and may disrupt the combined company’s business if not completed in a timely and efficient manner. During such process, the combined company may encounter difficulties in connection with, or as a result of, the following:

 

 

This integration may be especially difficult and unpredictable because our executive headquarters are based in Houston, and DeepOcean’s principal business operations are based in Haugesund, Norway. We may not succeed in integrating DeepOcean’s business with our own. If we fail to successfully integrate our businesses or fail to realize the intended benefits of the acquisition, our business would be adversely impacted and the market price of our common stock could decline. To achieve the anticipated benefits of the acquisition, we will need to, among other things:

 

 

Our assessment of the potential synergies and cost savings is preliminary and subject to change. We may need to incur additional costs to realize the potential synergies and cost savings, and there can be no assurance that such costs will not materially exceed our current expectations.

 

The integration of DeepOcean with our existing business will make substantial demands on our resources, which could divert needed attention away from our other operations.

 

Our integration of DeepOcean with our existing business will make substantial demands on our management, operational resources and financial and internal control systems. Our future operating results will depend in part on our ability to continue to implement and improve our operating and financial controls. The devotion of management’s time to the integration of DeepOcean with our business may limit the time available to management to attend to other operational, financial and strategic issues of our company. If our post-acquisition management focuses too much time, money and effort on the integration of the operations and assets of us and DeepOcean, they may not be able to execute the combined company’s overall business strategy or realize the anticipated benefits of the acquisition.

Our failure to retain current key employees and attract additional qualified personnel for the combined company’s operations could prevent us from implementing our business strategy or operating our business effectively and from achieving the full benefits of the acquisition.

 

In addition to the abilities and continued services of our current executive management team, the combined company’s success will depend, in large part, on the abilities and continued service of each of the current executives of DeepOcean, as well as other key employees of us and DeepOcean. We have limited experience in the subsea services market and have not previously developed a complete offering of subsea services that would be integrated with our current marine support vessel operations. We will depend on the technical and other experience of DeepOcean’s management and employees in the subsea market to fully implement our strategy. Although we and DeepOcean each have employment agreements in place with certain of our current executive officers, the combined company may not be able to retain the services of these individuals and the loss of their services, in the absence of adequate replacements, would harm our ability to implement the combined company’s business strategy and operate its business effectively.

 

In addition, in order to support the combined company’s continued growth, we will be required to effectively recruit, develop and retain additional qualified management, engineers and other technical employees. If we are unable to attract and retain additional necessary personnel, our plans for the combined company’s growth could be delayed or hindered. Competition for such personnel is intense, and there can be no assurance that we will be able to successfully attract, assimilate or retain sufficiently qualified personnel for the combined company. The failure to retain and attract necessary personnel could prevent us from achieving the full benefits of the DeepOcean acquisition and from executing the combined company’s planned growth strategy.

 

We incurred significant financial obligations as a result of the acquisition of DeepOcean shares and the financing transactions we entered into in connection with this acquisition, and our inability to satisfy these obligations could materially and adversely affect our financial results and financial condition and harm our business.

 

As the majority owner of DeepOcean, we will be exposed to DeepOcean’s liabilities, including its outstanding debt which was NOK 1,341,701,185 as of May 31, 2008, or $263,114,311 (based on a NOK/USD exchange rate of approximately 5.01 to $1 on May 31, 2008). DeepOcean has issued senior unsecured debt securities due 2009 in the aggregate principal amount of NOK 300 million, or approximately $59,880,000 (based on a NOK/USD exchange rate of approximately 5.01 to $1 on May 31, 2008). Upon a change of control of DeepOcean (which includes our acquisition of DeepOcean), each holder of the bonds has the right to require DeepOcean to repurchase its bonds for 100% of their principal value plus accrued interest. To date, holders of approximately 33% of the bonds have requested DeepOcean repurchase their bonds. DeepOcean’s obligation to repurchase the bonds, will reduce the cash flow available to it for other corporate purposes.

 

In connection with our acquisition of DeepOcean and the related financing transactions, DeepOcean is required to obtain waivers from its lenders with respect to $18,000,000 of its outstanding debt. If DeepOcean is unable to obtain such waivers from its lenders, the lenders could require the immediate repayment of such indebtedness. In that case, we could be required to fund the repayment of such indebtedness which could reduce the cash flow that may otherwise be available to us to achieve our business strategy, which could harm our business.

 

To finance the acquisition of DeepOcean, Trico Supply and certain of our other subsidiaries entered into a $200 million credit agreement and we issued $300 million in convertible debentures. Trico Shipping also entered into a NOK 260,000,000 short term credit facility (approximately $50,987,300 based on a NOK/USD exchange rate of approximately 5.01 to $1). Accordingly, our borrowings and debt service requirements have increased dramatically in connection with the acquisition of DeepOcean. Our inability to satisfy our debt service requirements could cause us to be in default under one or more of our credit facilities. If we default or breach our obligations under our credit facilities, we could be required to pay a higher rate of interest on our borrowings. Our lenders could also accelerate our repayment obligations or require us to repay all amounts under the credit facilities. Accordingly, our default of obligations under our credit facilities would significantly increase our cash flow requirements and could cause us to incur substantial damages, which could harm our business.

Our acquisition of DeepOcean shares and the financing transactions we entered into in connection with this acquisition will place a significant debt burden on us, which could limit our flexibility in managing our business and expose us to certain risks.

 

Trico Shipping’s acquisition of shares of DeepOcean and the mandatory offer to acquire the remaining outstanding shares of DeepOcean it does not currently own involve the incurrence of substantial additional debt. If Trico Shipping acquires all of the remaining DeepOcean shares that its does not currently own for NOK 32 per share, the total purchase price that Trico Shipping will have paid for DeepOcean would be approximately NOK 3,460,706,976, or approximately $689,384,000, based on the NOK/USD exchange rate in effect on the date of each payment of the purchase price, and assuming a NOK/USD exchange rate of 5.02 to 1 on the settlement date of the mandatory offer. We and our subsidiaries have borrowed or entered into agreements to borrow an aggregate of approximately $551 million in connection with the DeepOcean acquisition. As a result of becoming more leveraged on a consolidated basis, our flexibility in responding to adverse changes in economic, business or market conditions may be adversely affected, which could have a material adverse effect on our results of operations.

 

Our high degree of leverage may have important consequences to you, including the following:

 

 

The occurrence of any one of these events could have a material adverse effect on our business, financial condition, results of operations, prospects and ability to satisfy our obligations under our credit facilities.

 

The absence of financial statements prepared in accordance with U.S. generally accepted accounting principles makes it more difficult to obtain a meaningful and accurate understanding of how the acquisition of DeepOcean will affect us, our operating results and our financial condition.

 

DeepOcean is a Norwegian company and its financial statements were prepared in accordance with the International Financial Reporting Standards as issued by the International Accounting Standards Board and additional Norwegian financial reporting requirements and not in complete compliance with generally accepted accounting principles in the United States, or U.S. GAAP. There could be significant differences between the financial reporting standards used by DeepOcean and U.S. GAAP. Therefore, a review of DeepOcean’s financial statements may not provide an understanding of DeepOcean’s financial condition and operating results that is as complete and accurate as a review of our financial statements may provide of our financial condition and operating results.

 

We could be exposed to unknown liabilities of DeepOcean, which could cause us to incur substantial financial obligations which could harm our business.

 

If DeepOcean has liabilities of which we are not aware, as a majority stockholder of DeepOcean we would be exposed to these liabilities and would have little or no recourse against the parties from whom we purchased the DeepOcean shares. If such unknown liabilities exist, we could incur substantial financial obligations, which could adversely affect our financial condition and harm our business.

Sales of DeepOcean’s services could decline or be inhibited if customer relationships are disrupted by the acquisition, which could harm our business.

 

The acquisition of DeepOcean may disrupt relationships between DeepOcean and some of its customers. DeepOcean’s customers or potential customers may delay or alter buying patterns during the pendency of and following our mandatory offer to acquire the remaining outstanding shares of DeepOcean. These customers or potential customers may increase their purchase of competing services relative to services purchased from DeepOcean. Any significant delay or reduction in orders for DeepOcean’s services could cause the combined company’s sales to decline following the acquisition, which could cause our operating results to be lower than expected. This could harm our business and cause a decline in our stock price.

 

Sales of DeepOcean’s services could decline or be inhibited if its supplier relationships are disrupted by the acquisition of DeepOcean shares, which could harm our business.

 

The acquisition of DeepOcean shares may disrupt relationships between DeepOcean and its suppliers. DeepOcean’s suppliers may delay or alter delivery patterns during the pendency of and following our mandatory offer to acquire the remaining outstanding shares of DeepOcean. Any significant delay or reduction in deliveries of supplies to DeepOcean could cause a disruption in DeepOcean’s business following the acquisition, which could negatively impact our operating results. This could harm our business and cause a decline in our stock price.

 

Our acquisition of DeepOcean may not succeed because of competitive forces in the subsea services market.

 

The market for subsea services is highly competitive. While price is a factor, the ability to acquire specialized vessels and equipment, to attract and retain skilled personnel, and to demonstrate a good safety record are also important. Several of our competitors in the subsea market are substantially larger and have greater financial and other resources than we have. We believe that other vessel owners are beginning to add subsea service offerings to their customers. If other companies acquire vessels or equipment, or begin to offer integrated subsea services to customers, levels of competition may increase and our business could be adversely affected.

 

The subsea services market may be subject to additional risk factors of which we are not currently aware.

 

Because we have limited experience in the subsea services market, there may additional risks that we will be subject to in the subsea services market of which we are not currently aware as a result of our acquisition of DeepOcean. Such unknown risks could, if they exist and are significant, adversely affect our financial condition and harm our business.

 

General

 

Our board of directors is seeking stockholder approval of the issuance of all shares of our common stock that may be issued upon conversion of the convertible securities that were issued in connection with the acquisition. The following discussion provides background information with respect to the acquisition, the terms of the convertible securities issued in connection with the acquisition, the Nasdaq stockholder approval requirement and certain other related matters. All U.S. dollar amounts set forth in the following discussion are based on the NOK/U.S. dollar exchange rate on May 15, 2008 of NOK 5.075 to $1.

 

Background of the Transaction

 

The terms of the agreements and arrangements described below with respect to the acquisition, the financing and related matters were the result of negotiations between representatives of the Company and DeepOcean and certain of DeepOcean shareholders. The following is a brief discussion of the background of these negotiations, the acquisition and related transactions.

The Company’s recent business strategy has been to increase its presence in the subsea services market, which we believe is the fastest growing segment of offshore spending. This strategic focus is the result of our belief that customers are seeking integrated subsea solutions, including both vessel and service delivery. We believe this approach is advisable from a competitive standpoint, as other vessel owners are beginning to add subsea service offerings to their customers. Our current focus is to combine our vessels with subsea equipment and our engineering expertise to provide integrated subsea solutions.

 

To initiate this strategy we acquired Active Subsea ASA, a Norwegian offshore services company, with a fleet of eight medium-sized, multi-purpose platform supply vessels under construction, in November 2007. Subsequently, our efforts focused on the review of additional opportunities to expand our presence in the subsea services market both by organic growth and through potential acquisitions of existing business. We concentrated on finding a transformative transaction that would establish the Company as a leader in integrated subsea service solutions by adding subsea engineering, procurement, installation and construction service capabilities to our existing subsea vessels. We believe this would position the Company to benefit from the high growth in the subsea services market and use the Company’s existing resources to provide this expanded service offering to new customers on a global basis.

 

Consistent with the Company’s growth strategy of expanding subsea and service capabilities, shortly after the acquisition of Active Subsea, the board of directors and management evaluated a number of potential acquisition candidates. Among these was DeepOcean, a company with whom the Company had charter arrangements as a result of the acquisition of Active Subsea for two newbuild subsea vessels that are to be delivered in 2008 that will eventually account for approximately $17 million in annual revenue to Trico. As the Company continued discussions with DeepOcean with respect to the charter arrangements for two subsea vessels during late 2007 and early 2008, discussions centered around the capabilities of DeepOcean and their international growth strategy. Specifically, DeepOcean possessed capabilities that were consistent with the Company’s growth strategy — higher market growth rate, solutions-based service offerings, a less capital intensive business model, and a seasoned management team already in place.

 

In mid-December 2007, DOF ASA, a Norwegian provider of offshore and subsea services to the oil and gas industry and competitor of DeepOcean, announced that it had increased its ownership of DeepOcean shares from approximately 7% to nearly 40%, just below the then applicable ownership percentage threshold that would have required DOF to make a mandatory offer to purchase the remaining outstanding DeepOcean shares from its shareholders, in accordance with the Norwegian Securities Trading Act.

 

DOF also publicly announced its intention to pursue a merger between DeepOcean and DOF Subsea ASA, DOF’s majority owned subsidiary. Thereafter, DOF and DeepOcean entered into negotiations, which included discussions about appointing a DOF representative to DeepOcean’s board of directors. Thereafter in late-December, we understand that DeepOcean entered into non-exclusive discussions with DOF concerning a possible merger with DOF Subsea.

 

On January 23, 2008, DOF and DeepOcean entered into a standstill agreement. Pursuant to the agreement, DOF and agreed, until February 15, 2008, not to vote for or initiate any change in the composition of the DeepOcean board that was not recommended by the DeepOcean board. The agreement permitted DOF to nominate and vote in favor of a new member of the board of DeepOcean at the extraordinary general assembly of the DeepOcean shareholders on February 12, 2008. DeepOcean and its subsidiaries and affiliates agreed not to make any decisions to purchase or charter vessels or dispose of material assets, other than in the normal course of business.

 

On January 28, 2008, the nominating committee of DeepOcean’s board of directors nominated Oddvar Strangeland, a former DOF executive, to serve on DeepOcean’s board of directors. DeepOcean and DOF also agreed to put any discussions regarding a potential merger on hold while the DeepOcean board evaluated all of its strategic alternatives. On February 19, 2008, Gerhard Oluf Skåleskog, DeepOcean’s Chief Financial Officer, reported that DeepOcean and DOF were continuing their merger discussions.

 

Following DOF’s announcement, DeepOcean’s board retained Carnegie ASA as its financial advisor to advise the board on all strategic alternatives that might be available to DeepOcean, including DOF’s proposed merger between DeepOcean and DOF Subsea. Beginning in late February 2008, discussions commenced among Carnegie,

DeepOcean, the Company and the Company’s advisors. During these communications, the parties discussed possible strategic transactions between the Company and DeepOcean, including a potential acquisition by the Company or its affiliates of a majority of DeepOcean shares.

 

On February 28, 2008, Joseph S. Compofelice, the Company’s Chairman of the Board and Chief Executive Officer met with DeepOcean’s Chairman, Johan Rokstad, and Carnegie to discuss a broad range of potential strategic arrangements between the two companies. The Company and its advisors then began reviewing publicly available documents related to DeepOcean and its operations to evaluate the advisability of a potential strategic transaction between the Company and DeepOcean.

 

The Company’s board of directors held a meeting on March 12, 2008, to further evaluate the possible DeepOcean acquisition. The board considered that the DeepOcean acquisition would permit the Company to leverage its global markets, increase its vessel utilization and profitability and better serve customers with a more complete offering of integrated subsea services. DeepOcean also emerged as the leading potential acquisition candidate because the Company believed that DeepOcean itself was interested in exploring strategic alternatives to its relationship with DOF. The Company’s board evaluated a number of alternative transaction structures related to a transaction with DeepOcean, including acquiring a minority interest in DeepOcean in connection with the formation of a global strategic alliance between the two companies, and the purchase of certain of DeepOcean’s assets. The board’s review also considered issues related to any such strategic transaction with DeepOcean, including, among other matters, the structure of any acquisition of DeepOcean shares in light of DOF’s ownership of nearly 40% of the outstanding shares, and possible alternatives that may be available to the Company to finance the transaction.

 

Representatives of the management from the Company and DeepOcean and their financial advisors met on March 13, 2008 to explore the possible terms of a transaction. The parties discussed the structure of any such acquisition and a per share purchase price based on the then market price and the Company’s views of DeepOcean’s entity valuation.

 

On April 3, 2008, representatives of both management teams and their financial advisors met again. In this meeting, the parties agreed to continue to negotiate towards a framework for an offer to present to the DeepOcean board of directors. On April 8, 2008, the parties entered into a confidentiality agreement related to the exchange of certain business information in connection with the proposed transaction. Thereafter, DeepOcean granted the Company and its representatives access to information regarding DeepOcean’s operations necessary for the Company to conduct confirmatory due diligence.

 

On April 18, 2008, the Company’s board of directors held another meeting to review and discuss the proposed terms of the DeepOcean acquisition. As proposed, the transaction would involve four elements. First, the Company (through an indirect subsidiary) would purchase 20,000,000 newly issued DeepOcean shares for NOK 32 in cash, which would represent approximately 18.5% of DeepOcean’s total share capital outstanding upon such issuance. The proposed purchase and issuance would be conditioned upon, among other things, the successful registration of the share issuance with the Norwegian Companies Register.

 

Second, the Company or its subsidiary would purchase shares from members of DeepOcean’s management, as well as from West Supply IV AS, an affiliate of Østensjø Rederi AS, that was represented on DeepOcean’s board by the Chairman Johan Rokstad. These DeepOcean shares to be purchased from management and West Supply would represent approximately 16.9% of the total share capital of DeepOcean on a fully diluted basis. It was anticipated that these shares would be purchased from management and West Supply for a combination of cash and equity securities of the Company valued at NOK 32 per DeepOcean share.

 

Third, the Company or its subsidiary would purchase additional DeepOcean shares in the open market for NOK 32 in cash in an amount sufficient to secure a majority interest in DeepOcean. The Company’s agreement to purchase DeepOcean shares from management, West Supply and in the open market would be conditioned on the issuance of 20 million shares by DeepOcean to Trico Shipping and the successful registration of such issuance with the Norwegian Companies Register.

Fourth, the preceding purchases would be followed by a mandatory cash offer to purchase the remaining outstanding DeepOcean shares in accordance with Norwegian law at NOK 32 per share in cash (reduced by any dividend a tendering shareholder is entitled to receive).

 

The NOK 32 per share purchase price for the DeepOcean shares was the result of the Company and its advisors’ negotiations with DeepOcean’s management and DeepOcean’s advisors taking into account a number of factors, including the parties’ perceptions as to the value of DeepOcean, the market price of the shares at such time and the need to provide consideration sufficient to secure majority ownership.

 

Commencing in early May 2008, the Company, through its financial advisor and pursuant to confidentiality agreements, solicited proposals from a number of potential institutional investors proposing material terms on which such investors would finance approximately $300 million of the acquisition price for the DeepOcean shares through a private placement of convertible debt of the Company. The Company and its advisors reviewed the proposals and negotiated the terms with the proposed investors contemplating the issuance of the convertible debt over the next several days.

 

On May 7 and 8, 2008, representatives of the Company and DeepOcean management teams met for further due diligence reviews. On May 8, 2008, the Company furnished DeepOcean’s management and West Supply with the proposed material terms for the purchase of their shares. The Company proposed to purchase such shares in exchange for consideration valued at NOK 32 and consisting of a combination of cash and phantom stock units exercisable for shares of the Company’s common stock, or in some cases, cash. Over the next several days, the parties continued to discuss and negotiate the details of the proposed series of transactions. Concurrently, the Company also continued to negotiate the documentation issuance of the debentures with the proposed investors and the related debt financing with its bank lenders.

 

On May 14, 2008, the Company’s board of directors unanimously approved the acquisition and the related financing. The Company thereafter signed a securities purchase agreement with the debenture investors and entered into the $200 million credit agreement with Nordea.

 

At a DeepOcean board meeting held on May 15, 2008, its directors approved a series of measures to facilitate Trico’s offer for all outstanding shares in DeepOcean at NOK 32 per share, including the issuance of 20 million DeepOcean shares to Trico Shipping. Concurrently, Trico Shipping entered into agreements with management and West Supply for the purchase of the 18,233,900 DeepOcean shares held by such shareholders, on the terms and conditions described above in this proxy statement. Trico Shipping also entered into agreements to purchase an additional 17,495,055 DeepOcean shares in the open market. When coupled with the 20 million shares purchased directly from DeepOcean, Trico Shipping purchased or entered agreements to purchase an aggregate of 55,728,955 DeepOcean shares on May 15, 2008, representing approximately 51.5% of DeepOcean’s outstanding shares.

 

The Company and DeepOcean announced the acquisition and related transactions by a press release dated May 16, 2008, and the Company reported the acquisition, debt financing and related matters in its Current Report on Form 8-K filed May 16, 2008, as amended by its Current Report on Form 8-K/A filed May 19, 2008.

 

After May 15, 2008, Trico Shipping purchased an additional 2,700,000 DeepOcean shares in open market purchases for NOK 32 per share in cash, increasing its ownership of DeepOcean to approximately 54%. On May 28, 2008, Trico Shipping entered into a credit facility agreement with Carnegie Investment Bank AB Norway Branch, pursuant to which Carnegie agreed to make a NOK 260,000,000 short term credit facility (approximately $51,232,000 based on a NOK 5.075 to $1 exchange rate) available to Trico Shipping. Trico Shipping has used such borrowings to partially finance the acquisition and expects to use a portion for general corporate purposes. On May 30, 2008, the Company’s indirect wholly owned subsidiary, Trico Shipping launched its mandatory offer to acquire the remaining outstanding shares of DeepOcean.

 

On June 13, 2008, Trico Shipping acquired 35,220,000 DeepOcean shares from DOF, representing approximately 32.6% of the outstanding shares of DeepOcean for a purchase price of 1,127,040,000, or NOK 32 per share. Also on June 13, 2008, Trico Shipping purchased an additional 4,050,000 DeepOcean shares, representing approximately 3.75% of the outstanding shares of DeepOcean, in the open market for an aggregate purchase price of NOK 129,600,000, or NOK 32 per share. Trico settled these purchases on June 18, 2008.

DeepOcean’s ordinary annual meeting of its shareholders was held on June 13, 2008. Mr. Compofelice, the Company’s Chairman and Chief Executive Officer, was appointed as Chairman of DeepOcean’s board of directors, to replace Oddvar Stangeland on the board, and Johan Rokstad was appointed Vice Chairman of DeepOcean’s board of directors.

 

On June 30, 2008 the mandatory cash offer for the remaining Deep Ocean shares was closed. The purchase of the tendered shares is expected to be settled in the second week of July 2008.

 

Acquisition

 

Initial Purchase

 

On May 15, 2008, the Company, through its wholly owned subsidiary Trico Shipping, agreed to acquire an aggregate of 55,728,955 shares of common stock of DeepOcean ASA, a Norwegian public limited company listed on the Oslo Børs (the Oslo Stock Exchange). These DeepOcean shares represent 51.5% of the fully diluted capital stock of DeepOcean. Trico Shipping AS acquired these DeepOcean shares pursuant to the following agreements and arrangements:

 

(a) Subscription to purchase 20,000,000 newly issued Shares (the “New Shares”), representing 18.5% of the fully diluted capital stock of DeepOcean, directly from DeepOcean for a price of 32 Norwegian Kroner (NOK) per share (approximately $6.31 per share). The DeepOcean shares Trico Shipping purchased from DeepOcean pursuant to the subscription were issued by DeepOcean pursuant to a resolution of its board of directors without a separate subscription agreement between Trico Shipping and DeepOcean;

 

(b) The acquisition of 17,495,055 Shares, representing 16.2% of the fully diluted capital stock of DeepOcean, in the open market at a price of NOK 32 per share;

 

(c) Agreements with certain members of DeepOcean’s management and another DeepOcean shareholder to purchase 18,233,900 DeepOcean shares, representing 16.9% of the fully diluted capital stock of DeepOcean. These 18,233,900 DeepOcean shares were purchased pursuant to the following agreements:

 

1. West Supply Share Purchase Agreement.  The Company, Trico Shipping and West Supply IV AS, a Norwegian limited liability company, entered into a share purchase agreement dated May 15, 2008. Pursuant to this share purchase agreement, Trico Shipping purchased 15,045,000 DeepOcean shares from West Supply (representing approximately 13.9% of the fully diluted capital stock of DeepOcean) for a per share purchase price consisting of cash in the amount of NOK 16 and phantom stock units of the Company having a value of NOK 16 per share (with any fractional share paid in cash). The total consideration paid to West Supply to purchase its 15,045,000 DeepOcean shares was NOK 240,720,104.59 (approximately $47,433,000) and 1,352,558 of the Company’s phantom stock units. If Trico Shipping purchases additional DeepOcean shares for a purchase price greater than NOK 32 per share prior to expiration of the mandatory offer and, as a result, must increase the mandatory offer price under applicable Norwegian law, then Trico Shipping will also pay the difference in cash to West Supply.

 

2. West Supply Phantom Stock Units Agreement.  The Company entered into a phantom stock units agreement with West Supply dated May 20, 2008, pursuant to which the Company issued 1,352,558 phantom stock units to West Supply. Each phantom stock unit permits the holder to acquire one share of the Company’s common stock for no additional consideration upon exercise. The phantom stock units are not exercisable until 181 days after the completion and settlement of the mandatory offer and thereafter until the fifth anniversary of such completion and settlement of the mandatory offer. The phantom stock units issued to West Supply are subject to certain U.S. legal restrictions on foreign ownership of U.S. maritime companies, which are included in the phantom stock unit agreements.

 

3. West Supply Registration Rights Agreement.  The Company entered into a registration rights agreement with West Supply dated May 20, 2008. Pursuant to this agreement, the Company agreed to use its commercially reasonable efforts to cause any shares of the Company’s common stock issued or issuable upon the exercise of West Supply’s phantom stock units to be registered under the Securities Act of 1933, as amended, subject to certain conditions and exceptions set forth in the agreement.

4. Management Share Purchase Agreements.  The Company and Trico Shipping entered into certain share purchase agreements with certain members of DeepOcean’s management (and entities controlled by such members of management). Pursuant to each such agreement, Trico Shipping agreed to purchase from the applicable member of DeepOcean’s management the DeepOcean shares owned by such person (or his controlled entity) for a per share purchase price consisting of cash in the amount of NOK 19.20 and phantom stock units of the Company having a value of NOK 12.80 per share. The total consideration paid to these members of DeepOcean management was NOK 61,227,575.38 (approximately $12,065,000) and 229,344 of the Company’s phantom stock units. If Trico Shipping purchases additional DeepOcean shares for a purchase price greater than NOK 32 per share prior to the expiration of the mandatory offer and, as a result, must increase the mandatory offer price under applicable Norwegian law, then Trico Shipping will pay the difference in cash to the sellers.

 

The shareholders from whom Trico Shipping purchased DeepOcean shares pursuant to these share purchase agreements with management are as follows:

 

 

5. Management Phantom Stock Units Agreements.  The Company entered into phantom stock units agreements with the members of DeepOcean management (and their controlled entities) named in item 4 above. Pursuant to these management phantom stock units agreements dated May 20, 2008, the Company issued an aggregate of 229,344 phantom stock units to the members of DeepOcean management (and their controlled entities). Each phantom stock unit permits the holder to acquire one share of the Company’s common stock for no additional consideration upon exercise, subject to certain vesting restrictions described below, or, at our option, we may pay the holder the cash equivalent of such shares of Common Stock, based on the weighted average trading price of the our common stock during the last three trading days prior to each respective exercise date.

 

The phantom stock units issued to DeepOcean management (and their controlled entities) are subject to certain vesting and exercise periods. Generally, half of the phantom stock units granted to the members of DeepOcean’s management (and their controlled entities) vest and may be exercised on the first anniversary of the completion and settlement of the mandatory offer, and the other half vest and may be exercised on the second anniversary of such date. These vested phantom stock units are exercisable from such dates until the fifth anniversary of the completion and settlement of the mandatory offer. All such phantom stock units will be fully vested and exercisable upon certain changes of control of the Company or if DeepOcean’s earnings before interest, taxes, depreciation and amortization for its fiscal year ended December 31, 2008 is greater than NOK 489,000,000.

 

In addition, the vesting of the phantom stock units granted to management are subject to the following additional qualifications:

 

 

 

Additional Information Regarding Phantom Stock Units.  The value of the phantom stock units issued to West Supply and the members of DeepOcean’s management (and their controlled entities) was calculated based upon (i) the weighted average trading price of our common stock as reported by the Nasdaq Global Market for the three trading days prior to May 15, 2008 (the date that the parties entered into the applicable share purchase agreements) and (ii) the NOK/U.S. dollar exchange rate as quoted by the Federal Reserve Bank of New York at the end of each of the same three trading days. Based on this calculation, as of May 15, 2008 the value of each phantom stock unit was approximately NOK 177.97 per unit (approximately $35.14). Thus, the sellers received NOK 12.80 in cash and phantom stock units valued at NOK 19.20 per DeepOcean share sold, in total a consideration with a value of NOK 32 per DeepOcean share.

 

The foregoing description does not purport to be complete and is qualified in its entirety by reference to (i) the share purchase agreement among the Company, Trico Shipping and West Supply IV AS, (ii) the form of management share purchase agreement among the Company and certain members of management of DeepOcean and (iii) the form of phantom stock units agreement between the Company and each such member of DeepOcean’s management, filed as Exhibits 2.1, 2.2 and 10.2, respectively, to our Current Report on Form 8-K filed on May 16, 2008, as amended by our Current Report on Form 8-K/A filed on May 19, 2008, each of which is incorporated herein by reference. In addition, the foregoing description is qualified by reference to (x) the phantom stock units agreement between the Company and West Supply, and (y) the registration rights agreement between the Company and West Supply, filed as Exhibits 10.3 and 10.4, respectively, to our Current Report on Form 8-K/A filed on June 13, 2008, each of which is incorporated herein by reference.

 

We encourage you to read each such agreement in its entirety.

 

Subsequent to May 15, 2008, Trico Shipping purchased or entered into agreements to purchase an additional 6,750,000 DeepOcean shares in open market purchases at a price of NOK 32 per share.

 

On June 13, 2008, Trico Shipping purchased all of the 35,220,000 shares of DeepOcean owned by DOF, representing approximately 32.6% of the outstanding shares of DeepOcean, for an aggregate purchase price of NOK 1,127,040,000, or NOK 32 per share. Trico Shipping will be entitled to receive the announced DeepOcean dividend of NOK 0.50 per share. The share purchase agreement with DOF also provides that DOF will refrain from, among other things, initiating any legal action against the Company, Trico Shipping or DeepOcean and others relating to the Company’s acquisition of control of DeepOcean.

 

The foregoing description does not purport to be complete and is qualified in its entirety by reference to the share purchase agreement among Trico Shipping and DOF filed as Exhibit 2.1 to our Current Report on Form 8-K filed on June 16, 2008, which is incorporated herein by reference.

 

Mandatory Offer for Remaining DeepOcean Shares

 

As a result of the initial purchases, and in accordance with the Norwegian Securities Trading Act, chapter 6, Trico Shipping made a mandatory cash offer for all outstanding DeepOcean shares it does not own, thereby completing the acquisition of control of DeepOcean. There are no conditions to the mandatory offer. The mandatory offer will close and be settled after the ex-dividend date of DeepOcean’s announced dividend of NOK 0.50 per share. The aggregate value of the mandatory offer price and the announced dividend amount will be NOK 32 per share, based on an offer price for each share of NOK 31.50 payable in cash, in addition to the announced dividend for 2007 of NOK 0.50 per share.

 

The mandatory offer closed on June 30, 2008 and the settlement of the purchase of the tendered shares is expected to occur in the second week of July 2008.

 

Pursuant to Norwegian law, since Trico Shipping acquired more than 90% of the outstanding DeepOcean shares in the mandatory offer, it has the right to require that the remaining shareholders of DeepOcean sell their DeepOcean shares to Trico Shipping. Similarly, the other shareholders would have the right to demand that Trico Shipping purchase their DeepOcean shares. If the parties were unable to agree to a price to acquire such shares, then the price would be determined by a Norwegian court. If the compulsory acquisition were commenced within three months of the expiration of the mandatory offer, then the price would generally equal the mandatory offer price. Trico Shipping has acquired 99.74% of DeepOcean’s shares, and Trico Shipping intends to make a compulsory acquisition of the remaining DeepOcean shares.

 

Debenture Financing

 

Securities Purchase Agreement and Indenture

 

On May 14, 2008, the Company entered into a securities purchase agreement under which the Company agreed to sell $300 million aggregate principal amount of its 6.50% senior convertible debentures due 2028 to certain institutional investors. On May 16, 2008, the Company issued $300 million of the debentures in a private placement transaction. The debentures are governed by an indenture, dated as of May 16, 2008, between the Company and Wells Fargo Bank, National Association, as trustee.

 

The debentures are convertible, based on an initial conversion rate of 24.74023 shares of common stock per $1,000 principal amount of debentures (which is equal to an initial conversion price of approximately $40.42 per share), subject to adjustment. The conversion rate will be adjusted upon certain events including (i) stock dividends; (ii) certain subdivisions, combinations or reclassifications of our common stock; (iii) certain issuances or distributions to all or substantially all holders of our common stock; and certain other events. In addition, in the event of certain types of fundamental changes, holders of the debentures may elect either to receive an interest make-whole payment or to cause the Company to increase the conversion rate by a number of additional shares of our common stock (which reflect the approximate value of interest that would have accrued under the debentures at the applicable interest rate for the period from the applicable conversion date through May 15, 2013). Any of these adjustments to the conversion rate could mean that the number of shares of our common stock that are actually issuable upon conversion of all debentures may increase above the 7,422,069 shares that would be issuable if holders converted their debentures into shares of our common stock (and no cash) at the initial conversion rate.

 

If converted, holders will receive, at the company’s election, cash, shares of the Company’s common stock or a combination thereof. Holders may convert their debentures at their option at any time prior to the close of business on the business day immediately preceding the maturity date. Upon any conversion prior to May 15, 2013, the Company will pay the holder the present value of the remaining coupons owed on the principal amount of the debentures converted through and including May 15, 2013.

 

Upon conversion of the debentures, the Company’s flexibility in settling such conversion is subject to a “exchange cap,” which provides that the Company will not be obligated to issue shares of common stock upon conversion if the issuance of such shares would exceed the aggregate number of shares which the Company may issue without stockholder approval of the issuance under applicable rules and regulations of the NASDAQ Global Market. This provision and the required stockholder approval is discussed below in the section titled “— Reasons for Stockholder Approval of the Share Issuance.”

 

In addition, a holder may not convert the debentures to the extent the conversion would cause the holder, together with its affiliates, to beneficially own more than 9.99% of our then outstanding shares of common stock (excluding shares issuable upon conversion of the debentures which have not been converted). In this proxy statement, we refer to this provision as the “blocker provision.”

 

The debentures bear interest at a rate of 6.50% per year payable semiannually in arrears on May 15 and November 15 of each year beginning November 15, 2008. The debentures mature on May 15, 2028, unless earlier converted, redeemed or repurchased.

 

Subject to certain conditions, the Company may redeem up to 50% of the original principal amount of the debentures in whole or in part for cash, at a price equal to 100% of the principal amount of the debentures plus accrued and unpaid interest to, but not including, the redemption date, at any time if the last reported sale price of

our common stock has exceeded 175% of the conversion price of the debentures for at least 20 trading days within a period of 30 consecutive trading days ending on the trading day prior to the date of mailing of the redemption notice. Beginning on May 15, 2011, the Company may redeem any outstanding debentures in whole or in part for cash, at a price equal to 100% of the principal amount of the debentures plus accrued and unpaid interest to, but not including, the redemption date, at any time if the last reported sale price of our common stock has exceeded 175% of the conversion price of the debentures for at least 20 trading days within a period of 30 consecutive trading days ending on the trading day prior to the date of mailing of the redemption notice. On or after May 15, 2013, the Company may redeem for cash all or a portion of the debentures at a redemption price of 100% of the principal amount of the debentures to be redeemed plus accrued and unpaid interest to, but not including, the redemption date. Holders may require the Company to purchase all or a portion of their debentures on each of May 15, 2013, May 15, 2015, May 15, 2018 and May 15, 2023. In addition, if the Company experiences specified types of corporate transactions, holders may require the Company to purchase all or a portion of their debentures. Any repurchase of the debentures pursuant to these provisions will be for cash at a price equal to 100% of the principal amount of the debentures to be purchased plus accrued and unpaid interest to the date of repurchase.

 

The debentures are senior unsecured obligations of the Company and rank equally in right of payment to all of the Company’s other existing and future senior indebtedness. The debentures are effectively subordinated to all of the Company’s existing and future secured indebtedness to the extent of the value of the Company’s assets collateralizing such indebtedness and any liabilities of the Company’s subsidiaries.

 

Registration Rights Agreement

 

In connection with the sale of the debentures, the Company entered into a registration rights agreement, dated as of May 16, 2008, with the purchasers of the debentures. Under the registration rights agreement, the Company generally has agreed to (i) file a shelf registration statement with respect to the resale of the debentures and the common stock issuable upon conversion of the debentures within 30 days after the closing of the offering of the debentures and (ii) use its reasonable best efforts to cause the shelf registration statement to become effective (A) in the event that the shelf registration statement is not subject to a full review by the SEC, within 90 days after the closing of the offering of the debentures, or (B) in the event that the shelf registration statement is subject to full review by the SEC, within 120 days after such closing. The Company will use its reasonable best efforts to keep the shelf registration statement effective until the securities covered by the shelf registration statement (x) have been sold pursuant to the registration statement, (y) are eligible to be sold under Rule 144 under the Securities Act, assuming for this purpose that the holders of such securities are not affiliates of the Company, or (z) are no longer outstanding. If the shelf registration statement is not filed with the SEC within 30 days after closing of the offering, if the shelf registration statement is not declared effective by the SEC on or before the deadlines described above or if the shelf registration statement is filed and declared effective but, during the effectiveness period ceases to be effective or fails to be usable for its intended purpose, or if the Company suspends the effectiveness of the shelf registration statement for certain defined periods of time, the Company will be required to pay, subject to certain limitations, additional interest equal to one-half of one percent (0.50%) (per each thirty (30) day period of such registration related default) of the principal amount of debentures that are subject to the shelf registration statement and with respect to which the holders (or the shares of common stock issued upon conversion thereof), other than affiliates of the Company, may not sell or transfer all such securities immediately without restriction pursuant to Rule 144 of the Securities Act.

 

The Company sold the debentures in order to finance a portion of the acquisition. We expect that substantially all of the proceeds from the sale of the debentures will be used to pay a significant portion of the cash consideration for the acquisition.

 

The foregoing description of the securities purchase agreement, indenture and registration rights agreement does not purport to be complete and is qualified in its entirety by reference to the copies of the securities purchase agreement, the indenture and the form of registration rights agreement filed as Exhibits 4.1, 4.2 and 4.3, respectively, to the Company’s Current Report on Form 8-K filed on May 16, 2008, as amended by the Company’s Current Report on Form 8-K/A filed on May 19, 2008, each of which is incorporated herein by reference.

 

We encourage you to read each such agreement in its entirety.

Additional Acquisition Financing

 

Credit Agreement

 

In connection with financing the acquisition, Trico Supply AS, Trico Subsea Holding AS, Trico Subsea AS and Trico Shipping, as borrower, entered into a credit agreement on May 14, 2008. The credit agreement was comprised of a $200 million revolving credit facility with various lenders party from time to time thereto, Nordea Bank Finland PLC, New York Branch, as Administrative Agent, Book Runner and Joint Lead Arranger, Bayerische Hypo-Und Vereinsbank AG, as Joint Lead Arranger, and Nordea Bank Norge ASA, Grand Cayman Branch and Bayer. The credit agreement provides for the making of revolving loans to Trico Shipping. The Credit Agreement is guaranteed by certain of the Company’s subsidiaries and is collateralized by vessel mortgages and other security documents. Interest is payable on the unpaid principal amount outstanding at a rate applicable to the currency in which the funds are borrowed (the Eurodollar rate designated by the British Bankers Association for U.S. dollar denominated loans, or Euro LIBOR, NOK LIBOR or Sterling LIBOR for loans denominated in Euro, NOK or Sterling, respectively) plus 2.25% (subject to adjustment based on consolidated leverage ratio). The credit agreement matures on May 14, 2013.

 

The revolving credit facility under this credit agreement provides the Company with additional capacity to draw funds as required to finance a portion of the acquisition.

 

The foregoing description of the credit agreement does not purport to be complete and is qualified in its entirety by reference to the copy of the credit agreement filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on May 16, 2008, as amended by the Company’s Current Report on Form 8-K/A filed on May 19, 2008, which is incorporated herein by reference.

 

Credit Facility Agreement

 

On May 28, 2008, Trico Shipping entered into a Credit Facility Agreement with Carnegie Investment Bank AB Norway Branch, as lender. The credit facility agreement provides for a NOK 260,000,000 short term credit facility (approximately $51,232,000) that Trico Shipping has used to partially finance the acquisition and expects to use for general corporate purposes. Interest on any outstanding balance under the facility accrues at 8.3% per annum. The principal and accrued interest borrowed under the facility must be repaid by the maturity date of August 1, 2008. The facility is available for Trico Shipping to drawdown between the date of the agreement and one month prior to the maturity date. The facility is secured by a first priority pledge by Trico Shipping of the DeepOcean shares it currently holds. Trico Shipping may not drawdown on the facility if an event of default has occurred and continues or if the value of the DeepOcean shares it holds would be less than 200% of amount of the outstanding borrowings under the facility. For purposes of the facility, events of default include a failure to pay the amounts due under the facility, a breach of a representation by Trico Shipping in the agreement, or a material adverse change to Trico Shipping’s or DeepOcean’s financial condition, among other things.

 

The foregoing description of the credit facility agreement does not purport to be complete and is qualified in its entirety by reference to the copy of the credit facility agreement filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 3, 2008, which is incorporated herein by reference.

 

Reasons for Stockholder Approval of Share Issuance

 

In connection with the acquisition of the DeepOcean shares, we may issue up to 1,581,902 shares of our common stock upon exercise of the phantom stock units, assuming the exercise of all of the phantom stock units for shares of our common stock, and up to 7,422,069 shares of our common stock upon conversion of the debentures, assuming the conversion of all of the debentures into shares of our common stock (and no cash) at their initial conversion rate. The number of shares issuable upon conversion of the debentures is subject to adjustment as further described in the section titled “— Debenture Financing — Securities Purchase Agreement and Indenture” above. The discussion in this section regarding the number of shares issuable upon conversion of the debentures assumes that all of the debentures are converted into shares of our common stock (and none into cash) at their initial conversion rate of 24.74023 shares of common stock per $1,000 principal amount of debentures.

Our common stock is listed on The Nasdaq Global Market and, as such, the Company is subject to the Nasdaq Marketplace Rules. Under Nasdaq Marketplace Rule 4350(i)(1)(C), we must seek stockholder approval if we issue common stock or convertible securities (other than a public offering for cash) in connection with an acquisition of another company’s stock or assets, and the common stock issued (or that will be issued upon conversion) has or will have voting power equal to 20% or more of the outstanding voting power before the issuance, or the number of shares issued is or will be equal to 20% or more of the shares outstanding before the issuance. The issuance of 9,003,971 shares of our common stock under the convertible securities that were issued in connection with the acquisition would represent approximately 60% of the 15,105,358 shares of our common stock outstanding at the time of the issuance of the convertible securities.

 

Under prevailing interpretations of Nasdaq Marketplace Rule 4350(i)(1)(C), shares of our common stock that are issuable upon the conversion of the debentures or exercise of the phantom stock units are all considered common stock issued in connection with the acquisition of stock of another company for purposes of determining whether the 20% limit has been reached. The issuance of up to 1,581,902 shares of our common stock upon exercise of the phantom stock units combined with the issuance of up to 7,422,069 shares of our common stock upon conversion of the debentures (together with the possible issuance of additional shares of common stock upon conversion of the debentures upon any adjustment in the conversion rate), would exceed 20% of the outstanding shares of our common stock prior to such issuance, and as a result, the Company is seeking stockholder approval of Proposal 1 in order to comply with the applicable Nasdaq Marketplace Rule.

 

The indenture governing the debentures contains the exchange cap. Under the exchange cap, the Company is not obligated to issue shares of its common stock upon conversion of the debentures if the issuance would exceed the aggregate number of shares the Company may issue upon conversion without stockholder approval under the Nasdaq rules. The exchange cap no longer applies if the Company obtains stockholder approval of the issuance of such shares upon conversion of the debentures.

 

Pursuant to the securities purchase agreement, the Company agreed to call a stockholder meeting and seek stockholders’ approval of the issuance of all shares of our common stock that may be issued upon conversion of the debentures. If our stockholders approve Proposal 1, they will be approving the issuance of all shares of our common stock that may be issued upon the conversion and exercise of the convertible securities that we issued in connection with the acquisition, including all additional shares of common stock that may be issued upon conversion of the debentures if the conversion rate is adjusted pursuant to the terms of the indenture, as well as all shares that may be issued upon exercise of the phantom stock units. Approval of Proposal 1 will constitute approval pursuant to Nasdaq Marketplace Rule 4350(i)(1)(C).

 

Consequences to the Company and Stockholders

 

The board of directors believes that the stockholders’ approval of the share issuance is advisable and in the best interests of the Company and its stockholders. The $300 million principal amount of indebtedness incurred with respect to the debentures, and the Company’s effective obligation to either issue shares of its common stock or pay cash of approximately $8.1 million relating to the phantom stock units held by certain members of DeepOcean’s management (based on the weighted average value of such shares at the time the Company agreed to issue such phantom stock units), is material in relation to the Company’s level of indebtedness prior to the financing, the Company’s ability to service these obligations from its operating cash flow and the Company’s ability to repay these obligations in cash in full at maturity. The debentures can be converted, at the Company’s option, into cash, shares of the Company’s common stock, or a combination of cash and shares, subject to the exchange cap and the blocker provision which limit conversion of the debentures into shares of our common stock. If the Company settled all phantom stock units that were issued in connection with the acquisition in shares of its common stock, then, absent stockholder approval of Proposal 1, approximately $58.2 million of the $300 million principal amount of the debentures could be converted, at the Company’s option, into stock upon conversion. The balance of approximately $241.8 million of the debentures would be converted into cash upon conversion. If the stockholders approve Proposal 1, the Company would have much greater flexibility, if it so elected, to permit the conversion of all $300 million principal amount of the debentures to common stock of the Company, subject to the blocker provision and limitations on foreign ownership of our common stock set forth in our charter.

The board of directors believes that the Company’s ability to elect the conversion of all debentures into shares of our common stock would benefit the Company by permitting it to use more of its cash flow for general working capital purposes, rather than to service the indebtedness represented by the debentures. If holders of the debentures were unable to convert all of the debentures into shares of our common stock, then the Company would be required to settle the conversion of a portion of the debentures in cash (and any unconverted debentures would accrue interest until maturity that would also be paid in cash).

 

Furthermore, any conversion of the debentures into shares of our common stock would be at a conversion rate that is at a premium to the current trading price. On June 27, 2008, the closing price per share of our common stock as reported on the Nasdaq Global Market was $36.35. The current conversion rate for the debentures is 24.74023 shares of common stock per $1,000 principal amount of debentures, which is equal to an initial conversion price of approximately $40.42 per share. Therefore, any conversion of the debentures would be at a premium to the current price of our common stock, although our common stock has traded at prices above the initial conversion price in the past 60 days. The holders of the debentures would have no economic incentive to convert unless the price of our common stock increased substantially from its current level.

 

Issuance of shares of common stock under the convertible securities would significantly dilute the ownership interests and voting power of existing stockholders. Upon full conversion and exercise of the convertible securities into shares of our common stock (and no cash), the ownership interest of the Company’s existing stockholders would be reduced by approximately 37.4%, before giving effect to (i) the issuance of shares of common stock for potential future adjustments under the debentures or (ii) the issuance of shares of Common Stock pursuant to other outstanding convertible notes, options and warrants of the Company. In the event of future adjustments in the conversion rate of the debentures, the debentures may become convertible into a number of shares of our common stock representing a higher percentage of the our voting securities, which would cause additional dilution to the Company’s existing stockholders. The sale into the public market of these shares also could materially and adversely affect the market price of our common stock.

 

If the stockholders do not approve the share issuance, then (i) the phantom stock units would continue to be exercisable for a total of up to 1,581,902 shares of our common stock, and, in some instances, cash, subject to their terms, and (ii) the debentures would continue to be convertible into cash, shares of our common stock, or a combination of cash and shares of our common stock, subject to the exchange cap, the blocker provision, and the other terms of the debentures set forth in the related securities purchase agreement and indenture. In that event, any of the $300 million principal amount of the debentures that could not be converted, at our election, into shares of our common stock as a result of the exchange cap or the blocker provision would be convertible only into cash. Stockholder approval of the share issuance would mean that it would be possible for all convertible securities to be converted into shares of our common stock, if the Company elected to settle all such debentures in shares of its common stock.

 

In addition, pursuant to the terms of the securities purchase agreement related to the debentures, if the Company’s stockholders do not approve Proposal 1 at the special meeting, then the Company would be obligated to seek stockholder approval of such proposal at a subsequent meeting of stockholders.

 

If the Company’s stockholders approve Proposal 1, the exchange cap discussed above as to the number of shares of Common Stock that can be issued under the debentures would no longer be applicable, but the blocker provision would still be applicable, and we will be able to issue, at our election, additional shares of our common stock to the holders of the debentures in excess of this limitation, including in connection with potential future conversion rate adjustments pursuant to the terms of the indenture.

 

Reasons for the Company’s Acquisition of DeepOcean

 

Our board of directors, having concluded that the acquisition of DeepOcean is advisable and in the best interests of the Company and its stockholders, unanimously approved the acquisition, and all transactions and documents necessary to their consummation.

 

The decision of our board of directors to acquire the DeepOcean shares in the initial purchase and to launch the mandatory offer was based on an analysis of each company’s strengths and weaknesses. This analysis

allowed our board of directors to identify several potential benefits to us and our stockholders that, if realized, could increase stockholder value. The primary reasons for the DeepOcean acquisition include:

 

 

Although our board of directors believes the Company could realize these benefits in connection with the acquisition of DeepOcean shares, there is no assurance that the Company will achieve all or any of them. The Company and DeepOcean may not be able to execute the combined company’s overall business strategy or realize the anticipated benefits of the acquisition.

 

Our board of directors reviewed a number of additional factors in evaluating the acquisition, including, but not limited to the following:

 

 

Our Board of Directors also considered a number of countervailing factors that may pose a risk to the success of the combined entity including:

 

 

 

For a discussion of these and other risk factors and their possible effect on the success of the acquisition of DeepOcean, see “Risk Factors” on page 19.

 

Our board of directors reviewed each of the above factors in the overall context of the Company’s and DeepOcean’s business, prospects and financial condition. The board of directors did not afford special weight to any particular factor in isolation but rather examined all of these positive and negative factors in the aggregate to assess the prospects for the Company’s and DeepOcean’s business. In the view of our board of directors, the potentially countervailing factors did not, individually or in the aggregate, outweigh the advantages of the acquisition.

 

In view of the foregoing, our board of directors has concluded that the acquisition of DeepOcean and the financing are both advisable and in the best interests of our stockholders.

 

The Parties to the Acquisition

 

Trico Marine Services, Inc.

 

We are a leading provider of marine support vessels to the offshore oil and gas industry, operating primarily in international markets, with operations in the North Sea, West Africa, Mexico, Brazil, Southeast Asia, and the U.S. Gulf of Mexico. Using our larger and more sophisticated vessels, we provide support for the construction, installation, repair and maintenance of offshore facilities, the deployment of underwater remotely operated vehicles (or ROVs), the laying of sea floor cable, and trenching services. We intend to leverage our experience, relationships and assets to become a leading supplier of vessels to the subsea services market. Compared to our traditional towing and supply market, we believe the subsea services market is growing at a faster rate and provides a higher rate of return on new vessel construction.

 

Consistent with our subsea services market strategy, on November 23, 2007, we acquired all of the outstanding equity interests of Active Subsea ASA, a Norwegian public limited liability company, for approximately $247 million in an all cash transaction. Active Subsea has eight multi-purpose platform supply vessels currently under construction and scheduled for delivery in 2008 and 2009. These vessels are designed to support subsea services, including performing inspection, maintenance, and repair work using ROVs, dive and seismic support, and light construction activities. We have entered into long-term contracts for three of these multi-purpose platform supply vessels with contract periods ranging from two to four years. Two of these contracts also provide for multi-year extensions. The acquisition of Active Subsea more than doubles the number of vessels in our fleet with subsea capabilities and allows us to further leverage our global footprint and broaden our customer base to provide subsea services and support to subsea construction companies.

 

Our diversified fleet of vessels provides a broad range of other services to offshore oil and gas operators, including transportation of drilling materials, supplies and crews to drilling rigs and other offshore facilities and towing of drilling rigs and equipment from one location to another. As of May 15, 2008, Trico’s fleet consisted of 60 vessels, including five subsea platform supply vessels, seven other large capacity platform supply vessels, six large anchor handling, towing and supply vessels, 38 supply vessels, three crew boats, and one line handling (utility) vessel. Additionally, we have 11 vessels on order for delivery in 2008 and 2009, including eight multi-purpose platform supply vessels acquired in the acquisition of Active Subsea ASA, a Norwegian offshore services company.

 

With respect to the 11 vessels we have on order as of May 15, 2008, their estimated delivery schedules (subject to potential delays) are as follows: three in the third quarter of 2008, two in the fourth quarter of 2008, one in the first quarter of 2009, two in the second quarter of 2009, two in the third quarter of 2009 and one in the fourth quarter of 2009. Four vessels are under contracts with terms up to five years, including options to renew.

 

We also hold a 49% equity interest in Eastern Marine Services Limited, a Hong Kong limited liability company in which China Oilfield Services Limited holds a 51% equity interest. Eastern Marine develops and provides international marine support services for the oil and gas industry in China, other countries within Southeast Asia and

Australia. Of the 14 vessels we contributed to Eastern Marine, five were mobilized to China during the first half of 2007, another eight will be bareboated by us until planned mobilizations to China during 2008, and the remaining vessel will be bareboated by us until the expiration of an existing contract.

 

We generate the majority of our revenues by chartering our marine support vessels on a day rate basis. We typically retain operational control over chartered vessels and are responsible for normal operating expenses, repairs, wages, and insurance, while our customers are typically responsible for mobilization expenses, including fuel costs.

 

We provide all of our services through our direct and indirect subsidiaries in each of the markets in which we operate. Our domestic subsidiaries include Trico Marine Assets, Inc., which owns the majority of our vessels operating in the Gulf of Mexico and other international regions excluding the North Sea, and Trico Marine Operators, Inc., which operates all of our vessels in the Gulf of Mexico. In addition to our domestic operations, we operate internationally through a number of foreign subsidiaries, including Trico Shipping AS, which owns our vessels based in the North Sea.

 

We were incorporated in Delaware in 1993. Our principal executive offices are located at 3200 Southwest Freeway, Suite 2950, Houston, Texas 77027. Our telephone number is (713) 780-9926.

 

DeepOcean ASA

 

General

 

DeepOcean is a Norwegian public limited company headquartered in Haugesund, Norway. DeepOcean is a market leader in the provision of inspection, maintenance and repair, survey and construction support, and subsea intervention and decommissioning services. DeepOcean is also a leading supplier of marine trenching and cable laying services. DeepOcean’s shares of common stock are listed on the Oslo Børs (the Oslo Stock Exchange). DeepOcean supports its overseas operations through facilities in the United Kingdom, The Netherlands, Mexico and Singapore.

 

DeepOcean focuses on offering fully integrated services to its customers, combining the provision of project management and engineering services, vessels and equipment, offshore operation and project documentation into one package. DeepOcean’s engineering staff designs solutions involving its integrated subsea services in partnership with its customers, including oil exploration companies and engineering contractors. DeepOcean believes that this is a superior approach to many of its competitors that focus primarily on operating equipment.

 

Vessels and Equipment

 

DeepOcean controls a fleet of 14 vessels (including three owned vessels) equipped with dynamic positioning systems and together with its owners has driven the development of a new type of dynamic positioning support vessel equipped with heavy weather launch and recovery systems. DeepOcean operates a fleet of modern ROVs and trenching equipment and has pioneered the development of deepwater module handling systems used to place and install sophisticated equipment on the ocean seabed.

 

With an average age of six years, DeepOcean operates one of the youngest fleets of the industry. DeepOcean offers its customers a modern, flexible fleet with state-of-the-art design and outfitting. Four additional vessels will be added to DeepOcean’s fleet in 2008 and 2009.

 

Today, DeepOcean owns three vessels, with a fourth vessel (51% ownership) scheduled to be delivered in 2009. DeepOcean has charter arrangements with Active Subsea for two newbuild subsea vessels that are scheduled to be delivered in 2008. The Company acquired Active Subsea in November 2007.

 

DeepOcean seeks to operate a high quality fleet with a balanced mix of owned and chartered in vessels. Its fleet composition enables DeepOcean to balance-off market fluctuations, customer needs and development in technology, putting DeepOcean is in a position to offer a modern and flexible fleet on a continuous basis.

 

DeepOcean is also developing a Ship Management Department. The department will consist of personnel with broad experience from various fields of expertise like master mariner, shipbuilding and ship management.

Inspection, Maintenance and Repair

 

DeepOcean’s inspection, maintenance and repair services model is to act as a subsea “caretaker” for customers. In this capacity, DeepOcean provides visual inspection of subsea installations using ROVs. These ROVs are also capable of making general repairs using integrated tools and cranes. ROVs support subsea lifting operations and the installation and decommissioning of subsea equipment. In addition, DeepOcean has the ability to perform underwater “scale squeeze,” which involves pumping chemicals into subsea wells to remove scale in order to increase well production.

 

Survey and Construction Support

 

DeepOcean’s seabed mapping services map areas of seabed prior to the installation of pipelines, rights, templates and other subsea structures. These services may be provided by either vessels or ROVs and are based on multi beam echosounding techniques, side scanning sonar and sub-bottom profilers. DeepOcean also inspects underwater pipelines to evaluate pipeline condition, including damage to pipeline concrete coating, the level of cathodic protection, and the burial condition of trenched pipeline. Its construction support services include monitoring pipeline or cable installation via video or sonar technology, surveys of pipeline straightness during trenching, and video monitoring or seabed mapping to support dredging operations.

 

Marine Trenching

 

DeepOcean provides marine trenching services through its subsidiary, CTC Marine Projects. Marine trenching involves lowering or burying subsea transmission systems into the seabed or on continental shelf areas. Trenching protects these cables and pipelines against external objects (commercial fishing, anchors and dropped objects, for example). In addition, transmission systems that are placed in these trenches are stabilized against many typhoons and hurricanes. The soil surrounding buried pipelines also acts as an insulating medium that reduces the need for coating or heating.

 

Personnel

 

As of April 2008, DeepOcean employed over 835 people worldwide, including over 100 engineers active in project development and equipment design. As a result of the expected rapid growth of the subsea services industry, DeepOcean anticipates adding up to 260 employees in 2009 and has developed a strong international recruitment campaign and an in house training program to enhance its employees’ technical skills.

 

DeepOcean was formed in Norway in 1999. Its principal executive offices are located at Stoltenberggaten. 1, P.O. Box 2144, Postterminalen, N-5504 Haugesund, Norway. Its telephone number is (+47) 52 70 04 00.

 

No Appraisal Rights

 

No appraisal rights are available under the Delaware General Corporation Law for our stockholders in connection with the proposal to approve the proposed share issuance.

 

Exemption from Registration

 

The phantom stock units issued to certain members of DeepOcean’s management and West Supply, and shares of our common stock of the Company issuable in certain circumstances upon the exercise of the phantom stock units, have not been registered under the Securities Act of 1933, as amended, in reliance on the exemptions from registration provided by Section 4(2) of the Securities Act, and Regulation S promulgated under the Securities Act. The debentures and shares of our common stock issuable in certain circumstances upon the conversion of the debentures have not been registered under the Securities Act, in reliance on the exemption from registration provided by Section 4(2) of the Securities Act and Regulation D promulgated under the Securities Act.

 

Vote

 

The affirmative vote of a majority of the shares of our common stock present or represented and entitled to vote at the special meeting is required by the Nasdaq Marketplace Rules to approve Proposal 1.

If Proposal 1 is not approved by stockholders, the Company will be obligated to hold another meeting of stockholders to reconsider Proposal 1.

 

Accounting Treatment

 

The acquisition will be accounted for as a purchase business combination by the Company under accounting principles generally accepted in the United States. Under the purchase method of accounting, the assets and liabilities of DeepOcean will be recorded, as of completion of the acquisition, at their respective fair values and added to those of the Company. The financial condition and results of operations of the Company after completion of the acquisition will reflect DeepOcean’s balances and results after completion of the acquisition but will not be restated retroactively to reflect the historical position or results of operations of DeepOcean.

 

Following the completion of the acquisition, the earnings of the combined company will reflect purchase accounting adjustments, including the effect of changes in the cost bases for assets and liabilities on direct vessel operation expense and depreciation and amortization expense. Long-lived assets will be evaluated for impairment when events or changes in economic circumstances indicate the carrying amount of such assets may not be recoverable. The goodwill resulting from the transaction, which is not subject to amortization, will be reviewed for impairment on at least an annual basis. Any future impairments or market value adjustments would reduce the assets carrying values, and result in charges to earnings for the combined company.

 

Tax Treatment

 

Our security holders will continue to hold their securities and, as a result will not recognize any gain or loss from the acquisition. There should be no federal income tax consequences to a holder of our common stock as a result of the acquisition.

 

Regulatory Approvals

 

The acquisition and share issuance are not subject to the Hart Scott Rodino Act of 1976, as amended, or any other material federal or state regulatory requirement or approval, other than stockholder approval under the Nasdaq Marketplace Rules related to the share issuance that is described elsewhere in this proxy statement.

 

The offer document that Trico furnished to DeepOcean’s stockholders on May 30, 2008 in connection with the mandatory offer was subject to review and approval by the Oslo Børs (the Oslo Stock Exchange). In addition, a notification of the acquisition was made with the Norwegian Competition Authority.

 

Recommendation of the Board

 

The board of directors has unanimously determined that the share issuance is advisable and in the best interests of the company and its stockholders and unanimously recommends that the Company’s stockholders vote “FOR” the share issuance (Proposal 1).

 

Unaudited Pro Forma Combined Financial Statements

 

The following unaudited pro forma combined financial information gives effect to the acquisition by Trico Marine Services, Inc. and its subsidiaries (collectively “Trico” or “the Company”) of Active Subsea ASA (“Active Subsea”) on November 23, 2007, the acquisitions or agreement to acquire an approximate 52% interest in DeepOcean ASA (“Deep Ocean”) on May 16, 2008, open market purchases of DeepOcean shares for an additional 2% interest during the period of May 17, 2008 through the commencement of the mandatory tender offer (the “tender offer”), the tender offer to acquire the remaining 46% interest in DeepOcean, which commenced on May 30, 2008 and closed on June 30, 2008, and the related financings of the acquisitions.

 

The Company acquired Active Subsea for $247.6 million using available cash to fund the transaction. The Company acquired approximately 52% of DeepOcean for $370.3 million. In connection with this acquisition, Trico issued $300 million (approximately $287 million net of fees which were paid following the commencement of the tender offer) of 6.5% Senior Convertible Debentures (“convertible debentures”). To fund the transaction, the Company used its available cash, including borrowings under its existing revolving credit facilities and a portion of

the proceeds from its convertible debentures, and the issuance of common equity instruments to certain of DeepOcean’s shareholders (see further details below). Trico subsequently acquired an additional 5.75% interest in DeepOcean through the purchase of DeepOcean shares on the open market at 32 NOK per share in cash. The total cost of these open market purchases was $42.3 million and was funded using available cash. On May 30, 2008, Trico initiated a tender offer to acquire the remaining approximate 46% interest in DeepOcean with an estimated acquisition cost of approximately $300 million. The mandatory offer closed on June 30, 2008 and the settlement of the purchase of the tendered shares is expected to occur in the second week of July 2008. On June 13, 2008, Trico Shipping acquired approximately 32.6% of the outstanding shares of DeepOcean from DOF ASA at a price of NOK 32 per share. As a result of these purchases and the closing of the mandatory offer pursuant to Norwegian law, Trico Shipping has acquired 99.74% of the outstanding shares of DeepOcean. Because Trico Shipping owns in excess of 90% of DeepOcean’s outstanding shares, Trico Shipping has the right, under Norwegian law, to complete a compulsory acquisition of the remaining shares it does not own at NOK 32 per share in cash, which Trico Shipping intends to do. The total acquisition cost for 100% of DeepOcean is expected to be approximately $689,384,000 based on the NOK/USD exchange rate in effect on the date of each payment of the purchase price, and assuming a NOK/USD exchange rate of 5.02 to 1 on the settlement date of the mandatory offer. The Company intends to fund the costs of its tender offer and the purchase from DOF through its available cash on hand, including the remaining $110.6 million of proceeds from the issuance of the convertible debentures, and additional borrowings under its existing lines of credit.

 

The following unaudited pro forma combined statements and accompanying notes of Trico as of and for the three months ended March 31, 2008 and for the year ended December 31, 2007 (“the Pro Forma Statements”), which have been prepared by the Company’s management, are derived from (a) the audited consolidated financial statements of the Company for the year ended December 31, 2007 included in its Annual Report on Form 10-K; (b) the unaudited consolidated financial statements of the Company as of and for the three months ended March 31, 2008 included in its related Quarterly Report on Form 10-Q; (c) the unaudited consolidated balance sheet and income statement of DeepOcean as of and for the three months ended at March 31, 2008 and DeepOcean’s audited consolidated income statement for the year ended December 31, 2007 included in Annex B attached to this proxy statement; and (d) the unaudited statement of operations for Active Subsea for the nine-month period ended September 30, 2007 included in the Company’s Form 8-K/A dated February 5, 2008.

 

The unaudited pro forma combined balance sheet as of March 31, 2008 gives pro forma effect to the following transactions as if they each occurred on March 31, 2008:

 

 

 

The unaudited pro forma combined statements of operations for the year ended December 31, 2007 and for the three months ended March 31, 2008 give pro forma effect to the above transactions as if they occurred on January 1, 2007. In addition, the unaudited pro forma combined statement of operations for the year ended December 31, 2007 gives pro forma effect to the acquisition of Active Subsea ASA on November 23, 2007 as if it had occurred on January 1, 2007.

 

The Pro Forma Statements are provided for illustrative purposes only and do not purport to represent what the Company’s financial position or results of operations would have been had the acquisitions of Active Subsea and

DeepOcean occurred on the dates indicated or the financial position or results of operations for any future date or period. The Pro Forma Statements do not give effect to any cost savings or incremental costs that may result from the integration of Trico, Active Subsea and DeepOcean.

 

The Pro Forma Statements, including the related adjustments that are described in the accompanying notes, are based on available information and certain assumptions the Company believes are reasonable in connection with the transactions. These assumptions are subject to change.

 

The Pro Forma Statements include adjustments to the historical DeepOcean balance sheet as of March 31, 2008, statement of income for the three-month period ended March 31, 2008 and the statement of income for the year ended December 31, 2007 prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) to present adjusted historical financial information of DeepOcean in accordance with generally accepted accounting principles in the United States and Trico accounting policies.

 

The purchase price for Active Subsea has been finalized. The purchase price for DeepOcean is preliminary and subject to change. The allocation of DeepOcean’s purchase price to the acquired assets and liabilities in the Pro Forma Statements is based on management’s preliminary estimates. Such allocations will be finalized based on valuations and other studies performed under the direction of management. As a result, the final adjusted purchase price and purchase price allocations will differ, possibly materially, from that presented in the accompanying unaudited pro forma combined balance sheet.

 

The Pro Forma Statements should be read in connection with the (a) the historical consolidated financial statements and accompanying notes which are set forth in Trico’s Annual Report on Form 10-K for the year ended December 31, 2007 and in Trico’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, (b) the audited consolidated financial statements of Active Subsea as of December 31, 2006 and for the period December 1, 2006 (date of inception) through December 31, 2006 and the unaudited condensed consolidated financial statements of Active Subsea as of September 30, 2007 and for the nine months ended September 30, 2007 and the cumulative period December 1, 2006 through September 30, 2007 included in the Company’s Form 8-K/A filed on February 5, 2008 and (c) the audited consolidated financial statements of DeepOcean as of December 31, 2007 and 2006 and for the years ended December 31, 2007, 2006 and 2005 and its unaudited consolidated financial statements for the three months ended March 31, 2008 and 2007 included in Annex B attached to this proxy statement.

TRICO MARINE SERVICES, INC. AND SUBSIDIARIES

Unaudited Pro Forma Condensed Combined Balance Sheet

as of March 31, 2008