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    Hornbeck Offshore launches private offering

    Company News // August 8, 2012

    Hornbeck Offshore Services says it intends, subject to market and other conditions, to offer US$260,000,000 worth of convertible senior notes due in 2019 in a private offering in the US to qualified institutional buyers.

    The notes will be guaranteed on a senior, unsecured basis by the same subsidiaries of the company that currently guarantee its revolving credit facility and other outstanding senior notes.

    The ompany expects to grant a 30-day option to the initial purchasers of the Convertible Notes for up to an additional US$40,000,000 aggregate principal amount of the Convertible Notes. The Convertible Notes are expected to pay interest semiannually and will be convertible into cash, shares of the company's common stock or a combination of cash and shares of the company's common stock, at the company's election, based on a conversion rate to be determined.

    The Convertible Notes will mature in 2019, unless repurchased or converted in accordance with their terms prior to such date. Prior to June 1, 2019, the Convertible Notes will be convertible only upon the occurrence of certain events and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

    In connection with the offering, the company expects to enter into convertible note hedge transactions in respect of its common stock with one or more affiliates of the initial purchasers of the Convertible Notes. These convertible note hedge transactions are expected to reduce the potential dilution upon future conversion of the Convertible Notes.

    In addition, the company expects to enter into separate warrant transactions with the Option Counterparties at a higher strike price. The warrant transactions could separately have a dilutive effect to the extent that the market value per share of the Company's common stock exceeds the applicable strike price of the warrants.

    If the initial purchasers exercise their option, the company expects to enter into additional convertible note hedge and warrant transactions with the Option Counterparties.

    The company intends to use the net proceeds from the sale of the Convertible Notes, together with the proceeds from the sale of the warrants, to fund the cost of the convertible note hedge transactions entered into between the company and the Option Counterparties.

    The company expects to use the remaining net proceeds to retire its 1.625% senior convertible notes due 2026, which are first subject to repurchase by the company at the option of holders of such convertible notes, on November 15, 2013, and subject to redemption at the company's option on or after November 15, 2013, in each case at par plus accrued and unpaid interest, or for general corporate purposes, which may include retirement of other debt or funding for the acquisition, construction or retrofit of vessels.


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