HOUSTON (Jan. 6, 2011)—Deep Down Inc. has formed a joint venture with an affiliate of York Capital Management by combining its Flotation Technologies Inc. subsidiary with Cuming Corp.
The joint venture is called Cuming Flotation Technologies L.L.C., and is expected to produce revenues of $100 million this year, Deep Down said.
Under the joint venture agreement with York, oilfield services and products company Deep Down contributed the assets and liabilities of Flotation Technologies into a new entity, Flotation Tech L.L.C., plus $1.4 million in cash to the joint venture in exchange for 20 percent equity interest. York contributed $22.35 million in cash in exchange for 80 percent interest, Deep Down said.
Last May Deep Down announced it would acquire Cuming, and has been negotiating the purchase of the maker of syntactic foam flotation products and insulation materials for the offshore oil and gas industry since then.
The cash contributions will be used to partially fund the acquisition of Cuming by the joint venture, with York providing a bridge loan to fund the balance of the $42 million purchase price and to provide working capital.
Avon, Mass.-based Cuming has about 250 employees, supplying C-FLOAT buoyancy products, used to support both drilling and production risers in deepwater operations.
Deep Down said it expects the joint venture to generate more than $100 million of revenues in the year 2011.