As filed with the Securities and Exchange Commission on October 2, 2007

Registration No. 333-145550

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

Amendment No. 2

to

 

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

 

 

 

CAL DIVE INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

400 North Sam Houston Parkway, E., Suite 1000

Houston, Texas 77060

(281) 618-0400

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

 

 

 

 

Lisa Manget Buchanan

400 North Sam Houston Parkway, E., Suite 1000

Houston, Texas 77060

(281) 618-0400

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

 

 

Copies To:

 

 

 

 

 

Approximate date of commencement of proposed sale to the public:  As soon as practicable after the effectiveness of this registration statement and the satisfaction or waiver of all other conditions to the merger described herein.

 

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  o     

 

If this Form is filed to register additional securities of an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o     

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o     

 

 

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

 

SUBJECT TO COMPLETION, DATED OCTOBER 2, 2007

 

 

INFORMATION STATEMENT/PROXY STATEMENT/PROSPECTUS

Proposed Merger — Your Vote Is Very Important

 

Cal Dive International, Inc. and Horizon Offshore, Inc. have agreed on a merger transaction involving our two companies. We must obtain the approval of Horizon’s stockholders before we can complete the merger. We are sending this information statement/proxy statement/prospectus to Horizon stockholders to ask them to vote in favor of the adoption of the merger agreement. Cal Dive has already obtained the approval of the issuance of its shares of common stock in the merger by its majority stockholder. We are sending this information statement/proxy statement/prospectus to the other Cal Dive stockholders in order to inform them of such approval and of the proposed merger.

 

If Horizon stockholders approve and adopt the merger agreement and the merger is subsequently completed, Horizon will merge into a subsidiary of Cal Dive, and each share of Horizon common stock will be converted into the right to receive $9.25 in cash, without interest, and 0.625 of a share of Cal Dive common stock, plus additional cash for any fractional share. The implied value of the stock portion of the merger consideration will fluctuate as the market price of Cal Dive common stock fluctuates. You should obtain current stock price quotations for Cal Dive common stock and Horizon common stock. Cal Dive common stock is quoted on the New York Stock Exchange under the symbol “DVR.” Horizon common stock is quoted on the Nasdaq Global Market under the symbol “HOFF.”

 

This information statement/proxy statement/prospectus is being furnished to Horizon stockholders in connection with the solicitation of proxies by Horizon for use at its special meeting of stockholders and to Cal Dive stockholders in order to advise them of the proposed merger and that the requisite approval of Cal Dive stockholders has already been obtained. The date, time, and place of the special meeting of the Horizon stockholders are:

 

 

This document is a prospectus related to the issuance of shares of Cal Dive common stock in connection with the merger, a proxy statement for Horizon to use in soliciting proxies for its special meeting of stockholders, and an information statement for those Cal Dive stockholders who were not party to the approval that has already been obtained. Attached is an important document containing answers to frequently asked questions and a summary description of the merger (beginning on page 1), followed by more detailed information about Cal Dive, Horizon, the proposed merger, and the merger agreement. We urge you to read this document carefully and in its entirety. In particular, you should consider the matters discussed under “Risk Factors” beginning on page 14 of this information statement/proxy statement/prospectus.

 

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued in connection with the merger or passed upon the adequacy or accuracy of this information statement/proxy statement/prospectus. Any representation to the contrary is a criminal offense.

 

This information statement/proxy statement/prospectus is dated     , 2007, and is first being mailed to Cal Dive and Horizon stockholders on or about          , 2007.

 

REFERENCES TO ADDITIONAL INFORMATION

 

As used in this information statement/proxy statement/prospectus, “Cal Dive” refers to Cal Dive International, Inc. and its consolidated subsidiaries and “Horizon” refers to Horizon Offshore, Inc. and its consolidated subsidiaries, in each case, except where the context otherwise requires or as otherwise indicated. This information statement/proxy statement/prospectus incorporates by reference important business and financial information about Horizon from documents that it has filed with the Securities and Exchange Commission but that have not been included in or delivered with this information statement/proxy statement/prospectus. For a listing of documents incorporated by reference into this information statement/proxy statement/prospectus, please see the section entitled “Where You Can Find More Information” beginning on page 185 of this information statement/proxy statement/prospectus.

 

You can obtain any of the documents incorporated by reference into this information statement/proxy statement/prospectus from Horizon through the “SEC Filings” link located on the investor relations page of its website at www.horizonoffshore.com or from the Securities and Exchange Commission through its website at www.sec.gov. We are not incorporating the contents of the websites of the Securities and Exchange Commission, Horizon or any other person into this document. We are only providing the information about how you can obtain certain documents that are specifically incorporated by reference into this information statement/proxy statement/prospectus at these websites for your convenience.

 

Horizon will provide you with copies of the documents relating to Horizon incorporated by reference, excluding any exhibits to those documents, without charge, if you request it in writing or by telephone from:

 

HORIZON OFFSHORE, INC.

2500 CityWest Boulevard, Suite 2200

Houston, Texas 77042

 

Attn.: William B. Gibbens, III, Secretary

Telephone: (713) 361-2600

 

In order for you to receive timely delivery of the documents in advance of the Horizon special meeting, Horizon should receive your request no later than          , 2007.

 

Horizon has supplied all information contained in or incorporated by reference in this information statement/proxy statement/prospectus relating to Horizon. Cal Dive has supplied all information contained in this information statement/proxy statement/prospectus relating to Cal Dive. Cal Dive and Horizon have both contributed to information relating to the merger.

Cal Dive International, Inc.

 

NOTICE OF APPROVAL GIVEN AND ACTION TO BE TAKEN

 

To the Stockholders of Cal Dive International, Inc.:

 

WE ARE NOT ASKING YOU FOR YOUR PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. THE ACTIONS DESCRIBED BELOW HAVE ALREADY BEEN APPROVED BY WRITTEN CONSENT OF HOLDERS OF A MAJORITY OF CAL DIVE INTERNATIONAL, INC.’S OUTSTANDING SHARES OF VOTING STOCK. A VOTE OF THE REMAINING STOCKHOLDERS IS NOT NECESSARY.

 

Pursuant to the requirements of Section 14(c) of the Securities Exchange Act of 1934 and Section 228(d) of the General Corporation Law of the State of Delaware, this information statement is being mailed on or about     , 2007 to holders of record as of June 11, 2007 of shares of common stock, par value $0.01 (“Cal Dive Common Stock”), of Cal Dive International, Inc., a Delaware corporation (“Cal Dive”).

 

This information statement is being furnished in connection with the Agreement and Plan of Merger, dated as of June 11, 2007, entered into by and among Cal Dive, Cal Dive Acquisition, LLC, a wholly-owned subsidiary of Cal Dive (“Merger Sub”), and Horizon Offshore, Inc. (“Horizon”). If Horizon stockholders approve and adopt the merger agreement and the merger is subsequently completed, Horizon will merge into Merger Sub, and each share of Horizon common stock will be converted into the right to receive $9.25 in cash, without interest, and 0.625 of a share of Cal Dive Common Stock, plus additional cash for any fractional share. We currently anticipate that a total of approximately 20.4 million shares of Cal Dive Common Stock will be issued in the merger.

 

Approval of the issuance of the Cal Dive Common Stock in the merger by the holders of a majority of the outstanding shares of Cal Dive Common Stock is required pursuant to the rules of the New York Stock Exchange. However, on June 11, 2007, Helix Energy Solutions Group, Inc., which on that date owned a majority of the outstanding shares of Cal Dive Common Stock, executed a written consent approving such issuance. Therefore, no further action on the part of Cal Dive stockholders is required in connection with the proposed merger.

 

A special meeting of Horizon stockholders has been scheduled for     , 2007. We currently anticipate that the consummation of the merger and the other transactions contemplated by the merger agreement will occur promptly following the Horizon stockholder meeting, provided the merger agreement is approved and adopted by the holders of a majority of the outstanding shares of Horizon common stock, and subject to the satisfaction of other customary conditions to closing.

 

By Order of the Board of Directors,

 

Lisa M. Buchanan

Secretary

 

          , 2007

Horizon Offshore, Inc.

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD          , 2007

 

To the Stockholders of Horizon Offshore, Inc.:

 

You are cordially invited to attend the special meeting of stockholders of Horizon Offshore, Inc., a Delaware corporation (“Horizon”), to be held on     , 2007, at 9:00 a.m., Central Time, at          , Houston, Texas          . As described in this information statement/proxy statement/prospectus, the special meeting will be held for the following purposes:

 

1. To consider and vote upon a proposal to approve and adopt the Agreement and Plan of Merger, dated as of June 11, 2007, by and among Cal Dive International, Inc. (“Cal Dive”), Cal Dive Acquisition, LLC, a wholly-owned subsidiary of Cal Dive (“Merger Sub”), and Horizon. If Horizon stockholders approve and adopt the merger agreement and the merger is subsequently completed, Horizon will merge into Merger Sub, and each share of Horizon common stock will be converted into the right to receive $9.25 in cash, without interest, and 0.625 of a share of Cal Dive common stock, par value $0.01 per share, plus additional cash for any fractional share;

 

2. To consider and vote upon a proposal to adjourn or postpone the special meeting, if necessary, to solicit additional proxies in favor of the approval and adoption of the merger agreement; and

 

3. To consider and transact any other business as may properly be brought before the special meeting or any adjournments or postponements thereof.

 

The merger proposal is more fully described in the accompanying information statement/proxy statement/prospectus, which you should read carefully in its entirety before voting.

 

THE BOARD OF DIRECTORS OF HORIZON HAS CAREFULLY CONSIDERED THE TERMS OF THE MERGER AGREEMENT AND THE MERGER AND BELIEVES THAT THE MERGER IS ADVISABLE AND FAIR TO, AND IN THE BEST INTERESTS OF, HORIZON AND ITS STOCKHOLDERS. THE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE MERGER AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.

 

The Board of Directors of Horizon has fixed the close of business on     , 2007 as the record date for the determination of stockholders entitled to notice of, and to vote at, the special meeting or any reconvened meeting following an adjournment or postponement thereof. Only stockholders of record at the close of business on such record date are entitled to notice of and to vote at such meeting. A complete list of such stockholders will be available for examination at the special meeting and at Horizon’s offices at 2500 CityWest Boulevard, Suite 2200, Houston, Texas 77042, for ten days prior to the special meeting during ordinary business hours, after          , 2007, for the examination by any such stockholder for any purpose germane to the special meeting.          

 

It is important that your stock be represented at the special meeting regardless of the number of shares you hold. Please promptly mark, date, sign, and return the enclosed proxy in the accompanying envelope, whether or not you intend to be present at the special meeting. In some cases, you may be able to instruct your bank or brokerage firm how to exercise your proxy by telephone or the Internet. See “Information About the Special Meeting and Voting” beginning on page 35. Your proxy is revocable at any time prior to its use at the special meeting.

 

Please do not send your Horizon common stock certificates with the enclosed proxy. If the merger is completed, the exchange agent will send you instructions regarding the surrender of your stock certificates.

In connection with the proposed merger, you may exercise appraisal rights as provided in the Delaware General Corporation Law. The procedure for exercising your appraisal rights is summarized under the heading “Appraisal Rights” in the attached information statement/proxy statement/prospectus.

 

By order of the Board of Directors,

 

William B. Gibbens, III

Secretary

 

          , 2007

 

TABLE OF CONTENTS

 

 

ANNEXES

 

No person is authorized to give any information or to make any representation with respect to the matters described in this information statement/proxy statement/prospectus other than those contained herein or in the documents incorporated by reference herein and, if given or made, such information or representation must not be relied upon as having been authorized by Cal Dive or Horizon. This information statement/proxy statement/prospectus does not constitute an offer to sell or a solicitation of an offer to buy the securities offered by this information statement/proxy statement/prospectus or a solicitation of a proxy in any jurisdiction where, or to any person whom, it is unlawful to make such an offer or solicitation. Neither the delivery hereof nor any distribution of securities made hereunder shall, under any circumstances, create an implication that there has been no change in the affairs of Cal Dive or Horizon since the date hereof or that the information contained or incorporated by reference in this information statement/proxy statement/prospectus is correct as of any time subsequent to the date hereof.

 

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

 

The following questions and answers briefly address some commonly asked questions about the special meeting and the merger. They may not include all the information that is important to you. We urge you to read carefully this entire information statement/proxy statement/prospectus, including the annexes and the other documents we refer to in this information statement/proxy statement/prospectus.

 

Frequently Used Terms

 

We have generally avoided the use of technical defined terms in this information statement/proxy statement/prospectus but a few frequently used terms may be helpful for you to have in mind at the outset. We refer to:

 

 

About the Merger

 

 

 

 

About the Special Meeting

 

 

General

 

 

 

Horizon Offshore, Inc.

2500 CityWest Boulevard, Suite 2200

Houston, Texas 77042

(713) 361-2600

Attn: William B. Gibbens, III

		Closing Price per Share
		June 11, 2007				, 2007
Cal Dive common stock		$	16.00			$
Horizon common stock		$	16.95			$
Merger consideration equivalent		$	19.25			$

	•	absence of any temporary restraining order, preliminary or permanent injunction, or other order issued by a court of competent jurisdiction or other law, legal restraint, or prohibition having the effect of making the merger illegal or otherwise prohibiting the consummation of the merger;
	•	receipt of approvals and authorizations required under the antitrust laws, including expiration or early termination of the waiting period under the Hart-Scott-Rodino Act, to consummate the transactions contemplated by the merger agreement;
	•	approval for listing of the Cal Dive shares to be issued in the merger on the New York Stock Exchange, subject to official notice of issuance;
	•	continued effectiveness of the registration statement of which this information statement/proxy statement/prospectus is a part, the absence of a stop order by the Securities and Exchange Commission suspending the effectiveness of the registration statement and the absence of any continuing or threatened proceeding or investigation by the Securities and Exchange Commission to suspend such effectiveness;
	•	adoption of the merger agreement by the holders of a majority of the outstanding Horizon shares entitled to vote at the Horizon special meeting;
	•	accuracy as of the closing of the merger of the representations and warranties made by each of Cal Dive, Merger Sub, and Horizon to the extent specified in the merger agreement;
	•	Cal Dive’s, Merger Sub’s, and Horizon’s performance in all material respects of their respective covenants and agreements under the merger agreement; and

	•	receipt of opinions by Cal Dive and Horizon from their respective tax counsel to the effect that the merger will constitute a reorganization within the meaning of Section 368(a) of the Code.

 

RISK FACTORS

 

In addition to the other information included and incorporated by reference into this information statement/proxy statement/prospectus, including the matters addressed under the caption “Cautionary Statement Regarding Forward-Looking Statements” beginning on page 28, you should carefully read and consider the following risk factors in evaluating the proposals to be voted on at the special meeting of Horizon stockholders and in determining whether to vote for approval and adoption of the merger agreement. Please also refer to the additional risk factors identified in the periodic reports and other documents incorporated by reference into this information statement/proxy statement/prospectus and see “Where You Can Find More Information” beginning on page 185.

 

Risks Relating to the Merger

 

The exchange ratio will not be adjusted in the event the value of Cal Dive common stock declines before the merger is completed. As a result, the value of the shares of Cal Dive common stock at the time that Horizon stockholders receive them could be less than the value of those shares today.

 

In the merger, Horizon stockholders will be entitled to receive a combination of $9.25 in cash, without interest, and 0.625 of a share of Cal Dive common stock for each share of Horizon common stock owned, plus additional cash for any fractional share. Cal Dive and Horizon will not adjust the exchange ratio for the portion of the merger consideration to be paid in Cal Dive common stock as a result of any change in the market price of shares of Cal Dive common stock between the date of this information statement/proxy statement/prospectus and the date that you receive shares of Cal Dive common stock in exchange for your shares of Horizon common stock. The market price of Cal Dive common stock will likely be different, and may be lower, on the date you receive your shares of Cal Dive common stock than the market price of shares of Cal Dive common stock as of the date of this information statement/proxy statement/prospectus. During the period from December 14, 2006, the date Cal Dive’s common stock was first listed on the New York Stock Exchange, until          , 2007, the most recent practical date prior to the mailing of this information statement/proxy statement/prospectus, Cal Dive common stock traded in a range from a low of $      to a high of $      and ended that period at $     . See “Comparative Historical and Pro Forma Per Share Information” beginning on page 33 for more detailed share price information. Differences in Cal Dive’s stock price may be the result of changes in the business, operation, or prospects of Cal Dive, market reactions to the proposed merger, commodity prices, general market and economic conditions, or other factors. If the market price of Cal Dive common stock declines after Horizon stockholders vote on the merger, Horizon stockholders may receive less value than expected when they voted. Neither Cal Dive nor Horizon is permitted to terminate the merger agreement or resolicit the vote of Horizon stockholders because of changes in the market prices of their respective common stock.

 

The merger is subject to certain conditions to closing that, if not satisfied or waived, will result in the merger not being completed.

 

The merger is subject to customary conditions to closing, as set forth in the merger agreement. The conditions to the merger include, among others, the receipt of required approvals from Horizon’s stockholders. If any of the conditions to the merger are not satisfied or, if waiver is permissible, not waived, the merger will not be completed. In addition, under circumstances specified in the merger agreement, Cal Dive or Horizon may terminate the merger agreement. As a result, we cannot assure you that we will complete the merger. See “The Merger Agreement — Conditions Precedent” beginning on page 81 for a discussion of the conditions to the completion of the merger.

 

Certain directors and the executive officers of Horizon have interests and arrangements that are different from, or in addition to, those of Horizon’s stockholders and that may influence or have influenced their decision to support or approve the merger.

 

When considering the recommendation of Horizon’s board of directors with respect to the merger, holders of Horizon common stock should be aware that certain of Horizon’s directors and its executive officers have

interests in the merger that are different from, or in addition to, their interests as Horizon stockholders and the interests of Horizon stockholders generally. These interests include, among other things, the following:

 

 

As a result, these directors and executive officers may be more likely to support and to vote to approve the merger than if they did not have these interests. Holders of Horizon common stock should consider whether these interests may have influenced these directors and executive officers to support or recommend approval of the merger. As of the close of business on the record date for the Horizon special meeting, these directors and executive officers were entitled to vote approximately     % of the shares of Horizon common stock outstanding on that date. These and additional interests of certain directors and executive officers of Horizon are more fully described in the sections entitled “Interests of Horizon Directors and Executive Officers in the Merger” beginning on page 66 of this information statement/proxy statement/prospectus.

 

Cal Dive may face difficulties in achieving the expected benefits of the merger.

 

Cal Dive and Horizon currently operate as separate companies. Cal Dive’s management has no experience running the combined business, and Cal Dive may not be able to realize the operating efficiencies, synergies, cost savings, or other benefits expected from the merger. In addition, the costs that Cal Dive incurs in implementing synergies, including its ability to amend, renegotiate, or terminate prior contractual commitments of Cal Dive and Horizon, may be greater than expected. Cal Dive also may suffer a loss of employees, customers, or suppliers, a loss of revenues, or an increase in operating or other costs or other difficulties relating to the merger.

 

Cal Dive’s actual financial position and results of operations may differ significantly and adversely from the pro forma amounts included in this information statement/proxy statement/prospectus.

 

The unaudited pro forma operating data contained in this information statement/proxy statement/prospectus is not necessarily indicative of the results that actually would have been achieved had the proposed merger and Cal Dive’s other currently contemplated financing transactions related to the merger been consummated on January 1, 2007, or that may be achieved in the future. We can provide no assurances as to how the operations and assets of both companies would have been run if they had been combined, or how they will be run in the future, which, together with other factors, could have a significant effect on the results of operations and financial position of the combined company.

 

Horizon will be subject to business uncertainties and contractual restrictions while the merger is pending.

 

Uncertainty about the effect of the merger on employees, suppliers, partners, regulators, and customers may have an adverse effect on Horizon and potentially on Cal Dive. These uncertainties may impair Horizon’s ability to attract, retain, and motivate key personnel until the merger is consummated, and could cause suppliers, customers, and others that deal with Horizon to defer purchases or other decisions concerning Horizon, or to seek to change existing business relationships with Horizon. Employee retention may be particularly challenging during the pendency of the merger, as employees may experience uncertainty about their future roles with Cal Dive. If key employees depart because of issues relating to the uncertainty or

difficulty of integration or a desire not to remain with Cal Dive, Cal Dive’s business following the merger could be harmed. In addition, the merger agreement restricts Horizon from making certain acquisitions and taking other specified actions until the merger occurs. These restrictions may prevent Horizon from pursuing attractive business opportunities that may arise prior to the completion of the merger. See “The Merger Agreement — Covenants and Agreements” beginning on page 70 for a description of the restrictive covenants applicable to Horizon.

 

The merger agreement limits Horizon’s ability to pursue alternatives to the merger.

 

The merger agreement contains provisions that could adversely impact competing proposals to acquire Horizon. These provisions include a limited time period during which Horizon generally was permitted to solicit acquisition proposals or offers for a competing transaction. Since the expiration of such period, Horizon is prohibited from generally soliciting any acquisition proposal or offer for a competing transaction. The merger agreement also includes a provision that requires Horizon to pay to Cal Dive a fee of $18.9 million if the merger agreement is terminated in connection with an alternative transaction. In addition, even if the board of directors of Horizon determines that a competing proposal to acquire Horizon is superior, Horizon may not exercise its right to terminate the merger agreement unless it notifies Cal Dive of its intention to do so at least three business days prior to taking such action. See “The Merger Agreement — Covenants and Agreements” beginning on page 75 and “The Merger Agreement — Termination” beginning on page 82.

 

Cal Dive required Horizon to agree to these provisions as a condition to Cal Dive’s willingness to enter into the merger agreement. These provisions, however, might discourage a third party that might have an interest in acquiring all or a significant part of Horizon from considering or proposing that acquisition, even if that party were prepared to pay consideration with a higher value than the current proposed merger consideration. Furthermore, the termination fee may result in a potential competing acquiror proposing to pay a lower per share price to acquire Horizon than it might otherwise have proposed to pay.

 

Failure to complete the merger could negatively impact the stock price and the future business and financial results of Horizon.

 

Although Horizon has agreed that its board of directors will, subject to fiduciary exceptions, recommend that its stockholders approve and adopt the merger agreement, there is no assurance that the merger agreement and the merger will be approved, and there is no assurance that the other conditions to the completion of the merger will be satisfied. If the merger is not completed, Horizon will be subject to several risks, including the following:

 

 

In addition, Horizon would not realize any of the expected benefits of having completed the merger. If the merger is not completed, these risks may materialize and materially adversely affect Horizon’s business, financial results, financial condition, and stock price.

 

The price of Cal Dive common stock may be affected by factors different from those affecting the price of Horizon common stock.

 

Holders of Horizon common stock will receive Cal Dive common stock in the merger. Cal Dive’s business is different in many ways from that of Horizon, and Cal Dive’s results of operations, as well as the price of Cal Dive’s common stock, may be affected by factors different from those affecting Horizon’s results of operations and the price of Horizon common stock. The price of Cal Dive common stock may fluctuate significantly following the merger, including fluctuation due to factors over which Cal Dive has no control. For a discussion of Cal Dive’s business and certain factors to consider in connection with its business, including risk factors associated with its business, see “— Risks Relating to Cal Dive,” “Information About Cal Dive” and “Cal Dive’s Historical Consolidated Financial Statements and Supplementary Data” and the notes thereto included in this information statement/proxy statement/prospectus. For a discussion of Horizon’s business and certain factors to consider in connection with its business, including risk factors associated with its business, see Horizon’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006, which is incorporated by reference into this information statement/proxy statement/prospectus. See also the other documents incorporated by reference into this information statement/proxy statement/prospectus under the caption “Where You Can Find More Information” beginning on page 185 of this information statement/proxy statement/prospectus.

 

Cal Dive will have higher levels of indebtedness following the merger than either Cal Dive or Horizon had before the merger.

 

You should consider that, following the merger, Cal Dive will have higher levels of debt and interest expense than Cal Dive and Horizon, together, had immediately prior to the merger. As of June 30, 2007, after giving effect to the merger and other currently contemplated related financings, the combined company and its subsidiaries are expected to have approximately $475 million of indebtedness outstanding. See “Unaudited Condensed Combined Pro Forma Financial Data” on page 169 of this information statement/proxy statement/prospectus. The significant level of combined indebtedness after the merger may have an effect on the combined company’s future operations, including:

 

 

See “Proposed Financings” on page 184 of this information statement/ proxy statement/prospectus.

The opinion obtained by Horizon from its financial advisor does not reflect changes in circumstances between signing the merger agreement and the completion of the merger.

 

Lehman Brothers, Horizon’s financial advisor, delivered a “fairness opinion” to the Horizon board of directors. The opinion states that, as of June 11, 2007, the consideration to be received by Horizon stockholders pursuant to the merger agreement was fair from a financial point of view to Horizon stockholders. The opinion does not reflect changes that may occur or may have occurred after June 11, 2007, including changes to the operations and prospects of Horizon or Cal Dive, changes in general market and economic conditions, or other factors. Any such changes, or other factors on which the opinion is based, may significantly alter the value of Horizon or Cal Dive or the prices of shares of Horizon common stock or Cal Dive common stock by the time the merger is completed. The opinion does not speak as of the time the merger will be completed or as of any date other than the date of such opinion. For a description of the opinion that Horizon received from its financial advisor, see “The Merger — Opinion of Lehman Brothers Inc. — Financial Advisor to Horizon” beginning on page 47. For a description of the other factors considered by Horizon’s board of directors in determining to approve the merger, see “The Merger — Horizon’s Reasons for the Merger” beginning on page 45 and “The Merger — Recommendation of the Horizon Board of Directors” beginning on page 46.

 

The shares of Cal Dive common stock to be received by Horizon stockholders as a result of the merger will have different rights from the shares of Horizon common stock.

 

Horizon stockholders will become Cal Dive stockholders, and their rights as stockholders will be governed by the certificate of incorporation and bylaws of Cal Dive and Delaware corporate law. The rights associated with Horizon common stock are different from the rights associated with Cal Dive common stock. See “Comparison of Stockholders’ Rights” beginning on page 180 for a discussion of the different rights associated with Cal Dive common stock.

 

Helix will continue to control Cal Dive and Horizon stockholders will exercise less influence over management.

 

Helix will continue to own approximately 58.7% of the outstanding Cal Dive common stock following the merger. Consequently, Horizon stockholders will have no meaningful influence over the management and policies of Cal Dive.

 

The merger may be completed even though Cal Dive or Horizon suffers a material adverse change.

 

In general, neither party may refuse to complete the merger if the other party suffers a material adverse change between June 11, 2007, the date of the signing of the merger agreement, and the closing of the merger unless such material adverse change caused a representation, warranty or covenant of such other party to be materially breached. Accordingly, certain types of changes would not prevent the merger from going forward, even if the change would have a material adverse effect on Cal Dive or Horizon, including the following:

 

 

In addition, the parties could elect to complete the merger even if one or both suffers a material adverse change.

 

Risks Relating to Cal Dive

 

Cal Dive’s business largely depends on offshore exploration, development, and production activity in the oil and natural gas industry, which is currently at a historically high level and could decline in the future.

 

Cal Dive’s business is substantially dependent upon the condition of the oil and natural gas industry and, in particular, the willingness of oil and natural gas companies to make capital expenditures for offshore exploration, development, and production operations. The level of capital expenditures generally depends on the prevailing views of future oil and natural gas prices, which are influenced by numerous factors, including but not limited to:

 

 

Oil and natural gas prices have been at historically high levels and recent capital spending levels may not remain the same or increase. A sustained period of low offshore drilling and production activity or the return of lower commodity prices would likely have a material adverse effect on Cal Dive’s business, financial condition, or results of operations.

 

Market conditions in the marine contracting industry are highly cyclical and subject to rapid change. Due to the short-term nature of most of Cal Dive’s contracts, adverse changes in market conditions can have an immediate impact on Cal Dive’s results of operations.

 

Historically, the marine contracting industry has been highly cyclical, with periods of high demand and high dayrates often followed by periods of low demand and low dayrates. Periods of low demand intensify the competition in the industry and can result in vessels and diving systems being idle. Cal Dive may be required to idle vessels or diving systems or reduce contract rates in response to market conditions in the future. On the Gulf of Mexico Outer Continental Shelf, or OCS, contracts are generally short-term, and oil and natural gas companies tend to respond quickly to changes in commodity prices. Due to the historical short-term nature of many of Cal Dive’s contracts, changes in market conditions can have an immediate impact on Cal Dive’s results of operations. In addition, customers generally have the right to terminate Cal Dive’s contracts with little or no notice and without penalty. As a result of the cyclicality of Cal Dive’s industry, it expect its results of operations to be volatile.

Cal Dive’s business is concentrated on the Gulf of Mexico OCS, and the mature nature of this region could result in less exploration, development, and production activities in the area, thereby reducing demand for Cal Dive’s services.

 

The Gulf of Mexico OCS is a mature oil and natural gas production region that has experienced substantial exploration, development, and production activity for many years. Because a large number of oil and natural gas prospects in this region have already been drilled, additional prospects of sufficient size and quality could be more difficult to identify. Moreover, oil and natural gas companies may be unable to obtain the financing necessary to drill prospects in this region. The decrease in the size of oil and natural gas prospects, the decrease in production, or the failure to obtain such financing may result in reduced exploration, development, and production activity in the Gulf of Mexico and reduced demand for Cal Dive’s services.

 

Intense competition in Cal Dive’s industry may reduce its profitability and weaken its financial condition.

 

The businesses in which Cal Dive operates are highly competitive. Cal Dive’s contracts traditionally have been awarded on a competitive bid basis, and while customers may consider, among other things, the reputation, safety record, and experience of the contractor, price competition is often the primary factor in determining which qualified contractor is awarded a job. This competition has become more intense in recent years as mergers among oil and natural gas companies have reduced the number of available customers. Contract pricing is partially dependent on the supply of competing vessels. Generally, excess offshore service capacity puts downward pressure on contract rates. If other companies construct new vessels or relocate existing vessels to its markets, competition may further increase thus driving down the rates Cal Dive may charge its customers. Cal Dive believes that the competition for contracts will continue to be intense in the foreseeable future. The impairment of Cal Dive’s ability to compete successfully may reduce its profitability and weaken its financial condition.

 

If Cal Dive fails to manage its growth effectively, its results of operations could be harmed.

 

Cal Dive has a history of growing through acquisitions of companies and assets. Cal Dive must plan and manage its acquisitions effectively to achieve revenue growth and maintain profitability in its evolving market. If it fails to manage current and future acquisitions effectively, its results of operations could be adversely affected. Cal Dive’s growth has placed, and is expected to continue to place, significant demands on its personnel, management, and other resources. Cal Dive must continue to improve its operational, financial, management, and legal/compliance information systems to keep pace with the growth of our business.

 

Any future acquisitions could present a number of risks, including but not limited to:

 

 

If Cal Dive is unsuccessful in completing acquisitions of other businesses or assets, its business, financial condition, or results of operations could be adversely affected. In addition, if it is unsuccessful in integrating its acquisitions in a timely and cost-effective manner, its business, financial condition, or results of operations could be adversely affected.

Cal Dive’s operations outside of the United States are subject to additional political, economic, and other uncertainties that could adversely affect its business, financial condition, or results of operations, and its exposure to such risks will increase as it expands its international operations.

 

An element of Cal Dive’s business strategy is to expand into international oil and natural gas producing areas such as the Middle East, Southeast Asia, and Australia. Its operations outside of the United States are subject to risks inherent in foreign operations, including but not limited to:

 

 

In addition, laws and policies of the United States affecting foreign trade and taxation may also adversely affect Cal Dive’s international operations.

 

As Cal Dive’s international operations expand, the exposure to these risks will increase. Cal Dive’s business, financial condition, or results of operations could be susceptible to adverse events beyond its control that may occur in the particular country or region in which it is active.

 

Cal Dive is the subject of an agreed final judgment that prevents it from making acquisitions of certain saturation diving systems without the consent of the U.S. Department of Justice, which could adversely affect its ability to make strategic acquisitions and increase its revenues and profitability.

 

As part of the Acergy and Torch acquisitions in 2005, Helix entered into an agreed final judgment with the U.S. Department of Justice, or DOJ, to remedy certain anti-competitive effects of the acquisitions alleged by the DOJ. The final judgment requires Helix, until January 2009, to notify the DOJ of any proposed direct or indirect acquisition of a saturation diving chamber that has been operated in the Gulf of Mexico at any time since October 1, 2002 or any interest in a company that owns or operates such a chamber. Cal Dive is also subject to and will continue to be bound by the consent decree. Since Cal Dive is not able to make any acquisition of this type without obtaining the consent of the DOJ, its ability to satisfy its customers’ demands for services that require it to use saturation diving chambers and to generate revenues from these services may be limited.

 

The loss of the services of one or more of Cal Dive’s key employees, or its failure to attract and retain other highly qualified personnel in the future, could disrupt its operations and adversely affect its financial results.

 

Cal Dive’s industry has lost a significant number of experienced subsea professionals over the years due to, among other reasons, the cyclicality of the business. Cal Dive’s continued success depends on the active participation of its key employees. The loss of one or more of its key people could adversely affect its operations. Cal Dive believes that its success and continued growth are also dependent upon its ability to attract and retain skilled personnel. Unionization or a significant increase in the wages paid by other employers

could result in a reduction in its workforce, increases in the wage rates it pays, or both. If either of these events occurs for any significant period of time, Cal Dive’s revenues and profitability could be diminished and its growth potential could be impaired.

 

The operation of marine vessels is risky, and Cal Dive may incur losses or other liabilities that are not covered by insurance and could have a material adverse effect on its financial condition and results of operations.

 

Marine contracting involves a high degree of operational risk. Hazards, such as vessels sinking, grounding, colliding, and sustaining damage from severe weather conditions, are inherent in marine operations. These hazards can cause personal injury or loss of life, severe damage to and destruction of property and equipment, pollution or environmental damage, and suspension of operations. Damage arising from such occurrences may result in lawsuits asserting large claims. Cal Dive maintains such insurance protection as it deems prudent, including Jones Act employee coverage, which is the maritime equivalent of workers’ compensation, and hull insurance on its vessels. Such insurance may not be sufficient or effective under all circumstances or against all hazards to which it may be subject. A successful claim for which it is not fully insured could have a material adverse effect on its business, financial condition, or results of operations. Moreover, its ability to maintain adequate insurance in the future at rates that it considers reasonable may be limited. As a result of market conditions, premiums and deductibles for certain of its insurance policies have increased substantially and could escalate further. In some instances, certain insurance could become unavailable or available only for reduced amounts of coverage. For example, insurance carriers are now requiring broad exclusions for losses due to war risk and terrorist acts and limitations for wind storm damage. The current insurance on its vessels, in some cases, is in amounts approximating book value, which is less than replacement value. In the event of property loss due to a catastrophic marine disaster, mechanical failure or collision, insurance may not cover a substantial loss of revenues, increased costs and other liabilities, and could have a material adverse effect on Cal Dive’s operating performance if it were to lose any of its large vessels.

 

Cal Dive has substantial debt obligations that could restrict its operations and impair its financial condition.

 

Cal Dive currently has a $250 million five-year revolving credit facility. Cal Dive expects to enter into a new $675 million five-year revolving credit facility in connection with the merger which will replace its current facility. At June 30, 2007, Cal Dive had outstanding debt of $140 million under its current credit facility. Immediately following the merger, Cal Dive expects to have $475 million outstanding under its new credit facility.

 

This substantial indebtedness could have adverse consequences on Cal Dive, including:

 

 

If Cal Dive’s cash flow and capital resources are insufficient to service its debt obligations, it may be forced to reduce or delay its business activities and capital expenditures, sell assets, seek additional equity or debt capital, or restructure or refinance its debt. However, these measures might be unsuccessful or inadequate in permitting it to meet its scheduled debt service obligations. Cal Dive may be unable to restructure or refinance its obligations or obtain additional equity financing or sell assets on satisfactory terms or at all. As a result, an inability to meet its debt obligations could cause it to default on those obligations. A default under

any debt instrument could, in turn, result in defaults under other debt instruments. Any such defaults could materially impair its financial condition and liquidity.

 

Cal Dive’s contracting business declines in winter, and adverse weather conditions in the Gulf of Mexico can adversely affect its revenues.

 

Marine operations conducted in the Gulf of Mexico are typically seasonal and depend, in part, on weather conditions. Historically, Cal Dive has experienced its lowest vessel utilization rates during the first quarter, and to a lesser extent during the fourth quarter, when weather conditions are least favorable for offshore exploration, development, and construction activities. As is common in the industry, Cal Dive typically bears the risk of delays caused by some, but not all, adverse weather conditions. Accordingly, its results in any one quarter are not necessarily indicative of annual results or continuing trends.

 

Cal Dive’s original estimates of the costs associated with its qualified turnkey projects and capital projects may be incorrect and result in reduced profitability, losses, or cost over-runs on those projects.

 

Many of Cal Dive’s projects are performed on a qualified turnkey basis where a defined work scope is delivered for a fixed price and extra work, which is subject to customer approval, is billed separately. The revenue, cost, and gross profit realized on a turnkey contract can vary from the estimated amount because of changes in offshore job conditions, variations in labor, and equipment productivity from the original estimates, and the performance of others, such as alliance partners. These variations and risks inherent in the marine construction business may result in Cal Dive experiencing reduced profitability or losses on projects. In addition, estimates for capital projects, including recertification costs, may have cost over-runs due to unknown factors associated with the work to be performed and market conditions.

 

Cal Dive is subject to extensive federal, state, local, and other laws and regulations that could adversely affect the cost, manner, or feasibility of conducting its operations.

 

Cal Dive’s subsea construction, intervention, inspection, maintenance, and decommissioning operations are subject to extensive laws and regulations. In order to conduct its operations in compliance with these laws and regulations, Cal Dive must obtain and maintain numerous permits, approvals, and certificates from various federal, state, and local governmental authorities. Due to adverse operating market conditions or unfavorable financing conditions, there may be occasions when certain recertification efforts may be postponed, rendering certain vessel operations temporarily out of commission, until more favorable market or cost of capital conditions arise. In addition, Cal Dive’s costs of compliance may increase if existing laws and regulations are revised or reinterpreted, or if new laws and regulations become applicable to its operations that may, for instance, require it to obtain additional permits, approvals, and certificates for proposed projects. Any actual or alleged violation of permit requirements or failure to obtain any required permit could result in restrictions or prohibitions on its operations or criminal sanctions. Alternatively, Cal Dive may have to incur substantial expenditures to obtain, maintain, or renew authorizations to conduct existing projects. If a project is unable to function as planned due to changing requirements or local opposition, Cal Dive may suffer expensive delays, extended periods of non-operation, or significant loss of value in a project. All such costs may have a negative effect on Cal Dive’s business, financial condition, or results of operations. Failure to comply with such laws and regulations, as interpreted and enforced, could have a material adverse effect on Cal Dive’s business, financial condition, or results of operations.

 

Cal Dive may incur substantial costs and liabilities with respect to environmental, health, and safety laws and regulations.

 

Cal Dive may incur substantial costs and liabilities as a result of environmental, health, and safety requirements relating to, among other things, its subsea construction and intervention, inspection, maintenance, and decommissioning operations. These costs and liabilities could arise under a wide range of environmental, health, and safety laws, including regulations and enforcement policies, which have tended to become increasingly strict over time. Failure to comply with these laws and regulations may result in assessment of administrative, civil, and criminal penalties, imposition of cleanup and site restoration costs and liens, and the

issuance of orders enjoining or limiting its current or future operations. Compliance with these laws and regulations also increases the cost of its operations and may prevent or delay the commencement or continuance of a given operation. In addition, claims for damages, including damages for natural resources, to persons or property may result from environmental and other impacts of its operations.

 

Strict, joint, and several liability to remediate contamination may be imposed under certain environmental laws, which could cause it to become liable for, among other things, the conduct of others or for consequences of its own actions that were in compliance with all applicable laws at the time those actions were taken. New or modified environmental, health, or safety laws, regulations, or enforcement policies could be more stringent and impose unforeseen liabilities or significantly increase compliance costs. Therefore, the costs to comply with environmental, health, or safety laws or regulations or the liabilities incurred in connection with them could significantly and adversely affect its business, financial condition, or results of operations.

 

Cal Dive has a limited operating history as an independent company and its historical financial information is not necessarily representative of the results it would have achieved as an independent publicly traded company and may not be a reliable indicator of its future results.

 

Cal Dive’s historical financial information included in this information statement/proxy statement/prospectus does not necessarily reflect the financial condition, results of operations, or cash flows it would have achieved as an independent publicly traded company during the periods presented or those results it will achieve in the future. This is primarily a result of the following factors:

 

 

Helix owns a controlling interest in Cal Dive and will continue to own a controlling interest of Cal Dive after the merger. The interests of Helix may conflict with those of Cal Dive’s other stockholders, and other stockholders’ voting power may be limited.

 

Helix currently owns approximately 73% of the outstanding shares of Cal Dive’s common stock. If the merger is completed, Helix will own approximately 58.7% of Cal Dive’s common stock. For so long as Helix continues to own shares of Cal Dive’s common stock representing more than 50% of the total voting power, it will have the ability to direct the election and removal of all members of Cal Dive’s board of directors and to exercise a controlling influence over Cal Dive’s business and affairs, including any determinations with respect to mergers or other business combinations involving Cal Dive, or acquisition or disposition of assets, the incurrence of indebtedness by Cal Dive, the issuance of any additional common stock or other equity securities by Cal Dive, the repurchase or redemption of common stock or preferred stock by Cal Dive and the payment of dividends by Cal Dive. Similarly, Helix has the power to determine or significantly influence the outcome of matters submitted to a vote of Cal Dive’s stockholders, including the power to prevent an acquisition or any other change in control of Cal Dive. Because Helix’s interests as Cal Dive’s controlling stockholder may differ from the interests of Cal Dive’s other stockholders, actions taken by Helix with respect to Cal Dive may not be favorable to such other stockholders.

 

Prior to the completion of its initial public offering, Cal Dive also entered into a Master Agreement, a Corporate Services Agreement, and a number of other agreements with Helix setting forth various matters governing its relationship with Helix while it remains a significant stockholder in Cal Dive. These agreements govern Cal Dive’s relationship with Helix and allow Helix to retain control over, among other things, the provision of corporate services to Cal Dive and its ability to make certain acquisitions or to merge or consolidate or to sell all or substantially all its assets. The rights of Helix under these agreements may allow Helix to delay or prevent an acquisition of Cal Dive that our other stockholders may consider favorable.

Cal Dive will not be able to terminate these agreements or amend them in a manner it deems more favorable so long as Helix continues to own shares of Cal Dive common stock representing more than 50% of the total voting power of its common stock.

 

Conflicts of interest may arise between Helix and Cal Dive that could be resolved in a manner unfavorable to Cal Dive.

 

Questions relating to conflicts of interest may arise between Helix and Cal Dive in a number of areas relating to its past and ongoing relationships. Cal Dive’s current board of directors is comprised of six persons, two of whom serve as directors and executive officers of Helix and one of whom serves as a director of Helix. Notwithstanding the fact that following the completion of the merger Cal Dive’s board will be increased to eight directors and two Horizon directors will join Cal Dive’s board, for as long as Helix continues to own shares of Cal Dive common stock representing more than 50% of the total voting power of its common stock, it will have the ability to direct the election and removal of all the members of Cal Dive’s board of directors and to exercise a controlling influence over Cal Dive’s business and affairs.

 

Areas in which conflicts of interest between Helix and Cal Dive could arise include, but are not limited to, the following:

 

 

If Helix engages in the same type of business Cal Dive conducts or takes advantage of business opportunities that might be attractive to Cal Dive, Cal Dive’s ability to operate successfully and expand its business may be hampered.

 

Cal Dive’s amended and restated certificate of incorporation provides that, subject to any contractual provision to the contrary, Helix will have no obligation to refrain from:

 

 

In addition, the corporate opportunity policy set forth in Cal Dive’s amended and restated certificate of incorporation addresses potential conflicts of interest between Cal Dive, on the one hand, and Helix and its officers and directors who are officers or directors of Cal Dive, on the other hand. The policy provides that if Helix acquires knowledge of a potential transaction or matter which may be a corporate opportunity for both Helix and Cal Dive, Cal Dive will have renounced its interest in the corporate opportunity. It also provides that if one of Cal Dive’s directors or officers who is also a director or officer of Helix learns of a potential transaction or matter that may be a corporate opportunity for both Helix and Cal Dive, Cal Dive will have renounced its interest in the corporate opportunity, unless that opportunity is expressly offered to that person in writing solely in his or her capacity as Cal Dive’s director or officer.

 

If one of Cal Dive’s officers or directors, who also serves as a director or officer of Helix, learns of a potential transaction or matter that may be a corporate opportunity for both Helix and Cal Dive, Cal Dive’s amended and restated certificate of incorporation provides that the director or officer will have no duty to communicate or present that corporate opportunity to Cal Dive and will not be liable to Cal Dive or its stockholders for breach of fiduciary duty by reason of Helix’s actions with respect to that corporate opportunity.

 

This policy could result in Helix having rights to corporate opportunities in which both Cal Dive and Helix have an interest.

 

Future sales or distributions of Cal Dive’s shares by Helix could depress the market price for shares of Cal Dive common stock.

 

Helix may sell all or part of the shares of Cal Dive common stock that it owns or distribute those shares to its stockholders, including pursuant to demand registration rights that were granted to Helix. Sales or distributions by Helix of substantial amounts of Cal Dive’s common stock in the public market or to its stockholders could adversely affect prevailing market prices for Cal Dive’s common stock. Helix is not subject to any contractual obligation that would prohibit it from selling, spinning off, splitting off, or otherwise disposing of any shares of Cal Dive’s common stock.

 

Cal Dive will not have control over certain tax decisions and could be liable for income taxes owed by Helix.

 

Prior to the closing of its initial public offering, Cal Dive and certain of its subsidiaries were included in Helix’s consolidated group for U.S. federal income tax purposes. In addition, Cal Dive or one or more of its subsidiaries may be included in the combined, consolidated, or unitary tax returns of Helix or one or more of its subsidiaries for foreign, state, and local income tax purposes. Under Cal Dive’s Tax Matters Agreement with Helix, Helix will have the right to prepare and file income tax returns that include Cal Dive or its subsidiaries if Helix has any responsibility for the taxes shown on such income tax returns. The Tax Matters Agreement provides that Helix will have sole authority to respond to and conduct all tax proceedings (including tax audits) relating to such income tax returns. This arrangement may result in conflicts of interest between Helix and Cal Dive. For example, under the Tax Matters Agreement, Helix will be able to choose to contest, compromise, or settle any adjustment or deficiency proposed by the relevant taxing authority in a manner that may be beneficial to Helix and detrimental to Cal Dive.

 

Moreover, notwithstanding the Tax Matters Agreement, U.S. federal tax law provides that each member of a consolidated group is liable for the group’s entire tax obligation. Thus, to the extent Helix or other members of the consolidated group fail to make any U.S. federal income tax payments required by law for tax periods for which Cal Dive or its subsidiaries are included in Helix’s consolidated group, Cal Dive could be liable for the shortfall. Similar principles may apply for foreign, state, and local income tax purposes where Cal Dive files combined, consolidated, or unitary returns with Helix or its subsidiaries for foreign, state, and local income tax purposes.

Cal Dive could be responsible for taxes resulting from the transfer of assets to it by Helix.

 

To effect the separation affected in connection with Cal Dive’s initial public offering, Helix and its affiliates transferred to Cal Dive the assets related to its business. Under the Tax Matters Agreement, Helix is generally responsible for any taxes resulting from such transfer. However, under the Tax Matters Agreement, Cal Dive has agreed to be responsible for any additional taxes that may result from actions it takes.

 

Cal Dive’s stock ownership by Helix, provisions in Cal Dive’s agreements with Helix, and Cal Dive’s corporate governance documents and Delaware law may delay or prevent an acquisition of Cal Dive that its other stockholders may consider favorable.

 

For as long as Helix continues to own shares of Cal Dive common stock representing more than 50% of the total voting power of its common stock, Helix will have the ability to control decisions regarding an acquisition of Cal Dive by a third party. In addition, Cal Dive’s amended and restated certificate of incorporation, bylaws, and Delaware law contain provisions that could make it more difficult for a third party to acquire Cal Dive without the consent of Cal Dive’s board of directors. These provisions include restrictions on the ability of Cal Dive’s stockholders to remove directors, supermajority voting requirements for stockholders to amend Cal Dive’s organizational documents, restrictions on a classified board of directors, and limitations on action by Cal Dive’s stockholders by written consent. Some of these provisions, such as the limitation on stockholder action by written consent, only become effective once Helix no longer controls Cal Dive. In addition, Cal Dive’s board of directors has the right to issue preferred stock without stockholder approval, which could be used to dilute the stock ownership of a potential hostile acquirer. Delaware law also imposes certain restrictions on mergers and other business combinations between Cal Dive and any holder of 15% or more of Cal Dive’s outstanding voting stock. These restrictions under Delaware law do not apply to Helix until it beneficially owns less than 15% of Cal Dive’s common stock and subsequently increases its shareholdings to once again beneficially own at least 15% of Cal Dive’s common stock. Although Cal Dive believes these provisions protect its stockholders from coercive or otherwise unfair takeover tactics and thereby provide for an opportunity to receive a higher bid by requiring potential acquirers to negotiate with Cal Dive’s board of directors, these provisions apply even if the offer may be considered beneficial by some stockholders.

 

Conflicts of interest may arise due to the vesting schedule of grants of restricted stock to Cal Dive’s executive officers.

 

Following completion of its initial public offering, Cal Dive granted shares of restricted stock to its executive officers, of which 53% began to vest upon the closing of the IPO, another approximately 29% will begin to vest upon the closing of the merger and the remainder of which will commence to vest upon the first anniversary of the date on which Helix no longer owns shares of stock representing 51% or more of the total voting power of Cal Dive’s common stock. This could create, or appear to create, conflicts of interest when Cal Dive’s management is faced with a transaction or transactions that could reduce Helix’s ownership of Cal Dive’s common stock to below 51% but that could have different implications for Cal Dive’s other stockholders.

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

This information statement/proxy statement/prospectus, including the documents incorporated by reference, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are generally accompanied by words such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “seek,” “could,” “should,” “will,” “project,” “estimate,” “look forward to” and similar expressions which convey uncertainty of future events or outcomes.

 

The expectations set forth in this information statement/proxy statement/prospectus and the documents incorporated by reference regarding, among other things, accretion, returns on invested capital, achievement of annual savings and synergies, achievement of strong cash flow, sufficiency of cash flow to fund capital expenditures, and achievement of debt reduction targets are only the parties’ expectations regarding these matters. Actual results could differ materially from these expectations depending on factors such as:

 

 

 

Actual actions that the combined company may take may differ from time to time as the combined company may deem necessary or advisable in the best interest of the combined company and its stockholders to attempt to achieve the successful integration of the companies, the synergies needed to make the transaction a financial success, and to react to the economy and the combined company’s market for its services.

 

SELECTED HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL INFORMATION

 

Selected Cal Dive Historical Financial Data

 

For periods prior to December 14, 2006, Cal Dive’s historical financial and other data have been prepared on a combined basis from Helix’s consolidated financial statements using the historical results of operations and bases of the assets and liabilities of the shallow water marine contracting business of Helix and give effect to allocations of expenses from Helix. Cal Dive’s historical financial data will not necessarily be indicative of its future performance nor will such data necessarily reflect what Cal Dive’s consolidated and combined financial position and results of operations would have been had Cal Dive operated as an independent publicly traded company during the periods shown.

 

Cal Dive has prepared its consolidated and combined financial statements as if Cal Dive International, Inc. had been in existence as a separate company throughout all relevant periods. The consolidated and combined results of operations data and cash flow data for the years ended December 31, 2006, 2005, 2004 and 2003 and the consolidated and combined balance sheet data as of December 31, 2006, 2005 and 2004 presented below were derived from Cal Dive’s audited consolidated and combined financial statements and the related notes thereto included elsewhere in this information statement/proxy statement/prospectus. The consolidated and combined results of operations data and cash flow data for the year ended December 31, 2002 and for the six months ended June 30, 2007 and 2006, and the consolidated and combined balance sheet data as of December 31, 2003 and 2002 and June 30, 2007 and 2006 presented below were derived from Cal Dive’s unaudited consolidated and combined financial statements. The operating results for the six months ended June 30, 2007 and 2006 include all adjustments (consisting of only normal recurring adjustments) that Cal Dive believes are necessary for a fair statement of results for such interim periods.

 

The operating results of the acquired vessels from the Torch asset purchase are included in Cal Dive’s historical consolidated and combined statements of operations since the acquisition date of August 31, 2005. The operating results of the assets acquired from Acergy during 2005 are included in Cal Dive’s historical consolidated and combined statements of operations since the acquisition date of November 1, 2005. Cal Dive’s consolidated and combined statements of operations do not include the operating results of the DLB801 or the Kestrel prior to their acquisitions in January and March 2006, respectively. Cal Dive’s operating results of the assets acquired from Fraser Diving are included in the accompanying historical consolidated and combined statements of operations since the acquisition date of July 31, 2006.

 

Results for the six months ended June 30, 2007 are not necessarily indicative of the results expected for the fiscal year ending December 31, 2007 or any future period.

 

You should read the information contained in this table in conjunction with Cal Dive’s “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical audited consolidated and combined financial statements and the accompanying notes thereto of Cal Dive included elsewhere in this information statement/proxy statement/prospectus.

 

 

 

 

 

Selected Horizon Historical Financial Data

 

Horizon’s selected financial data for the five-year period ended December 31, 2006 is derived from its audited financial statements and Horizon’s selected financial data for the six months ended June 30, 2007 and 2006 is derived from its unaudited financial statements. You should read the information below together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto incorporated by reference into this information statement/proxy statement/prospectus.

 

 

 

 

Selected Unaudited Condensed Combined Pro Forma Financial Data

 

We derived the following unaudited condensed combined pro forma financial data from Cal Dive’s audited consolidated and combined financial statements for the year ended December 31, 2006, Horizon’s audited consolidated financial statements for the year ended December 31, 2006, Cal Dive’s unaudited condensed consolidated and combined financial statements for the six months ended June 30, 2007 and Horizon’s unaudited condensed consolidated financial statements for the six months ended June 30, 2007. The statement of operations data assumes the merger was effected on January 1, 2006. The balance sheet data gives effect to the merger as if it had occurred on June 30, 2007. The accounting policies for Cal Dive and Horizon are comparable. The financial results may have been different had the companies always been combined. Further, the pro forma combined financial data does not reflect the effect of asset dispositions, if any, that may be required by order of regulatory authorities, restructuring charges that will be incurred to fully integrate and operate the combined organization more efficiently or anticipated synergies resulting from the merger. Expected costs associated with the combination of the companies’ operations, such as severance costs for redundant functions, integrating information technology systems and other arrangements, are in the process of being evaluated by Cal Dive. These costs are not expected to exceed $25 million, of which approximately $12.4 million relates to additional purchase price consideration for change of control payments for Horizon’s executive officers. You should read this information in conjunction with Cal Dive’s Management’s Discussion and Analysis of Financial Condition and Results of Operations, Cal Dive’s Financial Statements and Supplementary Data and the notes thereto and the Unaudited Condensed Combined Pro Forma Financial Data included in this information statement/proxy statement/prospectus and Horizon’s Management’s Discussion and Analysis of Financial Condition and Results of Operations and Horizon’s consolidated financial statements and notes thereto included in Horizon’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q incorporated by reference in this information statement/proxy statement/prospectus.

 

 

 

COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE INFORMATION

 

Set forth below are the Cal Dive and Horizon historical and pro forma amounts per share of common stock for income from continuing operations and book value. The exchange ratio for the pro forma computations is 0.625 of a share of Cal Dive common stock for each share of Horizon common stock. The merger consideration is $9.25 in cash, without interest, and 0.625 of a share of Cal Dive common stock for each share of Horizon common stock outstanding immediately prior to completion of the merger.

 

The Horizon pro forma (equivalent) information shows the effect of the merger from the perspective of an owner of Horizon common stock. The information was computed by multiplying the Cal Dive pro forma combined information by the exchange ratio of 0.625. This computation does not include the benefit to Horizon stockholders of the cash component of the merger consideration.

 

You should read the information below together with the historical financial statements and related notes contained herein, in the case of Cal Dive, and in the Horizon Annual Report on Form 10-K for the year ended December 31, 2006 and Quarterly Report on Form 10-Q for the quarter ended June 30, 2007, in the case of Horizon, and other information filed with the SEC and incorporated by reference in this information statement/proxy statement/prospectus. See “Where You Can Find More Information” beginning on page 185.

 

The unaudited pro forma combined data below is for illustrative purposes only. The pro forma adjustments for the balance sheet are based on the assumption that the transaction was consummated on each of the respective dates presented below. The pro forma adjustments for the statements of operations are based on the assumption that the transaction was consummated on January 1, 2006.

 

The financial results may have been different had the companies always been combined. You should not rely on this information as being indicative of the historical results that would have been achieved had the companies always been combined or of the future results of the combined company. See “Unaudited Condensed Combined Pro Forma Financial Data” beginning on page 169 for a discussion of the pro forma financial data used in the comparative per-share amounts in the table below.

 

 

 

 

COMPARATIVE MARKET VALUE INFORMATION

 

The following table sets forth the closing price per share of Cal Dive common stock and the closing price per share of Horizon common stock on June 11, 2007 (the last business day preceding the announcement by Cal Dive and Horizon of the execution of the merger agreement) and          , 2007 (the most recent practicable trading date prior to the date of this information statement/proxy statement/prospectus). The table also presents the equivalent market value per share of Horizon common stock on June 11, 2007 and          , 2007, for receipt of a combination of $9.25 in cash, without interest, and 0.625 of a share of Cal Dive common stock, for each share of Horizon common stock owned by Horizon stockholders.

 

Horizon stockholders are urged to obtain current market quotations for shares of Cal Dive common stock and Horizon common stock before making a decision with respect to the merger.

 

No assurance can be given as to the market prices of Cal Dive common stock or Horizon common stock at the closing of the merger. Because the exchange ratio will not be adjusted for changes in the market price of Cal Dive common stock, the market value of the shares of Cal Dive common stock that holders of Horizon common stock will receive at the effective time of the merger may vary significantly from the market value of the shares of Cal Dive common stock that holders of Horizon common stock would have received if the merger were consummated on the date of the merger agreement or on the date of this information statement/proxy statement/prospectus.

 

 

STOCKHOLDER LITIGATION

 

On June 13, 2007, two putative stockholder derivative lawsuits were filed in state district court in Harris County, Texas relating to the merger: Edward Fritsche ex rel. Horizon Offshore, Inc. v. John T. Mills, et al., Cause No. 2007-35288 (61st State District Court); and Edith Olanoff ex rel. Horizon Offshore, Inc. v. John T. Mills, et al., Cause No. 2007-36084 (80th State District Court). These two lawsuits are substantially similar and are brought against the members of Horizon’s board of directors and Cal Dive. Both also name Horizon as a “nominal defendant,” as is customary in putative derivative lawsuits. The plaintiffs allege, among other things, that Horizon’s board of directors breached its fiduciary duty by utilizing a defective sales process in connection with the merger. As currently pleaded, neither lawsuit seeks to recover money damages. However, even though no application for a temporary restraining order or a temporary injunction has yet been filed, both seek to enjoin the merger. Only one of the lawsuits (Fritsche) has actually been served upon Horizon and Cal Dive or any of the other defendants. On July 30, 2007, Cal Dive and Horizon filed responses denying the allegations and asserting, among other things, that the plaintiffs did not properly state a cause of action. No hearing or trial has been set. Additional lawsuits could be filed in the future.

 

INFORMATION ABOUT THE SPECIAL MEETING AND VOTING

 

This information statement/proxy statement/prospectus is being furnished to Horizon stockholders by Horizon’s board of directors in connection with the solicitation of proxies from the holders of Horizon common stock for use at the special meeting of Horizon stockholders and any adjournments or postponements of the special meeting. This information statement/proxy statement/prospectus also is being furnished to Horizon stockholders as a prospectus of Cal Dive in connection with the issuance by Cal Dive of shares of Cal Dive common stock to Horizon stockholders in connection with the merger.

 

Date, Time and Place

 

The special meeting of stockholders of Horizon will be held on          , 2007 at 9:00 a.m., Central Time, at          , Houston, Texas          .

 

Matters to Be Considered

 

At the special meeting, Horizon stockholders will be asked:

 

 

At this time, the Horizon board of directors is unaware of any matters, other than those set forth in the preceding sentence, that may properly come before the special meeting.

 

Stockholders Entitled to Vote

 

The close of business on          , 2007 has been fixed by Horizon’s board as the record date for the determination of those holders of Horizon common stock who are entitled to notice of, and to vote at, the special meeting and at any adjournments or postponements thereof.

 

At the close of business on the record date, there were           shares of Horizon common stock outstanding and entitled to vote, held by approximately           holders of record. A list of the stockholders of record entitled to vote at the special meeting will be available for examination by Horizon stockholders for any purpose germane to the meeting. The list will be available at the meeting and for ten days prior to the meeting during ordinary business hours by contacting Horizon’s Secretary at 2500 CityWest Boulevard, Suite 2200, Houston, Texas 77042.

 

Quorum and Required Vote

 

Each holder of record of shares of Horizon common stock as of the record date is entitled to cast one vote per share at the special meeting on each proposal. The presence, in person or by proxy, of the holders of a majority of the issued and outstanding shares of Horizon common stock outstanding as of the record date constitutes a quorum for the transaction of business at the special meeting. The affirmative vote of the holders of a majority of the shares of Horizon common stock entitled to vote at the special meeting is required to approve and adopt the merger agreement.

 

As of the record date for the special meeting, directors and executive officers of Horizon and their affiliates beneficially owned an aggregate of           shares of Horizon common stock entitled to vote at the special meeting. These shares represent approximately     % of the Horizon common stock outstanding and entitled to vote as of the record date.

 

As of the record date for the special meeting, Cal Dive and its directors, executive officers, and their affiliates owned none of the outstanding shares of Horizon common stock.

 

How Shares Will Be Voted at the Special Meeting

 

All shares of Horizon common stock represented by properly executed proxies received before or at the special meeting, and not properly revoked, will be voted as specified in the proxies. Properly executed proxies that do not contain voting instructions will be voted FOR the approval and adoption of the merger agreement and any adjournment or postponement of the special meeting.

 

A properly executed proxy marked “Abstain” with respect to any proposal will be counted as present for purposes of determining whether there is a quorum at the special meeting. However, because the approval and adoption of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares entitled to vote at the special meeting, an abstention will have the same effect as a vote AGAINST approval and adoption of the merger agreement.

 

If you hold shares of Horizon common stock in “street name” through a bank, broker, or other nominee, the bank, broker, or nominee may vote your shares only in accordance with your instructions. If you do not give specific instructions to your bank, broker, or nominee as to how you want your shares voted, your bank, broker, or nominee will indicate that it does not have authority to vote on the proposal, which will result in what is called a “broker non-vote.” Broker non-votes will be counted for purposes of determining whether there is a quorum present at the special meeting, but because approval and adoption of the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares entitled to vote at the special meeting, broker non-votes will have the same effect as a vote AGAINST approval and adoption of the merger agreement.

 

If any other matters are properly brought before the special meeting, the proxies named in the proxy card will have discretion to vote the shares represented by duly executed proxies in their sole discretion.

 

How to Vote Your Shares

 

You may vote in person at the special meeting or by proxy. We recommend you vote by proxy even if you plan to attend the special meeting. You can always change your vote at the special meeting.

 

You may vote by proxy card by completing and mailing the enclosed proxy card. If you properly submit your proxy card in time to vote, one of the individuals named as your proxy will vote your shares of common stock as you have directed. You may vote for or against the proposals submitted at the special meeting or you may abstain from voting.

 

If you hold shares of Horizon common stock through a broker or other custodian, please follow the voting instructions provided by that firm. If you do not return your proxy card, or if your shares are held in a stock brokerage account or held by a bank, broker, or nominee, or, in other words, in “street name” and you do not instruct your bank, broker, or nominee on how to vote those shares, those shares will not be voted at the special meeting.

 

A number of banks and brokerage firms participate in a program that also permits stockholders whose shares are held in “street name” to direct their vote by the Internet or telephone. This option, if available, will be reflected in the voting instructions from the bank or brokerage firm that accompany this information statement/proxy statement/prospectus. If your shares are held in an account at a bank or brokerage firm that participates in such a program, you may direct the vote of these shares by the Internet or telephone by following the voting instructions enclosed with the proxy from the bank or brokerage firm. The Internet and telephone proxy procedures are designed to authenticate stockholders’ identities, to allow stockholders to give their proxy voting instructions and to confirm that those instructions have been properly recorded. Votes directed by the Internet or telephone through such a program must be received by 11:59 p.m., New York, New York time, on          , 2007. Requesting a proxy prior to the deadline described above will automatically cancel any voting directions you have previously given by the Internet or telephone with respect to your shares. Directing the voting of your shares will not affect your right to vote in person if you decide to attend the meeting; however, you must first obtain a signed and properly executed proxy from your bank, broker, or nominee to vote your shares held in street name at the special meeting.

If you submit your proxy but do not make specific choices, your proxy will be voted FOR each of the proposals presented.

 

How to Change Your Vote

 

If you are a registered stockholder, you may revoke your proxy at any time before the shares are voted at the special meeting by:

 

 

Merely attending the special meeting will not revoke any prior votes or proxies; you must vote at the special meeting to revoke a prior proxy.

 

If you hold shares of Horizon common stock through a broker or other custodian and you vote by proxy, you may later revoke your proxy instructions by informing the holder of record in accordance with that entity’s procedures.

 

Voting by Participants in the Horizon Benefit Plans

 

Under the Horizon stock incentive plans, a grantee of restricted shares of Horizon common stock has all the rights of a Horizon stockholder with respect to those shares, including the right to vote. Accordingly, holders of shares of Horizon restricted stock will be entitled to vote at the special meeting in the same way as holders of non-restricted shares of Horizon common stock. Beneficial holders of shares of Horizon common stock held within the Horizon 401(k) plan control the voting of those shares.

 

Solicitation of Proxies

 

In addition to solicitation by mail, directors, officers, and employees of Horizon may solicit proxies for the special meeting from Horizon stockholders personally or by telephone, facsimile, and other electronic means without compensation other than reimbursement for their actual expenses.

 

The expenses incurred in connection with the filing, printing, and mailing of this document will be shared equally by Cal Dive and Horizon. Arrangements also will be made with brokerage firms and other custodians, nominees, and fiduciaries for the forwarding of solicitation material to the beneficial owners of shares of Horizon common stock held of record by those persons, and Horizon will, if requested, reimburse the record holders for their reasonable out-of-pocket expenses in so doing.

 

Recommendation of the Horizon Board of Directors

 

The Horizon board of directors has unanimously approved the merger agreement and the transactions it contemplates, including the merger. The Horizon board of directors determined that the merger is advisable and in the best interests of Horizon and its stockholders and unanimously recommends that you vote FOR approval and adoption of the merger agreement. See “The Merger — Horizon’s Reasons for the Merger” beginning on page 45 and “The Merger — Recommendation of the Horizon Board of Directors” beginning on page 46 for a more detailed discussion of the Horizon board of directors’ recommendation.

 

Special Meeting Admission

 

If you wish to attend the special meeting in person, you must present a form of personal identification. If you are a beneficial owner of Horizon common stock that is held by a bank, broker, or other nominee, you

will need proof of ownership of Horizon common stock to be admitted to the meeting. A recent brokerage statement or a letter from your bank or broker are examples of proof of ownership.

 

No cameras, recording equipment, electronic devices, large bags, briefcases, or packages will be permitted in the meeting.

 

PLEASE DO NOT SEND IN ANY HORIZON COMMON STOCK CERTIFICATES WITH YOUR PROXY CARD. After the merger is completed, you will receive written instructions from the exchange agent informing you how to surrender your stock certificates to receive the merger consideration.

 

Adjournment and Postponements

 

The special meeting may be adjourned from time to time, to reconvene at the same or some other place, by approval of the holders of common stock representing a majority of the votes present in person or by proxy at the special meeting, whether or not a quorum exists, without further notice other than by an announcement made at the special meeting, so long as the new time and place for the special meeting are announced at that time. If the adjournment is for more than thirty days, or if after the adjournment a new record date is determined for the adjourned special meeting, a notice of the adjourned special meeting must be given to each stockholder of record entitled to vote at the special meeting. If a quorum is not present at the Horizon special meeting, holders of Horizon common stock may be asked to vote on a proposal to adjourn or postpone the Horizon special meeting to solicit additional proxies. If a quorum is not present at the Horizon special meeting, the holders of a majority of the shares entitled to vote who are present in person or by proxy may adjourn the meeting. If a quorum is present at the Horizon special meeting but there are not sufficient votes at the time of the special meeting to approve the other proposal(s), holders of Horizon common stock may also be asked to vote on a proposal to approve the adjournment or postponement of the special meeting to permit further solicitation of proxies.

 

THE MERGER

 

General

 

Horizon’s board of directors is using this document to solicit proxies from the holders of Horizon common stock for use at the Horizon special meeting, at which holders of Horizon common stock will be asked to vote upon approval and adoption of the merger agreement. In addition, Cal Dive is sending this document to Horizon stockholders as a prospectus in connection with the issuance of shares of Cal Dive common stock in exchange for shares of Horizon common stock in the merger. Cal Dive is also sending this document to Cal Dive stockholders who have not already voted to approve the issuance of Cal Dive common stock in the merger in order to inform them that the holder of a majority of Cal Dive’s outstanding shares of common stock has already approved the issuance of Cal Dive common stock in the merger and of the proposed merger.

 

The boards of directors of Horizon and Cal Dive have unanimously approved the merger agreement providing for the merger of Horizon into Merger Sub. Merger Sub, which is wholly-owned by Cal Dive, will be the surviving entity in the merger, and upon completion of the merger, the separate corporate existence of Horizon will terminate. We expect to complete the merger in the fourth quarter of 2007.

 

Background of the Merger

 

The board of directors and executive management of Helix periodically discussed strategic options over the past several years, including growth by acquisition. In February 2006, Helix formed Cal Dive as a wholly-owned subsidiary to facilitate the transfer of Helix’s shallow water marine contracting business. In October 2006, Helix concluded that effecting an initial public offering of Cal Dive was its best strategic option at that time for its shallow water marine contracting business.

 

During this same period, Horizon’s board of directors and executive management regularly reviewed its business strategy with the goal of maximizing stockholder value. This process included periodically evaluating alternatives, including, among other things, Horizon’s capital structure, financing alternatives and mergers and acquisitions. During this process, Horizon met with representatives of various investment banks, including Lehman Brothers, on several occasions to discuss its business, current financial market conditions and its various financial and strategic alternatives.

 

Cal Dive completed its initial public offering in December 2006. In January 2007, Cal Dive engaged Banc of America Securities LLC as its financial advisor to assist it in evaluating potential acquisition opportunities. On January 23, 2007, a team from Banc of America Securities met with executive management of Cal Dive and reviewed financial aspects of a potential acquisition of Horizon.

 

At a regularly scheduled meeting of Cal Dive’s board of directors on February 5, 2007, executive management made a brief presentation about potential acquisition targets, including Horizon. At a follow up meeting of Cal Dive’s board on February 28, 2007, executive management provided a more detailed presentation regarding the potential acquisition of Horizon, including acquisition structures and financing alternatives. The Cal Dive board authorized executive management to continue to explore the potential acquisition of Horizon.

 

In early 2007, during the course of its review of Horizon’s financial performance and business strategy, Horizon’s board of directors began to focus on potential merger, sale and financing alternatives to maximize stockholder value. As part of this review, Horizon’s board of directors focused on Horizon’s long-term ability to successfully compete in the highly competitive global marine construction industry and whether an appropriate business combination would provide an increase in scale that would enable Horizon to more effectively compete for large construction projects, address market demands, achieve cost and operating efficiencies and obtain other benefits. Horizon’s consideration of pursuing a combination was fostered in large measure by the negative market dynamics and operating results the company experienced from 2002 through 2005. Over the past two years, Horizon’s operating results had improved substantially primarily as a result of the strong operating results in the U.S. Gulf of Mexico, but executive management and the board continued to

be concerned about Horizon having the scale and service offerings to successfully compete for and perform large construction projects in the global marine construction market.

 

On March 7, 2007, at an investor conference in Orlando, Florida, Owen Kratz, Cal Dive’s Chairman, and Quinn Hébert, Cal Dive’s President and Chief Executive Officer, approached David Sharp, Horizon’s President and Chief Executive Officer, regarding the possibility of the combination of the two companies. At this meeting Messrs. Kratz, Hébert and Sharp had preliminary, high-level discussions regarding valuation of Horizon, strategic fit and potential operating efficiencies that could be attained by a combination, particularly as it related to diving services required for marine construction services. Following this meeting, Messrs. Hébert and Sharp met to further discuss, among other things, the business philosophy of the two management teams and explored in greater detail whether a potential combination would be beneficial to the two companies. At this meeting, Mr. Hébert informed Mr. Sharp that in order for Cal Dive to formulate a more definitive proposal, Cal Dive would need to review and evaluate certain non-public Horizon operational and financial information. Accordingly, Mr. Hébert requested that Horizon consider entering into a confidentiality agreement with Cal Dive and provided Mr. Sharp with Cal Dive’s initial request for information about Horizon.

 

Upon Mr. Sharp’s return to Houston, Texas, he consulted with other members of the executive management team and John Mills, Horizon’s non-executive Chairman of the Board. Mr. Mills then consulted with the other Horizon board members and further discussed Cal Dive’s expression of interest at its regularly scheduled board meeting held on March 8, 2007. Horizon’s executive management and board of directors were of the view that the combination of Cal Dive and Horizon represented a good strategic fit and should be pursued if appropriate valuation and terms could be negotiated. Following this process, Horizon contacted Lehman Brothers about serving as its financial advisor.

 

On March 9, 2007, Cal Dive provided Horizon with Cal Dive’s proposed confidentiality agreement, which included a 90 day exclusivity period for Cal Dive to conduct its due diligence of Horizon. During such 90-day period, Horizon would have been prohibited from talking with any other party about a possible business combination with Horizon. After consulting with the Horizon board, Mr. Sharp advised Mr. Hébert that Horizon would not enter into the confidentiality agreement as proposed. During the period between March 9-15, 2007, the parties and their advisors discussed Cal Dive’s proposed approach to a combination, including the lack of reciprocity in due diligence in a stock transaction and the absence of a preliminary indication of interest from Cal Dive regarding valuation. The parties and their advisors also discussed the various means by which a combination could be effected and whether or not the combination should be subject to a pre-signing market check or auction. During these discussions, representatives of Cal Dive explained that they were extremely concerned about confidentiality and did not want Horizon to conduct a pre-signing market check or conduct an auction. Instead, Cal Dive suggested that if the parties reached agreement on terms, Cal Dive would be prepared to provide Horizon with a contractual right to canvass the market for a superior proposal for a specified period of time, which is commonly known as a “go-shop” period. Cal Dive also indicated that it expected a termination fee of 3%-5% if a superior proposal arose as a result of this process. As part of discussions by Horizon’s executive management and Mr. Mills, Charles Buckner, chairman of the finance and risk committee of Horizon’s board, Lehman Brothers and Jones, Walker, Waecheter, Poitevent, Carrère & Denègre, LLP, Horizon’s principal outside counsel, the relative benefits of, and recent experiences and precedents with, a go-shop period were discussed. The potential benefits of utilizing a go-shop period discussed included greater ability relative to a pre-signing market check or auction process, to maintain confidentiality and avoid market speculation about a potential transaction which in turn would lessen the risk to Horizon if a potential transaction could not be negotiated on satisfactory terms, while still providing Horizon the right to canvass the market for an alternative transaction after a potential transaction was announced. Horizon’s executive management and board were also concerned about the impact that a breach of confidentiality could have with its key employees and potential recruitment by competitors, particularly if a transaction was not successfully negotiated and closed. Executive management of both companies then spent the next week negotiating various aspects of the confidentiality agreement, exclusivity, and due diligence, without resolution. Mr. Hébert circulated a memorandum to the Cal Dive board on March 14, 2007, advising the board of the status of the negotiations and updating it regarding its valuation analysis of Horizon.

On March 16, 2007, Lehman Brothers contacted Banc of America Securities to indicate that Horizon would not pursue discussions with Cal Dive without a preliminary understanding being reached regarding valuation and process. Later that day, Messrs. Sharp and Hébert discussed Horizon’s position and agreed that while the valuation and process related considerations remained outstanding they should continue to discuss potential advantages of a combination, including anticipated operating efficiencies and any potential synergies, the widened service offering and the extent of the enhanced platform for future expansion.

 

Mr. Hébert and Kregg Lunsford, Cal Dive’s Chief Financial Officer, and Mr. Sharp and Ron Mogel, Horizon’s Chief Financial Officer, met at an energy industry conference in New York City on March 19, 2007 and discussed at a high level the potential fit for the two companies and financial and administrative matters to help the two companies further assess operating efficiencies and potential synergies. Following that meeting, Messrs. Hébert, Lunsford, Sharp, and Mogel engaged in frequent further discussions in an attempt to resolve the outstanding issues with respect to the confidentiality arrangement and conduct of a mutual due diligence review of the companies.

 

On March 27, 2007, Cal Dive submitted the same non-reciprocal confidentiality agreement it had submitted previously with the 90 day exclusivity provision deleted. Horizon again communicated its position that it would not allow detailed due diligence to proceed without preliminary agreement on price and process. Mr. Sharp did, however, indicate to Mr. Hébert that Horizon would be prepared to allow the executive management teams to meet to discuss high-level information regarding the anticipated operating efficiencies, potential synergies and strategic fit of the two companies without executing a confidentiality agreement. The meeting of executive management of Cal Dive and Horizon occurred in Houston, Texas on March 30, 2007. At the conclusion of the meeting, Mr. Hébert indicated that Cal Dive would likely be in a position to present Horizon with a non-binding indication of interest setting forth its proposed valuation within the following few weeks.

 

During April 2007, there were several discussions between Messrs. Hébert and Sharp, but without any meaningful progress.

 

In early May 2007, Mr. Sharp advised Mr. Hébert that Horizon would continue the discussions only if Cal Dive provided a more definitive indication of the price it was prepared to offer for Horizon. On May 7, 2007, Cal Dive’s executive management presented the Cal Dive board with updated information regarding its valuation of Horizon and the opportunities presented by the potential acquisition, including that Horizon had requested a more firm indication of the price that Cal Dive was prepared to pay for the Horizon common stock. The Cal Dive board approved moving forward with the proposed transaction, and authorized the Cal Dive executive management to submit a non-binding indication of interest to Horizon.

 

On May 11, 2007, Messrs. Hébert, Lunsford, Sharp, and Mogel discussed potential valuation. Mr. Sharp indicated to Mr. Hébert that, notwithstanding the perceived strategic fit of the companies, he did not expect Horizon’s board to react favorably to a transaction having less than a 20% market premium over some period prior to the agreement. Mr. Hébert informed Mr. Sharp that Cal Dive was evaluating a purchase price in the range of $17.00 to $18.00 per share of Horizon common stock.

 

On May 14, 2007, Cal Dive presented Horizon with a confidential, non-binding indication of interest, indicating that Cal Dive was prepared to offer $9.25 in cash and 0.625 of a share of Cal Dive common stock for each outstanding share of Horizon common stock. The indication of interest also stated it was subject to the completion of satisfactory due diligence, the negotiation of a mutually satisfactory merger agreement and its approval by Cal Dive’s board, and customary closing conditions, but no financing contingency. Cal Dive’s closing price on the New York Stock Exchange on May 14, 2007 was $14.56, and Horizon’s closing price on the Nasdaq Global Market on that date was $15.60. Using that closing price for Cal Dive common stock, the implied value of the proposed consideration totaled approximately $18.35 a share of Horizon common stock. Cal Dive stressed that it was firm on price, but might be flexible on process and other issues. Cal Dive’s indication of interest stated that it would expire at 5:00 p.m. Central daylight time on May 18, 2007 unless accepted by Horizon prior to that time.

On May 15, 2007, Horizon’s board of directors met to discuss the indication of interest. The meeting was chaired by Mr. Mills. Also in attendance were representatives of Lehman Brothers and Jones Walker. Prior to Lehman Brothers’ attendance, the board discussed generally the terms contemplated by Cal Dive’s indication of interest, formally approved the retainer of Lehman Brothers as Horizon’s financial advisor and agreed to the financial and other terms of the retainer. After joining the meeting, Jones Walker and Lehman Brothers discussed with the board the terms reflected in the indication of interest and other issues and process considerations and the general corporate duties of directors. The board of directors discussed the valuation proposed by Cal Dive as well as process considerations such as the benefits and drawbacks of a pre-signing market check, auction process or go-shop period. The board agreed that confidentiality was extremely important to the process given the relatively small size of the marine construction industry and competitive market conditions. The board concluded that prior to reacting to Cal Dive’s valuation proposal or process considerations, the board should receive a formal valuation analysis of the strategic options identified by the board to allow it to fully evaluate the Cal Dive proposal against other available strategic options. The board noted that it would review Lehman Brothers’ evaluation at its next regularly scheduled meeting on May 23, 2007. The board also discussed whether to form a special board committee to assist in the process considerations if potential financial buyers were identified as part of the overall process. Horizon also retained Richards Layton & Finger, P.A. as its special Delaware counsel to assist the board in its process considerations and to advise regarding matters of Delaware corporate law.

 

On May 16, 2007, Messrs. Sharp and Mills separately called Mr. Hébert and advised him that Horizon’s board had determined that it was possibly interested, but that Horizon would not be able to respond by the May 18 deadline. Also on May 16, 2007, Cal Dive held a board meeting at which executive management provided an update on the status of the negotiations.

 

On May 23, 2007, Horizon’s board, along with representatives of Lehman Brothers, Jones Walker and Richards Layton met to discuss the strategic evaluation conducted by Lehman Brothers. After summarizing the principal economic terms of the Cal Dive indication of interest, Lehman Brothers presented the board with its detailed evaluation of other strategic options available to Horizon ranging from executing its present business plan, refinancing Horizon’s existing debt through issuing convertible notes, pursuing a leveraged buyout or acquiring another company. The board extensively discussed the timing, risks and potential effects of each of the strategic alternatives, the underlying assumptions of each and the difficulty of predicting future operating results in the marine construction industry. The board then discussed Cal Dive’s indication of interest and the process by which Horizon would assess whether another transaction offering greater value was available. With respect to the process, the board discussed with its advisors the relative benefits of, and recent experiences and precedents with, a go-shop period. The potential benefits of utilizing a go-shop period discussed included greater ability relative to a pre-signing market check or auction process to maintain confidentiality and avoid market speculation about a potential transaction, which in turn would lessen the risk to Horizon if a potential transaction could not be negotiated on satisfactory terms, while still providing Horizon the right to canvass the market for an alternative transaction after a potential transaction was announced. Horizon’s executive management and board also expressed concern about the impact that a breach of confidentiality could have with its key employees and potential recruitment by competitors, particularly if a transaction was not successfully negotiated and closed. The board concluded the meeting by instructing Lehman Brothers to make a counter proposal to Banc of America Securities that the per share stock consideration be increased from 0.625 to 0.700 of a share and that Cal Dive agree to a 45 day go-shop period with a 1% termination fee payable if a superior proposal arose as a result of that process.

 

On May 24, 2007, Horizon’s board, along with representatives of Lehman Brothers, Jones Walker and Richards Layton, met to receive an update from Lehman Brothers on the results of their discussions with Banc of America Securities. Lehman Brothers reported that Bank of American Securities indicated Cal Dive was unwilling to alter its proposed consideration, but was agreeable to working with Horizon to address its concerns with respect to having a meaningful and effective mechanism to pursue a superior alternative transaction. The board concluded, after due consideration, including the tenor of the negotiations leading to Cal Dive’s proposal and its agreement to address Horizon’s process concerns, that attempting to initiate further price negotiations was unlikely to produce a positive result and could put the existing proposal at risk. The

board instructed Lehman Brothers to contact Banc of America Securities and indicate that Horizon was prepared to proceed with reciprocal financial and legal due diligence.

 

On May 25, 2007, Cal Dive submitted a proposed mutual confidentiality agreement to Horizon, which included a 30 day exclusivity period (subject to exclusions for unsolicited superior proposals). Representatives of the companies negotiated the terms of the confidentiality agreement over the weekend, and each signed the agreed upon form of confidentiality agreement on May 29, 2007, the first business day after the Memorial Day holiday weekend. Following the execution of the confidentiality agreement, Horizon and Cal Dive, together with their respective financial and legal representatives, commenced work on a detailed due diligence process. The parties developed a comprehensive reciprocal diligence work plan and began taking steps to facilitate the parties’ diligence reviews. On June 1, 2007, representatives of both companies, including their financial advisors and legal counsel, met in Houston, Texas, and conducted a mutual due diligence review of each other. Late afternoon on June 1, 2007, Fulbright & Jaworski L.L.P., Cal Dive’s principal outside counsel, delivered its proposed merger agreement to Horizon and Horizon’s representatives.

 

On June 3, 2007, Horizon’s executive management, along with representatives of Lehman Brothers, Jones Walker and Richards Layton, discussed their comments to the draft merger agreement and the need to substantially negotiate its terms.

 

On June 4, 2007, Messrs. Sharp and Hébert met to discuss and exchange ideas regarding the management of the combined company and operating efficiencies that could be accomplished. That same day, Horizon’s board, along with representatives of Lehman Brothers, Jones Walker and Richards Layton, met to receive an update on the due diligence process and issues raised by the draft merger agreement. It was agreed that Mr. Sharp and Bill Gibbens, Horizon’s general counsel, would meet later that day with Mr. Hébert and Lisa Buchanan, Cal Dive’s general counsel, to discuss high level issues raised by the draft merger agreement, including the lack of reciprocity and scope of the representations, lack of reciprocity and scope of the pre-closing covenants, lack of representation of Horizon directors on the board of the combined company, the conditions to the consummation of the merger, including the definition of “material adverse effect,” the go-shop process and non-solicitation provisions, and Cal Dive’s request to have the right to match any superior proposal that may be received during the go-shop process. At the meeting, the board also decided to formally establish a special committee consisting of Horizon’s four independent directors to review, evaluate and, as appropriate, negotiate any transaction with any financial buyer that might indicate an interest in acquiring Horizon as part of the process. The special committee was established so as to be available in the event a conflict of interest developed among one or more members of the board if a financial buyer surfaced and the terms proposed by any financial buyer included the possibility of retaining management. In the event a proposal was made by a financial buyer, the special committee was delegated the full power and authority by Horizon’s board to, among other things, (i) review, evaluate and, as appropriate, negotiate the terms and conditions of any such possible transaction proposed by a financial buyer involving Horizon, including but not limited to a third party acquisition of Horizon, (ii) determine whether any possible transaction proposed by a financial buyer is fair to, and in the best interests of, Horizon and its stockholders, and (iii) recommend to Horizon’s full board what action, if any, should be taken by the company with respect to any possible transaction proposed by a financial buyer. Since no proposal was ever received from a financial buyer, the Special Committee never formally met. Following the meeting, Messrs. Sharp, Hébert and Gibbens and Ms. Buchanan met to discuss Horizon’s high level concerns about the draft merger agreement.

 

On June 5, 2007, Cal Dive distributed a revised merger agreement to Horizon.

 

On June 7, 2007, Horizon’s board, along with representatives of Lehman Brothers, Jones Walker and Richards Layton, met to update the Board on the contractual issues remaining in the merger agreement. Later that day, Jones Walker communicated outstanding issues and proposed resolution to Cal Dive and Fulbright.

 

On the morning of June 8, 2007, Cal Dive held a telephonic meeting with its board of directors, and executive management updated the board on the status of the negotiations and the open issues. Beginning at mid-day on June 8, 2007, executive management of the companies and their legal counsel met in Houston, Texas, and negotiated the open issues on the merger agreement. During the meeting, the principal outstanding issues were negotiated, including eliminating any match right, fixing the termination fee at 1.5% for superior

proposals arising as a result of the go-shop process and 3% thereafter, revising the terms of the process for entertaining any unsolicited superior proposals to meet Horizon’s requests and other remaining issues regarding the representations, covenants and closing conditions. On June 9, 2007, Horizon’s board, along with representatives of Lehman Brothers and Richards Layton, met so that the board could be updated on the results of the June 8th meeting between company representatives. Later that day, Fulbright circulated to representatives of both companies a revised draft merger agreement reflecting the revisions agreed to at the June 8th meeting.

 

On June 10, 2007, Lehman Brothers conducted its final due diligence with Helix’s executive management regarding the inter-company relationships between Cal Dive and Helix, and Helix’s present intention regarding its controlling ownership position in Cal Dive.

 

Mid-morning on June 11, 2007, Horizon advised Cal Dive of Horizon’s outstanding issues with the merger agreement. Throughout the day on June 11, 2007, the companies and their legal counsel and financial advisors participated in numerous telephone calls and exchanged numerous emails attempting to resolve the remaining open issues between the companies.

 

At 3:00 pm Central daylight time on June 11, 2007, Cal Dive held a telephonic meeting of its board of directors. At this meeting, Banc of America Securities reviewed with the board its financial analysis of the merger consideration and delivered to Cal Dive’s board an oral opinion, which was confirmed by delivery of a written opinion dated June 11, 2007, to the effect that, as of that date and based on and subject to various assumptions and limitations described in its opinion, the merger consideration to be paid by Cal Dive was fair, from a financial point of view, to Cal Dive. Also at that meeting, the Cal Dive board approved the transaction as it was then contemplated by Cal Dive and authorized executive management to continue to work to resolve the open issues. Cal Dive also received the written consent of Helix, its majority stockholder, to the issuance of Cal Dive common stock in the transaction.

 

At 4:00 pm Central daylight time on June 11, 2007, Horizon held a meeting of its board of directors, and the Horizon executive management updated the board on the status of the negotiations. At Horizon’s board meeting, executive management made final presentations regarding the results of its business and operational due diligence investigations and the financial and strategic implications of the proposed combination. The board also reviewed with counsel the material terms of the merger agreement. During the meeting, Lehman Brothers rendered its opinion that, as of the date of the meeting and based upon and subject to the factors, assumptions, matters, procedures, limitations and qualifications set forth in such opinions, the consideration to be received by the holders of Horizon common stock in the merger was fair, from a financial point of view, to such holders. The board was also advised by counsel with respect to its fiduciary obligations in connection with considering and approving the merger agreement. Following further discussion and based on the totality of the information presented and the fairness opinion issued by Lehman Brothers, Horizon’s board, among other things, declared the merger advisable and in the best interests of Horizon’s stockholders, unanimously approved the merger agreement, and resolved to recommend that Horizon’s stockholders vote to adopt the merger agreement.

 

Representatives of the companies continued to negotiate the remaining issues on the merger agreement until late afternoon on June 11, 2007. At around 8:00 pm Central daylight time on June 11, 2007, the merger agreement was signed by Mr. Hébert on Cal Dive’s behalf and Mr. Sharp on Horizon’s behalf. Promptly thereafter, the companies issued a joint press release announcing the merger. Horizon separately issued a press release prior to the market opening on June 12, 2007, announcing the go-shop period and process.

 

Promptly following the execution and announcement of the merger agreement, Lehman Brothers, on behalf of Horizon, began contacting third parties to determine whether any were interested in making an acquisition proposal for Horizon. These parties were identified by Lehman Brothers and approved by Horizon’s board of directors, and included strategic and financial buyers. In all, Lehman Brothers contacted 14 strategic buyers and 47 financial buyers. Of these 61 potential bidders, only two expressed an interest in engaging in preliminary discussions toward an acquisition proposal. Each of these two potential bidders was presented with a confidentiality agreement substantially similar to the form entered into between Horizon and Cal Dive, with the exception that Horizon was not subject to any confidentiality obligations and there was no

exclusivity provision. After negotiations, only one of the potential bidders entered into a confidentiality agreement with Horizon. The other potential bidder declined to enter into the confidentiality agreement and informed Lehman Brothers that it was no longer interested in discussing a potential acquisition proposal of Horizon. An information packet containing relevant materials on Horizon was sent to the interested party on June 15, 2007. On June 25, 2007, that party notified Lehman Brothers that it did not wish to pursue an acquisition proposal involving Horizon. There have been no other indications of interest with respect to a potential acquisition proposal for Horizon.

 

Horizon’s Reasons for the Merger

 

At its meeting on June 11, 2007, the Horizon board of directors, after an extensive review and thorough discussion of all facts and issues it considered relevant with respect to the merger, concluded unanimously that the merger agreement and the transaction contemplated thereby were advisable and in the best interests of Horizon’s stockholders. The Horizon board of directors authorized and approved the merger agreement and the transactions contemplated by the merger agreement, including the merger, and agreed to recommend to the stockholders of Horizon that they vote in favor of approval and adoption of the merger agreement. The Horizon board of directors unanimously recommends that its stockholders vote FOR the approval and adoption of the merger agreement.

 

In reaching their conclusion, the members of the Horizon board of directors relied on their personal knowledge of Horizon and the marine construction industry and on the advice of management and Horizon’s legal and financial advisors. The Horizon board of directors also reviewed the information provided by Horizon and its advisors. The Horizon board of directors considered numerous factors to be in favor of the merger, including, among others things, the following:

 

 

 

In reaching its determination, the Horizon board of directors also considered and evaluated, among other things: (i) other strategic alternatives that may have been available to Horizon, including the successful execution of its current business plan; (ii) the other terms of the merger agreement, including the ability to pursue superior alternative transaction proposals that may be identified following the 45-day “go-shop” period; (iii) the tax consequences of the merger for Horizon’s stockholders; and (iv) the right of Horizon’s stockholders to dissent under the merger agreement.

 

The Horizon board of directors also considered a variety of risks and other potentially negative factors concerning the combination, including the following:

 

 

The Horizon board of directors believed that, overall, the potential benefits of the combination to Horizon and Horizon’s stockholders outweighed these risks and negative factors.

 

This discussion of the information and factors considered by the Horizon board of directors is not intended to be exhaustive but addresses the major information and factors considered by the Horizon board of directors in its consideration of the merger. In reaching its conclusion, the Horizon board of directors did not find it practical to assign, and did not assign, any relative or specific weight to the different factors that were considered and individual members of the Horizon board of directors may have given different weight to different factors.

 

Recommendation of the Horizon Board of Directors

 

After careful consideration of the matters discussed above, the Horizon board of directors concluded that the proposed merger is in the best interest of the stockholders of Horizon.

 

FOR THE REASONS SET FORTH ABOVE, THE BOARD OF DIRECTORS OF HORIZON HAS UNANIMOUSLY ADOPTED THE MERGER AGREEMENT AS BEING IN THE BEST INTERESTS OF HORIZON AND ITS STOCKHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT HORIZON’S STOCKHOLDERS VOTE FOR THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.

 

Opinion of Lehman Brothers Inc. — Financial Advisor to Horizon

 

Horizon engaged Lehman Brothers to act as its financial advisor in connection with the merger. Lehman Brothers rendered its oral opinion to Horizon’s board of directors, which was subsequently confirmed in writing, on June 11, 2007, that, as of the date of the opinion and based upon and subject to certain matters and qualifications stated in the opinion letter, from a financial point of view, the consideration to be offered to the stockholders is fair to such stockholders.

 

The full text of Lehman Brothers’ opinion dated June 11, 2007, is included as Annex B to this information statement/proxy statement/prospectus and is incorporated herein by reference. Holders of Horizon’s common stock should read Lehman Brothers’ opinion letter in its entirety for a discussion of the procedures followed, factors considered, assumptions made and qualifications and limitations of the review undertaken by Lehman Brothers in connection with its opinion. This summary of the Lehman Brothers opinion is qualified in its entirety by reference to the full text of the opinion.

 

Lehman Brothers’ advisory services and opinion were provided for the information and assistance of the board of directors of Horizon in connection with its consideration of the proposed transaction. Lehman Brothers’ opinion was limited solely to the fairness of the merger consideration. Lehman Brothers’ opinion is not intended to be and does not constitute a recommendation to any stockholder as to how that stockholder should vote or act with respect to the proposed merger or any other matter described in this information statement/proxy statement/prospectus. Lehman Brothers was not requested to consider, and its opinion does not address, the relative merits of the merger compared to any alternative business strategies that might exist for Horizon or the effect of any other transaction in which Horizon might engage.

 

In arriving at its opinion, Lehman Brothers reviewed, among other things: