Edgar Filing: MIDLAND FABRICATORS & PROCESS SYSTEMS LLC

SECURITIES AND EXCHANGE COMMISSION,
WASHINGTON, D.C. 20549

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SCHEDULE 13E-3

(AMENDMENT NO. 2)

(RULE 13e-100)

TRANSACTION STATEMENT UNDER SECTION 13(e) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 13-E THEREUNDER

RULE 13e-3 TRANSACTION STATEMENT UNDER
SECTION 13(e) OF THE SECURITIES EXCHANGE ACT OF 1934

UNIFAB INTERNATIONAL, INC.
(Name of Issuer)

MIDLAND FABRICATORS AND PROCESS SYSTEMS, L.L.C.
MIDLAND ACQUISITION, INC.
WILLIAM A. HINES
JEANNE M. HINES MCDANIEL
(Name of Persons Filing Statement)

COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class of Securities)

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90467L209
(CUSIP Number of Class of Securities)

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MIDLAND FABRICATORS AND PROCESS SYSTEMS, L.L.C.
MIDLAND ACQUISITION, INC.
c/o William A. Hines
3636 N. CAUSEWAY, SUITE 300
METAIRIE, LOUISIANA 70002
Telephone Number (504) 837-5766

(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications on Behalf of Persons Filing Statement)

Copy to:

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Virginia Boulet, Esq.
Adams and Reese LLP
4500 One Shell Square
New Orleans, Louisiana 70139
(504) 581-3234

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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THIS TRANSACTION, PASSED UPON THE
MERITS OR THE FAIRNESS OF THE TRANSACTION OR PASSED UPON THE ADEQUACY OR
ACCURACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO
THE CONTRARY IS CRIMINAL OFFENSE.

This statement is filed in connection with (check the appropriate box):

a. [ ] The filing of solicitation materials or an information statement
subject to Regulation 14A, Regulation 14C, or Rule 13e-3(c) under the Securities
Exchange Act of 1934.

b. [ ] The filing of a registration statement under the Securities Act of
1933.

c. [ ] A tender offer.

d. [X] None of the above.

Check the following box if the soliciting materials or information
statement referred to in checking box (a) are preliminary copies. [ ]

Check the following box if the filing fee is a final amendment reporting
the results of the transaction: [ ]

CALCULATION OF FILING FEE

TRANSACTION VALUATION* AMOUNT OF FILING FEE

$177,943.20 $22.55

* Calculated, for the purposes of determining the filing fee only, in
accordance with Rule 0-11(b)(1) under the Exchange Act. This calculation
assumes the purchase of 889,716 shares of common stock, par value $0.01 per
share, of UNIFAB International, Inc. at a price of $0.20 per share. Such number
of shares represents the sum of 8,997,913 shares of UNIFAB common stock
outstanding as of September 30, 2004 less the 8,107,100 shares of UNIFAB common
stock held by Midland and 1,097 shares of UNIFAB common stock held by William
A. Hines.

[ ] Check Box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.

Amount previously paid: N/A Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A

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SUMMARY TERM SHEET

This summary and the remainder of this Transaction Statement on Schedule
13E-3 include information describing the "going private" merger involving UNIFAB
International, Inc. ("UNIFAB") and Midland Acquisition, Inc. ("Midland
Acquisition"), how it affects you, what your rights are with respect to the
merger as a shareholder of UNIFAB and the position of the people listed on the
cover of this Schedule 13E-3 above the caption "Name of Person(s) Filing
Statement," on the fairness of the merger to you. This summary provides an
overview of all material matters presented in this Transaction Statement and all
accompanying documents. The proposed transaction described in this Transaction
Statement has not been approved by the Board of Directors of UNIFAB or any
special committee of independent directors of UNIFAB, and it is not subject to
any vote of the shareholders of UNIFAB who are not affiliated with Midland
Acquisition. From March 14, 2001 through August 13, 2002, neither Midland nor
any affiliate of Midland was an officer or director of UNIFAB. Any information
set forth herein about UNIFAB during that period has been included in
substantial reliance upon the accuracy and completeness of UNIFAB's public
filings with the Securities and Exchange Commission during that time period or
from press releases by UNIFAB.

PURPOSE OF THE MERGER (PAGE 2).

Midland Acquisition is a wholly owned subsidiary of Midland Fabricators
and Process Systems, L.L.C., a Louisiana limited liability company ("Midland").
William A. Hines and Jeanne M. Hines McDaniel each owns approximately 45% of
Midland, and Mr. Hines also owns 1,097 shares of UNIFAB common stock. Mr. Hines
is a director and officer of UNIFAB. Immediately prior to the merger discussed
below, Midland and Mr. Hines will contribute their outstanding shares of
UNIFAB's common stock to Midland Acquisition, including 771,000 shares that
Midland has recently acquired by the conversion of $2,698,500 of a convertible
debenture of UNIFAB that Midland owns. After these contributions, Midland
Acquisition will own more than 90% of UNIFAB's issued and outstanding shares.
Midland will then cause Midland Acquisition to merge with and into UNIFAB as a
means of acquiring all of the other shares of UNIFAB common stock.

PRINCIPAL TERMS OF THE MERGER.

The Merger (page 24). Midland recently formed Midland Acquisition as a
vehicle to accomplish the merger in a way that will result in UNIFAB being a
wholly-owned subsidiary of Midland. As the holder of more than 90% of UNIFAB's
outstanding shares of common stock, Midland Acquisition will have the right to
effect the merger in this "short form" manner under Louisiana Business
Corporation Law Section 112G. Midland Acquisition will not seek, and it does not
require the approval of the directors of UNIFAB for the merger. Shareholders of
UNIFAB other than Midland Acquisition will not be entitled to vote their shares
with respect to the merger. The board of directors of UNIFAB has not taken any
action with respect to the merger, and to the knowledge of Midland does not make
any recommendations to the shareholders of UNIFAB with respect to the merger.

Merger Consideration (page 1). As a result of the merger, each share of
stock held by the public shareholders of UNIFAB unaffiliated with Midland will
be converted into the right to receive $0.20 in cash from Midland Acquisition
after the merger. The merger consideration of $0.20 per share is substantially
below prices at which shares of UNIFAB common stock have traded over the past
year. According to Yahoo.com, on November 11, 2004, shares of common stock of
UNIFAB traded at $0.30 on the over-the-counter market.

UNIFAB Shares Outstanding; Ownership by Midland and Midland Acquisition,
Inc. (page 1). As of September 30, 2004, a total of 8,997,913 shares of UNIFAB
common stock were outstanding, of which Midland owned a total of 8,107,100,
representing 90.1% of the total outstanding shares of UNIFAB common stock.

William A. Hines owned 1,097 shares of UNIFAB common stock, representing less
than 1% of the outstanding common stock of UNIFAB on September 30, 2004, and
will contribute his shares to Midland Acquisition prior to the merger.

Payment for Shares (page 24). Midland Acquisition will pay you for your
shares of UNIFAB common stock promptly after the effective date of the merger.
Instructions for surrendering your stock certificates will be set forth in a
Certificate of Merger and a Letter of Transmittal, which will be mailed to
shareholders of record of UNIFAB within ten calendar days following the date the
merger becomes effective, along with the Certificate of Merger. Please do not
submit your stock certificates before you have received these documents. Sending
us your stock certificates with a properly signed letter of transmittal will
have the effect of waiving your dissenters' rights described below. See Item 4
"Terms of the Transaction" beginning on page 24 of this Schedule 13E-3.

Source and Amount of Funds or Other Consideration (page 31). Midland
expects that the total amount of funds needed by Midland Acquisition to pay for
UNIFAB common stock in the merger, and to pay related fees and expenses, will be
approximately $285,443.20, assuming no outstanding options or warrants to
acquire UNIFAB common stock are exercised prior to the merger. Midland
Acquisition will obtain these funds from Midland in the form of capital
contributions.

Change in Plans (page 31). Midland has the right to change its plan to
effect the merger at any time. Midland has no legal obligation to effect the
merger, and may decide not to effect the merger if Midland determines that the
merger is not in the best interest of UNIFAB or Midland, for any reason.

BACKGROUND OF THE PROPOSED TRANSACTION

Traditionally, and prior to its initial public offering in September 1997,
UNIFAB was engaged in the custom fabrication of decks and modules of drilling
and production equipment weighing up to 3,500 tons for offshore oil and gas
platforms, with special expertise in the fabrication of decks with complex
piping requirements. From 1998 through 2001, UNIFAB used the cash proceeds of
its initial public offering and borrowed under its credit facility to make
acquisitions of various businesses with a view to providing services to the oil
and gas industry that were beyond UNIFAB's traditional expertise. In most cases,
these acquisitions were made without an overall acquisition strategy or a
related business plan and the management and operations of the acquired
companies were not integrated efficiently into UNIFAB. Each acquired company
contributed operating losses almost immediately after being acquired.
Accordingly, UNIFAB not only spent its cash reserves on this acquisition
strategy, but it borrowed money that could not be repaid from the company's
dwindling cash flow. UNIFAB suffered at this time from lack of competent
operations management, as UNIFAB's best managers, in a disagreement with
UNIFAB's chief executive officer, resigned as a group in April 1998 and went to
work for an offshore maintenance company, which has since become UNIFAB's
largest competitor for deck and platform fabrication at the Port of Iberia. By
the end of 2001, UNIFAB was not in compliance with its covenants under its
credit facility and UNIFAB's viability as a company was in question.

In the summer of 2001, UNIFAB engaged Dain, Rauscher, Wessels, an
independent national investment banking firm, to seek possible merger partners
or acquirors of UNIFAB. Materials were prepared to describe UNIFAB to potential
suitors. By September 2001, after extensive efforts by Dain, Rauscher, no party
had indicated an interest in acquiring UNIFAB in a transaction that provided
value to common shareholders. In September, after a meeting with representatives
of Dain, Rauscher and UNIFAB's secured creditors, the Board committed to replace
Mr. Berard from his position as chairman of the board and chief executive
officer of the company. See "Background of the Proposed Transaction" beginning
on page 2 for a more complete description of the circumstances giving rise to
the proposed transaction.

In August 2002, Midland acquired a controlling interest in UNIFAB in a
transaction that is described beginning on page 27. Midland was aware that
UNIFAB's audited financial statements for the period ended December 31, 2001
indicated that there was "substantial doubt" about UNIFAB's ability "to
continue as a going concern." At the time that Midland acquired its interest in
UNIFAB, it was Midland's hope that conditions in the offshore fabrication
industry would improve and, with the financial assistance that Midland could
provide, UNIFAB would become a profitable company. Since August 2002, however,
industry conditions have not improved substantially, and UNIFAB's financial
condition and results of operations have not improved despite significant
financial assistance from Midland.

Midland is unwilling to provide financial support to UNIFAB indefinitely.
Midland does not believe that UNIFAB is likely to become profitable in the near
future and that all resources of UNIFAB should be conserved. Midland believes
that UNIFAB cannot afford the expenses associated with being a public company,
including substantial additional expenses that would be required in late 2004
and thereafter, as UNIFAB would have to comply with the Sarbanes Oxley Act and
the rules and regulations thereunder. In order to conserve these resources,
Midland has decided that UNIFAB should "go private."

Louisiana law allows Midland, as a 90% shareholder of UNIFAB, to take
UNIFAB private in a short-form merger. Such a transaction requires corporate
action solely on the part of Midland; the shareholders of UNIFAB and the board
of directors of UNIFAB do not play any role in such transaction. The short-form
merger is therefore the most inexpensive way to effect a going private
transaction under the circumstances, and has therefore been chosen by Midland
as the structure for this transaction. In a short-form merger, the company
going private is merged with its 90% shareholder, and the minority shareholders
are paid cash compensation for their shares that the amount of which is
established unilaterally by the majority shareholder. Minority shareholders who
are dissatisfied with the amount of compensation they are entitled to receive
may elect to exercise their dissenters rights. Your dissenters rights are
explained in detail below, beginning on page 25.

Midland engaged the services of an independent financial consultant to
advise on the value of UNIFAB common stock. That firm advised Midland that a
share of UNIFAB common stock would have no fair value. Midland determined that,
at the effective time of the short-form merger, it would nonetheless pay $.20
per share for every minority share of UNIFAB common stock. This price is between
the value that Midland's independent advisor has indicated and the market price
at which UNIFAB common stock has been trading over the past year. It is not
necessarily the value that the Louisiana district court of New Iberia Parish
would award to minority shareholders who elect to exercise their dissenters'
rights.

While Midland currently intends to take UNIFAB private through a
short-form merger, until the time that the merger is effected, Midland will
consider any other alternative that would maximize shareholder value and yield
more than $.20 per share for the common shareholders of UNIFAB. For example,
since Midland engaged the firm of Chaffe & Associates, Inc. to consider the
fairness of the proposed merger transaction, Midland has engaged in discussions
with Dynamic Industries, Inc. regarding an acquisition of UNIFAB. Those
discussions ceased because, as Midland appreciated its position, Dynamic
Industries was interested only in a transaction involving the acquisition of
certain of UNIFAB's assets, and was not interested in a transaction that would
have ascribed value to the common stock of UNIFAB. Midland believes, based in
part on advice received by its independent financial advisor, that the proposed
merger is more favorable to shareholders of UNIFAB than would be any transaction
involving a liquidation of UNIFAB (whether pursuant to federal bankruptcy laws
or otherwise) in which the common stock of UNIFAB would not receive any value.

THE FILING PERSONS' POSITION OF THE FAIRNESS OF THE MERGER (PAGE 7).

Midland, Midland Acquisition and William A. Hines have each concluded that
the merger of Midland Acquisition and UNIFAB is both substantively and
procedurally fair to the shareholders of UNIFAB unaffiliated with Midland, based
primarily on the factors as set out in "Special Factors - Purposes,
Alternatives, Reasons and Effects" beginning on page 2, and "- Fairness of the
Transaction" beginning on page 7. Jeanne M. Hines McDaniel, one of the Filing
Persons, is not an officer or director of Midland, Midland Acquisition or
UNIFAB. Mrs. McDaniel is a 45.5% shareholder of Midland, but has never taken any
role in the management of Midland and is unfamiliar with its operations or the
operations of UNIFAB. Mrs. McDaniel takes the position that the merger is fair
to the shareholders of UNIFAB, having reached this position by adopting the
analysis and opinion of Chaffe & Associates and William Hines. The primary
reasons that the other Filing Persons believe the merger to be fair to the
shareholders of UNIFAB are as follows:

- The merger price of $.20 per share is higher than the fair value of a
share of UNIFAB common stock, as determined by Chaffe & Associates, Inc.,
an independent financial consultant to Midland.

- The merger price of $.20 per share is more than the holder of a share of
UNIFAB common stock would realize upon a liquidation of UNIFAB, as
determined by Chaffe & Associates, Inc.

- Shareholders of UNIFAB who are not satisfied with the merger price will
have the right to dissent from the merger, and have a court determine the
fair value of their shares. If the merger were not a short-form merger,
but was a typical corporate merger under Louisiana law, the fact that it
would be approved by 80% of the voting power of the company (which
Midland, alone, holds) would eliminate dissenters' rights for minority
shareholders. Accordingly, the short-form merger structure provides a
remedy for minority shareholders that would not normally be available
under Louisiana law.

- The market for UNIFAB's common stock has been extremely illiquid since the
stock was delisted from trading on the NASDAQ SmallCap Market in June
2004. The short-form merger transaction represents an opportunity for all
shareholders of UNIFAB who are not affiliated with Midland to receive a
cash payment for their shares, which would otherwise be extremely
difficult or impossible given the illiquidity of UNIFAB's common stock.
Additionally, the short-form merger transaction will allow the cash
payment to such shareholders without incurring a charge for broker fees.

CONSEQUENCES OF THE MERGER (PAGE 4).

Completion of the merger will have the following consequences:

- UNIFAB will be a privately held corporation, with Midland owning 100% of
the equity interest in UNIFAB and its business.

- Only the holders of the stock of Midland will have the opportunity to
participate in the future earnings and growth, if any, of UNIFAB.
Similarly, only the holders of the stock of Midland will face the risk of
losses generated by UNIFAB's operations or the risk of a decline in value
of UNIFAB after the merger.

- The shares of UNIFAB common stock will no longer be publicly traded, so
UNIFAB will no longer be subject to the reporting and other disclosure
requirements of the Securities Exchange Act of 1934, including
requirements to file annual and other periodic reports or to provide the
type of going private disclosure contained in this Schedule 13E-3.

- Subject to the exercise of statutory dissenters' rights, each share of
UNIFAB common stock held by UNIFAB's public shareholders unaffiliated with
Midland will be converted into the right to receive $0.20 per share in
cash, without interest.

The items set forth in the bullet points above should be read in conjunction
with the information set out in "Special Factors - Purposes, Alternatives,
Reasons and Effects of the Merger -- Effects" beginning on page 4.

CONDITIONS TO THE MERGER (PAGE 31).

iii

Midland Acquisition has no legal obligation to consummate the merger as
planned. Midland Acquisition may, in its sole discretion, determine not to close
the merger at any time. Specifically, should shareholders take legal action to
enjoin the merger, Midland Acquisition may determine not to proceed with the
merger, but instead to liquidate UNIFAB. Should a third party offer to purchase
UNIFAB on terms acceptable to Midland, Midland would not proceed with the
merger. The persons filing this Schedule 13E-3 believe that shareholders of
UNIFAB, including Midland Acquisition, may not recover any value for their
shares of common stock in the event of a liquidation.

DISSENTERS' RIGHTS (PAGE 25).

You have a statutory right to demand payment of the fair value of your
shares of UNIFAB common stock as determined in a judicial appraisal proceeding
in accordance with Section 131 of the Louisiana Business Corporation Law. The
value determined by the court may be more or less than the $0.20 per share in
cash offered in the merger. In order to qualify for these rights, you must send
to UNIFAB a written demand for the fair value of your shares within 20 days
after the date Midland mails to you a copy of the Certificate of Merger and
otherwise comply with the procedures for exercising dissenters' rights set forth
in the Louisiana Business Corporation Law. The statutory right of dissent is set
out in Section 131 of the Louisiana Business Corporation Law and is complicated.
A copy of Section 131 is attached as Exhibit (f) hereto. Any failure to comply
with its terms will result in an irrevocable loss of such right. Shareholders
seeking to exercise their dissenters' rights are encouraged to seek advice from
legal counsel. See Item 4(d) "Terms of the Transaction - Appraisal Rights"
beginning on page 25 of this Schedule 13E-3.

WHERE YOU CAN FIND MORE INFORMATION (PAGE 20).

More information regarding UNIFAB is available from its public filings
with the Securities and Exchange Commission, referred to herein as the
"Commission." See Item 2 "Subject Company Information" and Item 3 "Identity and
Background of the Filing Persons" beginning on pages 20 and 22, respectively, of
this Schedule 13E-3. If you have any questions about the merger, please contact
UNIFAB's corporate secretary, Martin K. Bech at (337) 367-8291.

INTRODUCTION

This Transaction Statement on Schedule 13E-3 is being filed jointly by
Midland Fabricators and Process Systems, L.L.C., a Louisiana limited liability
company ("Midland"), Midland Acquisition, Inc., a Louisiana corporation and a
wholly owned subsidiary of Midland ("Midland Acquisition"), William A. Hines
("Hines") and Jeanne M. Hines McDaniel. These persons are collectively referred
to in this Schedule 13E-3 as the "Filing Persons." This Schedule 13E-3 is filed
pursuant to Section 13(e) of the Securities Exchange Act of 1934, as amended,
and Rule 13E-3 thereunder, in connection with a short-form merger of Midland
Acquisition with and into UNIFAB International, Inc. ("UNIFAB"), under Section
112G of the Louisiana Business Corporation Law. The effective date of the merger
is expected to be November 5, 2004 or as soon as possible thereafter.

As of September 30, 2004, there were 8,997,913 issued and outstanding
shares of common stock, $0.01 par value per share, of UNIFAB, of which 8,107,100
shares were held by Midland and 1,097 shares were held by Hines (representing,
in the aggregate, approximately 90.1% of the total shares of UNIFAB common stock
outstanding). Midland and Hines intend to contribute the shares of UNIFAB common
stock that they own to Midland Acquisition immediately before the merger.

At the effective time of the merger, Midland Acquisition will be merged
with and into UNIFAB, and UNIFAB will become a wholly-owned subsidiary of
Midland. Upon the consummation of the merger, each share of UNIFAB's common
stock issued and outstanding immediately prior to the merger (other than shares
of common stock held by Midland Acquisition and shareholders of UNIFAB who
properly exercise dissenters' rights under Louisiana law) will be converted into
the right to receive $0.20 in cash, without interest, upon surrender of the
certificate for such share of UNIFAB common stock to Computershare Investor
Services, which is UNIFAB's transfer agent. The transfer agent's address and
telephone number are: 350 Indiana Street, Suite 800, Golden, Colorado 80401,
Attn: Shareholder Services, (303) 262-0600.

Midland determined the price per share to be paid for outstanding shares
of UNIFAB common stock in the merger based, in part, upon the advice of Chaffe &
Associates, Inc., an independent investment banking firm that appraised the fair
value of UNIFAB common stock.

Instructions with regard to the surrender of stock certificates will be
set forth in a Letter of Transmittal, which documents will be mailed, together
with a copy of the Certificate of Merger, to shareholders of record of UNIFAB on
or immediately following the date of the merger. These documents should be read
carefully.

As of September 30, 2004, options to purchase a total of 49,973 shares of
common stock were outstanding under UNIFAB's Long-Term Incentive Plan and
UNIFAB's Employee Long-Term Incentive Plan. The exercise prices of these options
range from $3.50 per share to $180.00 per share. Each outstanding option to
purchase shares of UNIFAB's common stock will either be cancelled on the
effective date of the merger (assuming the holder of the option agrees to a
cancellation) or would remain outstanding pursuant to its terms. In addition, as
of September 30, 2004, warrants to purchase 6,000 shares of UNIFAB common stock
at a price of $95.00 per share were held by an investment banking firm with
which UNIFAB had done business, which will remain outstanding in accordance with
its terms. As all outstanding stock options and warrants have exercise prices
that are substantially greater than $.20; it is unlikely that any such option or
warrant would be exercised.

Under Louisiana law, no action is required by the board of directors or
the shareholders of UNIFAB, other than Midland Acquisition, for the merger to
become effective. Midland Acquisition's board of directors has approved the
merger. UNIFAB will be the surviving corporation in the merger. After the
merger, Midland will be the only shareholder of UNIFAB.

This Schedule 13E-3 and the documents incorporated by reference in this
Schedule 13E-3 include certain forward-looking statements. These statements
appear throughout this Schedule 13E-3 and include statements regarding the
intent, belief or current expectations of the Filing Persons (except for Jeanne
M. Hines McDaniel), including statements concerning the Filing Persons'
strategies following completion of the merger. Such forward-looking statements
are not guarantees of future performance and involve risks and uncertainties.
Actual results may differ materially from those described in such
forward-looking statements as a result of various factors, such as general
economic conditions, positions and strategies of competitors and the ability to
obtain financing.

SPECIAL FACTORS

BACKGROUND OF THE PROPOSED MERGER

Traditionally, and prior to its public offering in September 1997, UNIFAB
was engaged in the custom fabrication of decks and modules of drilling and
production equipment weighing up to 3,500 tons for offshore oil and gas
platforms, with special expertise in the fabrication of decks with complex
piping requirements. From 1998 through 2001, UNIFAB used the cash proceeds of
its initial public offering and borrowed under its credit facility to make
acquisitions of various businesses with a view to providing services to the oil
and gas industry that were beyond UNIFAB's traditional expertise. In most cases,
these acquisitions were made without an overall acquisition strategy or a
related business plan and the management and operations of the acquired
companies were not integrated efficiently into UNIFAB. Each acquired company
contributed operating losses almost immediately after being acquired.
Accordingly, UNIFAB not only spent its cash reserves on this acquisition
strategy, but it borrowed money that could not be repaid from the company's
dwindling cash flow. UNIFAB suffered at this time from lack of competent
operational management as UNIFAB's best managers, in a disagreement with
UNIFAB's chief executive officer, resigned as a group in April 1998 and went to
work for an offshore maintenance company, which has since become UNIFAB's
largest competitor for deck and platform fabrication at the Port of Iberia.

The consequences of UNIFAB's loss of experienced operational management
and its acquisition strategy became very apparent in 2001. On March 14, 2001,
William Hines resigned from the board of directors. Mr. Hines was frustrated by
the refusal of UNIFAB's chairman of the board and chief executive officer to
address the lack of operational management and the company's inability to
integrate properly or to manage its acquired businesses. During each fiscal
quarter of 2001, UNIFAB suffered net losses. By the third quarter of 2001,
UNIFAB began to write off its investment in a number of its acquisitions and to
cease doing business at several acquired locations. Meanwhile, the buildings and
equipment at UNIFAB's main facility at the Port of Iberia were in disrepair,
reflecting a lack of basic maintenance and necessary capital investment, as Mr.
Berard had focused on acquisitions and endless letter writing to public
officials on matters unrelated to UNIFAB's operations. At the end of the third
quarter 2001, UNIFAB's chief executive officer, Mr. Dailey Berard, was replaced
by Jerome Chojnacki, a consultant with expertise in "turn around and work out
consulting." By the end of 2001, UNIFAB was not in compliance with its covenants
under its credit facility and UNIFAB's ability to continue as a going concern
was in question, according to its independent auditors.

In early January 2002, Mr. Chojnacki visited with Mr. Hines in his
Metairie, Louisiana office. He asked Mr. Hines to consider acquiring UNIFAB or
making a significant investment in UNIFAB. At that time, Mr. Hines indicated
that he would consider acquiring UNIFAB's assets in a bankruptcy, but was not
interested in acquiring an equity interest in a company that was as financially
weak as UNIFAB. Mr. Chojnacki indicated that management of the company was not
interested in placing UNIFAB in bankruptcy, and would seek out other potential
acquirors or investors. At that time, discussions between Mr. Hines and UNIFAB
terminated.

In the spring of 2002, management of UNIFAB again entered into discussions
with Mr. Hines concerning a possible acquisition of, or investment in, UNIFAB.
Midland was formed at that time for the purpose of pursuing the possible
acquisition of the secured debt of UNIFAB. Midland immediately contacted
UNIFAB's secured creditors to discuss possible payment terms. Midland believes
that, during this time period, UNIFAB's new management team may have continued
to pursue other alternatives to avoid an involuntary bankruptcy filing by
UNIFAB's secured creditors. By mid March 2002, Midland had agreed to terms with
UNIFAB's secured creditors and commenced negotiations with UNIFAB's board of
directors.

Between mid March 2002 and April 26, 2002, representatives of Midland and
representatives of UNIFAB, including UNIFAB's independent board members, held
numerous meetings to negotiate the terms of a transaction acceptable to both
parties. At the insistence of UNIFAB's board, Midland agreed to a covenant by
UNIFAB to maintain the listing of its shares on the NASDAQ for at least two
years. Midland also agreed that after the transaction, Midland would cause
UNIFAB to conduct a rights offering pursuant to which UNIFAB shareholders would
be offered the right to purchase shares of UNIFAB common stock at the same price
as the conversion price of Midland's convertible debenture. The parties also
arrived at the financial terms embodied in the Midland-UNIFAB Agreement.

Midland believes that its offer may have been one of a number of
transactions considered simultaneously by UNIFAB's board of directors (including
a possible transaction involving Twin Brothers, Inc.), and Midland believes that
UNIFAB's board of directors ultimately chose Midland's offer because it
maximized shareholder value and because Midland had come to terms with UNIFAB's
secured creditors, offering the company a transaction that provided immediate
solvency and working capital. On April 26, 2002, the Midland-UNIFAB agreement
was entered into, and the closing was consummated on August 13, 2002. A
description of that transaction is set forth beginning on page 27 below.

In August 2002, Midland acquired a controlling interest in UNIFAB in a
transaction that is described beginning on page 27. Midland was aware that
UNIFAB's audited financial statements for the period ended December 31, 2001
indicated that there was "substantial doubt" about UNIFAB's ability "to
continue as a going concern." At the time that Midland acquired its interest
in UNIFAB, it was Midland's hope that conditions in the offshore fabrication
industry would improve and, with the financial assistance that Midland could
provide, UNIFAB would become a profitable company. Since August 2002, however,
industry conditions have not improved substantially, and UNIFAB's financial
condition and results of operations have not improved despite significant
financial assistance from Midland.

Midland is unwilling to provide financial support to UNIFAB indefinitely.
By the summer of 2004, Midland had determined that UNIFAB was not likely to
become profitable in the near future and that all resources of UNIFAB should be
conserved. At that time, Midland began to consider various strategic
alternatives for conserving the resources of UNIFAB. Midland noted that UNIFAB
could not afford the expenses associated with being a public company,
including substantial additional expenses that would be required in late 2004
and thereafter, as UNIFAB would have to comply with the Sarbanes Oxley Act and
the rules and regulations thereunder. In order to conserve UNIFAB's resources,
Midland decided that, by the end of 2004, UNIFAB should "go private," be sold
to a third party or be liquidated. Midland also determined that, whatever
strategy adopted with respect to the entire company, in the meantime UNIFAB's
facility in Lake Charles, Louisiana should be shut down and sold and that
UNIFAB's Allen Tank subsidiary should be shut down and liquidated.

In 2004, as a result of UNIFAB's operating losses, Midland began
considering the benefits and detriments of each strategic alternative for
UNIFAB. Midland discussed possible acquisitions with The Shaw Group and Dynamic
Industries, two companies that had indicated an interest in acquiring all or
part of UNIFAB during the period that Midland was negotiating with UNIFAB.
Discussions with The Shaw Group were of a preliminary nature and terminated
without any offer being proposed by The Shaw Group. Dynamic Industries has thus
far exhibited interest only in a transaction involving the acquisition of
certain of UNIFAB's assets, and has not proposed a transaction that would
ascribe any value to the common stock of UNIFAB.

Prior to the Midland-UNIFAB transaction, UNIFAB closed down its Oil
Barges, Inc. operations. Since the Midland-UNIFAB transaction, UNIFAB has closed
down or tried to sell many of the other assets and facilities that UNIFAB
acquired after its initial public offering. In June 2003, UNIFAB closed down its
British operation, Allen Process Systems, Ltd. Additionally, UNIFAB has closed
Compression Engineering Services, Inc. and has consolidated and greatly reduced
its Allen Process Systems, LLC operations, and has closed its Lake Charles
operations. On September 7, 2004, UNIFAB engaged a broker to try to sell its
Lake Charles and Allen Process Systems facilities. While Midland is currently
prepared to close the proposed merger, Midland or UNIFAB would entertain any
offer by a third party to purchase UNIFAB or any part of its assets prior to the
date that the proposed merger is consummated.

At the same time, Midland engaged Chaffe & Associates to determine the
value of UNIFAB common stock in case Midland were to take UNIFAB private through
a short-form merger. Midland initially engaged Chaffe & Associates in June,
2004. Chaffe & Associates made its initial oral report to Midland on September
14, 2004. That report indicated that UNIFAB's common stock could have some
residual value if the company's assets were liquidated and its debts paid.
Chaffe & Associates indicated, however, that it was using a dated appraisal to
value UNIFAB's assets, and asked Midland to secure a more up-to-date appraisal
on certain material assets. In late September, Chaffe & Associates received an
update on the appraisal indicating that some of the equipment on the prior
appraisal had already been sold by UNIFAB and that some equipment had lost value
during the intervening years. Based on the new summary appraisal and updated
equipment list, on September 29, 2004, Chaffe & Associates delivered to Midland,
an oral report indicating that in a liquidation of UNIFAB, the common stock
would have no residual value. After receiving this report, Midland determined
that it would pay $.20 per share to shareholders of UNIFAB in a short-form
merger, even though Midland agreed with both the analysis and the conclusion of
Chaffe & Associates. Midland determined to pay cash in the short-form merger
with the hope that is willingness to pay more than the value reached by Chaffe &
Associates would obviate objections to the transaction. Chaffe & Associates
delivered its written opinion to Midland on October 5, 2004, a copy of which is
attached hereto as Exhibit C.

In the nine fiscal quarters ended September 30, 2004 (beginning with the
first fiscal quarter ended after the UNIFAB-Midland transaction was closed),
UNIFAB has incurred aggregate net losses of approximately $34.6 million. These
losses included approximately $14.2 million related to write-downs on properties
and assets acquired in earlier UNIFAB acquisitions and $4.9 million in interest
expense associated with debt incurred to finance such acquisitions. UNIFAB has
incurred additional losses associated with the lack of basic maintenance of
UNIFAB's facilities and equipment during years of neglect. UNIFAB continues to
suffer from competition from the local company that hired the management team
formerly responsible for UNIFAB's success and reputation. Most important, UNIFAB
has not had the cash reserves that many of its competitors have had to face the
challenges of globalization and outsourcing in the offshore fabrication industry
during the past three years. Midland has been required to provide directly, or
arrange for other parties to provide, working capital for UNIFAB over the course
of these nine fiscal quarters. At its highest, UNIFAB's debt for these working
capital loans was $17.1 million. At September 30, 2004, UNIFAB owed
approximately $10.5 million on these working capital loans. UNIFAB has been
unable to repay any portion of the debenture or notes that Midland acquired on
August 13, 2002. These notes begin to come due in 2005.

Midland also considered taking UNIFAB private by asking UNIFAB's board of
directors to consider and approve a reverse stock split or a merger of UNIFAB
into a company owned by Midland, in either case with the outcome that Midland
would be the only remaining shareholder of UNIFAB. Midland determined, however,
not to request UNIFAB's board to consider such a transaction because any such
transaction, insofar as it would involve the solicitation of proxies and holding
a special meeting of the shareholders of UNIFAB, would be more expensive than a
short-form merger.

During the summer and fall of 2004, Midland also considered liquidating
UNIFAB, either by shutting down operations and engaging in an orderly
liquidation of UNIFAB's assets or by placing UNIFAB in bankruptcy. Midland is
UNIFAB's largest creditor, and UNIFAB cannot pay Midland's debt in accordance
with its terms. In fact, UNIFAB continues to require additional credit and
financial support from Midland in order to meet its obligations to its
customers, suppliers and employees. Midland has determined at this time not to
liquidate UNIFAB or place UNIFAB in bankruptcy.

PURPOSES, ALTERNATIVES, REASONS AND EFFECTS OF THE MERGER

PURPOSES

The purpose of the merger is for Midland to acquire the minority public
interest in UNIFAB. This will enable UNIFAB to terminate the registration of its
common stock under Section 12(g) of the Securities Exchange Act of 1934, thereby
reducing the administrative and financial burdens associated with being a public
company. Midland believes that the limited trading volume in the shares of
UNIFAB common stock currently makes ownership of these shares unattractive to
the public holders of the shares. Midland also believes that, given UNIFAB's
relatively small shareholder base, the costs of maintaining UNIFAB's status as a
public company are not justified and that UNIFAB and its shareholders currently
derive no material benefit from registration under the Securities Exchange Act.

In structuring the merger as a short-form merger, rather than proposing to
merge UNIFAB into a subsidiary of Midland in a regular merger under Louisiana
law, Midland has purposefully reserved for UNIFAB's minority shareholders the
right to dissent from the merger should they choose to do so. If the merger were
structured as a regular merger under Louisiana law, Midland's 80% vote in favor
of the merger would cut off dissenters' rights of minority shareholders.
Although Midland, as a shareholder of UNIFAB, does not owe other shareholders
any fiduciary duties, Midland engaged an independent financial consultant,
Chaffe & Associates, Inc., for the purpose of delivering to Midland an opinion
with respect to the fairness of the merger consideration Midland is offering to
UNIFAB's minority shareholders.

Each filing person's purpose for entering this transaction is the same
because the financial interests of each filing person are inextricably bound to
one another. The Filing Persons are Midland, Midland's wholly-owned subsidiary
and Midland's major shareholders. Thus, each of the Filing Persons adopts the
purposes and reasons set forth below for entering into the merger.

ALTERNATIVES

Persons considered and rejected the alternative of a regular merger because of
the cost and delay involved in obtaining the approvals of both UNIFAB's board of
directors its shareholders. The Filing Persons also rejected the alternative of
a tender offer, as it entailed additional costs, and a subsequent short form
merger would in all likelihood still be required.

The Filing Persons believe that the short form merger with Midland
Acquisition under Section 112 of the Louisiana Business Corporation Law is the
quickest and most cost effective way for Midland to acquire the outstanding
public minority equity interest in UNIFAB. The short form merger is also the
only merger structure for the transaction that would serve to preserve the
rights of minority shareholders to dissent from the merger should they disagree
with the amount to be paid by Midland. The Filing Persons considered and
rejected the alternative of a regular merger because of the cost and delay
involved in obtaining the approvals of both UNIFAB's board of directors and
shareholders, and because the fact that Midland's ownership position exceeds 80%
would mean that Midland's vote would eliminate the rights of minority
shareholders, under Louisiana law, to exercise dissenters' rights. The Filing
Persons also rejected the alternative of a tender offer, as it entailed
additional costs, and a subsequent short form merger would in all likelihood
still be required.

REASONS

Midland acquired its interest in UNIFAB in August 2002. At that time,
UNIFAB's common stock was listed for trading on the NASDAQ SmallCap Market. When
Midland invested in UNIFAB, Midland hoped that Midland's financial and credit
support would allow UNIFAB to increase revenues and market share. Midland also
expected that access to the public markets would ultimately provide access to
public capital and greater liquidity. Although Midland anticipated that Midland
would be required to provide financial support for UNIFAB because of UNIFAB's
weakened financial condition in August 2002, Midland did not expect that the
need for financial support would continue indefinitely.

Despite Midland's financing and credit support, the domestic offshore
fabrication market did not see a material increase in demand during the two
years following Midland's acquisition of control of UNIFAB, so UNIFAB's revenues
and operating profit margins have not improved. In fact, UNIFAB had
approximately $34.6 million in net losses from the date of the Midland-UNIFAB
acquisition through September 30, 2004. Midland continues to be called upon to
provide financial security and support for UNIFAB. No other shareholder of
UNIFAB has provided, or offered to provide, such financial support to UNIFAB.
UNIFAB's continuing losses have caused the value of its common stock to drop
precipitously from the conversion value that Midland agreed to pay in August
2002. In view of UNIFAB's financial results since August 2002, Midland has no
expectation that it will recover any value for its investment in UNIFAB through
participation in the public trading markets.

Following years of successively declining revenue and net losses, UNIFAB's
common stock was delisted from the NASDAQ SmallCap Market on June 28, 2004
because of insufficient market capitalization, shareholders' equity and net
income from operations. Because of the delisting and UNIFAB's declining
revenues, Midland has been unable to realize the expected benefits of its
ownership in a public company. As a result, Midland has determined that the
costs and potential liabilities of maintaining UNIFAB as a public company,
particularly since the enactment of the Sarbanes-Oxley Act of 2002, greatly
outweigh any potential present or future benefits. Accordingly, Midland has
determined to take UNIFAB private.

In determining whether to acquire the outstanding public minority equity
interest in UNIFAB and to effect the merger, Midland considered the following to
be the principal benefits of taking UNIFAB private:

- elimination of UNIFAB's obligations under the Sarbanes-Oxley Act,
including obligations to document and test and, where necessary, develop
and/or revise its internal controls for reporting, which will require
UNIFAB to incur approximately $500,000 in the short term (associated with
purchasing new accounting software in the approximate amount of $150,000
and implementing internal control documentation) and approximately
$350,000 in additional costs annually associated with engaging additional
personnel and/or consultants, as UNIFAB does not currently have the
expertise or manpower to meet the requirements imposed on a public company
by the Sarbanes-Oxley Act, and paying increased auditing fees;

- reduction in the amount of public information available to competitors
about UNIFAB's business that would result from the termination of UNIFAB's
obligations under the reporting requirements of the Commission;

- elimination of additional burdens on management associated with public
reporting and other tasks resulting from UNIFAB's public company status;

- a decrease in costs, particularly those associated with being a public
company (for example, as a privately-held entity, UNIFAB would no longer
be required to file quarterly, annual or other periodic reports with the
Commission or publish and distribute to its shareholders

annual reports and proxy statements), that Midland anticipates could
result in substantial savings each year, including audit and legal fees;
and

- the fact that UNIFAB's shares were recently de-listed from trading on a
recognized national exchange and are thinly traded and the thin trading
volume makes the shares relatively illiquid; and the merger transaction
would provide immediate liquidity to the non-affiliated shareholders of
UNIFAB.

Midland also considered the advantages and disadvantages of certain
alternatives to acquiring the minority shareholder interest in UNIFAB, including
leaving UNIFAB as a majority-owned, public subsidiary.

In the view of Midland, the principal advantage to Midland of leaving
UNIFAB as a majority-owned, public subsidiary would be the ability of Midland to
invest for other purposes the cash that would otherwise be required to buy the
minority shareholder interest in UNIFAB. Midland concluded that the advantages
of leaving UNIFAB as a majority-owned, public subsidiary were significantly
outweighed by the disadvantages of doing so, and accordingly that alternative
was rejected.

There are approximately 1,200 holders of record of approximately 889,716
shares to be exchanged in the merger. Midland believes that the majority of
UNIFAB's shareholders hold relatively small positions. UNIFAB's shareholders
owning limited amounts of UNIFAB's common stock have limited liquidity because
typical transaction costs for the public sale of their shares in most cases
represent a large percentage of the value of their holdings at current market
prices. The going-private transaction described in this Schedule 13E-3 will
allow these shareholders to liquidate their holdings at a fair value without
these transaction costs.

The Filing Persons have determined to effect the merger at this time
because they wish to immediately realize the benefits of taking UNIFAB private,
as discussed above. UNIFAB's stock price was not a significant factor in the
timing of the Filing Persons' decision to conduct the merger.

This Rule 13e-3 transaction is structured as a short-form merger under
Section 112 of the Louisiana Business Corporation Law. This form of merger
allows the unaffiliated shareholders of UNIFAB to receive cash for their shares
of UNIFAB common stock quickly and allows UNIFAB to become a wholly owned
subsidiary of Midland without any action by the board of directors of UNIFAB or
the shareholders of UNIFAB.

EFFECTS

General. Upon completion of the merger, only the holders of the stock of
Midland will have the opportunity to participate in the future earnings and
growth, if any, of UNIFAB. Similarly, only the holders of the stock of Midland
will face the risk of losses generated by UNIFAB's operations or the decline in
value of UNIFAB after the merger. The Filing Persons will

indirectly realize all of the benefit in the estimated cost savings resulting
from UNIFAB no longer being public. The Filing Persons' beneficial ownership of
UNIFAB immediately prior to the merger in the aggregate will amount to
approximately 92.1%. Upon completion of the merger, the Filing Persons' interest
in UNIFAB's book value (approximately $2.1 million on December 31, 2003) and net
income (loss) (approximately $(11.8 million) for the fiscal year ended December
31, 2003) will increase from approximately 92.1% to 100% of those amounts.

Shareholders. Upon completion of the merger, the minority shareholders of
UNIFAB will no longer have any interest in, and will not be shareholders of,
UNIFAB and therefore will not participate in UNIFAB's future earnings and
potential growth and will no longer bear the risk of any decreases in the value
of UNIFAB. In addition, the minority shareholders of UNIFAB will not share in
any distribution of proceeds after any sales of businesses of UNIFAB, whether
contemplated at the time of the merger or after the merger. See Item 6(c),
"Purposes of the Transaction and Plans or Proposals - Plans," beginning on
page 30 of this Schedule 13E-3. All of the other incidents of stock ownership of
UNIFAB's shareholders (other than Midland), such as the rights to vote on
certain corporate decisions, to elect directors, to receive distributions upon
the liquidation of UNIFAB and to exercise dissenters rights upon certain mergers
or consolidations of UNIFAB (unless such dissenters rights are perfected in
connection with the merger), will be extinguished upon completion of the merger.

Upon completion of the merger, the minority shareholders of UNIFAB will
have liquidity, in the form of the merger price, in place of an ongoing equity
interest in UNIFAB, in the form of the shares of UNIFAB common stock. In
summary, if the merger is completed, the minority shareholders of UNIFAB will
have no ongoing rights as shareholders of UNIFAB (other than dissenters' rights
in the case of minority shareholders of UNIFAB who choose to perfect such rights
under Louisiana law).

The Shares. Once the merger is consummated, public trading of the shares
of UNIFAB common stock will cease. The Filing Persons intend to deregister the
shares of UNIFAB common stock under the Securities Exchange Act. As a result,
UNIFAB will no longer be required to file annual, quarterly and other periodic
reports with the Commission under Section 13(a) of the Securities Exchange Act
and will no longer be subject to the proxy rules under Section 14 of the
Securities Exchange Act. In addition, the principal shareholder of UNIFAB will
no longer be subject to reporting its ownership of shares of UNIFAB common stock
under Section 13 of the Securities Exchange Act or to the requirement under
Section 16 of the Securities Exchange Act to disgorge to UNIFAB certain profits
from the purchase and sale of shares of UNIFAB common stock.

The Options. As of December 31, 2003, there are outstanding stock options
to purchase up to an aggregate of 49,973 shares of UNIFAB common stock held by
certain employees and outside directors pursuant to UNIFAB's Long-Term Incentive
Plan and Employee Long Term Incentive Plan. Such options have exercise prices
that range from $3.50 per share to $180.00 per share. Prior to the merger,
Midland intends to request that the holders of these options agree to a
cancellation of the options. The Filing Persons do not anticipate that any
option holder will exercise his or her options prior to the merger.

The Warrants. There are outstanding warrants representing the right to
purchase up to an aggregate of 6,000 shares of UNIFAB common stock at a price of
$95 per share. An investment banking firm with which UNIFAB had a business
relationship holds the warrants. As the warrant purchase price far exceeds the
merger price, the Filing Persons do not assume that the warrants will be
exercised prior to the merger.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER

The following is a general description of the material U.S. federal income
tax consequences of the merger to beneficial owners of shares of UNIFAB common
stock. This description is based on the Internal Revenue Code of 1986, as
amended (the "Code"), existing, proposed and temporary U.S. Treasury Regulations
and judicial and administrative interpretations thereof, in each case as in
effect and available on the date of this Schedule 13E-3. All of the foregoing
are subject to change, which change could apply retroactively and could affect
the tax consequences described below. This description does not address any
aspect of state, local, foreign or other taxation, and does not address tax
considerations applicable to holders that may be subject to special tax rules,
including:

- banks, financial institutions or insurance companies;

- real estate investment trusts, regulated investment companies or
grantor trusts;

- dealers or traders in securities or currencies;

- tax-exempt entities;

- persons who received UNIFAB common stock as compensation for the
performance of services;

- persons who will hold UNIFAB common stock as part of a "hedging" or
"conversion" transaction or as a position in a "straddle" for U.S.
federal income tax purposes;

- persons that have a "functional currency" other than the U.S.
dollar;

- holders that are not U.S. Holders (as defined below).

For purposes of this description, a "U.S. Holder" is a beneficial owner of
shares of UNIFAB common stock that, for U.S. federal income tax purposes, is:

- a citizen or resident of the U.S.;

- a partnership or corporation created or organized in or under the
laws of the U.S. or any state thereof, including the District of
Columbia;

- an estate the income of which is subject to U.S. federal income
taxation regardless of its source; or

- a trust if such trust validly elects to be treated as a U.S. person
for U.S. federal income tax purposes or if (1) a court within the
U.S. is able to exercise primary supervision over its administration
and (2) one or more U.S. persons have the authority to control all
of the substantial decisions of such trust.

The receipt of cash by a shareholder, pursuant to the merger or pursuant
to the exercise of the shareholder's right to dissent, will be a taxable
transaction for U.S. federal income tax purposes and may also be taxable for
state and local income tax purposes as well. Accordingly, a shareholder will
recognize gain or loss equal to the difference between (1) the amount of cash
that such shareholder receives in the merger (including amounts a shareholder
receives if he or she asserts dissenters' rights) and (2) such shareholder's
adjusted tax basis in his or her shares of UNIFAB common stock. Such gain or
loss will be capital gain or loss if the shareholder holds the shares of UNIFAB
common stock as a capital asset, and generally will be long-term capital gain or
loss if, at the effective date of the merger, the shareholder has held the
shares of UNIFAB common stock for more than one year.

The cash payments made to a shareholder pursuant to the merger will be
subject to U.S. federal backup withholding at a rate of 28% unless the
shareholder provides to UNIFAB's transfer agent his, her or its tax
identification number (social security number or employer identification number)
and certifies that such number is correct, or unless an exemption from backup
withholding applies. In addition, such payments generally will be subject to
information reporting.

EACH BENEFICIAL OWNER OF SHARES OF UNIFAB COMMON STOCK IS URGED TO CONSULT SUCH
BENEFICIAL OWNER'S TAX ADVISER AS TO THE SPECIFIC TAX CONSEQUENCES TO SUCH
BENEFICIAL OWNER OF THE MERGER, INCLUDING THE APPLICATION OF STATE, LOCAL,
FOREIGN AND OTHER TAX LAWS.

FAIRNESS OF THE TRANSACTION

FAIRNESS

Since each of Midland and Midland Acquisition may be deemed to be the
beneficial owners of a majority of the shares of UNIFAB common stock, such
Filing Persons, together with William A. Hines and Jeanne M. Hines McDaniel, who
are also Filing Persons, may be deemed "affiliates" of UNIFAB within the meaning
of Section 13e-3 under the Securities Exchange Act. Accordingly, the rules of
the Commission require the Filing Persons, as affiliates of UNIFAB, to express
their belief as to the substantive and procedural fairness of the merger to the
unaffiliated shareholders of UNIFAB.

The Filing Persons have determined that the merger is both substantively
and procedurally fair to the shareholders of UNIFAB who are unaffiliated with
Midland. This belief is based, in part, upon the factors considered by Midland
in reaching its determination that the merger is fair to the minority
shareholders of UNIFAB.

The views of the Filing Persons are actually the views of William A.
Hines. Midland Fabricators and Process Systems, L.L.C. is a limited liability
company managed by its sole managing member, William A. Hines. Midland
Acquisition, Inc. is a newly-formed Louisiana corporation with a single
director, William A. Hines. Mrs. McDaniel, the former wife of Mr. Hines,
received her economic interest in Midland in the divorce settlement. During the
marriage and thereafter, Mrs. McDaniel has not taken any active role in the
management of Midland. She is a filing person solely because of her passive
economic interest in Midland. Mrs. McDaniel adopts the reasoning of Mr. Hines
for all purposes of this Schedule 13E-3.

The Filing Persons engaged Chaffe & Associates, Inc. to advise Midland
with respect to the value of the outstanding shares of UNIFAB common stock.
Chaffe & Associates, Inc. is an independent investment consulting banking firm
with experience in valuing companies like UNIFAB. Midland's management decided
to pay a merger price in excess of the amount that Chaffe & Associates, Inc.
found to be the value of UNIFAB's common stock. In arriving at their
conclusions as to fairness of the transaction, the Filing Persons are relying
upon the analysis of Chaffe & Associates, and expressly adopt such analysis as
their own.

The Filing Persons adopt as their own the reasoning and conclusions of
Chaffe & Associates in regard to the value of UNIFAB common stock, including
Chaffe & Associates' conclusion that UNIFAB common stock has no book value,
going concern value or liquidation value. The Filing Persons believe that $.20
per share is a merger price in excess of the fair value of a share of UNIFAB
common stock despite the historical and current market prices being paid in
isolated sales transactions for shares of UNIFAB common stock.

FACTORS CONSIDERED IN DETERMINING FAIRNESS

Summary. Midland and the other Filing Persons considered various factors in
analyzing the fairness of the proposed merger. Each of these factors is
discussed in greater detail below. The Filing Persons share the same economic
interest in the transaction, and have considered the same factors in analyzing
the fairness of the proposed merger. Each Filing Person shares the same
purpose and reasons for causing Midland Acquisition to enter into the proposed
merger, which are discussed above in "Purpose, Alternatives, Reasons and
Effects." In summary, the factors that favor the merger transaction for
Midland and the other Filing Persons were:

The factors that tend to favor the merger are:

- UNIFAB's financial condition is extremely poor, and the merger will help
UNIFAB to economize its financial resources by saving approximately $250,000
annually related to the UNIFAB's historical costs of compliance with the
federal securities laws, plus $500,000 in initial expenses and $350,000 in
annual expenses associated with compliance with enhanced reporting provisions
of the federal securities laws that will apply beginning in fiscal 2005.
Saving these resources will benefit both UNIFAB and Midland, as its sole
shareholder after the merger, but will not benefit the minority shareholders
of UNIFAB who will cease to have an economic interest in the company going
forward.

- Chaffe & Associates, an independent financial consulting firm experienced in
the valuation of businesses such as UNIFAB, has delivered its opinion to
Midland that the price to be paid in the merger is fair to the shareholders of
UNIFAB, from a financial point of view, and is in fact substantially above the
fair value of the common stock of UNIFAB. This factor benefits the minority
shareholders of UNIFAB insofar as, in the opinion of Chaffe & Associates, the
shareholders would not recover equivalent value were UNIFAB to be liquidated
or sold to a third-party buyer. This factor does not benefit UNIFAB or
Midland.

- The merger is structured as a short-form merger, consistent with Louisiana law
that preserves for minority shareholders the right to exercise dissenters'
rights. If the merger were structured in another manner, minority shareholders
would not have such rights. This factor benefits minority shareholders and is
a detriment to UNIFAB and Midland, which would be the defendants in any
lawsuit brought to exercise dissenters' rights.

- While the reported sale prices and reported bid and asked prices of UNIFAB
common stock have been in excess of the merger price over the past year,
Midland believes that the market for UNIFAB common stock is so illiquid that
all minority shareholders of UNIFAB would not be able to sell their shares
within a short period of time at or above the currently reported market price.
The proposed merger offers all minority shareholders the opportunity to sell
their shares for one price at the same time, without the payment of any
brokerage fee or commission, and thereby benefits the minority shareholders of
UNIFAB.

The factors that tend not to favor the merger are:

- Minority shareholders of UNIFAB have not been represented in negotiations with
Midland, either by the board of directors of UNIFAB (which, by statute, is not
involved in the short-form merger process) or an independent committee
representing the interests of minority shareholders. This factor, which is
inherent in the short-form merger process, is a detriment to minority
shareholders.

- The price to be paid in the merger is below the average trading price of
shares of UNIFAB common stock, as reported by Yahoo, during the past year.
This factor tends to suggest that the merger is not favorable for minority
shareholders.

- Midland will pay less than $500,000 in the merger, which is approximately the
cost of initial compliance with the Sarbanes-Oxley Act. If UNIFAB continues as
a going concern in the future, Midland and UNIFAB will be the sole
beneficiaries of the cost savings that result from going private.

- Should conditions in the offshore fabrication industry improve and UNIFAB's
financial condition improve, the minority shareholders of UNIFAB will not
participate in any increase in value of their investment in UNIFAB; under such
circumstances, only Midland would benefit by an increase in the value of
UNIFAB. On the other hand, should conditions in the offshore fabrication
industry deteriorate and UNIFAB's financial condition does not improve, only
Midland will bear the burden of further loss of value, which would benefit the
minority shareholders of UNIFAB.

In reaching their determination that the terms of the Merger are fair to
the shareholders of UNIFAB who are unaffiliated with Midland, the Filing Persons
considered the following factors:

UNIFAB's Financial Condition. The Filing Persons considered UNIFAB's
historical and current financial position as presented in the opinion of Chaffe
& Associates, including the fact that UNIFAB has generated losses for the past
four fiscal years and had a working capital deficiency in each of those years.
The reports of UNIFAB's independent auditors for the years 2001, 2002 and 2003
raise substantial doubt about UNIFAB's ability to continue as a going concern.
The financial performance as set forth in UNIFAB's Form 10-Q for the period
ended June 30, 2004 shows further deterioration with negative gross profit, an
overall loss and, for the first time, a deficit in equity. UNIFAB continues to
depend on Midland financially for working capital as well as certain financial
guarantees in order to gain new contracts. Without the backing of Midland, it is
unlikely that UNIFAB will be able to meet its obligations, including obligations
under its line of credit, in the ordinary course of business.

Current and Historical Market Prices. The Filing Persons considered that
the per share price to be paid to the shareholders of UNIFAB unaffiliated with
Midland in the merger is at a discount to the current and historical prices of
UNIFAB's common stock, as presented in the opinion of Chaffe & Associates. The
Filing Persons did not place great weight on this fact for purposes of
determining the fairness of the merger price and recognized that the merger
price provided immediate liquidity to the shareholders. The market for UNIFAB's
shares of common stock has been extremely illiquid since UNIFAB's common stock
was delisted from trading on the NASDAQ SmallCap Market in June 2004. The
opportunity for a significant number of shares of UNIFAB common stock to be sold
on the market in the foreseeable future, without substantially reducing the
market price, is remote. According to Yahoo.com, shares of UNIFAB common stock
traded for $.30 per share on November 11, 2004 on the over-the-counter market.
This price was well above the $0.20 per share value to be paid to the
shareholders of UNIFAB unaffiliated to Midland. The Filing Persons believe that
the reported market price of UNIFAB's common stock is not indicative that the
merger price is unfair. Among other reasons, the Filing Persons believe that
there is limited trading activity in UNIFAB common stock and a relatively
illiquid trading market. The merger price, on the other hand, will be paid to
all shareholders of UNIFAB who are not affiliated with Midland.

Net Book Value. As of June 30, 2004, UNIFAB had a deficit in shareholders'
equity of $4.7 million, resulting in a book value per share of negative $0.57.
The Filing Persons believe that the merger price represents a fair price when
compared with such book value.

Comparable Companies Analysis. The Filing Persons considered an analysis
of market values and trading multiples of UNIFAB and a peer group of four
publicly-traded companies in UNIFAB's business as presented in the opinion of
Chaffe & Associates. Based on the opinion, which analyzed Global Industries,
Ltd., Gulf Island Fabricators, Inc., McDermott International, Inc., and NATCO
Group, Inc., the Filing Persons believe the per share consideration to be paid
to the minority shareholders of UNIFAB is substantially greater than the value
per share implied by the comparable companies analysis. For a more detailed
explanation of this analysis, see the summary of Chaffe & Associates' Comparable
Companies Analysis on page 15.

Breakup/Liquidation Value Analysis. The Filing Persons considered the
breakup/liquidation analyses as presented in the opinion of Chaffe & Associates.
Based on the opinion, the Filing Persons concluded that both the orderly
liquidation value and forced sale liquidation value implied by the
breakup/liquidation models presented in the opinion are substantially less than
the merger price proposed to be paid in the merger.

Opinion of Chaffe & Associates. In addition to the foregoing factors, the
Filing Persons relied upon the analysis of the merger price performed by Chaffe
& Associates as well as the opinion of Chaffe & Associates, as described in
"Special Factors - Reports, Opinions, Appraisals and Negotiations", beginning on
page 11.

After performing its analyses, Chaffe & Associates determined that UNIFAB
common stock had no fair value. This finding is not surprising to Midland in
light of the facts that:

o At June 30, 2004, UNIFAB had a $4.7 million deficit in shareholders' equity,
so UNIFAB common stock had a negative book value;

o UNIFAB has not had positive earnings since 1999 and its current budget does
not project positive earnings for the foreseeable future; and

o UNIFAB does not have positive cash flow and its current budget does not
project positive cash flow for the foreseeable future.

The Filing Persons determined that Midland would pay $.20 per share in the
proposed merger even though the Filing Persons agree with, and expressly adopt
as their own, the approach, reasoning and conclusions of Chaffe & Associates.
Midland believes that $.20 per share is a fair price because it is in excess of
the actual fair value of UNIFAB common stock. Midland arrived at this price in
part because the aggregate price to be paid in the short form merger represents
part of the savings that UNIFAB will realize in the short term by becoming a
private company (based upon Midland's estimate that compliance has generally
cost UNIFAB approximately $250,000 per year, and compliance with Sarbanes-Oxley
would cost approximately $500,000 in 2005), offset by the estimated legal fees
and other costs that Midland estimates will be incurred in connection with the
going-private transaction. Additionally, Midland believes that paying a merger
price that is $.20 per share above the fair value of UNIFAB common stock should
reduce the risk that shareholders would dissent from the proposed merger.

Lack of Firm Offers. Midland has not received a firm offer for UNIFAB from
a third party in the two years leading up to this transaction. From time to time
over the past year, Midland has received indications of interest from two
parties in a possible acquisition of UNIFAB or certain assets of UNIFAB. In each
case, Midland has encouraged the interested party to make a firm offer to
acquire UNIFAB and has encouraged UNIFAB's management to cooperate in requests
for further information. In neither case has the third party determined to make
a firm offer to acquire UNIFAB. In preliminary conversations, both interested
parties indicated an unwillingness to pay cash for the common stock of UNIFAB.
In one case, the potential acquirer considered the possibility of acquiring only
certain assets of UNIFAB in a transaction that would involve a bankruptcy filing
by UNIFAB that would have the effect of eliminating any value to the common
shareholders. In such case, Midland rejected the proposal involving the
bankruptcy process. The Filing Persons believe that it is unlikely that finding
a third party buyer for UNIFAB is a realistic option for the shareholders of
UNIFAB unaffiliated with Midland. The Filing Persons believe that, over the
coming year, UNIFAB would continue to be viable only if either Midland or a
third party buyer provided substantial financial support to UNIFAB. UNIFAB's
independent auditors concluded as of December 31, 2003 that there is a
substantial doubt about UNIFAB's ability to continue as a going concern. Midland
has been unable to find any third party buyer willing to provide financial
support to UNIFAB, so long as UNIFAB continues to be publicly owned. Chaffe and
Associates has determined that if UNIFAB's assets are liquidated, the holders of
common stock would not receive any value for their interests in UNIFAB. These
facts suggest that the merger is a fair alternative to the shareholders of
UNIFAB, insofar as the merger is the only transaction that is likely to provide
cash compensation to all shareholders of UNIFAB other than Midland.

During the past year, Midland has considered various alternatives for
maximizing the value of its investment in UNIFAB, and Midland's representatives
on the Board of Directors of UNIFAB have considered various alternatives for
preserving value for other minority shareholders in UNIFAB. For example, since
Midland engaged the firm of Chaffe & Associates, Inc. to consider the fairness
of the proposed merger transaction, UNIFAB has engaged in discussions with
Dynamic Industries, Inc. and representatives of The Shaw Group regarding the
acquisition of UNIFAB. Those discussions ceased because, as Midland's
representatives on the Board of Directors of UNIFAB appreciated their positions,
neither Dynamic Industries nor The Shaw Group has offered any transaction that
would provide value to UNIFAB's common shareholders. Midland believes that any
potential acquirer would apply substantially the same analysis that Chaffe &
Associates applied in their determination that UNIFAB's common stock has no
value at this time. Midland believes that the proposed merger is more favorable
to shareholders of UNIFAB than would be any transaction involving a sale or
liquidation of UNIFAB (whether pursuant to federal bankruptcy laws or otherwise)
in which the common stock of UNIFAB would not receive any value.

Midland's representatives on the board of directors of UNIFAB have also
considered opportunities to sell portions of UNIFAB. On September 7, 2004,
UNIFAB engaged a broker to try to sell its Lake Charles and Allen Process
Systems facilities.

Purchase Price in Previous Purchases. The Filing Persons did not consider
the purchase prices paid by the Filing Persons for past purchases of shares of
UNIFAB stock to be material to their conclusion regarding the fairness of the
merger because the prices paid or deemed to have been paid for such shares of
UNIFAB stock may not reflect the current value of UNIFAB. UNIFAB's financial
condition has materially worsened since such purchases were made.

Average Market Prices for UNIFAB Common Stock. The Filing Persons are
aware that during the past year, shares of UNIFAB common stock have traded at an
average price substantially in excess of the $0.20 per share price to be paid in
the merger. For example, on November 11, 2004, shares of UNIFAB common stock
traded at $.30 per share, on the over-the-counter market, as reported by
Yahoo.com. Yahoo reports that UNIFAB common stock has traded in a range between
$.30 and $14.60 in the 52-week period ended December 30, 2004. The Filing
Persons do not believe that the average trading price or any particular trading
price of UNIFAB common stock over the past year has been representative of the
value of UNIFAB common stock. Instead, the Filing Persons adopt the analysis of
Chaffe & Associates as to the value of UNIFAB common stock. The Filing Persons
can offer no explanation why shares of UNIFAB common stock have traded at prices
substantially above $.20 while UNIFAB's financial statements have included a
"going concern" qualification and UNIFAB's balance sheet has shown negative
shareholder equity.

In September 2004, Midland converted a portion of its convertible
debenture into UNIFAB common stock at a conversion price of $3.50 per share.
Midland converted only that portion of the debenture that allowed Midland's
common stock ownership to exceed 90%, thereby making the short-form merger
procedure available. One effect of the partial conversion of Midland's debenture
was to decrease UNIFAB's debt, thereby increasing its shareholder equity. This
increase in shareholder equity was taken into account by Chaffe & Associates in
arriving at its valuation of UNIFAB common stock. The conversion price of the
debenture was arrived at by arms' length negotiations between UNIFAB and Midland
in April 2002, and was established by contract at that time. The conversion
price represented the per share market price of UNIFAB's common stock at the
time the convertible debenture agreement was executed (as adjusted for a later
10-to-1 reverse stock split). Because the conversion price was established years
before the actual conversion, the conversion price was not reflective of the
fair value of UNIFAB common stock on the date of conversion.

Procedural Fairness. The Filing Persons, for the specific reasons set
forth below, have determined that the merger is procedurally fair to the
unaffiliated shareholders of UNIFAB. In making such determination, the Filing
Persons considered that Louisiana law grants to all 90% shareholders the right
to effect a short-form merger in a unilateral fashion, without any requirement
that the terms of the merger be negotiated with the minority shareholders or
that the minority shareholders, either through the company's board of directors
or through any other type of representative, have any impact on the terms of the
transaction.

The Filing Persons believe that Louisiana's short-form merger statute is
procedurally fair to minority shareholders because it allows them to exercise
dissenters' rights and demand "fair value" for their shares as determined by a
court. (See "Special Factors -- Purposes, Alternatives, Reasons and Effects of
the Merger" and Item 4 "Terms of the Transaction" beginning on pages 2 and 24,
respectively, of this Schedule 13E-3.) If Midland were to effect the merger
using Louisiana's ordinary corporate merger statute, minority shareholders would
not have the right to dissent from the merger. The Louisiana legislature thus
balanced the interests of majority and minority shareholders by allowing the
holder of an overwhelming majority of shares to act unilaterally, but at the
same time preserving the rights of the minority to a hearing before an
independent judge. Accordingly, although the minority shareholders of UNIFAB
have not had the protections that could have been available from a process of
negotiation between Midland and independent representatives of the minority
shareholders, they do have protections afforded by Louisiana law. In fact,
Midland chose the short-form merger approach, instead of the regular merger
approach, in part to preserve for minority shareholders a right to dissent. The
Filing Persons believe that this Schedule 13E-3, together with UNIFAB's public
filings, contain relevant information to permit shareholders of UNIFAB who are
unaffiliated with Midland to determine whether to accept the merger price or to
exercise their dissenter's rights with respect to their shares of UNIFAB common
stock.

In addition to the foregoing factors and analyses, the Filing Persons have
considered the following five factors:

- following the consummation of the merger, the shareholders of UNIFAB
who are not affiliated with Midland will cease to participate in the
future earning or growth, if any, of UNIFAB, or benefit from an
increase, if any, in the value of their holdings in UNIFAB;

- the interests of the Filing Persons in determining the merger price
are adverse to the interests of the shareholders of UNIFAB who are
not affiliated with Midland and the fact Midland may have actual or
potential conflicts of interest in connection with the merger as
disclosed herein;

- the terms of the merger were not negotiated between Midland, on the
one hand, and the board of directors of UNIFAB, or any independent
representative of the unaffiliated shareholders of UNIFAB, on the
other hand. Louisiana's short-form merger statute allows a 90%
shareholder, such as Midland, to act unilaterally in approving a
short-form merger. The price to be paid in the merger does not
necessarily reflect a price that would have been negotiated between
Midland and the board of directors of UNIFAB, if the board had had
the ability to negotiate such a price.

- because the merger is being effected pursuant to a short-form merger
under Section 112 of the Louisiana Business Corporation Law and
consequently does not require approval by UNIFAB's board of
directors or UNIFAB's shareholders (other than Midland), neither
UNIFAB's board of directors nor the shareholders of UNIFAB who are
not affiliated with Midland will have the opportunity to vote on the
merger; and

- UNIFAB was not separately represented and UNIFAB's board of
directors did not participate in the evaluation of strategic
alternatives, including the merger.

After having given these additional five factors due consideration, the
Filing Persons have concluded that none of these factors, alone or in the
aggregate, is significant enough to outweigh the factors and analyses that the
Filing Persons have considered to support their belief that the merger is
substantively and procedurally fair.

In view of the number and wide variety of factors considered in connection
with making a determination as to the fairness of the merger to the shareholders
of UNIFAB unaffiliated with Midland, and the complexity of these matters, the
Filing Persons did not find it practicable to, nor

did they attempt to quantify, rank or otherwise assign relative weights to the
specific factors they considered. Moreover, the Filing Persons have not
undertaken to make any specific determination or assign any particular weight to
any single factor, but have conducted an overall analysis of the factors
described above.

The Filing Persons have not considered any factors, other than as stated
above, regarding the fairness of the merger to the shareholders of UNIFAB
unaffiliated with Midland, as it is their view that the factors they considered
provided a reasonable basis to form their belief.

No Approval of Security Holders. Because the merger is being effected as a
short-form merger under Section 112 of the Louisiana Business Corporation Law,
it does not require approval by the shareholders of UNIFAB (other than Midland).

No Independent Representation. No person has been engaged to act on behalf
of the shareholders of UNIFAB who are not affiliated with Midland.

No Approval of Directors. Because the merger is being effected as a
short-form merger under Section 112 of the Louisiana Business Corporation Law,
it does not require approval by the board of directors of UNIFAB.

Other Offers. Except as discussed above, no firm offers have been made in
the last two years for: (1) the merger or consolidation of UNIFAB with or into
another company, or vice versa; (2) the sale or other transfer of all or any
substantial part of the assets of UNIFAB; or (3) a purchase of UNIFAB's
securities that would enable the holder to exercise control of UNIFAB.

REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS

REPORT, OPINION OR APPRAISAL

In order to determine the appropriate fair cash value of shares of UNIFAB
common stock, Midland engaged the services of an independent investment banking
firm, Chaffe & Associates, Inc. Midland has not received any legal opinions
concerning the merger or the tax consequences of the merger to the shareholders
of UNIFAB. Additionally, no limitations were imposed by Midland upon Chaffe &
Associates with respect to the investigations made or procedures followed by it
in rendering its opinion. The Filing Persons adopt both the analysis and the
conclusions reached by Chaffe & Associates. The Filing Persons concluded from
each of the analyses performed by Chaffe & Associates that UNIFAB common stock
has a fair value of $0.

PREPARER AND SUMMARY OF THE REPORT, OPINION OR APPRAISAL

On June 14, 2004, Midland engaged Chaffe & Associates to act as its
financial advisor and requested that Chaffe & Associates evaluate the fairness
and adequacy, from a financial point of view, to the holders of UNIFAB common
stock (other than Midland and its affiliates) of the price per share that
Midland Acquisition will pay to minority shareholders of UNIFAB. Chaffe &
Associates was selected for this assignment based on its experience, expertise
and reputation in business valuation, and the fee quoted for the engagement. The
terms of the engagement are described in more detail below. As part of its
investment banking business, Chaffe & Associates is regularly engaged in the
valuation of businesses and their securities in connection

with mergers and acquisitions, fairness opinions, private placements, minority
shareholder representations and valuations for corporate, estate and tax
purposes.

On September 14, 2004, Chaffe & Associates delivered an oral report and
workpapers to management of Midland, advising on the preliminary results of its
valuation of UNIFAB, specifically that based on information available to date,
the UNIFAB common stock appeared to have no value. Chaffe & Associates stated
that it was still in the process of reviewing information on UNIFAB's projected
financial results and the market value of its assets.

On September 29, 2004, Chaffe & Associates delivered an oral report and
work papers to the management of Midland, advising that in Chaffe & Associates'
opinion, the UNIFAB common stock had zero value. For this report, Chaffe &
Associates updated the September 14 valuation work papers to account for new
information retrieved from UNIFAB to more accurately reflect UNIFAB's projected
financial results. Additionally, the report incorporated a verbal report from an
appraisal group that provided selective updated appraisals of UNIFAB's assets.
Chaffe & Associates stated that its analysis was complete except for receipt of
the written report of the appraisal group.

On October 5, 2004, Chaffe & Associates delivered its written opinion,
that as of that date and based upon and subject to various limitations,
qualifications and assumptions stated in the opinion, the $0.20 price per share
selected by Midland to be paid to minority shareholders of UNIFAB is fair and
adequate, from a financial point of view, to the holders of UNIFAB common stock
(other than Midland and its affiliates). For this opinion, Chaffe & Associates
incorporated the written report of the appraisal group that provided the final
selective appraisals of UNIFAB's assets, and, additionally, Chaffe & Associates
accounted for an anticipated refund due to UNIFAB of federal income taxes. This
report signified the final opinion of Chaffe & Associates in regards to the
value of UNIFAB common stock.

THE FOLLOWING DESCRIPTION OF CHAFFE & ASSOCIATES' OPINION RELATING TO THE
PURCHASE PRICE OF $0.20 PER SHARE TO BE PAID TO MINORITY SHAREHOLDERS OF UNIFAB
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE WRITTEN
OPINION, DATED OCTOBER 5, 2004, WHICH SETS FORTH THE ASSUMPTIONS MADE, MATTERS
CONSIDERED AND LIMITS ON THE REVIEW UNDERTAKEN. THE WRITTEN OPINION IS ATTACHED
TO THIS DOCUMENT AS EXHIBIT (C) AND IS SOMETIMES REFERRED TO IN THIS DOCUMENT AS
THE "FAIRNESS OPINION." UNIFAB'S SHAREHOLDERS ARE URGED TO READ THE FAIRNESS
OPINION IN ITS ENTIRETY. CHAFFE & ASSOCIATES' OPINION IS DIRECTED TO MR. HINES
AS MANAGING MEMBER OF MIDLAND, IS LIMITED ONLY TO THE FAIRNESS AND ADEQUACY OF
THE CONSIDERATION TO BE PAID IN THE TRANSACTION FROM A FINANCIAL POINT OF VIEW,
DOES NOT ADDRESS ANY OTHER ASPECT OF THE TRANSACTION, AND DOES NOT CONSTITUTE A
RECOMMENDATION TO ANY SHAREHOLDER OF UNIFAB OR MIDLAND.

In arriving at its opinion, Chaffe & Associates:

- reviewed the draft S.E.C. Schedule 13E-3 related to this transaction;

- reviewed certain publicly-available financial statements and other
information of UNIFAB;

- reviewed certain financial and operating information of UNIFAB provided
by UNIFAB senior management, including independent appraisals of
certain UNIFAB property, plant and equipment;

- interviewed and discussed UNIFAB's past and current operations,
financial condition and prospects with UNIFAB's senior management and
members of its board of directors and with Midland's senior management;

- reviewed and discussed the strategic rationale for the transaction
with members of both UNIFAB and Midland's senior managements;

- reviewed current and historical publicly-reported prices of the
common stock of UNIFAB;

- compared the financial performance of UNIFAB and the prices and
trading activity of its common stock with those of certain
comparable publicly-traded companies and their securities; and

- performed such other analyses and examinations, and considered such
other financial, economic and market criteria as Chaffe & Associates
deemed appropriate to its opinion.

In connection with its review, Chaffe & Associates relied upon and assumed
the accuracy and completeness of the financial and all other information
publicly available or furnished to it by UNIFAB or Midland or otherwise reviewed
by them. Chaffe & Associates did not independently verify the accuracy or
completeness of such information nor did it assume any responsibility or
liability for such accuracy or completeness. It did not make or obtain any
independent evaluations or appraisals of any of the assets or liabilities
(contingent or otherwise) of UNIFAB, but relied on valuations and appraisals
provided to it. With respect to financial projections, Chaffe & Associates
assumed, with Midland's consent, that the financial projections were reasonably
prepared on bases reflecting the best currently available estimates and
judgments of UNIFAB's and Midland's senior management as to future financial
performance of UNIFAB. Chaffe & Associates expressed no opinion with respect to
such forecasts or the assumptions on which they were based. Chaffe & Associates
further relied upon the assurance of UNIFAB's and Midland's senior managers that
they are not aware of any facts that would render any of the above information
inaccurate, incomplete, or misleading. The opinion was necessarily based upon
financial, economic, market and other conditions as they existed and could be
evaluated on the date of the opinion.

Chaffe & Associates expressed no view as to, and in its opinion does not
address, the relative merits of the transaction as compared to (i) any
alternative business strategy that might exist for UNIFAB or Midland, or (ii)
the effect of any other strategy to accomplish a going private transaction.
Although Chaffe & Associates evaluated the consideration to be paid in the
transaction from a financial point of view, it was not asked and did not
recommend the specific consideration to the paid. The consideration was
determined by Midland. Chaffe & Associates expressed no opinion on the tax
consequences of the transaction on UNIFAB or its shareholders.

In preparing its opinion, Chaffe & Associates performed a variety of
financial and comparative analyses, including those described below. The
following is a summary of the material analyses performed by Chaffe &
Associates, but is not a complete description of all of the analyses underlying
the opinion of Chaffe & Associates. The summary includes information presented
in a tabular format. In order to fully understand the financial analyses, these
tables must be read together with the accompanying text. The tables alone do not
constitute a complete description of the financial analyses. The presentation of
a fairness opinion is a complex process involving subjective judgments as to the
most appropriate and relevant methods of financial

analysis and the application of those methods to the particular circumstances.
The process, therefore, is not necessarily susceptible to a partial analysis or
summary description. Chaffe & Associates believes that its analyses must be
considered as a whole and that selecting parts of the summary without
considering all of its analyses, or attempting to ascribe relative weights to
some or all such factors and analyses, could create an incomplete or misleading
view of the processes underlying its analyses and the Fairness Opinion.

In performing its analyses, Chaffe & Associates also made numerous
assumptions with respect to industry performance, business and economic
conditions and various other matters, many of which cannot be predicted and are
beyond the control of UNIFAB and Midland. Chaffe & Associates prepared its
analyses solely for purposes of rendering its opinion and provided such analyses
to Midland. The analyses performed by Chaffe & Associates are not necessarily
indicative of actual values or future results, which may be significantly more
or less favorable than suggested by such analyses. Estimates on the values of
companies do not necessarily reflect the prices at which companies or their
securities may actually be sold. Such estimates are inherently subject to
uncertainty and actual values may be materially different.

Chaffe & Associates' opinion and analyses were only one of many factors
considered by Midland in its evaluation of the transaction and should not be
viewed as determinative of the views of Midland with respect to the
consideration to be paid to the minority shareholders of UNIFAB or the proposed
transaction.

Assumption Underlying the Analysis: In order for Midland to effectuate the
proposed merger as a short-form merger, Midland needed to acquire enough common
stock of UNIFAB so that it would have 90% of the issued and outstanding shares.
Midland had the right to convert a portion of its convertible debenture into
shares of UNIFAB common stock. Accordingly, Midland acquired an additional
771,000 shares of UNIFAB common stock by converting $2,698,000 of its
convertible denture at the stated conversion price of $3.50 per share.

The conversion price of the debentures was established by arms' length
negotiations between UNIFAB and Midland in April 2002, and was established by
contract at that time. The conversion price represented the per share market
price of UNIFAB's common stock at the time the convertible debenture agreement
was negotiated (as adjusted for a later 10-to-1 reverse stock split). Because
the conversion price was established years before the actual conversion, the
conversion price was not reflective of the fair value of UNIFAB common stock on
the date of conversion.

Chaffe & Associates' evaluation assumed that this conversion had taken
place as of the merger. Chaffe & Associates also noted that this conversion is
accretive to the minority shareholders of UNIFAB.

Review of UNIFAB's Financial Condition: Chaffe noted that UNIFAB generated
operating losses for the past four fiscal years, and had a working capital
deficiency in each of those years. The reports of UNIFAB's independent auditors
for the years 2001, 2002 and 2003 raise substantial doubt about UNIFAB's ability
to continue as a going concern. UNIFAB's recent financial performance for the
six-month interim period ending June 30, 2004 showed further deterioration, with
negative gross profit, an overall loss and for the first time, a deficit in
equity. UNIFAB continues to depend on Midland financially for working capital as
well as certain financial guarantees in order to gain new contracts. Without the
backing of Midland, it is unlikely that UNIFAB will be able to meet its
obligations, including obligations under its line of credit, in the ordinary
course of business.

Despite UNIFAB's dismal financial performance for the six months ending
June 30, 2004, UNIFAB's management continues in its efforts to reorganize
operations in order to return the company to profitability. UNIFAB has cut
selling, general and administrative

expenses; has discontinued certain of its unprofitable operations, which is
expected to further reduce ongoing expenses; has sold or is in the process of
selling certain assets which are no longer productive; and continues its
business development efforts. Even given these actions, UNIFAB does not
anticipate generating an operating profit for the last six months of 2004, based
on the company's current and anticipated level of work. Unless UNIFAB can
further reduce expenses, increase its revenue and improve its gross profit
margin, management of the company has concern about UNIFAB's potential to
achieve profitable operating results in 2005.

Chaffe & Associates performed a valuation analysis of UNIFAB using the
following methodologies: comparable company trading analysis,
liquidation/break-up analysis and stock trading analysis. Each of these analyses
was used to generate a reference for the equity value of UNIFAB.

Comparables Companies Analysis: Using publicly available information,
Chaffe & Associates reviewed and compared the market value and trading multiples
of UNIFAB and a peer group of four selected publicly-traded companies in the oil
and gas equipment fabrication business. This methodology was meant to provide a
market valuation based on the common stock trading multiples of selected
comparable companies. The group consisted of Global Industries, Ltd., Gulf
Island Fabricators, Inc., McDermott International, Inc., and NATCO Group, Inc
("Guideline Companies"). Although Chaffe & Associates noted that the Guideline
Companies were larger than UNIFAB, Chaffe & Associates selected these companies
because they were competitors of UNIFAB who were in the same economic market,
providing equipment and products used primarily by offshore oil and gas
exploration and production companies.

Chaffe & Associates noted that none of the Guideline Companies were
identical to UNIFAB and that, accordingly, the analysis of comparable public
companies necessarily involved complex considerations and judgments concerning
differences in financial and operating characteristics of the companies
reviewed and other factors that would affect the market values of comparable
companies. The Guideline Companies were considered generally comparable to
UNIFAB because of their industry and geographic concentration of their work in
the Gulf of Mexico. Chaffe & Associates noted the low or negative operating
results of three of the four Guideline Companies, who, like UNIFAB, continue to
suffer from soft demand for their products and services.

As discussed below, Chaffe & Associates determined almost all of UNIFAB's
financial measures to be negative, which stands in comparison to the Guideline
Companies. Regardless, Chaffe & Associates still found the Comparable Companies
Analysis to be meaningful because negative financial values do not render the
multiples non-comparable, but rather indicate a value of zero or a deficit.

Chaffe & Associates noted that none of the Guideline Companies were
identical to UNIFAB and that, accordingly, the analysis of comparable public
companies necessarily involves complex considerations and judgments concerning
differences in financial and operating characteristics of the companies reviewed
and other factors that would affect the market values of comparable companies.
The Guideline Companies were considered generally comparable to UNIFAB because
of their industry and geographic concentration of their work. Chaffe &
Associates noted the low or negative operating results of three of the four
Guideline Companies, but noted also that none of them were in the unusual
circumstance of UNIFAB, whose auditors provided going concern opinions for the
2001 and 2003 fiscal years.

The analysis compared information for UNIFAB as of June 30, 2004, and the
median data for the Guideline Companies as of the most recent period then
available for each comparable company. The table below lists the comparative
data.

Guideline Companies
UNIFAB Median
------ ------

Total Assets (000) $ 31,750 $ 454,550
Leverage Ratio 111.09% 12.30%
Current Ratio -0.47% 1.48%
Return on Sales -18.77% -0.38%
Adjusted Return in Assets -23.84% 0.39%
Adjusted Return on Equity N/M 3.46%
1-Year Growth in Earnings 42.32% -17.12%

4-Year Growth in Earnings -6.71% 23.97%
Projected 5-Year Growth in Earnings N/A 21.00%
Dividend Payout Ratio 0.00% 0.00%

Chaffe & Associates reviewed the appropriate market values as a multiple
of, among other things, latest 12 months ("LTM") earnings per share, LTM cash
flow after tax, book value, LTM revenue, and LTM earnings before interest,
taxes, depreciation and amortization ("EBITDA") of the Guideline Companies and
UNIFAB. All multiples were based on closing stock prices on August 27, 2004.
Earnings per share estimates for the Guideline Companies were based on publicly
available research analysts' estimates, and earnings per share estimates for
UNIFAB were based on internal estimates of the management of the company.

Guideline Companies
UNIFAB Median
------ ------

Price to LTM Earnings N/M 46.58x
Price to Projected Earnings (FYE 2004) N/M 16.01x
Price to Cash Flow After Tax N/M 23.16x
Price to Book Value N/M 1.38x
Market Capitalization to Revenue 0.14x 0.88x
Market Capitalization to EBITDA N/M 26.95x

Chaffe & Associates then applied a range of selected multiples implied by
the Guideline Companies to the LTM earnings per share, LTM cash flow after tax,
book value, LTM revenue and LTM EBITDA for UNIFAB. For this period, UNIFAB's
earnings based financial measures were all negative. In addition, UNIFAB had a
deficit equity position. When the peer multiple is applied to UNIFAB's only
positive financial measure for this period, LTM revenue, the value indication is
$19,372,489. Chaffe & Associates concluded that taken as a whole, this analysis
resulted in the following implied per share equity value indication for UNIFAB
as compared to the per share consideration to be paid to the minority
shareholders of UNIFAB.

Implied Median Equity Per Share Merger Consideration
Value Per Share for UNIFAB for UNIFAB
-------------------------- ----------

$0.00 $0.20

Chaffe determined that the per share consideration to be paid to the
minority shareholder of UNIFAB is substantially greater than the value per share
implied by the comparable companies analysis.

Breakup/Liquidation Analysis: In addition to considering UNIFAB as a going
concern, Chaffe & Associates calculated the net value of the company's assets
that may be available to shareholders upon a liquidation of UNIFAB, as a way to
derive an implied equity value. Chaffe & Associates noted, however, that the
minority shareholders of UNIFAB cannot force a liquidation of the company and
therefore would not necessarily be able to attain the value indicated by such an
analysis.

Chaffe & Associates performed two breakup/liquidation analyses, one
assuming an orderly liquidation of UNIFAB and one assuming a forced sale
liquidation. Both analyses were based on UNIFAB's June 30, 2004 balance sheet
adjusted for projected operating losses through August 30, 2004, and both
assumed the receipt of a potential federal income tax recovery anticipated in
the third quarter of 2004. Also, both were based on the following three
independent appraisals of certain UNIFAB property, plant and equipment, and a
fourth independent limited appraisal listed further below, updating the earlier
appraisals. The three independent appraisals are as follows: An appraisal of
machinery performed by WFA/Collateral Review Services, Inc., dated February 19,
2002 (finding an orderly liquidation value ("OLV") of $12,468,385 and a forced
sale liquidation value ("FSLV") of $9,400,830); an appraisal of leasehold
property referred to as UNIFAB West performed by Appraiser Associates of
Louisiana, dated October 5, 2001 (finding a market value of the leasehold estate
"as is" of $5,000,000 and a disposition value of the leasehold estate of
$3,500,000); and an appraisal of properties at the Port of Iberia performed by
Argote, Derbes, Graham, Shuffield & Tatje, Inc., dated October 22, 2001 (finding
a current market value in "as in condition" of $12,000,000; a market value as
separate, standalone properties of $14,136,000; and a disposition value in "as
in condition" of $7,765,000). Chaffe & Associates also relied on internally
generated information provided by UNIFAB's management relative to assets that
were disposed of or missing, and a fourth independent appraisal performed by
WFA/Collateral Review Services, Inc., which was a limited purpose appraisal
dated October 5, 2004, on certain primary machinery and equipment assets,
finding an OLV of $5,410,000 and an FSLV of $4,315,000). Additionally, Chaffe &
Associates, with the consent of Midland, relied on the accuracy and completeness
of the appraisals, however, Chaffe & Associates noted the age of the three
appraisals and remains concerned that market conditions may be substantially
different at present than at the time of the appraisals.

The liquidation analyses calculated the liquidation/breakup value of
balance sheet assets, net of liabilities of the company (including contingent
liabilities), and assumed certain transaction costs such as legal, brokerage
fees or other miscellaneous winding up expenses. Chaffe also assumed that any
tax that UNIFAB might owe on a gain on the sale of assets would be sheltered
from tax by the company's net operating loss carry forwards. These analyses
resulted in the following implied per share equity value indications for UNIFAB,
as compared to the per share consideration to be paid to the minority
shareholders of UNIFAB.

Orderly Liquidation Forced Sale Liquidation
Implied Equity Value Implied Equity Value Per Share Consideration
Per Share for UNIFAB Per Share for UNIFAB for UNIFAB
-------------------- -------------------- ----------

$0.00 $0.00 $0.20

Chaffe & Associates determined that both the orderly liquidation value and
forced sale liquidation value implied by the breakup/liquidation models are
substantially less than the per share consideration to be paid to the minority
shareholders of UNIFAB in the merger.

Stock Trading Analysis: Chaffe & Associates reviewed and analyzed the
historical trading volumes and prices at which UNIFAB's common stock had traded
from September 26, 2003 through September 27, 2004, and noted that the median
closing price was $1.76 per share. The highest closing price during this period
was $10.95 per share on March 2, 2004, and the lowest closing price was $.75 per
share on August 31, 2004. The median daily volume of UNIFAB's shares for the
52-week period August 27, 2003 through August 26, 2004 was 5,000 shares. (As a
consequence of UNIFAB's stock having been delisted, volume information has been
unavailable since August 26, 2004.)

On February 26, 2004, both price and volume increased sharply, peaking on
March 2, 2004 at $10.02 per share on volume of 3,675,900 shares. This trading
activity did not coincide with any change in UNIFAB's operations or financial
condition, according to UNIFAB. Chaffe & Associates noted that from September
26, 2003 through February 25, 2004, the median closing price of UNIFAB's shares
was $1.65, with a median volume of 1,600 shares. Chaffe & Associates notes since
this event, both the

price and volume of UNIFAB shares were affected through July 25, 2004, after
which, prices returned to historic norms.

Chaffe & Associates then analyzed the price to be paid to the
minority shareholders of UNIFAB in the transaction relative to UNIFAB's stock
price on September 27, 2004, as well as the 52-week trading range and provided
the following analysis.

Purchase Price
Price Per Share Premium (Discount)
--------------- ------------------

Transaction Price $ 0.20 0%
Price at closing on September 27, 2004 $ 0.75 (73%)
52-Week High $10.25 (98%)
52-Week Low $ 0.75 (73%)

The per share price to be paid to the minority shareholders of UNIFAB in
the transaction is at a discount to the current and historical prices of
UNIFAB's common stock. In light of UNIFAB's rapidly deteriorating financial
condition, Chaffe & Associates determined that recent trading prices were not
indicative of the fairness of the per share price to be paid in the transaction.

Other Valuation Methodologies: Chaffe & Associates was not able to rely on
certain other valuation methodologies commonly employed in valuing companies,
including discounted cash flow analysis and comparable transaction analysis,
largely because of the company's past and anticipated negative operating
results. Chaffe & Associates attempted to derive an implied equity value
indication for UNIFAB by determining the net present value of after-tax cash
flows. Management of UNIFAB provided Chaffe & Associates with a budget for 2004
that incorporates management's attempt to restructure UNIFAB to accommodate
trends in the market. This budget reflects management's best estimate of revenue
and expenses, including their most recent business development efforts and
expense cuts. Although the forecast shows UNIFAB is reducing losses, it is still
projecting negative cash flow for the foreseeable future. Because UNIFAB is
projected to not have a positive cash flow, the discounted cash flow model
indicates a value of zero.

Accordingly, the methodologies used in a discounted cash flow analysis and
a comparable transaction analysis do not yield a suitable comparison between
UNIFAB, which has no positive cash flow or earnings, and UNIFAB's competitors,
which do have cash flow and earnings. Despite its inability to use these
methodologies in assessing the fair value of UNIFAB, Chaffe & Associates
concluded that the merger price is fair because any price in excess of $0 is, in
the opinion of Chaffe & Associates, a fair price to pay for the stock of a
company with negative equity (negative book value per share) and that has
historical losses and continues to project negative cash flow and negative
earnings for the foreseeable future.

Chaffe & Associates researched publicly disclosed merger and acquisition
activity of companies in UNIFAB's SIC classification. All transactions found by
Chaffe were completed prior to 2000. Because market conditions were
substantially different than at present, Chaffe has not able to compare these
transactions to UNIFAB with any relevance, and was not able to conclude value
using that methodology.

Neither Chaffe & Associates not any of its principal officers or
shareholders have ownership interests in UNIFAB or Midland. In 1998, Chaffe &
Associates performed certain advisory services for Allen Tank, Inc., in its sale
to UNIFAB, for which and in connection with, Chaffe & Associates received
customary compensation in the amount of approximately $40,000.00. In 2002,
Chaffe & Associates performed certain advisory services for the board of
directors of UNIFAB in connection with its transaction with Midland, for which
Chaffe & Associates again received customary compensation of approximately
$55,000.00.

Under the terms of this engagement, Midland has agreed to pay Chaffe &
Associates a fee of $40,000 for delivery of Chaffe & Associates' opinion
relating to this transaction, and agreed to reimburse Chaffe & Associates for
direct expenses related to its services, including the reasonable fees and
expenses of its legal counsel. In addition, Midland has agreed to indemnify
Chaffe & Associates and related persons against liabilities, including
liabilities under the federal and state securities laws, arising out of its
engagement. Chaffe & Associates does not have an obligation to update, revise or
reaffirm the Fairness Opinion. Chaffe & Associates' fee was not contingent on
the substance of the opinion it rendered or on the consummation of the proposed
merger transaction.

AVAILABILITY OF DOCUMENTS

Copies of the opinion of Chaffe & Associates are available for inspection
and copying at Midland's principal executive offices during regular business
hours by any of UNIFAB's interested shareholders, or a representative who has
been so designated in writing, and may be obtained by mail, without charge, by
written request directed to Midland at the following address: 3636 N. Causeway,
Suite 300, Metairie, Louisiana 70002, attention: Frank Cangelosi.

TRANSACTION STATEMENT

ITEM 1. SUMMARY TERM SHEET.

See the section above captioned "Summary Term Sheet."

ITEM 2. SUBJECT COMPANY INFORMATION.

(a) Name and Address. The name of the subject company is UNIFAB
International, Inc. The principal executive offices of UNIFAB are located at
5007 Port Road, New Iberia, Louisiana 70562 and its telephone number is (337)
367-8291.

UNIFAB is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended, and in accordance therewith is
required to file reports, proxy statements and other information with the
Securities and Exchange Commission relating to its business, financial condition
and other matters. Such reports, proxy statements and other information are
available for inspection and copying at the Commission's public reference
facilities at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies may be
obtained at prescribed rates from the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. The Commission also maintains a web site
that contains reports, proxy and information statements and other information
regarding persons that file reports electronically with the Commission at
http://www.sec.gov.

(b) Securities. The exact title of the class of equity securities subject
to the merger is UNIFAB's common stock, par value $0.01 per share. As of
September 30, 2004, there were 8,997,913 shares of common stock outstanding.
Also, as of September 30, 2004, there were outstanding options to purchase
49,973 shares of UNIFAB common stock and a warrant outstanding to purchase 6,000
shares of UNIFAB common stock. The stock options and warrant prices exceed
substantially the price to be paid in the proposed merger.

(c) Trading Market and Price. From September 24, 1997 through June 11,
2002, UNIFAB's common stock, $.01 par value per share, was traded on the Nasdaq
Stock Market. Effective June 12, 2002, UNIFAB transferred its common stock
listing to the Nasdaq SmallCap Market, and the stock continued to trade under
the symbol "UFAB." The transfer to the Nasdaq SmallCap Market resulted in a more
favorable cost structure and less stringent listing requirements than that of
the Nasdaq Stock Market. Effective June 28, 2004, UNIFAB's common stock was
delisted from the Nasdaq SmallCap Market and began trading over -the counter,
with certain transactions reported in the "pink sheets."

On August 1, 2003, UNIFAB's shareholders approved a one-for-ten reverse
stock split of the outstanding shares of UNIFAB common stock, which became
effective immediately after Midland converted its initial equity investment in
UNIFAB (which was in the form of Series A preferred shares) into UNIFAB common
stock. As a result of the reverse stock split, as of August

8, 2003 there were 8,201,899 outstanding shares of UNIFAB common stock, with
Midland holding 7,380,000 shares.

The following table sets forth the high and low bid prices per share of
UNIFAB common stock for each fiscal quarter in the years ended December 31, 2003
and 2002 and the first and second fiscal quarters of 2004, through June 27,
2004, giving effect to the one-for-ten reverse stock split. Prices are those
reported by the Nasdaq SmallCap Market (from June 12, 2002 through June 27,
2004) and the NASDAQ Stock Market (from January 1, 2002 through June 11, 2002).
Since June 28, 2004, trading in UNIFAB common stock has been sporadic, and
reliable trading information is not available.

HIGH LOW
---- ---

December 31, 2004
First Quarter $14.60 $ 1.15
Second Quarter through June 27, 2004 8.19 1.34

December 31, 2003
First Quarter $ 3.80 $ 0.05
Second Quarter 3.90 2.20
Third Quarter 3.60 1.10
Fourth Quarter 2.10 0.90

December 31, 2002
First Quarter $ 8.40 $ 1.60
Second Quarter 13.00 2.00
Third Quarter 9.40 2.00
Fourth Quarter 3.90 1.60

(d) Dividends. UNIFAB has not paid dividends to its common shareholders in
the two most recent fiscal years. UNIFAB intends to retain earnings, if any, to
meet its working capital requirements and to finance the future operations and
growth of its business and, therefore, does not plan to pay any cash dividends
to holders of its common stock in the foreseeable future. Further, under
Louisiana law, UNIFAB may only pay dividends from retained earnings or capital
surplus. At the present time, UNIFAB has no retained earnings or capital
surplus. Accordingly, UNIFAB cannot legally pay dividends until UNIFAB returns
to profitability and has retained earnings or capital surplus. UNIFAB is also
restricted from paying dividends in the foreseeable future under the terms of
its credit agreements.

(e) Prior Public Offerings. Neither any of the Filing Persons nor, to the
knowledge of the Filing Persons, UNIFAB, has made an underwritten public
offering of the shares of UNIFAB common stock for cash during the past three
years that was registered under the Securities Act of 1933 or exempt from
registration pursuant to Regulation A thereunder.

(f) Prior Stock Purchases. None of the Filing Persons and no affiliate of
any of the Filing Persons have purchased any shares of UNIFAB common stock
during the past two years, except as described under Items 5(a) and (e) below.

ITEM 3. IDENTITY AND BACKGROUND OF FILING PERSONS.

MIDLAND FABRICATORS AND PROCESS SYSTEMS, L.L.C.

(a) Name and Address. The principal business address of Midland
Fabricators and Process Systems, L.L.C. ("Midland"), which also serves as its
principal office, is 3636 N. Causeway, Suite 300, Metairie, Louisiana 70002, and
its telephone number is (504) 837-5766.

(b) Business and Background of Entity. Midland, a Louisiana limited
liability company, beneficially owns approximately 92.1% of UNIFAB's common
stock. Midland holds common stock and a convertible debenture of UNIFAB and
otherwise does not engage in any business activities.

(c) Business and Background of Natural Persons. William A. Hines is the
sole manager of Midland and the owner of a 45.5% membership interest in Midland
and 1,097 shares of UNIFAB's common stock. Jeanne M. Hines McDaniel is the owner
of a 45.5% membership interest in Midland. The business address, position with
Midland, principal occupation, five-year employment history and citizenship of
Mr. Hines and Ms. Hines McDaniel, as well as the names, principal businesses and
addresses of any corporations or other organizations in which such principal
occupations are conducted, are set forth below.

MIDLAND ACQUISITION, INC.

(a) Name and Address. The principal business address of Midland
Acquisition, Inc. ("Midland Acquisition"), which also serves as its principal
office, is 3636 N. Causeway, Suite 300, Metairie, Louisiana 70002, and its
telephone number is (504) 837-5766.

(b) Business and Background of Entity. Midland Acquisition, a recently
formed Louisiana corporation, was formed for the sole purpose of merging with
and into UNIFAB. Midland Acquisition is wholly owned by Midland.

(c) Business and Background of Natural Persons. William A. Hines is the
President and the sole director of Midland Acquisition. Frank Cangelosi is the
Secretary-Treasurer of Midland Acquisition. The business address, position with
Midland Acquisition, principal occupation, five-year employment history and
citizenship of Mr. Hines, as well as the names, principal businesses and
addresses of any corporations or other organizations in which such principal
occupations are conducted, is set forth below. The business address, position
with Midland Acquisition, principal occupation, five-year employment history and
citizenship of Mr. Cangelosi, as well as the names, principal businesses and
addresses of any corporations or other organizations in which such principal
occupations are conducted, is set forth on Schedule I hereto.

WILLIAM A. HINES

(a) Name and Address. William A. Hines's business address is c/o Midland
Fabricators and Process Systems, L.L.C. International, Inc., 3636 N. Causeway,
Suite 300, Metairie, Louisiana 70002. Mr. Hines beneficially owns (through his
ownership interest in Midland, and his direct ownership of 1,097 shares of
UNIFAB common stock) approximately 92.1% of UNIFAB's common stock.

(b) Business and Background of Entity. Not applicable.

(c) Business and Background of Natural Persons. Mr. Hines, a United States
citizen, is the sole manager and the owner of a 45.5% membership interest in
Midland. Mr. Hines is Chairman of the Board and President of Nassau Holding
Corporation, the parent company of several oilfield-related companies, and an
affiliate of Midland. The business address of Nassau Holding Corporation is 3636
N. Causeway, Suite 300, Metairie, Louisiana 70002, and the business telephone
number is (504) 837-5766. Mr. Hines became the Principal Executive Officer of
UNIFAB in March 2003, and also serves as UNIFAB's Chairman of the Board. Mr.
Hines is also a director of Whitney Holding Corporation, a publicly traded
regional bank holding company. The business address of Whitney Holding
Corporation is 228 St. Charles Avenue, New Orleans, Louisiana 70130. Mr. Hines
previously served as a director of UNIFAB from July 1998 through March 2001. For
more information regarding Mr. Hines, reference is made to UNIFAB's Form 10-K
and Form 10-K/A for the fiscal year ended December 31, 2003.

JEANNE M. HINES MCDANIEL

(a) Name and Address. Jeanne M. Hines McDaniel's address is c/o Midland
Fabricators and Process Systems, L.L.C. International, Inc., 3636 N. Causeway,
Suite 300, Metairie, Louisiana 70002. Ms. Hines McDaniel beneficially owns
(through her ownership interest in Midland) approximately 92.1% of UNIFAB's
common stock.

(b) Business and Background of Entity. Not applicable.

(c) Business and Background of Natural Persons. Ms. Hines McDaniel, a
United States citizen, is the owner of a 45.5% membership interest in Midland.
Ms. Hines McDaniel is not employed and has not been employed during the past
five years.

Neither William A. Hines nor Jeanne M. Hines McDaniel (1) was convicted in
a criminal proceeding during the past five years (excluding traffic violations
or similar misdemeanors) or (2) has been a party to any judicial or
administrative proceeding during the past five years (except for matters that
were dismissed without sanction or settlement) that resulted in a judgment,
decree or final order enjoining the person from future violations of, or
prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws.

OTHER PERSONS

The name, business address, position with the relevant organization,
principal occupation, five-year employment history and citizenship of each of
the control people, officers and directors and group members, together with the
names, principal businesses and addresses of any corporations or other
organizations in which principal occupations are conducted, are set forth on
Schedule I hereto.

ITEM 4. TERMS OF THE TRANSACTION.

(a) Material Terms.

Under Louisiana law, corporate shareholders that own more than 90% of the
voting stock of a Louisiana corporation have the right to cause the Louisiana
corporation to merge with the corporate shareholder in a transaction referred to
as a "short-form merger." The only corporate action required to perfect a
short-form merger is action by the board of directors of the corporate
shareholder; no corporate action is required on the part of the company to be
merged. In a short-form merger, the shareholders of the merged company other
than the shareholder authorizing the merger are entitled to receive the cash
value of their shares. Shareholders who disagree with the consideration offered
for their shares are entitled to exercise their dissenters' rights under
Louisiana corporate law if they satisfy all of the requirements of such
exercise.

Midland and William A. Hines intend to contribute their shares of UNIFAB
common stock to Midland Acquisition prior to the effective date of the merger.
After that contribution is made, Midland Acquisition will own more than 90% of
the total outstanding shares of UNIFAB common stock. Accordingly, the board of
directors of Midland Acquisition will have the power to cause UNIFAB to merge
with Midland Acquisition. The price that Midland Acquisition will pay to
shareholders of UNIFAB unaffiliated with Midland will be $0.20 per share of
UNIFAB common stock. This amount was established by Midland based, in part, upon
the advice of Chaffe & Associates, Inc., an independent investment banking firm.
The factors considered by Chaffe & Associates in arriving at its conclusions
with respect to the value of UNIFAB common stock are set out in "Special Factors
- Fairness of the Transaction", beginning on page 7.

On the date that the short-form merger is effected by Midland Acquisition,
Midland Acquisition will cause the stock transfer agent of UNIFAB to send to
each shareholder of record of UNIFAB common stock other than Midland Acquisition
a letter of transmittal that can be used to exchange such shareholder's UNIFAB
common stock for the cash payment of $0.20 per share. Shareholders who do not
wish to accept such cash payment, but instead to dissent from the merger will be
entitled to do so by following the procedures discussed below under Item 4(d)
"Appraisal Rights."

The reasons for the merger are set out in "Special Factors - Purposes,
Alternatives, Reasons and Effects of the Merger."

For federal income tax purposes, the receipt of the cash by holders of the
shares of UNIFAB common stock pursuant to the merger will be a taxable sale of
the holders' shares of

UNIFAB common stock. See "Special Factors - Certain Federal Income Tax
Consequences of the Merger", beginning on page 6.

(c) Different Terms. Shareholders of UNIFAB will be treated as described
in Item 4(a) "Terms of the Transaction - Material Terms", beginning on page 24.

(d) Appraisal Rights.

ANY SHAREHOLDER OF UNIFAB UNAFFILIATED WITH MIDLAND WHO OBJECTS TO THE MERGER
AND DESIRES TO PERFECT DISSENTERS' RIGHTS MUST TAKE THE FOLLOWING STEPS TIMELY.
FAILURE TO COMPLY WITH THESE STEPS WILL RESULT IN THE LOSS OF THE RIGHT TO
DISSENT FROM THE MERGER. IF ANY SHAREHOLDER UNAFFILIATED WITH MIDLAND LOSES THE
RIGHT TO DISSENT, HIS OR HER SHARES WILL BE CONVERTED INTO THE RIGHT TO RECEIVE
CASH IN THE AMOUNT OF $0.20 PER SHARE.

Since Midland Acquisition will be the holder of approximately 90.1% of
UNIFAB's outstanding shares at the time of the merger, the merger of Midland
Acquisition with and into UNIFAB will be effected pursuant to the provisions of
Section 112(G) of the Louisiana Business Corporation Law, which allows a holder
of 90% or more of the shares of a corporation to consent to a "short form
merger." The short form merger requires only the approval of Midland
Acquisition's board of directors. No vote or other action is required on the
part of UNIFAB's board of directors or shareholders, and no vote or other
approval of the short form merger will be sought. Section 131 of the Louisiana
Business Corporation Law allows a shareholder of UNIFAB who objects to the price
offered in the merger and who complies with the provisions of that section to
dissent from the merger. Any shareholder unaffiliated with Midland will be
entitled to receive the fair value of his or her shares of UNIFAB in cash if he
or she properly dissents. The fair cash value of the unaffiliated shareholder's
share for this purpose will be determined in an agreement between the
shareholder and Midland Acquisition, unless the shareholder cannot agree with
Midland Acquisition as to the value. In that case, the state district court for
the Parish of Iberia will determine the value of the shareholder's shares.

To exercise the right of dissent, an unaffiliated shareholder must (i)
make a demand, in writing, for the cash value of the shares as of the day before
the merger certificate is filed and (ii) deposit his or her shares in escrow
with a bank or trust company in Iberia Parish.

Midland Acquisition will notify each shareholder of the merger by delivery
of a copy of the Certificate of Merger. Shareholders who wish to perfect their
dissenters' rights must send Midland Acquisition a written demand for payment of
the cash value of their UNIFAB shares. Midland Acquisition must receive the
demand within 20 days after the date on which the Certificate of Merger was
mailed to shareholders. This demand must state the amount the shareholder is
demanding for his or her shares and a post office address to which Midland
Acquisition may reply to the shareholder. The shareholder must also deposit the
certificate(s) representing his or her shares of UNIFAB

Stock in escrow with a bank or trust company located in Iberia Parish,
Louisiana. The shareholder must also include with the demand to Midland
Acquisition the written acknowledgment of the bank or trust company that holds
his or her certificate(s) that it is holding the certificate(s) on the sole
condition that the certificate(s) will be delivered to Midland Acquisition upon
payment of the value of the shares in accordance with Section 131 of the
Louisiana Business Corporation Law. The certificate(s) must also be duly
endorsed and transferred to Midland Acquisition.

EACH SHAREHOLDER MUST DO ALL OF THE THINGS DESCRIBED ABOVE IN ORDER TO
PRESERVE HIS OR HER RIGHT TO DISSENT AND TO RECEIVE THE FAIR VALUE OF HIS OR HER
SHARES IN CASH. IF ANY SHAREHOLDER DOES NOT FOLLOW EACH OF THESE STEPS AS
DESCRIBED, HE OR SHE WILL HAVE NO RIGHT TO DISSENT FROM THE MERGER.

If Midland Acquisition does not agree with the fair value that an
unaffiliated shareholder demands, or does not agree that payment is due, Midland
Acquisition will notify such shareholder within 20 days after it receives such
shareholder's demand and acknowledgment. In that case, Midland Acquisition's
notice will include the value Midland Acquisition is willing to pay for the
shares or a statement of its belief that no payment is due. If the shareholder
does not accept the amount offered by Midland Acquisition, the shareholder must
file suit against Midland Acquisition in the state district court for the Parish
of Iberia for a judicial determination of the fair cash value of the shares.
This suit must be filed within 60 days after receipt of Midland Acquisition's
notice. If a shareholder fails to bring such a suit within the applicable 60-day
period, such shareholder will be deemed to have consented to accept Midland
Acquisition's position in its notice (either that no payment is due or that
Midland Acquisition owes the shareholder only the amount specified).

If a suit is filed and Midland Acquisition deposits with the court the
amount, if any, that it specified in its notice of disagreement, then the costs
(not including legal fees) of the suit will be taxed against the shareholder if
the amount finally awarded to him or her, exclusive of interest or costs, is
equal to or less than the amount deposited by Midland Acquisition. Otherwise,
the costs (not including legal fees) will be taxed against Midland Acquisition.
The same rules apply to interventions in this instance as to the filing of the
suit itself.

If a shareholder files a demand for the value of his or her shares, such
shareholder will cease to have any rights as a shareholder of UNIFAB or Midland
Acquisition except the rights created by Section 131 of the Louisiana Business
Corporation Law. A shareholder may voluntarily withdraw his or her demand at any
time before Midland Acquisition gives its notice of disagreement. If a
shareholder wishes to withdraw his or her demand after that time, such
shareholder may only do so with the written consent of Midland Acquisition.

Any shareholder of UNIFAB who wishes to dissent should send any
communications in that regard to Martin Bech, Secretary, UNIFAB International,
Inc., 5007 Port Road, New Iberia,

Louisiana 70560, accompanied by all items required by the Louisiana Business
Corporation Law. All such communications should be signed by or on behalf of the
dissenting shareholder in the form in which his or her shares are registered on
the books of UNIFAB.

The foregoing summary of dissenters' rights under the Louisiana Business
Corporation Law is necessarily incomplete and is qualified in its entirety by
reference to 131 of the Louisiana Business Corporation law, which is set forth
in its entirety in this Schedule 13E-3 as Exhibit (f).

(e) Provisions for Minority Security Holders. None of the Filing Persons
intends to grant minority shareholders special access to Midland Acquisition's
or UNIFAB's records in connection with the merger. None of the Filing Persons
intends to obtain counsel on behalf of or appraisal services for minority
shareholders of UNIFAB.

(f) Eligibility for Listing or Trading. Not applicable.

ITEM 5. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.

(a) Transactions.

On April 26, 2002, UNIFAB entered into a preferred stock purchase, debt
exchange and modification agreement with Midland (the "Midland Agreement").
Pursuant to the Midland Agreement and prior to its consummation on August 13,
2002:

- UNIFAB consented to Midland's acquisition of the rights of the lenders
under UNIFAB's credit agreement dated November 30, 1999, as amended, with
Bank One Louisiana, N.A. and three other commercial banks. On May 1, 2002,
Midland acquired the rights of those lenders under the credit agreement
for $13,870,000 in cash, the source of which was capital contributions
from its members. On that date, the total amount of the principal, accrued
interest and penalties owing under the credit agreement was $21,331,564.
Thereafter, and prior to the consummation of the Midland Agreement,
Midland advanced UNIFAB $2,814,500 for working capital needs and to
establish a cash collateral account with Bank One to secure UNIFAB's
obligations under outstanding letters of credit.

- Midland acquired claims against UNIFAB in the amount of $5,622,881 held by
UNIFAB's unsecured creditors. Midland's acquisition cost for these claims
was an aggregate of $2,851,373, including payments made for the unsecured
creditors, fees paid to a collection agent and attorney's fees. Midland's
source of these payments was capital contributions from its members.

- Midland agreed to assist UNIFAB in obtaining a $7 million line of credit,
and UNIFAB and Midland subsequently agreed that this line of credit would
be in the amount of $8 million. UNIFAB subsequently established the line
of credit with the Whitney National Bank. An affiliate of Midland has
guaranteed UNIFAB's obligations under the line of credit.

- UNIFAB agreed to take all steps necessary to continue the listing of
UNIFAB's common stock on the Nasdaq SmallCap Market for a period of at
least two years following consummation of the Midland Agreement.

Upon consummation of the Midland Agreement on August 13, 2002:

- $10,000,000 of the amount UNIFAB owed Midland under the credit agreement
was cancelled in exchange for 738 shares of UNIFAB's Series A preferred
stock. Each share of this preferred stock had voting rights equal to
100,000 shares of UNIFAB's common stock, and would convert into 100,000
shares of UNIFAB's common stock when the authorized number of UNIFAB's
unissued and unreserved common shares was at least 100 million.

- $12,791,024 of the amount UNIFAB owed Midland under the credit agreement
was converted into the following, which continue to constitute secured
indebtedness under the credit agreement: (i) a convertible debenture in
the principal amount of $10,651,564 payable in five equal annual
installments, bearing interest at Wall Street Journal Prime (that is, the
prime rate of interest reported in the Wall Street Journal in its daily
table of "Money Rates") plus 2.5 percentage points and convertible into
shares of UNIFAB's common stock at $3.50 per share (the closing price of
UNIFAB common stock on the Nasdaq National Market on March 6, 2002, the
date UNIFAB concluded negotiations on the terms of the convertible
debenture, which price has been adjusted to reflect the one-for-ten
reverse split effected by UNIFAB on August 1, 2003); and (ii) a promissory
note in the principal amount of $2,139,500 (the amount of the advances
made to UNIFAB by Midland after UNIFAB entered into the Midland
Agreement), which is payable August 13, 2005 and bears interest at the
rate of Wall Street Journal Prime plus 3.0 percentage points.

- Midland transferred to UNIFAB the claims it had acquired from UNIFAB's
unsecured creditors in the amount of $5,622,881. In exchange for these
claims, UNIFAB delivered to Midland a promissory note in the principal
amount of $4,708,936, payable August 13, 2006, and bearing interest at the
rate of Wall Street Journal Prime plus 3.0 percentage points. This
promissory note also constitutes secured indebtedness under UNIFAB's
credit agreement with Midland.

- $675,000 of the amount UNIFAB owed Midland under the credit agreement was
cancelled in exchange for the assignment to Midland of accounts receivable
of UNIFAB's subsidiary, Superior Derrick Services of Texas, L.L.C., in the
amount of $1,191,405, against which UNIFAB had established reserves of
$516,405.

- $680,000 of the amount UNIFAB owed Midland under the credit agreement
(substantially all of which consisted of penalties) was forgiven by
Midland, and Midland waived all of UNIFAB's defaults under the credit
agreement.

On August 1, 2003, the shareholders of UNIFAB approved an increase in the
number of shares of authorized common stock to 150,000,000 shares, and approved
a one-for-ten reverse stock split of the outstanding shares of UNIFAB's common
stock, to be effective immediately after the conversion of Midland's series A
preferred shares. Accordingly, on August 3, 2003, each share

of series A preferred stock was converted into 100,000 shares of UNIFAB common
stock and the one-for-ten reverse stock split was effected, resulting in Midland
owning 7,380,000 shares of common stock of UNIFAB. Also as a result of the
increase in UNIFAB's authorized shares, Midland had the right, at any time, to
convert its convertible debenture into up to 3,043,304 shares of common stock of
UNIFAB.

Since the closing of the Midland Agreement, Midland has provided
financial, operational and management support to UNIFAB. Under an informal
arrangement with UNIFAB, Midland has agreed to provide financial support and
funding for working capital or other needs at Midland's discretion from time to
time. At June 30, 2004, $7,800,000 was outstanding and owed to Midland related
to this informal arrangement. Midland provided a standby letter of credit to a
customer of UNIFAB in support of a contract included in UNIFAB's backlog at
December 31, 2003. The letter of credit was in the amount of $3.1 million and
expired on March 31, 2004. Since that time, UNIFAB has been awarded contracts,
totaling $13.1 million, which have required a financial guarantee or letter of
credit from Midland. Midland also provides accounting information system and
reporting services to UNIFAB, including maintaining computer hardware and
software to process financial information and produce management reports,
processing data associated with those reports, assisting in report design and
preparation, processing operating and payroll checks, consulting assistance with
the design and implementation of financial reporting systems and other related
services.

In the year ended December 31, 2003, UNIFAB executed several contracts
with Ridgelake Energy, Inc. to fabricate a platform and design and manufacture
process equipment. Ridgelake is owned and controlled by Mr. William A. Hines and
his family. The total value of these contracts was $6.9 million; these contracts
were completed at December 31, 2003. Included in revenue and gross profit for
the year ended December 31, 2003 are $6,872,000 and $922,000, respectively,
related to these contracts. At December 31, 2003, UNIFAB had a $41,000
receivable from Ridgelake related to these contracts.

(b) Significant Corporate Events.

Prior to consummation of the Midland Agreement, UNIFAB entered into
agreements, effective April 2002, terminating the employment agreement of Dailey
J. Berard, who was then a director of UNIFAB and was formerly chairman of the
board, president and chief executive officer of UNIFAB, and the consulting
agreement of Jerome E. Chojnacki, who was then the chairman of the board,
president and chief executive officer. Also effective April 2002, UNIFAB
obtained the resignation of Mr. Berard as a director and the resignation of Mr.
Chojnacki as Chairman of the Board, President and Chief Executive Officer. Upon
consummation of the transaction, Charles E. Broussard resigned from UNIFAB's
board of directors, and the remaining directors, Perry Segura and George C. Yax,
appointed Mr. Hines, Frank J. Cangelosi, Jr., William A. Downey, Daniel R.
Gaubert, Donald R. Moore and Allen C. Porter, Jr., all designated by Midland, as
members of the board. These changes to UNIFAB's board of directors were made in
connection with the closing of the transactions contemplated by the Midland
Agreement.

Other than as described in this section and elsewhere in this Schedule
13E-3, there have been no negotiations, transactions or material contacts that
occurred during the past two years

between (1) any of the Filing Persons, or to the best knowledge of any of the
Filing Persons, any of the persons listed on Schedule I hereto and (2) UNIFAB or
its affiliates concerning any merger, consolidation, acquisition, tender offer
for or other acquisition of any class of UNIFAB's securities, election of
UNIFAB's directors or sale or other transfer of a material amount of assets of
UNIFAB.

(c) Negotiations or Contacts. Other than as described in this Schedule
13E-3, there have been no negotiations or material contacts that occurred during
the past two years concerning the matters referred to in paragraph (b) of this
Item between (1) any affiliates of UNIFAB or (2) UNIFAB or any of its affiliates
and any person not affiliated with UNIFAB who would have a direct interest in
such matters.

(e) Agreements Involving the Subject Company's Securities.

Prior to consummation of the Midland Agreement, Midland agreed to cause
its designees to the board of directors to approve the calling of a meeting of
shareholders for the purpose of voting on an increase in the authorized number
of shares of UNIFAB's common stock, and to approve a rights offering pursuant to
when UNIFAB would offer common stock to its shareholders for $3.50 per share.
Midland also agreed to vote its shares in favor of the proposed increase in the
authorized number of UNIFAB's shares. The increase in UNIFAB's authorized shares
and reverse stock split are described in Item 5(a) above. The rights offering
was not consummated because the trading price of UNIFAB's common stock has been
less than $3.50 per share since the date of the Midland Agreement, except for
certain sporadic trading in the over-the-counter market.

Other than as described in this section and elsewhere in this Schedule
13E-3, there have been no agreements, arrangements or understandings, whether or
not legally enforceable, between any of the Filing Persons or, to the best
knowledge of any of the Filing Persons, any of the persons on Schedule I hereto
and any other person with respect to any securities of UNIFAB.

ITEM 6. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.

(b) Use of Securities Acquired. In the merger, all shares of UNIFAB common
stock, except for shares owned by Midland Acquisition, will be converted into
the right to acquire the cash purchase price. After the merger, Midland will be
the sole holder of UNIFAB common stock.

(c) Plans. Midland currently expects that, following the consummation of
the merger, the business and operations of UNIFAB will continue to be conducted
by UNIFAB substantially as they are currently being conducted. Midland intends
to continue to evaluate the business and operations of UNIFAB with a view to
maximizing UNIFAB's potential, and it will take such actions as it deems
appropriate under the circumstances and market conditions then existing.

Immediately following the merger, UNIFAB will have only one shareholder,
Midland, entitling UNIFAB to terminate its reporting obligations under Section
12(g) of the Securities Exchange Act of 1934 by filing a Form 15 with the
Securities and Exchange Commission. As a result, UNIFAB's common stock will no
longer be traded on the over-the-counter market or quoted in the pink sheets,
and there will be no public market for UNIFAB's common stock.

For additional information, see "Special Factors - Purposes, Alternatives,
Reasons and Effects of the Merger - Effects" and Item 4(a) "Terms of the
Transaction - Material Terms" beginning on pages 4 and 24, respectively, of this
Schedule 13E-3.

ITEM 7. PURPOSES, ALTERNATIVES, REASONS AND EFFECTS OF THE MERGER.

See "Special Factors - Purposes, Alternatives, Reasons and Effects of the
Merger" beginning on page 2 of this Schedule 13E-3.

ITEM 8. FAIRNESS OF THE TRANSACTION.

See "Special Factors - Fairness of the Transaction" beginning on page 7 of this
Schedule 13D-3.

ITEM 9. REPORTS, OPINIONS, APPRAISALS AND NEGOTIATIONS.

See "Special Factors - Reports, Opinions, Appraisals and Negotiations" beginning
on page 11 of this Schedule 13E-3.

ITEM 10. SOURCE AND AMOUNTS OF FUNDS OR OTHER CONSIDERATION.

(a) Source of Funds. The total amount of funds required by Midland
Acquisition to pay the merger price to all unaffiliated shareholders of UNIFAB,
and to pay related fees and expenses, is estimated to be approximately
$285,443.20, assuming no outstanding options to acquire UNIFAB common stock are
exercised prior to the merger. Midland Acquisition will obtain the necessary
funds from capital contributions from its shareholder, Midland. Because Midland
intends to provide the necessary funding for the merger, Midland Acquisition has
not arranged any alternative financing arrangements.

(b) Conditions. Midland Acquisition has no legal obligation to consummate
the merger as planned. Midland Acquisition may, in its sole discretion,
determine not to close the merger at any time. Specifically, should
shareholders take legal action to enjoin the merger, Midland Acquisition may
determine not to proceed with the merger, but instead to liquidate UNIFAB.
Should a third party offer to purchase UNIFAB on terms acceptable to Midland,
Midland would not proceed with the merger. The persons filing this
Schedule 13E-3 believe that shareholders of UNIFAB, including Midland
Acquisition, may not recover any value for their shares of common stock in the
event of a liquidation.

(c) Expenses. UNIFAB's transfer agent will receive reasonable and
customary compensation for its services and will be reimbursed for certain
reasonable out-of-pocket expenses and will be indemnified against certain
liabilities and expenses in connection with the merger, including certain
liabilities under U.S. federal securities laws.

None of the Filing Persons will pay any fees or commissions to any broker
or dealer in connection with the merger. Brokers, dealers, commercial banks and
trust companies will, upon request, be reimbursed by the Filing Persons for
customary mailing and handling expenses incurred by them in forwarding materials
to their customers. The fees of Chaffe & Associates, Inc. in connection with its
appraisal of the value of shares of UNIFAB common stock will be paid by Midland.

The following is an estimate of fees and expenses to be incurred by the
Filing Persons in connection with the merger:

FEES
--------

Legal fees and expenses $ 84,000
Fees of Chaffe & Associates, Inc. 45,500
Printing 6,500
Transfer Agent (including mailing) 7,500
Miscellaneous fees and expenses 2,500
--------
Total $136,000
========

(d) Borrowed Funds. Not applicable.

ITEM 11. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.

(a) Securities Ownership. At the effective time of the merger, Midland
Acquisition is expected to be the owner of 8,108,197 shares of UNIFAB common
stock (or approximately 90.1% of the total shares of UNIFAB common stock
outstanding). Because (1) Midland holds 100% of the equity interest in Midland
Acquisition, (2) William A. Hines holds a 45.5% equity interest in Midland, and
(3) Jeanne M. Hines McDaniel holds a 45.5% equity interest in Midland, each may
also be deemed to be the beneficial owners of these shares of UNIFAB common
stock.

(b) Securities Transactions. On September 30, 2004, Midland converted
$2,698,500 of a convertible debenture into 771,000 shares of UNIFAB common
stock. Midland and William A. Hines will contribute their shares of UNIFAB
common stock (or approximately 90.1% of the total shares of common stock
outstanding) to Midland Acquisition immediately prior to the merger.

There were no other transactions in the shares of UNIFAB common stock
effected during the past 60 days by the Filing Persons or, to the best knowledge
of the Filing Persons, the directors and executive officers of any of the Filing
Persons.

ITEM 12. THE SOLICITATION OR RECOMMENDATION.

Not applicable.

ITEM 13. FINANCIAL STATEMENTS.

(a) Financial Information. The audited consolidated financial statements
of UNIFAB as of and for the fiscal years ended December 31, 2003 and December
31, 2002 are incorporated

herein by reference to UNIFAB's Annual Report on Form 10-K for the year ended
December 31, 2003, filed with the Commission on March 30, 2004. The unaudited
consolidated financial statements of UNIFAB for the six month period ended June
30, 2004 are incorporated by reference to Part I, Item 1 of UNIFAB's Quarterly
Report on Form 10-Q for the period ended June 30, 2004, filed with the
Commission on August 16, 2004.

The financial statements of UNIFAB incorporated herein by reference to
documents filed with the Commission are available for inspection and copying at
the Commission's public reference facilities at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies may be obtained at prescribed rates from the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Commission also maintains a web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission at http://www.sec.gov.

(b) Pro Forma Information. Not applicable.

(c) Summary Information. Set forth below is certain selected consolidated
financial information with respect to UNIFAB and its subsidiaries excerpted or
derived by the Filing Persons from the audited consolidated financial statements
of UNIFAB contained in UNIFAB's Form 10-K and the unaudited consolidated
financial statements of UNIFAB contained in UNIFAB's Form 10-Q. The information
as of June 30, 2004 is derived from UNIFAB's Quarterly Report on Form 10-Q for
the quarter ended June 30, 2004. More comprehensive financial information is
included in reports and in other documents filed by UNIFAB with the Commission,
and the following financial information is qualified in its entirety by
reference to such reports and other documents and all of the financial
information (including any related notes) contained therein or incorporated
therein by reference.

The selected financial information presented below as of and for the
fiscal years ended December 31, 2001, 2002 and 2003 has been derived from
UNIFAB's audited consolidated financial statements. The selected financial
information as of and for the six months ended June 30, 2004 and June 30, 2003
are derived from UNIFAB's unaudited consolidated financial statements. The
unaudited financial statements include all adjustments, consisting of normal
recurring adjustments that UNIFAB considers necessary for a fair presentation of
the financial position and results of operations for these periods. The results
of operations for the six months ended June 30, 2004 and June 30, 2003 are not
necessarily indicative of results that may be expected for the entire year. The
selected financial information should be read in conjunction with the
consolidated financial statements, related notes and other financial information
incorporation by reference herein.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

Three Months
Year ended December 31, ended June 30,
------------------------------- --------------
2001 2002 2003 2003
---------- --------- -------- --------------
(Dollars in thousands, except per share data)

Statement of Operations Data:
Revenue $ 81,733 $ 33,286 $ 55,774 $ 14,483
Cost of revenue 79,244 39,260 60,618 13,964
---------- --------- -------- --------------
Gross profit (loss) 2,489 (5,974) (4,844) 519
Other operating expenses(2) 5,490 -- --
Impairment of Lake Charles Facility -- 5,074 -- --
Loss on disposal of equipment -- 351 -- --
Impairment of goodwill 14,786 -- -- --
General and administrative expense 7,417 7,242 5,051 1,206
---------- --------- -------- --------------
Operating income (loss) (25,204) (18,641) (9,985) (687)
Other income (expense):
Interest expense (2,794) (1,894) (1,951) (504)
Interest income 33 18 11 1
---------- --------- -------- --------------
Income (loss) before income taxes (27,965) (20,517) (11,835) (1,190)
Income tax expense (benefit) 1,316 -- -- --
---------- --------- -------- --------------
Net income (loss) $ (29,281) $ (20,517) $(11,835) $ (1,190)
========== ========= ======== ==============
Basic and diluted earnings (loss) per share(3) $ (36.02) $ (5.59) $ (1.44) $ (0.15)
========== ========= ======== ==============
Basic and diluted weighted average
shares outstanding(3), (4) 813 3,670 8,200 8,199
Cash dividends declared per common share(1) $ -- $ -- $ -- $ --
Other financial data:
Depreciation and amortization $ 3,054 $ 2,700 $ 2,214 $ 577
Capital expenditures 2,293 1,194 1,306 174
Net cash (used in) operating activities (94) (2,676) (10,625) 658
Net cash (used in) investing activities (2,203) (1,037) (1,236) (294)
Net cash provided by financing activities 2,047 3,039 11,791 (251)
Other operating data:
Direct labor hours worked 1,176,000 479,000 839,000 190,000
Number of employees (at end of period)(5) 450 317 425 --
Backlog (at end of period) $ 8,333 $ 22,487 $ 7,617 16,105

Three Months Six Months Six Months
ended June 30, ended June 30, ended June 30,
-------------- -------------- ---------------
2004 2003 2004
-------------- -------------- ---------------
(Dollars in thousands, except per share data)

Statement of Operations Data:
Revenue $ 9,068 $ 24,006 $ 22,908
Cost of revenue 9,323 23,303 23,066
-------------- -------------- ---------------
Gross profit (loss) (255) 703 (158)
Other operating expenses(2) -- --
Impairment of Lake Charles Facility 3,307 -- 3,307
Loss on disposal of equipment 389 -- 389
Impairment of goodwill -- 260
General and administrative expense 780 2,364 1,744
-------------- -------------- ---------------
Operating income (loss) (4,731) (1,661) (5,858)
Other income (expense):
Interest expense (538) (965) (1,078)
Interest income 5 5 8
-------------- -------------- ---------------
Income (loss) before income taxes (5,264) (2,621) (6,928)
Income tax expense (benefit) -- -- --
-------------- -------------- ---------------
Net income (loss) $ (5,264) $ (2,621) $ (6,928)
============== ============== ===============
Basic and diluted earnings (loss) per share(3) $ (0.64) $ (0.32) $ (0.84)
============== ============== ===============
Basic and diluted weighted average
shares outstanding(3), (4) 8,220 8,199 8,211
Cash dividends declared per common share(1) $ -- $ -- $ --
Other financial data:
Depreciation and amortization $ 569 $ 1,159 $ 1,138
Capital expenditures 35 719 59
Net cash (used in) operating activities 718 (2,136) (1,089)
Net cash (used in) investing activities 16 (682) 97
Net cash provided by financing activities 877 3,029 1,130
Other operating data:
Direct labor hours worked 123,000 321,000 344,000
Number of employees (at end of period) -- -- --
Backlog (at end of period) 12,005 $ 16,105 $ 12,005

December 31, December 31, June 30,
2003 2002 2004
------------ ------------ --------
(in thousands)

Balance Sheet Data:
Current assets $ 14,296 $ 12,072 $ 10,127
Current liabilities 15,637 9,231 21,640
Working capital (deficit) (1,341) 2,841 (11,513)
Noncurrent assets 25,923 27,207 21,623
Noncurrent liabilities 22,471 16,138 14,830
Shareholders' equity (deficit) 2,111 13,910 (4,720)
Redeemable preferred stock - - -
Minority interest - - -

(1) The Company intends to retain earnings, if any, to meet its working
capital requirements and to finance the future operation and growth of its
business, and therefore, does not plan to pay cash dividends to holders of
its common stock in the foreseeable future.

(2) Includes primarily asset impairments. See Note 1 to The Consolidated
Financial Statements

(3) Earnings (loss) per share and weighted average share amounts have been
restated to give effect to the one-for-ten reverse stock split on August
3, 2003.

(4) For the year ended December 31, 2002, basic and diluted weighted average
shares include the effect of the conversion of the preferred stock issued
on August 13, 2002 in connection with the Midland Recapitalization and
Investment Transaction.

(5) Number of employees only available at fiscal year end.

At December 31, At June 30,
2003 2004
--------------- -----------

Shareholders' Equity (Deficit) $ 2,111,000 $(4,720,000)
Share outstanding 8,201,899 8,226,913

Book value (deficit) per share $ 0.26 $ (0.57)

ITEM 14. PERSONS/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.

(a) Solicitations or Recommendations. There are no persons or classes of
persons who are directly or indirectly employed, retained, or to be compensated
to make solicitations or recommendations in connection with the merger.

(b) Employees and Corporate Assets. No employees or corporate assets of
UNIFAB will be used by the Filing Persons to consummate the merger.

ITEM 15. ADDITIONAL INFORMATION.

None.

ITEM 16. EXHIBITS.

(a) Letter from Midland Fabricators and Process Systems, L.L.C. to
UNIFAB International, Inc. shareholders.*

(b) None.

(c) Opinion of Chaffe & Associates, Inc., dated October 5, 2004. Chaffe
& Associates has consented to the inclusion of its' opinion as an
exhibit as evidenced in this attached opinion.*

(d) Power of Attorney.*

(f) Section 131 of the Louisiana Business Corporation Law.*

(g) None.

* These exhibits were previously filed in the original 13E-3, dated
October 6, 2004, and are incorporated by reference.

SIGNATURES

After due inquiry and to the best of my knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.

Dated: November 18, 2004

MIDLAND FABRICATORS AND PROCESS SYSTEMS,
L.L.C.

By /s/ William A. Hines
-------------------------------------
William A. Hines
Managing Member

MIDLAND ACQUISITION, INC.

By /s/ William A. Hines
-------------------------------------
William A. Hines
President and Chief Executive Officer

William A. Hines

/s/ William A. Hines
-------------------------------------
William A. Hines

Jeanne M. Hines McDaniel

By: /s/ Frank J. Cangelosi, Jr.
------------------------------------
Frank J. Cangelosi, Jr.
Attorney-in-Fact

S-1

SCHEDULE I

DIRECTORS AND EXECUTIVE OFFICERS

The following table lists the name, business address, position with
entity, present principal occupation or employment and five-year employment
history of the directors and executive officers of Midland Acquisition, Inc.,
together with the names, principal businesses and addresses of any corporations
or other organizations in which such principal occupation is conducted.

NAME, BUSINESS
ADDRESS AND POSITION
BUSINESS PRINCIPAL OCCUPATION AND WITH
TELEPHONE FIVE-YEAR EMPLOYMENT MIDLAND
NUMBER HISTORY ACQUISITION

Frank J. Cangelosi, Jr. Mr. Cangelosi, a certified public accountant, Secretary-Treasurer
c/o Nassau Holding Corporation has served as the Vice President of Finance of
3636 N. Causeway, Suite 300 Nassau Holding Corporation, the parent company
Metairie, Louisiana 70002 of several oilfield-related companies, and an
(504) 837-5766 affiliate of Midland, since June 1985. Mr.
Cangelosi is a United States citizen.

William A. Hines Mr. Hines became the Principal Executive Director, President
c/o Midland Fabricators and Officer of UNIFAB in March 2003. Mr. Hines and Chief Executive
Process Systems, L.L.C. serves as UNIFAB's Chairman of the Board and is Officer
3636 N. Causeway, Suite 300 also the Chairman of the Board and President of
Metairie, Louisiana 70002 Nassau Holding Corporation, the parent company
(504) 837-5766 of several oilfield-related companies,
including Midland. Mr. Hines is also a
director of Whitney Holding Corporation, a
publicly traded regional bank holding company.
Mr. Hines previously served as a director of
our company from July 1998 through March 2001.
Mr. Hines is a United States citizen.

During the past five years, neither Midland Acquisition nor any person listed in
the table above has been convicted in a criminal proceeding (excluding traffic
violations and similar misdemeanors) or has been a party to any judicial or
administrative proceeding (except for matters that were dismissed without
sanction or settlement) that resulted in a

Schedule I-1

judgment, decree or final order enjoining the person from future violations of,
or prohibiting activities subject to, federal or state securities laws, or a
finding of any violation of federal or state securities laws.

Schedule I-2

INDEX TO EXHIBITS

(a) Letter from Midland Fabricators and Process Systems, L.L.C. to
UNIFAB International, Inc. shareholders.*

(b) None.

(c) Opinion of Chaffe & Associates, Inc., dated October 5, 2004. Chaffe
& Associates has consented to the inclusion of its opinion as an
exhibit as evidenced in their attached opinion.*

(d) Power of Attorney.*

(f) Section 131 of the Louisiana Business Corporation Law.*

(g) None.
----------
* These exhibits were previously filed in the original 13E-3 dated October 6,
2004, and are incorporated by reference.