Archer Limited – Agreement in principle on refinancing solution and launch of private placement of minimum $100 million in new equity.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO AUSTRALIA, CANADA, HONG KONG, JAPAN OR THE UNITED STATES, OR ANY OTHER JURISDICTION IN WHICH THE RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER OF ANY OF THE SECURITIES DESCRIBED HEREIN.

Hamilton, Bermuda, 6 March 2023

Archer Limited ("Archer", the "Company" and together with its subsidiaries the "Group") is pleased to announce that it has reached an agreement in principle with its secured lenders and other stakeholders for an overall refinancing solution which will create a holistic and robust financial platform for the Group (the "Refinancing").

The refinancing solution includes a new senior 1^st lien facility of USD 260 million, a new USD 200 million 2^nd lien bond, conversion of the outstanding Convertible Bond to equity and issuance of a minimum USD 100 million of new equity.

The Refinancing represents a contemplated pro-forma net debt of USD 413 million, equaling an opening leverage of 3.7x based on the mid-point of ´23 guided EBITDA. The consolidated net debt package is expected to be less than 20% of the Company’s current revenue backlog. The total financing package have an estimated cash cost of SOFR + 4.3%, pending actual leverage ratio, and total cost, including PIK element on 2^nd lien bond, of SOFR + 6.5%.

Dag Skindlo, the Company’s CEO, comments:

“This comprehensive refinancing for Archer is a balanced solution to a significant balance sheet overhang and leaves the Company well placed to capitalise on the significant opportunities we see ahead, in a much more positive trading environment for oil field services. 

I would like to thank all of our stakeholders for supporting us in recapitalising the Company and together with my colleagues much look forward to focusing on running the business for value in the future.”

Details of the Refinancing

The Refinancing consists of the following main elements:

New Senior 1^st Lien Facility

New 1^st Lien USD 260 million multicurrency facility with DNB Bank ASA, Skandinaviska Enskilda Banken AB (Publ) Oslo branch and Sparebank1 SR-Bank ASA as lenders, and Archer Norge AS and Archer Assets (UK) Ltd. as borrowers (the "Senior Facility") consisting of:

• • USD 150 million term loan facility
  • USD 100 million revolving credit facility
  • USD 10 million guarantee facility with possibility to upsize with further USD 5 million

The Senior Facility will have a tenor of 4 years and a margin of SOFR + margin between 300-550 bps. The Senior Facility will be secured through a first priority share charge over the shares of each guarantor, assignments of intragroup loans and will have a shared security package with the 2^nd Lien Bonds (as defined below) subject to an intercreditor agreement which is expected to be entered into between the lenders. The facility will be subject to customary financial covenants. Net proceeds will be used to refinance the Group's existing 1^st lien debt.  Please refer to slide 66 in the attached presentation for further details.

New fully backstopped 2^nd Lien bond issue

New 2^nd Lien USD 200 million bond issue with a 4.25 years tenor (the "2^nd Lien Bond") with SOFR plus 5% cash interest and 5% PIK, to be issued by the Company's indirect subsidiary Archer Norge AS. The 2^nd Lien Bond is fully back-stopped by a consortium led by Hemen Holding Limited ("Hemen"). The 2^nd Lien Bonds are subject to customary covenants and will be secured on a 2^nd lien basis with a shared security package with the Senior Facility. Marketing under the 2^nd Lien Bond is expected to commence shortly after completion of the Private Placement as further detailed below. Net proceeds will be used to refinance the Group's existing 1^st lien debt. Please refer to slide 67 in the attached presentation for further details regarding the 2^nd Lien Bond.

Conversion of convertible bond

As part of the Refinancing, the Company has agreed in principle with the lender under the Group’s USD 13.1 million convertible loan (the “Convertible Loan”) that the Convertible Loan shall be converted to common shares in the Company (the "Conversion Shares"). The conversion price will be the lower of the subscription price in the Private Placement (as defined below) and the conversion price calculated in accordance with the existing terms for the Convertible Loan. The Conversion of the Convertible Loan is subject to approval from parties holding at least 50% of the ordinary shares of the Lender and holders of at least a majority (by value) of certain senior secured notes issued by the Lender to release the security granted over the Convertible Loan (the "Lender Consents"). The conversion of the Convertible Loan is furthermore subject to approval by the SGM (as defined below) of the required increase of the Company's authorised share capital.  The Conversion Shares will be subject to a six month lock-up from the time of issuance.

New equity – contemplated private placement of shares

As part of the Refinancing, the Company will seek to raise the NOK equivalent of USD 100 million in new equity through a contemplated private placement of new common shares (the "Private Placement"). The subscription price per Offer Share has been set to NOK 1 (the “Offer Price”), based on a broad wall-crossing exercise targeting both existing shareholders and new investors. The Private Placement will be directed towards new and existing shareholders in the Company subject to applicable exemptions from the obligation to prepare a prospectus pursuant to the EU Prospectus Regulation.  The Company has received indications that Hemen will subscribe for the NOK equivalent of USD 25 million in the Private Placement. Hemen has agreed to a six month lock up on shares held in Archer, including the Offer Shares allocated in the Private Placement. The Company has furthermore received indications that the Company's largest shareholder, Paratus Energy Services Limited ("Paratus") will subscribe its pro rata allocation based upon its interest in the issued share capital of the Company, being the NOK equivalent of USD 15.5 million. The Company has furthermore received indication that the Company's CEO, CFO and member of the Board, Jan Erik Klepsland will participate in the Private Placement. Net proceeds will be used to refinance the Group's existing 1^st lien debt.

The Company’s Board will, subject to completion of the Private Placement, consider to carry out a subsequent offering of new shares (the "Subsequent Offering") which, subject to applicable securities laws, will be directed towards existing shareholders in the Company as at 6 March 2023 (as registered with the VPS on 8 March 2023) who (i) were not allocated Offer Shares in the Private Placement, and (ii) are not resident in a jurisdiction where such offering would be unlawful, or would (in jurisdictions other than Norway) require any prospectus filing, registration or similar action. The Subsequent Offering is expected to be launched shortly after publication of the Prospectus (as defined below).

For further details, please refer to the separate announcement relating to the contemplated private placement.

Conditions and timeline

• The Refinancing is inter-conditional, and subject to agreement on final form documents for the 1^st Lien facility, the loan agreement relating to the 2^nd Lien bonds as well as the intercreditor agreement.
• The new common shares in Tranche 2 of the Private Placement and issuance of the Conversion Shares will be subject to approval by the SGM of an increase in the authorized share capital of the Company.
• The 1^st Lien Facility and the 2^nd Lien Bond are inter-conditional and subject to completion of the Private Placement and the conversion of the Convertible Loan.
• The Convertible Loan is conditional upon completion of the Private Placement and the conditions for satisfaction of the terms of the 1^st Lien Facility and the 2^nd Lien Bond being satisfied (except only for the conversion of the Convertible Loan).
• Listing of the new common shares and the consummation of the Subsequent Offering and listing of any common shares issued pursuant thereto is conditional upon the approval and publication of a combined offering and listing prospectus which is expected to take medio March 2023 (the "Prospectus").

Subject to satisfaction of conditions for completion of all elements of the Refinancing, it is expected that overall completion of the Refinancing will take place within 30 April 2023.

Dilution and equal treatment considerations

The Company is of the view that the Group will derive economic and other benefits from the Private Placement and the Refinancing, that the Private Placement and the Refinancing are in the best commercial interests of the Company and has deemed it advisable and in the best interests of the Company and its shareholders to raise capital and redeem debt in this manner.

The Board considers that although the Refinancing, including the Private Placement, will imply a dilution of the existing shareholders of the Company, the pricing has been determined on the basis a broad wall-crossing exercise targeting both existing shareholders and new investors, that existing shareholders, to the extent possible, will be given the opportunity to participate in, and be allocated shares in the Private Placement and that the remaining shareholders will be given the opportunity to mitigate the effect of the Refinancing through participation in a contemplated subsequent repair offering. Taking these factors into consideration, and balancing the Company’s need to refinance the Company’s debt through the contemplated Refinancing and the interests of the minority shareholders, the Board is of the view that the transactions, taken as a whole, represent a balanced solution taking into account the common interest of the Company and its shareholders, cf. section 5-14 of the Norwegian Securities Trading Act.

Advisors

DNB Markets, part of DNB Bank ASA ("DNB Markets") is acting as financial advisor to the Company in connection with the overall Refinancing solution.

DNB Markets, Pareto Securities AS, Sparebank 1 Markets, Skandinavia Enskildabanken AB (Public) Oslo Branch and Arctic Securities AS are acting as Joint Bookrunners for the Private Placement (jointly the "Managers").

Fulcrum Advisory Partners LLP (“Fulcrum Partners”) provided consultancy services to the Company in connection with the Refinancing.

Advokatfirmaet Schjødt AS is acting as legal advisor to the Company and Advokatfirmaet Wiersholm AS is acting as legal advisors to the Managers.

This information is considered to be inside information pursuant to the EU Market Abuse Regulation and was published by Joachim Houeland, Manager Treasury and Investor Relations of the Company, on 6 March 2023 at 16:30 (CET).

For additional information, please contact:

Dag Skindlo, Chief Executive Officer, Mobile: +4798226624, Email:dag.skindlo@archerwell.com

Espen Joranger, Chief Financial Officer, Mobile: +47 982 06 812, Email: espen.joranger@archerwell.com

Joachim Houeland, Manager Treasury and Investor Relations, Mobile: +47 482 78 748, Email: joachim.houeland@archerwell.com

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Important information:

This announcement is not and does not form a part of any offer to sell, or a solicitation of an offer to purchase, any securities of the Company. Copies of this announcement are not being made and may not be distributed or sent into any jurisdiction in which such distribution would be unlawful or would require registration or other measures.

The securities referred to in this announcement have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and accordingly may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and in accordance with applicable U.S. state securities laws. The Company does not intend to register any part of the offering in the United States or to conduct a public offering of securities in the United States. Any sale in the United States of the securities mentioned in this announcement will be made solely to “qualified institutional buyers” as defined in Rule 144A under the Securities Act.

In any EEA Member State, this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Regulation, i.e., only to investors who can receive the offer without an approved prospectus in such EEA Member State. The “Prospectus Regulation” means Regulation (EU) 2017/1129, as amended (together with any applicable implementing measures) in any Member State.

This communication is only being distributed to and is only directed at persons in the United Kingdom that are (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”) or (ii) high net worth entities, and other persons to whom this announcement may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investments activity to which this communication relates is available only for relevant persons and will be engaged in only with relevant persons. Persons distributing this communication must satisfy themselves that it is lawful to do so.

The issue, subscription or purchase of shares or other financial instruments in the Company is subject to specific legal or regulatory restrictions in certain jurisdictions. Neither the Company nor the Managers assume any responsibility in the event there is a violation by any person of such restrictions. The distribution of this release may in certain jurisdictions be restricted by law. Persons into whose possession this release comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

Matters discussed in this announcement may constitute forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as “believe”, “expect”, “anticipate”, “strategy”, “intends”, “estimate”, “will”, “may”, “continue”, “should” and similar expressions. Any forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Such assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. The Company does not make any guarantee that the assumptions underlying any forward-looking statements in this announcement are free from errors nor does it accept any responsibility for the future accuracy of the opinions expressed in this announcement or any obligation to update or revise the statements in this announcement to reflect subsequent events. You should not place undue reliance on any forward-looking statements in this announcement. The information, opinions and forward-looking statements contained in this announcement speak only as at its date, and are subject to change without notice. The Company does not undertake any obligation to review, update, confirm, or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this announcement.

This announcement is made by and, and is the responsibility of, the Company. The Managers are acting exclusively for the Company and no one else and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients, or for advice in relation to the contents of this announcement or any of the matters referred to herein. Neither the Managers nor any of their respective affiliates makes any representation as to the accuracy or completeness of this announcement and none of them accepts any responsibility for the contents of this announcement or any matters referred to herein.

This announcement is for information purposes only and is not to be relied upon in substitution for the exercise of independent judgment. It is not intended as investment advice and under no circumstances is it to be used or considered as an offer to sell, or a solicitation of an offer to buy any securities or a recommendation to buy or sell any securities of the Company. The distribution of this announcement and other information may be restricted by law in certain jurisdictions. Persons into whose possession this announcement or such other information should come are required to inform themselves about and to observe any such restrictions. This announcement is an advertisement and is not a prospectus for the purposes of the Prospectus Regulation as implemented in any Member State.