Archer Limited : Comprehensive debt refinancing and contemplated private placement

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Archer Limited: Comprehensive debt refinancing and contemplated private placement

As previously announced, Archer Limited ("Archer" or the "Company") has evaluated various options to strengthen the Company's balance sheet and improve its financial stability. The Company is pleased to announce a comprehensive refinancing, including an equity issue to re-establish a robust financial platform for the Company. 

Archer has retained ABG Sundal Collier ASA, Arctic Securities AS, DNB Markets, a part of DNB Bank ASA, Nordea Markets, a part of Nordea Bank AB (publ), filial i Norge, and Skandinaviska Enskilda Banken AB (publ.), Oslo Branch, as Joint Bookrunners (together referred to as the "Managers") to advise on and effect a private placement of new shares with gross proceeds in the amount of USD 60 - 120 million directed towards existing shareholders and potential new Norwegian and international investors (the "Private Placement"). The subscription price will be determined through a book-building process to be conducted by the Managers.

The Managers have received significant indications of interest from investors, including from Hemen Holding Ltd., to subscribe in the Private Placement for an amount well exceeding the minimum required transaction size of USD 60 million.

The net proceeds from the Private Placements will be used to strengthen the Company's balance sheet and liquidity position as well as for general corporate purposes.

In connection with the Private Placement, the Company has secured agreement with lenders representing 94% of the exposure under the Company's main facility, the USD 625 million revolving credit facility (the "RCF"), for a restructuring of the RCF on favorable terms, and has on this basis initiated preparations for a scheme of arrangement under which the proposed amendments are capable of being effected with the consent of the lenders representing 75% of the exposure. The restructuring of the RCF, together with the contemplated Private Placement, is a key milestone in the process of re-establishing a solid financial platform and securing a robust business plan for the Company. The amendments to the RCF include increased commitments of USD 55 million to a total of USD 680 million, replacing the current overdraft facilities. The amendments further include an extension of the maturity until 30 September 2020. All fixed debt installments will be suspended until 30 March 2020, but with potential variable debt amortization depending on Archer's financial performance (cash sweep based amortization). Furthermore, financial covenants will suspended and/or amended to create headroom to Archer's business plan.

Archer has also entered into a conditional agreement with Seadrill to convert approximately USD 125 million of subordinated debt and USD 21 million of accrued interest and fees into a new USD 45 million subordinated convertible loan maturing in December 2021. The subordinated convertible loan will have a conversion right into equity in 2021 based on a strike price of 75% above the subscription price in the Private Placement. Additionally, to decouple Archer's bank financing from Seadrill and to remove cross default provisions, the USD 278 million guarantees provided by Seadrill to the Archer banks, will be released in exchange for a 10% payment of the face value of the guarantees to the banks. The payment will reduce Archer's bank debt by approximately USD 28 million.

The amendments to the loan agreements, and the agreement with Seadrill, are subject to, inter alia, final documentation, customary conditions precedent and completion of a new equity issue in Archer in the minimum amount of USD 60 million.

The application period for the Private Placement will commence today, 28 February 2017 at 16:30 CET and close tomorrow, 1 March 2017 at 08:00 CET. The Company may at its own discretion extend or shorten the application period at any time and for any reason. The minimum order in the Private Placement has been set to the number of shares that equals an aggregate purchase price of NOK 1 million. The Company may, at its sole discretion, allocate an amount below EUR 100,000 to the extent applicable exemptions from the prospectus requirement pursuant to the Norwegian Securities Trading Act and ancillary regulations are available.

The CEO, John Lechner, and the CFO of Archer, Dag Skindlo, will each subscribe for and be allocated NOK 1 million in Private Placement.

The allocation of New Shares in the Private Placement will be made at the discretion of the Company's Board of Directors in consultation with the Managers.

Completion of the Private Placement is subject to i) necessary corporate resolutions being made and ii) the shares having been fully paid and legally issued. As a consequence of the private placement structure, the shareholders' preferential rights will be deviated from. The waiver of the preferential rights is considered necessary in the interest of time and successful completion of the Private Placement and planned refinancing.

The new shares issued in the Private Placement will not be listed on the Oslo Stock Exchange before a listing prospectus has been prepared and published by the Company, expected to take place end of March or early April 2017. Pending such listing, the new shares will be delivered on a DVP basis on a separate ISIN and will be sought listed and tradable in the Norwegian OTC market.

Subject to completion of the Private Placement, the Board of Directors intends to carry out a subsequent offering of new shares (the "Subsequent Offering"). The Subsequent Offering will be directed towards shareholders in the Company as of close of trading today, 28 February 2017, as registered in the VPS on 2 March 2017 (the "Record Date") who were not allocated shares in the Private Placement, and who are not resident in a jurisdiction where such offering would be unlawful, or would (in a jurisdiction other than Norway) require any prospectus filing, registration or similar action ("Eligible Shareholders"). Eligible Shareholders will receive non-transferable subscription rights based on their shareholding as of the Record Date. The subscription rights will give Eligible Shareholders a preferential right to subscribe for and be allocated shares in the Subsequent Offering. The subscription price in the Subsequent Offering will be equal to the subscription price in the Private Placement.

Enclosed is a presentation dated 28 February 2017, which gives more detailed information on the proposed debt restructuring and the Company. Further, reference is made to the Company's financial report for Q4 2016 published today.

For further information, please contact:

Dag Skindlo, CFO and EVP Strategy

+ 47 98 22 66 24

dag.skindlo@archerwell.com

Important information:

The release is not for publication or distribution, in whole or in part directly or indirectly, in or into Australia,

Canada, Japan or the United States (including its territories and possessions, any state of the United States and the District of Columbia) or any other jurisdiction in which the release, publication or distribution would be unlawful. This release is an announcement issued pursuant to legal information obligations, and is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act. It is issued for information purposes only, and does not constitute or form part of any offer or solicitation to purchase or subscribe for securities, in the United States or in any other jurisdiction. The securities mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "US Securities Act"). The securities may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the US Securities Act. The Company does not intend to register any portion of the offering of the securities in the United States or to conduct a public offering of the securities in the United States. Copies of this announcement are not being made and may not be distributed or sent into Australia, Canada, Japan or the United States. The issue, exercise, purchase or sale of subscription rights and the subscription or purchase of shares in the Company are subject to specific legal or regulatory restrictions in certain jurisdictions. Neither the Company nor the Managers assumes 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. The Managers are acting for the Company and no one else in connection with the Private Placement and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients or for providing advice in relation to the Private Placement and/or any other matter referred to in this release.

Forward-looking statements:

This release and any materials distributed in connection with this release may contain certain forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they reflect the Company's current expectations and assumptions as to future events and circumstances that may not prove accurate. A number of material factors could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements.