Dolphin Drilling AS: Private Placement Successfully Completed
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART DIRECTLY OR INDIRECTLY, IN AUSTRALIA, CANADA, JAPAN, HONG KONG, SOUTH AFRICA 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.
(Oslo, 22 June 2023) Reference is made to the stock exchange announcement made by Dolphin Drilling AS ("Dolphin Drilling" or the "Company") on 22 June 2023 regarding the launch of a contemplated private placement of new shares in the Company (the "Offer Shares") raising gross proceeds of the NOK equivalent of approximately USD 60 million through an accelerated bookbuilding process (the "Private Placement").
Dolphin Drilling is pleased to announce that the board has resolved to conditionally allocate 84,471,200 Offer Shares at a subscription price of NOK 7.50 (the "Subscription Price") per Offer Share, raising gross proceeds of NOK 633,534,000 million through the Private Placement. The Private Placement was carried out on the basis of an accelerated bookbuilding process managed by Arctic Securities AS, Clarksons Securities AS, DNB Markets, a part of DNB Bank ASA, Fearnley Securities AS and Pareto Securities AS, as joint bookrunners in the Private Placement (the "Managers"). The net proceeds to the Company from the Private Placement will be used to finance the acquisition of Paul B. Loyd Jr. and Transocean Leader (the "Transaction"), for working capital and other Transaction related costs, as well as for general corporate purposes.
Two of the Company's largest shareholders, Strategic Value Partners LLC ("SVP") and S.D. Standard ETC Plc ("SDS"), subscribed for, and were conditionally allocated, Offer Shares for USD 13 million and USD 7 million, respectively. Certain members of the Company's management subscribed for, and were conditionally allocated, Offer Shares for approx. USD 0.235 million.
SVP, SDS and certain of the Company's primary insiders have entered into customary lock-up arrangements with the Managers that will restrict, subject to customary exceptions, their ability to, without the prior written consent of the Managers, issue, sell or dispose of shares, as applicable, for a period of 180 days.
The Offer Shares will be settled with existing and unencumbered shares in the Company that are already listed on Euronext Growth Oslo, pursuant to an agreement entered into between certain Managers, the Company, SVP and SDS (the "Agreement"). The shares delivered to the subscribers will thus be tradable upon delivery subject to conditions having been met. Expected first day of trading will be on or about 30 June (X) subject to conditions being met, and settlement is expected on or about on or about 4 July (DVP X+2).
Completion of the Private Placement by allocation and delivery of the Offer Shares to investors is subject to (i) approval by the Company’s extraordinary general meeting expected to be held on or about 30 June 2023 ("EGM") of the Private Placement, the issue of the new A-shares and the share capital reduction; (ii) the Agreement remaining unmodified and in full force and effect, and (iii) binding agreements for the Transaction being validly entered into by the parties thereto, including signed letter of agreement to consent (on satisfaction of conditions) for sale of the rigs and novation by the counterparties to the drilling contracts.
Subject to relevant approvals by the EGM, SVP and SDS have undertaken to use the full proceeds received from the settlement of the Private Placement, in addition to the consideration payable for Offer Shares allocated to SVP and SDS, to acquire new A-shares in the Company. The number of A-shares to be issued will be 1 A-share per 10 Offer Shares allocated in the Private Placement, but with 10 times the number of votes and economic benefits compared to the ordinary shares, and will be issued at a price per A-share equal to 10 times the price per Offer Share. The purpose is to enable the Company to complete the Private Placement at an Offer Price which is below the nominal value of the existing ordinary shares. All of the new A-shares will be converted into ordinary shares by way of a 1:10 share split as soon as practically possible (following completion of a share capital reduction by way of reducing the nominal value of the Company's shares). The conversion is expected to take place within an overall timeline of eight (8) weeks from the settlement date, including a 6 weeks' creditor notification period. Following such conversion, the new A-shares (as converted to ordinary shares) will rank pari passu with the other shares in the Company.
Completion of the Private Placement implies a deviation from the shareholders' pre-emptive right to subscribe for the Offer Shares. The Board has considered the Private Placement in light of the equal treatment obligations under applicable regulations and is of the opinion that the waiver of the preferential rights inherent in a private placement, taking into consideration the time, costs and risk of alternative methods of the securing the desired funding, is in the common interest of the shareholders of the Company.
The Company intends to carry out a subsequent offering with non-tradeable subscription rights of up to 11,100,000 new shares in the Company at the Subscription Price, each with a par value of NOK 10 (to be adjusted to NOK 1 per share following completion of the share capital reduction), for gross proceeds of up to NOK 83,250,000 (equal to up to 13.1% of the size of the Private Placement) which, subject to applicable securities law, will be directed towards existing shareholders in the Company as of end of trading on 22 June 2023 (as registered in the VPS two trading days thereafter) who (i) were not included in the wall-crossing phase of the Private Placement, (ii) were not allocated Offer Shares in the Private Placement; and (iii) 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"). Completion of such Subsequent Offering will, inter alia, be subject to (i) all relevant corporate resolutions being made, including approval by the EGM; (ii) prevailing market price of the Company's shares, including the price of the Company's shares not trading below the offer price in the Subsequent Offering over a period with sufficient liquidity, (iii) completion of the share capital reduction and (iv) the publication of an offering prospectus.
Whether or not the Subsequent Offering will ultimately take place, will depend inter alia on the development of the price of the shares in the Company after completion of the Private Placement. The Subsequent Offering may be cancelled or discontinued at the discretion of the Company, in cooperation with the Managers, if the shares of the Company trade at or below the Subscription Price at meaningful volumes, which will imply that eligible shareholders have had the opportunity to limit dilution by acquiring listed shares in the secondary market at price levels at or below the Subscription Price.
Implementation of a long-term incentive scheme
The Board of the Company has furthermore resolved to implement a long-term incentive scheme for executives and members of the Management of the Company (the "LTIP"). Under the LTIP, 6,225,000 options will be granted with the following strike price and vesting structure: 1/3 after 12 months with a strike price aligning with the Offer Price in the Private Placement, 1/3 after 24 months with a strike price of NOK 15 and 1/3 after 36 months with a strike price of NOK 18.
Advisors:
Arctic Securities AS, Clarksons Securities AS, DNB Markets, a part of DNB Bank ASA, Fearnley Securities AS and Pareto Securities AS are acting as Managers for the Private Placement.
Advokatfirmaet Schjødt AS is acting as legal advisor to the Company and Advokatfirmaet Simonsen Vogt Wiig 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 is subject to the disclosure requirements pursuant to section 5-12 the Norwegian Securities Trading Act.
This stock exchange announcement was published by Ingolf Gillesdal, Head of Investor Relations Dolphin Drilling AS on 22 June 2023 at the time set out in this notice on behalf of the Company.
For further information, please contact:
Ingolf Gillesdal email: ingolf.gillesdal@dolphindrilling.com, tel: +47 920 45 320
Dolphin Drilling | www.dolphindrilling.com
Dolphin Drilling is a leading harsh environment drilling contractor for the offshore oil and gas industry. Dolphin Drilling owns a fleet of three high-technical standard 4th and 5th generation enhanced Aker H3 units, Borgland Dolphin, Blackford Dolphin, and Bideford Dolphin, operated by an experienced team with a strong operational track record. The company has offshore and onshore offices and operations in Norway, Scotland, Brazil, and Nigeria.
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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.