Farstad Shipping ASA – Launch of private placement of new shares and convertible bonds


Ålesund, Norway, 7 February 2017 – Reference is made to the stock exchange announcement by Farstad Shipping ASA ("Farstad" or the "Company") dated 6 February 2017 regarding a proposed comprehensive restructuring of the Company (the "Restructuring") as well as a contemplated combination of the Company with Deep Sea Supply Plc ("DESSC") and Solstad Offshore ASA ("Solstad Offshore") (the "Combination").

As part of the Restructuring, the Company shall conduct a private placement (the "Private Placement 1") of new shares towards Aker Capital AS ("Aker") and Hemen Holding Limited ("Hemen") for a total cash subscription of NOK 450 million and for a subscription price per share of NOK 0.35, of which each of Aker and Hemen will subscribe for and be allocated shares for an amount of NOK 225 million.

As part of the Restructuring, the Company will further conduct a private placement of new shares and/or convertible bonds ("CBs") (the "Private Placement 2", and together with the Private Placement 1, the "Private Placements") with a total subscription amount of NOK 150 million in cash, for a subscription/conversion price per share of NOK 0.35, being the same price as in the Private Placement 1. The full subscription is guaranteed by Aker and Hemen for NOK 75 million each.

The Private Placement 2 is directed towards holders of bonds in the Company's bond loans (ISIN NO 001 0679871 and NO 001 0635964), subject to applicable selling restrictions. Certain large bondholders have pre-subscribed for shares/CBs for a total amount of NOK 50 million and will be allocated shares/CBs for such amount. Any part of Private Placement 2 which is not subscribed by the bondholders shall be subscribed by Tyrholm & Farstad Invest AS (an affiliate of the Company's principal existing shareholder, Tyrholm & Farstad AS) up to a maximum amount of NOK 50 million, and, if there is any amount in excess of NOK 50 million, such excess amount may be subscribed by the other existing shareholders of the Company.

In the event that Tyrholm & Farstad Invest AS' subscription pursuant to the above is less than NOK 50 million, Tyrholm & Farstad Invest AS shall subscribe for shares in Private Placement 1 for such amount that is required to allow Tyrholm & Farstad Invest AS to subscribe for an aggregate amount equal to NOK 50 million in the Private Placements, and Aker and Hemen's subscriptions in Private Placement 1 shall be reduced correspondingly on a pro rata basis.

The subscription period in the Private Placement 2 will commence immediately today (7 February 2017) at 08:30 hours (CET) and close at 16:30 hours (CET) on 10 February 2017. The Company may however at its own discretion extend or shorten the subscription period at any time and for any reason. The minimum order and allocation amount in the Private Placement 2 is the number of CBs and new shares respectively corresponding to NOK 1,000,000 (or the NOK equivalent of EUR 100,000, if higher).

Completion of the Private Placements is conditional on, among other things, final loan documentation, approval by the bondholders in the Company's two outstanding bond loans FAR03 and FAR04, the approval of the credit committees of senior lenders, and relevant corporate resolutions. If the aggregate amount of CBs subscribed for in the Private Placement 2 is less than NOK 80 million, no CBs will be issued by the Company.

The Company reserves the right to allocate CBs to bondholders who have subscribed for shares, in order to secure a pro rata allocation in the event that the Private Placement 2 is over-subscribed and the total subscription of CBs exceeds NOK 80 million.

The CBs, if issued, shall be zero-coupon unsecured and subordinated convertible bonds, and will be offered to bondholders as an alternative to subscribing new shares, the CBs being convertible into shares in the Company at any time at the option of the holder. The CBs shall be converted into shares on the maturity date (if not previously converted into shares) and the Company may demand conversion: (i) upon the occurrence of an event whereby formal insolvency proceedings of the Company is initiated in any relevant jurisdiction; and/or (ii) (a) if the CBs are declared to be or otherwise become payable, (b) if there is a cessation of payments or unilateral standstill by the Company or any subsidiary on any senior debt owing by the Company or any of its subsidiaries and/or (c) if any financial indebtedness of the Company or any subsidiary is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described).

The Private Placements will result in the issuance of a maximum of 1,714,285,714 new shares in the Company (provided that no CBs are subscribed for and allocated).

The 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.

The Company has retained ABG Sundal Collier ASA and Pareto Securities AS as managers for the Private Placements.

Sales contacts:

ABG Sundal Collier: +47 22 01 60 32

Pareto Securities: +47 22 87 87 70

For further details on the Restructuring and the proposed Combination, please refer to the Restructuring stock exchange announcement and the detailed Restructuring term sheet, both dated 6 February 2017, and the company presentation attached hereto.

The new shares issued in the Private Placements will not be tradable before the shares have been fully paid and the new shares have been registered with the Norwegian Central Securities Depository (the "VPS"). The new shares will when issued rank equal in all respects to the existing shares of the Company. The current nominal value of the Company's ordinary shares is NOK 1.00. As part of the Restructuring, the Company will carry out a share capital reduction in order to reduce the nominal value of the ordinary shares to NOK 0.05. The new shares issued in the Private Placements will following approval and publication of a listing prospectus be listed on Oslo Børs. Pending such listing, the new shares will be registered on a separate ISIN and not be listed or tradable on Oslo Børs. If issued, an application will be made for the CBs to be listed on Oslo Børs. The Company will seek an interim registration of the new shares on N-OTC or Merkur Market.

In order to be able to complete the Private Placements, the Company's Board of Directors will propose to the shareholders' meeting that existing shareholders' pre-emptive rights to subscribe the new shares are set aside. The Company's Board of Directors believes that this is necessary and in the best interest of the Company and its shareholders and other stakeholders as it secures the financing required by the Restructuring.

Further, the Company's Board of Directors will propose that the shareholders' meeting also authorise the Board of Directors to carry out a subsequent equity offering (the "Repair Issue") in which the existing shareholders of the Company (as per the end of the last day of the subscription period for the Private Placement 2) who have not been allocated shares in the Private Placement 2 are offered to subscribe for shares at the same subscription price as in the Private Placements for a total subscription amount of NOK 50 million. Each such existing shareholder shall receive non-transferrable subscription rights to subscribe for its pro rata part of such shares. To the extent that any such existing shareholder does not subscribe for all shares for which it has received subscription rights, such other existing shareholders will be given the opportunity to subscribe such shares (observing the principle of equal treatment of shareholders). The Company's Board of Directors might resolve to include bondholders (as per the end of the last day of the subscription period for the Private Placement 2) who have not been allocated shares/CBs in the Private Placement 2 in the Repair Issue, provided that the maximum amount of the Repair Issue is not exceeded.

Tyrholm & Farstad AS, the Company's principal existing shareholder, Sverre A. Farstad and Jan H. Farstad have waived their rights to participate in the Repair Issue.

Each of Aker and Hemen have guaranteed NOK 25 million of the subscription of the Repair Issue, such that the aggregate amount thereof guaranteed is NOK 50 million.

For further information, please contact:

CEO Karl-Johan Bakken, tel. +47 901 05 697

CFO Olav Haugland, tel. +47 915 41 809

Farstad Shipping’s fleet currently consists of 56 vessels (27 AHTS, 22 PSV and 7 SUBSEA). The company’s operations are managed from Aalesund, Melbourne, Perth, Singapore, Macaé and Rio de Janeiro with a total of 1,500 employees engaged onshore and offshore. The company’s strategy is to be a leading quality provider of large, modern offshore service vessels to the oil industry.




This press release is for information purposes only and shall not constitute or be construed as an offer to buy, sell, issue, or subscribe for, or the solicitation of an offer to buy, sell, issue, or subscribe for any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Copies of this announcement are not being made and may not be distributed or sent into the Australia, Canada, Japan, the United States or any other jurisdiction in which such distribution would be unlawful or would require registration or other measures.

The securities referred to herein have not been and will not be registered under the U.S. Securities Act, or any state securities laws, and will be sold within the United States only to qualified institutional buyers ("QIB"), as defined in Rule 144A under the U.S. Securities Act ("Rule 144A"), through affiliates of the managers, in reliance upon the exemption from the registration requirements provided by section 4(2) of the U.S. Securities Act Rule 144A, and to certain non-U.S. persons in offshore transactions in reliance on Regulation S under the U.S. Securities Act. The securities to be offered will be subject to certain restrictions on transfer.

Certain statements contained herein that are not statements of historical fact, may constitute forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual results or events concerning the Company to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. None of the Company, the managers or any of their affiliates or advisors provide any assurance that the assumptions underlying such forward-looking statements are free from errors nor do any of them accept any responsibility for the future accuracy of the opinions expressed in this press release or the actual occurrence of the forecasted developments. Except as may be required by applicable law or stock exchange regulation, neither the Company nor the managers, or any of their affiliates or advisors, assume any obligation to update any forward-looking statements or to confirm these forward-looking statements to actual results.

This information is subject of the disclosure requirements set out in Section 5-12 of the Norwegian Securities Trading Act.