Norse announces proposed refinancing of bond portfolio

February 28, 2012

Norse is pleased to announce a proposed refinancing of its bond debt. The Company has reached a refinancing agreement with its bondholders constituting a majority in each of the NEC 02, 04 and 05 bond issues. The Company will issue new convertible bonds with principal amount minimum USD 21 million and maximum USD 40 million, where the minimum amount of USD 21 million will be settled by conversion of a corresponding principal amount of NEC02/04/05 bonds (pro rata). The convertible debt has a strike of NOK 0.37 per share (subject to adjustment clauses), carries a 5% coupon, is 3 years in duration, contains a call provision, and is secured by the shares in Norse’s wholly owned subsidiary, Norse Energy Holding Inc.

The Company is to prepay the remaining outstanding bonds, in total USD 35 million, at par within June 2012 (“the Remedy Period”). The Company will present the bondholders with a plan to source the USD 35 million on or before 31 March 2012, which could include asset sales, sale of further convertible bonds to new investors, issuance of equity, other M&A activity and/or joint ventures.

The NEC03 bonds (par value USD 3.74 million) are being called and are being replaced by a new bond loan ("NEC06") with approximately 1 year longer duration (2013).  This loan will be USD 3.74 million (the same as the par amount on the NEC03 bonds) with a coupon of Libor plus 0.5%, and it is secured with first priority in the security package for the NEC bonds. Subscribers of this bond will receive warrants to subscribe for 7.5 million shares in the Company at strike NOK 0.28 per share, with 1 year duration. Existing bondholders have pre-subscribed to this NEC06 bond which will be issued upon settlement of the call of the NEC03 bond. The bondholders have agreed to waive financial covenants in the Remedy Period, and to give any waivers required to implement and finance the restructuring proposal.

As a consequence of the restructuring, Norse will obtain up to 3 years extended maturity for USD 21 million of bond debt. In addition the Company has obtained flexibility to deliver on a full refinancing of the remaining outstanding bond debt.

Norse is very pleased with the solution and the support from bondholders to complete a full refinancing of the company. Bondholder meetings will be called for the 9thMarch 2012 in order to implement the proposal.

Pareto Securities AS and Carnegie ASA have acted as advisors to Norse in the connection with the bond refinancing. 

For further information, please contact:  

                                                                                                                                                                                                                                                      
J. Chris Steinhauser, Chief Financial Officer
Phone: +1 716 568-2048 Email: csteinhauser@norseenergy.com

S. Dennis Holbrook, Chief Legal Officer                                                                              
Cell: +1 716 713-2489 Email: dholbrook@norseenergy.com