Global solution to the Normand Maximus "Residual Claim"
Skudeneshavn, 22 November 2024
Reference is made to previous communication from Solstad Offshore ASA (the "Company") regarding the USD 197 million claim guaranteed by the Company, related to the financing of the vessel Normand Maximus (the "Residual Claim").
The Company is pleased to announce that the Company and some of its subsidiaries have entered into two agreements which finally discharge the Residual Claim.
The agreements implies a reduction of the Group's net debt by approximately NOK 1 billion. The agreements (related to the Residual Claim) are estimated to have an annual positive accounting effect of approximately NOK 500 million through reduced interest and depreciation. In addition, the contract extension for CSV Normand Maximus announced on 21 November 2024 will have positive one-off accounting effect of approximately NOK 500 million which will be reflected in the Company’s Q4 accounts.
The agreements are as follows:
The Company and subsidiaries have entered into an agreement with MYF Maximus Limited ("MYF"). MYF is a former shareholder in Maximus Limited. Maximus Limited is the creditor for the Residual Claim.
MYF had initiated litigation in Norway and in the Cayman Islands to reclaim their previous shareholding and control in Maximus Limited. The litigation pertained to enforcement of share security by the Lenders in 2021.
The litigation was initiated against the lenders that had originally provided bank financing for the acquisition of "Normand Maximus" in 2016(the "Lenders").
The agreement with MYF involves that MYF waives any claim and rights in Maximus Limited and the Residual Claim. The litigation in Cayman and Norway is discontinued and the judgment by the Oslo District Court of 7 July 2023 in favour of the Lenders is final.
A payment will be made by the Company's group to MYF in an amount of USD 91.45 million. This payment is agreed between the parties and Maximus Limited to discharge the Residual Claim in full.
The Company and the Lenders on the other side have entered into an agreement which discharges the rights and interests that the Lenders had in Maximus Limited and the Residual Claim pursuant to agreements entered into between the Company and the Lenders.
The agreements entered into also involves that the Company now owns and controls Maximus Limited, including the cash in the company.
The net amounts of approx. USD 102 million payable to MYF and the Lenders will be financed by cash in the Company and a term and revolving credit facility with DNB Bank ASA.
The Residual Claim has prevented the Company from paying dividends, whereas the new financing arrangements permit payment of dividend subject to financial performance of the Company.
The transaction was completed today, 22 November 2024.
Background on the litigation
The maturity date for the Residual Claim was originally 31 March 2024, but was postponed to 16 January 2027 in connection with the refinancing of the group announced 23 October 2023.
As part of the refinancing, a subsidiary of the Company was granted an option to purchase the Residual Claim against payment of NOK 200 million. The payment from the Company to the Lenders under the agreement now entered into is equal to the purchase option price of NOK 200 million. In addition NOK 25 million is paid to the Lenders as cost coverage.
The right to exercise the purchase option was contingent on the outcome of litigation in Norway and in the Cayman Islands regarding the ownership of the shares and control in Maximus Limited as the creditor for the Residual Claim.
The litigation was pending between the Lenders and MYF.
If the Lenders prevailed in the litigation, the option to purchase the Residual Claim was exercisable.
In the event that the Lenders did not prevail, the Company would have to pay or refinance the Residual Claim in 2027, in an amount including incurred interest of USD 241 million. The amount now paid under the agreements entered into with MYF and the Lenders is approximately 42% of the amount that would otherwise fall due in 2027.
The two agreements between the involved parties, means that a satisfactory solution has been reached.
CEO Lars Peder Solstad says:
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"The Company has been seeking solutions to the Residual Claim over time. The litigation on the Residual Claim was expected to be ongoing until at least 2026. The Residual Claim made a refinancing of the group at Company level for the March 2024 debt maturities impossible. Also after the refinancing announced in October 2023, the Residual Claim placed limitations on the operation and development of the Company.
Considering the risks involved with the litigation and the uncertainty that the Residual Claim placed upon the group, we are pleased to have reached a solution with the involved parties at satisfactory terms.
This uncertainty related to the Residual Claim is now brought to an end. The solution is made possible by the liabilities released and values unlocked in the 2023 refinancing of the group. Improved markets has during 2024 also opened for financing of the solution at manageable terms.
We look forward to take full advantage of this new flexibility in a strong offshore market."
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Contacts
Lars Peder Solstad CEO, at +47 91 31 85 85
Kjetil Ramstad CFO, at +47 90 75 94 89
Solstad Offshore ASA
This information is considered to be inside information pursuant to the EU Market Abuse Regulation article 7 and is subject to the disclosure requirements pursuant to MAR article 17 and Section 5-12 the Norwegian Securities Trading Act. This announcement was published by Kjetil Ramstad, CFO of Solstad Offshore ASA, on 22 November 2024 at 12:00.