Refinancing of Solstad Offshore

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Skudeneshavn, October 23, 2023 – Solstad Offshore ASA ("SOFF" and, together with its subsidiaries, the "Solstad Group") is pleased to announce that its subsidiary Solstad Shipholding AS (“Solstad”) has reached an agreement with Aker ASA (via its wholly owned subsidiary Aker Capital AS, hereinafter “Aker”), AMSC ASA (“AMSC”), DNB Bank ASA (“DNB”) and Export Finance Norway (“Eksfin”) for an overall refinancing solution which will create a robust industrial platform going forward (the “Refinancing”).

• Successful refinancing of Solstad’s fleet loan maturing 31 March 2024
• Aker will contribute minimum NOK 2.25 billion in equity in a new entity to be established (“Solstad NewCo”) below SOFF
• AMSC will contribute 100 percent of the shares in the entity owning the CSV Normand Maximus valued at NOK 1.0 billion against receiving new shares in Solstad NewCo
• Shareholders in SOFF will be offered to subscribe new shares in Solstad NewCo to raise gross proceeds of NOK 750 million
• A new fleet loan of NOK 9.7 billion underwritten by DNB and Eksfin
• Maturity of the residual claim relating to the CSV Normand Maximus extended similarly to the maturity of the new credit facilities
• The Solstad Group continues to operate as today with no effect on employees and clients

Solstad has, together with Aker, developed and negotiated NOK 9.7 billion in new credit facilities, underwritten by DNB and Eksfin, to fully refinance the fleet loan maturing 31 March 2024. As part of the Refinancing, a new corporate structure for which Solstad NewCo will serve as the parent company will be established and a total of NOK 4.0 billion of new equity will be raised where Aker will contribute minimum NOK 2.25 billion and underwrite an additional NOK 0.75 billion to significantly improve the financial position of Solstad NewCo. In addition, AMSC will contribute the owning entity for the CSV Normand Maximus against issuance of NOK 1.0 billion equivalent of new shares in Solstad NewCo. Furthermore, the refinancing will also entail amendments to the terms of the residual claim relating to the former lease arrangement for Normand Maximus, including the extension of its maturity similarly to the maturity of the new credit facilities.  The Refinancing and its competitive terms have been made possible through Aker’s strong and long-term support to the Solstad Group.

“The Refinancing provides a solution to the benefit of all stakeholders in Solstad. This combination will position both Solstad NewCo and the Solstad Group for future growth and shareholder value creation in the projected strong offshore market going forward. Aker has been an instrumental contributor to the Solstad Group from day one and without Aker’s support, both over the past years and going forward, this Refinancing would not have been possible. Passing this important milestone means that we have secured a solid industrial solution,” said Lars Peder Solstad, CEO of SOFF.

Solstad has worked closely with Aker, DNB and Eksfin to solve a challenging refinancing situation which included multiple parties and diverging interests. Due to the complex nature of Solstad’s current liabilities, including a residual claim from former lease arrangements with respect to CSV Normand Maximus, the Refinancing entails the establishment of the Solstad NewCo structure.

“The Refinancing will establish a robust industrial platform positioning Solstad NewCo as a global leading offshore operator with one of the most modern fleets of high-end vessels and a healthy balance sheet including NOK 4 billion of new equity. I would like to extend my appreciation towards DNB and Eksfin for their support in the Refinancing. The strong market outlook and the immediate deleveraging provides a solid basis for increased value creation with a clear ambition to initiate quarterly dividend payments from Solstad NewCo in 2024. Aker strongly supports the Solstad Group, Solstad NewCo, its management team, and its competent organization,” said Øyvind Eriksen, President & CEO of Aker.

The Refinancing will secure the position as a “going concern” for both SOFF and Solstad NewCo. SOFF will retain around 27 percent ownership of Solstad NewCo while existing shareholders of SOFF, excluding Aker, will receive subscription rights to participate in the NOK 0.75 billion tranche of the private placement of new shares, corresponding to around 14 percent ownership of Solstad NewCo. Solstad NewCo will consist of 35 high-end AHTS and CSV vessels. SOFF will retain full ownership of the remaining business consisting of 7 high-end AHTS’ and CSV vessels and 50% ownership in the Normand Installer joint venture together with SBM.

“With our high-end fleet of vessels, strong team, solid track-record and truly global presence, Solstad is very well positioned to take part in what is set to be a very strong market cycle within offshore energy in our core markets globally. The refinancing substantially reduces the financial risk to all stakeholders, while preserving as much of the upside as possible. We are happy to put behind us the refinancing, providing a solid foundation for our operations and a basis to both continue deleveraging and to deliver long term shareholder value creation,” said Lars Peder Solstad, CEO of Solstad.

The Refinancing includes:

1. establishing a new corporate structure by contribution in kind of certain subsidiaries and activities of Solstad;
2. a private placement directed towards Aker, raising gross proceeds of NOK 2.25 billion in cash against issuance of new shares in Solstad NewCo (the “First Private Placement”);
3. a private placement underwritten by Aker and directed towards all other existing shareholders in SOFF as of 27 October 2023, raising gross proceeds of NOK 0.75 billion against issuance of new shares in Solstad NewCo (the “Second Private Placement”, and together with the First Private Placement, the “Private Placements”);
4. a private placement directed towards AMSC where the shares in the owning entity for CSV Normand Maximus is contributed in-kind against issuance of NOK 1.0 billion equivalent of new shares in Solstad NewCo (the “Maximus Transaction”);
5. a new senior secured term loan of NOK 9.7 billion, including debt related to CSV Normand Maximus, underwritten by DNB and Eksfin and a new senior secured RCF of NOK 0.75 billion underwritten by DNB (the “Senior Secured Financing”);
6. full repayment of Solstad's existing bank liabilities in the amount of NOK 11.9 billion as per Q3 2023, without recourse to Solstad

The components of the Refinancing are subject to customary closing conditions. Completion of the Refinancing is expected to take place around year-end 2023.

New corporate structure and Solstad NewCo

Two Norwegian limited liability companies ("Solstad NewCo" and "Solstad NewCo 2") will be established as part of the Refinancing where Solstad NewCo will serve as the parent company for the new structure and will in the first instance be wholly owned by Solstad, with no other assets, rights, and obligations than those acquired and assumed in connection with the Refinancing. Prior to completion of the Refinancing, Solstad will transfer 100 percent of the shares in Solstad Shipowning Holding AS, Solstad Operations Holding AS and Solstad Management Holding AS as contribution in kind to Solstad NewCo 2. The shares in Solstad NewCo 2 will immediately thereafter be transferred to Solstad NewCo as a contribution in kind.

The Refinancing is based on a pre-money valuation of Solstad NewCo of NOK 1,500 million, which Solstad, Aker and AMSC agree is the fair market value, considering relevant valuation principles, comparable transactions in the Norwegian market and the financial position of SOFF and the companies being included in the Solstad NewCo structure prior to the Refinancing.

Solstad, Aker and AMSC will enter into a shareholders’ agreement (the “Shareholders’ Agreement”) for Solstad NewCo which gives each of Solstad and AMSC the right to appoint one board member and one observer to the board of directors of Solstad NewCo. The Shareholders' Agreement will further give Aker the right to appoint a majority of the board members of Solstad NewCo. The Shareholders’ Agreement will contain other customary provisions, including an intent to procure that the shares in Solstad NewCo are listed on a regulated market within 12 months from closing of the Second Private Placement. The shares of Solstad in Solstad NewCo will be subject to a one year lock-up. Moreover, Aker will during the second year of the Shareholders' Agreement have a right of first offer on such shares, and a right to purchase such shares if SOFF's direct or indirect shareholding in Solstad falls below 2/3.

In order to secure completion of the Refinancing in accordance with its terms, Aker has been granted warrants to subscribe for new shares in Solstad Shipowning Holding AS, Solstad Operations Holding AS and Solstad Management Holding AS equal to the par value of the shares in question.

The Private Placements

As part of the Refinancing, Solstad NewCo will raise NOK 2.25 billion in new equity from Aker through the First Private Placement.

Subsequently to the First Private Placement, Solstad NewCo will raise NOK 0.75 billion in new equity through the Second Private Placement. The Second Private Placement will, subject to applicable securities laws, be directed towards existing shareholders in SOFF as at 27 October 2023 (as registered with the VPS on 31 October 2023 (the “Record Date”)) who (i) were not allocated shares in the First Private Placement and (ii) 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. (“Eligible Shareholders”).

The subscription price per Solstad NewCo share in the Second Private Placement will be equal to the subscription price per share in the First Private Placement. Eligible Shareholders will receive tradable subscription rights to participate pro rata to their shareholding in SOFF on the Record Date. Oversubscription or subscription without subscription rights will not be allowed. Aker has underwritten the Second Private Placement in order for Solstad NewCo to satisfy certain requirements under the new credit facilities entered into as part of the Refinancing, and Aker will therefore subscribe for such portion of the Second Private Placement that is not subscribed by Eligible Shareholders.

The Second Private Placement is expected to be launched shortly after completion of the First Private Placement and the subscription period shall commence as soon as a prospectus has been approved by the Financial Supervisory Authority and published, with the subscription period expiring two calendar weeks after the date of publication of the prospectus. The net proceeds from the Private Placements will be used to partly refinance Solstad’s fleet loan maturing 31 March 2024 and for general corporate purposes.

The Maximus Transaction

In addition to the Private Placements, AMSC will as part of the Refinancing contribute the shares in the owning entity for CSV Normand Maximus, including the current bareboat charter and purchase option for the vessel, in kind, against receiving newly issued shares in Solstad NewCo. The subscription price per Solstad NewCo share in the Maximus Transaction will be the same as in the Private Placements, provided that if currency fluctuations result in the contribution being valued lower than NOK 1.0 billion at closing, the subscription price will be reduced in so far as necessary to issue the agreed number of shares on the basis of the agreed valuation of NOK 1.0 billion.

The CSV Normand Maximus was sold from its original owner Maximus Limited to AMSC in the fourth quarter 2022 and subsequently delivered to a subsidiary of SOFF under a bareboat agreement for a five-year firm period plus extension options. Following the Refinancing, the Solstad Group will maintain operational control of the vessel while the ownership of the vessel will at the same time be part of Solstad NewCo, contributing positively to cash flow generation going forward. In addition, Solstad NewCo will assume the senior secured debt related to CSV Normand Maximus, which, as part of the transaction, will be refinanced on similar terms as the Senior Secured Financing.

The Senior Secured Financing

As of Q3 2023, Solstad had around NOK 11.9 billion of debt outstanding under the fleet loan maturing 31 March 2024. This will be fully repaid, and in part refinanced by NOK 9.7 billion in new credit facilities, underwritten by DNB and Eksfin, for which Solstad NewCo 2 will be the borrower. The Senior Secured Financing will have a tenor of 3 years (7-year profile), with two 1 year extension options. The Senior Secured Financing will be secured by  first priority mortgages over the vessels owned by Solstad NewCo's subsidiaries and guarantees from Solstad NewCo and other companies in the Solstad NewCo structure and subject to customary financial covenants. The Senior Secured Financing will be without recourse to SOFF and its subsidiaries.

In addition, and as part of the Refinancing, Solstad NewCo has secured a new senior secured revolving credit facility in the form of a NOK 0.75 billion facility underwritten by DNB.

Dilution and equal treatment considerations for the shareholders of SOFF

The Board of Directors of SOFF has considered the structure of the Refinancing, including the Private Placements and the Maximus Transaction in light of the equal treatment obligations towards its shareholders under the Norwegian Public Limited Companies Act, the Norwegian Securities Trading Act and the rules on equal treatment under Oslo Rule Book II for companies listed on the Oslo Stock Exchange and the Oslo Stock Exchange's Guidelines on the rule of equal treatment and is of the opinion that the transactions are in compliance with these requirements. SOFF is of the view that SOFF will derive economic and other benefits from the Refinancing, that the Refinancing is in the best commercial interests of SOFF and has deemed it advisable and in the best interests of SOFF and its shareholders to complete the transaction as set out above.

The Board notes that the Refinancing, including the Private Placement and the Maximus Transaction, will imply a dilution of SOFF's ownership interests, and thereby indirectly the ownership interests of SOFF's shareholders (other than Aker) in the currently wholly owned subsidiaries which will be contributed into the new Solstad Newco structure. It is, however, the Board's opinion that the pricing has been determined based on an assessment of fair market value of Solstad NewCo, considering relevant valuation principles, comparable transactions in the Norwegian market and the financial position of SOFF and Solstad prior to the Refinancing. Furthermore, SOFF's existing shareholders will be given the opportunity to mitigate the dilutive effect of the Refinancing through participation in the contemplated Second Private Placement. Taking these factors into consideration and balancing the need to refinance Solstad’s debt through the contemplated Refinancing and the interests of SOFF's minority shareholders, the Board is of the view that the transactions, taken as a whole, represent a balanced solution taking into account the common interest of SOFF and its shareholders, cf. section 5 -14 of the Norwegian Securities Trading Act.

Financials

The EBITDA for Solstad Group in 3Q23 is expected to be in the range of NOK 700-800 million.

Proforma 2023 EBITDA for Solstad NewCo, including CSV Normand Maximus contributed by AMSC, is estimated to be in the range of NOK 2.6-2.8 billion. Net debt in Solstad NewCo is estimated to be NOK 7.7-7.9 billion at year-end 2023, giving a Net Debt/EBITDA ratio below 3x. Solstad NewCo proforma 2024 EBITDA is estimated to be in the range of NOK 3.3-3.5 billion. Net debt year-end 2024 is estimated to be NOK 5.8-6.0 billion giving a Net Debt/EBITDA below 2x. Further, Solstad NewCo proforma 2025 EBITDA is forecasted to be in the range of NOK 3.7-4.1 billion.

Total transaction value is estimated at NOK 5.5 billion. The transaction is expected to result in possible neutral accounting effect for Solstad as at the date of this publishing, impact to be reassessed and reflected in 4Q23 accounts.

About the Solstad Group’s offering

With more than 50 years of experience, the Solstad Group is one of the leading and most capable owners and operators of high-end offshore vessels offering maritime excellence to the global offshore energy markets. With its modern fleet, strong track-record, and solid competence, the Solstad Group operates throughout the offshore energy industry, within both oil and gas and renewables. While the majority of Solstad Group’s business has up to now been within oil and gas, its flexible fleet has already and will increasingly meet the growing activity within renewables. The renewables business currently accounts for about one third of Solstad’s EBITDA.

The existing Windstaller Alliance between Aker Solutions, DeepOcean and the Solstad Group within the renewables business will continue. The alliance combines the expertise of three offshore industry leaders to deliver an integrated and highly flexible service offering for offshore renewables projects. The three alliance partners have been involved in more than 60 percent of floating wind projects in Europe to date. In August 2023, the Windstaller Alliance successfully demonstrated its integrated offering on a floating wind project offshore Spain by executing a work scope including pre-survey, towing, mooring and dynamic cable installation with connection of a floating turbine. The Solstad Group’s modern vessels and competence was instrumental for the project, and the methodology utilized by the alliance is directly transferable to floating offshore wind projects worldwide.

Pareto Securities has acted as financial adviser, and Wikborg Rein has acted as legal adviser to Solstad in the Refinancing process.

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.

Skudeneshavn, October 23, 2023

Contacts

Lars Peder Solstad CEO, at +47 91 31 85 85

Kjetil Ramstad CFO, at +47 90 75 94 89

Solstad Offshore ASA

www.solstad.com