31.03.2020

Restructuring outline

SOFF is pleased to announce that a large majority of the stakeholders, including secured lenders, leasing companies, industrial shareholders and key bondholders have established a common plan to finalize negotiations on the basis of a restructuring outline to the benefit of all stakeholders (the “Restructuring Outline”). As such, the relevant stakeholders have confirmed their intention to work together to enter into a binding agreement based on the Restructuring Outline within end of April 2020.

“Passing this milestone means that we continue to operate Solstad Offshore ASA in a controlled manner in these challenging times, with predictability for our employees and clients word-wide. The discussions with the stakeholders are constructive and we look forward to work with the parties with a view to agree on the restructuring over the next weeks” says CEO Lars Peder Solstad.

The Restructuring Outline is based on the following main components:

• Approximately NOK 10 billion of debt will be converted into equity. The debt converted to equity consists of secured debt, leasing obligations, bond obligations and other unsecured debt. All debt converted to equity will have the same conversion rate.
• The Group’s balance sheet and liquidity will be notably strengthened.
• The Group’s financial and company structure will be simplified. Apart from certain ring-fenced structures, surviving secured debt of the Company will be included in a fleet loan maturing after four years.
• The SOFF 04 bonds will receive a fee of NOK 50 million financed by new equity, and the residual claim will be converted to equity in the Company.
• The bondholders in Solship Invest 1 AS will be repaid an amount equal to Solship Invest 1 AS corporate cash (which amounts to approximately NOK 26 million). The residual claim will be converted to equity in the Company. 
• The Group’s fleet will be refocused and 37 vessels of the older and less sophisticated vessels are envisaged to be sold or scrapped over a period of time. The long term business of the Group will be based on a core fleet of approximately 90 vessels.
• Termination agreements in respect of the leasing agreements for the five vessels owned by subsidiaries of SFL Corporation Ltd. have been  entered into. SFL will receive a cash fee of NOK 10 million.
• The leasing agreements for two vessels owned by a subsidiary of Ocean Yield ASA, F-Shiplease AS, will be replaced by new lease agreements on amended terms. The charter rate payable under the new lease agreements shall be a reference rate equal to the average per vessel EBITDA in a pool of seven similar UT731 design vessels. F-Shiplease AS will carry all upside/downside from the operation of its vessels during the charter period.
• Upon completion of the restructuring, the existing shares will represent 0.4%, and the converted debt will represent at least 65-75% of the Company’s shares.
• Existing industrial shareholders including Lars Peder Solstad and companies controlled by him will continue to support the Company, and will be offered to subscribe for shares so as to retain an ownership of up to 1/3 of the shares in the Company upon completion of the restructuring. The shares to be subscribed by the industrial shareholders will be subject to a lock up period. The remaining shareholders will be offered to subscribe for shares so as to retain a total ownership of up to 2%. The total subscription amount for the shares in consideration for cash (to represent up to 35% of the shares of Company upon completion of the restructuring) will be up to approximately NOK 70 million.

The components of the Restructuring Outline are subject to credit and internal approvals with the stakeholders.

Furthermore, relevant companies within the Group have today agreed with key financial creditors, including most of the Group’s secured lenders, F- Shiplease AS, SFL Corporation Ltd, Vard Group AS and Sterna Finance Ltd for a further extension of the relevant suspension agreements until 30 April 2020. One secured creditor to subsidiaries of Solship Invest 1 AS has not agreed to extend the current standstill period, and the relevant subsidiaries have declared a unilateral standstill pending the outcome of the negotiations. A subsidiary of Solship Invest 3 AS maintains its unilateral standstill towards one creditor.

Moreover, the current suspension period in SOFF 04 and a waiver period in the Solship Invest 1 AS bond expires today. This means that as of 1 April 2020 there will be a breach under the terms of the bond loans in the Group. However key bondholders have already confirmed their support to the restructuring and have agreed to vote in favor of the solution contemplated by the Restructuring Outline provided that certain milestones are met. The Group therefore expects that the bonds will be restructured on the terms of the Restructuring Outline as set out above.

“We are entering a period where global offshore activity is likely to be reduced with the impact of the Covid-19 virus and drop in the oilprice. A successful implementation of the restructuring will enable the Company to better meet the challenges of the current markets and position the company well for the coming years” says CEO Lars Peder Solstad.

Skudeneshavn, 31 March 2020

Contacts
Lars Peder Solstad CEO, at +47 91 31 85 85
Anders Hall Jomaas CFO, at +47 40 04 29 18

Solstad Offshore ASA
www.solstad.com

This information is subject of the disclosure requirements according to the Norwegian Securities Trading Act section § 5-12.