NORSK TILLITSMANN ASA w w w. f r ii s t e c. n o

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1 NORSK TILLITSMANN ASA w w w. f r ii s t e c. n o (Dette brevet til obligasjonseierne er kurt utarbeidet på engelsk. For ytterligere informasjon vennligst ta kontakt med Norsk Tillitsmann ASA på telefon ) To the bondholders in: ISIN NO FRN Fairstar Heavy Transport NV Callable Second Secured Bond Issue 2008/2009 Oslo, 10 February 2009 SUMMONS TO BONDHOLDERS MEETING - PROPOSED WAIVER IN RESPECT OF FINANCIAL COVENANT REQUIREMENT Norsk Tillitsmann ASA is appointed loan trustee (the Loan Trustee ) for the bond issue with ISIN NO (the Loan ) where Fairstar Heavy Transport N.V. (the Borrower ) is the issuer. All capitalised terms used herein shall have the meaning assigned to them in the loan agreement (the Loan Agreement ) entered into on 11 April 2008 between the Borrower and the Loan Trustee, unless otherwise stated in this summons. The Borrower has approached the Loan Trustee to convene a Bondholders meeting to consider a request for a waiver to disregard, any effect of any non-cash gain or loss from the change in fair market value of interest rate hedging agreements in connection with the equity covenant. Currently non-cash gains or losses from the periodic revaluation (mark-to-market) of our portfolio of interest rate swap agreements negatively influence Equity Ratio as it is currently calculated. In the last 9 months, there has been a significant drop in U.S. Dollar interest rates. The subsequent noncash effect will cause the Equity Ratio of the Borrower to be below requirements of the Loan Agreement. The Borrower requests a waiver which allows them to disregard the non-cash effects of such swap valuations when calculating Equity Ratio under the Loan Agreement clause 14.3 (b). 1. Background Pursuant to Clause 14.3 (b) of the Loan Agreement the Borrower shall: During the term of the Loan, the Borrower shall (unless the Loan Trustee or the Bondholders meeting (as the case may be) in writing has agreed to otherwise) comply with the following financial covenants: (b) ensure that the Group (on a consolidated basis) maintains an Equity Ratio of minimum 30 %>. M AILING ADDRESS # P.O.BOX I4 7 O VIKA, N -O Il6 OSLO LOCATION HAAKON VII GATE I, OSLO, NORWAY fax org.nr no MVA » mail@trustee.no 2

2 NORSK TILLITSMANN ASA Pursuant to Clause 1 of the Loan Agreement, Equity is defined as the aggregate book value (on a consolidated basis) of the Group s total equity in accordance with IFRS minus any senior liability or perpetual liability with a step-up treated as equity under IFRS as set out in the then most recent audited consolidated financial statements (or, if no audited consolidated financial statements are prepared, then reference shall be made to unaudited consolidated financial statements (if any) or on the basis o f pro forma consolidated financial statements) o f the Borrower. Pursuant to Clause 1 of the Loan Agreement, Equity Ratio is defined as: the ratio of Equity to Total Assets Pursuant to Clause 1 of the Loan Agreement, Total Assets is defined as: the aggregate book value (on a consolidated basis) of the Group's total assets which are treated as assets in accordance with IFRS, as set out in the then most recent audited consolidated financial statements (or, if no audited consolidated financial statements are prepared, then reference shall be made to unaudited consolidated financial statements (if any) or on the basis of pro forma consolidated financial statements) o f the Borrower. During 2005 and 2006 the Borrower entered into a series interest rate swaps (IRSs) to hedge the fluctuation in LIBOR movements on its debt service. These so called floating to fixed interest rate swaps are in accordance with International Financial Reporting Standards (IAS 39), marked-to-market at the last day of each reporting period. Consequently, any resulting gain or loss from the change in fair market value of the hedge are non-cash and unrealized. Because of the borrower s compliance with hedge accounting rules, the movements are recorded through Equity (Cash Flow Hedge Reserve). The balance sheet impact is a financial instrument (either asset or liability) and an increase or decrease in equity. As of December 31, 2008, the mark-to-market valuation of those interest rate swap instruments was approximately USD in favour of the swap counterparty, of which approximately USD million will be attributable to the fourth quarter income statement. The interest rate swaps have been entered into well before the bond issue to fix the floating LIBOR interest rates under (i) a USD 60 million loan facility, and (ii) a USD 16 million loan facility to protect stakeholders against negative interest rate fluctuations. It was not foreseen that the unprecedented volatility in the USD credit market would result in significant non-cash, unrealised losses related to these interest rate swaps, particularly when such interest rate swaps have been entered into to protect investors against negative interest rate fluctuations. 2. Further process to strengthen the Borrower s capital situation The Borrower is currently in the process of raising further equity to ensure that 3

3 NORSK TILLITSMANN ASA the Company complies with the financial covenants set out in clause 14.3 (b) of the Loan Agreement. An underwritten equity issue of up to NOK 75 million will take place in February The proceeds from the offering will be used by the Borrower to redeem outstanding debt obligations. When combined with cash flows generated from current contracts and the Borrower s credit facilities, the Borrower will have secured the liquidity necessary to redeem all of its outstanding bonds no later than 11 October In this respect, please find enclosed as Appendix 1 the press release regarding the underwritten equity issue posted on the news release pages of Oslo Stock Exchange (NewsWeb) 25 January The Proposal The Borrower proposes that it shall be permitted, when computing Equity Ratio for the purpose of calculation in Clause 14.3 (b) to disregard any non-cash gain or loss in the market value of its interest rate swap portfolio. As a result the accounts will reflect the actual cash disbursements for interest hedging purposes. The change of the Equity Ratio calculation will provide a more accurate Equity Ratio position including the maintenance of the Equity Ratio covenant of 30%. An approval will avoid a possible technical breach under the Loan Agreement, which might affect relationships between the Borrower and others who do not otherwise consider these unrealized, non-cash gains and losses as material to the financial condition of the Borrower. In the opinion of the Borrower, avoiding these unintended consequences will benefit the Borrower and therefore ultimately benefit the Bondholders. According to the Loan Agreements, the proposed consent requires approval from the Bondholders. Such approval ought to be given if the Bondholders find the overall risk assessment and risk compensation (if any) to be fair. As compensation to the Bondholders, the Borrower offers a one-time waiver fee of 0.50% (flat) of the face value of the Bonds, payable to the Bondholders based on their holdings as of the date of the Bondholders Meeting on the fifth banking day following the Bondholders meeting, provided that the Bondholders Meeting grants the proposed waiver. The Loan Trustee notes that the Borrower offers compensation to the Bondholders through a flat waiver fee for the proposed waiver. Further, the Borrower, is about to implement a share issue which will both strengthen the Equity of the Borrower, which will counter-effect and possibly eliminate the need for the waiver after a short period of time. The proceeds from the share issue will also serve to repay the Loan which matures on 12 October Although the proposed waiver relaxes the requirements to the Equity of the Borrower, the planned share issue will, when completed strengthen the Equity. The request is put forward to the Bondholders without further evaluation or recommendations from the Loan Trustee. The Bondholders must independently 4

4 NORSK TILLITSMANN ASA evaluate whether the proposed changes are acceptable. 4. Bondholders meeting: Bondholders are hereby summoned to a Bondholders meeting: Time: Place: 19 February 2009 at 11:00 hours (Oslo time), The premises of Norsk Tillitsmann ASA, Haakon VIIs gt 1, Oslo - 7th floor Agenda: 1. Approval of the summons. 2. Approval of the agenda. 3. Election of two persons to co-sign the minutes together with the chairman. 4. Request for change of the Bond Agreement: It is proposed that the Bondholders meeting resolve the following: The Bondholders approve that for the purpose of computing Equity in respect of Clause 14.3 (b), the Borrower shall disregard from such computation, the effect of any non-cash gain or loss from the change in fair market value of any interest rate hedging arrangements entered into and maintained by the Borrower, or any consolidated subsidiary, from time to time. As compensation to the Bondholders, the Borrower offers a one-time waiver fee of 0.50% (flat) of the face value of the Bonds, payable on the fifth banking day following the Bondholders meeting, provided that the Bondholders meeting grants the proposed waiver. The above mentioned resolution will according to the Loan Agreement require that 2/3 of the bonds represented at the bondholders meeting voting in favour and a minimum 5/10 of the outstanding bonds being represented at the meeting. Bondholders may be represented in person or by proxy. -ooo- Please find attached a Bondholder s Form from the Securities Depository (VPS), indicating your bondholding at the printing date. The Bondholder s Form will serve as proof of ownership of the Bonds and of the voting rights at the bondholders meeting. (If the bonds are held in custody - i.e. the owner is not registered directly in the VPS - the custodian must confirm; (i) the owner of the bonds, (ii) the aggregate nominal amount of the bonds and (iii) the account number in VPS on which the bonds are registered.) 5

5 NORSK TILLITSMANN ASA The individual bondholder may authorise Norsk Tillitsmann to vote on its behalf, in which case the Bondholder s Form also serves as a proxy. A duly signed Bondholder s Form, authorising Norsk Tillitsmann to vote, must then be returned to Norsk Tillitsmann in due time before the meeting is scheduled (by scanned , telefax or post - please see the first page of this letter for further details). In the event that Bonds have been transferred to a new owner after the Bondholder s Form was made, the new Bondholder must bring to the Bondholders meeting or enclose with the proxy, as the case may be, evidence which the Bond Trustee accepts as sufficient proof of the ownership of the Bonds. For practical purposes, we request those who intend to attend the bondholders meeting, either in person or by proxy other than to Norsk Tillitsmann, to notify Norsk Tillitsmann by telephone or by (at set out at the first page of this letter) within 16:00 hours (4 pm) (Oslo time) the Banking Day before the meeting takes place. Enclosed: Press Release Bondholder s Form

6 MeldingsID: Innsendt dato: :16 UtstederlD: Utsteder: Instrument: Marked: FAIR Fairstar Heavy Transport NV FAIR - Fairstar Heavy Transport Kategori: KAPITALENDRINGER / UTBYTTEOPPLYSNINGER Informasjonspliktig: Lagringspliktig: Vedlegg: Tittel: Meldingstekst: Ja Nei FAIRSTAR HEAVY TRANSPORT LAUNCHES UNDERWRITTEN EQUITY ISSUE OF UP TO NOK 75 MILLION TO RETIRE OUTSTANDING BONDS Fairstar Heavy Transport NV ('Fairstar' or 'the Company'), announces it has successfully arranged for an underwritten equity issue of up to NOK75 million. The Board of Directors of Fairstar will call for an Extraordinary General Meeting on 16 February 2009 to approve the transaction. The transaction structure is an innovative combination of a share capital increase in the form of a rights issue of up to 10,000,000 new shares each with a nominal value of EUR 0.46, with pre-emption rights for shareholders (i.e. approx. 0.3 new shares per ordinary share) at a subscription price of NOK 5.0 ('Tranche A') and a directed share issue of up to 4,166,667 new shares each with a nominal value of EUR 0.46, towards the owners (the 'Bondholders') of the Fairstar Heavy Transport Secured Bond Issue 2008/2009 (the 'Bond Loan') at a subscription price of NOK 6.0 ('Tranche B') (collectively the 'Offering'). A syndicate of the Company's current shareholders has underwritten 5.3 million new shares in Tranche 1 Utskriftsdato

7 A and a syndicate of the Company's current Bondholders has underwritten 3.8 million new shares in Tranche B. NOK 51 million of the Offering is fully underwritten. The additional NOK 24 million is not underwritten. All of the Company's eligible shareholders and bondholders will be offered prorata subscription rights. Proceeds from the Offering will be used by Fairstar to retire outstanding debt obligations. When combined with cash flows generated from current contracts and the Company's banking facilities, Fairstar will have secured the liquidity necessary to redeem all of its outstanding Bonds no later than October 11, 2009 (the Bond Loan redemption date). The Offering: Tranche A The Company shall issue up to 10,000,000 new shares towards its current shareholders as of 16 February 2009, notwithstanding limitations in certain jurisdictions, (the 'Eligible Shareholders). The Eligible Shareholders shall have the right to participate in Tranche A pro-rata in accordance with their shareholding in the Company. Transferable subscription rights will not be issued. The subscription price is set at NOK 5.0 per share. Oversubscription and subscription without rights shall be excluded. Tranche B The Company shall issue up to 4,166,667 new shares towards the Bondholders as of 16 February In addition to receiving an underwriting commission, the underwriters will be entitled to the right to be allocated in total 40% of the shares in Tranche B. Allocation of new shares in Tranche B will be facilitated through offering all the Bondholders to convert up to nok 25 million of the Bond Loan's par value. The shares in Tranche B will be allocated to the Bondholders pro-rata according to their subscription for new shares, and the Bondholders shall as payment transfer to Fairstar a number of Bonds correspondent to the amount payable for their 2 Utskriftsdato

8 allocated shares, as payment in kind. For both Tranche A and B All subscribers in the Offering will receive a special class of shares ('Class B Shares'). Under the terms of the Company's current Articles of Incorporation (the 'Articles') it is necessary to amend the Articles to effect a reduction of the par value of the Company's current ordinary shares. This amendment will require shareholder approval and the timing of this reduction will require an interim period of approximately two - three months. During this interim period, the Class B Shares shall have the same rights as the Company's ordinary Shares, except for an adjustment in voting rights during this interim period to facilitate the reduction in par value (see the EGM agenda for further description). The Class B Shares will be delivered to the subscribers as depository receipts issued in the VPS under a separate ISIN NO, and sought to be quoted on the Norwegian Securities Dealers Association's OTC-List. Once the statutory requirements for the capital reduction have been met, the Class B shares will be converted into the Company's ordinary shares and thereafter listed on the official exchange in Oslo. The Offering is conditional upon approval by an Extraordinary General Meeting (the 'EGM') in Fairstar to be held on 16 February 2009 in Rotterdam. The agenda of the egm and other relevant documents thereto shall be made available on the Company's website and at the office of the Company. Philip Adkins, CEO of Fairstar: 'Capital markets today are extremely unstable. Access to liquidity is key to corporate survival. As long as there is reason to believe Fairstar will not be able to redeem its outstanding bond obligation it is extremely difficult to demonstrate to the market the true value of our Company. The demand for offshore heavy transport continues to be strong and Fjord is fully booked for the next twelve months. Fjell will join her sister ship in early 2009 and already has two firm contracts in place. Both vessels have unique operational features that will give Fairstar the advantage of pricing power in 3 Utskriftsdato

9 the current environment. Operating revenues show no sign of deterioration. The fundamental attraction of our business is its ability to generate significant cash flow. By issuing equity and redeeming our outstanding bonds, Fairstar will be able to direct this future cash flow away from debt service and back to our shareholders, resulting in a more accurate valuation of our Company's ~ shares by the market.' The underwriting syndicates have been established by ABG Sundal Collier Norge ASA who will act as Manager for the Offering. Fairstar will prepare a prospectus (pursuant to the Prospectus Directive 2003/71/EC) for the Offering, which sets out the further details, which is subject to approval by the relevant authority competent to approve such prospectus. Profile Fairstar Heavy Transport is a specialized provider of long distance ocean transportation services for the offshore and onshore energy industries. Fairstar operates two of the world's largest and most modern self-propelled semisubmersible heavy transport vessels, Fjord and Fjell. The Fjord entered service in March The Fjell is currently being converted to a selfpropelled vessel at Malta Shipyards Ltd in Malta and is expected to enter service early Fairstar is based in Rotterdam and quoted on the Oslo Stock Exchange (ticker: FAIR). IMPORTANT INFORMATION: This notice is not an offer to sell or a solicitation of an offer to buy any of the securities described herein, and is not for distribution to or release, directly or indirectly, in the United States of America, Australia, Canada or Japan. The securities referred to herein have not been and will not be registered under the US Securities Act of 1933, as amended, and may not be offered or sold in the United States or to US persons unless the securities are registered under the Securities Act, or an exemption from the registration requirements of the Securities Act is available. No public offering of the securities 4 Utskriftsdato

10 will be made in the United States. 5 Utskriftsdato