Term Sheet. ISIN: [ ] Solstad Offshore ASA Senior Unsecured Open Bond Issue 2014/2019 (the Bonds or the Bond Issue )

Transcription

1 Term Sheet ISIN: [ ] Solstad Offshore ASA Senior Unsecured Open Bond Issue 2014/2019 (the Bonds or the Bond Issue ) Settlement date: Expected to be 24 June 2014 Issuer: Currency: Borrowing Limit: First Tranche Coupon rate: Solstad Offshore ASA, a limited liability company incorporated under the laws of Norway with company registration number NOK. NOK 1,000 million. NOK [700-1,000] million. 3 months NIBOR % p.a., quarterly interest payments. Settlement Date: Expected to be 24 June Maturity Date: First Interest Payment Date: Last Interest Payment Date: Interest Payments: Price: Amortization: Nominal value: Status of the Bonds: 24 June 2019 (5 years after Settlement Date). 24 September 2014 (3 months after Settlement Date). Maturity Date. Interest on the Bonds will commence to accrue on the Settlement Date and shall be payable quarterly in arrears on the interest payment day in March, June, September and December each year. Day-count fraction for the coupon is act/360, business day convention is modified following and business day is Oslo % (par) The Bonds shall be repaid in full at the Maturity Date at 100% of par value (plus accrued interest on redeemed amount). The Bonds will have a nominal value of NOK 1,000,000 each, with a minimum subscription amount of NOK 1,000,000. The Bonds shall constitute senior unsecured debt of the Issuer. The Bonds shall rank at least pari passu with all other obligations of the Issuer other than obligations which are mandatorily preferred by law. The Bonds shall rank ahead of subordinated capital. The Bonds are unsecured.

2 Purpose of the Bonds: Bondholders Put Option: Special issues applicable to the Issuer: The net proceeds from the Bonds shall be used for refinancing and general corporate purposes. Upon a Change of Control Event occurring, each holder of Bonds (a "Bondholder") shall have a right of pre-payment (Put Option) of the Bonds at a price of 101% of par value (plus accrued interest), for a period of 15 calendar days following the notice of a Change of Control Event. During the term of the Bonds, the Issuer shall (unless the Trustee or the Bondholders meeting (as the case may be) in writing has agreed to otherwise) comply with inter alia the following general covenants: a) Mergers: The Issuer shall not, and it shall ensure that no Material Subsidiary shall, carry out any merger or other business combination or corporate reorganization involving consolidating the assets and obligations of the Issuer or such subsidiary with any other company or entity not being a member of the Group if such transaction would have a Material Adverse Effect. b) De-mergers: The Issuer shall not, and shall ensure that no Material Subsidiary shall, carry out any demerger or other corporate reorganization involving splitting the Issuer or such Material Subsidiary into two or more separate companies or entities, if such transaction would have a Material Adverse Effect. c) Continuation of business: The Issuer shall not, and shall ensure that none of the Material Subsidiaries shall, cease to carry on its business. The Issuer shall procure that no material change is made to the general nature or scope of the business of the Group from that carried on at the date of the Bond Agreement, and/or as set out in the Bond Agreement. d) Disposal of business, assets, subsidiaries or operations: The Issuer shall not, and shall ensure that no Material Subsidiary shall, sell or otherwise dispose of all or a substantial part of its assets, or operations to any person not being a member of the Group, unless the transaction is carried out at fair market value, on terms and conditions customary for such transaction and further provided that such transaction would not have a Material Adverse Effect. No Group Company shall enter into such transaction if the transaction would have Material Adverse Effect. e) Ownership of Material Subsidiaries: The Issuer shall not, and shall ensure that no member of the Group shall, sell, transfer, assign or otherwise dilute or dispose of any shares or any other ownership interest in any Material Subsidiary to any person not being a member of the Group, unless the transaction is carried out at fair market value, on terms and conditions customary for such transaction and further provided that such transaction does not have a Material Adverse Effect. f) Subsidiaries distribution: The Issuer shall not permit any Material Subsidiary to create or permit to exist any contractual obligations (or encumbrances) restricting the right of any Material Subsidiary to (i) pay dividends or make other distributions to its shareholders, (ii) pay any Financial Indebtedness to the Issuer, make any loans to the Issuer or (iii) transfer any of its assets and properties to the Issuer, except in all cases if provided in the Bond Agreement or to the extent required to comply with customary provisions, financial covenants or restrictions in financing agreements or in any shareholders or joint venture agreements. g) Event of default: The Bond Agreement shall include standard event of default provisions related to the Issuer and Material Subsidiaries (where relevant), with applicable remedy provisions and exceptions, including cross default provisions for the Issuer and any Group Company on any Financial Indebtedness of NOK 50 million or more.

3 h) Reporting: The Issuer shall of its own accord make management and financial reports (quarterly, written in English) available to the Trustee and on its web pages for public distribution not later than 125 days after the end of the financial year and not later than 65 days after the end of the relevant interim period. i) Listing: The Issuer s shares shall remain listed on the Oslo Børs or on another stock exchange reasonably acceptable to the Trustee. j) Intra-group transactions: All transactions between any companies in the Group shall be on commercial terms, and shall comply with all provisions of corporate law applicable to such transactions, including for Norwegian companies, Section 3-9 of the Private or Public Limited Companies Act k) Arm s length transaction: No member of the Group shall engage in, directly or indirectly, any transaction with any party not being a member of the Group or a non-consolidated company (without limitation, the purchase, sale or exchange of assets or the rendering of any service), except in the ordinary course of business and pursuant to the reasonable requirement of such member of the Group's business and upon fair and reasonable terms that are not less favorable to such member of the Group, as the case may be, than those which might be obtained in an arm's length transaction at the time. l) Corporate status: The Issuer shall not, and shall ensure that no Material Subsidiary shall, change its type of organization or jurisdiction of incorporation. Financial Covenants: The Issuer undertakes to comply with the following financial covenants: Minimum Book Equity: From Settlement Date to Maturity Date, the Issuer shall at all times on a consolidated basis maintain a Book Equity of minimum NOK 1,500 million. Value Adjusted Equity Ratio: From Settlement Date to Maturity Date, the Issuer shall at all times ensure that the Value Adjusted Equity Ratio of the Issuer on consolidated basis shall not fall below 20%. Minimum Working Capital: From Settlement Date to Maturity Date, the Issuer shall at all times on a consolidated basis maintain a Working Capital above NOK 100 million. The Issuer undertakes to comply with the above Financial Covenants at all times, such compliance to be measured and reported on a quarterly basis to the Trustee. Other Covenants: Definitions: The Bond Agreement shall, in addition to the above listed special issues and financial covenants, include such other covenants as are customary in the Norwegian high yield bond market as of the date of the Bond Agreement. Book Equity means the Issuer s (consolidated) book equity, calculated in accordance with the GAAP. Change of Control Event means any person or group (as such term is defined in the Norwegian Limited Liability Companies Act 1-3), other than companies affiliated with the Solstad Family becomes the owner, directly or indirectly, of more than 50% of the outstanding shares and/or voting rights of the Issuer. Current Assets means the aggregate at the date of computation of the current assets of the Issuer (consolidated) calculated in accordance with the GAAP.

4 Current Liabilities means the aggregate amount of the current liabilities of the Issuer (consolidated), calculated in accordance with the GAAP, not including the next twelve months instalments (including balloon payments) on long term debt. Decisive Influence means a person having, as a result of an agreement or through the ownership of shares or interests in another person: (a) a majority of the voting rights in that other person; or (b) a right to elect or remove a majority of the members of the board of directors of that other person. When determining the relevant person s number of voting rights in the other person or the right to elect and remove members of the board of directors, rights held by the parent company of the relevant person and the parent company s Subsidiaries shall be included. Financial Indebtedness means any indebtedness incurred in respect of: (a) moneys borrowed; (b) any amount raised by acceptance under any acceptance credit facility or dematerialized equivalent; (c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument; (d) the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with GAAP, be treated as finance or capital lease; (e) receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis); (f) any amount raised under any other transaction (including any forward sale or purchase agreement) having the commercial effect of a borrowing; (g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the mark to market value shall be taken into account); and (h) without double counting, the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (g) above. GAAP means the generally accepted accounting practice and principles in the country in which the Issuer is incorporated including, if applicable, the International Financial Reporting Standards (IFRS) and guidelines and interpretations issued by the International Accounting Standards Board (or any predecessor and successor thereof), in force from time to time. Group means the Issuer and its Subsidiaries from time to time, and a Group Company means the Issuer or any of its Subsidiaries from time to time. Market Value of Vessels is set as the average value from three reputable and independent appraisers appointed by the Issuer. Such appraisers to be the same appraisers as for any bank loan facilities, to the extent possible. Material Adverse Effect means a material adverse effect on: (a) the business, financial condition or operations of the Issuer and/or the Group (taken as a whole), (b) the Issuer s ability to perform and comply with its obligations under the Bond Agreement; or (c) the validity or enforceability of the Bond Agreement. Material Subsidiary means the following companies (i) Solstad Rederi AS (Nesavegen 39, 4280 Skudeneshavn with organization number ) and all its Subsidiaries from time to time, (ii) Solstad Offshore UK Ltd. (3rd Floor, Salvesen Tower, Blaikies Quay, Aberdeen, AB11 5PW, Reg No - SC 91332) and all its Subsidiaries from time to time, (iii) Solstad Offshore Asia Pacific Ltd 1A International Business Park #06-01 Singapore , but excluding its Subsidiaries. Solstad Family means Johannes Solstad and Per Gunnar Solstad, and their direct lineal descendants, the personal estate of any of the aforementioned persons and any trust created for the benefit of one or more of the aforementioned persons and their estates.

5 Subsidiary means a company over which another company has Decisive Influence. Value Adjusted Equity means the Issuer s consolidated equity adjusted for the Market Value of Vessels. Value Adjusted Equity Ratio means the ratio of Value Adjusted Equity to Value Adjusted Total Assets. Value Adjusted Total Assets means the Issuer s consolidated total assets adjusted for the Market Value of Vessels. Working Capital means Current Assets less Current Liabilities. Conditions Precedent to Disbursement: Disbursement of the net proceeds of the Bond Issue to the Issuer will be subject to such conditions precedents as are customary in the Norwegian high-yield bond market as of the date of the Bond Agreement. Issuer s ownership of bonds: Managers: Trustee: Registration: Paying Agent: Taxation: Bond Agreement: The Issuer has the right to acquire and own the Bonds. Such Bonds may at the Issuer s discretion be retained by the Issuer, sold or discharged. Nordea Bank Norge ASA, Nordea Markets, P.O. Box 1166 Sentrum, 0107 Oslo, Norway; and Swedbank Norge, branch of Swedbank AB (publ), P.O. Box 1441 Vika, 0115 Oslo, Norway. Nordic Trustee ASA, Postboks 1470 Vika, 0116 Oslo, Norway. The Norwegian Central Securities Depository ( VPS ). Principal and interest accrued will be credited the bondholders through VPS. Nordea Bank Norge ASA The Issuer shall pay any stamp duty and other public fees in connection with the Bonds, but not in respect of trading in the secondary market (except to the extent required by applicable laws), and shall deduct before payment to the bondholders at source any applicable withholding tax payable pursuant to law. A bond agreement will be entered into by the Issuer and the Trustee acting as the bondholders representative, and it shall be based on Norwegian bond market standard. The Bond Agreement shall regulate the bondholders rights and obligations with respect to the Bonds. If any discrepancy should occur between this Term Sheet and the Bond Agreement, then the Bond Agreement shall prevail. Each subscriber in the Bonds, such subscription documented by a subscription agreement, a taped telephone conversation, or otherwise, is deemed to have granted authority to the Trustee to finalize the Bond Agreement. Minor adjustments to the structure described in this Term Sheet may occur. The Bond Subscription Agreements specifically authorize the Trustee to execute and deliver the Bond Agreement on behalf of the prospective bondholders, who will execute and deliver such Subscription Agreements prior to receiving Bond allotments. On this basis, the Issuer and the Trustee will execute and deliver the Bond Agreement and the latter s execution and delivery is on behalf of all of the subscribers, such that they thereby will become parties to the Bond Agreement. The Bond Agreement specifies that all Bond transfers shall be subject to the terms thereof, and the Trustee and all Bond transferees shall, when acquiring the Bonds, be deemed to have accepted the terms of the Bond Agreement, which specifies that all such transferees shall automatically become parties to the Bond Agreement upon completed transfer having been registered in the VPS, without any further action required to be taken or formalities to be complied with. The Bond Agreement shall specify that it shall be made

6 available to the general public for inspection purposes and may, until redemption in full of the Bonds, be obtained on request by the Trustee or the Issuer, and such availability shall be recorded in the VPS particulars relating to the Bonds. Listing: Market making: Governing Law: Eligible purchasers: An application will be made for the Bonds to be listed on Oslo Børs. No market-maker agreement has been made for this Issue. Norwegian law and Norwegian courts. The Bonds shall only be offered to non- U.S. persons in offshore transactions within the meaning of Rule 902 under the U.S. Securities Act of 1933, as amended ( Securities Act ) except for Qualified Institutional Buyers ( QIBs ) within the meaning of Rule 144A under the Securities Act. In addition to the Subscription Agreement that each investor will be required to execute, each U.S. investor that wishes to purchase Bonds will be required to execute and deliver to the Issuer a certification in a form to be provided by the Issuer stating, among other things, that the investor is a QIB. The Bonds may not be purchased by, or for the benefit of, persons resident in Canada. Nordea is not registered with the U.S. Securities and Exchange Commission as a U.S. registered broker-dealer and will not participate in the offer or sale of the Bonds within the United States. Transfer restrictions: Subject to: Bondholders will not be permitted to transfer the Bonds except (a) subject to an effective registration statement under the Securities Act, (b) to a person that the Bondholder reasonably believes is a QIB within the meaning of Rule 144A that is purchasing for its own account, or the account of another QIB, to whom notice is given that the resale, pledge or other transfer may be made in reliance on Rule 144A, (c) an offshore transaction in accordance with Regulation S under the Securities Act, including, in a transaction on the Oslo Børs, and (d) pursuant to any other exemption from registration under the Securities Act, including Rule 144 there under (if available). The Bonds may not, subject to applicable Canadian laws, be traded in Canada for a period of four months and a day from the date the Bonds were originally issued. The issue of Bonds shall be subject to approval of the bond documentation by the Issuer s board and the Trustee. Oslo, 10 June 2014 Solstad Offshore ASA as Issuer Nordea Bank Norge ASA as Joint Lead Manager Swedbank Norge as Joint Lead Manager