Golden Energy Offshore Services AS Securities Note Senior Secured Bond Issue 2014/2017 ISIN: NO 001 0711732 28 November 2014 Manager
Important Information The Securities Note has been prepared in connection with the application for listing of Bonds issued by Golden Energy Offshore Services AS (the Issuer ) at the Oslo Stock Exchange. The Financial Supervisory Authority of Norway (NW.: Finanstilsynet) (the Norwegian FSA ) has reviewed and approved this Securities Note in accordance with Sections 7-7 and 7-8 of the Norwegian Securities Trading Act. The Norwegian FSA has not reviewed and approved that accuracy and completeness of the information contained in the Securities Note. The review and approval by the Norwegian FSA is strictly limited to whether or not the Issuer has included information in accordance with a specific list of content requirements. The Norwegian FSA has not conducted any review or approval of any corporate issues described or otherwise referred to in the Securities Note. New information that is significant for Golden Energy Offshore Services AS (the Issuer ) may be disclosed after the Securities Note has been made public, but prior to the listing of the Bonds. Such information will be published as a supplement to the Securities Note pursuant to Section 7-15 of the Norwegian Securities Trading Act. On no account must the publication of the disclosure of the Securities Note give the impression that the information herein is complete or correct on a given date after the date of the Securities Note, or that the business activities of the Issuer or its affiliates business may not have been changed. Only the Issuer and the Manager are entitled to procure information about conditions described in the Securities Note. Information procured by any other person is of no relevance in relation to the Securities Note and cannot be relied on. Unless otherwise stated, the Securities Note is subject to Norwegian law. In the event of any dispute regarding the Securities Note, Norwegian law will apply. In certain jurisdictions, the distribution of the Securities Note may be limited by law, for example in the United States of America, or in the United Kingdom. Verification and approval of the Securities Note by the Norwegian FSA implies that the Securities Note may be used in any EEA country. No other measures have been taken to obtain authorization to distribute the Securities Note in any other jurisdiction where such action is required. Persons that receive the Securities Note are ordered by the Issuer and the Manager to obtain information on and comply with such restrictions. This Securities Note is not an offer to sell or a request to buy Bonds. The content of the Securities Note does not constitute legal, financial or tax advice and bond owners should seek legal, financial and/or tax advice. Contact the Issuer or the Manager to receive copies of the Securities Note. This Securities Note shall be read together with the Registration Document dated 28 November 2014. The documents together constitute a prospectus (the Prospectus ). 1
Table of Contents 1 SUMMARY 3 2 RISK FACTORS 8 3 PERSONS RESPONSIBLE 13 3.1 Persons responsible for the information 13 3.2 Declaration by persons responsible 13 4 DETAILED INFORMATION ABOUT THE SECURITIES 14 5 ADDITIONAL INFORMATION 27 5.1 Persons involved 27 6 DEFINITIONS 28 APPENDIX 1: BOND AGREEMENT 29 2
1 SUMMARY The information in this chapter is given in accordance with the Commission Delegated Regulation (EU) no. 486/2012 Disclosure requirements in summaries. Summaries are made up of disclosure requirements known as Elements. These elements are numbered in Sections A E (A.1 E.7). This summary contains all the Elements required to be included in a summary for this type of securities and Issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be inserted in the summary because of the type of securities and Issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of not applicable. Section A Introduction and warnings Element Disclosure recuirement Disclosure A.1 Warning - This summary should be read as introduction to the prospectus; - any decision to invest in the securities should be based on consideration of the Prospectus as a whole by the investor; - where a claim relating to the information contained in the Prospectus is brought before a court, the plaintiff investor might, under the national legislation of the Member States, have to bear the costs of translating the Prospectus before the legal proceedings are initiated; and - civil liability attaches only to those persons who have tabled the summary including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read toghether with the other parts of the Prospectus or it does not provide, then read toghether with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities. A.2 Consent Not applicable. No resale or final placement of securities by financial intermediaries.. Section B Issuer and any guarantor Element Disclosure recuirement B.1 Legal and commercial name B.2 Domicile/legal form/legislation/ country of incorporation Disclosure The legal and commercial name is Golden Energy Offshore Services AS. The Issuer is organised as a private limited company. The Issuer is domiciled in Norway and is incorporated and operates under the laws of Norway. B.4b Any known trends affecting the Issuer There are no known trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on the Company s prospects for the current financial year. B.5 The group that the Issuer is part of The Issuer is fully owned by Golden Energy Offshore AS. The combined Group consists of the Issuer, Golden Energy Offshore AS, Golden Energy Offshore Group Holdings (Norway) AS, Golden Energy Offshore Group Services AS, Golden Energy Offshore Group Chartering AS, Golden Energy PSV Invest I, Golden Energy PSV Invest II, Golden Energy PSV Invest III, Golden Energy PSV Invest IV, Sakashita Co Ltd, Famar Shipping AS, Golden Energy Offshore Management Holding AS, Golden Energy Offshore Management AS and Golden Energy Offshore Crewing AS. 3
B.9 Profit forecasts or estimates B.10 Qualifications in audit report B.12 Selected historic key financial information Not applicable. No profit forecasts or estimates are included in the Prospectus. Not applicable. The audit report contains no qualifications. Below is a summary of the Issuer s balance sheet per 30 June 2014. NOK Total fixed assets 500 081 721 Total current assets 32 408 830 Total assets 532 490 552 Total long-term debt 354 407 049 Total current liabilities 25 178 268 Total liabilities 379 585 317 Total equity and liabilities 532 490 552 There has been no material adverse change in the prospects of the Issuer since the date of its last published audited financial statements. There has been no significant changes in the Issuer s financial or trading position subsequent to the period covered by the historical financial information B.13 Recent events There are no recent events particular to the Issuer which are to a material extent relevant to the evaluation of the Issuer s solvency. B.14 Dependance on Group companies Except for the fact that other Group companies perform management services for the Issuer, the Issuer is not dependent on other entities in the Group. B.15 Principal activities The Issuer is the sole beneficial owner of the Vessels M/V Energy Swan and M/V Energy Scout, and its principal activity is to own and operate the Vessels. B.16 Major shareholders The sole and ultimate owner of the Group is Mr. Victor Restis, a leading Greek shipping entrepreneur operating in several countries. Mr. Victor Restis is the sole ultimate owner of the Group by virtue of being the ultimate beneficiary to the bearer shares, i.e. the physical stock certificate, of Charlotte Trading Ltd. B.17 Credit ratings assigned to the Issuer or its debt securities Not applicable. There are no credit ratings for the Issuer or the Bonds. Section C Securities Element Disclosure recuirement C.1 Type, class and ISIN Disclosure NO 001 0711732. Senior Secured Callable Bond Issue 2014/2017. Bond issue of NOK 370 million with floating interest, payable quarterly each year. The Bonds will mature 28 May 2017. The Issuer has call options. C.2 Currency NOK C.5 Restrictions on the free There are no restrictions on the free transferability of the Bonds. transferability C.8 Rights attached to the securities The Bonds shall be senior debt of the Issuer, secured on first priority basis over the Security as set out herein, and rank at least pari passu with the claims of its other creditors, except for obligations which are mandatorily preferred by law. The Bonds shall rank ahead of subordinated capital. 4
C.9 Information about interest, amortization, yield and representative The Coupon Rate is 3 month NIBOR + 725bps per annum. Interest is payable quarterly starting on the First Interest Payment Date, 28 August 2014, and till the Final Maturity Date, 28 May 2017. Interest on the Bonds will commence to accrue from (and including) the Settlement Date and shall be payable quarterly in arrears on the Interest Payment Date 28 February, 28 May, 28 August and 28 November each year (each an Interest Payment Date ) and on the Final Maturity Date. Day-count fraction for the coupon is actual/360, business day convention is modified following, and business day is Oslo. Principal and interest accrued will be credited to the Bondholders through VPS. Amortization. On each Interest Payment Date in February, May, August or November from and including May 2015 to and including February 2017, the Bonds shall be repaid pro rata with an amount equal to 1.25% of the original Borrowing Amount each time and at par value (the Scheduled Instalments ). At the Final Maturity Date, the remaining amount (equal to 90% of the Borrowing Amount) shall be repaid at par value together with accrued interest thereon (the Balloon Repayment ). Yield is dependent on the market price. At the end of November 2014 the yield was indicated to about 10.0 % p.a. Nordic Trustee ASA (as the Bond Trustee) entered into the Bond Agreement on behalf of the Bondholders and is granted authority to act on behalf of the Bondholders to the extent provided for in the Bond Agreement. C.10 Derivative component in the interest payment Not applicable. There is no derivative component in the interest payment. C.11 Admission to trading An application for admission of the Bonds to trading on the Oslo Stock Exchange will be made once the Prospectus has been approved. Section D Risks Element D.2 Key information on the key risks that are specific to the Issuer If any of the risks mentioned below actually occur, the Issuer s business, financial position and operating results could be materially and adversely affected, and the Issuer could be unable to pay interest, principal or other amounts on or in connection with the Bonds. Risk factors relating to the Issuer and the industry in which it operates are; risk related to employment of the Vessels, risks related to key customers, risks related to termination of charter contracts, market risks, e.g. risks related to competition and the fact that the Issuer operates in a cyclical market, environmental risks, risks related to operation and maintenance costs, risks related to oil price fluctuations, geopolitical risks, political and regulatory risks, risks of disputes with customers and/or suppliers, risks related to requisition or arrest of assets, intellectual property rights risks, risks related to the Management company s ability to attract and keep sufficient skilled workers for the Issuer, risks related to the Issuer being controlled by a major shareholder, risks related to work stoppages or labour disputes, insurance coverage risk, risks associated with fair market value appraisals, financial and liquidity risk factors, foreign currency risk, tax risk, risks related to fluctuations in the value of the Vessels, risks related to additional capital 5
requirements, risk that the Issuer may be unable to redeem the Bonds on the Final Maturity date, risks related to Angola, e.g. risks related to corrupt practices and risks related to emerging markets. D.3 Key information on the key risks that are specific to the securities An investment in Bonds involves inherent risks. Prospective investors should carefully consider, among other things, the risk factors set out in the Prospectus before making an investment decision. The risks and uncertainties described in the Prospectus are risks of which the Issuer is aware and that the Issuer considers to be material to its business. Element E.2b Disclosure requirements Reasons for the offer, use of proceeds All investments in Bonds have risk associated with such investment. The risk is related to the general volatility in the bond market, varying liquidity in the Bond as well as company specific risk factors. The following risk factors may apply when investing in the Bonds: - the Issuer s substantial indebtedness due to the Bond Issue could have negative consequences for the Bondholders - there may be no public market for the Bonds - there may be limitations on the transferability of the Bonds - legal investment considerations may restrict uncertain investments - the price of the Bonds is volatile - certain Group companies may incur subsantially more debt - the terms and conditions of the Bond Agreement allow modification of the Bonds or waivers or authorizations of breaches and substitution of the Issuer - change of control the Issuer s ability to redeem the Bonds with cash may be limited - mandatory prepayment events may lead to a prepayment of the Bonds in circumstances where an investor may not be able to reinvest the prepayment proceeds at an equivalent rate of interest - risks related to insolvency and bankruptcy of the Issuer - enforcement of rights as a Bondholder across multible jurisdictions may prove difficult - the value of the collateral securing the Bonds may not be sufficient to satisfy the Issuer s obligations under the Bonds - additional capital requirements - the Issuer may not be able to redeem the Bonds at the Final Maturity Date - following a default, the Trustee may not be able to realize any or all of the security - interest rate risk Prospective investors should consider, among other things, the risk factors set out in the Prospectus, before making an investment decision. Disclosure Section E Offer The net proceeds from the Bond Issue (net of fees and legal costs of the Manager and the Trustee and any other costs and expenses incurred in connection with the Bond Issue) shall be employed (in the following order of priority) toward: (i) finance the Issuer s acquisition of the Vessels; and (ii) for general corporate purposes of the Issuer. E.3 Terms and conditions of the offer Not applicable. The Prospectus has not been made in connection with the placement of the Bond Issue, but in connection with the application of listing of the Bonds. However, some of the terms and conditions of the completed Bond Issue can be found in section 4 of this Securities Note. E.4 Any interest material to The involved persons in the Issuer have no interest, nor conflicting 6
the issue/offer, including conflicting interests E.7 Estimated expenses charged to the investor by the Issuer or the offeror interests, that are material to the Bond Issue. Not applicable. No expenses were charged to the investors in the Bond Issue. 7
2 RISK FACTORS An investment in Bonds issued by the Issuer involves inherent risks. Prospective investors should carefully consider, among other things, the risk factors set out in the Prospectus, including those set out in the Registration Document, before making an investment decision. The risks and uncertainties described in the Prospectus are risks of which the Issuer is aware and that the Issuer considers to be material to its business. This section is not intended to be exhaustive additional risks and uncertainties not presently known to the Issuer, or that it currently deems immaterial, may also impair the Issuer s business operations or the value of the Bonds. The Issuer cannot assure investors that any of the events discussed in the risk factors below will not occur. If they do, the Issuer s and the Group s business, financial condition, results of operations and cash flows could be materially adversely affected. In such case, the trading price of the Bonds could decline, and an investor may lose all or part of its investment. An investment in the Bonds is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all or part of the investment. 2.1 Risks Related to the Bonds 2.1.1 The Issuer's substantial indebtedness due to the Bond Issue could have negative consequences for the Bondholders Following the issuance of the Bonds, the Issuer will have substantial indebtedness which could have negative consequences for the Bondholders as: 8 - the Issuer may be more vulnerable to general adverse economic and industry conditions; - the Issuer may be at a competitive disadvantage compared to its competitors with less indebtedness or comparable indebtedness at more favourable interest rates and as a result, it may not be better positioned to withstand economic downturns; - the Issuer s ability to refinance indebtedness may be limited or the associated costs may increase; - the Issuer s flexibility to adjust to changing market conditions and ability to withstand competitive pressures could be limited, or the Issuer could be prevented from carrying out capital expenditures that are necessary or important to the Issuer s efforts to improve operating margins or the Group s business in general; - the Issuer will have to dedicate a substantial portion of its cash flow to the payment of interest on its indebtedness, and repayment of the principal, which reduces the availability of cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes; and - the terms and conditions of the Bond Agreement contains restrictions on the Issuer's activities, including, but not limited to, its ability to incur further debt, amend the contracts to which it is a party, declare and pay dividends, granting financial assistance or creating encumbrances over its assets. Such restrictions could have a material adverse effect on the Issuer s results of operations and financial position, hereunder the Issuer s ability to service the Bonds; - there is the inherent risk that the Issuer may default under the financial and operating covenants contained in the Bond Agreement and/or in relevant debt instruments and/or finance agreements applicable to the Issuer. If the Issuer or the Group is unable to generate sufficient cash flow from operations in the future to service its debt at its scheduled maturity or where the debt for any reason is required to be prepaid, the relevant entity may be required to refinance all or a portion of its existing debt, including the Bonds, or to obtain additional financing. There can be no assurance that any such refinancing would be possible or that any additional financing could be obtained. Inability to obtain such refinancing or financing may have a material adverse effect on the Issuer s or Group s business, results of operations and financial position. 2.1.2 There may be no public market for the Bonds The Bonds are new securities for which currently there is no trading market. The Issuer will apply for the Bonds to be listed on the Oslo Stock Exchange. The liquidity of any market for the Bonds will depend on the number of holders of those Bonds, investor interest at large and relative to the Issuer and its business segment in particular, and the interest of securities dealers in making a market in those securities and other factors. Accordingly, there can be no assurance as to: - the liquidity of any such market that may develop; - Bondholders ability to sell the Bonds; or - the price at which Bondholders would be able to sell the Bonds.
If such a market were to exist, the Bonds could trade at prices that may be lower than the principal amount or purchase price, depending on many factors, including prevailing interest rates, the market for similar notes and the Issuer s financial performance. If an active market does not develop or is not maintained, the price and liquidity of the Bonds may be adversely affected. 2.1.3 There may be limitations on the transferability of the Bonds The Bonds are freely transferable and may be pledged, subject to the following: - Bondholders may be subject to purchase or transfer restrictions with regard to the Bonds, as applicable from time to time under local laws to which a Bondholder may be subject (due e.g. to his or her nationality, residency, registered address, and place(s) for doing business). Each Bondholder must ensure compliance with local laws and regulations applicable at his or her own cost and expense; - notwithstanding the above, a Bondholder who has purchased the Bonds in contradiction to mandatory restrictions applicable may nevertheless utilize his or her voting rights under the Bond Agreement. In particular, the Bonds have not been, and will not be, registered under the U.S. Securities Act, or under the securities laws of any other jurisdiction. The Bonds may not be transferred, offered or resold in the United States or to U.S. persons (as defined in Regulation S under the U.S. Securities Act) nor may they be transferred, offered or resold in any other jurisdiction in which the registration of the Bonds is required but has not taken place, unless an exemption from the applicable registration requirement is available or the transfer, offer or resale of the Bonds occurs in connection with a transaction that is not subject to these provisions. 2.1.4 Legal investment considerations may restrict certain investments The investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and to what extent (1) the Bonds are legal investments for it, (2) the Bonds can be used as collateral for various types of borrowing and (3) other restrictions apply to its purchase or use of the Bonds. Financial institutions should consult their legal advisors or the appropriate regulators to determine the appropriate treatment of the Bonds under any applicable risk-based capital or similar rules. 2.1.5 The price of the Bonds is volatile The market value of the Bonds could be subject to significant fluctuations in response to actual or anticipated variations in the Issuer s operating results and those of its competitors, adverse business developments, changes to the regulatory environment in which the Issuer operates, changes in financial estimates by securities analysts and the actual or expected sale of a large number of Bonds, as well as other factors. In addition, in recent years, the global financial markets have experienced significant price and volume fluctuations, which, if repeated in the future, could adversely affect the market value of the Bonds without regard to the Issuer s operating results, financial condition or prospects. The market value of the Bonds also depends on the level of market interest rate, and increases in market interest rates may adversely affect the value of the Bonds 2.1.6 Certain Group companies may incur substantially more debt Certain Group companies (other than the Issuer under the Bond Issue) may be able to incur additional indebtedness under their respective loan agreements as of the date of this Securities Note, subject to maintenance of covenants and other conditions. If the Group incurs additional indebtedness, the related financial risks faced could intensify, for example if a Group company fails to service its debt or comply with the covenants thereunder that may adversely affect the financial situation of the Group and lead to forced sale of the Group s assets. This may indirectly adversely affect the Issuer. 2.1.7 The terms and conditions of the Bond Agreement allow modification of the Bonds or waivers or authorizations of breaches and substitution of the Issuer The Bond Agreement contains provisions for calling meetings of Bondholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Bondholders, including Bondholders who did not attend and vote at the relevant meeting and Bondholders who voted in a manner contrary to the majority. 9
The Trustee may, without the consent of the Bondholders, agree to certain modifications of the Bond Agreement and other finance documents (as defined in the Bond Agreement) which, in the opinion of the Trustee, are proper to make. Such modifications which will be binding upon the Bondholders will be further described in the Bond Agreement. 2.1.8 Change of control the Issuer's ability to redeem the Bonds with cash may be limited Upon the occurrence of a Change of Control Event, each individual Bondholder shall have a right of prepayment of the Bonds at a price of 101% of par value plus all accrued and unpaid interest to the date of redemption together with a prepayment premium established in the Bond Agreement. However, it is possible that the Issuer may not have sufficient funds at the time of the Change of Control Event to make the required redemption of Bonds. The Issuer's failure to redeem tendered Bonds would constitute an event of default under the Bond Agreement. 2.1.9 Mandatory prepayment events may lead to a prepayment of the Bonds in circumstances where an investor may not be able to reinvest the prepayment proceeds at an equivalent rate of interest In accordance with the terms and conditions of the Bond Agreement, the Bonds are subject to mandatory prepayment by the Issuer on the occurrence of certain specified events. Following any early redemption after the occurrence of a Mandatory Prepayment Event (as defined in the Bond Agreement), it may not be possible for Bondholders to reinvest such proceeds at an effective interest rate as high as the interest rate on the Bonds and may only be able to do so at a significantly lower rate. It is further possible that the Issuer will not have sufficient funds at the time of the Mandatory Prepayment Event to make the required redemption of Bonds. 2.1.10 Risks related to insolvency or bankruptcy of the Issuer As a general matter, the Issuer s liabilities in respect of the Bonds may, in the event of a bankruptcy or insolvency proceeding or similar proceeding, rank junior to certain of such Issuer s debts that may be entitled to priority under the laws of the relevant jurisdiction. 2.1.11 Enforcement of rights as a Bondholder across multiple jurisdictions may prove difficult It may be difficult or impossible for Bondholders to bring an action against the Issuer or the assets of the Issuer. Upon the occurrence of an event of default under the Bond Agreement, any enforcement proceedings could be subject to lengthy delays resulting in increased custodial costs, deterioration in the condition of the transaction security, adverse tax consequences and substantial reduction of the value of such assets that are the subject of the transaction security. The costs of enforcement in foreign jurisdictions, particularly if proceedings are on-going simultaneously in different jurisdictions, can be high and can include fees based on the face amount of the security being enforced. Even if the Bondholders are successful in bringing an action in these jurisdictions, local laws may prevent or restrict the Bondholders from enforcing a judgment against the obligors assets or the assets of its officers. Any of the Vessels may also be located in international waters outside the jurisdiction of any national courts. This may make it difficult for the Trustee to bring a successful enforcement action against each of the Vessels as it may be difficult for the Trustee or officials of the applicable government or agency to physically seize the assets and engage in enforcement action. The laws of relevant states (in relation to claims against each of the Vessels) may confer maritime lien status or other preferred claim status on certain categories of claims against or relating to any of the Vessels as a result of which certain claims against each of the Vessels may take priority over the mortgage and other security interests securing the Bonds. Such preferred status may arise in support of, among other matters, claims by vessel repairers or other contractors who provide work and services in respect of each of the Vessels, claims for salvage, claims for damage caused by collisions, claims for wages and other employment benefits, claims relating to pollution liabilities and other regulatory infringements, as well as potential claims for necessary goods and other services supplied to each of the Vessels. However, the categories of claims giving rise to maritime liens and other preferred claims, and the ranking of such liens and claims, vary from one jurisdiction to another. Maritime liens and other preferred claims can attach without any court action, notice, registration or documentation, and accordingly their existence cannot necessarily be identified through court, company registry or other searches. 10
2.1.12 The value of the collateral securing the Bonds may not be sufficient to satisfy the Issuer's obligations under the Bonds There can be no assurance that the Trustee will be able to sell any of the security for the Bond Issue, including the Vessels, without delays (or even at all) or that the proceeds obtained will be sufficient to pay all of the secured obligations. The value of the Vessels and other collateral securing the Bonds and the amount actually received on any sale of the Vessels and such other collateral will depend upon many factors including, amongst other things, the physical condition of the assets, the then current conditions in the industry in which the Issuer operates, the legal or factual possibility to sell the assets in an orderly sale (or at all), the laws, regulations and procedures of the jurisdiction where the sale is carried out, the condition of the international, national and local economies, the availability of buyers and other factors which are beyond the control of the Trustee and the Issuer. The Issuer does not have any obligation to pledge additional vessels or assets to secure the Bonds in the event the Bonds become under-secured. If this were to coincide with the time in which the collateral was sold to satisfy payment obligations on the Bonds, there may be insufficient proceeds from such sales to satisfy all payment obligations due under the Bonds. 2.1.13 Additional capital requirements The Issuer may require additional capital in the future due to unforeseen liabilities or in order for it to take advantage of opportunities for acquisitions, joint ventures or other business opportunities that may be presented to it. There can be no assurance that the Issuer will be able to obtain necessary financing in a timely manner on acceptable terms. 2.1.14 The Issuer may be unable to redeem the Bonds on the Final Maturity Date The Issuer's ability to service its indebtedness depends on many factors beyond its control, and no assurance can be given that the Issuer will be able to make scheduled payments under the Bond. Pursuant to the Bond Agreement, the Bonds shall be payable in full on the Final Maturity Date. In the event that the Issuer is unable to meet its ongoing debt obligations or has insufficient cash to redeem the Bonds in full on the Final Maturity Date, no assurance can be given that it will be able to obtain the necessary debt or equity refinancing, or that such refinancing will be on terms acceptable to the Issuer. A failure to obtain required refinancing would have a material adverse effect on the Issuer s business, operations and financial condition and the ability to repay the Bonds on the Final Maturity Date. 2.1.15 Following a default, the Trustee may not be able to realize any or all of the security It may be difficult or even impossible for the Trustee to enforce the security. In particular, the enforcement of vessel mortgages (including the ones to be provided over each of the Vessels) can be complicated and time consuming. For example, it can be difficult to locate the Vessels without the assistance of a specialist agency, or problematic to enforce the mortgage as it would be subject to the laws of the place where the Vessel is situated at the time of enforcement. Even if the initial arrest of either of the Vessels is achieved, the process (if any) by which it can be sold and the proceeds ultimately realized varies greatly from jurisdiction to jurisdiction. The sales process may be convoluted: sales under vessel mortgages are court-controlled in many jurisdictions and could be conducted through formal auctions, which could result in the enforcement and realization of proceeds becoming a bureaucratic, lengthy and cumbersome exercise in which the mortgagee has little control over the timing and price of the sale. Such proceedings normally require substantial fees to third parties, such as courts, legal advisers, public authorities etc. The ability of any prospective purchasers to carry out a satisfactory inspection and due diligence of the collateral may also be limited or non-existent in such procedures, resulting in a price significantly below fair market value. These issues further increase the risk that, after the enforcement of the security, following deduction of all costs and expenses incurred in connection with the enforcement, there may be insufficient funds to settle amounts owed under the Bonds. These and other factors relating to a forced sale of collateral could result in the Bondholders losing all or part of their investment. 2.1.16 Interest rate risk Interest rate risk is the risk that results from the variability of the NIBOR interest rate. The coupon payments, which depend on the Coupon Rate, will vary in accordance with the variability of the NIBOR interest rate. The interest rate risk related to the Bond Issue will be limited, since the Coupon Rate will be adjusted quarterly according th the change in the reference interest rate (NIBOR 3 months) over the 3 year tenor. The primary price risk for a floating rate bond issue will be related to the market view of the correct trading level for the credit spread related to the bond issue at a certain time during the tenor, compared with the credit margin the bond 11
issue is carrying. A possible increase in the credit spread trading level relative to the coupon defined credit margin may relate to general changes in the market conditions and/or Issuer specific circumstances. However, under normal market circumstances the anticipated tradable credit spread will fall as the duration of the bond issue becomes shorter. In general, the price of bonds will fall when the credit spread in the market increasess, and conversely the bond price will increase when the market spread decreases. 12
3 PERSONS RESPONSIBLE 3.1 Persons responsible for the information Persons responsible for the information given in the Securities Note are as follows: Golden Energy Offshore Services AS, St Olavs plass 1, 6002 Aalesund, Norway. 3.2 Declaration by persons responsible Golden Energy Offshore Services AS confirms that, having taken all reasonable care to ensure that such is the case, the information contained in the Securities Note is, to the best of its knowledge, in accordance with the facts and contains no omission likely to affect its import. Aalesund, 28 November 2014 Per Ivar Fagervoll Chief Executive Officer Golden Energy Offshore Services AS 13
4 DETAILED INFORMATION ABOUT THE SECURITIES Any definition in this section, which is not explained in this section, the Registration Document or in section 6, Definitions, shall have the same meaning as definitions in the Bond Agreement, which is included in Appendix 1. ISIN: NO 001 0711732 The Reference Name/The Bond Issue: Borrower/Issuer: Security type: Governing law: Currency: Borrowing amount: Nominal value: Coupon Rate: FRN Golden Energy Offshore Services AS Senior Secured Callable Bond Issue 2014/2017 Golden Energy Offshore Services AS (incorporated under the laws of Norway with business registration number 913 011 384) Bond issue with floating interest The Bond Issue has been created under Norwegian law NOK NOK 370 million The Bonds have a nominal value of NOK 1 each. 3 month NIBOR + 725bps, quarterly interest payments. Issue/Settlement Date: 28 May 2014. Final Maturity Date: 28 May 2017 (3 years after Settlement Date). Amortization: On each Interest Payment Date 28 February, 28 May, 28 August or 28 November from and including May 2015 to and including February 2017, the Bonds shall be repaid pro rata with an amount equal to 1.25% of the original Borrowing Amount each time and at par value (the Scheduled Instalments ). At the Final Maturity Date, the remaining amount (equal to 90% of the Borrowing Amount) shall be repaid at par value together with accrued interest thereon (the Balloon Repayment ). All claims under the Bonds, including interest and principal, is subject to the time-bar provisions of the Norwegian Limitation Act of 18 May 1979 No. 18. First Interest Payment Date: Last Interest Payment Date: Interest Payments: 28 August 2014 (3 months after Settlement Date). Final Maturity Date. Interest on the Bonds will commence to accrue from (and including) the Settlement Date and shall be payable quarterly in arrears on the Interest Payment Date in February, May, August and November each year (each an Interest Payment Date ) and on the Final Maturity Date. Day-count fraction for the coupon is act/360, and business day convention is modified following, and business day is Oslo. Principal and interest accrued will be credited to the Bondholders through VPS. Issue Price: 100.00% of par value. 14
Purpose of the Bond Issue: The net proceeds from the Bond Issue (net of fees and legal costs of the Manager and the Trustee and any other costs and expenses incurred in connection with the Bond Issue) shall be employed (in the following order of priority) toward: (i) (ii) finance the Issuer s acquisition of the Vessels; and for general corporate purposes of the Issuer. Yield: Status of the Bonds: Eligible purchasers: Outstanding Bonds: Call options (American): Dependent on the market price. Based on broker indications and recent trades at the end of November 2014, the yield was indicated to around 10.0% p.a. The Bonds shall be senior debt of the Issuer, secured on first priority basis over the Security as set out herein, and rank at least pari passu with the claims of its other creditors, except for obligations which are mandatorily preferred by law. The Bonds shall rank ahead of subordinated capital. The Bond Issue was only 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 application form that each investor was required to execute, each U.S. investor that wished to purchase Bonds was 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 was a QIB. The Bonds were offered to, or for the benefit of, persons resident in Canada. The Bond Agreement contains customary terms and provisions for a U.S. Rule 144A or Regulation S placement. Means the aggregate nominal value of the total number of Bonds not redeemed or otherwise discharged. The Issuer may redeem the Bonds in whole, but not in part (all or nothing) at any time from and including: (i) (ii) (iii) (iv) the Interest Payment Date falling 1.5 years after Settlement Date to, but not including, the Interest Payment Date falling 2 years after Settlement Date at a price equal to 105.50% of par value (plus accrued and unpaid interest on redeemed Bonds); the Interest Payment Date falling 2.0 years after Settlement Date to, but not including, the Interest Payment Date falling 2.5 years after Settlement Date at a price equal to 103.00% of par value (plus accrued and unpaid interest on redeemed Bonds); the Interest Payment Date falling 2.5 years after Settlement Date to, but not including, the date falling 45 calendar days before Final Maturity Date at a price equal to 102.00% of par value (plus accrued and unpaid interest on redeemed Bonds); and the date falling 45 calendar days before Final Maturity Date to, but not including, the Final Maturity Date at a price equal to 100.00% of par value (plus accrued and unpaid interest on redeemed Bonds). Exercise of the Call Option shall be notified by the Issuer in writing to the Bond Trustee and the Bondholders at least thirty (30) Business Days prior to the settlement date of the Call Option. On the settlement date of the Call Option, the Issuer shall pay to each of the Bondholders holding Bonds to be redeemed, in respect of each such Bond, the principal amount of such Bond (including any premium as stated above) and any unpaid interest accrued up to the settlement date. 15
Security: All amounts outstanding to the Trustee and the Bondholders under the Finance Documents, including but not limited to principal, interest, fees and expenses, shall be secured by the following security (the Security ): Pre-Settlement Security: From the Issuer: (i) a first priority pledge over the Escrow Account (the "Escrow Account Pledge"); Pre-Disbursement Security: From the Parent: (i) a first priority share pledge granted by the Parent over all of the shares (100%) in the Issuer (the Share Pledge ); From the Issuer: (ii) (iii) (iv) (v) (vi) a first priority cross-collateralized mortgage over each of the Vessels in the amount of NOK 400,000,000 per Vessel, including all relevant equipment being legally part of the Vessels under Norwegian law (the Mortgage ); a first priority assignment of trade receivables (Norwegian: factoringpant ) of the Issuer in the amount of NOK 400,000,000 (the "Factoring Agreement"), such Factoring Agreement to be registered with the Norwegian Registry of Movable Property; a first priority pledge (excluding the Escrow Account established Pre-Settlement) over the Accounts (the "Accounts Pledges"); a first priority assignment of any Charter (provided that such assignment is permitted pursuant to the terms of the relevant Charter and applicable law (it being understood that the Issuer shall use reasonable efforts for any such Charter to allow for an assignment thereof in favour of the Trustee, and (if so permitted) shall give notice and use its best endeavours to obtain consent and acknowledgement of such assignment from any charterer.)) (the "Charter Assignment"); a first priority assignment of any rights of the Issuer under the Management Agreement (to the extent legally permissible). The assignment to contain (to the extent legally permissible) direct cure and step-in rights and termination rights in case of default (the Assignment of Management Agreement ); and (vii) a first priority assignment of any Insurances (as defined below) related to the Vessels. The Pre-Settlement Security shall be established no later than two business days prior to the Settlement Date. The Pre-Disbursement Security shall be established prior to or in connection with the release of funds from the Escrow Account as described in more detail under Conditions Precedent below. The Security listed in items (i) (vii) above shall collectively be referred to as the "Security Documents", and shall be made in favour of the Trustee on behalf of the Bondholders. 16
Vessels: Means the following vessels: (i) (ii) Energy Swan, the platform supply vessel registered under Norwegian flag ( NOR ) with IMO number 9319985 and calling signal LFUR; and Energy Scout, the platform supply vessel registered under Norway International Register flag ( NIS ) with IMO number 9322188 and calling signal LMWM3. (each a Vessel, together the Vessels ) Quiet Enjoyment Letter: If required by any client (the Client ) under a Charter, the Trustee (on behalf of the Bondholders) shall be authorized and obligated to issue a quiet enjoyment letter (the QEL ) in favour of such Client (and its creditors) in such form as the Issuer shall reasonably require in order to be able to comply with the requirements of the Charter. The QEL shall be given on industry standard terms, and shall include an undertaking that for as long as (i) (ii) the Client is not in breach of obligations under the Charter which breach would permit the termination of the Charter, and payment of all amounts due and payable under the Charter is duly made pursuant to the terms thereof, then, the rights and remedies of the Trustee under the Mortgage shall be subordinated and subject to the rights and remedies of the Client under the Charter, and the Trustee shall not disturb or interfere with the quiet and peaceful use, possession and enjoyment of the Vessels by the Client under the Charter, provided that the QEL may only be issued if the QEL provides for the Trustee (i) to (if applicable) be notified by the Client if the vessel owner is in default under any Charter and is granted the right to remedy such breach, and (ii) in case of an Event of Default under the Bond Agreement which is not remedied, to have a right to assign the Vessel and the Charter to a nominee of the Trustee, being reasonably satisfactory to the Client. The Issuer shall be obliged to use its best effort to obtain the right for the Trustee to assign the relevant Vessel and the Charter to a nominee of the Trustee pursuant to this paragraph (ii) and the Trustee shall be obliged to issue the QEL if the Issuer, despite its best efforts, fail to obtain such right. Accounts: The Issuer shall ensure that the following accounts shall be opened and maintained in the name of the relevant party with a bank acceptable to the Trustee (together, the Accounts ): (i) the Escrow Account (in connection with the settlement of the Bonds); (ii) the Earnings Account; and (iii) the Debt Service Account. Earnings Accounts: The Issuer shall (i) open and maintain an account (with a bank acceptable to the Trustee) (the Earnings Account ) held in the name of the Issuer for each Vessel or collectively for the Vessels; and (ii) procure that all earnings related to the Vessels shall be paid directly to such Earnings Account. 17
For the avoidance of doubt, if such earnings related to the Vessels are received in more than one currency, the relevant parties shall open additional Earnings Accounts in such other currencies under the same basis as described above. The Earnings Accounts shall be pledged on first priority basis in favour of the Trustee, but not blocked (unless an Event-of-Default occurs and is outstanding). Debt Service Account: Commencing one calendar month after Settlement Date, the Issuer shall ensure to transfer monthly from the Earnings Account into the Debt Service Account an amount equal to the 1/3 of the Coupon Rate payable on the next Interest Payment Date, and: Commencing nine calendar months after Settlement Date, the Issuer shall ensure to transfer monthly from the Earnings Account into the Debt Service Account an amount equal to 1/3 of the next payable Scheduled Instalment (excluding the Balloon Repayment). The Debt Service Account shall be pledged and blocked in favour of the Trustee (on behalf of the Bondholders). The deposited amount shall only be released for the interest and amortization payments as and when they fall due. Issuer Covenants: 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 the following general covenants: (i) (ii) (iii) (iv) (v) (vi) Dividends: The Issuer may not within any financial year, during the term of the Bonds, declare or make any dividend payment, repurchase of shares or make other distributions to its shareholders. Financial assistance: The Issuer shall not grant any loans, any guarantees or any other financial assistance (including, but not limited to granting security) to or for the benefit of any third party except for (A) normal trade credit or advance payments granted or made in the ordinary course of business and (B) any guarantee and security granted to secure any currency and/or interest hedging liability entered into in relation to the Bond Issue, provided that such guarantee and security is subject to the Intercreditor Agreement; Mergers: The Issuer shall not make or carry out any merger or other business combination or corporate reorganization involving consolidating the assets and obligations of the Issuer with any other companies or entities; De-mergers: The Issuer shall not carry out any de-merger or other corporate reorganization involving a split of the Issuer into two or more separate companies or entities; Continuation of business: The Issuer shall not cease to carry on its business and shall procure that no material change is made to the general nature of its business from that carried on at the date of the Bond Agreement, or as contemplated by the Bond Agreement; Financial indebtedness restrictions: The Issuer shall not create or permit to subsist any financial indebtedness other than (i) any financial indebtness arising under the the Bond Issue, (ii) any currency and/or interest hedging liability entered into in relation to the Bond Issue and (iii) any recourse claim under any performance guarantee facility with the purpose to secure performance under any duly executed charter; 18