This is not an offering memorandum or offering circular or prospectus and should not be treated as offering material of any sort and is for information purposes only. NOT FOR DISTRIBUTION IN OR TO THE U.S. (OR TO U.S. PERSONS) OTHER THAN QUALIFIED INSTITUTIONAL BUYERS, CANADA, AUSTRALIA OR JAPAN, OR IN ANY OTHER JURISDICTION IN WHICH SUCH DISTRIBUTION WOULD BE PROHIBITED BY APPLICABLE LAW. Songa Offshore ASA - Commercial Paper (the Notes / Note Issue ) Settlement date: Expected to be September 22 nd 2008 ISIN: tbd Issuer/Borrower: Form of security: Loan amount: Currency: Interest rate coupon: Songa Offshore ASA Commercial Paper /Notes Up to NOK 300 million (the Loan ) NOK 11.50 % p.a. Disbursement date/settlement date: Expected to be September 22 nd 2008 Maturity date: The Notes carry interest from and including: Interest payment date: Interest convention: Issue price: Redemption: Expected to be September 22 nd 2009 (12 months after Settlement date) The Disbursement date The Maturity date Actual days/365 100% of par The Loan to be redeemed in full at 100% of par at the Maturity date. Denomination: NOK 500,000 Purpose: The net proceeds of the Loan shall be used for working capital and general corporate purposes. Status of the Notes: The Notes shall rank at least pari passu with all other senior, unsecured obligations of the Issuer other than obligations which are mandatory preferred by law. The Notes shall rank ahead of subordinated capital. Security: Financial covenants The Notes are not secured by any mortgage, pledge or other security. The Issuer shall during the term of the Notes ensure that the following financial covenants are complied with; (i) The Equity Ratio to be, from Disbursement date until December 31 st 2008 (evidenced by its quarterly consolidated financial statement from the fourth quarter 2008), no less than 3.00:10.00,
(ii) (iii) and thereafter no less than 3.50:10.00 Equity to be no less than USD 750 million Not pay dividends and/or distribute assets and/or make loans to its shareholders and/or acquire shares issued in its capital or enter into any transaction having the same effect, exceeding 75% of its consolidated net year end result after taxation. Such distribution may be made on a quarterly basis and based on the net result after taxation for the preceding financial quarter (however limited to 75% thereof). Equity Ratio means, on a consolidated basis and at any given time, the ratio between the Equity and the Borrower s total assets (based on book values, adjusted for the Market Value and excluding the value of non-tangible assets, if any) in accordance with IFRS. Equity means, on a consolidated basis and at any given time the Borrower s equity (based on book values, adjusted for Market Value and excluding the value of non-tangible assets, if any) in accordance with IFRS. Market Value means, the market value of the Vessels, to be determined as follows; The Borrower shall twice (2) during the duration of the Notes with at least 6 months time-interval arrange for the Vessels to be valued at its expense by two reputable shipbrokers (to be among R.S. Platou Offshore, Fearnley Offshore, Pareto Offshore and Clarkson), such valuation to be made available to the Trustee within one week after such valuation. The valuations above shall be on the basis of a voluntary sale between willing buyer and seller, free of any charter or employment contract. The aggregate value of the Vessels shall be the arithmetic mean of the two valuations. Vessels means collectively; - SONGA SATURN (drillship built 1983/2006, IMO no. 8109589, owned by Songa Offshore Pte Ltd, to be transferred to Pegasus Invest Pte Ltd), - SONGA MERCUR (semi submersible third generation Pacesetter F&G 9500, built 1989, IMO no. 8755376, owned by the Borrower), - SONGA VENUS (semi submersible second generation Pacesetter 1-900, built 1975/2005, IMO no. 8755613, owned by the Borrower), - SONGA DEE (semi submersible third generation Mitsubishi 602, built 1984/2004, IMO no. 8751095, owned by the Borrower), - DEEPSEA TRYM (semi submersible second generation Aker H3 design, built 1976, IMO no. 8752271, owned by the Borrower), and - DEEPSEA DELTA (semi submersible modified Ocean Ranger design, built 1981/1996, IMO no. 8756590, owned by Songa Delta Limited.); or if a vessel is sold or has suffered a total loss, the remaining vessels. 2
Special issues: Change of Control: The Issuer shall not without the approval of the Trustee or, where necessary, the Noteholders' meeting: a) cease to carry on its business; b) de-merge, merge or in any other way restructure its business, save for the current and ongoing relocation/redomicilation from Norway to Cypros, in a manner which might jeopardize the Issuer s fulfilment of its obligations under the Loan Agreement; c) sell or dispose of all or a substantial part of its operations or change the nature of its business in a manner which is likely to jeopardize the Issuer s fulfilment of its obligations under the Loan Agreement; d) permit any member of the Group to engage in, directly or indirectly, any transaction with any party, except in the ordinary course of such members of the Group s business and upon fair and reasonable terms that are no less favourable to the member of the Group than those which might be obtained in arm s length transaction at the time. Upon the occurrence of a Change of Control Event, each Noteholder shall have the right of prepayment (Put option) of the Notes at a price equal to 100% of par value (plus accrued interests) during a period of 60 days following the notice of a Change of Control Event. Change of Control means any person or group becomes the owner, directly or indirectly, of more than 50% of the outstanding shares of the Issuer. Loan Agreement: By subscribing for Notes the Subscriber will be deemed to have authorized the Trustee to negotiate and execute the Loan Agreement on its behalf. Limited changes to the terms in the Term Sheet may be made in the Loan Agreement. Any transfer of Notes will be subject to the provisions of the Loan Agreement and all Note transferees shall, in taking transfer of Notes, be deemed to have accepted the terms of the Loan Agreement and will become bound by the Loan Agreement. The Loan Agreement will be available to the general public for inspection purposes and may until redemption in full of the Notes be obtained on request to the Trustee or the Issuer. Events of default: The Loan Agreement will be subject to customary event of default provisions. Governing law: Disputes arising out of or in connection with the Loan Agreement which are not resolved amicably shall be resolved in accordance with Norwegian law and in the Norwegian courts, with the Oslo District Court as venue in the first instance. Taxation: The Issuer shall pay any stamp duty and other public fees in connection with the Loan, but not in respect of trading in the secondary market, except to the extent by reason of operation of applicable laws, and shall deduct at source any applicable withholding tax payable pursuant to law. Listing: An application will be made for the Notes to be listed on Oslo Børs ABM Approvals / Permissions: The Notes have been issued in accordance with the Issuers Board approval dated [ ]. 3
Eligible purchasers: Transfer restrictions: The Notes are not being offered to and may not be purchased by investors located in the United States except for Qualified Institutional Buyers (QIBs) within the meaning of Rule 144A under the U.S. Securities Act of 1933, as amended ( Securities Act ). In addition to the Application Form which each investor will be required to execute, each U.S. investor that wishes to subscribe for Notes will be required to execute and deliver to the Issuer an investor representation letter in a form to be provided by the Manager. The Notes may not be purchased by, or for the benefit of, persons resident in Canada, Australia or Japan. Noteholders located in the United States will not be permitted to transfer the Notes except (a) subject to an effective registration statement under the Securities Act, (b) to a person that the Noteholder 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) outside the United States in accordance with Regulation S under the Securities Act in a transaction on the Oslo Børs, and (d) pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if available). The Notes may not be traded in Canada. Joint Lead Managers: Market Making: Trustee: Payment Agent: Carnegie ASA and Pareto Securities AS (the Managers ) No market-maker agreement has been made for this Note issue. Norsk Tillitsmann ASA, P.O.Box 1470 Vika, NO-0116 Oslo, Norway Nordea Bank Norge ASA Issuer s organisation number: 988 124 923 Registration: Issuers website: Subject to: The Norwegian Central Securities Depository (VPS). Principal and interest accrued will be credited the Noteholders through VPS. www.songaoffshore.no The issue of the Notes shall be subject to finalized loan documentation and approval of loan documentation by the Issuer and the Trustee. Songa Offshore ASA 16 September 2008 Carnegie ASA and Pareto Securities AS Issuer Managers THIS INDICATIVE TERM SHEET IS NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OR TO U.S. PERSONS, OTHER THAN TO QUALIFIED INSTITUTIONAL BUYERS AS DEFINED UNDER THE U.S. SECURITIES ACT OF 1933 ( QIB s). THIS INDICATIVE TERM SHEET IS NOT AN OFFER OF SECURITIES FOR SALE INTO THE UNITED STATES OR TO U.S. PERSONS, OTHER THAN TO QIB s. THE SECURITIES DESCRIBED IN THIS INDICATIVE TERM SHEET MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS (AS SUCH TERM IS DEFINED IN REGULATION S UNDER THE U.S. SECURITIES ACT OF 1933, AS 4
AMENDED) UNLESS THEY ARE REGISTERED OR EXEMPT FROM REGISTRATION. THERE WILL BE NO PUBLIC OFFER OF SECURITIES IN THE UNITED STATES. The Notes may not be offered to the public in any jurisdiction in circumstances which would require the Issuer of the Notes to prepare or register any prospectus or offering document relating to the Notes in such jurisdiction, in particular where the Issuer would be required to do so under the EU Directive 2003/71 concerning prospectuses to be published when securities are offered to the public or admitted to trading in the European Economic Area (the Prospectus Directive) or any legislative, regulation or other measure implementing the Prospectus Directive. The distribution of this Indicative Term Sheet and the offer and sale of the Notes in certain jurisdictions may be restricted by law. Any persons reading this Indicative Term Sheet should inform themselves of and observe any such restrictions. This Indicative Term Sheet is only directed at persons outside the United Kingdom or persons within the United Kingdom falling within the definition of investment professionals (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order )) or other persons to whom it may lawfully be communicated in accordance with the Order and without contravening Section 21 of the Financial Services and Markets Act 2000. In the case of investment professionals, this notice is directed at persons having professional experience in matters relating to investments and the investments and investment activity to which it relates will be engaged in only with such persons; persons who do not have professional experience in matters relating to investments should not rely on it. This Indicative Term Sheet comprises only a summary of the terms and conditions of the intended offering (the Offering ) of the Notes by the Issuer described herein and has been prepared for information and discussion purposes only. The information herein is indicative only and subject to change without notice and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person for any purpose. By accepting delivery of this Indicative Term Sheet, you agree to the foregoing. Although the indicative information set forth in this Indicative Term Sheet is reflective of the terms of the Offering as at the time and date of this communication, under which we believe an issuance of securities might be structured, no assurance can be given that such an issuance could in fact be executed, nor is the Issuer obliged to issue such securities. 5