DOF ASA

Legal Proceedings Report • Jan 27, 2023

Proposal for a restructuring plan

Proposal for a restructuring plan

The board of directors of DOF ASA has decided to submit a proposal for a

restructuring plan to the reconstructor and the DOF group's financial creditors

and will prepare a notice convening an extraordinary general meeting to consider

this proposal, provided that the financial creditors and the reconstructor

support the proposal.

The restructuring plan will now be submitted to the financial creditors for

approval. At the same time, the Board will work to document support for the plan

from a sufficient number of shareholders. The plan has already received support

from Møgster Offshore AS, which owns approximately 31.6 percent of the shares in

DOF ASA.

· The Board's proposal means that the existing shareholders will own 3.75% of

a strengthened DOF ASA after debt conversion. The company will continue its

operations and the shareholders will retain a share of the value creation that

many expect will occur going forward.

· Based on preceding dialogue, the Board considers that the current proposal

is a reasonable compromise that should receive a sufficient majority among the

company's creditors and shareholders.

· If the proposal is not adopted, there will be no prospect that the company

will be able to achieve a reconstruction and the court will probably open

bankruptcy after a report from the reconstruction committee. The business will

continue to operate as today through the subsidiary DOF Service AS and its

underlying companies. However, shareholder value will in all likelihood be lost.

The restructuring proposal is based on the restructuring agreement that was

negotiated between the company and the creditors and voted down at the

extraordinary general meeting on 11 November 2022.

A key point in the restructuring agreement is how much of the company the

existing shareholders should retain after debt has been converted to equity. The

original proposal would have meant that shareholders would own 4 percent of the

shares in the company. After this proposal was voted down, it was likely that

the shareholders would end up with a 1 percent stake.

The proposal that the board has now submitted means that the existing

shareholders will own 3.75 per cent of the company's shares after debt

conversion. The proposal is otherwise identical to the previous proposal.

- The Board is submitting this proposal for reconstruction after careful

consideration and extensive contact with creditors and shareholders. The Board

of Directors believes that it would be impossible to obtain sufficient support

among shareholders for a solution where they would only own 1 percent of the

company after debt conversion. Similarly, the Board believes that it would be

impossible to achieve acceptance among the creditors for more than 3.75 percent

to the existing shareholders, says Leif Chr. Salomonsen, Chairman of the Board

of DOF ASA.

The work of the new board

At the Annual General Meeting on 14 December 2022, the shareholders of DOF ASA

elected a new Board of Directors. The new Board of Directors noted that leading

shareholders felt that they did not have sufficient information to take a

position on the restructuring proposal presented.

The new board therefore immediately started the work of obtaining an overview of

relevant and updated information about the situation in the company, including

in particular valuations and assessments of liquidity and future cash flow. In

parallel, the board investigated whether it might be possible to obtain

agreement with the financial creditors for any alternative solutions that could

give shareholders a larger share of the company's assets and future value

creation than the original proposal.

In this period, the board has had regular contact and meetings  with

representatives of the company's shareholders and the company's creditors and

their advisers. The aim of these contacts and meetings has been to explore the

possibility of other solutions, including refinancing of the debt, sale of ships

and a share issuance. Unfortunately, none of these solutions have been possible

to realize.

The way forward

Based on preceding dialogue, the Board considers that the current proposal is a

reasonable compromise that should receive a sufficient majority among the

company's creditors and shareholders. The company's main shareholder has

confirmed support for the plan subject to the creditors' approval.

In the coming days, the Board will seek to obtain further pre-acceptances from

shareholders. At the same time, the company is preparing a more detailed

statement of the company's results and cash flow in the fourth quarter and for

the year 2022 as a whole and balance sheet values as of 31 December 2022. This

information will be made available to the market prior to the Extraordinary

General Meeting.

No guaranteed solution

While it is considered possible that the Board's proposal will be able to obtain

sufficient support from shareholders and creditors, the Board stresses that

there are no guarantees that the solution will be accepted.

In the current situation of the company, the company's financial creditors could

at any time notify the reconstructor that they will not contribute to a solution

such as the one proposed by the board. In that case, the reconstructor will ask

Hordaland District Court to suspend the restructuring process and open

bankruptcy in DOF ASA. If the solution does not achieve a sufficient majority

among the shareholders, the result will be the same.

It will then be up to Hordaland District Court to assess whether there are

grounds for declaring DOF ASA bankrupt.

Solvent or not

The decisive factor for Hordaland District Court's conclusion will be whether,

based on, inter alia, the report from the reconstruction committee, it is likely

that DOF ASA will be able to achieve a restructuring. Whether the company is

solvent or not is in principle not decisive.

In the event that the court nevertheless decides to look further into the

solvency issue, it will consider whether the value of the assets of DOF ASA

(i.e. shares in the subsidiary DOF Services AS) is worth more than the debt in

DOF ASA, as well as the liquidity. In practice, this question will depend on

whether the value of the assets of the DOF Group that can be realised in a

bankruptcy is greater than the debt. Thus, it is not the value of the assets of

DOF as a going concern that is at issue.

In order to shed light on this question, the Board of Directors of DOF ASA has

obtained and assessed independent valuations of the DOF Group's assets. The

shipbrokers Fearnleys and Clarkson have assessed the value of the DOF Group's

vessels. The advisory firm Deloitte has reviewed these and assessed them against

the company's debt, other liabilities and available liquid assets. Deloitte has

also assessed the value of the DOF Group's other activities, including the

shares in DOFCON and the engineering services.

The assessments now available are based on vessel values as of 31 December 2022.

They show that vessel values in US dollars have increased since 31 September

2022. A weaker dollar has had the opposite effect, removing much of the increase

in value measured in NOK. However, a weaker dollar also reduces the krone value

of the company's debt.

The final report from Deloitte is still pending. The Board of Directors has

therefore not been able to reach a final conclusion as to whether the company

will be considered insolvent, but considers it probable.

The Board's recommendation

If the district court opens bankruptcy in DOF ASA, the creditors will take over

all assets in DOF ASA and the shareholders will lose everything. Even if

Hordaland District Court does not open bankruptcy in DOF ASA, the guarantee

liability that DOF ASA has on behalf of its subsidiaries will remain. It is thus

completely unlikely that the shareholders in any scenario could receive more

value than the Board's proposed solution.

Based on the above analyses and assessments, it is the Board's clear opinion

that the best solution for the company and for all of the company's

stakeholders, shareholders as well as creditors, will be that the Board's

proposal for reconstruction is implemented.

- The Board would have liked to see the shareholders retain a larger share of

the company than the reconstruction suggests. If it had been possible to turn

back the clock and restart negotiations with the creditors today, this might

have been possible. However, it is a fact that the DOF Group has approximately

NOK 25 billion in debt on which, for the most part, neither interest nor

instalments have been paid for more than two years, says Salomonsen.

- "We are already in overtime and need a solution now. The company has been

living at the mercy of its creditors for a long time. With the Board's proposal,

the existing shareholders will own 3.75% of a strengthened DOF ASA, the company

will continue its operations and the shareholders will participate in the value

creation that many expect will take place in the time to come, Salomonsen

concludes.

For further information, please contact:

Chairman: Leif Chr. Salomonsen, tlf.: 992 42 888

With a multi-national workforce of about 3,900 personnel, DOF ASA is an

international group of companies which owns and operates a fleet of modern

offshore/subsea vessels, and engineering capacity to service both the offshore

and subsea market. With 40 years in the offshore business, the group has a

strong position in terms of experience, innovation, product range, technology

and capacity.

DOF's core businesses are vessel ownership, vessel management, project

management, engineering, vessel operations, survey, remote intervention and

diving operations primarily for the oil and gas sector. From PSV charter to

Subsea engineering, DOF offers a full spectrum of top quality offshore services

to facilitate an ever-growing and demanding industry.

The company's main operation centers and business units are located in Norway,

the UK, the USA, Singapore, Brazil, Argentina, Canada, Angola, and Australia.

DOF ASA is listed on the Oslo Exchange since 1997.