Hunter Group ASA

Related Party Transaction • Apr 26, 2018

Hunter Group ASA - Enters into definitive VLCC contract transfer agreements with Apollo Asset Ltd.

Hunter Group ASA - Enters into definitive VLCC contract transfer agreements with Apollo Asset Ltd.

Oslo, 26 April 2018

General

Reference is made to previous announcements concerning the non-binding

indicative offer from Apollo Asset Ltd. ("Apollo"), upon which Apollo, a company

controlled by board member Arne Fredly, indicated its willingness to transfer

four (4) VLCC shipbuilding contracts and options for up to three (3) more VLCC

shipbuilding contracts to Hunter Group ASA, as first announced on 10 April 2018

at 08:53 (the "OSE Notice").

The board of directors of the Company has today signed a definitive back-to-back

contract transfer agreement (the "Contract Transfer Agreement") with Apollo in

connection with the transfer of the Shipbuilding Contracts, Option Agreement,

Refund Guarantees and certain rights in respect of specifications review

services (as defined below).

The ultimate owner of Apollo, Mr. Arne Fredly, is a board member of the Company,

and has, pursuant to the Norwegian Public Limited Companies Act section 6-27,

not participated in the Company's decisions in connection with the Contract

Transfer Agreement.

The object for the Contract Transfer Agreement

Before the execution of the Contract Transfer Agreement, Apollo has entered into

four (4) shipbuilding contracts and four (4) corresponding supplemental

agreements with Daewoo Shipbuilding Marine Engineering Co., Ltd. (the

"Builder"), dated on or about February/March 2018 respectively (together, the

"Shipbuilding Contracts"), for the construction and delivery of four (4) 300,000

DWT ECO Design Crude Oil Tankers, having Builder's hull Nos. 5455, 5456, 5457

and 5460 (together, the "Firm Vessels"), and one (1) option agreement dated 27

February 2018 (the "Option Agreement") for the construction and delivery of

three (3) optional vessels with identical specifications as the Firm Vessels

(together, the "Optional Vessels") (the Firm Vessels and the Optional Vessels

together referred to as the "Vessels").

As set out in the OSE Notice, the Shipbuilding Contracts and Option Agreement

contain the following key terms, without any mark-up or additional fees to

Apollo other than the Warrants (as described below):

Shipbuilding Contr. Contract amount      Scrubber           Tot. contract

amount  Delivery

No. 1                          MUSD 82.5              MUSD 2.7           MUSD

85.2                  Oct./Nov. 2019

No. 2                          MUSD 82.5              MUSD 2.7           MUSD

85.2                  Oct./Nov. 2019

No. 3                          MUSD 82.5              MUSD 2.7           MUSD

85.2                  Dec. 2019

No. 4                          MUSD 82.8              MUSD 2.7           MUSD

85.5                  Dec. 2019

Option     Contract amount     Scrubber                Tot. contract amount

Delivery

No. 1        MUSD 82.8               MUSD 2.7                MUSD 85.5

Q2 2020

No. 2        MUSD 82.8               MUSD 2.7                MUSD 85.5

Q2 2020

No. 3        MUSD 82.8               MUSD 2.7                MUSD 85.5

Q2 2020

Expiry date for exercising the Options towards the Builder is 27 May 2018.

V.Ships Norway AS ("VShips") has assisted with the review of the Firm Vessels'

specifications towards the Builder. The Company (or any nominee) will

subsequently enter into a building supervision agreement for the building

supervision of the Firm Vessels and, if applicable, the Optional Vessels.

It is a condition for Apollo's obligation to pay the first and subsequent

instalments, under each of the Shipbuilding Contracts, that the Builder provides

a refund guarantee issued by Export-Import Bank of Korea ("KEXIM") in favor of

Apollo as security for the Builder's obligation under the Shipbuilding Contracts

to refund the pre-delivery instalments paid by Apollo (together, the "Refund

Guarantees"). As of the date hereof, KEXIM has not issued the Refund Guarantees

(expected late April 2018). The first instalments (10% of the contract price

under the corresponding Shipbuilding Contract) are payable within three (3)

banking days following issuance of each of the Refund Guarantees (the

Shipbuilding Contracts, the Option Agreement and the Refund Guarantees are

hereinafter the referred to together as the "Transaction Agreements").

The investors participating in the private placement of MNOK 172.5 will, prior

to the annual general meeting in the Company to be held on 9 May 2018, pre-pay

the subscription amount under the private placement to the Company, after which

the Company will relend the pre-paid subscription amounts to Hunter Tankers AS,

together with own existing corporate funds, in order for Hunter Tankers AS to

fulfill its obligation to pay the first instalments under the Shipbuilding

Contracts. The Company owns 100% of the issued shares in Hunter Tankers AS.

The Contract Transfer Agreement's parties and structure

Pursuant to the Contract Transfer Agreement, Apollo acts as transferor and the

Company acts as transferee, and the parties intend transaction contemplated by

the Contract Transfer Agreement shall be undertaken in a three-step process as

follows:

1.         The Company (or its nominee) shall assume all rights and obligations

of Apollo under the Transaction Agreements on a back-to-back basis to the effect

that the Company (or its nominee) shall perform towards Apollo all obligations

Apollo is obliged to perform under any of the Transaction Agreements and

thereupon be entitled to the same rights and benefits from Apollo as Apollo is

entitled to under the Transaction Agreements;

2.         Subject to certain conditions being fulfilled, the Transaction

Agreements shall be novated, transferred or assigned (as the case may be) from

Apollo to the Company (or its nominee) so that the Company (or its nominee)

replaces Apollo as party to or beneficiary of (as the case may be) the

Transaction Agreements; and

3.         In the event that the novation, transfer and assignment as aforesaid

are not completed before delivery of the Vessels, the Company (or its nominee)

shall become the registered owner of the Vessels upon delivery from the Builder.

Novation to Hunter Tankers AS

The Company intends to enter into a novation agreement (the "Novation

Agreement"), with Apollo and the wholly owned subsidiary Hunter Tankers AS,

whereby the Contract Transfer Agreement, save for the Company's rights and

obligations related to the Warrants (as defined below), shall be transferred and

novated from the Company to Hunter Tankers AS, and shall constitute an agreement

between Apollo and Hunter Tankers AS on the terms and subject to the conditions

of the Contract Transfer Agreement. The Company will guarantee the obligations

of Hunter Tankers AS towards Apollo under the Novation Agreement.

Execution and effectiveness of the Contract Transfer Agreement and the Novation

Agreement is conditional upon the annual general meeting of the Company to be

held on 9 May 2018: (i) approving the Contract Transfer Agreement and the

Novation Agreement; (ii) approving the private placement of NOK 172.5 million,

directed certain towards co-investors in the Shipbuilding Contracts, with a

subscription price per share of NOK 2.30; and (iii) approving issuance of the

Warrants. Execution of the Contract Transfer Agreement and the Novation

Agreement  is not subject to any regulatory approval.

Consideration to Apollo

In consideration of Apollo entering into the Contract Transfer Agreement, Apollo

shall be entitled to subscribe for new shares in the Company as follows: (i)

5,000,000 shares at a subscription amount of NOK 2.60 per share (exercisable

within 3 years from the date of issuance of the Warrants); (ii) 5,000,000 shares

at a subscription amount of NOK 2.90 per share (exercisable within 4 years from

the date of issuance of the Warrants); and (iii) 5,000,000 shares at a

subscription amount of NOK 3.20 per share (exercisable within 5 years from the

date of issuance of the Warrants), together, the "Warrants". The Warrants shall

be approved by the general meeting of the Company in accordance with the

Norwegian Public Limited Liability Company Act 1997 section 11-12. The further

details related to the Warrants are set out in the general meeting of the

Company issuing the Warrants.

Other than the Warrants, Apollo will not receive any consideration for entering

into the Contract Transfer Agreements.

Financing of the Shipbuilding Contracts and Vessels under the Option Agreement

The Company and Hunter Tankers AS intend to finance its obligations towards

Apollo and the Builder by existing corporate funds and funds being available to

the Company and Hunter Tankers AS (equity and external finance) at the time of

settlement of the instalments under the Shipbuilding Contracts.

The Contract Transfer Agreement's significance for Hunter Group

The Contract Transfer Agreement represents an important milestone for Hunter

Group ASA under the new tanker strategy. Based on the terms of the Shipbuilding

Contracts and Option Agreement, the Company will be set for growth, and both the

Company and Apollo consequently believe the transfer will be an important step

for the Company to create shareholder value, and in the best interest of the

Company and its shareholders.

***

For further information, please contact:

Henrik A. Christensen

Chairman Hunter Group ASA

Cell phone +47 90 96 76 83

Email henrik@rosom.no

This stock exchange announcement is made pursuant to section 5-2 of the

Norwegian Securities Trading Act, and prepared in accordance with the Continuing

Obligations of the Oslo Stock Exchange section 3.4 (extended announcement).

www.huntergroup.no (http://www.bxpl.com)