Belships — M&A Activity 2018

Oct 4, 2018

Belships ASA 04 October 2018

The transaction

Transaction summary Strategic rationale

• Belships and Kontrari have on 4 October 2018 signed a merger plan, pursuant to which Belships will assume the assets, rights and obligations of the Lighthouse companies, against consideration shares in Belships
• − The assets include four Supramax and five Ultramax dry bulk vessels and a controlling stake in Lighthouse Navigation, a commercial management company based in Bangkok with annual turnover of USD ~96m¹
• − The shareholders of the Lighthouse companies will upon completion of the merger receive a total of 127,765,993 consideration shares
• − The exchange ratio in the merger is based on an equity value of Belships of USD 37.66 million, corresponding to a price per share of NOK 6.6²
• The completion is subject to approval by the EGM
• − Sonata, holding 67.05% of shares at the time of the EGM, has undertaken to support the resolution to approve the merger and issue the consideration shares
• − The completion of the merger is expected to take place before yearend 2018

• A share sale of 14,285,714 shares from Sonata to Kontrari for a total consideration of NOK 100 million will be completed three business days after the approval of the merger plan and share capital increase by EGM, subject to certain conditions being fulfilled

• Consolidation of matching fleets increases the fleet size from seven to 16 vessels, significantly strengthening Belships' position within the Supramax and Ultramax segments

• − Increased earnings potential
• − Realisation of operational synergies
• − Improved commercial negotiation position
• − Optimised mix of multi-year charter backlog and spot exposure
• Complementing management activities create a complete in-house operational structure, ideally positioning Belships as a platform for further growth
• − Technical management through Belships' Singapore operations
• − Commercial management through Lighthouse's Bangkok operations
• Increased free float and potentially improved liquidity in the stock
• − Improved access to capital markets
• − Ambitious sponsors targeting further expansion

¹⁾ Reported revenue for 2017

²⁾ Based on USDNOK of 8.1921 (3 October 2018) and excluding treasury shares 2

Belships ASA – Key investment highlights

Experienced owner and operator of high quality ships on long-term charters and spot contracts to highly reputable customers

2

Optimised mix of charter backlog and spot market exposure – USD 40m multi-year charter backlog providing predictable revenue base

6

Founded in 1918 and listed on the Oslo stock exchange since 1937; one of the longest listed companies in Oslo

1

3

Continued focus on fleet expansion of modern dry bulk tonnage – supported by ambitious sponsors

5

Widely anticipated improving dry bulk market represents attractive window of opportunity for earnings and asset value recovery

4

All services and key functions in-house, and a management team with proven operational track record

Business strategy and core activities

• Pure play on the dry bulk market, with a attractive spot market exposure and charter backlog
• Tonnage provider to highly reputable and good credit risk customers
• Optimised operational set-up, with inhouse commercial and technical management
• Cost efficiency in operation and administration
• Transparency, impeccable corporate governance and shareholder friendly information philosophy
• Target an efficiently priced equity with an attractive dividend - flexibility to buying back own shares if undervalued

Modern uniform fleet with average age of ~5 years

	Vessel	Type	Built	DWT	Yard	Ownership	Employment
n o uti b ntri o c	Imabari Newbuild	Ultramax	2020	63,000	Imabari	TC-in1	Open
	Belnippon	Ultramax	2018	63,000	Imabari	TC-in2	TC to Cargill
	Belisland	Ultramax	2016	61,000	Imabari	BB-in3	TC to Canpotex
	Belforest	Ultramax	2015	61,000	Imabari	BB-in4	TC to Cargill
	Belocean	Supramax	2011	58,000	Dayang	Owned	TC to Cargill
	Belnor	Supramax	2010	58,000	Dayang	Owned	TC to Canpotex
	Belstar	Supramax	2009	58,000	Dayang	Owned	TC to Canpotex
n o uti b ntri o c	Indian Light	Ultramax	2016	63,200	Hantong	Owned	Spot
	Baltic Light	Ultramax	2016	63,200	Hantong	Owned	Spot
	Atlantic Light	Ultramax	2016	63,200	Hantong	Owned	Spot
	Northern Light	Ultramax	2015	63,200	Hantong	Owned	Spot
	Southern Light	Ultramax	2015	63,200	Hantong	Owned	Spot
	Orient Light	Supramax	2008	50,292	PT Pal	Owned	Spot
	Bering Light	Supramax	2008	50,292	PT Pal	Owned	Spot
	Pacific Light	Supramax	2007	50,198	PT Pal	Owned	Spot
	Eastern Light	Supramax	2006	50,223	PT Pal	Owned	Spot

Belships

• 1) Time charter period of 8+1+1 years from Feb-20 with purchase options after the fourth year
• 2) Time charter period of 8+1+1+1 years from Jan-18 with purchase options after the fourth year
• 3) Bareboat charter lease period of 15 years from Mar-16 with purchase options after the fifth year
• 4) Bareboat charter lease period of 12 years from Sep-15 with purchase options after the third year

Optimised mix of charter and spot market exposure

Charter backlog	Solid charter counterparties
		Charter period		Net TC rate
Vessel	2018	2019	2020	2021		 One of the world's largest potash exporters, selling over 10 million tonnes
Belnippon Cargill					USD 11.1k/d
Belstar	Canpotex				USD 16.0k/d	one-third of global capacity
Belforest Cargill					USD 13.0k/d1	 Canpotex is a joint venture that is wholly
Belocean	Cargill				USD 11.6k/d2	producers, Mosaic and Nutrien
Imabari newbuild		Under construction			Open
Belnor	Canpotex				USD 16.0k/d
Belisland	Canpotex				USD 17.3k/d
Indian Light	Spot				nm
Baltic Light	Spot				nm
Atlantic Light	Spot				nm	 Largest private US company in terms of
Northern Light	Spot				nm
Southern Light	Spot				nm	in 2017 and ~150,000 employees worldwide
Orient Light	Spot				nm	 Major business areas within agricultural
Bering Light	Spot				nm
Pacific Light	Spot				nm
Eastern Light	Spot				nm	financial risk management

61% Share of revenue:

• One of the world's largest potash exporters, selling over 10 million tonnes of potash every year, representing about one-third of global capacity

• Canpotex is a joint venture that is wholly owned by the two Saskatchewan potash producers, Mosaic and Nutrien

• Largest private US company in terms of revenue, with USD 109.7bn in revenues in 2017 and ~150,000 employees worldwide

• Major business areas within agricultural services, crop and livestock, food, health and pharmaceuticals, and industrial and financial risk management

1) USD 10.0k/day until 1 Nov 2018, USD 13.0k/day thereafter

2) USD 9.8k/day until 15 October 2018, USD 11.6k/day thereafter 6

Complete in-house technical and commercial management

Company structure

Disclaimer

This presentation has been prepared by Belships ASA (the "Company"). The contents of this presentation shall not be construed as legal, business or tax advice, and the furnishing of this presentation should not be considered as the giving of investment advice by the Company or any of its directors, officers, agents, employees or advisers. Prospective investors should consult its own legal, business or tax advisor as to legal, business or tax advice.

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This presentation contains forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors which may cause the Company's and its subsidiary's actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievement. No representation or warranty (expressed or implied) is made as to, and no reliance should be placed on, the fairness, accuracy or completeness of the information contained herein. Accordingly neither the Company nor its directors, officers or employees will accept any liability whatsoever arising directly or indirectly from the use of this document, including any reproduction or redistribution.