Fjord Defence Group ASA

Earnings Release • Aug 31, 2018

Songa Bulk ASA - Financial Report

Songa Bulk ASA - Financial Report

Second Quarter 2018 Transaction, Highlights, Events, Results and Fleet

SECOND QUARTER 2018 - TRANSACTION WITH STAR BULK

- On 14 May 2018, the Company entered into an agreement with Star Bulk Carriers Corp. (Star Bulk) to sell all its vessels to Star Bulk against a consideration of 13 688 000 shares of Star Bulk and $144.55 million in cash, with listing of the consideration shares on Oslo Stock Exchange through a dual listing of Star Bulk and a distribution of these shares to the shareholders of Songa Bulk ASA, with repayment of the bond loan with the cash proceeds at the mandatory prepayment price.

- On 5 June 2018, the annual general meeting of the Company approved the transaction.

- The transaction was completed on 6 July 2018.

SECOND QUARTER 2018 FINANCIAL HIGHLIGHTS

- The Company reports a net loss of $3.2 million in Q2 2018 compared to net profit of $1.6 million in Q1 2018. Net loss in Q2 2018 comprise of loss from discontinued operations of $3.2 million. The main reason for the loss is financial expenses in connection with redemption of the Company's bond loan at 104% of nominal value. Gain from sale of vessels will be recognized in Q3 2018. The estimated gain from sale of vessels was approximately $24 million.

SECOND QUARTER 2018 EVENTS

CORPORATE

- On 4 April 2018 a dividend of $0.10 per share, $3.6 million in total, was paid to the shareholders. The distribution was considered repayment of paid in capital.

- In the annual general meeting of the Company held on 5 June 2018, the shareholders resolved to reduce the share capital of the company by NOK 178 300 000 (approximately $21 million). The amount will be distributed to the shareholders at a later stage, either in cash or as distribution in kind.

SUBSEQUENT EVENTS:

- On 6 July 2018 the transaction with Star Bulk was completed and all vessels were delivered to the new owner. The Company received 13 688 000 shares of Star Bulk and $144.55 million in cash. The cash proceeds were used to repay the bond loan at 104% of nominal value plus accrued interests. In connection with completion the Board of Directors of the Company resolved to pay a dividend of $151 million, equal to $4.21 per share. The distribution was considered repayment of paid in capital.

- On 13 July 2018 a total of 10 929 550 shares of Star Bulk were distributed to the shareholders and an additional 169 365 shares were distributed on 17 August 2018. The distributions equals approximately $148 million of the resolved dividend of $151 million and was effected to shareholders who completed and submitted representation and warranties letters in accordance with instructions given. The remaining amount of about $3 million will be distributed, mainly as distribution in kind, later upon receipt of representation and warranties letters from shareholders that did not yet submit such letter.

- On 29 August 2018 a total of 1 639 595 shares of Star Bulk were distributed to the shareholders in connection with commencement of the share capital reduction resolved on 5 June 2018. The distribution equals approximately $20.7 million of the resolved amount of $21 million and was effected to shareholders who completed and submitted representation and warranties letters in accordance with instructions given. The remaining amount of about $0.3 million will be distributed, mainly as distribution in kind, later upon receipt of representation and warranties letters from shareholders that did not yet submit such letter.