Eqva ASA

Legal Proceedings Report • Oct 25, 2019

Update of financial situation

Update of financial situation

Reference is made to the stock exchange announcements of 2 and 17 July 2019 regarding agreement with the company's senior lenders and bondholders regarding changes to existing loan agreements, including amended covenants. This mainly due to major losses on two prototype projects at Havyard Ship Technology's shipyard in Leirvik, which was announced on 21 March 2019.

In connection with the latest project prognoses, further losses have been confirmed for the above-mentioned prototype projects. The reason for the new losses is due to operational conditions, including increased use of hours with subsequent delays in the completion of the mentioned vessels. New scheduled delivery times are set for November and December 2019.

The overall effect is that the company will be in breach of the new covenants as of Q4 2019 in terms of requirements for equity and working capital, and the results for Q3 2019 will therefore be lower than previously expected.

The company has initiated dialogue with lenders to minimize the effects of the said breaches, and where Fearnely Securities has been engaged to assist the company in implementing a long-term and sustainable capital structure.

Updated information on the covenant breach will be provided as soon as possible, and latest when reporting the financial results for Q3 2019.