Prosafe SE

Regulatory Filings • Sep 16, 2010

RECOMMENDATION FROM THE BOARD OF DIRECTORS

PROSAFE PRODUCTION PUBLIC LIMITED

RECOMMENDATION FROM THE BOARD OF DIRECTORS

This statement is made by the Board of Directors of

Prosafe Production Public Limited ("Prosafe

Production" or the "Company") in connection with the

revised and improved voluntary offer from BW Offshore

Limited ("BWO") to acquire all outstanding shares of

the Company.

Background

On 21 June 2010, BWO announced its intention to make

a voluntary tender offer (the "Original Offer") for

the shares in Prosafe Production, which subsequently

was made through an offer document dated 27 July 2010

(the "Original Offer").

On 16 August 2010, the Board of Directors of Prosafe

Production issued a statement pursuant to which it

recommended its shareholders not to accept the

Original Offer.

On 13 September 2010, following negotiations over the

preceding weekend, Prosafe Production and BWO issued

a joint press release announcing their intention to

enter into a combination agreement ("Transaction

Agreement") pursuant to which BWO were to revise the

Original Offer by increasing the consideration

offered and extending the acceptance period.

On 15 September 2010, the Boards of Prosafe

Production and BWO resolved and executed the

Transaction Agreement. Consequently, and as follows

from the amendment announcement made by BWO today

pursuant to sections 5.13 and 5.14 of the Original

Offer document, BW Offshore has now formally adjusted

the Original Offer by increasing the cash

consideration to NOK 3.00. Under this revised offer

(the "Revised Offer"), the Prosafe Production

shareholders are now offered to exchange their shares

for an improved consideration consisting of:

(i) 1.2 BWO share;

and

(ii) NOK 3.00 in cash,

for every share of Prosafe Production. At the same

time, the Offer Period has been extended until 30

September 2010. The other terms set out in the

Original Offer, including with respect to conditions,

remain the same

Board Recommendation

Having reviewed and considered the terms of the

Revised Offer and having evaluated the Company's

strategic and financial options in order to maximize

value for all shareholders, the Board of Directors of

Prosafe Production has concluded that a combination

of BWO and the Company for the consideration now

offered by BWO is in the best interest of Prosafe

Production and its shareholders. The Board of

Directors expects that the combined company,

benefiting from the resources and experience of BWO

and Prosafe Production jointly, will create a strong

platform for profitable growth and success. The

shareholders in Prosafe Production will be able to

participate in this potential as a part of the

consideration consists of shares in BWO.

Compared to the Original Offer, the cash

consideration is under the Revised Offer increased

with NOK 1.00, from NOK 2.00 to NOK 3.00.

Furthermore, following the recent development in BWO,

including the announced agreement with National

Oilwell Varco regarding the sale of APL (Advanced

Production & Loading) Plc, the Board is of the view

that the value of the in-kind consideration in the

form of 1.2 BWO shares per share in Prosafe

Production is significantly higher than what was

apparent at the time of announcement of the Original

Offer.

The Board has received new fairness opinions from its

financial advisors First Securities AS and Pareto

Securities AS (together the "Advisors") dated 15

September 2010. The two separate opinions both

conclude that the Revised Offer is fair to the

shareholders of Prosafe Production from a financial

point of view. The opinions are based upon and

subject to the assumptions, considerations,

qualifications, factors and limitations set forth

therein.

Considering the above, and based on an overall

evaluation of relevant factors, the Board of

Directors therefore recommends the shareholders of

Prosafe Production to accept the Revised Offer made

by BWO.

Other Considerations

Under the Revised Offer, the implied offer price of

NOK 15.20 per Prosafe Production share (based on the

closing price on 13 September 2010) values the

Company's aggregate outstanding shares at

approximately NOK 3,879 million. Further, the implied

offer price reflects a 18% premium over the volume

weighted average price for PROD's shares during the 1

month preceding 13 September 2010, a 9% premium over

the volume weighted average price for PROD's shares

during the 3months preceding 13 September 2010 and a

14% premium over the volume weighted average price

for PROD's shares during the 12 months preceding 13

September 2010.

Completion of the Revised Offer is conditional upon

the same conditions as the Original Offer, including

that Prosafe Production shareholders accepting the

Revised Offer for the number of Prosafe Production

shares required in order for BWO to obtain a

shareholding of more than 90% of the total number of

issued shares on a fully diluted basis, and that any

necessary consents and approvals are obtained.

The acceptance period for the Revised Offer is

extended to 30 September 2010 at 17.30 CET.

Settlement will be made no later than 10 Norwegian

business days after the date of the announcement from

BWO that the closing conditions have been met or

waived by BWO.

Detailed information about the Revised Offer,

including conditions, is set out in the Original

Offer document dated 27 July 2010, with certain

supplements to be included the supplemental offer

document expected to be issued by BWO on or about 17

September 2010. The Board notes in this respect that

it has not conducted any due diligence reviews with

respect to BWO and its business in connection with

the offers nor reviewed the supplemental offer

document. As part of the offer consideration is made

up by shares of BWO, Prosafe Production shareholders

should carefully review both the Original Offer and

the supplemental offer document, including without

limitation the various risk factors set out therein,

before making its decisions.

Consequences of Completion

In the event the Revised Offer is completed

successfully, BWO may propose to the general meeting

of Prosafe Production that an application be made to

Oslo Børs to de-list the Prosafe Production shares

from Oslo Børs. An application to de-list the shares

of Prosafe Production would require the approval by

2/3 majority of votes cast and the share capital

represented at such general meeting.

The combination of the companies is likely to result

in an integration of parts of the two companies'

organizations and hence there may be consequences for

Prosafe Production's employees with regards to

employee functions and the Company's locations of

operations. The Board of Directors has also noted

that in the Original Offer document dated 27 July

2010, it is stated that BW Offshore will as soon as

possible seek the synergies expected from the

combination of BWO and Prosafe Production, thus

potentially affecting the total number of employees

in the combined group as ways to combine and

streamline the operations will be explored.

Directors' and Management's assessment of the Offer

as shareholders

The Board members who own shares in the Company

(directly or indirectly), Ronny Johan Langeland and

Arne Austreid, as well as the CEO Bjørn Henriksen,

COO Roy Hallås and CFO Sven Børre Larsen, all intend

to accept the Offer.

* * *

This recommendation is effective as of this date. The

recommendation may, subject to the provisions of the

Transaction Agreement, on certain conditions be

withdrawn or modified, including in the event of a

competing superior offer by a third party or material

new adverse information being included in the

supplemental offer document.

Limassol, 15 September 2010

The Board of Directors of Prosafe Production Public

Limited