Reach Subsea — Capital/Financing Update 2016

Apr 26, 2016

TAKING ACTIONS TO REMAIN COMPETITIVE

TAKING ACTIONS TO REMAIN COMPETITIVE

TAKING ACTIONS TO REMAIN COMPETITIVE

Reach Subsea has agreed on a comprehensive

restructuring of its charter agreements, which will

enable Reach to move forward with market based charter-

in rates. Solstad Offshore and Østensjø Rederi will as

part of the restructuring become new shareholders of

Reach Subsea.

Although the details of the agreement are confidential

between the parties, we can convey that Reach Subsea

will be well equipped to handle a prolonged period of

weak market conditions. A significant reduction in

charter commitments will provide Reach with a

competitive and flexible total cost base. Reach Subsea

is now positioned to exploit opportunities in the

market, and create shareholder value.

The immediate financial implications for Reach Subsea

are:

- Reach's total off-balance sheet bank

guarantees of NOK 87m will be cancelled

- Leasing debt will be reduced by NOK 26m, while

bank debt will increase by NOK 20m

- As compensation, the total restricted cash

deposits of NOK 53m will be released and paid out

- Reach will issue 15m shares, subscribed at NOK

2 per share, to major shareholders, board members, key

employees and the ship owners

As a result total debt, including bank guarantees, and

adjusted for restricted cash deposits, will be reduced

from approximately NOK 140m to approximately NOK 95m.

The company's working capital and cash position is

unaffected by the restructuring, and remains robust.

In particular in light of the reduced and flexible

cost base going forward.

The Board will shortly summon the AGM and will as part

of this propose the issuance of 15m shares, all of

which have been subscribed for at NOK 2 per share. 5m

shares will be issued to each of Solstad and Østensjø,

while 5m shares will be issued to major shareholders,

board members and key employees. In addition, the

Board will propose that 4m options with strike price

NOK 3 per share are issued to Solstad Offshore.

Jostein Alendal, CEO of Reach Subsea, says: "We are

pleased to have achieved a mutually acceptable

solution that is adapted to the current market

climate. This will enable Reach to continue working

with ship owners known for quality and reliability - a

necessity in our line of business. We are now equipped

to face a prolonged period of poor markets, and will

continue to deliver services of the highest quality."

www.reachsubsea.no