Solstad Offshore ASA — M&A Activity 2016

Jul 28, 2016

REM Offshore enters into Agreement to merge with Solstad Offshore

REM Offshore enters into Agreement to merge with Solstad Offshore

Skudeneshavn and Fosnavåg, July 28, 2016.

Solstad Offshore ASA ("SOFF" or "Solstad") and REM

Offshore ASA ("REM") have on July 27, 2016 agreed to

merge REM with a wholly-owned subsidiary of Solstad

("Merger Sub") ("the Merger"). REM, the principal

shareholders of REM, and SOFF and its principal

shareholders, have entered into an agreement that sets

out the terms of the merger.

The Merger will be completed as a statutory triangular

merger pursuant to and in accordance with Norwegian

law, whereby Merger Sub will be the surviving company.

Solstad will create a new class B shares which will

have the same economic rights as the ordinary shares

in SOFF (to be renamed class A shares), but with

1/10th vote. It is Solstad´s intention that the new

class B shares can be an instrument for further

consolidation in the industry. As merger

consideration, REM´s shareholders will receive new

SOFF class B shares, except as provided below. The

Merger will be based on an agreed exchange ratio of

0.0696 SOFF shares per REM share. This is based upon

the issue prices in REM and SOFF's private placements,

proposed this June and July, of NOK 0.87 per share and

NOK 12.50 per share respectively, corresponding to an

agreed exchange ratio of 0.0696 SOFF class B shares

per REM share. Åge Remøy and his related companies

will, however, receive 6,000,000 SOFF class A shares

for the first NOK 75 million REM shares subscribed by

them in REM's NOK 150 million directed share issue,

which will be carried out as proposed before the

Merger. It is a condition from Åge Remøy´s side that

his current controlling position in REM is carried

over into a significant voting interest in Solstad

after the Merger, which will be effected by his

entitlement to get half of the consideration shares

attributable to the directed share issue in REM in the

form of SOFF class A shares. The principal

shareholders of Solstad have agreed to this and look

forward to having Åge Remøy as a key industrial

shareholder. His principal holding company will also

nominate a member to the board of directors of Solstad

upon effectiveness of the Merger.

"The offshore service vessel (OSV) industry is

undergoing a period of great uncertainty," says Lars

Peder Solstad, CEO of Solstad. "Reduced spending

across the upstream value chain has contributed to the

current overcapacity, adversely impacting dayrates and

utilization. The OSV industry's fragmented structure

is further compounding these negative effects. Solstad

and REM both see the need to create larger entities

with financial and operational strength to weather the

downturn. The combination of Solstad and REM is one

step in the right direction, but there remains a

strong rationale for further consolidation."

REM and Solstad are Norwegian offshore service vessel

companies that combined will operate a total of 62

vessels. After the Merger, Solstad will retain its

Skudeneshavn head office, from which the combined

fleet of CSV vessels will be operated. The combined

fleet of PSV vessels will be operated from the current

REM head office in Fosnavåg.

"On a standalone basis, both REM and Solstad have

strong operational capabilities, high-in-demand

specialist expertise, and an employee and management

base that cultivates innovative business

developments," REM CEO Arild Myrvoll said. "From a

commercial perspective, the Merger will further

strengthen these pillars of productivity and

profitability, while at the same time improving

margins and reducing downtime through inherent cost

and operational synergies."

"I am satisfied that the merged company will allocate

substantial activities to Fosnavåg, with potential for

substantial increase, which will contribute to

securing development possibilities for the region and

stable employment opportunities for our nearly 500

highly qualified employees", says REM Chairman Åge

Remøy.

"Solstad and Aker have put forth an industrial

solution for the restructuring of Rem Offshore. The

merger is a necessary structural measure in today's

offshore service vessel (OSV) market, which will

enable the combined company to achieve significant

synergies through more efficient operations and a

lower cost base. The combination of Solstad's, REM's

and Aker's industrial expertise, M&A capabilities and

financial strength will provide a strong platform

through Solstad for further development of the OSV

industry", says Øyvind Eriksen, President and CEO of

Aker.

The formal plan of merger is expected to be published

shortly after REM and SOFF have released their interim

financial statements as of and for the six-month

period ended June 30, 2016 in late August.

Extraordinary shareholders´ meetings in REM and SOFF

are expected to be held on or around October 1, 2016,

with the Merger becoming effective on or around

December 1, 2016.

REM is undergoing an overall restructuring to

strengthen its balance and liquidity position, as

announced on June 27, 2016. The Merger is premised

upon the completion of REM's restructuring prior to

the Merger, requisite approvals from creditors of REM

and SOFF and requisite approvals or absence of

intervention by competent regulatory authorities. The

Merger is supported by the largest shareholder in REM,

Åge Remøy and companies controlled by him, as well as

the largest shareholders in SOFF.

SOFF is also going through a comprehensive refinancing

plan as announced on June 7, 2016. At the same time

SOFF also disclosed that it foresees to participate in

a consolidation within the industry. Completion of the

refinancing and the Merger will form a good platform

for weathering the tough times the industry is going

through.

An information memorandum pursuant to clause 3.5 of

the Continuing Obligations for Issuers will be

prepared jointly by REM and SOFF and will likely be

combined with the offering and listing prospectus for

the SOFF class A and B shares to be issued and listed

in connection with the Merger, the NOK 20 million

repair issue of SOFF class B to REM shareholders, and

the offering prospectus for the NOK 39.9 million

repair issue of SOFF class A shares to SOFF

shareholders, as described further below.

Share issues in REM prior to the Merger

Prior to the Merger, REM will complete a directed

share issue towards companies related to Åge Remøy of

NOK 150,000,000 at NOK 0.87 per share, as per the

proposal made by the board of directors of REM on June

29, 2016 for the REM extraordinary general meeting to

be held July 21, 2016, (but which was later

cancelled). Subject to the completion of the Merger,

Åge Remøy and his related companies will receive

6,000,000 SOFF class A shares and 6,000,000 SOFF class

B shares, both at NOK 12.50, as consideration shares

in the Merger.

Shareholders in Rem before the restructuring (and

Merger) will receive 1,414,120 class B shares in SOFF

(as consideration for their share after the

restructured REM as proposed to the extraordinary

general meeting in REM). Further ,and subject to

completion of the Merger, REM shareholders not

participating in the directed share issue will be

offered to participate in a NOK 20 million directed

issue (the "repair issue") of SOFF class B shares at

NOK 12.50 per share as described below.

As part of the restructuring of REM, shares were

proposed to be issued to bondholders of REM and to

Vard Group AS. These shares will be exchanged for SOFF

class B shares through the Merger.

Share issues in SOFF

The NOK 39.9 million directed issue ("repair issue")

of shares in SOFF at NOK 12.50 per share resolved at

the extraordinary general meeting on July 13, 2016

will not be affected by the Merger, except that the

timing of the publication of the requisite prospectus

and the offering period is expected to be aligned with

the publication of the Information Memorandum on the

Merger and the Merger plan, which will be sent to all

shareholders together with the calling notice to an

extraordinary general meeting of SOFF to vote on the

merger plan.

Further, and as resolved at that extraordinary general

meeting, a directed issue of NOK 285.1 million at NOK

12.50 per share will take place. The amount is

subscribed by Aker with NOK 250 million while the

balance is subscribed by the Solstad family´s

companies SOFF Holding AS, Ivan II AS and Solstad

Invest AS.

Subject to completion of the Merger, REM shareholders,

other than companies related to Åge Remøy, not

participating in the directed share issue NOK 150

million of REM shares to be carried out prior to the

Merger, will be offered to participate in a NOK 20

million directed issue ("repair issue") of SOFF class

B shares at NOK 12.50 per share.

SOFF will apply for the new class B shares to be

listed on the main list of Oslo Børs.

Assuming (i) completion of Aker´s investment

undertaking in the aggregate amount of NOK 250 million

at NOK 12.50 per SOFF class A share, (ii) the

simultaneous investment undertaking in the aggregate

amount of NOK 35.1 million by the Solstad Family (ii)

full subscription of the NOK 39.9 million SOFF repair

issue of SOFF class A shares at NOK 12.50 per SOFF

class A share, (iii) full subscription of the NOK 20

million repair issue to current REM shareholders at

NOK 12.50 per SOFF class B shares, (iv) issuance of

137,665,714 REM shares, or SOFF class B shares in lieu

thereof at the exchange ratio for the Merger, to REM

bondholders pursuant to the REM restructuring plan of

June 27, 2016, and (v) issuance of 13,776,554 REM

shares to Vard Group AS pursuant to that plan, the

issued number of shares of SOFF is expected to be

90,241,182. The number of class B shares is expected

to be 19,553,805 and the number of votes 72,642,757.

Under these assumptions, Aker will hold 20,000,000

class A shares and 1,807,150 class B shares,

representing approximately 24% of the shares and 28%

of the votes. This includes SOFF class B shares issued

to Aker in its capacity as holder of REM bonds. The

Solstad family will, through its related companies,

hold 20,937,457 class A shares, representing

approximately 23% of the shares and 29% of the votes.

Åge Remøy and his related companies will hold

6,000,000 class A shares and 7,112,003 class B shares,

representing approximately 15% of the shares and 9% of

the votes.

As part of the proposed Merger, Aker will issue a put

option to Åge Remøy´s principal holding company

exercisable in the thirteenth month after

effectiveness of the Merger for a total of 6,000,000

class B shares in SOFF, with a strike price of NOK

12.50 per share. Acquisition of class B shares on the

basis of that agreement will increase the number of

SOFF shares held by Aker by 6,000,000 and the number

of votes by 600,000. This would represent an increase

of Aker´s holding under the same assumptions of

approximately 7% of the equity and approximately 1% of

the votes.

No changes have been made to the proposed NOK 250

million convertible loan from Aker as set out in

Solstad´s refinancing plan announced on June 7, 2016.

***

Aker´s Chief Financial Officer Frank Reite is a member

of the board of directors of Solstad Offshore ASA.

Ellen Solstad and Lars Peder Solstad of the Solstad

family, who through their related companies hold

shares in Solstad Offshore ASA are a member of the

board of directors and the chief executive officer,

respectively, of Solstad Offshore ASA.

Åge Remøy is the chairman of the board of directors of

REM Offshore ASA.

***

For further information, please contact:

Åge Remøy, Chairman of, REM Offshore ASA at +47 90 59

12 92 or Arild Myrvoll, Chief Executive Officer of REM

Offshore ASA at +47 90 01 41 88.

Lars Peder Solstad, Chief Executive Officer of Solstad

Offshore ASA at +47 913 18 585 or Sven Stakkestad,

Deputy Chief Executive Officer of Solstad Offshore ASA

at +47 905 15 802.

Atle Kigen, Head of corporate communications of Aker

ASA at +47 9078 4878.