Solstad Offshore ASA — Share Issue/Capital Change 2017

Feb 6, 2017

Fully funded restructuring plan for Farstad Shipping agreed. Key stakeholders to seek combination of Solstad Offshore, Farstad Shipping and Deep Sea Supply, creating a world leading OSV company

Fully funded restructuring plan for Farstad Shipping agreed. Key stakeholders to seek combination of Solstad Offshore, Farstad Shipping and Deep Sea Supply, creating a world leading OSV company

Ålesund, Skudeneshavn and Grimstad, 6 February 2017

Farstad Shipping ASA ("Farstad Shipping"), Aker

Capital AS ("Aker"), a wholly owned subsidiary of Aker

ASA, Hemen Holding Limited ("Hemen") (a company

indirectly controlled by trusts established by Mr.

John Fredriksen for the benefit of his immediate

family), as well as Farstad Shipping's senior lenders,

substantial parts of its bondholders, and F-Shiplease

AS (a subsidiary of Ocean Yield ASA), have entered

into an agreement (the "Restructuring Agreement") for

a fully-funded financial restructuring of Farstad

Shipping (the "Farstad Restructuring"). Furthermore,

the parties to the Restructuring Agreement, together

with Soff Invest AS and Ivan II AS (jointly

the "Solstad Family Companies") and Tyrholm & Farstad

AS, have agreed to work for a combination of Solstad

Offshore ASA ("Solstad Offshore"), Farstad Shipping

and Deep Sea Supply Plc ("Deep Sea Supply") following

completion of the Farstad Restructuring, creating a

world class OSV company (the "Combination").

As repeatedly expressed by a range of industry

experts, the fragmented Norwegian OSV industry

requires consolidation. By agreeing to complete the

Farstad Restructuring and to work for the proposed

Combination, senior lenders, bondholders and long-

standing family owners supported by industrial

investors are making a collective effort to secure a

successful refinancing of Farstad Shipping and to

create a new and robust OSV company operating out of

Norway in the high-end segments of the global OSV

industry.

"With this solution, we provide Farstad, Solstad and

Deep Sea Supply with an industrial platform to sustain

the current downturn in the OSV market and be well

positioned to exploit a market recovery. We are

pleased to have reached an agreement with our banks,

bondholders and other stakeholders", says CEO Karl

Johan Bakken of Farstad Shipping.

A successful completion of the Combination will create

the largest company in the high-end global offshore

supply vessel industry with a fleet of 154 vessels.

When including all vessel classes and lower spec

vessels, the company ranks fourth globally. The

company will operate a fleet of 33 CSV, 66 PSV and 55

AHTS vessels deployed globally in all deep water hubs.

"For over a year we have advocated strongly for

consolidation in the OSV industry. One step was taken

through the merger of REM Offshore ASA into Solstad

Offshore in 2016. With a successful completion of the

Combination we would take further steps to build the

world's leading OSV company", Lars Peder Solstad, CEO

of Solstad Offshore comments.

Following a successful completion of the proposed

Combination, it is proposed that Solstad Offshore will

be the parent company in the consolidated group, and

will have support of two of the strongest participants

in the shipping and offshore sector through Hemen and

Aker.

"The proposed Combination is a necessary structural

measure in today's OSV market, which will enable the

combined company to achieve significant synergies

through more efficient operations and a lower cost

base", Jon Are Gummedal, CEO of Deep Sea Supply

comments.

" We are excited by this opportunity to work closely

with the Fredriksen group and other stakeholders to

realize our ambition to establish an efficient global

leader in the OSV segment. The proposed combination of

Solstad's, Farstad's and Deep Sea Supply's operational

experience, high quality fleet and global network

together with the Fredriksen group's and Aker's

industrial expertise, M&A capabilities and financial

strength will provide a powerful platform through

Solstad Offshore", says Øyvind Eriksen, President and

CEO of Aker.

The new consolidated group, "Solstad Farstad", will

build on the complementary strengths of the three

companies, combining the existing Solstad Offshore's

CSV capabilities with Farstad Shipping's AHTS

experience, international presence and good, long-

standing position in Brazil and Australia, together

with Deep Sea Supply's cost efficient PSV operating

model. The Combination will enable realization of

substantial cost and revenue synergies in the range of

NOK 400-650 mln annually that will further contribute

to strengthen the combined company.

Lars Peder Solstad will be proposed as the Chief

Executive Officer of the combined company, which will

be headquartered out of Skudeneshavn, Norway. The

focus of the initial discussions between the parties

has been to create a company with a strong industrial

position. The process to define the operating model

and organizational structure of the combined company

will be based on the competitive strengths of Farstad

Shipping, Deep Sea Supply and Solstad Offshore. The

companies will until further continue to operate as-is

in their current organizational structure.

The Farstad Restructuring

The Farstad Restructuring will be undertaken as

follows:

(i)Farstad Shipping's creditors will convert existing

and future debt claims to equity (the "Debt

Conversion")

Under the Debt Conversion, Farstad Shipping's senior

lenders, bondholders and F-Shiplease AS (a subsidiary

of Ocean Yield ASA) will complete a debt to equity

conversion as follows:

a)Farstad Shipping will assume debt owing by its

subsidiaries to certain senior lenders in the amount

of NOK 940,000,000 and the senior lenders will then

convert those NOK 940,000,000 into 752,000,000 new

shares of Farstad Shipping at a price of NOK 1.25 per

share.

b)The senior lenders will release Farstad Shipping's

subsidiaries of their obligation to pay NOK

332,000,000 in future interest in exchange for a NOK

271,000,000 claim against Farstad Shipping (equaling

the net present value of such future interest

payments), and the NOK 271,000,000 claim will be

converted into 774,285,714 new shares of Farstad at a

share price of NOK 0.35.

c)The outstanding bond debt in FAR03 and FAR04 with a

total outstanding amount of NOK 1,406,895,444.44,

representing a principal of NOK 1,400,000,000 plus

interest in the amount of NOK 6,895,444.44, shall be

converted into 1,125,516,355 new shares of Farstad at

share price NOK 1.25.

d)F-Shiplease AS (a wholly owned subsidiary of Ocean

Yield ASA) will release Farstad Supply AS of its

obligation to pay NOK 70,000,000 of the "amortization"

element and NOK 109,036,299 of the "interest" element

of its two bare-boat leasing agreements with

F-Shiplease, in exchange for a NOK 160,858,516 claim

against Farstad Shipping (equaling the sum of the NOK

70,000,000 "amortization" element and the net present

value of the "interest" element being NOK 90,858,516).

The NOK 70,000,000 "amortization" element of the claim

will be converted into 56,000,000 new shares of

Farstad at a price of NOK 1.25 per share, whereas the

NOK 90,858,516 "interest" element of the claim will be

converted into 259,595,760 new shares of Farstad

Shipping at a share price of NOK 0.35.

(ii)The existing financing agreements of Farstad

Shipping will be amended (the "Farstad Amended

Financing Terms")

The terms and conditions of the existing financing

agreements for Farstad Shipping (except for financing

agreements with Westpac and BNDES) will be amended and

harmonized, including by adding the following features:

a)The amortization profile of the loans (after

adjustment for the amounts converted to equity) shall

be reduced to 10% of the original profile from Q1

until 31 December 2021. Commencing in Q1 2022 the

balance of amortizing senior debt will become

amortizing in linear instalments of 20% per year,

whereas senior loans with a bullet repayment profile

will receive an extraordinary repayment of 4% in Q2

2019. The final maturity date for all loans (with

maturity date prior to the new maturity date) will be

extended to Q4 2023;

b)A cash sweep mechanism will be introduced;

c)In addition to certain financial covenants,

restrictions will be introduced with respect to

Farstad's ability to pay dividends, incur new debt,

carry out equity issues and make capital expenditures;

d)Minimum value clause at 100% across the group's

fleet (but suspended throughout 2019);

e)Removal of current ownership covenants;

f)Pre-approval of sale of older vessels at prices

below secure debt using agreed mechanisms.

For the F-Shiplease lease agreements, a part of the

lease payments will be deferred from Q1 2017 and until

Q4 2021. Commencing in Q1 2022, the lease payments

will revert to the original levels and in addition all

deferred payments will become repayable in linear

instalments of 20% per year, with a bullet repayment

of deferred payments in Q4 2023. The maturity dates of

the leases remain unchanged, being March and June

2025, and a new cash sweep mechanism will be

introduced in the leases.

(iii)Farstad Shipping will issue NOK 650 mln of new

equity fully underwritten by Aker and Hemen

(the "Equity Issue")

The Equity Issue, which is fully underwritten by Aker

and Hemen on a 50:50 basis, will consist of a NOK 450

mln share issue to Hemen and Aker ("Private Placement

1"), a NOK 150 mln share/convertible bond issue to

Farstad Shipping's bondholders and Tyrholm & Farstad

Invest AS (an affiliate of Farstad Shipping's main

shareholder) ("Private Placement 2") and a NOK 50 mln

repair issue to existing Farstad Shipping shareholders

who are not allocated shares in Private Placement 2

(the "Repair Issue"). The subscription price in the

Equity Issue will be NOK 0.35 per share. Aker and

Hemen will each subscribe for shares for NOK 225 mln

in Private Placement 1, and will subscribe for and be

allocated any remaining part of the Equity Issue that

is offered to but not subscribed by bondholders or

Farstad Shipping's shareholders. As of today's date,

Farstad's bondholders have in aggregate undertaken to

subscribe for NOK 50 mln in Private Placement 2, and

Tyrholm & Farstad Invest AS has undertaken to

subscribe for shares for a total amount of NOK 50 mln

in the Equity Issue. In case Tyrholm & Farstad Invest

AS' subscription cannot be fully covered under Private

Placement 2 due to additional bondholder

subscriptions, Aker and Hemen's allocations in Private

Placement 1 will be reduced correspondingly on a 50:50

basis as needed to ensure that Tyrholm & Farstad

Invest AS is allocated shares for a total amount of

NOK 50 mln.

(iv)Aker and Hemen have agreed to participate in the

take-out financing of the newbuild "FAR Superior"

As part of the Farstad Restructuring, Aker and Hemen

have agreed with Farstad Shipping's senior lenders

that each of Aker and Hemen will, subject to certain

conditions, participate with up to NOK 50 mln (in

total 100 mln) in a NOK 300 mln take-out facility for

the financing of the final instalment payable by

Farstad Shipping to Vard Singapore upon delivery of

the newbuild "FAR Superior" expected be delivered from

Vard Singapore's Vietnamese shipyard in February 2017.

Any such participation by Aker and Hemen shall be

considered an advance on their subscription

obligations in Private Placement 1 and reduce their

remaining subscription obligations NOK for NOK.

Upon completion of the Farstad Restructuring, assuming

that Hemen and Aker combined subscribe for NOK 550 mln

being the entire remaining part of the Equity Issue

which is not already allocated to Tyrholm & Farstad

Invest AS (NOK 50 mln) and subscribing bondholders

(NOK 50 mln), Aker will hold 785,714,285 shares

representing approximately 16.2% of the shares and

votes in Farstad Shipping, F-Shiplease AS, a wholly

owned subsidiary of Ocean Yield ASA, a subsidiary of

Aker ASA, will hold 315,595,760 shares representing

approximately 6.5% of the shares and votes in Farstad

Shipping, and Aker and F-Shiplease AS will in the

aggregate hold 1,101,310,045 shares representing

approximately 22.6% of the shares and votes in Farstad

Shipping. Hemen will hold 785,714,285 shares

representing approximately 16.2% of the shares and

votes in Farstad Shipping.

If however Aker and Hemen combined subscribe for only

NOK 400 mln as a result of not being allocated any

shares issued in Private Placement 2 or Repair Issue

and Tyrholm & Farstad Invest AS being allocated its

full subscription of 142,857,142 shares under Private

Placement 1, Aker will hold 571,428,571 shares

representing approximately 11.7% of the shares and

votes in Farstad Shipping and F-Shiplease AS will hold

315,595,760 shares representing approximately 6.5% of

the shares and votes in Farstad Shipping, and Aker and

F-Shiplease AS will in the aggregate hold 887,024,331

shares representing approximately 18.2% of the shares

and votes in Farstad Shipping. Hemen will hold

571,428,571 shares representing approximately 11.7% of

the shares and votes in Farstad Shipping.

Assuming a subscription of NOK 50 mln (142,857,142

shares) by Tyrholm & Farstad Invest AS, Sverre A.

Farstad and his affiliated companies Tyrholm & Farstad

AS and Tyrholm & Farstad Invest AS will hold in

aggregate 159,653,342 shares representing

approximately 2.9% of the shares and votes in Farstad

Shipping after the Farstad Restructuring.

The Farstad Restructuring is expected to be completed

during first half of 2017. Closing is dependent on,

among other things, final loan documentation, approval

by the bondholders in Farstad Shipping's two

outstanding bond loans FAR03 and FAR04, and the

approval of the credit committees of the senior

lenders. Completion of the Farstad Restructuring is

not dependent on the Combination being completed.

Large Bondholders in FAR03 and FAR04 have undertaken

to vote in favor of the Farstad Restructuring.

Further, Tyrholm & Farstad AS, Farstad Shipping's

largest shareholder holding 15,796,199 shares

representing 40.5% of the shares and votes in the

company, has undertaken to vote in favor of the

Farstad Restructuring. The same applies to Sverre A.

Farstad (1,000,000 shares, or 2.56%) and Jan H.

Farstad (1,050,000 shares, or 2.69%).

A prospectus will be published in connection with the

new shares issued in Farstad Shipping pursuant to the

Farstad Restructuring in accordance with applicable

regulations.

The Combination of Solstad Offshore, Farstad Shipping

and Deep Sea Supply

The Combination is proposed to be structured as

follows:

(i)Deep Sea Supply and Farstad Shipping will merge

into and be established as individual subsidiaries

under Solstad Offshore, with shareholders of Deep Sea

Supply and Farstad Shipping receiving shares in

Solstad Offshore as consideration (the "Mergers").

Under the Mergers, Farstad will merge with a newly

incorporated subsidiary of Solstad Offshore and

Farstad's former shareholders will receive shares in

Solstad Offshore as merger consideration. The exchange

ratio in the Solstad Offshore / Farstad merger will be

0.35:12.50 Farstad shares per Solstad Offshore share.

Contemporaneously with the Solstad Offshore / Farstad

merger, Deep Sea Supply will combine with Solstad

Offshore in a merger or merger-like transaction

whereby all of Deep Sea Supply's assets, rights and

obligations will ultimately be transferred to a

subsidiary of Solstad Offshore against consideration

in the form of Solstad Offshore shares. The amount of

Solstad Offshore consideration shares issued will be

based on an agreed exchange ratio of 1.32:12.50 Deep

Sea Supply shares per Solstad Offshore share.

(ii)The existing financing agreements of Solstad

Offshore and Deep Sea Supply will be sought amended

and harmonized with the Farstad Amended Financing

Terms.

(iii)In connection with the Combination, Solstad

Offshore will complete a NOK 200 mln private placement

directed towards Hemen at a subscription price of NOK

12.50 per share. The proceeds from the private

placement will passed on by Solstad Offshore to the

part of the new group comprising the former Deep Sea

Supply operations.

(iv)Aker will convert its NOK 250 mln convertible loan

to Solstad Offshore in exchange for shares, such

convertible loan having originally been granted to

Solstad Offshore in 2016 together with a NOK 250mln

equity investment by Aker in Solstad Offshore.

(v)Solstad Offshore's dual share class structure will

be collapsed, and all Class A and Class B shares will

be converted to common shares on a 1:1 basis.

(vi)Solstad Offshore will assume Farstad Shipping's

obligations under any convertible bond issued as part

of the Equity Issue (with logical amendments to the

convertible bond issue).

The transaction elements listed above are

interdependent and will become effective

simultaneously upon completion of the Combination. The

Combination has not been considered or approved by the

respective boards of directors of Solstad Offshore and

Deep Sea Supply, and remains subject to, among other

things, their review and approval. Further, the

Combination is subject to, among other things,

agreement on final transaction documentation,

competition authority approvals and relevant corporate

resolutions.

The senior lenders in Farstad Shipping have undertaken

to vote in favour of and otherwise support the

Combination, including by voting in favour of any

changes to the board of directors of Farstad Shipping

as Aker and Hemen may jointly propose. Further, the

senior lenders have undertaken a lockup obligation

preventing them from selling their shares in Farstad

Shipping until such time as the Combination is finally

approved or until 30 September 2017, unless otherwise

agreed with Aker and Hemen.

The total issued number of shares and votes of Solstad

Offshore upon completion of the Combination is

expected to be 292,524,298.

If Hemen and Aker combined has subscribed for NOK 550

mln in the Farstad Restructuring Equity Issue, Aker

will hold 63,668,050 shares representing approximately

21.8% of the shares and votes in Solstad Offshore,

F-Shiplease AS, a wholly owned subsidiary of Ocean

Yield ASA, a subsidiary of Aker ASA, will hold

8,836,681 shares representing approximately 3.0% of

the shares and votes in Solstad Offshore, and Aker and

F-Shiplease combined will hold 72,504,731 shares

representing approximately 24.9% of the shares and

votes in Solstad Offshore. Following the conversion of

the NOK 250 mln convertible loan, Aker will no longer

hold any rights to shares in Solstad Offshore. Under

the same assumptions, Hemen will hold 52,133,037

shares, representing approximately 17.9% of the shares

and votes in Solstad Offshore.

If Hemen and Aker combined has subscribed for only NOK

400 mln in the Farstad Restructuring Equity Issue,

Aker will hold 57,668,050 shares representing

approximately 19.8 % of the shares and votes in

Solstad Offshore, F-Shiplease AS, a wholly owned

subsidiary of Ocean Yield ASA, a subsidiary of Aker

ASA, will hold 8,836,681 shares representing

approximately 3.0% of the shares and votes in Solstad

Offshore, and Aker and F-Shiplease combined will hold

66,504,731 shares representing approximately 22.8% of

the shares and votes in Solstad Offshore. Following

the conversion of the NOK 250 mln convertible loan,

Aker will no longer hold any rights to shares in

Solstad Offshore. Under the same assumptions, Hemen

will hold 46,133,037 shares, representing

approximately 15.8% of the shares and votes in Solstad

Offshore

Aker and Hemen have agreed to adjust their

shareholdings following completion of the Combination

so that they end up as approximately equal

shareholders in the combined company.

The Solstad Family Companies will following the

Combination hold 21,066,965 shares representing

approximately 7.2% of the shares and votes in Solstad

Offshore.

Sverre A. Farstad and his affiliated companies Tyrholm

& Farstad AS and Tyrholm & Farstad Invest AS will

following the Combination hold in aggregate 4,470,294

shares representing approximately 1.5% of the shares

and votes in Solstad Offshore.

The final shareholdings will depend on the take-up of

the Farstad Shipping Equity Issue and any amendments

that may be made to the proposed terms of the

Combination.

Further details of the proposed Combination will be

presented in due course and in accordance with

applicable regulations. Subject to agreement on final

transaction documentation and the other conditions

mentioned above, the Combination is expected to be

completed during 2017.

***

Aker ASA´s Chief Financial Officer Frank Reite is a

member of the board of directors of Solstad Offshore.

Ellen Solstad and Lars Peder Solstad of the Solstad

family, who through their related companies Soff

Invest AS and Ivan II AS hold shares in Solstad

Offshore are a member of the board of directors and

the chief executive officer, respectively, of Solstad

Offshore.

Sverre A. Farstad is the chairman of the board of

Farstad Shipping.

***

A joint press briefing will be hosted at Aker's

offices at Fornebu today at 14:00 CET.

Contact:

Karl Johan Bakken, Chief Executive Office of Farstad

Shipping at +47 901 05 697

Atle Kigen, Head of corporate communications of Aker

ASA at +47 9078 4878.

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.

Anders Hall Jomaas, Chief Financial Officer of Deep

Sea Supply Plc at +47 400 42 918