Agreement regarding division of Rem Offshore ASA

Pursuant to the agreement, eight vessels, including a new building contract and certain other assets and liabilites will be transferred to a new incorporated company that Solstad Rederi AS will receive shares in against redemption of Solstad Rederi AS' shares in REM.

 

The vessels that will be transferred to Solstad through this agreement are; Rem Balder, Rem Commander, Rem Fortress, Rem Clough, Rem Fortune, Rem Supplier, Rem Spirit and a newbuilding at STX Norway Offshore AS - Brattvåg.

THE TRANSACTION
The two major shareholders in REM are of the opinion that the preferable procedure for dividing REM is to do a share capital reduction whereby Solstad Rederi AS' shares in REM are redeemed against Solstad Rederi AS receiving shares in NewCo, thereby taking over parts of the REM business. The board of directors of REM has given its support to this proposal.

All shareholders in REM, except Solstad Rederi AS and the Remøycompanies will be offered to:

a) maintain their shareholding in REM, or
b) receive shares in NewCo proportionately to the capital reduction and according to their current shareholding in REM, i.e for 48,7% of their current shareholding in REM.

Solstad Rederi AS will as far as possible receive shares in NewCo only, and all Solstad Rederi AS' share in REM will be redeemed provided that no other shareholder decides to redeem shares in REM and receive shares in NewCo. To the extent that other shareholders decide to receive shares in NewCo, the redeemed part of Solstad Rederi AS' shareholding in REM, is reduced correspondingly.

The Remøycompanies will not receive shares in NewCo, but will maintain their shareholding in REM. However, if other shareholders wish to redeem parts of their shareholding against receiving shares in NewCo, the Remøycompanies have undertaken also to receive shares in NewCo to the extent required to avoid that Solstad Rederi AS receives an ownership share of 90% or more in NewCo.

Solstad Rederi AS has waived the right to claim a forced redemption in the event that Solstad Rederi AS comes in a position that would entitle Solstad Rederi AS to make such claim towards minority shareholders according to the limited companies act 1997, section 4-26.

At completion of the share capital reduction in REM, the part of the REM business that is transferred will be allocated in a subsidiary of Solstad Rederi AS.

After some time, the business transferred will be integrated in the Solstad group of companies, also corporate-wise. In the event, this will be contemplated for example by way of a merger, alternatively by an offer to purchase the shares of the minority shareholders, based on the conversion rate between NewCo and the relevant Solstad entity. The conversion rate will be based on value adjusted equity, and settlement made in SOFF shares, based on value adjusted equity.   

IMPLICATIONS FOR SOFF
The fleet transferred is from an industrial point of view very suitable together with SOFF's existing fleet of construction service vessels (CSV), platform supply vessels (PSV) and large anchor handling vessels (AHTS). There is a good balance between vessels on fixed term contracts and the exposure towards the spot market.

THE BUSINESS TRANSFERRED
The part of REM which is assumed to be transferred is in the opinion of SOFF a balanced and representative part of REM, with regards to new building commitments, segment exposure, debt to asset ratio, contract coverage etc. Further, SOFF is of the opinion that the net asset value of the transferred activities is corresponding with Solstad Rederi AS' share of the net assets value of REM prior to the transaction.

In addition to the vessels and new building contract, the new company will receive approximately NOK 240 million in cash and NOK 105 million in paid in installments under the new building contract for hull no. 724 at STX_Norway Offshore AS - Brattvåg.

Further, the new company will receive a claim against REM in the amount of NOK 19 million in connection with a loan in the amount of NOK 40 million granted by REM to a third party. The total booked value of the transferred assets in REM’s accounts is approximately NOK 2.3 billion as of 31.12.2008.

NewCo and/or SOFF will take over the bond loan in REM in the nominal amount of NOK 250 million at a value of NOK 237 million.

NewCo will also assume a payment obligation of NOK 615 million in connection with the new building contract for hull no. 724 at STX Norway Offshore AS – Brattvåg with delivery March 2010. In connection with delivery of the vessel, a firm financing offer is granted, but yet to be drawn, of up to 70 % of the project cost.

Of REM’s total booked equity, the transferred activity represents approximately NOK 700 million.

The preliminary pro forma financial key figures for 2008 for the transferred activities shows operating income in 2008 at NOK 424 million and  operating result before depreciation and amortization at NOK 258 million. Two of the vessels included in the transferred activities were delivered medio March and ultimo October 2008 respectively, and did not operate an entire accounting year during 2008. Existing charterparties will follow the relevant vessels.

The cash flow from the operation from 1 January 2009 until the completion of the contemplated transaction will be allocated to the company in which the relevant vessels will be placed.

IMPLICATIONS FOR EMPLOYEES
The seamen employed by REM will to the extent possible be offered to continue their service on the vessels which they serve today, and the seamen doing service on the vessels being transferred to the new company in the transaction, in total about 200 seamen, will be offered transfer from the current employer to SOFF.

SUBJECTS TO THE TRANSACTION
The division of REM require approval from the shareholders meeting in REM. The board of directors in REM will summon for an extraordinary shareholders meeting to make the required resolutions.

Provided that the necessary resolutions are made, the transaction will be consummated legally as soon as the required resolutions are made, all required approvals or consents are obtained from contract counterparts/third parties, and the documentation is comleted and the deadlines allow, presumably during July 2009.

SOFF will publish an Information Memorandum pursuant the regulations given by Oslo Børs (Oslo Børs Løpende Forpliktelser) within the applicable deadlines.

Skudeneshavn 14 April 2009

Solstad Offshore ASA

Contact person: Lars Peder Solstad or Sven Stakkestad (Tel: +47 52 85 65 00)