Tuesday 12 June 2018

Sevan Marine ASA has on 7th June 2018 entered into an agreement with Sembcorp Marine Integrated Yards Pte. Ltd. (“SCM”, a subsidiary of Sembcorp Marine group), whereby SCM will acquire interests and title to all of Sevan Marine’s intellectual property and proprietary business, employees, the shares of HiLoad LNG AS and to certain other defined assets against cash consideration of USD 28,000,000. The Cash Consideration from the Transaction is intended to be distributed to Sevan Marine’s shareholders to the extent allowed by statutory law.

The Transaction is subject to approval by the shareholders’ meeting and other third-party consents being obtained.

As a result of the Transaction, the scope and scale of Sevan Marine’s operations will be substantially reduced. Sevan Marine shall retain the income from the Dana Western Isles license agreement. Sevan Marine will retain the shares of Sevan Holding V AS including the position as claimant in the Logitel-case. The Transaction will result in Sevan Marine’s remaining business being limited, however generating operating revenues from existing licenses going forward with some upside potential. The Shell Penguins License agreement is intended to be transferred to SCM. All funds received from Shell under the Shell Agreement shall be paid to Sevan Marine from SCM as and when received. These funds are not included in the Cash Consideration. The Company intends to retain its listing on the Oslo Børs.

Sevan Marine’s Board will propose to distribute the Cash Consideration and other available funds to its shareholders, to the extent permitted, as soon as practically possible following completion of the Transaction. The Board believes that it can return 6 NOK / share or approximately MNOK 330 to shareholders in the next 6 to 12 months subject to the Transaction completing and required shareholder and corporate approvals having been received.

The Board will propose a share capital reduction of 2 NOK / share to be approved at the same extraordinary general meeting as the Transaction. After completion and the finalizing of an interim balance sheet, the Board then intends to declare an interim dividend equal to the Cash Consideration (approximately 4 NOK / share).

All operating and associated costs including unexpired leases in maintaining the three office locations and all the employees in Sevan Marine will transfer to SCM, subject to acceptance from the relevant employee under the rules governing transfers of business undertakings. CEO Reese McNeel has entered into a retention agreement with Sevan Marine and Sevan Marine has the option to retain his services for an additional 12 months from completion on terms customary for such agreements.

Subject to completion of the Transaction, Reese McNeel will be entitled to receive a success fee of NOK 1,500,000. Other members of the management team will also be entitled to receive success fees on completion of the Transaction of NOK 600,000 in aggregate.

Terms of the Transaction

The completion of the Transaction is expected to take place in Q3 2018.

Completion of the Transaction remains subject to approval from the general meeting of Sevan Marine with 2/3rds majority.

Companies controlled by Teekay Corporation representing 43.5% of Sevan Marine’s shares have expressed support for the Transaction.

An extraordinary general meeting is expected to be held on July 6, 2018. The agenda for the general meeting will be (i) approval of the Transaction; and (ii) corporate actions necessary to facilitate distribution of the Cash Consideration to shareholders, including a reduction in share capital of approximately 2 NOK / share subject to completion of the Transaction.

Completion is also conditional on third-party consents being obtained from key contract partners.

If Sevan Marine receives a binding offer, subject to customary conditions, from another party for the business and assets contemplated by the Transaction for a cash price not less than 10 % higher than the Cash Consideration or a voluntary or mandatory cash offer is announced in accordance with the Norwegian Securities Act chapter 6, Sevan Marine has the right to terminate the Transaction. SCM shall have the right, but not an obligation to match such offer.

Sevan Marine has agreed to reimburse SCM reasonable transaction costs should Sevan Marine terminate the agreement.

Upon Completion, SCM will terminate the dispute between Sevan Marine and Sembmarine SSP Inc and Jurong Shipyard Pte. Ltd filed in Texas, United States.

The agreement will terminate if the conditions are not fulfilled prior to 31 December 2018.

Wikborg Rein acts as counsel to Sevan Marine.

Key information relating to the business sold (unaudited):

Profit and loss (all amounts in NOK thousands) 2017

Total operating revenue: 51,070

Operating profit (-loss): (31,247)

Net profit (-loss): (31,306)

Balance sheet (all amounts in NOK thousands) 2017

Total assets: 11,942

Equity: 4,282