Petrojack ASA Offer Document and Prospectus

Transcription

Offer Document and Prospectus
Voluntary offer for the acquisition of all shares outstanding in
Petrojack ASA
Made by
Awilco Offshore ASA
Terms of the offer
1 Awilco Offshore share for 2 Petrojack shares
New shares to be issued
A maximum of 17,156,485 Awilco Offshore shares
Offer period
From 16 September 2005 to and including 30 September 2005
Lead Manager
Co-manager
15 September 2005
Important information
This Offer Document has has been prepared in connection with the Offer by Awilco Offshore ASA
to acquire all outstanding shares in Petrojack ASA and the issuance of the Consideration Shares (as
defined and described herein). The Offer Document has been prepared to comply with the
requirements of the Norwegian Securities Trading Act and Stock Exchange Regulations. The Offer
Document has been reviewed by the Oslo Stock Exchange pursuant to sections 4-18 cfr 4-14 and 57 of the Securities Trading Act.
The information contained herein is as of the date hereof and is subject to change, completion and
amendment without notice. There may have been changes in matters affecting the Offeror
subsequent to the date of this Offer Document. Any new material information that might have an
effect on the assessment of the Consideration Shares arising after the publication of this Offer
Document and before the completion of the Offer will be published as a supplement to this Offer
Document in accordance with applicable regulations in Norway, cf. section 14-6 of the Stock
Exchange Regulations. The delivery of this Offer Document shall under no circumstances create
any implication that the information contained herein is complete or correct as of any time
subsequent to the date hereof.
This Offer Document does not constitute an offer to sell, or a solicitation of an offer to buy any of
the securities offered hereby, by or on behalf of the Offeror, the Manager, any of their respective
affiliates or any other person in any jurisdiction in which it is unlawful for any person to make such
an offer or solicitation. The distribution of this Offer Document and the offering or sale of the
Consideration Shares may be restricted by law in certain jurisdictions. Person into whose
possession this Offer Document may come are required by the Offeror and the Manager to inform
themselves about and to observe any such restrictions. This Offer Documents may not be used for,
or in connection with any offer to, or solicitation by, anyone in any jurisdiction under any
circumstances in which such offer or solicitation is not authorized or is unlawful.
The Offer described in this Offer Document will not be made directly or indirectly in the United
States, Canada, Australia or Japan, and this Offer Document may not be distributed in or sent to the
United States, Canada, Australia or Japan.
This Offer Document and the shares issued hereby have not been nor will be registered under the
U.S. Securities Act of 1933, as amended (the “Securities Act”) or any state securities laws. The
shares will not be offered or sold to U.S. persons (as defined in Regulation S under the Securities
Act), unless the Offeror determines in its sole discretion that it may do so under an applicable
exemption from the registration requirements of the Securities Act and relevant state securities law.
Certain statements made in this Offer Document may include forward-looking statements. These
statements relate to the Offeror’s expectations, beliefs, intentions or strategies regarding the future.
These statements may be identified by the use of words like “anticipate”, “believe”, “estimate”,
“expect”, “intend”, “may”, “plan”, “project”, “will”, “should”, “seek”, and similar expressions.
The forward-looking statements reflect the Offeror’s current views and assumptions with respect to
future events and are subject to risks and uncertainties. Actual and future results and trends could
differ materially from those set forth in such statements.
All inquiries relating to this Offer Document or the matters addressed herein should be
directed to the Offeror or the Manager. No persons other than those described in this Offer
Document have been authorized to disclose or disseminate information about this Offer
Document or about the matters addressed in this Offer Document. If given, such information
may not be relied upon as having been authorized by the Offeror.
1
Table of Contents
1.
2.
3.
4.
5.
6.
7.
8.
Summary .............................................................................................................................. 6
1.1 Background for the offer................................................................................................ 6
1.2 Summary terms of the offer ........................................................................................... 6
1.3 Awilco Offshore ASA ................................................................................................... 6
1.4 Petrojack ASA ............................................................................................................... 7
Summary in Norwegian (Sammendrag på norsk)............................................................ 8
2.1 Bakgrunn til tilbudet ...................................................................................................... 8
2.2 Tilbudspris ..................................................................................................................... 8
2.3 Awilco Offshore ASA ................................................................................................... 8
2.4 Petrojack ASA ............................................................................................................... 9
Terms and Conditions of the Offer .................................................................................. 10
3.1 The Offer ..................................................................................................................... 10
3.2 The Offeror .................................................................................................................. 10
3.3 The target company ..................................................................................................... 10
3.4 The Offer consideration ............................................................................................... 10
3.5 Conditions to the offer ................................................................................................. 11
3.6 The Offer Period .......................................................................................................... 11
3.7 Acceptances of the Offer ............................................................................................. 11
3.8 Shareholder rights ........................................................................................................ 12
3.9 Settlement .................................................................................................................... 12
3.10 Costs of Tendering Shareholder................................................................................... 13
3.11 Relationship with Petrojack’s board of directors and management............................. 13
3.12 Acquisition of Petrojack shares outside the Offer ....................................................... 13
3.13 Mandatory offer ........................................................................................................... 13
3.14 Compulsory acquisition of shares................................................................................ 13
3.15 Continued listing of Petrojack ..................................................................................... 14
3.16 Legal Consequences of the Offer................................................................................. 14
3.17 Consequences for the Employees ................................................................................ 14
3.18 Tax Consequences of the Offer.................................................................................... 14
3.19 Statement from the board of directors of Petrojack ..................................................... 14
3.20 Contact between the Offeror and the target company.................................................. 15
3.21 Governing law / Jurisdiction........................................................................................ 15
3.22 Announcements ........................................................................................................... 15
3.23 Costs ............................................................................................................................ 15
Background to and reasons for the Offer........................................................................ 16
The Offer consideration .................................................................................................... 18
Short description of Petrojack ASA................................................................................. 19
6.1 Company description ................................................................................................... 19
6.2 Key Financial Figures.................................................................................................. 20
6.3 Shareholders................................................................................................................. 21
Description of Awilco Offshore ASA ............................................................................... 22
7.1 Company background .................................................................................................. 22
7.2 Anders Wilhelmsen Group – background.................................................................... 23
7.3 Relation to the Anders Wilhelmsen Group .................................................................. 24
7.4 Company strategy ........................................................................................................ 25
7.5 The accommodation units............................................................................................ 25
7.6 The jack-up drilling rig newbuilding contracts............................................................ 28
7.7 Legal structure ............................................................................................................. 29
7.8 Board of Directors ....................................................................................................... 30
7.9 Management and employees........................................................................................ 31
Market overview ................................................................................................................ 32
8.1 Market positioning....................................................................................................... 32
2
9.
10.
11.
12.
13.
8.2 The market for accommodation rigs ............................................................................ 33
8.3 The market for jack-up drilling rigs............................................................................. 36
Financial information........................................................................................................ 32
9.1 Proforma accounts ....................................................................................................... 39
9.2 Effect of International Financial Reporting Standards (IFRS) .................................... 40
9.3 Accounting principles .................................................................................................. 41
9.4 Accounts ...................................................................................................................... 43
9.5 Other financial information ......................................................................................... 46
9.6 Statutory auditors......................................................................................................... 47
Share capital and shareholder matters............................................................................ 48
10.1 Share capital................................................................................................................. 48
10.2 Share capital after the Offer......................................................................................... 48
10.3 Share price development.............................................................................................. 50
10.4 Shareholder policy and corporate governance ............................................................. 51
Legal matters ..................................................................................................................... 52
11.1 The transfer of assets ................................................................................................... 52
11.2 Construction contracts ................................................................................................. 52
11.3 Bank financing agreements.......................................................................................... 57
11.4 Management agreements ............................................................................................. 59
11.5 Certain other legal matters ........................................................................................... 60
Taxation.............................................................................................................................. 61
12.1 Introduction.................................................................................................................. 61
12.2 Taxation related to holding and disposal of the Shares ............................................... 61
12.3 Duties on the Transfer of Shares.................................................................................. 63
12.4 Inheritance tax.............................................................................................................. 63
12.5 Norwegian Tonnage Tax ............................................................................................. 63
Risk factors......................................................................................................................... 64
Appendix 1 Rig specifications – Port Reval ........................................................................ 67
Appendix 1 Rig specifications – Port Reval ........................................................................ 67
Appendix 2 Rig specifications – Port Rigmar...................................................................... 71
Appendix 3 Rig specifications – PPL contracts and options ............................................... 75
Appendix 4 Rig specifications – Keppel contract and option.............................................. 79
Appendix 5 Articles of Association ..................................................................................... 80
Appendix 6 Second quarter report 2005 .............................................................................. 81
Appendix 7 Application form .............................................................................................. 82
3
Statements of responsibility
The Board of Directors
This Offer Document has been prepared in connection with the Offer by Awilco Offshore ASA to
acquire all outstanding shares in Petrojack ASA as described herein. The Board of Directors
confirms that, to the best of its knowledge, the information contained in this Offer Document is in
accordance with the facts and contains no omissions likely to affect the import of the Offer
Document. Statements in the Offer Document about current and future market conditions and
prospects for the Offeror have been made on a best judgement basis. The Offeror is not involved in
any legal proceedings or disputes material to an evaluation of the Company. All information
regarding Petrojack ASA is based on publicly available information and has not been
independently verified by Awilco Offshore ASA.
Oslo, 15 September 2005
The Board of Directors of Awilco Offshore ASA
Sigurd E. Thorvildsen (Chairman)
Jarle Roth
Tor Bergstrøm
Arne Alexander Wilhelmsen
Marianne Blystad
The Managers
Enskilda Securities, as lead manager, and Fearnley Fonds, as co-manager, have been appointed by
Awilco Offshore ASA to act as Managers in connection with the Offer. The Managers have
assisted in the preparation of this Offer Document based on information received from Awilco
Offshore and external sources. The Managers have endeavoured to provide a description of the
Offeror that is as consistent and complete as possible. However, the Managers do not accept any
legal or commercial responsibility for the accuracy or completeness of the contents of this Offer
Document. This Offer Document includes forward-looking statements as to how Awilco Offshore
may perform in the future. The management of Awilco Offshore has based these forward-looking
statements on current expectations and projections about the way in which future events and
financial trends affect the financial conditions of AWO’s business. These forward-looking
statements are subject to risks and uncertainties, and the Managers cannot assume responsibility for
these assumptions. As of the date of this Offer Document, Enskilda Securities owns 1,471,900
shares (whereof 1,471,900 shares are held as hedge for sold future contracts) and Fearnley Fonds
owns 400 shares in Awilco Offshore. Employees of Enskilda Securities hold 0 shares and
employees of Fearnely Fonds hold 0 shares in Awilco Offshore.
Enskilda Securities ASA
Fearnley Fonds ASA
Legal counsel
We have acted as Norwegian legal counsel to Awilco Offshore in connection with the Offer.We
confirm that the Board of Directors of Awilco Offshore has been granted a valid authorisation from
the Offeror’s General Meeting to increase the share capital of the Offeror through the issuance of
the Consideration Shares. As soon as the Board of Directors has passed the required resolution to
carry out such share capital increase, we will issue a confirmation regarding this to the Oslo Stock
Exchange. We confirm that the general description of tax matters referred to in section 12 of this
Offer Document reflects the present tax regime in Norway for Norwegian investors. We have not
reviewed any commercial, financial, technical or market matters described in this Offer Document.
Wiersholm, Mellbye & Bech advokatfirma AS
4
Definitions
Anders Wilhelmsen Group
A Wilhelmsen AS and its subsidiaries
Awilco
Awilco AS, a company in the Anders Wilhelmsen Group
AWO, Awilco Offshore, the
Offeror
Awilco Offshore ASA and, unless the context requires
otherwise, its consolidated subsidiaries
Board of Directors
The board of directors of the Offeror
Consideration Shares
Up to 17,156,485 shares in Awilco Offshore offered as
consideration in the Offer.
DBS Bank
Development Bank of Singapore Ltd
Enskilda Securities
Fearnley Fonds
Fearnley Fonds ASA
Jurong
Jurong Shipyard PTE Ltd
Keppel FELS
Keppel FELS Limited
LOG
Larsen Oil & Gas AS
Managers
Enskilda Securities as lead manager and Fearnley Fonds as comanager, collectively referred to as the “Managers”
NOK
Norwegian Kroner
Nordea
Nordea Bank Norge ASA
Offer
Awilco Offshore’s offer to acquire all outstanding shares of
Petrojack as described in this Offer Document
Offer Document
This offer document and prospectus, including all appendices
hereto
Offer Period
The period from and including 16 to 30 September 2005,
subject to any extensions.
Petrojack
Petrojack ASA
PPL
PPL Shipyard Pte Ltd
SCB
Standard Chartered Bank
Sinvest
Sinvest ASA
USD
United States Dollars
VPS
Verdipapirsentralen, the Norwegian Central Securities
Depositary
5
1.
Summary
The following summary is qualified in its entirety by reference to the more detailed information
appearing elsewhere in this Offer Document, including section 13 “Risk factors”. This summary
does not contain all information that is of importance to investors in deciding whether to apply for
Offer Shares. Investors should read the entire Offer Document carefully.
1.1
Background for the offer
On August 4 2005 Awilco Offshore announced that it had acquired approximately 20% of the
shares outstanding in Petrojack and its intention to launch a voluntary Offer for all of the shares in
Petrojack. A revised Offer and indicative timetable for the Offer was announced on August 23
2005. Awilco Offshore has previously stated its intention to play an active role in the consolidation
of the Norwegian drilling-rig industry. The Company believes that there are significant benefits to
be derived from consolidation, including organisational synergies, economies of scale with respect
to management and marketing of the drilling rigs as well as increased attention in the capital
markets.
1.2
Summary terms of the offer
The voluntary Offer made by Awilco Offshore offers Petrojack shareholders the opportunity to
exchange two Petrojack shares for one Awilco Offshore share, equivalent to an exchange ratio of
2:1. Based on the closing share price of Awilco Offshore on 22 August 2005 (the day prior to
announcement of the revised voluntary Offer) of NOK 34.50 this values each Petrojack share at
NOK 17.25 and the entire share capital of Petrojack at approximately NOK 997 million.
1.3
Awilco Offshore ASA
Awilco Offshore was incorporated on 21 January 2005 as a wholly-owned direct subsidiary of
Awilco, a company in the Anders Wilhelmsen Group. In February 2005, Awilco Offshore
acquired from Awilco all of the offshore accommodation and drilling rig assets of the Anders
Wilhelmsen Group and, as part of the transaction, raised NOK 1,000 million in new equity from
external investors through a private placement. In May of 2005 Awilco Offshore completed an
Initial Public Offering and was listed on the Oslo Stock Exchange.
Background
Awilco and the Anders Wilhelmsen Group, originally founded in 1939, have a long tradition within
investments in maritime and offshore assets. Having sold its entire offshore exposure to Petroleum
Geo-Services in 1998, Awilco commenced new offshore investments in 2002, at that time
acquiring an accommodation unit. One additional accommodation unit was purchased and rebuilt
in 2004. Also in 2004, Awilco acquired one contract for a jack-up drilling rig newbuilding at PPL.
A further three jack-up newbuilding contracts were entered into at Keppel and PPL during 2005.
Asset and market exposure
Awilco Offshore is exposed to two distinct markets from the outset; the market for accommodation
units (holding two units) and the market for jack-up drilling rigs (holding four newbuilding
contracts and four newbuilding options). The accommodation units mainly operate in the North Sea
and are both suited, as two of only four units in the world fleet, for employment on the Norwegian
Continental Shelf. The jack-up newbuilding contracts and options have the main terms set out in
the table below.
6
Name
Contracted rigs
WilPower
WilCraft
WilSuperior
WilTBN
Yard
W. depth
D. depth
PPL
Keppel
PPL
Keppel
375ft
400ft
375ft
400ft
30,000ft
30,000ft
30,000ft
30,000ft
Optional rigs
PPL option 1A
Keppel option B
PPL option 2
PPL option 3
PPL
Keppel
PPL
PPL
375ft
400ft
375ft
375ft
30,000ft
30,000ft
30,000ft
30,000ft
Decl. by
03 / 2006
08/ 2006
10 / 2006
09 / 2007
Delivery
Project price
Financing
2Q06
4Q06
2Q07
4Q07
131 MUSD
131 MUSD
130 MUSD
134 MUSD
SCB
Nordea
Nordea
Nordea*
+24mo
+28mo
+24mo
+24mo
144 MUSD
150 MUSD
131 MUSD
132 MUSD
* in process
The project prices set out above are the expected prices of the rigs delivered and fully equipped.
The prices include yard contract prices (which are firm for the contracted rigs and the PPL option
rigs), newbuilding supervision, owner furnished equipment, spares, financing, and other project
expenses.
Organisation and management
The Offeror is incorporated as a Norwegian public limited liability company and has its registered
office in Oslo.The Offeror has five full-time employees. The Offeror’s managing director is Henrik
Fougner, who has more than 15 years of experience from banking and the shipping and offshore
industry. A minor part of the Offeror’s support functions, such as accounting and treasury services,
are provided pursuant to a management agreement with Anders Wilhelmsen & Co AS.
All commercial and operational management of the jackup drilling fleet is provided by Premium
Drilling, a company established jointly by Sinvest ASA and Awilco Offshore. Premium Drilling
will be responsible for advising the owners on business development and market strategy, and for
the marketing, contracting and operation of the two companies’ fleet of jackup drilling rigs. The
head office of Premium Drilling is located in Houston, USA. Bill Rose, former Vice President of
Noble Corporation, has been appointed as its CEO. The process of creating a professional drilling
contractor is well underway.
Corporate, technical- (including supervision of the new buildings) and commercial management for
the accommodation rigs are being ensured by the Offeror itself. The Offeror acquires operational
management services for the accommodation units from third party service providers, Polycrest AS
and OSM Offshore AS. These are both independent managers of offshore units.
Objective and strategy
Key elements of the Offeror’s strategy is:
•
To create the basis for a leading international drilling contractor.
•
To participate in and take advantage of an expected upturn in the jack-up drilling market and
to further expand into this market, partly by utilising cash flow from the accommodation rigs.
•
To be an active participant in sector consolidation.
•
To have an opportunistic approach to expansion in other offshore segments.
1.4
Petrojack ASA
Petrojack ASA is a Norwegian-based rig-owning company listed on the Oslo Stock Exchange.
Petrojack has entered into contracts for the construction of three jackup rigs to be constructed at the
Jurong shipyard in Singapore. The rigs are under construction and are scheduled for delivery in
March 15 2007, January 15 2008 and June 30 2008 respectively. Petrojack was incorporated in
October 2004 by LOG a company owned by Mr. Berge Gerdt Larsen. Petrojack was listed during
February 2005. The main owners are Berge Gerdt Larsen, Awilco Offshore and Sinvest ASA.
7
2. Summary in Norwegian (Sammendrag på norsk)
Det følgende er en oversettelse av sammendraget av prospektet (prospektets kapittel 1). I tilfelle av
avvik mellom den engelske teksten og den norske oversettelsen skal den engelske teksten ha
forrang. Investorer oppfordres til å lese hele prospektet. Det er lagt til grunn tilsvarende
definisjoner og forkortelser som i den engelske teksten. Det følgende sammendraget må leses i
sammenheng med den mer detaljerte informasjon som fremgår i andre deler av dette prospektet,
herunder i kapittel 13 “Risk factors”. Sammendraget er ingen erstatning for den mer detaljerte
informasjonen i prospektet.
2.1
Bakgrunn til tilbudet
Den 4. august 2005 annonserte Awilco Offshore kjøpet av ca. 20% av aksjene i Petrojack og deres
hensikt om å fremsette et frivillig Tilbud til alle aksjonærene i Petrojack. Et revidert Tilbud og
indikativ timeplan ble annonsert 23. august 2005. Awilco Offshore har tidligere fremhevet sin
intensjon om å spille en aktiv rolle i konsolideringen av den norske borerigg industrien. Selskapet
mener at betydelige verdier kan skapes gjennom konsolidering, inkludert organisasjonsrelaterte
synergier, stordriftsfordeler med hensyn til drift og markedsføring av riggene samt økt interesse fra
kapitalmarkedet.
2.2
Tilbudspris
Det frivillige Tilbudet framsatt av Awilco Offshore gir Petrojacks aksjonærer muligheten til å bytte
to Petrojack aksjer mot en Awilco Offshore aksje, tilsvarende et bytteforhold på 2:1. Basert på
sluttkursen for Awilco Offshore den 22. august 2005 (dagen før annonseringen av det reviderte
Tilbudet) på NOK 34,50 gir dette en verdi per Petrojack aksje på NOK 17,25 og for den samlede
aksjekapitalen til Petrojack på NOK 997 millioner.
2.3
Awilco Offshore ASA
Awilco Offshore ble stiftet den 21. januar 2005 som et heleid datterselskap av Awilco, et selskap i
Anders Wilhelmsen-gruppen. I februar 2005 overtok Awilco Offshore alle eiendeler innen
offshore riggvirksomhet som før var eiet av Awilco, og som del i denne transaksjonen ble det
gjennomført en rettet kontantemisjon hvor selskapet ble tilført NOK 1,000 millioner i ny
egenkapital fra eksterne investorer. I mai 2005 ble Awilco Offshore notert på Oslo Børs.
Bakgrunn
Awilco og Anders Wilhelmsen-gruppen, som har røtter tilbake til 1939, har en lang tradisjon for
investeringer i maritime og offshore-baserte eiendeler. Etter salget av hele offshore-virksomheten
til Petroleum Geo-Services i 1998 gjorde gruppen igjen nye offshore-investeringer i 2002, da med
kjøp av en boligrigg. Ytterligere en rigg ble kjøpt og konvertert til boligrigg i 2004. I 2004 kjøpte
Awilco seg også inn i en nybyggingskontrakt for en oppjekkbar borerigg, en satsing som har blitt
utvidet i 2005 gjennom kontraheringen av ytterligere tre oppjekkbare borerigger.
Eksponering til eiendeler og markeder
Awilco Offshore er eksponert mot to separate markeder; markedet for boligrigger (gjennom å eie to
enheter) og markedet for oppjekkbare borerigger (gjennom fire nybyggingskontrakter og fire
opsjoner til nye kontrakter). Boligriggene er i det vesentlige beskjeftiget i Nordsjøen og er egnet,
som to av kun fire enheter i verden, for beskjeftigelse på norsk sokkel. Innen oppjekkbare
borerigger har selskapet nybyggingskontrakter og opsjoner med betingelser som angitt i tabellen
nedenfor.
8
Navn
Faste kontrakter
WilPower
WilCraft
WilSuperior
WilTBN
Verft
Vanndyp
Boredyp
PPL
Keppel
PPL
Keppel
375ft
400ft
375ft
400ft
30,000ft
30,000ft
30,000ft
30,000ft
Opsjoner
PPL opsjon 1A
Keppel opsjon B
PPL opsjon 2
PPL opsjon 3
PPL
Keppel
PPL
PPL
375ft
400ft
375ft
375ft
30,000ft
30,000ft
30,000ft
30,000ft
Opsj. til
03 / 2006
08/ 2006
10 / 2006
09 / 2007
Levering
Prosjektpris
Finansiering
2Q06
4Q06
2Q07
4Q07
131 MUSD
131 MUSD
130 MUSD
134 MUSD
SCB
Nordea
Nordea
Nordea*
+24md
+28md
+24md
+24md
144 MUSD
150 MUSD
131 MUSD
132 MUSD
* under utarbeidelse
Prosjektprisene angitt over er de forventede prisene for riggene levert og fullt utstyrt. Prisene
inkluderer verkstedpriser (som er faste for de faste kontraktene og PPL-opsjonene), oppfølgning i
byggeperioden, eierspesifisert utstyr, reservedeler, finansiering og andre prosjektkostnader.
Organisasjon og ledelse
Selskapet er registrert i Norge som allmennaksjeselskap og har sitt registrerte kontor i Oslo.
Selskapet har fem faste ansatte. Selskapets administrerende direktør er Henrik Fougner, som har
mer enn 15 års erfaring fra bank, shipping og offshore. En begrenset del av Selskapets
støttefunksjoner slik som regnskap og likviditetsstyring ivaretas gjennom en management avtale
med Anders Wilhelmsen & Co AS.
All kommersiell og operasjonell drift av jackup boreriggene ivaretaes av Premium Drilling, et
selskap opprettet i fellesskap av Awilco Offshore og Sinvest. Premium Drilling vil være ansvarlig
for å gi råd til eierne på selskapets utvikling og markedsstrategi samt markedsføring, inngåelse av
kontrakter og drift av de to selskapenes jack-up flåter. Hovedkontoret til Premium Drilling ligger i
Houston, USA. Bill Rose, tidligere konserndirektør i Noble Corporation, har blitt utnevnt til
administrerende direktør. Prosessen med å bygge et profesjonelt drillingselskap er derfor godt
underveis.
Administrasjon samt teknisk (inkludert byggeoppfølgningen av nybyggene) og kommersiell drift
av boligenhetene ivaretas av Selskapet selv. Awilco Offshore kjøper operasjonelle driftstjenester
for boligenhetene fra tredjepartsleverandørene, Polycrest AS og OSM Offshore AS. Begge disse
selskapene er uavhengige operatører av boligenheter.
Målsetning og strategi
Sentrale elementer i selskapets strategi vil være:
•
Å legge grunnlag for et ledende internasjonalt boreselskap.
•
Å delta i, og dra nytte av, en forventet bedring i markedet for oppjekkbare borerigger, samt å
ekspandere ytterligere i dette markedet dels gjennom den kontantstrøm som genereres fra
selskapets boligrigger.
•
Å være en aktiv deltager i konsolidering innen sektoren.
•
Å ha et opportunistisk syn på ekspansjon innen andre segmenter av offshorenæringen.
2.4
Petrojack ASA
Petrojack ASA er et norskbasert riggselskap notert på Oslo Børs. Petrojack har kontrahert tre jackup rigger ved Jurong verftet i Singapore. Riggene er under konstruksjon og forventes levert
henholdsvis 15. mars 2007, 15. januar 2008 og 30. juni 2008.
Petrojack ble stiftet i oktober 2004 av LOG et selskap eiet og kontrollert av Berge Gerdt Larsen.
Petrojack ble notert på Oslo Børs i februar 2005. I dag er Berge Gerdt Larsen, Awilco Offshore og
Sinvest ASA blant de største eierne av Petrojack.
9
3.
Terms and Conditions of the Offer
3.1
The Offer
Awilco Offshore hereby offers to acquire all outstanding shares in Petrojack not already owned by
it or by Sinvest which is consolidated with Awilco Offshore pursuant to the Securities Trading Act
§ 4-5 cfr § 1-4 no. 5 (see chapter 4 of this Offer Document for a description of the basis of the
consolidation of Awilco Offshore and Sinvest).
The Offer is not being made in any country where the making of the Offer or its acceptance would
be a violation of the laws of such country. Shareholders of Petrojack resident outside of Norway
should read the information on the inside cover page. This Offer Document will be sent to all
persons registered as shareholders of Petrojack on 13 September 2005 to the addresses registered
with the VPS, except for shareholders with registered addresses in jurisdictions where this Offer
Document may not be lawfully distributed. A description of the background to the Offer is set out
in chapter 4 of this Offer Document.
3.2
The Offeror
The Offer is made by:
Awilco Offshore ASA
Beddingen 8 Aker Brygge
0250 OSLO
Awilco Offshore is a Norwegian public limited liability company registered with the Norwegian
Register of Business Enterprises with registration number 987 861 894. As of the date of the Offer
Document Awilco Offshore owns 11,942,030 shares in Petrojack, equal to 20.7% of the total
number of outstanding shares in Petrojack. Sinvest, with which Awilco Offshore has entered into a
co-operation agreement with regard to Petrojack (see chapter 4 of this Offer Document for a
description of this co-operation agreement), owns 11,572,000 shares in Petrojack, equal to 20.0%
of the total number of outstanding shares in Petrojack.
Other related parties of Awilco Offshore (as defined in section 1-4 of the Norwegian Securities
Trading Act) do not own any shares in Petrojack. Neither Awilco Offshore nor any of its related
parties hold any convertible bonds, warrants, stock options or other instruments entitling the holder
to acquire shares in Petrojack.
3.3
The target company
The target company is:
Petrojack ASA
Stranden 1 Aker Brygge
0113 Oslo
Petrojack is a Norwegian public limited liability company registered with the Norwegian Register
of Business Enterprises with registration number 987 358 920.
3.4
The Offer consideration
Awilco Offshore offers to issue one new share in consideration of each two Petrojack shares
tendered pursuant to the Offer. By signing and delivering a Form of Acceptance, the tendering
shareholder will authorize the Manager to subscribe on its behalf for the Consideration Shares to be
issued to it. A description of Awilco Offshore’s shares and share capital is included in chapter 10 of
this Offer Document. No interest compensation will be paid for the period from the date of
acceptance until the settlement date.
10
Any acceptance received encompassing an odd number of Petrojack shares, will be rounded up to
the nearest even number of Petrojack shares.
3.5
Conditions to the offer
The Offer is subject to satisfaction or waiver by Awilco Offshore of each of the following
conditions:
(i)
Satisfactory due diligence of Petrojack by Awilco Offshore, including as
described in 3.16.
(ii)
Awilco Offshore shall have become the owner of shares constituting no less
than 67 per cent of the total number of outstanding shares in Petrojack.
(iii)
All necessary approvals from public authorities.
The above conditions to the Offer must be satisfied or waived within two weeks of the expiry of the
Offer Period. If the conditions to the Offer has not been satisfied or waived within this time limit,
the Offer will lapse, and any Petrojack shareholders who have accepted the Offer will no longer be
bound by such acceptance and the Tendered shares will be released the following day.
3.6
The Offer Period
The Offer Period under the Offer is from and including 16 September 2005 to 4.00 p.m.
(Norwegian time), 30 September 2005. Awilco Offshore expressly reserves the right to extend the
Offer Period one time with up to one week, i.e. the Offer Period may be extended until 7 October
2005. Any extension of the Offer Period will be announced in the manner described in section 3.22
no less than 24 hours before the expiry of the Offer Period. If the Offeror decides to extend the
Offer Period, there will be a corresponding postponement of other dates referred to herein in the
period after the Offer Period, including the dates set out in section 3.9 of this Offer Document.
3.7
Acceptances of the Offer
In order to accept the Offer, shareholders of Petrojack must deliver a Form of Acceptance, properly
completed and signed to one of the Managers before 4.00 p.m. (Norwegian time), on 30 September,
2005. The Form of Acceptance, duly completed and signed, must be sent by letter, fax or be
delivered to the Managers at the following addresses:
Filipstad Brygge 1
P.O. Box 1363 Vika
0113 Oslo
Telefax: +47 21 00 89 62
Fearnley Fonds ASA
Grev Wedels plass 9
PO Box 1158 Sentrum
0107 Oslo
Telefax: +47 22 93 60 00
Any acceptance of the Offer is irrevocable. The valid acceptance of the Offer pursuant to the
procedure described in this Offer Document will constitute a binding agreement between the
tendering shareholder and Awilco Offshore upon the terms and subject to the conditions of the
Offer and the relevant Form of Acceptance.
Awilco Offshore reserves the right to reject any or all acceptances of the Offer determined by it, at
its sole discretion, not to be in proper form, or to be unlawful. Awilco Offshore also reserves the
right to treat an acceptance of the Offer as valid, in whole or in part, even though it is not entirely
complete or not accompanied by required document(s) or if it is received at places other than set
out above. Awilco Offshore reserves the right, but has no obligation to accept acceptances which
are received after the expiry of the Offer Period. Shareholders holding Petrojack shares at more
than one VPS account will receive a separate Form of Acceptance for each VPS account.
11
All Petrojack shares to be tendered under the Offer must be transferred free of any encumbrances
or other third-party rights whatsoever and with all shareholder rights attached to them. Any third
party with registered encumbrances or other third-party rights over the relevant VPS account(s)
must sign the Form of Acceptance and thereby waive the rights in the shares and approve the
transfer of shares to Awilco Offshore free of any encumbrances or other third-party rights
whatsoever. Any shareholder whose Petrojack shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such nominee if such shareholder
wishes to accept the Offer.
By executing and delivering the Form of Acceptance, the shareholder irrevocably authorises the
Managers to block the Petrojack shares encompassed by the acceptance in favour of the Managers
on behalf of Awilco Offshore. This means that no transactions relating to the Petrojack shares
encompassed by the acceptance may be undertaken after the Offer has been accepted. The blocking
will only be in effect in relation to the Petrojack shares encompassed by the Acceptance and will
not have any affect on other securities which are registered at the same VPS account If the
conditions to the Offer has not been satisfied or waived within two weeks of the expiry of the Offer
Period, the blocking of the shares will promptly be lifted and the shareholders who have accepted
the Offer will be free to dispose of their shares, see section 3.6 of this Offer Document.
Any omission or failure to dispatch the Offer Document or the Form of Acceptance or any notice
required to be dispatched under the terms of the Offer to, or any failure to receive the same by, any
person to whom the Offer is or should be made, shall not invalidate the Offer in any way or create
an implication that the Offer has not been made to any such person. No acknowledgement of
receipt of any Form(s) of Acceptance is required or will be given. All communications, notices etc.
to be delivered by or sent to or from shareholders of Petrojack (or their designated agent(s)) will be
delivered by or sent to or from such shareholders (or their designated agent(s)) at their own risk.
Such communications, notices etc will be sent to the shareholders address as it is registered in VPS.
3.8
Shareholder rights
Petrojack shareholders accepting the Offer will remain owners of the tendered Petrojack shares
and, to the extent permitted by Norwegian law, retain their voting rights and other shareholder
rights, until the settlement of the Offer.
3.9
Settlement
By accepting this Offer, shareholders of Petrojack authorize the Manager, upon the Offer being
declared unconditional by Awilco Offshore, to transfer the tendered Petrojack shares to an escrow
account in VPS-account in the name of Enskilda Securities for the benefit of Awilco Offshore.
Such transfer is expected to take place within 5 days following the waiver of all conditions
precedent to the Offer by Awilco Offshore, at the latest on 19 October 2005.
As soon as reasonably possible after such transfer, Awilco Offshore will cause the increase of the
share capital to be registered with the Norwegian Register of Business Enterprises. The registration
is expected to take place no later than three business days after the day on which the Tendered
Shares are transferred to the escrow VPS account for the benefit of the Offeror, i.e. at the latest on
24 October 2005. The Consideration Shares cannot be sold or otherwise disposed of until the share
capital increase has been registered with the Norwegian Register of Business Enterprises. The
Consideration Shares will be registered at the VPS-account[s] at which the tendered Petrojack
shares were registered no later than three business days following the registration of the share
capital increase with the Norwegian Register of Business Enterprises which is expected to be at the
latest on 27 October 2005. The tendered Petrojack shares will not be transferred to Awilco
Offshore until the Consideration Shares have been properly issued and registered.
12
3.10 Costs of Tendering Shareholder
Awilco Offshore will pay costs directly related to VPS transactions in connection with the Offer.
Petrojack shareholders who accept the Offer will not incur any brokerage fees or other costs
directly related to VPS transactions in connection with the Offer. Awilco Offshore will not cover
any costs for advisory or other services incurred by Petrojack shareholders at their own initiative.
3.11 Relationship with Petrojack’s board of directors and management
No special advantages or benefits will be accorded to the board of directors or the management of
Petrojack in connection with the Offer.
3.12 Acquisition of Petrojack shares outside the Offer
To the extent permitted by the Securities Trading Act § 4-10, Awilco Offshore reserves the right to
acquire Petrojack shares outside the Offer both during and after the Offer Period. If Awilco
Offshore acquires Petrojack shares in the Offer Period, and Awilco Offshore and Sinvest at such
time jointly own more than 40% of the shares in Petrojack, Awilco Offshore will be obligated
under the Securities Trading Act to make a mandatory offer for all shares in Petrojack not already
owned by it, see section 3.13 below.
3.13 Co-operation with Sinvest - Mandatory offer
On 30 August 2005, Awilco Offshore entered into an agreement with Sinvest to co-operate with
regard to an acquisition of Petrojack. Sinvest currently holds 20.0% of Petrojack’s shares. Under
the agreement, all further acquisitions by either party will be made on a 50/50 basis. This means
that 50% of any Petrojack shares acquired by Awilco Offshore through the Offer, will be re-sold to
Sinvest at a price in cash equal to Awilco Offshore’s cost price no later than 14 days after the
completion of Awilco Offshore’s acquisition of the shares. The co-operation agreement also
includes an obligation on each of the parties to seek to co-ordinate their voting at general meetings
of Petrojack.
In Awilco Offshore’s opinion, this co-operation agreement will mean that Awilco Offshore and
Sinvest will be consolidated under the Securities Trading Act § 4-5 cfr § 1-4 no. 5. This means that
if Awilco Offshore, as a result of the Offer or otherwise, acquires any further shares in Petrojack,
and Awilco Offshore and Sinvest at such time jointly own more than 40% of the shares in
Petrojack, Awilco Offshore will be obligated under the Securities Trading Act to make a
mandatory offer for all shares in Petrojack not already owned by it or Sinvest.
The offer price for the mandatory offer must be equal to, or higher than, the highest price paid, or
agreed to be paid, by Awilco Offshore or any related party (including Sinvest) for shares in
Petrojack during the six-month period prior to the date at which the obligation to make a mandatory
offer is triggered. If it is clear that the market price when the mandatory offer obligation is
triggered is higher, the offer price is required to be at least as high as the market price.
See chapter 4 for more information on the agreement between Awilco Offshore and Sinvest.
3.14 Compulsory acquisition of shares
If Awilco Offshore, as a result of the Offer or otherwise, were to become the holder of more than
90 per cent of the shares and votes in Petrojack, Awilco Offshore would have the right to effect a
compulsory acquisition pursuant to section 4-25 of the Norwegian Public Limited Companies Act
of the shares in Petrojack not already owned by it.
13
Under the co-operation agreement between Awilco Offshore and Sinvest described in chapter 4 of
this Offer Document, Awilco Offshore and Sinvest will make any further acquisitions in Petrojack
on a 50/50 basis. This means that 50% of any Petrojack shares acquired by Awilco Offshore
through the Offer, will be re-sold to Sinvest at a price in cash equal to Awilco Offshore’s cost price
within 14 days of Awilco Offshore’s acquisition. The cost price will be determined using the
closing share price of Awilco Offshore on the day that the share capital increase is carried out. For
as long as such an ownership structure is maintained, the conditions for carrying out a compulsory
acquisition would not be satisfied unless the parties transferred their shareholdings to a joint
holding company.
3.15 Continued listing of Petrojack
In the event that the Offer is completed, Awilco Offshore will consider proposing to the general
meeting of Petrojack that an application be made to the Oslo Stock Exchange to de-list Petrojack’s
shares from the Oslo Stock Exchange. Such an application would require the approval of the
general meeting of Petrojack by a majority of 2/3 of the votes cast and the share capital represented
at such general meeting.
3.16 Legal Consequences of the Offer
Awilco Offshore does not expect the Offer to have any material legal consequences for Petrojack.
However, according to the prospectus published by Petrojack on 3 February 2005 in connection
with its listing on The Oslo Stock Exchange:
y
y
y
Petrojack’s loan agreement with DBS Bank implies that LOG shall remain manager of
Petrojack for as long as the loan agreement remains in effect.
A failure by “Berge Gerdt-Larsen/LOG” to maintain management control of Petrojack or any
change in the day-to-day management arrangements of Petrojack will constitute an event of
default under Petrojack’s loan agreement with DBS Bank unless DBS Bank consents to such
changes.
Berge Gerdt-Larsen has undertaken to maintain a shareholding interest in Petrojack of not less
than 10 per cent until all amounts under the loan agreement with DBS Bank and other financing
documents have been paid in full.
Awilco Offshore has not had access to the loan agreement with DBS Bank, and is not in a position
to consider the above restrictions in detail. The Offer is expressly conditional upon a satisfactory
due diligence of Petrojack. If the due diligence process reveals that any of the above issues will
have material adverse effect on Petrojack, this condition will not be satisfied.
3.17 Consequences for the Employees
According to publicly available information, Petrojack does not have any employees.
3.18 Tax Consequences of the Offer
A description of the Norwegian tax consequences of the Offer is included in chapter 12 of this
Offer Document.
3.19 Statement from the board of directors of Petrojack
Under the Norwegian Securities Trading Act § 4 -16, the board of directors of Petrojack is required
to issue a statement concerning the Offer, including information on the employee’s views and other
factors of significance for assessing whether the shareholders should accept the Offer, no later than
one week prior to the expiry of the Offer Period.
14
3.20 Contact between the Offeror and the target company
Awilco Offshore has not had any contact with the board of directors or management of Petrojack
prior to launching the Offer. Awilco Offshore has, however, in combination with the Managers had
discussions with certain shareholders of Petrojack as well as Petrojack’s financial advisor ABG
Sundal Collier regarding the possible acquisition of major shareholders’ holdings in Petrojack. A
more detailed description of the background the Offer is set out in chapter 4 of this Offer
Document.
3.21 Governing law / Jurisdiction
The Offer and any acceptance thereof are subject to Norwegian law.
Any disputes that arise in connection with the Offer or any acceptance thereof which cannot be
amicably resolved shall be subject to the exclusive jurisdiction of the Norwegian courts, with Oslo
as venue in the first instance.
3.22 Announcements
Any announcements from Awilco Offshore will be made through the information system of the
Oslo Stock Exchange.
3.23 Costs
Awilco Offshore expects to incur the following fees and expenses in connection with the Offer
Name
Enskilda Securities
Fearnley Fonds
Wiersholm, Mellbye & Bech
Ernst & Young
Kjelstrup & Wiggen
Location
Oslo
Oslo
Oslo
Oslo
Nature of engagement
Manager
Manager
Legal services
Audit services
Expert statement
Amount (NOK mill.)
3.0 – 12.0
0.0 – 12.0
0.2
0.1
0.1
Estimated fees to the Managers are based an agreed success fee arrangement. The fee payable to
Fearnley Fonds ASA has not yet been determined and will depend on degree of involvement and
level of work performed. Other fees are based on hourly rates and an estimated time consumed.
Fees include value added tax, as applicable.
In addition to the fees set out above, Awilco Offshore will also be responsible for other costs
incurred, including cost of printing and distribution of the Offer Document and fees to the Oslo
Stock Exchange and VPS.
15
4.
Background to and reasons for the Offer
Awilco Offshore has previously stated its intention to play an active role in the consolidation of the
Norwegian drilling-rig industry. Awilco Offshore believes that there are significant benefits to be
derived from consolidation, including organisational synergies, economies of scale with respect to
management and marketing of the drilling rigs as well as increased attention in the capital markets.
In the period 1-3 August 2005, Awilco Offshore acquired 11,942,030 shares in Petrojack through a
combination of cash purchases in the market and agreements with major shareholders to exchange
Petrojack shares for shares in Awilco Offshore. The shareholders that accepted the offer to
exchange their Petrojack shares for shares in Awilco Offshore have been offered compensation in
the event that Awilco Offshore increases its offer within a period of one month.
On 4 August, 2005, Awilco Offshore announced an offer to acquire all outstanding shares in
Petrojack at a consideration of 1 Awilco Offshore share for every 2.31 Petrojack shares.
On 23 August 2005, Awilco Offshore announced an improved offer. This Offer is described in
detail in this Offer Document.
On 30 August 2005, Awilco Offshore entered into an agreement with Sinvest to co-operate with
regard to an acquisition of Petrojack. Sinvest currently holds 20.0% of Petrojack’s shares. The
agreement states that it is the intention of the parties to acquire control of Petrojack if market
conditions permit this. The parties also agree to work towards placing Petrojack’s rigs under the
management of Premium Drilling. Under the agreement, all further acquisitions by either party will
be made on a 50/50 basis. The agreement also provides that the parties agree that Awilco Offshore
shall proceed with the Offer set out in this Offer Document, and that any shares acquired through
the Offer shall be subject to the above mentioned principle of 50/50 acquisition. This means that
50% of any Petrojack shares acquired by Awilco Offshore through the Offer, will be re-sold to
Sinvest at a price in cash equal to Awilco Offshore’s cost price no later than 14 days after the
completion of Awilco Offshore’s acquisition of the shares. The cost price will be determined using
the closing share price of Awilco Offshore on the day that the share capital increase is carried out.
Under the agreement, if either party desires to sell its Petrojack shares, the other party is entitled to
acquire them at market price or, alternatively, to require that the sale be carried out in a coordinated manner on a 50/50 basis. The co-operation agreement also includes an obligation on each
of the parties to seek to co-ordinate their voting at general meetings of Petrojack.
In Awilco Offshore’s opinion, this co-operation agreement will mean that Awilco Offshore and
Sinvest will be consolidated under the Securities Trading Act § 4-5 cfr § 1-4 no. 5. This means that
if Awilco Offshore, as a result of the Offer or otherwise, becomes acquires any further shares in
Petrojack, and Awilco Offshore and Sinvest at such time jointly own more than 40% of the shares
in Petrojack, Awilco Offshore will be obligated under the Securities Trading Act to make a
mandatory offer for all shares in Petrojack not already owned by it or Sinvest. The offer price for
the mandatory offer must be equal to, or higher than, the highest price paid, or agreed to be paid, by
Awilco Offshore or any related party (including Sinvest) for shares in Petrojack during the sixmonth period prior to the date at which the obligation to make a mandatory offer is triggered, see
section 3.13 of this Offer Document. The highest price paid in cash by Awilco Offshore is NOK
13.40. Awilco Offshore has also acquired shares in Petrojack against consideration in Awilco
Offshore shares, based on an exchange rate of 1 Awilco Offshore share for every 2.31 Petrojack
shares. To the best of Awilco Offshore’s knowledge, the highest price paid by Sinvest for Petrojack
shares is NOK 17.50 per share.
Through the voluntary Offer Awilco Offshore wishes to strengthen its position and increase its
16
exposure towards the jack-up drilling market while executing on its stated strategy of playing an
active role in the consolidation of the drilling industry. Awilco Offshore believes that it has built a
highly competent organisation and excellent foundation for management of the drilling rigs through
Premium Drilling, company jointly owned with Sinvest. Awilco Offshore believes that significant
synergies can be extracted through the transfer of management of Petrojack’s rigs into the Premium
Drilling organisation.
If the Offer is successful, it is Awilco Offshore’s intention to propose a delisting of Petrojack and
to bring the commercial and operational management of Petrojack’s assets (the jackup drilling rigs)
under the management of Premium Drilling. It is anticipated that this would entail a termination of
Petrojack’s current management agreement with LOG. The acquisition will not otherwise affect the
Petrojack organisation as Petrojack does not have any full-time employees.
17
5.
The Offer consideration
The voluntary Offer made by Awilco Offshore offers Petrojack shareholders the opportunity to
exchange two Petrojack shares for one Awilco Offshore share, equivalent to an exchange ratio of
2:1. Based on the closing share price of Awilco Offshore on 22 August 2005 (the date of
announcement of the revised voluntary Offer) of NOK 34.50 this values each Petrojack share at
NOK 17.25 and the entire share capital at approximately NOK 997 million. Using the volumeweighted average price of Awilco Offshore over the month prior to announcement of the revised
Offer, the Offer values each Petrojack share at NOK 17.10.
This corresponds to a premium of 28% to the closing price of Petrojack on the Oslo Stock
Exchange on August 3 2005 of NOK 13.4, the day prior to the initial announcement of Awilco
Offshore’s intention to launch a voluntary Offer.The Offer corresponds to a 22% premium over the
volume-weighted average price of Petrojack over the last two months prior to 22 August of NOK
14.1.
The exchange ratio is the result of a thorough consideration by Awilco Offshore taking into
consideration, among others, the share price and trading volume development of Awilco Offshore
and Petrojack respectively preceding the announcement of the offer as well as discounted cash flow
and relative trading multiple-based valuation.
The exhibit below shows the development of the Petrojack share price and trading volume from the
day of the listing on the Oslo Stock Exchange to the day preceding this Offer document.
25 000
20
Volume ('000s)
Share price
18
20 000
16
15 000
12
Volume ('000s)
Share price (NOK)
14
10
10 000
8
6
4
5 000
2
0
feb-05
0
mar-05
apr-05
mai-05
jun-05
jul-05
aug-05
Source: Oslo Børs
18
6.
Short description of Petrojack ASA
The information in this chapter is based on publicly available information regarding Petrojack,
including information published by Petrojack in its introductory prospectus dated February 3,
2005, subsequent stock exchange releases from Petrojack and other public sources of information.
Awilco Offshore has not independently verified any information regarding Petrojack.
6.1
Company description
Petrojack ASA is a Norwegian-based rig-owning company which was established in October 2004
and listed on the Oslo Stock Exchange during February 2005. The company has entered into
contracts for the construction of three jack-up rigs at Jurong shipyard in Singapore. The first rig
will be delivered March 15, 2007.
Petrojack’s stated strategy is to create value for its shareholders by contracting new or acquiring
existing jack-up drilling rigs with a view to operating them on medium to long term contracts. The
company intends to take advantage of the expected strong development in the drilling rig market
has stated that it intends to actively consider structural alternatives such as mergers, acquisitions or
outright sale to competitors in order to create maximum shareholder value.
Corporate history
Petrojack was incorporated on October 4, 2004 by LOG, an offshore-industry project development,
investment, rental and management company owned by Mr. Berge Gerdt Larsen.
The contract for the first jack-up rig to be built by Jurong shipyard in Singapore, came into effect
December 15, 2004.
Petrojack was listed on the Oslo Stock Exchange in February 2005. The company declared options
for two additional jack-up rigs to be constructed at Jurong on April 15 and June 18, 2005.
The jack-up rigs
Petrojack has entered into EPC contracts with Jurong/SembCorp Marine for the construction of
three jack-up rigs at Jurong shipyard in Singapore. The rigs are Baker Marine class jack-up rigs
with an operating water debt capacity of 375 feet and drilling depth capacity of approximately
30,000 feet.
The rig price for the first jack-up rig is USD 125.3m, while the total project cost is estimated to
approximately USD 135.9m. Development Bank of Singapore (DBS Bank) has provided Petrojack
with a loan facility of up to USD 106.0m (subject to a maximum of 80 percent of the rig price plus
certain other defined costs) for the construction of the jack-up rig. The remaining amount,
approximately USD 31m, is financed through equity. The delivery date is on or before March 15,
2007.
The rig price for the second jack-up rig is USD 126.5m with 80 % yard financing during the
construction period. Delivery date is on or before January 15, 2008.
The rig price for the third jack-up rig is USD 131.2m with 80 % yard financing during the
construction period. Delivery date is on or before June 30, 2008.
Management and Board of Directors
Petrojack has entered into a management agreement with LOG where LOG shall be responsible for
the appointment of Petrojack’s managing director and provide additional staff, supplies and
equipment to undertake all necessary administrative functions. LOG shall report to Petrojack’s
Board of Directors and shall also be responsible for the operation and financing of Petrojack,
19
according to the strategy set forth by Petrojack’s Board of Directors.
Petrojack’s current management consists of:
Lars Moldestad
Gro Aadahl Kvalheim
Martin Nordaas
Unni F. Tefre
CEO
CFO
Project Manager / Head of Yard Supervision
Office Manager
Petrojack’s current Board of Directors consists of:
Erik Solheim
Petter H. Tomren
Gunnar Hirsti
Berge G. Larsen
6.2
Chairman
Board Member
Board Member
Board Member
Key Financial Figures
Income statement
(NOK)
Operating revenues
Q2 2005
-
H1 2005
-
2004
-
Operating expenses
(1,475,043)
(3,002,393)
(473,532)
Operating profit (loss)
(1,475,043)
(3,002,393)
(473,532)
3,461,188
7,636,588
217,233
47,916
(10,363)
-
2,034,061
4,623,832
Financial income
Financial expenses
Pre tax profit
Tax
Net result
-
-
(256,299)
0
2,034,061
4,623,832
(256,299)
30/06/2005
31/03/2005
31/12/2004
Fixed assets
Current assets
257,192,327
116,569,446
125,640,910
159,022,164
134,199,323
89,867,436
Total assets
373,761,773
284,663,074
224,066,759
Equity
Liabilities
367,900,877
5,860,896
278,260,443
6,402,631
202,058,512
22,008,247
373,761,773
284,663,074
224,066,759
Balance sheet statement
(NOK)
Total equity and liabilities
Source: Petrojack ASA
20
6.3
Shareholders
As per August 24, 2005, the share capital of Petrojack consists of 57,825,000 shares each with a
par value of NOK 5. Petrojack has no outstanding or authorized stock options, warrants or
convertible debt. The table below shows the largest shareholders in Petrojack registered in VPS as
of 9 September, 2005.
Shareholder
AWILCO OFFSHORE ASA
SINVEST ASA ATT: SVEIN BJØRNHOLM
INCREASED OIL RECOVE
INDEPENDENT OIL TOOL
GOLDMAN SACHS INTERN EQUITY NONTREATY
CREDIT SUISSE FIRST (EUROPE) PRIME BROKE
GEVERAN TRADING CO L
NORDEA VEKST AKSJEFONDET V/NORDEA
BANK OF NEW YORK, BR BNY GCM CLIENT ACCT
NET AS
GOLDMAN SACHS INTERN EQUITY HOUSE
FIRST SECURITIES ASA MEGLERKONTO INNLAND
ABG SUNDAL COLLIER N MEGLERKONTO
DEUTSCHE BANK AG LON PRIME BROKERAGE
DANSKE BANK A/S 3887 SETTLEMENTS NOR
VERDIPAPIRFONDET NOR V/NORDEA FONDENE AS
HALVORSEN ØYVIND
LARSEN MILLY KARIN
ERIKSEN LEIF W. C/O AON GRIEG AS
BARINGS (GUERNSEY) L NON TREATY CLIENTS A
Total top 20
No. Of shares
11 942 030
11 572 000
10 043 259
5 426 923
4 090 867
4 062 450
1 047 000
920 000
881 000
796 000
456 945
355 298
318 000
313 440
304 000
255 000
205 000
200 000
186 818
185 000
53 561 030
Ownership in %
21 %
20 %
17 %
9%
7%
7%
2%
2%
2%
1%
1%
1%
1%
1%
1%
0%
0%
0%
0%
0%
93 %
Source: VPS
21
7.
Description of Awilco Offshore ASA
7.1
Company background
Awilco Offshore was incorporated on 21 January 2005 as a 100% owned subsidiary of Awilco, a
company in the Anders Wilhelmsen Group. In February 2005, the Offeror acquired from Awilco
all investments of the Anders Wilhelmsen Group within offshore accommodation and drilling. A
description of the acquisition agreements is set out in section 11.1. As part of the transaction, the
Offeror raised NOK 1,000 million in new equity from external investors. In May 2005 the Offeror
carried out a small new issue and was listed on the Oslo Stock Exchange.
The assets held by the Offeror fall within two segments; offshore accommodation units and jack-up
drilling rigs.
Accommodation units
The Offeror owns two accommodation units suited for employment in the North Sea; one jack-up
accommodation unit and one semi-submersible accommodation unit. Both units are suited for
operation on the Norwegian Continental Shelf, which has some of the strictest requirements in the
market. Only four units of the world-wide fleet of specialised accommodation units comply with
the requirements for operation on the Norwegian Continental Shelf.
The jack-up accommodation unit “Port Rigmar” is currently employed on a contract on the Ekofisk
field on the Norwegian Continental Shelf. The fixed contract currently runs until October 2006.
The client, ConocoPhillips, holds options to extend the contract for up to four additional years.
Based on the firm contract, the unit would secure an EBITDA of approximately USD 10.5 – 11
million in 2005. For a further description of the unit and the contract, see section 7.5.
The semi-submersible accommodation unit “Port Reval”, which was converted from a service rig,
has secured employment through November 2006 and additional three months in 2007. Currently,
the rig is employed on a contract on the Eldfisk with client ConocoPhillips Norge. Commencement
was early September and duration is 10 months. The rig also has secured contracts with Aker
Kværner for four months in 2006 and three months in 2007. For 2005, the EBITDA contribution is
expected to be approximately USD 6.5 million from the Aker Kværner contract (June 05 to August
05) and approximately USD 5.5 million from the ConocoPhillips contract. For a further
description of the unit and the contracts, see section 7.5.
During the spring, Port Reval was undergoing a minor upgrade at a yard in Haugesund. The
upgrading was made to satisfy requirements made for work on the Norwegian Continental Shelf.
Jack-up drilling rigs and options
The Offeror has four newbuilding contracts and four newbuilding options. A summary of the
contracts and options is set out below.
Name
Contracted rigs
WilPower
WilCraft
WilSuperior
WilTBN
Optional rigs
PPL option 1A
Keppel Option B
PPL option 2
PPL option 3
* in process
Yard
W. depth
D. depth
PPL
Keppel
PPL
Keppel
375ft
400ft
375ft
400ft
30,000ft
30,000ft
30,000ft
30,000ft
PPL
Keppel
PPL
PPL
375ft
400ft
375ft
375ft
30,000ft
30,000ft
30,000ft
30,000ft
Decl. by
03 / 2006
08/ 2006
10 / 2006
09 / 2007
Delivery
Project price
Financing
2Q06
4Q06
2Q07
4Q07
131 MUSD
131 MUSD
130 MUSD
134 MUSD
SCB
Nordea
Nordea
Nordea*
+24mo
+28mo
+24mo
+24mo
144 MUSD
150 MUSD
131 MUSD
132 MUSD
The project prices set out above are the expected prices of the rigs delivered and fully equipped.
22
The prices include yard contract prices (which are fixed for the contracted rigs and the PPL option
rigs), newbuilding supervision, owner furnished equipment, spares, financing, and other project
expenses.
Each of the Offeror’s options can be declared independently of the others. A particular feature for
the PPL options is that both the steel price and the currency exchange rate element of the contract
price have been fixed. This is normally not the case, as yards will typically reserve the right to
adjust the final price for movements in steel prices, currency exchange rates and certain other
factors.
Following the ordering of WilTBN, the Offeror was awarded an option for an additional rig from
Keppel Fels. The Keppel option B has steel price and currency exchange rate adjustments based on
the levels of steel prices and currency exchange rates that applied on second half of July 2005.
The price is also subject to increase in major equipment price over that purchased for WilTBN.
Price increase in major equipment includes but is not limited to the price of main engines and
generators, emergency generators, cranes and drilling equipment set.
Under the Keppel option B agreement, a total of USD 12 million of the yard price will be subject to
adjustment in the event of variations in the steel price from second half of July 2005 to the time of
entering into a firm contract. Correspondingly, a total of USD 84 million of the yard price will be
subject to adjustment in the event of variations in the currency exchange rates between USD and
Singapore Dollars, and between USD and Euros, from second half of July 2005 to the time of
entering into a firm contract.
Additional information on the rigs and designs is provided in section 7.6. A further description of
the newbuilding contracts and option agreements is set out in section 11.2. A description of the
financing arrangements is set out in section 11.3.
7.2
Anders Wilhelmsen Group – background
The Anders Wilhelmsen Group is a privately owned group of companies based in Norway and with
headquarters located in Oslo. The first company in the group, A Wilhelmsen AS, was founded in
1939 as a shipowning and investment company, and the group has over the years been involved in
many sectors of the marine industry.
The chart below gives an illustration of the main businesses in the Anders Wilhelmsen Group.
23
The Anders Wilhelmsen Group
100%
100%
21%
Royal Caribbean Cruises
Ltd.
Linstow AS
Awilco AS
100%
A Wilhelmsen Capital AS
Real estate
Hotels
Shopping
Shipping
Cruise liner
Venture
Private equity
Share trading
Currently 45,4% ownership
In addition, Wilhelmsen family members own approx. 4,5%
Awilco Offshore ASA
Jackups
Accommodation units
The Anders Wilhelmsen Group participated in the foundation of Royal Caribbean Cruise Line
(RCCL) in 1969 which has since developed into one of the world’s leading cruise liners. Current
ownership, together with ownership of Wilhelmsen family members, is approximately 21% of this
company. Through a shareholders’ agreement with Cruise Associates, the Anders Wilhelmsen
Group is a leading and influential shareholder in RCCL.
The group also has large engagements in real estate through its wholly-owned company Linstow,
with primary focus on central Oslo and the Baltic region. Maritime investments are held through
Awilco, a name with long traditions in the group. The group also has significant financial
investments, held through A Wilhelmsen Capital AS.
7.3
Relation to the Anders Wilhelmsen Group
Ownership
As of the date of this Offer Document, Awilco has an ownership of approximately 45.4% of the
Offeror. In addition, members of the Wilhelmsen family have an ownership of approximately
4.5%. However, the only part of the Wilhelmsen family group of companies that should be grouped
is Aweco Holding AS which owns 2.8% of Awilco Offshore. Aweco Holding AS owns 60.1% of A
Wilhelmsen AS which again owns 100% of Awilco AS and therefore will be consolidated with
Awilco under the Securities Trading Act § 4-5. Assuming acceptance of the Offer by all
shareholders of Petrojack (excluding Sinvest), Awilco’s ownership of the Offerer will be reduced
to approximately 40%%, and the ownership of members of the Wilhelmsen family will be reduced
to approximately 4%. The purpose of the Anders Wilhelmsen Group’s investment in the Offeror is
to create value for all shareholders. The Anders Wilhelmsen Group expects to remain a significant
shareholder in the Offeror going forward, but considers its investment to be of a financial nature
and will take its decisions to buy or sell shares in this perspective.
Board representation
The Anders Wilhelmsen Group intends, for as long as it retains a significant ownership position in
the Offeror, to seek representation on the Board of Directors of the Offeror.
Management contract
A minor part of the Offeror’s support functions, such as accounting and treasury services, are
provided pursuant to a management agreement with Anders Wilhelmsen & Co AS.
See section 11.4 for a description of this agreement.
24
Non-competition
The Anders Wilhelmsen Group has stated its intention, for as long as it remains a shareholder of
the Offeror, to refrain from competing investments. It is the intention that any investment in
drilling rigs, accommodation rigs, or similar types of equipment, will only be offered to the
Offeror, and if declined, will not be made by other companies in the Anders Wilhelmsen Group.
7.4
Company strategy
Awilco Offshore intends to create the basis for a leading international drilling contractor and will,
in doing so, employ strategies as set forth below.
Investments
Awilco Offshore intends to be a service provider to oil companies by offering first-class equipment
for use in various stages of exploration for, and production of, oil and gas. The Offeror intends to
grow, particularly in the drilling rig segment, by possibly taking on new newbuilding contracts.
The Offeror will have an opportunistic approach to expansion into other offshore segments.
Operation
The Offeror believes that its exposure to the accommodation market will provide a stable
underlying cash flow which will provide financial leverage to its construction of jack-up drilling
rigs. As the time of delivery of jack-up drilling rigs approaches, the Offeror will consider entering
into short- or long-term contracts to secure cash flows and to provide the financial stability for
additional newbuilding orders.
Consolidation
The Offeror believes that further consolidation of the oil service industry will take place and will
consider taking part in such consolidation. The Offeror believes that it has the strength to take
active part in such consolidation and will consider opportunities to grow by mergers and
acquisitions. The Offeror has been informed that Awilco, its largest shareholder, will consider any
such consolidation on the basis of the transaction’s financial implications and that it will not resist
any transaction from the point of view of having its ownership percentage reduced.
7.5
The accommodation units
The Offeror has two accommodation rigs suited for employment in the North Sea; one jack-up
accommodation unit and one semi-submersible accommodation unit. Both units are suited for
employment on the Norwegian Continental Shelf, which has some of the strictest requirements in
the market. Only four units in the world fleet of specialised accommodation units comply with the
requirements for employment in this region.
25
Key specifications
Additional specifications of the accommodation units are set forth in Appendix 1 and Appendix 2.
Rig name:
Port Rigmar
Port Reval
Design:
Robin 300 self elevating jack-up
accommodation rig
Aker H-3 (enhanced) semi-submersible
accommodation rig
Built / converted:
Built 1979 as drilling rig, converted to
accommodation mode in 1991
Built 1976 as drilling rig; converted to
tender support rig; converted to
accommodation mode in 2004
Flag:
Bahamas
Bahamas
Class:
DnV; +1A1 Self-elevating Accommodation
Unit
DnV; +1A1 Accommodation HELDK,
PASMOOR V
Suited for:
Norwegian, UK and Danish continental
shelf
Norwegian and UK continental shelf
Dimensions:
Length 65m, breadth 65m, depth 8m, leg
lengths 127m (417ft)
Length 108m, breadth 67m, main deck
elevation 37m, operational draft 21m
Capacities:
Variable load 2200mt, fuel/diesel oil 254m3,
helifuel bundle for 2 tanks, potable water
532m3
Deckload 1600t, fuel/diesel oil 2326m3,
helifuel 7500ltr, potable water 602m3,
displacement 22344t
Accommodation:
162 two bed cabins, 2 single bed cabins, all
with daylight, toilet and shower; galley and
dining room for 152 persons; various
recreation rooms; hospital and first aid
treatment rooms; gymnasium; 14 offices and
1 conference room
262 single bed cabins, 50 two bed cabins, all
with daylight, shared (separate) toilet and
shower; galley and dining room for 152
persons; various recreation rooms; hospital
and first aid treatment room; gymnasium;
various offices and conference room; laydown and storage area and workshop
Machinery:
3 main diesel engines each of 2200HP; 4
generators each of 930kW; 1 emergency
diesel generator 400kW; 1 fresh water
maker 75m3/d; 3 deep well pumps each
295m3/h
4 main diesel engines each 2200HP; 4
generators each 1500kW; 1 emergency
diesel generator 800kW; 2 fixed four-blade
propellers with steerable rudders driven by 2
electric DC motors each 1250kW; 2 fresh
water makers 35+60m3/d
Mooring:
3 anchor winches with 3000’ x 1.25” wire; 3
anchors Bruce 1.5t
12 anchor winches; 12 anchor chains each
1370m;12 anchors Stevpris 14.5t
26
Technical mgr.:
Polycrest AS, an independent manager of
offshore units
OSM Offshore AS, an independent manager
of offshore units
Employment:
Contract to Oct 2006 with ConocoPhillips
for employment on the Ekofisk field. T/C
contract with a rate of USD 55,500 per day
to Oct 2005 and USD 68,000 per day from
Oct 2005 to Oct 2006.
The unit is currently employed at the Eldfisk
field with client Conoco Phillips Norge.
Commencement was early September and
duration is 10 months. Gross contract value
is approximately USD 24.5 million.
Charterer has 4x1 year options to extend the
contract. Rates for the first option year are
USD 68,000 per day. Rates for the next
three option years are subject to negotiation
and the options therefore have character of a
right of first refusal. Options must be
declared one year in advance.
The unit will thereafter be employed for
Aker Kværner for UK/Norwegian sector on
the Frigg field for the period July-October
2006 at a rate of USD 130,000 per day (with
cost compensation if employed on
Norwegian sector). This contract further
covers three months in the spring of 2007 on
similar terms.
Norwegian sector employment – about USD
25,000 – 28,000 per day
Norwegian sector employment – about USD
31,000 – 34,000 per day
Opex:
UK sector employment – about USD 25,000
– 28,000 per day
Idle periods – costs will depend on duration
but normally there will be full opex one
month before and after contract; when fully
idle about USD 10 – 12,000 per day
27
7.6
The jack-up drilling rig newbuilding contracts
The Offeror has entered into four newbuilding contracts to build jack-up drilling rigs.
contracts are distributed with two contracts at the PPL yard and two at the Keppel Fels yard.
The
In addition to these firm contracts, the Offeror holds additional options to construct four jack-up
rigs, as further described in section 11.2.
Key features of the designs are set out below. Additional design specifications are included in
Appendix 3 and Appendix 4.
Yard
PPL
Keppel
Design:
Baker Marine Pacific 375’ Class
KFELS MOD V ‘B’ Class
Class:
ABS A1, CDS, Self-Elevating Drilling Unit
ABS +A1 Self-Elevating Drilling Unit
Water depth
375ft
400ft
Drilling depth
30,000ft
30,000ft
Cantilever
70ft outreach maximum
70ft outreach maximum
BOP
15,000psi
15,000psi
Generators
10,750bhp
10,750bhp
Deckload
3400mt
2400mt
Pipe handling
Remotely operated
Remotely operated
Contracts
WilPower is secured on a five year bare-boat contract with Arabian Drilling Company. The
contract value is approximately USD 131 mill (including mobilization and demobilization fees),
and Arabian Drilling Company has the option to extend the contract for a further year, for a
contract value of approximately USD 33 mill. Arabian Drilling Company will be responsible for all
28
operating and local expenses. The rig will be employed in Saudi Arabia, and will commence work
under the contract in July 2006.
No contracts have been secured for any of the other units.
Expected capital expenditure
The table below sets forth the expected capital expenditure for the firm contract rigs. The amounts
referred to as paid are amounts that have been paid or will be paid prior to completion of the
Offering.
USD mill.
Investments
WilPower
WilCraft
WilSuperior
WilTBN
Total
Paid
3q05
43.0
49.2
13.0
21.0
105.2
6.5
26.8
54.3
4q05
1q06
2q06
19.5
33.0
26.0
25.6
26.8
111.4
33.5
26.0
59.5
19.5
3q06
19.5
19.5
4q06
29.8
13.0
26.8
69.6
1q07
13.0
26.8
39.8
2q07
3q07
4q07
Total
26.8
26.8
130.5
131.0
129.6
134.0
525.1
26.8
26.8
226.1
94.0
205
525.1
19.5
19.5
Financing source
92.2
33.3
22.5
19.5
52.4
6.2
Equity
13.0
21.0
27.0
33.0
WilPower debt
10.0
26.0
19.5
63.4
39.8
19.5
Corp. bank debt *
105.2
54.3
59.5
19.5
111.4
19.5
69.6
39.8
19.5
Total
* Corp. bank debt includes the Offeror’s own estimate for financing of WilTBN (in process with Nordea).
Final payment schedule has not yet been established for WilTBN. The above schedule is the
Company’s own estimate.
The Offeror expects to cover its payments of interest costs and instalments (as further described in
section 11.3) from cash generated from operations.
7.7
Legal structure
Awilco Offshore ASA is a Norwegian public limited liability company incorporated on 21 January
2005. Awilco Offshore was registered with the Norwegian Register of Business Enterprises on 11
February 2005 under the registration number 987 861 894. In accordance with its articles of
association, Awilco Offshore ASA shall have its registered office in the municipality of Oslo. The
registered address of Awilco Offshore ASA is Beddingen 8 Aker Brygge, N-0250 Oslo, Norway.
The chart below illustrates the group structure. All direct and indirect subsidiaries are wholly
owned.
29
Awilco Offshore is the owner of 50% of Premium Drilling. The other 50% of the shares are held by
Sinvest. Premium Drilling, which was established in June, 2005, will be responsible for advising
the owners on business development and market strategy, and for the marketing, contracting and
operation of the two companies’ fleet of jackup drilling rigs. The head office of Premium Drilling
is located in Houston, USA. Bill Rose, former Vice President of Noble Corporation, has been
appointed as its CEO.
7.8
Board of Directors
As of the date of this Offer Document, the following persons serve on the Board of Directors of
Awilco Offshore.
Sigurd E. Thorvildsen (40), Oslo, Chairman
Mr Thorvildsen has 15 years of experience from the shipping and offshore industries. He holds the
position as Managing Director of Awilco. Before joining Awilco, Mr Thorvildsen was for several
years a partner in the shipbroking firm O-J. Libaek and Partners AS. He holds a degree
(Siviløkonom) from Handelshøyskolen BI.
Arne Alexander Wilhelmsen (40), Oslo
Mr Wilhelmsen has 16 years of experience from finance and the shipping and offshore industries.
He is CEO of Anders Wilhelmsen & Co AS and has held a variety of managerial positions within
the Anders Wilhelmsen group since 1995. Mr. Wilhelmsen is a member of the board of directors of
A Wilhelmsen AS and various other business units within the Anders Wilhelmsen group of
companies, including as chairman of Awilco, and serves as a director of the board of Royal
Caribbean Cruise Line. He also serves on the board of directors for Nordisk Skipsrederforening and
as a deputy board member in Norges Rederiforbund. Mr. Wilhelmsen has a Masters of Business
Administration from IMD, Lausanne, Switzerland.
Jarle Roth (44), Oslo
Mr Roth is President and CEO of Unitor ASA, a position he has held since 2001. He has been
employed in various companies related to the Ulltveit-Moe Group since 1990. He is educated as a
naval architect (1983) and holds a degree (siviløkonom) from NHH (1987) in addition to a
doctorate programme within organisation and strategy from NHH (1989).
Marianne Blystad (47), Oslo
Mrs Blystad has experience from her position as an attorney with the law firm Bull & Co in Oslo
with specialisation within company law and real estate. Mrs Blystad has held positions in Citibank,
Eksportfinans and Rederiet Arne Blystad AS. She holds a degree (siviløkonom) from
Handelshøyskolen BI (1984) and a law degree (cand.jur.) from the University of Oslo (2002).
Tor Bergstrøm (56), Kolbotn
Mr Bergstrøm has more than 30 years of experience from banking, industry and asset management,
both in Norway and internationally. He holds the position as Executive Vice President of Anders
Wilhelmsen & Co AS. He is chairman of A Wilhelmsen Capital AS and, among other
responsibilities, a member of the board of directors of Mamut ASA and Advanced Production and
Loading ASA. Bergstrøm was for many years Executive Vice President and CFO of the Aker
Group and before that heading Asset Management in the Storebrand Group. He has also been
working in banking, both in Norway and in the US. He has broad experience as board member of
manufacturing companies, investment companies and finance companies, both in Norway and
internationally. He holds a degree (siviløkonom) from the Norwegian School of Economics and
Business Administration.
Mr Wilhelmsen has 33.2% ownership in Aweco Holding AS which owns 3,300,000 shares in the
Offeror. No other directors hold shares in the Offeror.
30
No remuneration has been paid or granted to the Offeror’s board of directors. The level of
remuneration will be determined at the annual general meeting (May 2006).
7.9
Management and employees
Management agreements
Management services are provided to the Offeror by Premium Drilling AS, a company jointly
owned with Sinvest ASA. In addition, Anders Wilhelmsen & Co AS, the holding company of the
Anders Wilhelmsen Group, provides accounting and treasury services to the Offeror. See section
11.4 for a description of the management agreements.
Corporate management
Henrik Fougner (42), managing director, Bærum
Mr Fougner has more than 15 years of experience from banking and the shipping and offshore
industries, both in Norway and internationally. He previously held the position as CFO of Awilco
AS. Before joining Awilco in 2001 Henrik Fougner was CFO of Osprey Maritime Limited in
Singapore. He has also been working in banking through Den norske Bank and Scandinavian Bank
Group, both in London and Oslo, focusing on the shipping- and offshore industry. He holds an
MBA from the Norwegian School of Economics and Business Administration.
Mr Fougner’s remuneration in his capacity as managing director of the Offeror is under
consideration by the board of the Awilco Offshore. Until such conclusion, he has and will continue
to receive the same salary as he had as CFO of Awilco, NOK 1.200.000.
Key personnel – commercial management
Thor Alexander Krafft (61)
Mr Krafft is Senior Vice President in Awilco Offshore ASA, and has more than 35 years of
international experience from shipping and the oil and gas offshore industry. Mr Krafft has worked
for Esso, Gotaas Larsen/Golar Nor Offshore and Arne Blystad Rederi. He holds an MBA from
University of Wisconsin,USA.
Knut Martin Wadet (54)
Mr Wadet has 30 years experience from the offshore oil and gas and marine industries, both in
Norway and internationally. He holds a position as Vice President with special responsibility for
the two accommodation units Port Reval and Port Rigmar. Previously Mr. Wadet was General
Manager of the marine contracting entity Farmand Survey, he has been employed by Stolt-Nielsen
Seaway and the Kværner group, and has spent several years in the Middle East and South East
Asia. He holds a degree in business administration (Siviløkonom) and a degree in civil engineering.
Jan B. Usland (45)
Mr Usland is Director – Offshore Business Development in Awilco Offshore ASA. He holds an
MSc in Naval Architecture and Marine Engineering from NTNU (Norway) and enjoys more then
20 years of experience within the offshore oil & gas industry primarily from management, business
development and technical positions with floating production and drilling contractors. He was
previously Senior Vice President, Floating Production with Northern Offshore ASA.
Key personnel – technical management
Claus Mørch (58)
Mr Mørch has both a MSc in Mechanical engineering and a BSc in Marine engineering from the
University of Newcastle upon Tyne. Mr Mørch is Senior Vice President of Awilco Offshore ASA.
He has more than 30 years experience in the marine and offshore market with broad experience in
relation to newbuilding projcts, conversions and management of shipping and offshore units and
has worked within the Anders Wilhelmsen group for 20 years.
As of the date of this document Awilco Offshore management hold no shares in Awilco Offshore.
31
8.
Market overview
8.1
Market positioning
The Offeror’s main assets give exposure to two market segments; accommodation units and jackup drilling rigs. Both of these markets are related to the international oil and gas industry and have
drivers linked to exploration and production of oil and gas.
Oil and gas projects have a life cycle from exploration, through production, to abandonment. The
Offeror’s assets are typically employed in different phases of the life cycle, as illustrated below.
Phase
Seismic
Exploration
drilling
Engineering,
construction,
installation
Accommodation
and support
Accommodation
units
Jack-up drilling
rigs
Drilling of
exploration wells
Production
Abandonment
Accommodation,
maintenance,
upgrades,
modifications,
stand by, hospital
Drilling of
production wells
Accommodation
and support
Typically, accommodation units are used in the production phase of a field and is less dependent on
the general strength of the oil and gas markets. On the other hand, jack-up drilling rigs are
typically used in the exploration phase where demand is more directly correlated with the overall
activity in the oil and gas markets. These markets are currently enjoying strong demand, as clearly
evidenced by the development in the oil price.
Short- to medium-term oil price forecasts are well in excess of historical levels as seen from the
graph below, showing the price of Brent Blend oil since 1986 including future prices.
70
60
Future price (WTI)
USD per bbl (Brent Blend)
50
Weekly figures
40
12 Month average
30
20 year average (USD 22.0)
20
10
0
86
87
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06E
07E
Source: Enskilda Securities
32
8.2
The market for accommodation rigs
Market overview and status
The market for accommodation rigs is a highly specialized part of the offshore market. First of all,
it is a small market; secondly, it is dominated by a few operators globally; and thirdly, it is
separated from the drilling markets by being more directly linked to oil companies’ production than
to their exploration.
Accommodation units provide a flexible means of providing accommodation and service capacity
to an offshore field. They are used for short- or long-term purposes whenever manning and/or deck
capacity is required beyond the capacity of the fixed installation.
The market is geographically divided into a few segments. Historically, accommodation units have
mainly been used in the North Sea and Mexico. With the long-term chartering of five Prosafe units
by Pemex in 2003, Mexico took over as a leading market for such units.
The supply of accommodation units
The current world fleet of dedicated accommodation units is limited and the most relevant units are
summarized in the table below.
Market / unit
North Sea
Borgholm Dolphin
MSV Regalia
Port Rigmar
Port Reval
Pride Rotterdam
Owner
Type
Design
Capacity (beds)
Fred. Olsen
Prosafe
Awilco Offshore
Awilco Offshore
Pride
Semi
Semi
Jack-up
Semi
Jack-up
Aker H-3
GVA 3000
Robin 300
Aker H-3
Gusto
600
243
326
362
200
Gulf of Mexico
MSV Chemul
Jasminia
Jupiter I
Safe Britannia
Safe Hibernia
Safe Lancia
Safe Regency
Pemex
Prosafe
Cotemar
Prosafe
Prosafe
Prosafe
Prosafe
Semi
Semi
Semi
Semi
Semi
Semi
Semi
GVA 2000
GVA 2000
Small semi
Pacesetter
Aker H-3
GVA 2000
Pacesetter
433
600
720
812
500
600
780
Other markets
Safe Astoria
Safe Concordia
Safe Caledonia
Safe Scandinavia
Consafe Offshore
Consafe Offshore
Prosafe
Prosafe
Semi
Semi
Semi
Semi
Sedco 600
256
376
550
527
Pacesetter
Aker H-3
Source: Fearnley Fonds
In addition to the units set forth above, there are several units that are used for accommodation
purposes in special markets, but these can not be deemed relevant for competitive purposes. This
includes some small shallow-water units being employed in the Southern North Sea, barges being
employed in West Africa, construction platforms, diving ships, and a limited number of emergency
stand-by units. Also, conventional drilling rigs do, from time to time, operate as accommodation
units, but this is mainly on short term contracts with limited bed capacity requirements (100-150
beds, i.e. below the capacity of conventional accommodation units).
The world fleet of accommodation units has declined significantly over the last 15 years, as several
units have been converted into drilling rigs. With a fleet of about 20 units, there was a large
overcapacity of accommodation units in the North Sea in the early to mid-1990s as many of the
large construction projects came to an end.
Over the last years, three units have been converted into accommodation mode. This includes the
Offeror’s unit Port Reval, formerly a service rig, the Fred. Olsen unit Borgholm Dolphin which was
33
formerly a cold-stacked drilling rig, and the Consafe Offshore unit “Safe Astoria” which was also
formerly a cold-stacked drilling rig.
There is currently two additional rigs undergoing conversion into accommodation units. Consafe
Offshore are converting the “Safe Bristolia” which will be delivered in Q1 2006. This unit is being
converted from a formerly cold-stacked drilling rig to a 550 bed accommodation unit at Yantai
Raffles Shipyard in China. The unit is contracted to commence operation in the Far East region,
and will not be suited for North Sea operation.
The Houston based EER (Energy Equipment Resources) has also bought and old rig that will be
converted into a accommodation unit with 400 beds – “Odin Millennium”. The unit is currently
undergoing conversion and upgrades at a US yard, but will not be North sea ready. EER has
already secured a 3 year contract with Petrobras for the unit.
While additional conversion into accommodation mode may take place, the number of rig
structures available for such conversion is little. In the present strengthening market for drilling
rigs, the owners generally seek to have their marginal units employed in drilling mode rather than
investing in conversions.
Consafe Offshore has recently taken delivery of the accommodation and service unit “Safe
Concordia”, the first new building in more than 15 years. The unit was built at Keppel FELS in
Singapore. It will not be suited for North Sea operation.
Demand for accommodation rigs
There are several sources of demand for accommodation units, linked to the various phases of the
oil fields. These include;
Installation and commissioning
Support services during installation and testing of new fixed installations. In the North Sea such
activity was formerly a large market, but has now become a minor part of demand. The market in
Mexico has been stable to growing over the last 5 years. Additional growth is expected in
deepwater provinces as West Africa, Brazil and South East Asia.
Support services during hook-ups of satellite fields to existing installations (growth niche in the
North sea with a number of subsea tie back prospects).
Production and maintenance
Support services during upgrading and maintenance on fixed installations (the major part of the
North Sea market).
Stand-by and hospital services (small part of the market);
Long-term addition of accommodation capacity on producing fields (small part of market).
Abandonment
Abandonment and de-commissioning of fixed installations (small but growing part of the market).
The key demand drivers are oil companies’ spending on new offshore production facilities and
upgrades to enhance production from fields in operation. As further discussed in section 8.3, the
level of such spending is strongly correlated to expectations for future oil and natural gas prices,
the requirement to grow production at a sustainable rate and the need to replace production lost
through depletion.
The North Sea and Mexico have, historically, been the prime markets for such units. In addition
emerging markets as West Africa and Australia have absorbed 1-2 units over the last few years.
34
Also, prospects for further growth are identified in other key offshore provinces as Brazil and
South East Asia.
The current large market in Mexico (currently 8 out of total 16 floating accommodation units in the
world are employed in Mexico) is for a large part linked to new installations. All of the 8 units are
fixed on firm contracts beyond 2006. While ongoing, this is a very stable market, and the long term
outlook is stable to growing.
In the North Sea, the market is to a much larger extent based on maintenance and upgrading service
on existing fields, as the installation phase is mainly past. This includes both planned maintenance
and short-term repair work. Since this is linked directly to the production of oil and gas and thereby
to the oil company’s cash flows, the contracts are often time critical. Some contracts are entered
into long in advance to ensure a well-timed process. In addition abandonment and
decommissioning of old installations is expected to create demand for accommodation services in
the future. As an example Port Reval is fixed on the Frigg removal project in 2006 and 2007.
The North Sea market is characterized by a harsh environment and there is traditionally little
maintenance activity in the winter season.
Current supply – demand balance
The chart below illustrates the employment status for the relevant units in the world fleet of
accommodation units.
Q1
2005
Q2
Q3
Q4
Q1
2006
Q2
Q3
Q4
Q1
2007
Q2
Q3
Q4
North Sea semis
Borgholm Dolphin (UK)
MSV Regalia (NOR)
Port Reval (NOR)
Safe Caledonia (UK)
Safe Scandinavia (NOR)
#
North Sea jack-ups (ex. Workfox)
Port Rigmar (NOR)
Pride Rotterdam (DK)
Gulf of Mexico units
MSV Chemul (damaged by Katrina)
MSV Iolair
Jasminia
Jupiter 1
Safe Britannia
Safe Hibernia
Safe Lancia
Safe Regency
Other markets
Safe Astoria
Yard
Safe Bristolia
Yard
Safe Concordia (del. Mar-05)
Yard
Fixed contracts
Options
Under construction
35
8.3
The market for jack-up drilling rigs
Background
Drilling on offshore oil and gas fields is primarily done with units of the three categories below.
The selection of a unit will depend on several factors, such as water depth, drilling depth, weather
conditions, location, and availability of units.
Jack-ups
Semi-submersibles
Drillships
Jack-ups have legs that are lowered
to the seabed, whereafter the hull is
jacked up clear of the sea surface.
Depth capability is limited to leg
length, so jack-ups are generally
shallow water units. Some of the
largest units can operate in 450ft
water depth but the majority of the
fleet is equipped for 250-300ft water
depth.
Semis are floating units implying
that their depth capacity is not
limited to leg length. They have
hulls or pontoons that are filled with
ballast water to provide stability.
When drilling, they are kept in
position by anchors or dynamic
positioning. Semis are often referred
to in “generations”, with the last
generations being the last built and
largest units with water depth
capacity up to 10,000ft.
Drillships have ordinary ship hulls and a
derrick on top for drilling through a hole
in the hull. Being ships, they have an
advantage in more efficient movement
between drilling operations. Like semis,
the drillships may be anchored or
equipped with dynamic positioning.
Drillships represent a smaller element of
the market.
All of the Offeror’s current exposure to the drilling market is through jack-up drilling rigs, through
its newbuilding contracts and options.
Offshore rig activity is closely correlated to oil companies’ investments related to the exploration
and production of oil and gas (often referred to as E&P spending). E&P activity is driven by the
dual requirement to grow production at a sustainable rate while replacing production lost through
depletion.
E&P spending and the offshore rig activity has historically been highly cyclical. Such levels of
spending may be influenced significantly by oil and natural gas prices and expected changes or
instability of such prices, as well as other factors, including demand for oil and gas and regional
and global economic conditions.
36
The figure below demonstrates the link between jack-up rig demand and oil prices with a 1 year
time lag.
360
Demand Jack up rigs
45
Oil price 1 year ago
40
30
300
25
280
20
260
15
240
Oil price (brent)
35
320
10
jan. 05
jan. 04
jan. 03
jan. 02
jan. 01
jan. 00
jan. 99
jan. 98
jan. 97
jan. 96
jan. 95
jan. 94
jan. 93
0
jan. 92
200
jan. 91
5
jan. 90
220
jan. 89
# active jack up rigs world wide
340
As illustrated above the offshore rig market has experienced both booming periods (1995-97) and
soft markets (1998-2000). However, since bottoming out late 2001, demand for jack-ups has
increased steadily and current status is characterized by firm markets in all key regions and
segments.
Supply
The current fleet of jack-ups comprises 404 units, including 70 non-competitive units (typically
owned and operated by national oil companies and not actively marketed to others). For the
purpose of this document, the total fleet is referenced if not otherwise noted.
There are currently 39, 350ft and above jack-up rigs on order representing 10% of the total fleet.
10 of the new buildings are for delivery in 2006, while 14 are scheduled for 2007. The current lead
time for new buildings is above 30 months, and potential additions of new buildings will not enter
the market before 2007. Awilco Offshore owns four of the new buildings currently in order.
Aging world fleet
The majority of the current operating rigs were constructed in the late 1970’s and early 1980’s, and
the average age of the fleet is 23 years today. Roughly 75% of the current fleet is between 20 and
27 years old, and only 4% of the current fleet is less than 6 years old. Although the useful lifetime
of rigs is difficult to predict, it is expected that new requirements for drilling deeper and more
complex wells will require replacement of older assets over time. In addition attrition of units due
to accidents, conversions and retirement has been in the range of 2-6 units annually over the last 5
years.
37
90
80
Jack ups, new buildings
70
60
50
40
Another 11 options for jack ups to be
delivered after 2008 in market
30
20
10
0
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008E
Current market balance
Total utilization of the worldwide jack-up fleet is around 91% today, with most of the individual
drilling markets stable or improving and varying little from that number. Excluding cold stacked
rigs (not actively marketed), the effective utilization is 98%, a level that, in historical context, is
very high. Thus, all worldwide markets are virtually in balance today, with little room for
mobilization of units between regions as no region seems to have available capacity to spare.
Region
US GoM
Central America
South America
West Africa
North Sea
Middle East
South East Asia
Other
Sum
Demand
89
37
5
19
33
67
28
62
340
Total supply
109
38
6
19
36
74
30
63
375
Utilisation
82%
97%
83%
100%
92%
91%
93%
98%
91%
Cold stacked
19
1
0
0
0
7
2
0
29
Eff. Utilisation
99%
100%
83%
100%
92%
100%
100%
98%
98%
Source: Petrodata / Fearnley Fonds
The fleet of jack-ups rigs made for 350ft and deeper water depths, comprises 62 units today. These
are the jack-ups that can most efficiently drill deep and complex wells. Recent federal royalty
waivers on “deep shelf” natural gas production in the US Gulf of Mexico, extensive use of
horizontal wells in the North Sea region and technically challenging fields developments in Middle
East and South East Asia are forecasted to increase demand for these rigs in the future.
Ultra premium jackups by contractor
Contractor
Rig today
On order
Atwood
1
0
Awilco
0
4
Diamond
2
2
ENSCO
12
2
GSF
16
0
Maersk
4
4
Rowan
18
3
Sinvest
0
6
Smedvig
1
0
COSL
0
2
Petrojack
0
3
Seadrill
0
4
Noble
3
2
Transocean
2
0
Scorpion
0
2
Gulf
0
2
Others
3
3
Sum:
62
39
Total
1
4
4
14
16
8
21
6
1
2
3
4
5
2
2
2
6
101
Ultra premium jackups by region
Region
Contracted
Austr / NZ
2
Canada (E)
2
C America
2
NW Europe
12
S America
1
SE Asia
3
USA, GoM
25
M East
1
Mediterranean
4
West Africa
4
Indian Ocean
1
Mexico
3
Caspian Sea
1
Sum:
61
Supply
3
2
2
12
1
3
25
1
4
4
1
3
1
Utilisation
67%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
62
100%
Source: Petrodata / Fearnley Fonds
38
Rate developments
Rates for all kind of jack-up equipment has seen substantial increases over the last year, with
leading edge rate structures approaching previous peak levels in main “jack-up provinces” as US
Gulf of Mexico, North Sea and South East Asia. One of the strongest rate rebounds has taken place
for ultra premium units with technical characteristics similar to the Awilco Offshore units on order.
The right-hand graph below provides average and leading edge rate structures on new fixtures from
January 2000 till now. For purpose of this graph, harsh environment units have been excluded from
the statistics.
140 000
100 000
90 000
US GOM Jackups 301'+ IC- Average (US$)
Southeast Asia Jackups 250-300' IC - Average (USD)
US GOM Jackups 250-300 - Average (USD)
US GOM Jackups 301'+ IC- High (US$)
120 000
80 000
100 000
D ayrate (U S D /d)
D ayrate (US D /d)
70 000
60 000
50 000
40 000
80 000
60 000
40 000
30 000
20 000
20 000
10 000
jul.05
m ai.05
jan.05
m ar.05
nov.04
jul.04
sep.04
m ai.04
jan.04
m ar.04
nov.03
jul.03
sep.03
m ai.03
jan.03
m ar.03
nov.02
jan.91
jul.91
jan.92
jul.92
jan.93
jul.93
jan.94
jul.94
jan.95
jul.95
jan.96
jul.96
jan.97
jul.97
jan.98
jul.98
jan.99
jul.99
jan.00
jul.00
jan.01
jul.01
jan.02
jul.02
jan.03
jul.03
jan.04
jul.04
jan.05
jul.05
sep.02
0
0
9.
Financial information
9.1
Proforma accounts
General
Awilco Offshore ASA was founded on 21 January 2005. The pro forma group accounts for 2004
have been prepared on a historical cost basis on a consolidated level. The pro forma accounts are
presented as if the offshore segment was reorganized per beginning of the period presented, and is
derived from audited financial statements for Awilco group for 2004. The pro forma accounts have
been provided based on the assumptions stated below. Pro forma financial statements are provided
for informational purposes only and are not necessarily indicative of actual results that would have
been achieved if the transactions and assumptions described below had occurred during the period
presented.
Since the formation of Awilco’s offshore segment into the wholly owned AWO group is seen as a
reorganization of a segment in a wholly owned subgroup of Awilco, the reorganization has been
recorded using the continuity method. Consequently, the net book value of the assets, rights and
liabilities transferred to the AWO group, corresponds to the net book value under the previous
organization and ownership structure.
Pro forma adjustments
Equity contribution
The Offeror carried out a private placement in the period from 14 – 18. February 2005. Prior to
completion of the private placement, the share capital of the Offeror was increased through the
conversion into equity of part of the consideration for the offshore assets transferred from Awilco.
This conversion of debt into equity is rolled-back and reflected in the pro forma balance sheet per
beginning of 2004. Correspondingly, debt not converted to equity is also reflected in the pro forma
balance sheet per beginning of 2004. Interest cost on this debt is reflected in the accounts using the
same interest rate as agreed in 2005.
39
The transfer of assets from Awilco to AWO is in the pro forma accounts assumed to have been
executed using the same underlying values as actually used in the reorganization that took place in
2005.
The proceeds from the private placement were received by the Offeror at end of February 2005,
and are reflected in the financial report for 1st quarter 2005, and is not rolled back to be reflected in
the pro-forma accounts for 2004.
Inter-company debt
Part of the proceeds from the private placement was used to repay inter-company debt to Awilco.
In order to better reflect the actual funding of the segment in 2004, combined with that the proceeds
from the private placement mentioned above is not rolled-back to 2004, no pro forma adjustments
are made to the actual inter-company debt that existed in 2004.
Management fee
The Offeror has entered into management agreements with Anders Wilhelmsen & Co AS. The
management fee will equal the costs incurred in delivering the agreed management services. The
pro forma accounts for 2004 include a management fee of approximately NOK 15 million.
Tax
The accommodation rigs have been organised within the Norwegian tonnage tax regime since the
acquisition date of the rigs. However, the law has recently been changed so that with effect from
the fiscal year 2006, rigs will not longer qualify for the tonnage tax regime. This means that the
Offeror will no longer be in a position to benefit from the deferred taxation allowed under the
regime. Consequently, the deferred tax on historical operating profits from the accommodation
units will become payable.
In the pro forma accounts, the Offeror has provided for income tax on the basis of their profit for
financial reporting purposes, adjusted for income and expense items which are not taxable or
deductible for income tax purposes, using the current tax rate. This deferred tax provision is
reflecting the possible change on tax rules mentioned above.
Income tax expense has been adjusted for the effects of pro forma adjustments to the profit and loss
statement.
9.2
Effect of International Financial Reporting Standards (IFRS)
General information
As from 2005 Norwegian public companies are subject to new accounting standards introduced in
the European Union. The new accounting standards are called International Financial Reporting
Standards (IFRS). The objective of IFRS is to develop, in the public interest, a single set of high
quality, understandable and enforceable global accounting standards that provide accurate,
transparent and comparable information to help users make economic decisions.
AWO has prepared the pro forma accounts for 2004 according to the IFRS. AWO has prepared the
pro forma accounts based on the current understanding of IFRS.
Below is a description of the main effects between the accounting principles previously used by
Awilco compared with the IFRS principles used in the pro-forma accounts of AWO;
Assets
The useful economic lives of the accommodation rigs are estimated for the material components of
the rigs separately. The major components of the rigs are estimated to have useful economic lives
in the range from 20-38 years. Based on experience, performance and future scheduled dockings,
economic lives are evaluated on a regular basis – at least annually. If the estimated useful economic
life changes future depreciations are adjusted accordingly.
40
There is established residual value for the accommodation rigs. Awilco’s previous principle has
been to depreciate assets to zero over the economic life. We have recalculated accumulated
depreciations for each asset taking into account the residual value and dismantling expenses. The
asset value has been appreciated by the difference in accumulated depreciation based on IFRS and
Norwegian GAAP. Future depreciations are based on depreciation schedules including residual
values and dismantling expenses. The residual value is based on the market value for scrapping at
the reporting date.
Reclassification of docking expenses
Docking expenses are regarded as a separate part of the rig value with a different depreciation
period than the rig. Depreciation of docking expenses is therefore reclassified from operating
expenses to depreciation.
Deferred tax and tax expense
Income tax expense has been adjusted for the effects of IFRS adjustments to the profit and loss
statement. Deferred tax is adjusted due to changes in asset values.
Long term debt
First year installment of long term debt has been classified as current liabilities.
9.3
Accounting principles
Classification of balance sheet items
Assets and liabilities related to the operation of the company are classified as current assets and
liabilities. Assets for long term use are classified as fixed assets.
Revenue
Revenues are recognized as earned, based on contractual daily rates or on a fixed price basis.
Debt issuance costs
Debt issuing costs are amortized and then capitalized if they are directly attributable to the
acquisition, construction or production of a qualifying asset. Borrowing costs are capitalized until
the assets are substantially ready for their intended use. If the resulting carrying amount of the asset
exceeds its recoverable amount, an impairment loss is recorded.
Taxes and deferred tax liabilities
The Offeror provides for income tax on the basis of their profit for financial reporting purposes,
adjusted for income and expense items which are not taxable or deductible for income tax
purposes.
Deferred taxation is provided in the balance sheet as the liability method in respect of temporary
differences between the tax base of an asset or liability and its carrying amount in the balance
sheet. The tax base of an asset or liability is the amount attributed to that asset or liability for tax
purposes. Deferred tax liabilities are recognized for all taxable temporary differences. Deferred
tax assets are recognized for all deductible temporary differences to the extent that it is probable
that taxable profits will be available against which the deductible temporary difference can be
utilized.
Current assets
Current assets are valued at the lower of historical cost and market value.
Foreign currency
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction.
41
Monetary assets and liabilities denominated in foreign currencies are retranslated at the exchange
rate at the balance sheet date.
Fixed assets
Rigs and equipment are stated at cost less accumulated depreciation and accumulated impairment
loss. The cost of an asset comprises its purchase price and any directly attributable costs of
bringing the asset to its working condition. In situation where it can be clearly demonstrated that
expenditures have resulted in an increase in the future economic benefits expected to the obtained
from the use of the asset beyond its originally assessed standard of performance, the expenditures
are capitalized as an additional cost of the asset.
Components of new fixed assets with different economic useful lifetime will have different
depreciation time.
Depreciation is calculated using the straight-line method to write off the cost, after taking into
account the estimated residual value, of each asset over its expected useful life. The expected useful
life for the accommodation rigs is 20 – 38 years.
The useful lives of assets and the depreciation method are reviewed periodically to ensure that the
method and period of depreciation are consistent with the expected pattern of economic benefits
from items of property, plant and equipment.
When assets are sold or retired, their costs and accumulated depreciation and accumulated
impairment loss are eliminated from the accounts and any gain or loss resulting from their
disposals is included in the income statement.
Newbuilding contracts
Newbuilding contracts include payments made under the contracts, capitalized interest and other
costs directly associated with the new bilding program.
Impairment of assets
All assets are reviewed for impairment whenever events of changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. Whenever the carrying amount of an asset
exceeds its recoverable amount, an impairment loss is recognized in the income statement. The
recoverable amount is the higher of an asset’s net selling price and value in use. The net selling
price is the amount obtainable from the sale of an asset in an arm’s length transaction less the costs
of disposal while value in use is the present value of estimated future cash flows expected to arise
from the continuing use of an asset and from its disposal at the end of its useful life. Recoverable
amounts are estimated for individual assets or, if it is not possible, for the cash-generating unit.
Reversal of impairment losses recognized in prior years is recorded when there is an indication that
the impairment losses recognized for the asset no longer exist or have decreased. The reversal is
recorded in the income statement.
Cash flow statement, cash and cash equivalents
The cash flow statement is prepared using the indirect method. Cash represents cash on hand and
deposits with bank that are repayable on demand. Cash equivalents represent short-term, highly
liquid investments which are readily convertible into known amounts of cash with original
maturities of three months or less and that are subject to an insignificant risk of change in value.
Consolidation
The consolidated statements consist of Awilco Offshore ASA and companies where the parent
company controls directly or indirectly more than 50% of the votes. Companies are consolidated
from the time when control is obtained. Companies in the group apply consistent accounting
principles. Inter-company transactions and balances between group companies are eliminated.
42
9.4
Accounts
Profit and loss statement
All figures in NOK 1000
Net operating income
Actual
01.01 - 30.06
2005
Pro forma
01.01 - 31.12
01.01 - 30.06
2004
2004
86 445
270 731
77 542
(66 184)
(9 484)
(26 216)
(101 885)
(136 349)
(21 093)
(40 805)
(198 247)
(51 071)
(10 147)
(14 589)
(75 808)
Operating result
(15 439)
72 484
1 734
Financial items
Interest income
Interest costs
Foreign exchange gain/(loss)
Other financial items
Net financial items
6 041
(12 369)
(32 938)
(2 561)
(41 826)
1 044
(12 348)
28 950
(962)
16 684
317
(3 744)
(14 027)
(618)
(18 072)
Profit before tax
(57 266)
89 168
(16 338)
17 499
(26 483)
4 563
(39 767)
62 685
(11 774)
-0,41
1,03
-0,19
Operating expenses
Adminstrative expenses
Depreciation
Total operating expenses
Tax expense
Profit/(loss) in period
Earnings per share
43
Balance sheet
Actual
Pro forma
30.06.05
31.12.04
30.06.04
Assets
Accomodation units
Jack-up rigs, under construction
Other fixed assets
Fixed assets
566 244
150 854
597 470
97 162
717 098
694 632
1 257 398
717 098
694 632
46 148
0
610 240
656 388
45 057
9 039
146 602
200 698
40 317
19 510
130 336
190 164
1 913 786
917 796
884 796
1 269 834
269 458
189 871
35 226
48 617
19 495
Mortgage debt
Other debt
Total long term debt
426 364
77 251
503 616
223 131
0
223 131
270 703
0
270 703
Creditors
Intercompany debt
Other short term debt and accruals
Total short term debt
0
0
105 111
105 111
3 425
337 828
35 337
376 590
26
350 878
53 823
404 727
1 913 786
917 796
884 796
Investments in associated companies
Total fixed assets
Receivables and accruals
Group receivables
Cash, bank
Current assets
Total assets
581 179
656 096
623
1 237 898
19 500
Equity and debt
Equity
Deferred tax
Total debt and equity
44
Cash flow statement
Cash flow generated by/used in operations
Profit before tax
Tax payable
Depreciation
Foreign exchange effects unrealized
Cash flow from operations
Change in debtor, creditors ,
accruals and provisions
Actual
01.01 - 30.06
2005
Pro forma
01.01 - 31.12 01.01 - 30.06
2004
2004
(57 266)
0
26 216
28 814
-2 236
89 168
(10 424)
40 805
(46 683)
72 866
(16 338)
(361)
14 589
15 350
13 240
18 034
28 887
16 609
15 799
101 754
29 849
Cash flow generated by/used in investments
Invested in fixed assets
Proceeds from sale of fixed assets
Net sale/(purchase) of shares
Other investments
Net cash flow from investments
(547 016)
0
0
(19 500)
-566 516
(262 261)
0
0
0
-262 261
(213 578)
0
0
0
-213 578
Cash flow generated by/used in financial activities
Dividend and/or group contribution etc
New debt
Repayment debt
Equity contributions
Net cash flow from financial activities
0
573 618
(587 688)
1 028 426
1 014 355
5 049
105 573
(29 772)
164 728
245 577
0
102 959
(15 072)
164 647
252 534
463 638
146 602
610 240
85 070
61 532
146 602
68 804
61 532
130 336
Net cash flow from operations
Net cash flow for the year
Cash and cash equivalents per opening balance
Cash and cash equivalents per end of period
Equity
The Company's share capital is NOK 1.141.333.500 made up of 114.133.350 shares with a par value of
NOK 10 per share. All shares of the Company are of the same class and are equal in all respects. The
Company's articles of association do not provide for shares of other classes.
Actual
Group equity
Proforma equity per opening balance
Reversed pro forma effects*
Capital transfers, group contribution etc
Equity contributions
Dividend
Profit/(loss) in period
Equity per ending balance
30.06.05
269 458
11 716
0
1 028 426
0
-39 767
1 269 834
31.03.05
269 458
11 716
0
965 000
0
-23 097
1 223 078
*) The proforma adjustments for 2004 are included in the proforma equity opening balance as
specified above. As these adjustments only relate to the proforma financial statements for 2004, the
net equity effect of the proforma adjustments are reversed in the opening balance of equity in 2005.
45
9.5 Auditor’s statement
The financial statements for the second quarter set out above have not been subject to review or
audit.
In connection with the public listing of the company, Ernst & Young conducted a review of the
first quarter figures of 2005 and a review of the pro forma financial statements and adjustments for
2004. Both reviews were made in accordance with Norwegian Auditing Standard on Review
Engagements RS 910. Further information on this can be obtained from the prospectus issued in
connection with Awilco Offshore’s initial public offering.
9.6
Other financial information
Currency and use of financial instruments
The majority of the Offeror’s revenues and expenses, as well as assets and liabilities, are
denominated in USD. The Offeror currently has no intention to engage in the use of hedging or
speculation activity through the use of financial instruments.
Per share data
Figures in NOK
2Q2005
Actual
-0.41
-
Earnings per share
Dividend per share
2Q2004
Proforma
-0.19
-
2004
Proforma
1.03
-
Analytical information
Awilco Offshore’s is exposed to two distinct markets; the market for accommodation units and the
market for jack-up drilling rigs, holding three rigs under construction. See more information in
chapter 7. The Company’s activity in 2004 was operation of the two accommodation units, of
which one unit was in operation for the full year while the other unit commenced operation in June
2004 shortly after completion of its reconstruction. The net operating income and operating
expenses for 2004, as set out in the pro forma accounts for 2004 in section 9.4, reflect this activity.
Set out below is an overview of contract rates received by the Company’s accommodation units in
2004/2005.
Unit / Contract
Starting
Ending
Rate, USD/day
Port Rigmar
BP Valhall
ConocoPhillips
ConocoPhillips
August 2003
February 2004
October 2005
February 2004
September 2005
September 2006*
55,500
55,500
68,000
Port Reval
BP Clair
Aker Kværner
June 2004
June 2005
January 2005
August 2005
110,000
130,000
* Plus options
9.7
Events since the second quarter report
On August 30 2005, the Offeror and Sinvest ASA announced to co-operate on the acquisition of
Petrojack. The parties have agreed that all future acquisitions of Petrojack shares shall be made on
a 50/50 basis. The parties agreed to continue Awilco Offshore’s Offer and that an improved offer
will not be made.
On September 5 2005, the Offeror entered into a five year bare-boat contract with Arabian Drilling
Company for the employment of the drilling rig under construction, WilPower. The contract value
is approximately USD 131 mill (including mobilization and demobilization fees), and Arabian
Drilling Company has the option to extend the contract for a further year for a contract value of
approximately USD 33 mill. Arabian Drilling Company will be responsible for all operating and
local expenses. The rig will be employed in Saudi Arabia, and will commence work under the
contract in July 2006.
46
9.8
Statutory auditors
Awilco Offshore’s statutory auditor is Sondre Kvaalen at Ernst & Young, Oslo, Norway. Ernst &
Young has been Awilco Offshore’s auditor since the company’s inception.
47
10. Share capital and shareholder matters
10.1 Share capital
Share capital prior to the Offer
The Offeror’s share capital prior to the Offer is NOK 1,185,303,330, made up of 118,530,333
shares with a par value of NOK 10 per share, all fully paid. All shares of the Offeror are of the
same class and are equal in all respects. The Offeror’s articles of association do not provide for
shares of other classes. Each share carries the right to one vote in shareholders’ meetings. The
Offeror’s articles of association do not provide for limitations on the transferability or ownership of
shares.
The development of the Offeror’s share capital is set forth in the table below.
Time
January 2005
February 2005
February 2005
February 2005
May 2005
August 2005
Event
Incorporation
Contribution of assets
Split 10:1
New issue
New issue
New issue
Capital increase
1,000,000
610,333,500
500,000,000
30,000,000
43,969,830
Share price
100.0
20.0
22.0
33.9
Share capital
1,000,000
611,333,500
611,333,500
1,111,333,500
1,141,333,500
1,185,303,330
Shares issued
10,000
6,113,335
61,133,350
111,133,350
114,133,350
118,530,333
There are no outstanding warrants, stock options, convertible bonds or other securities convertible
into shares of the Offeror.
10.2 Share capital after the Offer
The Consideration Shares will be issued through an increase of the share capital of the Offeror. The
new shares will be issued to shareholders of Petrojack who accept the Offer based on the offered
exchange ratio of 2:1 and the subscription price will be determined based on the closing share price
of the Awilco Offshore share on the day that the resolution is passed. The reasons why Awilco
Offshore has offered this exchange ratio are set out in section 4 of this Offer Document. The
number of new shares to be issued by the Offeror will depend upon the level of acceptance of the
Offer. Since the number and identity of the Petrojack shareholders who accept the Offer will only
be known after the Offer Period, the formal resolution to increase the share capital can only be
passed after the expiry of the Offer Period.
Assuming completion of the Offer, the share capital of the Offeror will be increased by a minimum
of NOK 10 and a maximum of NOK 171,564,850, through the issuance of a minimum of 1 and a
maximum of 17,156,485 new shares, to a minimum of NOK 1,185,303,340 and a maximum of
NOK 1,356,868,180, made up of a minimum of 118.530.334 and a maximum of 135,686,818
shares, each with a nominal value of NOK 10.
The board of directors of the Offeror anticipates passing the following resolution after the expiry of
the Offer Period pursuant to the authorization granted at the extraordinary general meeting on 4
April, 2005:
1.
The company’s share capital is increased by [●]* through the issuance of [●]*new
shares, each with a par value of NOK 10 at a subscription price of NOK [●]* per share.
The share premium will be transferred to the company’s share premium fund.
2.
The new shares are issued to shareholders of Petrojack ASA who have accepted
Awilco Offshore ASA’s voluntary offer to acquire all outstanding shares in the
company, as further listed in appendix 1 to this resolution. Subscription for the shares
shall take place in the minutes of the board meeting.
3.
In consideration of the new shares, the subscribers shall contribute 2 shares in
Petrojack ASA for each new share of Awilco Offshore ASA.
4.
The share contribution shall be made no later than [●]* by the transfer of the tendered
48
5.
6.
shares in Petrojack ASA to a VPS-account in the name of Awilco Offshore ASA.
The new shares shall carry rights to dividends from and including the financial year
2005, and shall otherwise rank equal with the existing shares as from the registration of
the share capital increase with the Register of Business Enterprises.
Section 4 of the articles of association shall be amended so as to reflect the number of
shares and the share capital after the share capital increase.
*These items of information will not be known until after the end of the Offer Period. Appendix 1 will include a list of
the Petrojack shareholders who have accepted the Offer and the number of Consideration Shares to be issued to each of
them. The subscription price will be determined based on the closing share price of the Awilco Offshore share on the day
that the resolution is passed. Since the new shares will be issued in consideration of the tendered Petrojack shares and in
accordance with the offered exchange ratio of 2:1, the subscription price will not have any impact on the number of
shares received by each tendering Petrojack shareholder.
If Awilco Offshore, as a result of the Offer or otherwise, becomes acquires any further shares in
Petrojack, and Awilco Offshore and Sinvest at such time jointly own more than 40% of the shares
in Petrojack, Awilco Offshore will be obligated under the Securities Trading Act to make a
mandatory offer for all shares in Petrojack not already owned by it or Sinvest, see section 3.13 of
this Offer Document
Registration
The Offeror’s shares are registered in VPS with Nordea Bank Norge ASA, Securities Service
Department, as registrar. The shares are registered with ISIN NO 001 0255722.
Authorizations to issue new shares
The extraordinary general meeting on 4 April 2005 also granted the board of directors an
authorization to increase the share capital by up to NOK 525,666,750. The authorization is valid
until the annual general meeting in 2006, but in no event later than June 30, 2006. The
authorization includes share capital increases against contributions other than in cash, the right to
incur special obligations for the company, cfr. the Norwegian Public Limited Liability Companies
Act § 10-14, and resolutions on mergers in accordance with § 13-5 the Norwegian Public Limited
Liability Companies Act. The pre-emptive rights of the shareholders under § 10-4 of the
Norwegian Public Limited Liability Companies Act may be set aside. The general meeting has not
issued any instructions to the board of directors as to the use of the authorization.
As of the date of this Offer Document Awilco Offshore has used NOK 73,969,830 of the above
mentioned authorization.
Other authorizations
The Offeror does not hold any authorizations to issue convertible loans or to acquire own shares.
Shareholders and share trading
As per 12 September 2005, the number of shareholders of the Offeror is 631, of which 87% are
Norwegian and 13% are non-Norwegian.
The following table sets forth the 20 largest shareholders of the Offeror, as registered in VPS as per
9 September 2005.
Shareholder
AWILCO AS ATTN: MARIE KASSEL
BANK OF NEW YORK, BR S/A EQUITY TRI-PARTY
AWECO HOLDING AS
GOLDMAN SACHS & CO EQUITY NONTREATY CUS
CREDIT SUISSE FIRST (EUROPE) PRIME BROKE
ORKLA ASA
ODIN OFFSHORE ODIN FORVALTNING AS
No. Of shares
53 850 630
3 459 311
3 300 000
3 262 700
3 024 000
2 572 300
2 303 000
Ownership in
%
45,4 %
2,9 %
2,8 %
2,8 %
2,6 %
2,2 %
1,9 %
49
CITIBANK, N.A. GENERAL IRISH RES.-T
BANK OF NEW YORK, BR BNY GCM CLIENT ACCOU
ODIN NORDEN
DEUTSCHE BANK (SUISS
MERRILL LYNCH INTERN A/C MLI GEF A/C NON
STOREBRAND LIVSFORSI P980, AKSJEFONDET
ENSKILDA SECURITIES EGENHANDELSKONTO
DEUTSCHE BANK AG LON PRIME BROKERAGE FULL
BARINGS (GUERNSEY) L NON TREATY CLIENTS A
THE NORTHWESTERN MUT INSURANCE COMPANY FO
WATRIUM AS
ODIN NORGE
TEIGEN FRODE NAKA RACHA TLD, 87/2
Total top 20
2 288 200
2 059 527
1 981 087
1 883 500
1 616 000
1 589 598
1 521 900
1 480 946
1 353 528
1 165 420
1 100 000
1 057 050
1 000 000
91 868 697
1,9 %
1,7 %
1,7 %
1,6 %
1,4 %
1,3 %
1,3 %
1,3 %
1,1 %
1,0 %
0,9 %
0,9 %
0,8 %
77,5 %
The shareholders referred to as being related to Wilhelmsen family members are Aweco Holding
AS, Watrium AS and Miami AS which together hold approximately 4.5% of the shares in Awilco
Offshore. Aweco Holding AS owns 60.1% of A Wilhelmsen AS which again owns 100% of
Awilco AS and therefore Aweco Holding AS and Awilco AS will be consolidated with Awilco
under the Securities Trading Act § 4-5 with respect to their ownership in Awilco Offshore ASA. In
total the Wilhelmsen family therefore controls 49.9% of the shares and votes in Awilco Offshore
ASA.
Mr Arne Alexander Wilhelmsen has 33.2% ownership interest in Aweco Holding AS. For further
detail of the Wilhelmsen family ownership in Awilco Offshore ASA see section 7.3.
10.3 Share price development
The below chart shows the share price performance of Awilco Offshore since its listing on the Oslo
Stock Exchange on May 11 2005.
38,00
8 000
36,00
7 000
34,00
6 000
32,00
30,00
4 000
28,00
Volume ('000s)
Share price (NOK)
5 000
3 000
26,00
2 000
24,00
1 000
22,00
20,00
11-mai
0
25-mai
08-jun
22-jun
06-jul
20-jul
03-aug
17-aug
31-aug
50
10.4 Shareholder policy and corporate governance
Corporate governance
Awilco Offshore is dedicated to observing high standards of corporate governance, based on the
principles set forth in the Norwegian Code of Practice for Corporate Governance, as published on 7
December 2004 (the “Code of Practice”). The Offeror’s Board and management are carrying out
an assessment with regard to the implementation of the recommendations of the Code of Practice.
The Offeror will annually produce a report as to corporate governance, which will be included in its
annual report. It is the Offeror’s ambition to adopt the recommendations set forth in the Code of
Practice. To the extent that the Offeror does not fully adhere to all the recommendations in the
Code of Practice, the reasons for choosing an alternative approach will be explained in this report.
Shareholder policy
The Offeror intends to provide the market and its shareholders with reliable, timely and consistent
information to ensure that investors at all times have a sound basis for their investment decisions.
In addition to regular quarterly reporting, the Offeror will provide notifications in respect of
significant events as they occur. The Offeror intends to meet regularly with investors and analysts.
Any financial reports, notifications and presentations will be made available through the
notification system of the Oslo Stock Exchange.
Dividend policy
The Offeror has large expected capital expenditures and currently has no plans to pay dividends
until these expenditures have been made. In addition, the Offeror’s financing arrangements place
limitations on the Offeror’s ability to pay dividends.
It is however envisaged that the dividend policy will be reconsidered when the rigs currently under
construction have been delivered and earnings from these rigs are being generated. Any such
dividends will be considered in light of the Offeror’s financial position, its debt covenants, and
capital requirements for additional investment.
51
11. Legal matters
This section 11 makes use of a number of definitions not used elsewhere in this Offer Document.
Such definitions are made in the text below.
11.1 The transfer of assets
Awilco Offshore was incorporated on 21 January 2005 as a wholly owned subsidiary of Awilco.
Wilpower AS and Wilcraft AS were incorporated on the same date as wholly owned subsidiaries of
Awilco Offshore.
On 13 February 2005, the Offeror entered into a share purchase agreement with Awilco pursuant to
which the Offeror acquired all of the shares in Port Rigmar AS, Awilco Sea Beds AS, Awilco Sea
Beds II AS and Wilhelmsen Oil & Gas AS for an aggregate purchase price of NOK 571,645,229
plus interest at a rate of 2% p.a. from 1 January 2005 to closing. The acquisition was made with
economic effect from 1 January 2005.
On 13 February 2005, the Offeror’s wholly owned subsidiary Wilpower AS entered into a share
purchase agreement with Awilco pursuant to which it acquired all of the shares in Awilco Drilling
Ltd for a purchase price of NOK 164,640,954 plus interest at a rate of 2% p.a. from 1 January 2005
to closing. The acquisition was made with economic effect from 1 January 2005.
On 13 February, 2005, the Offeror’s wholly owned subsidiary Wilcraft AS entered into a share
purchase agreement with Awilco pursuant to which it acquired all of the shares in Wilcraft Ltd for
a purchase price of NOK 80,640 plus interest at a rate of 2% p.a. from 1 January 2005 to closing.
The acquisition was made with economic effect from 1 January 2005.
11.2 Construction contracts
PPL Contract 1
The PPL Contract 1 was entered into on 20 March 2004 between Mosvold Drilling Ltd (now called
Awilco Drilling Ltd) and PPL under which PPL agreed to design, construct, launch, equip, test and
deliver to Awilco Drilling Ltd a Pacific Class 375 ft jack-up drilling rig (the “PPL Rig”).
All rights and obligations of Awilco Drilling Ltd under the PPL Contract 1 have since been novated
to Mosbarron Ltd (now called Wilpower Ltd).
The PPL Rig, bearing builder’s hull number P.2007, shall be delivered with a “+A1 Self-Elevating
Drilling Unit” classification with the American Bureau of Shipping.
The price for the PPL Rig (the “Contract Price”) is USD 112,100,000, payable by eight
instalments: The three first instalments, comprising 30% of the Contract Price, have already been
paid. The last five instalments will be paid as follows:
1.
2.
3.
4.
5.
20% is payable on completion of the main deck;
15% is payable on installation of the three first leg sections;
10% is payable on launching;
10% is payable on completion of leg erection; and
15% is payable on delivery.
In addition to the Contract Price, Wilpower Ltd shall pay to PPL a provisional contract sum of
USD 5,500,000 (the “PC Sum”), according to the same payment schedule as the Contract Price.
The PC Sum shall be used by PPL to make payments on behalf of Wilpower Ltd:
52
1. of up to USD 2,500,000 in respect of various project management costs; and
2. of up to USD 3,000,000 in respect of equipment for the PPL Rig, variation orders and various
finance costs.
The difference between the project price set out in section 7.1 and the Contract Price and the PC
Sum comprises inter alia variation orders, spare parts, pipe handling, cost of site teams and other
construction supervision costs and financing costs.
Any part of the PC Sum which has not been used by delivery shall be repaid to Wilpower Ltd or its
financing banks to reduce Wilpower Ltd’s indebtedness.
Property and risk in the PPL Rig shall remain with PPL until delivery, when it shall pass to
Wilpower Ltd.
Following delivery, PPL provides a 12 month warranty against defects in workmanship and
materials, and failure of the PPL Rig to meet the performance criteria set out in the Specifications.
Subject to permissible delays and force majeure, delivery of the PPL Rig shall take place in May
2006, being 24 months after the payment of the first instalment of the Contract Price.
If delivery is delayed by more than 14 days beyond the contractual delivery date, and the delay is
not due either to force majeure or other permissible delays, then PPL will pay liquidated damages
of USD 50,000 for each day of delay after the 14 day grace period, subject to a maximum of 5% of
the Contract Price, when Wilpower Ltd shall be entitled to cancel the PPL Contract 1.
PPL will also pay liquidated damages if the variable load criteria set out in the PPL Contract 1 are
not achieved, subject to a maximum of USD 5,000,000. If the deficiency in any variable load
exceeds 5%, Wilpower Ltd shall be entitled to cancel the PPL Contract 1.
If the total delay, whether for permissible or non-permissible delays, reaches 240 days, Wilpower
Ltd shall be entitled to cancel the PPL Contract 1.
On cancellation on any of the above grounds, Wilpower Ltd’s only remedy is to recover all
amounts then paid by it under the contract, together with interest at three month Libor plus 2%.
In addition to the circumstances mentioned above, Wilpower Ltd shall be entitled to cancel the PPL
Contract 1 for material continuing breach or delay on the part of PPL, or on the bankruptcy or
receivership of PPL or SCM.
On cancellation of the PPL Contract 1 by Wilpower Ltd in such circumstances, it shall be entitled
to recover damages for its losses and/or to take possession and title to the rig under construction,
and all material and equipment in the possession or owned by PPL and intended to be incorporated
into the PPL Rig, and either remove them from PPL’s shipyard or complete the work at such
shipyard. If Wilpower Ltd exercises its right to take possession and title to the rig under
construction, PPL’s liability for loss or damage sustained by Wilpower Ltd shall be limited to 10%
of the Contract Price.
PPL may cancel the PPL Contract 1 for material breach or delay on the part of Wilpower Ltd, or on
its bankruptcy or receivership, and recover damages for its losses.
The PPL Contract 1 is governed by English law with non-exclusive submission to the Commercial
Court in London.
PPL’s obligations under the PPL Contract 1 are guaranteed by SCM, by a performance guarantee
dated 7 May 2004.
53
PPL Option Agreement
The PPL Option Agreement was entered into on 30 March 2004 between PPL and Awilco Drilling
Ltd under which PPL granted to Awilco Drilling Ltd options to require PPL to design, construct,
equip, complete and deliver up to three further jack-up drilling units similar to the PPL Rig.
The first option is exercisable during the period 1 October 2004 to 1 July 2005 and has been
exercised, see “PPL Contract 2” below. This contract rig is referred to elsewhere in this Offer
Document as WilSuperior.
The second option is exercisable during the period 1 April 2006 to 1 October 2006.
The third option is exercisable during the period 1 March 2007 to 1 September 2007.
Each option is independent and may be exercised whether or not any other option is exercised
provided, however, that no option may be exercised if Awilco Drilling Ltd is then in breach of the
PPL Contract 1.
An option may be exercised by notice from Awilco Drilling Ltd and, within 30 days from the
exercise of an option, the parties will enter into a construction contract in substantially the same
form as the PPL Contract 1, subject to the following amendments:
1. construction will commence three months after the date of the notice exercising the option, and
the contractual delivery date shall be 24 months after commencement of construction;
2. the contract price for the first option unit shall be USD 120,934,000, for the second option unit
122,046,000 and for the third option unit 123,157,000, but each price is subject to adjustment if
the cost of the relevant drilling package (which is supplied by third parties) exceeds USD
25,000,000 (The difference between the project prices set out in section 7.1 and these contract
prices comprises inter alia variation orders, spare parts, pipe handling, cost of site teams and
other construction supervision costs and financing costs);
3. subject to Awilco Drilling Ltd’s consent (not to be unreasonably withheld) the relevant unit may
be built at another shipyard in Singapore wholly owned by SCM.
Awilco Drilling Ltd may assign its rights under the PPL Option Agreement to a special purpose
company with satisfactory equity and which is wholly owned, controlled or managed by Awilco
Drilling Ltd.
In the event that SCM’s guarantee of the financing of the PPL Rig is released, PPL will procure
that SCM provides a similar guarantee for the financing of one of the option units, provided that the
financial terms of the new guarantee, and the underlying obligations of the relevant borrower, are
not more onerous than those in respect of the financing of the PPL Rig.
The PPL Option Agreement is governed by English law with non-exclusive submission to the
Commercial Court in London.
PPL Contract 2
On 22 February 2005, Awilco Drilling assigned its right under the PPL Option Agreement to the
First Option to its wholly-owned subsidiary Wilsuperior Ltd. On the same day, Wilsuperior Ltd.
exercised the First Option. A construction contract (the “PPL Contract 2”) was entered into on 5
March 2005 between Wilsuperior Ltd and PPL for the design, construction, launching, equipment,
testing and delivery of the PPL Rig 2 (to be named “WilSuperior”). The PPL Contract 2 is in all
material respects similar to the PPL Contract 1, with the exceptions that:
1. The Contract Price under the PPL Contract 2 is USD 120,934,000 inclusive of drilling
54
package (with the difference between the Contract Price and the project price set out in
section 7.1 comprising inter alia variation orders, spare parts, pipe handling, cost of site
teams and other construction supervision costs ad financing costs); and
2. The scheduled delivery of the PPL Rig 2 shall be in July 2007.
PPL Option 1A
Following the exercising of the first option under the PPL Option Agreement on 22 February 2005,
PPL has granted a new option (Option 1A) to Awilco Drilling Ltd to require PPL to design,
construct, equip, complete and deliver an additional jack-up drilling unit like the first option rig.
The terms and conditions for Option 1A shall be the same as the definition in the PPL Option
Agreement described above save for the following:
1. Notice period is from 1 October 2005 to 1 March 2006;
2. Construction Commencement Date is three months after the notice has been served;
3. The option Contract Price is USD 135.5m (with the difference between the Contract Price
and the project price set out in section 7.1 comprising inter alia variation orders, spare
parts, pipe handling, cost of site teams and other construction supervision costs ad
financing costs).
Keppel Contract
The Keppel Contract was entered into on 31 January 2005 between Keppel FELS and Wilcraft Ltd
under which Keppel FELS agreed to design, construct, equip, complete, test and deliver a “Keppel
FELS MOD V Enhanced B-Class” mobile offshore self-elevating drilling unit (the “Keppel FELS
Rig”).
The Keppel FELS Rig shall be delivered with a “+A1 Self-Elevating Drilling Unit” classification
with the American Bureau of Shipping.
The price for the Keppel FELS Rig (the “Contract Price”) is USD 117,200,000. The difference
between the project price set out in section 7.1 and the Contract Price comprises additional work
with Keppel FELS, estimated by Keppel FELS to approximately USD 8 million, as well as inter
alia , cost of site teams and other construction supervision costs and financing costs. Subject only to
adjustment for agreed variation orders, the Contract Price is a fixed lump sum price, and includes
an allowance of USD 700,000 for spares beyond those required by class and other regulatory
bodies.
The Contract Price is payable in five instalments. Two instalments, comprising 40% of the Contract
price, have already been paid. The last three instalments will be paid as follows:
1. 20% is payable within three business days of notice that keel-laying of the first double-bottom
block has taken place;
2. 20% is payable within three business days of notice of launching/float-out; and
3. 20% is payable on delivery of the rig to Wilcraft Ltd.
The contractual delivery date is 31 December 2006. If delivery is delayed by more than 30 days,
and the delay is not due either to force majeure or other permissible delays, then Keppel FELS will
pay liquidated damages of USD 40,000 for each day of delay after the 30 day grace period, subject
to a maximum of USD 6,000,000.
If Wilcraft Ltd has secured a drilling contract and can financially benefit from early delivery,
Wilcraft Ltd will pay a bonus of USD 15,000 for each day by which delivery precedes the
contractual delivery date, subject to a maximum of USD 900,000.
Keppel FELS will also pay liquidated damages if the variable load criteria set out in the Keppel
55
Contract are not achieved, subject to a maximum of USD 2,400,000.
Risk of loss or damage to the Keppel FELS Rig shall remain with Keppel FELS until delivery, but
title to the rig, and all equipment, raw materials, goods and appurtenances intended for
incorporation or installation in the rig, shall pass progressively to Wilcraft Ltd as it is constructed.
Following delivery, Keppel FELS provides a 12 month warranty against defects in workmanship
and materials.
Wilcraft Ltd may terminate the Keppel FELS Contract for material continuing breach by Keppel
FELS, on the insolvency of Keppel FELS, or if delivery is delayed by reason of force majeure or
other non-permissible delays aggregating 180 days or more, in which event Wilcraft Ltd may, at its
option, either:
1. recover all amounts paid to Keppel FELS under the contract, together with interest at three
month Libor plus 1.5%, and any purchaser’s supplies (and will then retransfer title to the rig
under construction and all other equipment, raw materials, goods and appurtenances which had
been transferred to it by Keppel FELS); or
2. take possession of the rig under construction, together with all other equipment, raw materials,
goods and appurtenances which it then owns, and any purchaser’s supplies.
Keppel FELS may terminate the Keppel FELS Contract if delivery is delayed by reason of force
majeure aggregating 180 days or more, in which event Wilcraft Ltd may exercise its options as
described above.
Keppel FELS may also terminate the Keppel FELS Contract:
1. if Wilcraft Ltd fails to make any payment due under the contract within seven days of demand;
2. if Wilcraft Ltd fails to take delivery of the rig on completion; or
3. on the insolvency of Wilcraft Ltd;
in which event Keppel FELS may recover from Wilcraft Ltd all costs incurred by it in the
construction of the rig, and in terminating the construction work, to the extent that such costs
exceed the amounts already paid by Wilcraft Ltd under the contract.
Except for its liability:
1. to refund instalments and interest;
2. to pay liquidated damages;
3. to deliver the Keppel FELS Rig to Wilcraft Ltd free from encumbrance; and
4. certain indemnities;
Keppel FELS’ liability under the Keppel FELS Contract is limited to 10% of the Contract Price.
The Keppel FELS Contract is governed by English law with non-exclusive submission to the courts
of Singapore.
The obligations of Keppel FELS to refund amounts paid by Wilcraft Ltd under the Keppel FELS
Contract plus interest on those amounts, in the event of termination have been guaranteed by
Keppel Marine and Offshore Limited, Keppel FELS’ immediate parent company, by a guarantee
dated 2 February 2005.
Awilco, the intermediate parent company of Wilcraft Ltd, has issued a letter of comfort to Keppel
FELS dated 27 January 2005 regarding its policy towards its subsidiaries.
56
Keppel Option Agreement
The Keppel Option Agreement was also entered into on 31 January 2005 between Keppel FELS
and Wilcraft Ltd, under which Keppel FELS granted to Wilcraft Ltd an option to require Keppel
FELS to construct and deliver a second rig, identical to the Keppel FELS Rig, on the same terms
and conditions as those contained in the Keppel Contract, except that: The first option was
exercisable during the period 1 August 2005 to 31 January 2006 and has been exercised, see
“Keppel Contract 2” below. This rig is referred to elsewhere in this Offer document as “WilTBN”.
Keppel Contract 2
On August 1 2005 Wilcraft Ltd. exercised Keppel option A. A construction contract (the “Keppel
Contract 2”) was entered into on August 18 2005 between Wilcraft Ltd and PPL for the design,
construction, completion and delivery of the Keppel Rig 2 (To Be Named ). The Keppel Contract
2 is in all material respects similar to the Keppel Contract 1 (“WilCraft”), with the exceptions that:
1. The Contract Price under the Keppel Contract 2 is USD 119,800,000 inclusive of drilling
package (with the difference between the Contract Price and the project price set out in
section 7.1 comprising inter alia variation orders, spare parts, pipe handling, cost of site
teams and other construction supervision costs ad financing costs); and
2. The scheduled delivery of the Keppel Rig 2 shall be in the fourth quarter of 2007.
Keppel Option B
Following the exercising of the Keppel option A, Keppel Fels has granted a new option (Keppel
option B) to Wilcraft Ltd to require Keppel Fels to design, construct, equip, complete and deliver
an additional jack-up drilling unit like the first option rig.
The terms and conditions for Keppel option B shall be the same as the definition in the Keppel
Option Agreement described above save for the following:
1. Notice period is from 1 March 2006 to 1 August 2006;
2. The delivery date shall be no later than 31 May 2009;
3. The option Contract Price is USD 136m (with the difference between the Contract Price
and the project price set out in section 4.1 comprising inter alia variation orders, spare
parts, pipe handling, cost of site teams and other construction supervision costs ad
financing costs).
4. The Contract Price is subject to adjustments for currency exchange rates, steel price
increase and price increase for major equipment prices..
Wilcraft Ltd may nominate another company to enter into the construction contract for the option
rig, provided that:
1.
2.
3.
it is a subsidiary or affiliate of Wilcraft Ltd;
it has the financial capacity to fulfil its obligations under the construction contract; and
Wilcraft Ltd or a subsidiary of Wilcraft Ltd is appointed as the company’s representative
and project manager for the construction contract.
The Keppel Option Agreement is governed by English law with non-exclusive submission to the
courts of Singapore.
11.3 Bank financing agreements
PPL Contract 1 financing
A credit facility agreement (the ”Loan Agreement”) was entered into on 7 May 2004 between
Wilpower Ltd as borrower, certain financial institutions as lenders and Standard Chartered Bank
(“SCB”) as Arranger, Facility Agent and Security Agent. The loan Agreement was amended by a
letter dated 14 May 2004 (the “Amendment Letter”).
57
To finance its obligations under the PPL Contract 1, the Lenders have provided a loan facility to
Wilpower Ltd of USD 94,080,000 or (if lower) 80% of the Contract Price and the PC Sum.
As a condition of drawdown under the loan facility, Wilpower Ltd was required to deposit into an
escrow account with SCB an amount of not less than USD 23,520,000, to fund the 20% balance of
the Contract Price and the PC Sum. This condition has been fulfilled.
The loan facility is available for drawing in multiple tranches for a period of 32 months from the
date of the Loan Agreement (ie until 7 January 2007).
The loan carries interest at a rate of Libor (for interest periods of one, three or six months, or other
periods agreed by the lenders) plus a margin of 2.25%.
The loan is repayable by eight instalments, each of the first seven being in the amount of USD
3,136,000 and the final instalment being equal to the outstanding balance of the loan.
The first instalment is to be repaid on 7 January 2007 and each subsequent instalment is repayable
at six-monthly intervals thereafter.
The loan (or relevant part) shall be prepaid in the following circumstances:
1. if the PPL Rig is sold or becomes a total loss;
2. to the extent that it becomes unlawful for a lender to maintain its participation in the loan;
3. to the extent that Wilpower Ltd receives damages from PPL under the PPL Contract 1 relating
to the performance of the PPL Rig;
4. to the extent that the PC Sum is not fully utilised before delivery; or
5. if Wilpower Ltd pays a dividend, an amount equal to one third of the dividend shall be prepaid.
Wilpower Ltd’s obligations under the Loan Agreement are (or are to be) secured by:
1.
2.
3.
4.
a guarantee from SCM (the “SCM Guarantee”);
a charge over Wilpower Ltd’s escrow account with SCB,
a charge granted by Awilco Drilling Ltd over the share capital of Wilpower Ltd,
a security assignment and charge over (i) the PPL Contract 1 and SCM’s performance guarantee
of that contract, (ii) insurances over the PPL Rig, (iii) any charter or other employment contract
for the PPL Rig, (iv) any sale contract for the PPL Rig, and (v) all other assets of Wilpower Ltd,
and
5. a mortgage over the PPL Rig.
The PPL Contract 1 provides that in the event that SCM’s guarantee of the financing of the PPL
Rig is released, PPL will procure that SCM provides a similar guarantee for the financing of one of
the option units, provided that the financial terms of the new guarantee, and the underlying
obligations of the relevant borrower, are not more onerous than those in respect of the financing of
the PPL Rig.
In addition, Awilco Drilling Ltd has entered into a shareholder support agreement, under which
Awilco Drilling Ltd has agreed (amongst other things) to subscribe for further shares in Wilpower
Ltd in order to fund (i) any operating costs arising before delivery of the PPL Rig under the PPL
Contract 1 and (ii) any modification costs, in respect of which Wilpower Ltd does not have
available funds.
The Loan Agreement includes provisions usually found in loan documentation of this nature,
including (amongst others) covenants (i) that Wilpower Ltd will remain a wholly owned subsidiary
of Awilco Drilling Ltd, (ii) that Awilco Drilling Ltd will remain a subsidiary of Awilco Offshore,
58
(iii) that, upon listing, Awilco Offshore remains listed, (iv) that Awilco will have control of 40% of
the board of directors of Awilco Offshore, provided that such requirement is permitted by the Oslo
Stock Exchange, and (v) that Wilpower Ltd will continue to be managed by Wilhelmsen Marine
Services AS under the terms of a management agreement.
The Loan Agreement is governed by English law and the parties submit to the jurisdiction of the
English courts.
Nordea Credit Facility
Certain subsidiaries of the Offeror have entered into an agreement with Nordea Bank Norge ASA
for USD 210 million of senior credit facilities consisting of:
1. A term-loan facility in an aggregate principal amount equal to USD 80 million for the debt
financing of the accommodation units, all of which has been drawn.
2. A pre- and post delivery term loan facility in an aggregate principal amount equal to the lesser
of (x) USD 130 million and (y) 50% of the delivered cost of the jack-up units to be financed by
the facility, being the WilCraft rig and the WilSuperior rig.
Borrowers under the loan agreement are Port Rigmar AS, Wilhelmsen Oil & Gas AS, Wilcraft Ltd
and Wilsuperior Ltd.
The loans are secured by:
1. Guarantees from the Offeror, Awilco Sea Beds AS, Awilco Sea Beds II AS, Wilcraft AS and
any holding company of Wilsuperior Ltd.
2. A first priority security interest in the rigs/accommodation units being financed by the loans,
and all earnings from and insurances on such rigs/accommodation units.
3. A first priority security interest in the shares of certain of the Offeror’s subsidiaries.
4. During the construction period of the jack-up rigs, a first priority security interest in the
borrowers’ rights under the shipbuilding contracts, insurance and related refund guarantees.
The loans shall carry interest at a rate of LIBOR plus a margin of 1 5/8% per annum. A
commitment fee at a rate of 40% of the margin will accrue on the unutilized commitment from time
to time under the pre- and post delivery term loan facility.
The loans will be repaid in quarterly instalments of USD 1.43 million in respect of each of the
accommodation units, commencing three months from the initial borrowing date, and in quarterly
instalments of USD 1.35 million in respect of each of the WilCraft and WilSuperior rigs. The final
maturity of the credit facilities will be on the fifth anniversary of the initial borrowing date.
The loan agreement includes customary financial covenants, including covenants as to minimum
cash, positive working capital, minimum interest coverage ratio, capitalization ratio and collateral
maintenance ratio. Other covenants includes the maintenance of Awilco Offshore’s listing on the
Oslo Stock Exchange. Anders Wilhelmsen Group maintaining negative control (34%) over the
Offeror, limitations on consolidation, mergers and de-mergers, limitations on dividends and
limitations on new indebtedness.
The Company is in the process of amending the Nordea Credit Facility to also include the financing
of Keppel Contract 2 (“WilTBN”).
11.4 Management agreements
Premium Drilling
Sinvest ASA and Awilco Offshore ASA have entered into a shareholders’ agreement relating to
Premium Drilling AS. The agreement defines and clarifies the areas of responsibility of Premium
Drilling. Premium Drilling shall be responsible for the marketing, contracting and operation
(including repair & maintenance) of the two companies’ fleet of jackup drilling rigs. Premium
Drilling shall also advise the owners on business development and market strategy.
59
Each rig owing company will enter into separate management agreements with Premium Drilling.
The agreements shall be entered into not later than six months before scheduled delivery of the rig
from the shipyard. No management agreements have yet been entered into (the Offeror’s first rig is
scheduled for delivery in the second quarter of 2006).
S,G&A expenses will from the outset be covered by an initial equity contribution, which was paid
by the two parties at the establishment in May 2005. In the future these costs will be covered by a
management fee paid equally by the owners, while direct operating expenses for the drilling units
will be funded by the respective owner of the drilling rig. The level of the fixed part of the
management fee has not yet been determined.
Anders Wilhelmsen & Co AS
Awilco Offshore has entered into a management agreement with Anders Wilhelmsen & Co AS.
The agreement covers a minor part of the Offeror’s support functions such as accounting-, treasury
services and office rentals. The management fee will be on market terms and can be terminated by
the Offeror by six months written notice and by Anders Wilhelmsen & Co AS by twelve months
written notice.
11.5 Certain other legal matters
Rights to the Awilco name
AWO has entered into an agreement with Awilco in respect of the Awilco name. Under this
agreement, AWO is granted free of charge a non-exclusive, non-transferable right to use the name
“Awilco” as part of its corporate name and, subject to certain restrictions, as a trade mark. Awilco
may terminate the agreement by six months’ notice if Awilco’s ownership in AWO should for any
reason be reduced below 20 per cent. Awilco may terminate the agreement with immediate effect if
AWO is in material breach of the agreement or if AWO uses the “Awilco” name in a manner which
is likely to cause material harm to the goodwill attached to the name. A termination of the
agreement by Awilco would mean that AWO would need to change its corporate name and to cease
using any trade marks which include the name “Awilco”.
Litigation
There are no material claims, actions, suits, litigation or proceedings pending, expected or
threatened against or affecting AWO or any of its subsidiaries or any of its assets before any court,
arbitrator or any administrative body or governmental authority, nor is there any qualified basis for
any such claim, action, suit, litigation or proceeding that has not been disclosed herein.
Documents
Documents referred to in this Offer Document are available for inspection at the Offeror’s office in
Oslo.
60
12. Taxation
12.1 Introduction
The summary is of a general nature, and investors who wish to clarify their own tax situations
should consult with and rely upon their own tax advisers. Investors resident in jurisdictions other
than Norway should consult with and rely upon local tax advisors as regards the tax position in
their country of residence.
Set out below is a summary of Norwegian tax matters related to sale of the shares in Petrojack
pursuant to the Offer, as well as acquisition, holding and future sale of shares in Awilco Offshore.
The summary is based on Norwegian law, including tax treaties, applicable at the date of this Offer
Document. It should be noted that Norway at the date of this Offer Document is in the process of
introducing a tax reform which will influence on the fiscal treatment of the instruments dealt with
in this summary. As a part of the first phase of the tax reform the Exemption Method (with main
effect from 26 March 2004) and the Shareholder Model (with effect from 1 January 2006) have
been introduced. It should be noted that the tax reform rules include a number of transitional
provisions which may affect the taxation in the years 2005-2006.
12.2 Taxation related to holding and disposal of the Shares
Norwegian Shareholders
Net wealth tax
Shareholders resident in Norway for tax purposes (“Norwegian shareholders”) are, with the
exception of limited companies and similar entities, subject to net wealth taxation by the State and
the local municipality. Shares are included as part of the taxable base for this purpose. Shares listed
on the Oslo Stock Exchange are currently valued at 65 % of market value on 1 January in the
assessment year. The maximum combined rate of net wealth tax is 1.1%.
Taxation of dividends and capital gain on realization of shares
Corporate shareholders
The Exemption Method exempts Norwegian corporate shareholders from taxation on received
dividend distributions and capital gains from sale of shares in Norwegian companies. Likewise
losses on realization of shares will not be deductible for tax purposes.
Individual shareholders
Dividends distributed to Norwegian individual shareholders are under current rules (until 31
December 2005) taxable as general income at 28 %. Norwegian shareholders are, however, entitled
to a tax credit under the Norwegian imputation tax system. The tax credit corresponds with the tax
payable by the shareholder on the dividends. This implies that Norwegian individual shareholders
under 2005 are effectively exempted from tax on dividend distributions from Norwegian
companies.
Norwegian shareholders are taxable in Norway for capital gains on the realization of shares, and
have a corresponding right to deduct losses that arise on such realization. The tax liability applies
irrespective of time of ownership, and the number of shares sold. Gains are taxable as general
income in the year of realization, and losses can be deducted from general income in the year of
realization. The tax rate for general income is currently 28 %.
When calculating gain or loss, Norwegian shareholders must apply a “first-in, first-out” (FIFO)
principle. Costs incurred in connection with the acquisition and/or sale of shares may be deducted
from the Norwegian shareholders’ taxable income in the year of sale.
61
As a part of the Norwegian tax reform the imputation tax system on dividends will be replaced by
the Shareholder Model from 1 January 2006. Pursuant to the Shareholder Model, share income
(dividend income or capital gain from sale of shares) of individual shareholders is liable to 28 %
tax on total share income in excess of an estimated capital yield. The estimated capital yield shall
be computed for each individual shareholders on the basis of the cost price of each of the shares
multiplied by a risk-free interest. The protection interest rate shall be based on the effective rate of
interest on government bonds of five year’s maturity.
Foreign Shareholders
In general
This section summarizes Norwegian rules of taxation relevant to shareholders who are not regarded
as residents of Norway for tax purposes (“foreign shareholders”). Foreign shareholders’ tax
liabilities in their home country or other countries will depend on tax rules applicable in the
relevant country.
Corporate shareholders - taxation of dividends
According to the Exemption Method, foreign corporate shareholders resident within the EEA area
are not subject to Norwegian dividend withholding tax. Corporate shareholders tax resident outside
of the EEA area are subject to dividend withholding tax pursuant to Norwegian domestic
legislation and applicable tax treaties.
Individual shareholders – taxation of dividends
According to Norwegian domestic legislation dividends paid to foreign individual shareholders are
subject to a maximum withholding tax of 25 %, or a lower rate pursuant to the provisions of an
applicable income tax treaty. Norway has entered into income tax treaties with over 80 countries,
with withholding taxes reduced to 15% in most tax treaties.
From 1 January, 2006, new domestic legislation is introduced in Norway regarding dividend
withholding tax to individual shareholders resident within the EEA-area. Dividends distributed in
2006 and subsequent years will be subject to withholding tax at the applicable tax treaty rate.
However, such shareholders may choose to have dividends subject to the general withholding tax
of 25% and seek refund for an allowance under the internal Norwegian tax provisions. In general
the allowance is calculated as the acquisition cost of the share (adjusted for RISK-amount for the
income year 2005), multiplied by a determined (risk-free) interest rate.
In accordance with the present administrative system in Norway, a distributing company will
generally deduct withholding tax at the applicable reduced rate when dividends are paid directly to
an eligible foreign shareholder, based on information registered with the VPS as to the tax
residence of the foreign shareholder. Dividends paid to foreign shareholders in respect of nominee
registered shares are not eligible for reduced treaty-rate withholding at the time of payment unless
the nominee, by agreeing to provide certain information regarding beneficial owners, has obtained
approval for reduced treaty-rate withholding from the Central Office - Foreign Tax Affairs
(Sentralskattekontoret for utenlandssaker), or formerly the Directorate of Taxes.
Foreign shareholders should consult their own advisers regarding the availability of treaty benefits
in respect of dividend payments, including the ability to effectively claim refunds of over-withheld
amounts.
Taxation on realization of shares
Gains from sale or other disposition of shares by a foreign corporate shareholder will according to
Norwegian domestic legislation not be subject to taxation in Norway.
A foreign individual shareholder who has been a resident of Norway for tax purposes within the
five calendar years proceeding the year of the sale or disposition is subject to Norwegian capital
62
gain taxation. However, such taxation may be limited pursuant to applicable tax treaty.
12.3 Duties on the Transfer of Shares
No stamp or similar duties are currently imposed in Norway on transfer of shares, whether on
acquisition or disposal.
12.4 Inheritance tax
When shares are transferred either through inheritance or as a gift, such transfer may give rise to
inheritance or gift tax in Norway if the decedent, at the time of death, or the donor, at the time of
the gift, is a resident or citizen of Norway. However, in the case of inheritance tax, if the decedent
was a citizen but not a resident of Norway, Norwegian inheritance tax will not be levied if
inheritance tax or a similar tax is levied by the decedent’s country of residence. Irrespective of
residence or citizenship, Norwegian inheritance tax may be levied if the shares are held in
connection with the conduct of a trade or business in Norway. The basis for the inheritance or gift
tax computation on listed shares is the market value of the shares at the time the transfer takes
place.
12.5 Norwegian Tonnage Tax
The accommodation rigs Port Rigmar and Port Reval have been organised within the Norwegian
tonnage tax regime since May 2002 and July 2004 respectively. However, a change in the law has
recently been adopted which will exclude rigs from the tonnage tax regime with effect from the
fiscal year 2006. This means that the accommodation rigs will have to exit the tonnage tax regime,
and that it will not be possible to organise the jack-up rigs within the regime. This will have an
adverse effect on the Offeror as it will no longer be in a position to benefit from the deferred
taxation, but will be taxed based on the taxable income each year. Furthermore, accumulated profit
not yet taxed will become taxable..
63
13. Risk factors
A number of risk factors may adversely affect the Offeror. These risk factors include financial risks,
technical risks, risks related to the business operations of the Offeror, environmental and
regulatory risks. If any of these risks or uncertainties actually occurs, the business, operating
results and financial condition of the Offeror could be materially and adversely affected. The risks
presented in this Offer Document are not exhaustive, and other risks not discussed herein may also
adversely affect the Offeror. Prospective investors should consider carefully the information
contained in this Offer Document and make an independent evaluation before making an
investment decision.
Included in this Offer Document are various “forward-looking statements”, including statements
regarding the intent, opinion, belief or current expectations of the Offeror or its management with
respect to, among other things, (i) the Offeror’s target market, (ii) evaluation of the Offeror’s
markets, competition and competitive position, (iii) trends which may be expressed or implied by
financial or other information or statements contained herein. Such forward-looking statements are
not guarantees of future performance and involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance and outcomes to be materially
different from any future results, performance or outcomes expressed or implied by such forwardlooking statements. Such factors include, but are not limited to, the risk factors described below
and elsewhere in this Offer Document.
Construction risks: The Offeror has entered into the contracts for the fabrication, installation and
commissioning of four deep drilling jack-ups; including hull, marine equipment and supply and
installation of drilling equipment. The contracts stipulate dates of delivery and specified prices. In
the case of late delivery, the Offeror may be in a position to impose penalties. However, delays
may still represent serious negative consequences for the Offeror.
The contractual rights of the relevant owner to take title to, and possession of, either rig under
construction will not be enforceable in the event of a bankruptcy or receivership of the relevant
yard.
Charters: The Offeror cannot be assured that it will obtain charter contracts for one or more of its
rigs when completed, or that such contracts, if and when obtained, will be obtained on profitable
terms to the Offeror. Furthermore, there is often considerable uncertainty as to the duration of
offshore charters because most charter contracts give the operator both extension and early
cancellation options. There can also be off-hire periods between charters. The cancellation or
postponement of one or more charters can have a major impact on the earnings of drilling and
service companies.
Oil prices: Historically, demand for offshore exploration, development and production has been
volatile and closely linked to the price of hydrocarbons. Low oil prices typically lead to a reduction
in exploration drilling as the oil companies’ scale down their investment budgets. The sharp
reduction in production costs on new oil fields will probably somewhat reduce the strong historical
correlation between rig rates and oil prices
Market risks: Demand for drilling services in connection with exploration, development and
production in the offshore oil and gas sector is particularly sensitive to price falls, reductions in
production levels and disappointing exploration results. On the supply side, there is uncertainty
when it comes to the construction of new rigs, the upgrading and maintenance of existing rigs, the
conversion of other types of rigs into drilling units and alternative uses for equipment as market
conditions change.
The Offeror may assume substantial liabilities: Contracts in the offshore sector require high
64
standards of safety, and it is important to note that all offshore contracts are associated with
considerable risks and responsibilities. These include technical, operational, commercial and
political risks, and it is impossible to insure against all the types of risk and liabilities mentioned.
For instance, under some contracts the Offeror may have unlimited liability for losses caused by its
own gross negligence.
Political risks: Changes in the legislative and fiscal framework governing the activities of the oil
companies could have an impact on exploration and development activity or affect the company’s
operations directly. Changes in political regimes may constitute a risk factor for operations in
foreign countries.
Currency fluctuations: Because a portion of Awilco Offshore’s business is conducted in
currencies other than USD, the Offeror will be exposed to volatility associated with foreign
currency exchange rates in the course of business. There can be no assurance that the Offeror will
not experience currency losses in the future.
Interest rate risks: The Offeror’s bank financing agreements are subject to floating interest rates.
Hence, the Offeror will be financially exposed to fluctuations in interest rates.
Service life and technical risks: The service life of drilling rigs is generally assumed to be more
than 30 years but will depend ultimately on their efficiency. There will always be some exposure to
technical risks, with unforeseen operational problems leading to unexpectedly high operating costs
and/or lost earnings.
Environmental risk: The Offeror’s operations may involve the use and/or disposal of materials
that may be classified as hazardous substances. The environmental laws and regulations of the
countries in which the Offeror may operate expose the Offeror to liability for the conduct of, or for
conditions caused by, others, or for acts of the Offeror that were in compliance with all applicable
laws at the time such actions were taken. In the past several years, protection of the environment
has become a higher and more visible priority of many governments throughout the world.
Offshore drilling in certain areas has been opposed by environmental groups and, in some areas,
has been legally restricted. The Offeror’s operations could be restricted and its rigs could become
more expensive to operate if new laws or legislation are enacted or other governmental actions are
taken that prohibit or restrict offshore drilling or impose additional environmental protection
requirements. Moreover, the Offeror may have no right to compensation from its customers if its
costs are increased through such governmental actions, and its operating margins may fall as a
result.
Fluctuations in share price: The market price of the Offeror’s share may fluctuate and may
decline below the offer price in the Offering. The market price of the Offeror’s shares may
fluctuate widely, depending on many factors beyond the Offeror’s control, including:
• market expectations of the rig construction performance;
• investor perceptions of the outlook for the Offeror to obtain future engagements for its rigs
on profitable terms;
• the outcome of the intended IPO process; and
• the other factors listed above under “Risk factors”.
The price of the Offeror’s shares will also be subject to fluctuations in line with general movements
in the capital markets and the liquidity of the secondary market. Earnings of offshore companies
and the value of the equipment used have historically seen large fluctuations.
As a result of these and other factors, the Offeror cannot give assurance that any investor will be
able to sell its shares at a price equal to or greater than the offer price in the Offering.
Control by major shareholder: Awilco currently holds approximately 45.4% of the shares of the
65
Offeror. This means that Awilco has the ability to significantly influence the outcome of matters
submitted for the vote of shareholders, including the election of members of the board of directors.
The commercial goals of Awilco as a shareholder, and those of the Offeror, may not always remain
aligned. The substantial equity interest by Awilco may make it more difficult for the Offeror to
maintain its business independence from other companies within the Anders Wilhelmsen Group.
If Awilco were to sell a large number of shares in the Offeror, or there is a perception in the market
that such sales could occur, the trading price of the shares in the Offeror could decline. Such sales
could also make it more difficult for the Offeror to offer equity securities in the future at a time and
at a price that are deemed appropriate.
Since Awilco owned more than 40% of the shares in the Offeror at the time of its listing on the
Oslo Stock Exchange, Awilco will be exempt from the mandatory bid requirements under the
Norwegian Securities Trading Act unless at any time the ownership of Awilco falls below 40%.
Risks related to the acquisition of Petrojack: An acquisition by Awilco Offshore may trigger
rights for contract parties of Petrojack to terminate or modify agreements with Petrojack. This
could adversely affect the value of Petrojack. Although the Offer is subject to a satisfactory due
diligence of Petrojack, Awilco Offshore cannot be certain that it will obtain a complete overview of
the effects of a change of control in Petrojack. Furthermore, Awilco Offshore cannot be certain that
any actions taken to deal with such issues will be successful. If Awilco Offshore becomes the
owners of Petrojack it will seek to incorporate Petrojack into its other operations. There can be no
assurance that this incorporation will be successful. For instance, if persons currently involved in
the management of Petrojack do not remain with the company, this could potentially cause
disruptions to or have other negative consequences for Petrojack’s existing building projects.
66
Appendix 1
Rig specifications – Port Reval
67
68
69
70
Appendix 2
Rig specifications – Port Rigmar
71
72
73
74
Appendix 3
Rig specifications – PPL contracts and options
This specifications below will apply to both WilPower and WilSuperior.
75
76
77
78
Appendix 4
Rig specifications – Keppel contract and option
Keppel FELS rig
Deck lay-out
PPL vs. Keppel FELS designs:
Common characteristics
• Proven drilling equipment with excellent performance characteristics
• Improved drilling efficiency
• Zero discharge
• Pipe-handling package
• Drilling depth 30,000ft+
• Well control equipment (15,000psi) high temperature
PPL design
• Leg spacing wider
• Larger spudcans
• Larger deck area and high variable load
• Flexible operation
• Robust
Keppel FELS design
• Standardised foot print
• Compact lay-out – efficient unit
• Larger cantilever operating envelop
79
Appendix 5
Articles of Association
The Offeror’s Articles of Association are set out below in Norwegian official form, as last amended
on 11 August 2005, and in an English office translation.
§1 Firma
Selskapets firma er Awilco Offshore ASA. Selskapet er et
allmennaksjeselskap.
§1 Company
The name of the Company is Awilco Offshore ASA. The
Company is a public limited-liability company.
§2 Forretningskontor
Selskapets forretningskontor er i Oslo kommune.
§2 Registered offices
The Company’s registered offices are in the municipality
of Oslo.
§3 Virksomhet
Selskapets virksomhet er å drive offshorevirksomhet og
dermed beslektet virksomhet inkludert skipsfart. Innenfor
formålet er også å drive erverv, forvaltning, belåning og
salg av kapitalgjenstander innenfor offshore og
shippingvirksomhet, samt investering i aksjer, obligasjoner
og interessentinnskudd av enhver art, og delta med
eierinteresser i andre selskaper med naturlig tilhørende
virksomhet.
§3 Activities
The activities of the Company are to run offshore
operations and associated business, including shipping.
The objectives also include undertaking acquisition,
administration, and sale of capital assets within offshore
and shipping, as well as investment in shares, bonds and
partnership contributions of any nature, and participating
with ownership interests in other companies as well as
naturally associated operations.
§4 Aksjekapital
Selskapets aksjekapital er NOK 1.185.303.330 fordelt på
118.530.333 aksjer, hver med pålydende NOK 10.
§4 Share capital
The Company’s share capital is NOK 1,185,303,330
divided into 118,530,333 shares, each with a nominal value
of NOK 10.
§5 Ledelse
Selskapets styre består av 3 – 6 styremedlemmer etter
generalforsamlingens nærmere beslutning.
§5 Management
The Company’s Board of Directors comprises 3 – 6
directors in accordance with the general meeting’s further
resolution.
Selskapets firma tegnes av styrets leder. Styret kan
meddele prokura. Selskapet skal ha en daglig leder.
The Chairman of the Board signs for the Company. The
Board of Directors may grant powers of procuration. The
Company shall have a chief executive director.
§6 Generalforsamling
Den ordinære generalforsamling skal behandle:
§6 General meeting
The annual general meeting shall consider:
1.
1.
2.
Godkjennelse av årsregnskapet og årsberetningen,
herunder utdeling av utbytte.
Andre saker som etter loven eller vedtektene hører
under generalforsamlingen.
2.
Approval of the financial statements for the year and
the annual report, including distribution of a
dividend.
Other matters that according to law or to the Articles
of Association are appropriate to the general
meeting.
80
Appendix 6
Second quarter report 2005
81
82
83
84
85
86
87
Appendix 7
Application form
Acceptance form
To be used to accept the offer by Awilco Offshore ASA (Norwegian Registration No. 987 861 894) to acquire all outstanding shares in
Petrojack ASA (Norwegian Registration No. 987 358 920)
Return to:
Fearnley Fonds ASA
Filipstad Brygge 1, 8. floor
Grev Wedels plass 9
P.O. Box 1363 Vika
PO Box 1158 Sentrum
0113 Oslo
0107 Oslo
Fax: + 47 21 00 89 62
Telefax: +47 22 93 60 00
The acceptance is for shares in Petrojack ASA as stated below
Right holder registered:
Name of shareholder
VPS-account number
Number of shares
(Yes or No)
CLOSING DATE FOR ACCEPTANCE:
Enskilda Securities ASA or Fearnley Fonds ASA (collectively the “Managers”) must receive this acceptance form by 16.00 CET on 30
September 2005 which is the end of the acceptance period. Any extension of the acceptance period will be announced in the electronic
information system on Oslo Børs. Shareholders with shares in Petrojack ASA split between several VPS accounts must complete and return a
separate form for each VPS account.
To Awilco Offshore ASA ("the Offeror") and the Managers:
1.
I/we have received the offer document dated 15 September 2005 (The “Offer Document”) and accept the offer set out therein (the “Offer”) to sell
all my/our shares in Petrojack ASA as stated above (together with any shares sold pursuant to item 2 below, the “Tendered Shares”), in accordance
with the terms and conditions stated in the Offer Document and in this acceptance form. I/We will receive one share in Awilco Offshore ASA (the
“Consideration Shares”) for each two shares in Petrojack ASA sold hereby. I/We hereby irrevocably authorize the Managers to subscribe for the
Consideration Shares on my/our behalf.
2.
This acceptance also covers any Petrojack ASA shares that, in addition to the number of shares specified above, have been or will be acquired and
are registered at the above VPS-account when the acceptance is registered, not later than 16.00 CET on 30 September 2005.
3.
I/we understand that from today's date I/we will not be able to sell or in any other way dispose, put up as security or move to another VPS-account,
the Tendered Shares. I/we understand that is the Managers are given irrevocable authority to, on the date that this acceptance is received and
registered by the Managers, to block the Tendered Shares at the above VPS-account in favour of the Managers on behalf of the Offeror until the
conditions to the Offer have been satisfied/waived or the Offer has lapsed. I/we understand that I/we will retain ownership of the Tendered Shares,
including voting rights, until settlement under the Offer is made.
4.
The Managers are granted irrevocable authority to debit the Tendered Shares from my/our VPS-account(s) and to transfer the Tendered Shares to
an escrow VPS account in the name of the Managers for the benefit of the Offeror, within 5 days after the conditions for the Offer are fulfilled
and/or waived. As soon as reasonably possible after such transfer, Awilco Offshore will cause the increase of the share capital to be registered with
the Norwegian Register of Business Enterprises. The registration is expected to take place no later than three business days after the day on which
the Tendered Shares are transferred to the escrow VPS account for the benefit of the Offeror, i.e. at the latest on 24 October 2005. The
Consideration Shares cannot be sold or otherwise disposed of until the share capital increase has been registered with the Norwegian Register of
Business Enterprises. The Consideration Shares will be registered at the VPS-account[s] at which the tendered Petrojack shares were registered no
later than three business days following the registration of the share capital increase with the Norwegian Register of Business Enterprises which is
expected to be at the latest on 27 October 2005. The tendered Petrojack shares will not be transferred to Awilco Offshore until the Consideration
Shares have been properly issued and registered.
5.
The Tendered Shares will be transferred free of any encumbrances or other third-party rights whatsoever and with all shareholder rights attached to
them. I/we recognise that this acceptance will be valid only if any right holders (indicated by a “Yes” beneath "Right holder registered" above
right) have given their written consent on this acceptance form for the Tendered Shares to be transferred to the Offeror free of any charges.
6.
The Offeror will pay all my/our VPS transaction costs incurred directly in connection with my/our acceptance.
7.
The Offer and all acceptances of the Offer will be subject to Norwegian law. Accepting shareholders and the Offeror agree that all matters
pertaining to the Offer come under the jurisdiction of the Norwegian courts, with Oslo as the exclusive legal venue.
__________________
Place
______________________
Date
______________________________________
Binding signature *
* If signed in accordance with power of authority, the power of authority (and in event of a company the company certificate) is to be attached.
* If signed by a person having signatory powers, the company certificate is to be attached.
Right holder:
As a right holder, I consent to the transfer of the Tendered Shares to the Offeror free of any encumbrances or other third-party rights.
__________________
Place
______________________
Date
______________________________________
Right holder's signature *
* If signed in accordance with power of authority, the power of authority (and in event of a company the company certificate) is to be attached.
* If signed by a person having signatory powers, the company certificate is to be attached.
88
Awilco Offshore ASA
Beddingen 8
N-0250 Oslo, Norway
Filipstad Brygge 1
PO Box 1363 Vika
N-0113 Oslo, Norway
Grev Wedels plass 9
PO Box 1158 Sentrum
N-0107 Oslo, Norway
Print: Sekkelsten & sønn as

Petrojack ASA Offer Document and Prospectus

Transcription

Similar documents

eolos - The Business Booster by KIC InnoEnergy

WITH BROADPOINT

Conceptual design of offshore concrete structures

Celigo - Calcey Technologies

texaco petronius

Mostostal Pomorze SA,

Sutura, Inc.

0900 W Plaza RigNet Inc

Tristone Capital Global Energy Forum Presentation

Effer 120000-3S Marine Crane