Aker ASA: REM Offshore enters into Agreement to merge with Solstad Offshore

28.07 2016 09:46

Solstad Offshore ASA ("SOFF" or "Solstad") and REM Offshore ASA ("REM") have on July 27, 2016 agreed to merge REM with a wholly-owned subsidiary of Solstad ("Merger Sub") ("the Merger"). REM, the principal shareholders of REM, and SOFF and its principal shareholders, have entered into an agreement that sets out the terms of the merger.

The Merger will be completed as a statutory triangular merger pursuant to and in accordance with Norwegian law, whereby Merger Sub will be the surviving company. Solstad will create a new class B shares which will have the same economic rights as the ordinary shares in SOFF (to be renamed class A shares), but with 1/10th vote. It is Solstad's intention that the new class B shares can be an instrument for further consolidation in the industry. As merger consideration, REM's shareholders will receive new SOFF class B shares, except as provided below. The Merger will be based on an agreed exchange ratio of 0.0696 SOFF shares per REM share. This is based upon the issue prices in REM and SOFF's private placements, proposed this June and July, of NOK 0.87 per share and NOK 12.50 per share respectively, corresponding to an agreed exchange ratio of 0.0696 SOFF class B shares per REM share. Åge Remøy and his related companies will, however, receive 6,000,000 SOFF class A shares for the first NOK 75 million REM shares subscribed by them in REM's NOK 150 million directed share issue, which will be carried out as proposed before the Merger. It is a condition from Åge Remøy's side that his current controlling position in REM is carried over into a significant voting interest in Solstad after the Merger, which will be effected by his entitlement to get half of the consideration shares attributable to the directed share issue in REM in the form of SOFF class A shares. The principal shareholders of Solstad have agreed to this and look forward to having Åge Remøy as a key industrial shareholder. His principal holding company will also nominate a member to the board of directors of Solstad upon effectiveness of the Merger.

"The offshore service vessel (OSV) industry is undergoing a period of great uncertainty," says Lars Peder Solstad, CEO of Solstad. "Reduced spending across the upstream value chain has contributed to the current overcapacity, adversely impacting dayrates and utilization. The OSV industry's fragmented structure is further compounding these negative effects. Solstad and REM both see the need to create larger entities with financial and operational strength to weather the downturn. The combination of Solstad and REM is one step in the right direction, but there remains a strong rationale for further consolidation."

REM and Solstad are Norwegian offshore service vessel companies that combined will operate a total of 62 vessels. After the Merger, Solstad will retain its Skudeneshavn head office, from which the combined fleet of CSV vessels will be operated. The combined fleet of PSV vessels will be operated from the current REM head office in Fosnavåg.

"On a standalone basis, both REM and Solstad have strong operational capabilities, high-in-demand specialist expertise, and an employee and management base that cultivates innovative business developments," REM CEO Arild Myrvoll said. "From a commercial perspective, the Merger will further strengthen these pillars of productivity and profitability, while at the same time improving margins and reducing downtime through inherent cost and operational synergies."

"I am satisfied that the merged company will allocate substantial activities to Fosnavåg, with potential for substantial increase, which will contribute to securing development possibilities for the region and stable  employment opportunities for our nearly 500 highly qualified employees," says REM Chairman Åge Remøy.

"Solstad and Aker have put forth an industrial solution for the restructuring of Rem Offshore. The merger is a necessary structural measure in today's offshore service vessel (OSV) market, which will enable the combined company to achieve significant synergies through more efficient operations and a lower cost base. The combination of Solstad's, REM's and Aker's industrial expertise, M&A capabilities and financial strength will provide a strong platform through Solstad for further development of the OSV industry," says Øyvind Eriksen, President and CEO of Aker.

The formal plan of merger is expected to be published shortly after REM and SOFF have released their interim financial statements as of and for the six-month period ended June 30, 2016 in late August. Extraordinary shareholders' meetings in REM and SOFF are expected to be held on or around October 1, 2016, with the Merger becoming effective on or around December 1, 2016.

REM is undergoing an overall restructuring to strengthen its balance and liquidity position, as announced on June 27, 2016. The Merger is premised upon the completion of REM's restructuring prior to the Merger, requisite approvals from creditors of REM and SOFF and requisite approvals or absence of intervention by competent regulatory authorities. The Merger is supported by the largest shareholder in REM, Åge Remøy and companies controlled by him, as well as the largest shareholders in SOFF.

SOFF is also going through a comprehensive refinancing plan as announced on June 7, 2016. At the same time SOFF also disclosed that it foresees to participate in a consolidation within the industry. Completion of the refinancing and the Merger will form a good platform for weathering the tough times the industry is going through.

An information memorandum pursuant to clause 3.5 of the Continuing Obligations for Issuers will be prepared jointly by REM and SOFF and will likely be combined with the offering and listing prospectus for the SOFF class A and B shares to be issued and listed in connection with the Merger, the NOK 20 million repair issue of SOFF class B to REM shareholders, and the offering prospectus for the NOK 39.9 million repair issue of SOFF class A shares to SOFF shareholders, as described further below.

Share issues in REM prior to the Merger
Prior to the Merger, REM will complete a directed share issue towards companies related to Åge Remøy of NOK 150,000,000 at NOK 0.87 per share, as per the proposal made by the board of directors of REM on June 29, 2016 for the REM extraordinary general meeting to be held July 21, 2016, (but which was later cancelled). Subject to the completion of the Merger, Åge Remøy and his related companies will receive 6,000,000 SOFF class A shares and 6,000,000 SOFF class B shares, both at NOK 12.50, as consideration shares in the Merger.

Shareholders in Rem before the restructuring (and Merger) will receive 1,414,120 class B shares in SOFF (as consideration for their share after the restructured REM as proposed to the extraordinary general meeting in REM). Further, and subject to completion of the Merger, REM shareholders not participating in the directed share issue will be offered to participate in a NOK 20 million directed issue (the "repair issue") of SOFF class B shares at NOK 12.50 per share as described below.

As part of the restructuring of REM, shares were proposed to be issued to bondholders of REM and to Vard Group AS. These shares will be exchanged for SOFF class B shares through the Merger.

Share issues in SOFF
The NOK 39.9 million directed issue ("repair issue") of shares in SOFF at NOK 12.50 per share resolved at the extraordinary general meeting on July 13, 2016 will not be affected by the Merger, except that the timing of the publication of the requisite prospectus and the offering period is expected to be aligned with the publication of the Information Memorandum on the Merger and the Merger plan, which will be sent to all shareholders together with the calling notice to an extraordinary general meeting of SOFF to vote on the merger plan.

Further, and as resolved at that extraordinary general meeting, a directed issue of NOK 285.1 million at NOK 12.50 per share will take place. The amount is subscribed by Aker with NOK 250 million while the balance is subscribed by the Solstad family's companies SOFF Holding AS, Ivan II AS and Solstad Invest AS.

Subject to completion of the Merger, REM shareholders, other than companies related to Åge Remøy, not participating in the directed share issue NOK 150 million of REM shares to be carried out prior to the Merger, will be offered to participate in a NOK 20 million directed issue ("repair issue") of SOFF class B shares at NOK 12.50 per share.

SOFF will apply for the new class B shares to be listed on the main list of Oslo Børs.

Assuming (i) completion of Aker's investment undertaking in the aggregate amount of NOK 250 million at NOK 12.50 per SOFF class A share, (ii) the simultaneous investment undertaking in the aggregate amount of NOK 35.1 million by the Solstad Family (ii) full subscription of the NOK 39.9 million SOFF repair issue of SOFF class A shares at NOK 12.50 per SOFF class A share, (iii) full subscription of the NOK 20 million repair issue to current REM shareholders at NOK 12.50 per SOFF class B shares, (iv) issuance of 137,665,714 REM shares, or SOFF class B shares in lieu thereof at the exchange ratio for the Merger, to REM bondholders pursuant to the REM restructuring plan of June 27, 2016, and (v) issuance of 13,776,554 REM shares to Vard Group AS pursuant to that plan,  the issued number of shares of SOFF is expected to be 90,241,182. The number of class B shares is expected to be 19,553,805 and the number of votes 72,642,757. Under these assumptions, Aker will hold 20,000,000 class A shares and 1,807,150 class B shares, representing approximately 24% of the shares and 28% of the votes. This includes SOFF class B shares issued to Aker in its capacity as holder of REM bonds. The Solstad family will, through its related companies, hold 20,937,457 class A shares, representing approximately 23% of the shares and 29% of the votes. Åge Remøy and his related companies will hold 6,000,000 class A shares and 7,112,003 class B shares, representing approximately 15% of the shares and 9% of the votes.

As part of the proposed Merger, Aker will issue a put option to Åge Remøy's principal holding company exercisable in the thirteenth month after effectiveness of the Merger for a total of 6,000,000 class B shares in SOFF, with a strike price of NOK 12.50 per share. Acquisition of class B shares on the basis of that agreement will increase the number of SOFF shares held by Aker by 6,000,000 and the number of votes by 600,000. This would represent an increase of Aker's holding under the same assumptions of approximately 7% of the equity and approximately 1% of the votes.
No changes have been made to the proposed NOK 250 million convertible loan from Aker as set out in Solstad's refinancing plan announced on June 7, 2016.


Aker's Chief Financial Officer Frank Reite is a member of the board of directors of Solstad Offshore ASA.

Ellen Solstad and Lars Peder Solstad of the Solstad family, who through their related companies hold shares in Solstad Offshore ASA are a member of the board of directors and the chief executive officer, respectively, of Solstad Offshore ASA.

Åge Remøy is the chairman of the board of directors of REM Offshore ASA.



For further information, please contact:

Åge Remøy, Chairman of REM Offshore ASA at +47 90 59 12 92 or Arild Myrvoll, Chief Executive Officer of REM Offshore ASA at +47 90 01 41 88.

Lars Peder Solstad, Chief Executive Officer of Solstad Offshore ASA at +47 913 18 585 or Sven Stakkestad, Deputy Chief Executive Officer of Solstad Offshore ASA at +47 905 15 802.

Atle Kigen, Head of corporate communications of Aker ASA at +47 9078 4878.


This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.