REM Offshore and Solstad Offshore announce merger plan
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, Solstad said in a press release.
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.
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.
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.
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.
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.
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.
