• DOF ASA is looking to raise NOK 500 million at a price of NOK 0.60 per share
• Main owner Møgster Mohn Offshore AS has pre-committed NOK 400 million (Møgster Offshore is owned by Møgster family and Frederik W. Mohn)
• DOF ASA increasing ownership in DOF Subsea to 65% at the bottom of the cycle
o DOF ASA will subscribe the full NOK 500 million equity issue in DOF Subsea at NOK 10.5 per share, compared to book value NOK 51 per share and First Reserve cost price of NOK 44 per share (NOK ~5.2 bn on 100%)
• DOF Subsea is a global subsea player with combination of strong firm backlog and upside from projects
o Long-term chartering has 9x high-end construction vessels with average 5 year remaining contract tenor
o Subsea IMR Projects – 17x vessels with ~71 ROVs and ~1,300 employees
• DOF’s main exposure is Subsea and Brazil:
o 65% of EBITDA is DOF Subsea (with high contract coverage)
o 25% of EBITDA is Brazilian activity – long term contracts, local flag privileges and long-term funding from BNDES
o 10% of EBITDA is traditional offshore supply vessel activity
• DOF investment case:
o 2017 EBITDA approximately NOK 2.4 billion
o Newbuilds with delivery after 2017 will generate NOK ~0.5 billion EBITDA on firm contracts
o Repaying NOK 1.8 billion of debt each year (82% of normal amortization)
o Liquidity maintained as planned – can sustain a downturn until 2022 and be well positioned for healthy earnings when the market returns
• Market upswing expected 2019 in subsea and 2020 in supply
• Focus on continue building organization in subsea
• The two remaining newbuild to be delivered in 2018 and 2019 are committed on firm 8-year contracts with Petrobras – 6-years payback
• On Pareto Securities equity research estimates, a price of NOK 0.60 is EV/EBITDA 6.4x 2019E and 5.1x 2020E pre-money
• Issuer: DOF ASA
• Listing: The DOF shares are listed on the Oslo Stock Exchange under the ticker code “DOF”.
• Shares outstanding: 1,994,561,682 comprising 1,683,979,179 ordinary shares and 310,582,503 shares to be issued through the zero-coupon mandatorily convertible loan DOF ASA 16/21 0% SUB CONV (DOF12).
• Transaction structure and size: Private placement of NOK 500,000,000 through issuance of 833,333,333 new ordinary shares (the “Offer Shares”), each with a nominal value of NOK 0.50, at an Offer Price of NOK 0.60 per Offer Share
• Pricing: The Offer Price is NOK 0.60 per Offer Share
• Use of proceeds: The net proceeds from the Private Placement will be used; i) to finance the increase of DOF’s ownership in DOF Subsea AS (“DOF Subsea”) through subscription of new shares in DOF Subsea for NOK 500 million at NOK 10.50 per share equal to a pre-money valuation of DOF Subsea of NOK 1.26 billion , and ii) for general corporate purposes. DOF will through the subscription of new shares in DOF Subsea increase its ownership in DOF Subsea from today’s 51% to 65%. The remaining shares in DOF Subsea are owned by funds managed by First Reserve.
• Minimum order/allocation: The NOK equivalent of EUR 100,000
• Allocation criteria: Allocations will be made at the sole discretion of the board of directors of the Company (the “Board”) in consultation with the Managers. The Board will focus on criteria such as (but not limited to) current ownership in the Company and in the convertible loan DOF ASA 16/21 0% SUB CONV (DOF12), timeliness of the application, relative order size, sector knowledge, perceived investor quality and investment horizon.
• Conditions: i) the Board of directors of the Company resolving to allocate Offer Shares in the Private Placement, ii) approval of the Private Placement and the increase of the share capital required for the Subsequent Offering by the EGM, iii) the DOFSUB07 bondholder meeting approving an extension of the maturity of the bond loan from currently May 2018 to October 2019 for NOK 100 million of the bond loan and May 2020 for the remaining NOK 408 million of the bond loan, at an annual interest rate of NIBOR + 7% (the bondholder meeting will be held prior to the EGM), and iv) banks’ credit committee approval of soft terms relating to the NOK 3.8 billion facility in DOF Rederi AS with a liquidity effect of minimum NOK 550 million and extension of an credit facility in DOF ASA from October 2019 until mid 2021.
• Joint Lead Managers and Bookrunners: Pareto Securities AS, ABN AMRO Bank N.V., Clarksons Platou Securities AS and Nordea Bank AB (publ), filial i Norge
• Investor Documentation: Company presentation, application agreement and term sheet
• Application period: 27 November 2017 at 16.30 hours (CET) to 28 November 2017 at 08.00 hours (CET)
• The Company reserves the right to at its sole discretion shorten or extend the Application Period at any time. If the Application Period is shortened or extended, the other dates referred to herein may be amended accordingly.
• Conditional allocation: On or about 28 November 2017 (settlement of allocated Offer Shares subject to general meeting approval and satisfaction of the other conditions)
• Call for bondholder meeting DOF Subsea: On or about 27 November 2017
• Call for extraordinary general meeting (the “EGM”): On or about 28 November 2017
• Bondholder meeting DOF Subsea: On or about 12 December 2017
• EGM: On or about 19 December 2017
• Delivery vs. Payment (DVP): On or about 20 December 2017
• The Private Placement will be settled with existing and unencumbered shares in the Company that are already listed on the Oslo Stock Exchange, pursuant to a share lending agreement between the Managers, the Company and Møgster Mohn Offshore AS. Hence, the shares allocated in the Private Placement (other than those allocated to Møgster Mohn Offshore AS) will be tradeable immediately after delivery.
Please note that this only represents a summary of the transaction details. More detailed information is included in the placing announcement including the Term Sheet and Application Agreement attached hereto.
Please note that the above information is not specifically assessed against the individual customer relationship, and therefore does not constitute investment advice.
Investments in securities are associated with certain risk, and we kindly advise you to update yourself on the risk factors other specific detail related to the investment.