NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO AUSTRALIA, CANADA, JAPAN, HONG KONG, SOUTH AFRICA OR THE UNITED STATES, OR ANY OTHER JURISDICTION IN WHICH THE RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER OF ANY OF THE SECURITIES DESCRIBED HEREIN.
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Haugesund, 15 February 2023: Reach Subsea ASA (“Reach” or the “Company”) has engaged Arctic Securities AS, Fearnley Securities AS and SpareBank 1 Markets AS (the “Managers”) as joint lead managers and joint bookrunners to assist the Company in a contemplated private placement (the “Private Placement”) of new shares in the Company (the “Offer Shares”) to raise gross proceeds of between approx. NOK 100 to 125 million (the “Offer Size”).
The net proceeds from the Private Placement will be used (i) to finance the equity portion of the Company’s planned acquisition of Subsea IMR vessel “Edda Sun”, (ii) for investments in necessary equipment and mobilization of three new vessels (which in addition to “Edda Sun” includes “Go Electra” and “Olympic Triton), (iii) for working capital and (iv) for general corporate purposes. To fully finance the vessel and equipment investments Reach Subsea has obtained NOK 150 million in new bank financing (“Edda Sun” vessel financing) and NOK 75 million in lease financing (equipment). The remaining NOK 225 million will be financed by equity. Ownership of “Edda Sun” will be structured and held in a special purpose vehicle (the “SPV”) which is expected to be owned 49.9% by Reach Subsea, and 50.1% by a strategic vessel owning partner (the “Partner”). The Partner intends to invest NOK 100 million directly in the SPV with NOK 100 - 125 million being financed by Reach Subsea using proceeds raised in the Private Placement.
The Private Placement is directed towards investors subject to, and in compliance with, applicable exemptions from relevant prospectus or registration requirements.
The subscription price for the Offer Shares (the “Subscription Price”) and the final number of Offer Shares to be issued will be determined by the Board of Directors in Reach (the “Board”) based on an accelerated book-building process.
North Industries 1 AS (“North Industries”), a company controlled by chairman of the Board Rachid Bendriss and Board member Anders Onarheim, will subscribe for, and be allocated, New Shares for NOK 15 million in the Private Placement. Wilhelmsen New Energy AS (“Wilhelmsen New Energy”), a company owned by Oslo Børs listed shipping conglomerate Wilh. Wilhelmsen Holding ASA, will subscribe for, and be allocated, its pro rata share in the Private Placement. Certain other primary insiders in the Company will subscribe for, and are expected to be allocated, New Shares for an aggregate amount of approx. NOK 3 million in the Private Placement.
The bookbuilding period for the Private Placement will commence today, 15 February 2023 at 16:30 hours CET, and is expected to close on or before 16 February 2023 at 08:00 hours CET. The Company, in consultation with the Managers, reserves the right to, at any time and in its sole discretion, close or extend the bookbuilding period or to cancel the Private Placement in its entirety without notice. If the bookbuilding period is shortened or extended, the other dates referred to herein might be changed accordingly.
Notifications of allocations are expected to be distributed to subscribers on or about 16 February 2023.
The Private Placement will be divided into two tranches. Tranche 1 of the Private Placement (“Tranche 1”) will consist of up to 22,500,000 Offer Shares (the “T1 Offer Shares”), which equals the maximum number of shares the Board may issue pursuant to the authorization granted by the Company’s annual general meeting of 30 May 2022 (the “Board Authorization”). Tranche 2 of the Private Placement (“Tranche 2”) will consist of a number of Offer Shares that corresponds to a total transaction size (i.e. both tranches) equal to the Offer Size.
North Industries and Wilhelmsen New Energy have agreed to take delivery of Offer Shares in Tranche 2 to the extent necessary to permit other applicants to receive their full allocation of Offer Shares in Tranche 1. Accordingly, all other applicants are expected to receive their full allocation in Tranche 1.
Settlement in the Private Placement is expected to take place as follows:
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Settlement of the T1 Offer Shares is expected to take place on 20 February 2023. The T1 Offer Shares will be settled on a delivery-versus-payment basis with existing and unencumbered shares in the Company that are already listed on the Oslo Stock Exchange, to be lent from North Industries (the “Share Lender”, in its capacity as such) by the Managers pursuant to a share lending agreement entered into between the Managers, Reach and the Share Lender (the “Share Lending Agreement”). The share loan will be settled with new shares in the Company to be resolved issued by the Board pursuant to the Board Authorization. The Offer Shares in Tranche 1 are expected to be tradeable from notification of allocation, expected on or about 16 February 2023.
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Settlement of the T2 Offer Shares is expected to take place on or about 14 March 2023 following and subject to (inter alia) a resolution by an extraordinary general meeting of the Company, expected on or about 10 March 2023 (the “EGM”), to issue the T2 Offer Shares.
Completion of Tranche 1 in the Private Placement is subject to a resolution by the Board to issue T1 Offer Shares pursuant to the Board Authorization. Completion of Tranche 2 is subject to (i) completion of Tranche 1 and (ii) the EGM resolving to issue such Offer Shares. Further to this, completion of the Private Placement is subject to the Board resolving to consummate the Private Placement and allocate the Offer Shares (conditionally in respect of Tranche 2). The Company reserves the right, at any time and for any reason, to cancel, and/or modify the terms of, the Private Placement.
As the number of shares allocated in the Private Placement may exceed 22,500,000, which is the maximum number of shares available under the Board Authorization, it is expected that the Board will convene the EGM to approve the issuance of the T2 Offer Shares for the purpose of delivery of such Offer Shares to North Industries and Wilhelmsen New Energy and, if applicable, to authorize the Board to issue new shares in the a potential subsequent offering (see below). Should the EGM fail to approve such issuance, the completion of the Private Placement will not be affected, but (a) North Industries and Wilhelmsen New Energy will not receive the shares in Tranche 2 and (b) the Company’s gross proceeds from the Private Placement will be limited to the gross proceeds from the Offer Shares in Tranche 1.
The Private Placement will be directed towards selected Norwegian and international investors (a) outside the United States, subject to applicable exemptions from any prospectus and registration requirements and in reliance on Regulation S. under the U.S, Securities Act 1933, as amended (the “Securities Act”), and (b) to investors in the United States who are QIBs as defined in Rule 144A under the Securities Act, in each case subject to an exemption being available from offer prospectus requirements and any other filing or registration requirements in the applicable jurisdictions and subject to other selling restrictions. The minimum application and allocation amount has been set to the NOK equivalent of EUR 100,000 per investor. The Company may, however, at its sole discretion, allocate an amount below EUR 100,000 to the extent applicable exemptions from the prospectus requirement pursuant to the Norwegian Securities Trading Act and ancillary regulations are available. Further selling restrictions and transaction terms will apply.
The Board has considered the structure of the contemplated Private Placement in light of the equal treatment obligations under the Norwegian Public Limited Companies Act, the Norwegian Securities Trading Act and the rules on equal treatment under Oslo Rule Book II for companies listed on the Oslo Stock Exchange and the Oslo Stock Exchange’s guidelines on the rule of equal treatment, and is of the opinion that the proposed Private Placement is in compliance with these requirements. By structuring the transaction as a private placement, the Company will be in a position to raise capital in an efficient manner and closely coordinated with the planned acquisition of “Edda Sun”, with a lower discount to the current trading price and with significantly lower completion risks compared to a rights issue. In addition, the Private Placement is subject to marketing through a publicly announced bookbuilding process and a market-based offer price should therefore be achieved. Furthermore, the number of Offer Shares to be issued in connection with the contemplated Private Placement implies that the dilution of existing shareholders will be limited and below applicable prospectus thresholds. Finally, the Board will consider to propose to carry out a subsequent offering directed towards certain shareholders who do not participate in the Private Placement (see details below) in order to further limit the dilute effect of the Private Placement. On this basis and based on an assessment of the current equity markets, the Board has considered the Private Placement to be in the common interest of the Company and its shareholders. As a consequence of the contemplated Private Placement structure, the shareholders’ preferential rights to subscribe for the Offer Shares will be deviated from.
Notwithstanding the above, the Company reserves the right, subject to completion of the Private Placement, to carry out a customary subsequent offering of new shares at the Subscription Price. Any such subsequent offering, if applicable and subject to applicable securities laws, will be directed towards existing shareholders in the Company as of 15 February 2023 (as registered in the VPS two trading days thereafter), who (i) were not included in the wall-crossing phase, (ii) were not allocated Offer Shares in the Private Placement, and (iii) are not resident in a jurisdiction where such offering would be unlawful or would (in jurisdictions other than Norway) require any prospectus, filing, registration or similar action. Whether a subsequent offering will be carried out will, among other things, depend on the result of the Private Placement and the subsequent development of the Company’s share price.
Arctic Securities AS, Fearnley Securities AS and SpareBank 1 Markets AS is appointed by the Company as joint lead managers and joint bookrunners for the Private Placement.
Advokatfirmaet Schjødt AS is acting as legal advisor to the Company.
For more information please contact:
Birgitte Wendelbo Johansen
Chief Financial Officer of Reach Subsea ASA
bwj@reachsubsea.no
About Reach Subsea:
Reach Subsea ASA Group offers subsea services as a subcontractor and/or directly to end clients, based out of our head office in Haugesund. The core business of the Group is based on modern, high spec Work ROVs operated by highly-qualified offshore personnel, and supported by onshore engineering resources. The Group’s objective is to be a preferred subsea partner and full-service provider of subsea operations for clients, focusing on safety, environment, financial solidity and profitability. www.reachsubsea.no
IMPORTANT NOTICE
This announcement is not and does not form a part of any offer to sell, or a solicitation of an offer to purchase, any securities of Reach. The distribution of this announcement and other information may be restricted by law in certain jurisdictions. Copies of this announcement are not being made and may not be distributed or sent into any jurisdiction in which such distribution would be unlawful or would require registration or other measures. Persons into whose possession this announcement or such other information should come are required to inform themselves about and to observe any such restrictions.
The securities referred to in this announcement have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and accordingly may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and in accordance with applicable U.S. state securities laws.
The Company does not intend to register any part of the offering or their securities in the United States or to conduct a public offering of securities in the United States. Any sale in the United States of the securities mentioned in this announcement will be made solely to “qualified institutional buyers” as defined in Rule 144A under the Securities Act.
In any EEA Member State, this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Regulation, i.e., only to investors who can receive the offer without an approved prospectus in such EEA Member State. The expression “Prospectus Regulation” means Regulation 2017/1129, as amended, together with any applicable implementing measures in any Member State.
This communication is only being distributed to and is only directed at persons in the United Kingdom that are (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”) or (ii) high net worth entities, and other persons to whom this announcement may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only for relevant persons and will be engaged in only with relevant persons. Persons distributing this communication must satisfy themselves that it is lawful to do so.
Matters discussed in this announcement may constitute forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as “believe”, “expect”, “anticipate”, “strategy”, “intends”, “estimate”, “will”, “may”, “continue”, “should” and similar expressions. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control.
Actual events may differ significantly from any anticipated development due to a number of factors, including without limitation, changes in investment levels and need for the Company’s services, changes in the general economic, political and market conditions in the markets in which the Company operate, the Company’s ability to attract, retain and motivate qualified personnel, changes in the Company’s ability to engage in commercially acceptable acquisitions and strategic investments, and changes in laws and regulation and the potential impact of legal proceedings and actions. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. The Company does not provide any guarantees that the assumptions underlying the forward-looking statements in this announcement are free from errors nor does it accept any responsibility for the future accuracy of the opinions expressed in this announcement or any obligation to update or revise the statements in this announcement to reflect subsequent events. You should not place undue reliance on the forward-looking statements in this document.
The information, opinions and forward-looking statements contained in this announcement speak only as at its date, and are subject to change without notice. The Company does not undertake any obligation to review, update, confirm, or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this announcement.
Neither the Managers nor any of their respective affiliates makes any representation as to the accuracy or completeness of this announcement and none of them accepts any responsibility for the contents of this announcement or any matters referred to herein.
This announcement is for information purposes only and is not to be relied upon in substitution for the exercise of independent judgment. It is not intended as investment advice and under no circumstances is it to be used or considered as an offer to sell, or a solicitation of an offer to buy any securities or a recommendation to buy or sell any securities in the Company. Neither the Managers nor any of their respective affiliates accepts any liability arising from the use of this announcement.
This information is considered to be inside information pursuant to the EU Market Abuse Regulation (MAR) and is subject to the disclosure requirements pursuant to MAR article 17 and Section 5-12 the Norwegian Securities Trading Act. This stock exchange announcement was published by Birgitte Wendelbo Johansen, Chief Financial Officer at Reach Subsea ASA on the time and date provided.
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