Reference is made to the stock exchange announcements made by Archer Limited ("Archer", the "Company" and together with its subsidiaries, the "Group") on 30 October 2024 regarding a contemplated private placement (the "Private Placement") of new common shares in the Company (the "Offer Shares") and the agreement in principle with respect to a contemplated acquisition of Wellbore Fishing & Rental Tools, LLC (“WFR”) (the “Transaction”).
The Company is pleased to announce that it has raised the NOK equivalent of approx. USD 50 million in gross proceeds through the Private Placement of 24,393,100 new common shares at a subscription price of NOK 22.465 per share (the "Subscription Price"), equal to the closing price on Oslo Stock Exchange prior to announcement of the Private Placement. The net proceeds from the Private Placement, together with existing cash on the balance sheet, will be used to finance the Transaction. Due to strong demand, the transaction was upsized from the initial USD 40 million as the Company elected to use its option to settle the last USD 10 million, that were initially planned to be issued as consideration shares, in cash. The transaction was significantly oversubscribed at the new deal size.
The Private Placement was carried out on the basis of an accelerated bookbuilding process managed by DNB Markets, a part of DNB Bank ASA and Pareto Securities AS as joint global coordinators and joint bookrunners (the "Joint Global Coordinators"), and Arctic Securities AS, Skandinaviska Enskilda Banken AB (publ), Oslo Branch, and SpareBank 1 Markets AS as joint bookrunners in the Private Placement (together with the Joint Global Coordinators, the "Managers").
The Private Placement is divided in two separate tranches, where the first tranche ("Tranche 1") consists of 13,512,837 Offer Shares (the "Tranche 1 Shares") and the second tranche ("Tranche 2") consists of the remaining 10,880,263 Offer Shares in the Private Placement (the "Tranche 2 Shares"). Tranche 1 is in turn split in two parts where Tranche 1a ("Tranche 1a") consist of 13,287,181 Offer Shares (the "Tranche 1a Shares") and Tranche 1b ("Tranche 1b") consist of 225,656 Offer Shares (the "Tranche 1b Shares"). The Tranche 1b Shares will be delivered to one specific investor after agreement with such investor.
Allocation to pre-committing investors and primary insiders
The Company’s largest shareholder, Paratus JU Newco Bermuda Limited (“Paratus”), subscribed for, and was allocated, 5,891,614 Offer Shares, which is equal to the NOK equivalent of approx. USD 12.1 million, in the Private Placement. Paratus is a wholly owned subsidiary of Paratus Energy Services Limited. The Company's second largest shareholder, Hemen Holding Limited (“Hemen”), subscribed for, and was allocated, 4,988,649 Offer Shares, which is equal to the NOK equivalent of approx. USD 10.2 million, in the Private Placement. Hemen is indirectly controlled by trusts established by Mr. John Fredriksen for the benefit of his family. Mr. John Fredriksen therefore has no economic interest in the Company’s shares.
Settlement
Notification of allocations and settlement instructions for the Private Placement is expected to be distributed by the Managers to the applicants on 31 October 2024. Hemen and Paratus have been conditionally allocated the Tranche 2 Shares, meaning that all other investors have been allocated Tranche 1 Shares.
Settlement of the Tranche 1a Shares will take place on 4 November 2024 on a delivery versus payment (DVP) basis. The Tranche 1a Shares will be settled with existing and unencumbered shares in the Company that are already listed on Oslo Stock Exchange, pursuant to a share lending agreement between the Joint Global Coordinators, the Company and Hemen (the "Share Lending Agreement"). The Tranche 1a Shares will thus be tradable from notification of allocation (31 October 2024).
Settlement of the Tranche 1b Shares is expected to take place on or about 5 November 2024 on a delivery versus payment (DVP) basis. The Tranche 1b Shares will be settled with new shares in the Company to be issued by the Company pursuant to the existing authorized capital of the Company. DVP settlement will be facilitated through a pre-funding agreement expected to be entered into between the Joint Global Coordinators and the Company (the "Pre-funding Agreement").
Settlement of Tranche 2 Shares is expected to take place shortly after completion of the SGM (as defined below). The Tranche 2 Shares, as well as 518,718 Tranche 1 Shares which will be used for redelivery of the share loan to Hemen, will be issued on a separate ISIN pending approval of a listing prospectus.
Following the issue of the Tranche 1 Shares, the Company's issued share capital will be USD 784,834.35 divided on 78,483,435 common shares, each with a par value of USD 0.01. Following, and subject to, the successful completion of Tranche 2, the Company's issued share capital will be increased to USD 893,636.98, divided on 89,363,698 Shares, each with a par value of USD 0.01.
Completion of the Private Placement
The completion of Tranche 1 is subject to the Share Lending Agreement and Pre-Funding Agreement being in full force and effect. The completion of Tranche 2 is subject to the completion of Tranche 1 and a resolution by the SGM to issue increase the authorized capital of the Company in order to facilitate the issuance of the Offer Shares in Tranche 2. Further to this, completion of both Tranche 1 and Tranche 2 in the Private Placement is subject to the Board resolving to consummate the Private Placement and allocate the Offer Shares.
Completion of Tranche 1 is not conditional upon completion of Tranche 2. The settlement of Offer Shares in Tranche 1 will therefore remain final and binding and cannot be revoked, cancelled or terminated by the respective applicants if Tranche 2 is not completed.
An authorization for the Board to issue the Tranche 2 Shares (through increase of the Company's authorized share capital) is expected to be granted by the special general meeting of the Company (the "SGM") to be held on or about 13 November 2024. All investors who were allocated shares in the Private Placement have undertaken an obligation to attend the SGM and vote in favor of the resolutions relating to Tranche 2 as proposed by the Board. The Company has received voting undertakings to support the approval of the increase in the authorized capital.
No subsequent offering
The Private Placement represents a deviation from the shareholders' pre-emptive right to subscribe for the new shares. The Board has considered the Private Placement in light of the equal treatment obligations under applicable regulations and is of the opinion that the waiver of the preferential rights inherent in a private placement, taking into consideration the time, costs and risk of alternative methods of the securing the desired funding, is in the common interest of the shareholders of the Company. The Board has considered whether at subsequent offering should be carried out in conjunction with the Private Placement, but has decided not to proceed with such subsequent offering. In this respect, the Board has inter alia considered that a substantial number of existing shareholders in the Company participated in and were allocated shares in the Private Placement. Hence, the Board has considered that the Private Placement represents a limited dilution to the shareholders who were not eligible to participate in the Private Placement. In addition, the Subscription Price of NOK 22.465 equals the closing price of the Company's shares prior to announcement of the Placement, and the Company's remaining shareholders are thus expected to be able to purchase shares in the market at prices equal to the Subscription Price. The Board is therefore of the view that a subsequent offering will be of limited benefit to the Company's remaining shareholders, and hence not justifiable in light of the cost associated with a subsequent offering.
Advisors:
DNB Markets, part of DNB Bank ASA and Pareto Securities AS are acting as joint global coordinators and joint bookrunners, and Arctic Securities AS, Skandinaviska Enskilda Banken AB (publ), Oslo Branch, and SpareBank 1 Markets AS are acting as joint bookrunners for the Private Placement.
Advokatfirmaet Schjødt AS is acting as legal advisor to the Company.
This information is considered to be inside information pursuant to the EU Market Abuse Regulation and was published by Joachim Houeland, Manager Treasury and Investor Relations of the Company, on the date and time provided herein.
