Shandong to Acquire Northern Offshore for NOK 1.3 Billion

Source: 6/29/2015, Location: Europe

The boards of directors of Northern Offshore, Ltd. (NOF) and Shandong Offshore International Company Limited (the “Purchaser”) are pleased to announce that they have reached agreement on the terms of a recommended cash acquisition of NOF by Shandong Offshore Company Limited (Bidco), a wholly owned subsidiary of the Purchaser (the “Acquisition”). The Acquisition will be implemented by way of an amalgamation (the “Amalgamation”) under Bermuda law at an acquisition price of NOK 7.59 per NOF share, payable in cash (the “Acquisition Price”). The Acquisition Price values NOF’s issued share capital at approximately NOK 1.3 billion. The consideration will be financed from the Purchaser’s existing cash resources.

The Amalgamation is, among other things subject to approval of NOF shareholders at a special general meeting (the “SGM”) expected to be held on or about July 15, 2015. The resolution must be approved by more than 50 per cent of the NOF shareholders voting at the SGM. Bidco has received undertakings on customary conditions to vote in favour of the Acquisition from NOF shareholders holding in aggregate approximately 65 per cent. of NOF’s issued share capital, including from the Company’s two largest shareholders, including Geveran Trading Co. Ltd.

The Acquisition is expected to become effective during the first half of August 2015. At the time at which the Amalgamation becomes effective, each NOF share (other than NOF shares held by the Purchaser, Bidco, any other subsidiary of the Purchaser or any subsidiary of NOF, if any) will be converted into the right to receive the Acquisition Price.

The board of directors of NOF unanimously recommends that NOF shareholders vote to approve the Acquisition at the SGM. In considering whether to recommend the Acquisition, the board has among other things taken into account that the Acquisition represents an attractive valuation for NOF shareholders today, and that the Acquisition represents an opportunity for NOF shareholders to realise their entire investment in NOF, in cash at a premium without the risks associated with public market sentiment and the current economic environment. As a basis for their considerations, the board of NOF has among other things received a fairness opinion from Fearnley Securities AS where Fearnley Securities AS concludes, subject to the qualifications and assumptions set out in their opinion, that the Acquisition Price in their opinion is fair from a financial point of view.

The directors and senior management of NOF who hold shares in NOF have irrevocably undertaken to vote in favour of the Acquisition in respect of their own beneficial shareholdings of approximately 8.3 million NOF shares (and, where applicable, of their connected persons), in aggregate representing approximately 5 per cent. of NOF’s entire existing issued share capital.

Completion of the Acquisition is subject to customary conditions, which include the approval of the Amalgamation by NOF shareholders at the SGM, there having been no material breach of the Implementation Agreement, and (subject to customary qualifications) there having occurred no change effect, development or event which is, or would, reasonably be expected to have a material adverse effect on the financial condition, business, assets or results of operations of the NOF group take as a whole.

Commenting on the Acquisition, Yu Bing, Director of the Purchaser and Dr. Sun Yuanhui, Chairman of Blue Ocean Drilling Limited, said:

“The acquisition of Northern Offshore Ltd. is a positive step in our vision of building a high-performing offshore drilling organization to meet the current and future needs of the Global E&P sector. By retaining the NOF leadership team, when combined with our Blue Ocean Drilling leadership, we will have assembled a highly skilled and experienced team to direct and execute on our strategies as the new Northern Offshore Ltd. going forward. NOF provides proven operating and safety systems, a respected and proven operating organization with an established presence in the North Sea and Asia Pacific, well maintained assets and the most important asset - quality people to execute our strategy. Enhancement of the new NOF fleet is already underway with the combined NOF and Blue Ocean Drilling new–builds; six (6) high specification, deepwater jackups due to be delivered in 2016 through 2018, which will make the new NOF an attractive partner to those E&P companies looking for premium, high specification assets operated by a proven organization whose focus is operations and efficiencies that can contribute to lowering their clients total well costs. We’ll continue to evaluate and act upon further opportunities which meet the technical and financial criteria of the new Northern Offshore Ltd. as we examine ways to further enhance our fleet in an accretive manner.”

Commenting on the Acquisition, Gary W. Casswell, President and CEO of NOF said:

“This transaction represents a major milestone in Northern Offshore’s previously stated strategy to transform our company to a niche, premium jackup drilling contractor with new, state of the art assets. With the exception of the Norwegian continental shelf, NOF will be able to operate in all major petroleum resource regions around the world. Combining the four (4) under construction high spec jackups of Blue Ocean Drilling with Northern Offshore’s two (2) under construction state of the art jackups with deliveries in 2016 thru early 2018, we will realize organizational synergies and have the opportunity to build additional critical mass in our current operations in the North Sea and Asia Pacific as well as position us to pursue new clients in new areas. Going forward, with the support of our new Board of Directors, we will be opportunistic while remaining fiscally responsible to continue growing the company with the selective acquisition or new construction of additional premium jackup assets. Finally, I would like to acknowledge and express our sincere appreciation for the loyalty and support of all of our past and present shareholders who have helped us reach this new beginning.”

Pareto Securities Inc. is acting as financial adviser to the Purchaser.

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Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

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