Cecon Restructures Financing for Three Newbuilds

Cecon ASA, through its subsidiary Rever Offshore AS (Rever), has reached an agreement to restructure and extend the existing financing related to the construction of their three offshore construction vessels (hulls 717, 718, and 719) at Chantier Davie yard in Quebec, Canada.

The Restructuring provides Rever with necessary working capital financing, allowing the company to fund start-up costs of 717 and initiate the completion of hulls 718 and 719 earlier than under the current financing, which is expected to reduce overall construction cost and expedite the delivery of the vessels.

The key elements of the Restructuring can be summarized as follows:

• The previously secured financing from funds managed by York Capital Management Global Advisors, LLC and its affiliates which is due and payable upon the delivery of 717, is to be supplemented by additional bonds in principal amount of USD 8 million, which will be used for completion of hull 717 and for working capital purposes. The Additional 717 Bonds issue is fully underwritten, by funds managed by York, by funds managed by Warwick Capital Partners LLP, and by companies affiliated with Chairman Riulf Rustad. The issuance of Additional 717 Bonds and warrants will be subject to definitive documentation, including amending and restating the existing First Bond Loan Agreement. Accordingly, the Additional 717 Bonds will be subject to the same security package and restrictions contained in the First Bond Loan Agreement and related documentation. The warrants shall (if possible) be registered in the Norwegian Central Securities Depository (VPS).
• The previously secured financing of hull 718, has been re-structured such that a new separate facility of USD 25 million has been secured for a start-up of hull 718 in early December 2013, while the remainder of the financing for hull 718 will be available from after refinancing and delivery of hull 717. In addition, the new 718 financing includes a flexible extension facility of USD 15 million from January 2015. The total funds available under the new hull 718 financing is increased to USD 95 million; USD 5 million of which will be available for working capital purposes. The terms of the new 718 financing are better than the previous secured financing, with comparable cost and increased flexibility to Rever, and will be subject to definitive documentation (including amending and restating the existing First Bond Loan Agreement).
• Discussions for concluding the financing of hull 719 are expected to be finalized before 31 December at improved terms and conditions compared to the existing facility contemplated for hull 719.
• The Restructuring gives Rever and the Cecon group the financial flexibility to manage the construction process and the commercial development of the company in an optimal manner. The Restructuring secures Rever with minimum USD 8 million in working capital to enable Rever to properly supervise the construction and commercialization of the vessels

The construction of hull 717 is on schedule for delivery by March 2014. The total price including variation orders is expected to be within 10% of the earlier communicated shipyard price. The final contract for construction of hull 718 and hull 719 is in final phases of negotiation.

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Press Release, November 8, 2013