Havila Shipping Acquires Ownership Interest in Five PSVs

On 27 June 2011, Havila Shipping ASA  entered into an agreement with its controlling shareholder Havila AS and Havila AS’ wholly-owned subsidiary Havvåg AS for the purpose of transferring Havila AS’ indirect ownership interests in the five platform supply vessels MV Havila Fortune, MV Havila Aurora, MV Havila Borg, MV Havila Commander and MV Havila Crusader (the “PSVs”) to the Company (the “Transaction”).

The transfer of the ownership interest in the PSVs to the Company will be carried out through a transfer of the shares in subsidiaries of Havila AS and interests in Havila PSV DIS as contribution in kind against the issue of shares in the Company.

Havila AS’ ownership interests in the PSVs are primarily held by private limited companies, wholly- or partly-owned subsidiaries of Havila AS, which in turn hold ownership interests in the partnerships owning the PSVs, provided, however, that Havila AS holds some interests directly in Havila PSV DIS (the “SPVs”).

Following completion of the Agreement, the Company will, indirectly, be the owner of 40% in MV Havila Crusader and MV Havila Commander, 49% in MV Havila Borg and 50% in MV Havila Aurora and MV Havila Fortune. MV Havila Aurora, MV Havila Borg and MV Havila Fortune are currently managed by the Company (commercial and technical management), while MV Havila Commander and MV Havila Crusader are on 8-year bareboat charters to the Company. All PSVs are currently operational and on contracts of variable lengths, with remaining duration between two months and five years, offering a balanced market exposure.

The acquisition of a controlling stake in the two PSVs currently leased, MV Havila Commander and MV Havila Crusader is expected to improve earnings significantly through a reduction of net leasing costs, which is currently approximately NOK 100 million annually, and improving the overall financial structure of the Company through replacing leasing with traditional financing.

The acquisition of three additional PSVs, MV Havila Aurora, MV Havila Borg and MV Havila Fortune, is also considered favourable as the Company already operates all of these PSVs, with solid operating performance. These PSVs have remaining contract durations of approximately two months, one year and five years (plus options), respectively, providing Havila Shipping with growth at a favourable entry point for expansion in the supply market, and at the same providing balanced contract mix.

The financing of all PSVs will be continued under new ownership.

As part of the transactions, the Company will cancel the Total Return Swap on approximately 1.05 million shares. The reason for this, is that the Company having such financial exposure to its own share price is outside the key business scope of the Company.

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Source:Havila Shipping , June 29, 2011;