Norway: Sevan Marine Secures Short-term Financing

Reference is made to the press release issued by Sevan Marine ASA (the “Company”) on 11 July 2011. The Company announces that it has entered into a USD 36.1 million bond loan agreement with Norsk Tillitsmann ASA (“Norsk Tillitsmann”) acting on behalf of a group of holders of the Company’s existing bonds.

The loan will support the short-term working capital needs of the Company and its subsidiaries into September 2011, pending a final resolution of the restructuring discussions ongoing with the Company’s bondholders and other stakeholders. At least USD 30 million of the proceeds will be used in relation to the upgrade project for the FPSO Sevan Voyageur to secure progress of this project due to its material significance to the Company and its stakeholders at large. The Company is in continued discussion with its banks and commercial partners on the FPSO Sevan Voyageur project for additional liquidity support.

The bonds will be issued at 97% of par value and carry a coupon of 15% p.a. payable upon repayment of the loan. The loan will mature in July 2012 but may be redeemed by the Company at any time prior to maturity. The redemption price will be 107.5% of par value during the first six months following issue date, and thereafter 103.75% of par value. The bonds will mature at par value. The bonds are subject to mandatory redemption upon the successful completion of a long-term restructuring solution in which the Company raises new capital in an amount of USD 175 million or more.

The loan will be secured by a first priority pledge over the Company’s shares in Sevan Drilling ASA (“Sevan Drilling”), and the Company has received a release of the lock-up restrictions agreed at the time of the Sevan Drilling IPO to enable such a pledge to be put in place. To the extent that the loan is redeemed prior to 5 April 2012 (the expiry of the initial lock-up period), the Company’s shares in Sevan Drilling shall again be subject to the lock-up as agreed at the time of the Sevan Drilling IPO. The loan does not contain any covenants that are tied to the underlying price of the Sevan Drilling shares.

Disbursement of the loan is expected to take place shortly, subject to certain conditions precedent being satisfied, including (i) stand-still agreements with the bank financiers and charterers of the FPSO Sevan Voyageur until the end of September 2011 (which have been agreed in principle), (ii) irrevocable undertakings from bondholders representing a majority of the bonds in each of the bond issues outstanding to vote in favor of stand-still agreements until the end of September 2011, and (iii) irrevocable undertakings from bondholders representing at least 2/3 of the bonds in the unsecured bond issue, the FPSO Sevan Hummingbird bond issue and the FPSO Sevan Voyageur bond issue, respectively, to vote in favor of interest deferrals until the end of September 2011. The Company expects to issue a summons for bondholders’ meetings later this week, to formalize the interest deferrals and stand-still arrangements.

The Company will continue its constructive dialogue with bondholders and other relevant parties regarding a long-term restructuring solution as described in the press release dated 11 July 2011. The Company is optimistic that a long-term solution to the current financial challenges can be obtained by the end of September 2011.

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Source: Sevan Marine, July 20, 2011