Reference is made to the stock exchange notice dated 23 July 2014 regarding the signing of a demerger plan between Saga Tankers ASA ("Saga" or the "Company") and Ferncliff TIH 1 AS ("Ferncliff"). Reference is furthermore made to the notice of the extraordinary general meeting of the Company and the documentation accompanying the notice (published on the Company's website www.sagatankers.no).
A detailed stock exchange notice is hereby released in compliance with the requirements pursuant to section 3.4 of the continuing obligations for companies listed on the Oslo Axess. An information memorandum will be released pursuant to section 3.5 of the continuing obligations.
1 THE TRANSACTION AND THE PARTIES TO THE TRANSACTION
The transaction (the "Transaction") is a demerger of certain assets owned by Ferncliff. The assets shall be spun out from Ferncliff and merged into the Company (Norwegian: Fisjonsfusjon). The parties to the transaction are thus the Company and Ferncliff.
The assets (the "Assets") to be spun out from Ferncliff and merged into the Company consist of an ownership interest and shares in Vallhall Fotballhall KS, Vallhall Fotballhall AS and Vallhall Fotballhall Drift AS, and shares in the listed companies Prospector Offshore Drilling S.A (ticker PROS) and SD Standard Drilling Plc (ticker SDSD). Saga already holds shares and an ownership interest in the abovementioned companies.
Please find below an overview of Saga's shares and ownership interest in such companies pre and post the Transaction, as well as an overview of the shares and ownership interest comprised by the Assets.
| Company | Saga share and ownership interest pre Transaction | Shares and ownership interest comprised by the Assets | Saga's shares and ownership post Transaction |
| Vallhall Fotballhall KS | 17.23% ownership interest | 32.072% ownership interest | 49.305% ownership interest |
| Vallhall Fotballhall AS | 526,579 shares (19.15 % of total outstanding shares) | 980,006 shares (35.64% of total outstanding shares) | 1,506,585 (54.79% of total outstanding shares) |
| Vallhall Fotballhall Drift AS | 600 shares (20.00% of total outstanding shares) | 1,055 shares (35.17% of total outstanding shares | 1,655 (55.17% of total outstanding shares) |
| PROS | 3,810,048 shares (4.03% of total outstanding shares) | 5,768,072 shares (6.10% of total outstanding shares) | 9,578,120 (10,13% of total outstanding shares) |
| SDSD | 3,517,996 shares (1.34% of total outstanding shares) | 46,162,086 shares (17.62% of total outstanding shares) | 49,680,082 (18,96% of total outstanding shares) |
The purpose of the Transaction is the development and consolidation of the current core activities of the Company in the companies comprised by the Assets, as further accounted for below.
The Transaction is governed by the Norwegian Public Limited Liability Act chapter 14 and will be implemented with continuity for accounting and tax purposes.
The board of directors of the Company (the "Board") will propose at an extraordinary general meeting of the Company, to be held on 25 August 2014, that the shareholders of the Company approve the Transaction. Provided that the shareholders approve the Transaction, the Transaction will be registered with the Norwegian Register of Business Enterprises for the mandatory creditor notification period of 6 weeks. Following the creditor notification period and the clarification of any, if any, objections by the creditors, the completion of the Transaction will be registered with the Norwegian Register of Business Enterprises around the middle or end of October 2014.
2 CONSIDERATION UNDER THE TRANSACTION
As consideration for the Assets to be transferred to the Company under the Transaction, the sole shareholder of Ferncliff, Mr. Øystein Stray Spetalen, will receive 89,056,319 new shares in the Company, each with a par value of NOK 1 and at a price of NOK 2.175 per share. Following the completion of the Transaction, Mr. Spetalen will own 98.3 % of the total outstanding shares in the Company. The value of the new shares received by Mr. Spetalen is NOK 193.7m.
The share capital of the Company will be increased by NOK 89,056,319, from NOK 86,777,409 to NOK 175,833,728. The increase in share capital of the Company will be registered at the same time as the completion of the Transaction.
3 FURTHER DESCRIPTION OF THE COMPANY, THE ASSETS AND THE TRANSACTION
The business activity of the Company is investment and management related to shipping, rig, real estate, stock trading and other related business activities.
The Company's Board consists of the following persons:
- Mr. Øystein Stray Spetalen, Chairman of the Board of Directors;
- Mr. Martin Nes, Director of the Board;
- Mrs. Brita Eilertsen, Director of the Board.
The composition of the Board will not be changed as a consequence of the Transaction.
The management of the Company consists of its CEO, Mr. Espen Lundaas. Mr. Lundaas also occupies the position as CFO of the Company. Mr. Lundaas is the sole employee of the Company. No employees of Ferncliff will be transferred in the Transaction.
As stated above, the Company already holds shares in the companies comprised by the Assets.
The Assets have not been subject to separate financial reporting. However, both PROS and SDSD are companies listed on the Oslo Axess stock exchange and are thus subject to the same disclosure requirements regarding financial statements as the Company. For further financial information regarding PROS and SDSD, please refer to the periodic financial statements of both companies. The financial statements may be found at the companies' websites (http://www.prospectoroffshoredrilling.com/ and http://www.standard-drilling.com/, respectively).
The shares in Vallhall Fotballhall have been accounted for as associated companies, as the Company exercises significant influence over Vallhall Fotballhall by virtue of board representation. The Company's financial reports regarding its shares and ownership interest in the Vallhall Fotballhall companies may be found in the annual report for 2013 (published on the Company's website www.sagatankers.no.)
The results and aggregated assets and liabilities of the shares and the ownership interest in the Vallhall Fotballhall companies to be transferred as part of the Transaction for 2012 and 2013 are set out below:
Per 31 December 2012:
| Company Name | Country of Incorporation | Assets | Surplus Value | Liabilities | Revenue | Profit |
| Vallhall Fotballhall AS | Norway | 2,199,019 | -199,674 | 519,536 | - | - |
| Vallhall Fotballhall Drift AS | Norway | 735,819 | -11,504 | 453,180 | - | - |
| Vallhall Fotballhall KS | Norway | 33,106,290 | -6,070,541 | 15,039,759 | - | - |
| In total | 36,041,129 | -6,281,719 | 16 012 475 | - | - |
Per 31 December 2013
| Company Name | Country of Incorporation | Assets | Surplus Value | Liabilities | Revenue | Profit |
| Vallhall Fotballhall AS | Norway | 2,407,238 | -199,674 | 528,613 | - | 199,142 |
| Vallhall Fotballhall Drift AS | Norway | 737,348 | -11,504 | 448,063 | 3,915,586 | 6,645 |
| Vallhall Fotballhall KS | Norway | 33,562,327 | -6,070,541 | 13,621,883 | 3,992,868 | 1,873,913 |
| In total | 36 706 912 | -6,281,719 | 14,598,558 | 7,908,455 | 2 079 701 |
4 BACKGROUND FOR AND CONSEQUENCES OF THE TRANSACTION
The Transaction implies that the Company is strengthening its investment activities.
The purpose of the Transaction is to secure the development and increase of the current core activities of the Company through an increase of ownership in companies where the Company already has an ownership interest. The Transaction will be fully financed with equity through an increase of the Company's share capital. Following the demerger, the total book value of the Company's equity will increase from MNOK 188.7 with MNOK 193.7 to an estimated total of MNOK 382.4.
The Board further considers that the transfer of the Assets to the Company through the Transaction will strengthen the Company's influence over such Assets and make the Company more attractive for existing and potential partners(such as securities firms, shipyards, other contractors and banks).
5 RELATED PARTY TRANSACTION
As mentioned above, Mr. Spetalen is the sole shareholder of Ferncliff and as consideration for the Assets to be transferred to the Company under the Transaction, Mr. Spetalen will receive 89,056,319 new shares in the Company, each with a par value of NOK 1. The Board has obtained an independent fairness opinion from Swedbank in compliance with section 4 of the Norwegian Corporate Governance Code.
Further, Mr. Spetalen is the Chairman of the Board of Directors of the Company. The Transaction is thus a transaction between related parties. Mr. Spetalen has not participated in the Board's discussion of the Transaction.
For further information, please contact:
CEO Espen Lundaas
+47 92 43 14 17
This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.