June 12, 2006
Sea Containers sells Silja
Sea Containers Ltd. (NYSE: SCRA and SCRB) and AS Tallink Grupp (TSE:TAL1T ET) say they have entered into a definitive agreement that will see Sea Containers sell its Baltic ferry subsidiary Silja Oy Ab to Tallinkapproximately $594 million in cash and shares.
The consideration for the sale of Silja's core business is Euros 450 million cash and 5 million ordinary shares in Tallink. The dollar equivalent values are approximately $570 million cash and $24 million in shares. Sea Containers may not dispose of the shares within 12 months of the sale's completion without Tallink's permission.
The sale includes six of the eight ships held for sale by Sea Containers as part of the Silja core business.
The deal does not include the fast ferry services from Helsinki, Finland to Tallinn, Estonia and the two SuperSeaCat fast ferries which operate on the route. That business will continue to be operated by Sea Containers on a stand-alone basis.
The transaction also excludes Silja's three "legacy" vessels which are not employed on the core routes.
Two of the non-core Silja 'legacy' fleet, Opera and Finnjet, will become free of bank debt and Sea Containers will continue to seek to dispose of them. Sea Containers has separately completed the sale of the third legacy ship, the Walrus, for a consideration of $21 million, paying all related bank debt of $21 million.
Tallink will continue to operate the business under the Silja brand and the ships will continue to sail under their current flags and with their existing officers and crew. Tallink will ensure that Silja's existing obligations towards the employees, including pension obligations, are not adversely affected by the transaction.
Commenting on the sale, Enn Pant, Chairman and CEO of Tallink, said that as a result of the acquisition Tallink and Silja will together form the leading shipping company in the Baltic Sea area, which has been a vision of Tallink for years.
Bob MacKenzie, Chief Executive Officer of Sea Containers, added: "We updated the market on March 24, 2006 on the process of selling the core of the Silja fleet and we believe that the price we have negotiated is a fair one. The sale of Silja is a vital part of our efforts to reduce substantially the overall level of Sea Containers' debt. As a result of the transaction, approximately $510 million of related bank debt will be repaid."
Upon completion of the Silja sale, Sea Containers anticipates that after working capital adjustments and transaction fees it will receive net cash proceeds of approximately $60 million and repay approximately $510 million of related bank debt.
Sea Containers has also signed a memorandum of agreement to sell its 81meter fast ferry Rapide. If completed, all the proceeds of the sale would be used to retire debt secured by the ship.