Cecon ASA restructures financing for for Davie trio

First of three construction vessels was floated out last month. All three were originally to deliver in 2009 First of three construction vessels was floated out last month. All three were originally to deliver in 2009

NOVEMBER 8, 2013 — Cecon ASA reports that a restructuring of financing has been agreed for the three construction vessels (hulls 717, 718, and 719) building for it at Chantier Davie Canada Inc., Lévis, Quebec.

Cecon originally ordered the three vessels back in 2007. The entire series was scheduled to be delivered from the shipbuilder in 2009.

The restructuring provides Cecon subsidiary Rever Offshore AS with necessary working capital financing , allowing Rever 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 from the shipyard.

Cecon says 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 that is due and payable upon the delivery of 717, is to be supplemented by additional bonds in principal amount of $8 million (the "Additional 717 Bonds"), which will be used for completion of hull 717 and for working capital purposes. The Additional 717 Bonds will mature in June 2015. The Additional 717 Bonds have a 12% coupon, paid in kind until delivery of hull 717, and detachable warrants with a strike price of NOK 5,000 per Rever share, or an implicit pre money valuation of Rever of $30 million. These warrants will expire on 31 December 2015, and if exercised, proceeds will equal $8 million. Cecon will not purchase the Additional 717 Bonds and warrants and, accordingly, Cecon's ownership in Rever will be reduced from 85% to 67% if all warrants are exercised. However, Cecon's share of the Additional 717 bonds and the warrants will be offered as a stapled deal to the largest shareholders and warrant holders of Cecon and, consequently, the offer is exempted from the Norwegian prospectus requirements. 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 Cecon 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 $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 $15 million from January 2015. The total funds available under the new hull 718 financing is increased to $95 million; $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 is described as giving 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 a minimum $8 million in working capital to enable Rever to properly supervise the construction and commercialization of the vessels.

Cecon says the construction of hull 717 is on schedule for delivery by March 2014. The final contract for construction of hull 718 and hull 719 is in final phases of negotiation.

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