The proposed action would demerge PGS' floating production business into a newly-formed entity named Petrojarl ASA. The activities within the geophysical business will continue in the name of PGS. The separation will be implemented through a combined demerger and offering structure.
When the demerger concludes, each PGS shareholder will receive one share in Petrojarl for each share held in PGS on the record date. Each shareholder will thus hold separate investments in two listed companies. Descriptions of the two companies follow.
The board recommends the demerger primarily because it believes each of the two PGS businesses need clearer strategic direction and increased flexibility to pursue growth opportunities. Through the separation, PGS and Petrojarl will obtain independent access to financing and each will be able to independently develop an optimal capital structure for its business. Furthermore, the separation will make possible separate evaluations of each business and allow each business to attract its own investor base.
The listing of Petrojarl is planned for early July 2006. Petrojarl will have its headquarters in Trondheim, Norway. The CEO of Petrojarl will be Espen Klitzing, who currently heads PGS' existing production business.
Completion of the demerger is subject in part to approval by an extraordinary general meeting of PGS shareholders scheduled for April 28.
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