BW Offshore, APL to Merge

The boards of APL ASA and BW Offshore Limited have agreed to recommend to their shareholders a combination of the two companies, creating a major presence in the global FPSO market with a strong platform for future growth.

The new company will bring together leading track records and project execution capabilities with a strong technology edge. The joint resources in engineering, operations, business development and client relationships will create a highly effective combination. As an example, in the promising growth area of the Gulf of Mexico, APL's turret technology and BW Offshore's recent track record in developing the first FPSO for the region will create a winning team for future projects there.

"By combining forces, we are creating a strong international FPSO company with a very capable Norwegian-based management that is well positioned to capture the growth opportunity we see in the market. The winners in the booming FPSO market will be those who can demonstrate a strong track-record, execution capacity and a technological edge. We are very enthusiastic about what our two companies can become by joining forces," said William A. Smith and Andreas Sohmen-Pao, Chairman and Vice Chairman of the Board of Directors of APL and BW Offshore respectively, in a joint statement.

For practical purposes, BW Offshore will be the acquiring entity. The combination will be executed as a voluntary offer in which APL shareholders are offered a choice between cash settlement based on a price of NOK 85.00 per APL share or 3.0249 BWO shares per APL share. The offer will in aggregate be limited to maximum 40 percent cash settlement. This means that if cash settlement is chosen for more than 40 percent of the accepted shares, a pro rata adjustment will be made so that the settlement in sum consists of 40 percent cash and 60 percent BWO shares. Notwithstanding the foregoing shareholders holding 1000 shares or less is entitled to take all cash for their shares. If cash settlement is chosen for less than 40 percent of the accepted shares all shareholders choosing the cash alternative will receive full cash settlement. If all APL shareholders accept the exchange offer with settlement in BWO shares, then APL's shareholders will hold approx. [31] percent and BWO's shareholders will hold approx. [69] percent of the combined company. The offer is subject to regulatory and other customary approvals, as well as, to BW Offshore receiving valid and unconditional acceptances of the offer from shareholders representing more than 90% of the shares. The offer document will be distributed to all APL shareholders as soon as practically possible.

APL will remain as a separate brand name and APL will be a subsidiary of BW Offshore following a combination. APL will continue to serve a wide range of clients' turret and mooring requirements, in addition to developing its other business areas.

"It has been APL's long-term goal to broaden its product offering in the oilfield services market. With this transaction we are taking a major step forward in that ambition. By tapping into BW Offshore's track-record, operational skills and financial resources we will be able to create more value for our shareholders," said APL CEO Carl Arnet in a statement.

BW Offshore CEO Svein Moxnes Harfjeld adds: "APL's technological edge and engineering capacity makes the company a very attractive partner for us. BW Offshore has had a strong and long-standing client relationship with APL and we know what the company can deliver. Together with APL we will have an unparalleled service offering to our clients."

The Boards have agreed that BW Offshore will call an EGM and propose to elect a new Board that includes i.a. Helmut Sohmen, William A. Smith and Andreas Sohmen-Pao. The current corporate management of BW Offshore will be strengthened by Carl Arnet continuing as CEO of APL while also being appointed Deputy CEO of the combined entity with overall responsibility for technology and business development.

BW Offshore controls 4,415,000 shares in APL, representing 10.1% of APL's outstanding shares. BW Offshore has received pre-acceptances from the following primary insiders in APL:

• Carl Arnet, CEO of APL 1,940,524
• Knut Sæthre, CFO of APL 76,344
• Tor Bergstrom, Board member of APL 1,200
• Svein Eggen, Board member of APL 33,600
• Jan Knut Fiskaa, Board member of APL 6,000
• Steinar Slaatelia, Board member of APL 4,000