Thule has reached a major milestone with the agreement securing full access to the QGM yard and the rigs. The following update is information that can be released at this time.
Access to the QGM yard
Thule has full access to the yard. Commissioning work has commenced on Thule Power and the rig will be finalized at the QGM yard. Moving Thule Power outside of the QGM yard is possible with the guidance of the Trustee, but not a preferred strategy.
Trustee of the yard
Strategic Alliances Corporation has been appointed Trustee as part of this agreement securing full access to the yard. Mr. Ron LeKarz has a long standing business relationship with Saudi interests and is managing the company on behalf of these interests. The primary objective of the Trustee is to get the yard up and running at full speed.
Thule has a detailed weekly liquidity forecast until Thule Power is delivered. The liquidity is tight, with a substantial number of unpaid invoices, but this has improved with the sale of unnecessary excess equipment on Thule Power. Thule continues to exercise a very controlled and careful cash management system.
The first 50% installment on the sale of Chekovo Ltd. (Thule Power owning company) is delayed. This has resulted in close discussions and mutual cooperation with the bondholder trustee to get a workable solution under the current default situation, including a postponement of the interest payments due in March 2008. Sale of other equipment not needed at this stage with respect to the newbuildings is also contemplated to alleviate the liquidity situation until Thule Power is delivered.
Sales discussions on both of the newbuildings are taking place. Several potential buyers have inspected the rigs over the last week and Thule is currently in negotiations with a few of them.
Regarding possible share issues, the major shareholders have stood by Thule throughout this crisis. Now that the crisis is over, they will most certainly stand by the company. Thule will seek funding through other sources first and only go to the shareholders as a last resort.
Completion of Thule Power
Thule Power is expected to be delivered in end Q3 2008. The workforce and resources to complete the rig are on-site and the expected additional cost to completion is about USD 10 million.
Completion of Thule Energy and Thule Force
Once further funding is secured (i.e. sale of one or both of the newbuildings), construction will commence. Currently, only limited maintenance is performed on the rigs, but full conservation of all equipment has been concluded. A complete overview of the whereabouts and status of all Thule equipment for the newbuildings is secured showing a total cost of US $114 million of which US $87 million is paid for and delivered. Expected cost for completing Thule Energy is US $55 million plus finance costs, and US $65 million plus finance costs for Thule Force. Expected delivery of the rigs are 4Q 2009 for Thule Energy and 1Q 2010 for Thule Force.
The semi-submersible rig located in the US is still for sale. Several interested parties have inspected the rig, but the sales efforts have so far not been successful.
Thule has reached a settlement agreement with QGM. The assets are intact, one rig company is sold, and more rigs might be sold. The liquidity is currently tight until Thule Power is delivered, but with the sale of one or both of the newbuildings, the company may be debt free or close to debt free in the near future.
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