In accordance with the sales agreements dated December 15 and 16, 2008 with Thule Drilling, Royal Oyster has evidenced their commitment to fulfill their part of the agreement by depositing the first instalment of US $9 million into a UAE bank. The payment will be released by Royal Oyster as soon as they receive confirmation from Thule Drilling and its creditors that the sales agreements will be honored.
This decision now rests firmly with Norsk Tillitsmann (NT) and the bondholders, who up to now, have refused to cooperate and instead have decided to issue an arrest order on Thule Power.Thule has also advised NT and the bondholders about a long term charter opportunity that Royal Oyster is negotiating with an oil major. Royal Oyster risks to lose this opportunity if the arrest is not withdrawn very soon. This fact is presently also being ignored by NT and the bondholders. The arrest order makes it difficult for Thule to maintain and preserve the present condition of Thule Power, which is technically complete. The situation right now is that third party suppliers, once again, are left in the dark as to when they can complete commissioning of the rig and also worry whether or not they will be paid. Each day work is delayed on Thule Power can mean weeks of delay, because suppliers disappear and maintenance may become inadequate. Weeks of delay could soon turn into months.
Through the correspondence with NT and the bondholders, it is apparent that they are trying to force Thule to accept terms which will demolish what remains of shareholder value and push Thule into bankruptcy. This strategy has been confirmed by NT's law firm, BAHR, who only weeks ago through Dagens Naeringsliv encouraged Thule to do just that, i.e. file for bankruptcy. Thule rejects this encouragement by BAHR on the grounds that the sales agreements, now honored by Royal Oyster, means that the company's balance sheet is adequate, even though the shareholders in Thule have suffered substantial losses.
As much as Thule would like to find an amicable way forward and complete Thule Power in accordance with the sales agreements, the actions by NT and the bondholders make this very difficult, and very soon impossible.
We expect that if the current situation remains at an impasse for much longer, the agreements with Royal Oyster will be in jeopardy, and what remains of value for both the bond and shareholders in Thule will be destroyed.
Under Norwegian law, NT and the bondholders have a fiduciary duty to act responsibly and protect shareholder value. Since they refuse to accept the agreements which are able to save their loan, which will also give the shareholders some payback on their investment in Thule, and for which there is no alternative agreements, they will naturally be held accountable for any and all damages resulting from these hostile actions.
We have requested that these bondholders identify themselves. We have been informed that the "instructing bondholders", representing about 70% of the bonds, are all USA based equity funds, and their names are QVT, DA Capital, ORE Hill partners and Whitebox.
Right now, with the arrest order on Thule Power and NT/bondholders having rejected every proposal from Thule Drilling, Royal Oyster is hesitant to release the funds that are standing on an account in a UAE bank since all three sales agreements (newbuildings/yard, Thule Power and Thule Phoenix) are regarded by Royal Oyster as part of an integral package.
Both Thule and Royal Oyster regret the situation and expect and demand that Norsk Tillitsmann and the bondholders release Thule Power in order for the transactions contemplated by agreements to be completed. Further delays of funds into Thule will escalate the detrimental effects on both the bondholders and the shareholders.
Following the completion of the work MIS has performed on Thule Power, the rig was moved by MIS to the inner anchorage within the Sharjah Port limits. Even though the rig is arrested, Thule continues with best endeavours the commissioning work where the rig is located, despite the difficulties caused by the rig not being dockside. Contingent on the arrest being lifted, Thule Power will be finalized within a few months at a budget of US $5 million. Right now, the situation can best be described as one where Thule is doing its utmost to continue work on Thule Power, essentially funding this for the benefit of the bondholders, who on their part, are doing what they can to destroy what is left of bondholder and shareholder value in these assets.
The Board and Administration of Thule urge Norsk Tillitsmann and the bondholders to start cooperating in order to preserve the remaining values in Thule.
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