Fairstar Successfully Arranges Underwritten Equity Issue
Fairstar has successfully arranged for an underwritten equity issue of up to NOK75 million. The Board of Directors of Fairstar will
call for an Extraordinary General Meeting on February 16, 2009 to approve the transaction. The transaction structure is an innovative combination of a share capital increase in the form of a rights issue of up to 10,000,000 new shares each with a nominal value of EUR 0.46, with pre-emption rights for shareholders (i.e. approximately 0.3 new shares per ordinary share) at a subscription price of NOK 5.0
('Tranche A') and a directed share issue of up to 4,166,667 new shares each with a nominal value of EUR 0.46, towards the owners of the Fairstar Heavy Transport Secured Bond Issue 2008/2009 at a subscription price
of NOK 6.0 ('Tranche B') (collectively the 'Offering').
A syndicate of the Company's current shareholders has underwritten 5.3 million new shares in Tranche A and a syndicate of the Company's current Bondholders has underwritten 3.8 million new shares in Tranche B. NOK 51 million of the Offering is fully underwritten. The additional NOK 24 million is not underwritten. All of the Company's eligible shareholders and bondholders will be offered pro-rata subscription rights.
Proceeds from the Offering will be used by Fairstar to retire outstanding debt obligations. When combined with cash flows generated from current contracts and the Company's banking facilities, Fairstar will have secured the liquidity necessary to redeem all of its outstanding Bonds no later than October 11, 2009 (the Bond Loan redemption date).
The Company shall issue up to 10,000,000 new shares towards its current shareholders as of February 16, 2009, notwithstanding limitations in certain jurisdictions, (the 'Eligible Shareholders'). The Eligible Shareholders shall have the right to participate in Tranche A pro-rata in accordance with their shareholding in the Company. Transferable subscription rights will not be issued. The subscription price is set at NOK 5.0 per share. Oversubscription and subscription without rights shall be excluded.
The Company shall issue up to 4,166,667 new shares towards the Bondholders as of February 16, 2009. In addition to receiving an underwriting commission, the underwriters will be entitled to the right to be allocated in total 40% of the shares in Tranche B. Allocation of new shares in Tranche B will be facilitated through offering all the Bondholders to convert up to NOK 25 million of the Bond Loan's par
value. The shares in Tranche B will be allocated to the Bondholders pro-rata according to their subscription for new shares, and the Bondholders shall as payment transfer to Fairstar a number of Bonds correspondent to the amount payable for their allocated shares, as payment in kind.
For both Tranche A and B
All subscribers in the Offering will receive a special class of shares ('Class B Shares'). Under the terms of the Company's current Articles of Incorporation (the 'Articles') it is necessary to amend the Articles to effect a reduction of the par value of the Company's current ordinary shares. This amendment will require shareholder approval and the timing of this reduction will require an interim period of approximately two-three months.
During this interim period, the Class B Shares shall have the same rights as the Company's ordinary Shares, except for an adjustment in voting rights during this interim period to facilitate the reduction in par value (see the EGM agenda for further description). The Class B Shares will be delivered to the subscribers as depository receipts issued in the VPS under a separate ISIN NO, and sought to be quoted on the Norwegian Securities Dealers Association's OTC-List. Once the statutory requirements for the capital reduction have been met, the Class B shares will be converted into the Company`s ordinary shares and thereafter listed on the official exchange in Oslo.
The Offering is conditional upon approval by an Extraordinary General Meeting (the 'EGM') in Fairstar to be held on February 16, 2009 in
Rotterdam. The agenda of the EGM and other relevant documents thereto shall be made available on the Company's website and at the office of the Company.
Philip Adkins, CEO of Fairstar, said, "Capital markets today are extremely unstable. Access to liquidity is key to corporate survival. As long as there is reason to believe Fairstar will not be able to redeem its outstanding bond obligation it is extremely difficult to demonstrate to the market the true value of our Company. The demand for offshore heavy transport continues to be strong and Fjord is fully booked for the next twelve months. Fjell will join her sister ship in early 2009 and already has two firm contracts in place. Both vessels have unique operational features that will give Fairstar the advantage of pricing power in the current environment. Operating revenues show no sign of deterioration. The fundamental attraction of our business is its ability to generate significant cash flow. By issuing equity and redeeming our outstanding bonds, Fairstar will be able to direct this future cash flow away from debt service and back to our shareholders, resulting in a more accurate valuation of our Company's shares by the market."
The underwriting syndicates have been established by ABG Sundal Collier Norge ASA who will act as Manager for the Offering.
Fairstar will prepare a prospectus (pursuant to the Prospectus Directive 2003/71/EC) for the Offering, which sets out the further details, which is subject to approval by the relevant authority competent to approve such prospectus.