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Shelf Drilling announces four-rig transaction, issuance of new common shares

Reference is made to the announcement by Shelf Drilling on 21 February 2019 regarding the entering into of agreements with affiliates of China Merchants for the contemplated acquisition of two jackup rigs, issuance of new common shares and bareboat charter agreements for two additional jackup rigs.

“The closing of this transaction marks an important milestone for Shelf Drilling and we would like to congratulate everyone involved in this process,” David Mullen, Chief Executive Officer, said. “The on-time delivery of the two premium CJ-46 jackups is the result of a truly collaborative effort between Shelf Drilling and China Merchants. Our alliance with China Merchants significantly strengthens our competitive position and creates tangible value for all our stakeholders. It also provides us access to the experience and resources of one of the largest state-owned enterprises in China and we look forward to welcoming their representatives to our board. The addition of these four premium jackup rigs creates exciting near-term opportunities for Shelf Drilling in an improving jackup market.”

In connection with the completion of the transaction, 26,769,230 new common shares, each with a par value of $0.01, have been issued to Wealthy Marvel International, an affiliate of China Merchants, and Wealthy Marvel Enterprises, a joint venture between China Merchants and CMIC Ocean En-Tech Holding Co., at a subscription price per share of $6.50. The subscription amount will be used to settle the purchase price for the two premium CJ46 jackup rigs acquired by, and delivered to, the group.

The new common shares have been legally and validly issued and will be registered in the VPS in the form of depository receipts/securities. A prospectus for the listing of the securities on the Oslo Stock Exchange has been approved by the Financial Supervisory Authority of Norway on 7 May 2019 and has been made publicly available here. Hard copies of the prospectus are available at the offices of Advokatfirmaet Thommessen AS at Haakon VIIs gate 10, 0161 Oslo, Norway.

Following the issuance of the new common shares, the share capital of the Company is $1,380,096.24 consisting of 138,009,624 common shares, each with a par value of $0.01.

Further, the issuance of the new common shares resulted in a dilution of existing security holders. Consequently, the shareholding of each of (i) funds affiliated with, managed or advised by CHAMP III Management Pty, (ii) funds affiliated with Castle Harlan and (iii) a fund affiliated with Lime Rock Management (the “sponsors”) fell below 14% of the issued and outstanding common shares of the company. According to the company’s articles of association, the number of directors to be appointed by each of the sponsors will be reduced by one, so that each of the sponsors is entitled to appoint only one individual as a member of the board of directors. As such, the following individuals will no longer be members of the board of directors of the company: David Pittaway, John Reynolds and Tyson Smith. The sponsors and China Merchants have, however, agreed to, at the next general meeting of the company, vote in favor of the reappointment of these three directors plus the appointment of two new directors nominated by China Merchants.

This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

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