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2016-03-15

Songa Offshore SE : Announces comprehensive refinancing

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART DIRECTLY OR
INDIRECTLY, IN AUSTRALIA, CANADA, JAPAN OR THE UNITED STATES

Songa Offshore SE ("Songa Offshore" or the "Company") intends to issue a subordinated convertible bond of USD 100m with an option to upsize to USD 125m (the "New Convertible Bond") and complete a subsequent equity offering of up to USD 25m at NOK 0.15 per share (the "New Equity"), both as part of a comprehensive refinancing. The proposed refinancing further includes a full conversion to equity of SONG06 (the "Existing Convertible Bond") in an amount of USD 150 million at NOK 0.176 per share, significant interest reductions, maturity extensions and other amendments to SONG04, SONG05 and the Perestroika shareholder loan, as well as amendments to the Company's secured debt facilities (collectively the "Refinancing"). The New Convertible Bond is partly underwritten by way of a USD 91.5m bridge financing (the "Bridge Bond"), which has been subscribed for in full by the largest stakeholders in the Company. The Refinancing is supported by qualified majorities across all three bond series.
The Bridge Bond will immediately add needed liquidity and safeguard the operations of the Company and the delivery of Songa Enabler, the Company's final Cat D newbuild. A liquidity shortfall, cured by the Bridge Bond and the subsequent Refinancing, has arisen mainly due to the negative impact of the lower than anticipated initial utilisation of Songa Equinox and Songa Endurance, delayed rig deliveries, as well as cash deposit requirements in the bank financing related to Songa Encourage and Songa Enabler, as described in the Company's report for Q4 2015.
Songa Equinox and Songa Endurance both operated with an earnings efficiency of 98% for the last three weeks. Songa Encourage is expected to arrive in Bergen 15 March 2016 and commence drilling operations in April 2016. The delivery of Songa Enabler is expected to take place end of March and the rig is scheduled to commence drilling operations in August 2016.
The Refinancing will secure the commencement of all four long term Cat D drilling contracts for Statoil and create a sustainable long term financial platform for the Company. The four drilling contracts provide for ample debt amortisation capacity and will uniquely position Songa Offshore relative to other drilling contractors through the current market downturn.
Further details of the Refinancing is described below and set out in the attached materials.

Revision of completion dates for the Songa Equinox and Songa Endurance
drilling contracts

The Statoil drilling contracts stipulate that the client is entitled to shorten the duration of the drilling contracts by the same amount of time that the rigs have been delayed, relative to a pre-agreed delivery window. In this respect, Songa Offshore has received notice that Statoil has exercised its contractual rights to reduce the contract lengths on the Songa Equinox by 347 days and on the Songa Endurance by 184 days.
Songa Encourage and Songa Enabler are scheduled to commence their drilling contracts in April 2016 and August 2016, each approximately four months after their respective pre-agreed delivery windows. The aggregate contract backlog for the four Cat D rigs, adjusted for the received notice described above, is estimated to be in excess of 30.5 rig years or USD 5.1 bn as of 29 February 2016, excluding options.

The New Convertible Bond

The New Convertible Bond will be issued by the Company as subordinated unsecured debt. The New Convertible Bond will be denominated in USD and will have a strike price of 15% above the reference price set at NOK 0.15. In addition, each investor allocated an amount in the New Convertible Bond will receive warrants at the new par value for shares in the Company in an amount of 1,701,720 for each USD 100,000 of allocation. The New Convertible Bond will have semi-annual coupon payments of 2% p.a..
The outstanding amount under the Bridge Bond will be converted into the New Convertible Bond following the required resolutions by an extraordinary general meeting ("EGM"). In addition, the Company will give preference on participation to (i) holders of the Existing Convertible bonds, holders of SONG04 and SONG05, and existing shareholders, and (ii) new investors. Additional standard criteria, such as inter alia timeliness of application, will also be taken into consideration. The minimum subscription amount will be USD 150,000.

Interest reductions, extensions and other amendments to SONG04, SONG05 and the
Perestroika Shareholder Loan

The maturity dates of SONG 04, SONG05 and the Perestroika shareholder loan is proposed amended, so that 1/3 of the current outstanding amount will mature in May 2018, December 2018 and June 2018, respectively (the "First Maturities"), with the remaining outstanding amounts to be repaid 30 months thereafter.
Coupon payments are proposed reduced to (i) 0% in the period to and including September 2016, (ii) approx. 2.5% on average in the period from and including October 2016, and (iii) 1.5% below the currently prevailing coupon rate from the respective First Maturities and until the respective final maturities. Interest accrued up to the effective date of the Refinancing will be paid to holders of SONG04, SONG05 and the Perestroika Shareholder Loan in the form of 1,119,159,876 shares in the Company (the "Equity Compensation"), equivalent to approx. 6% of the pro forma fully diluted share capital.
Covenants will be partially suspended and amended, providing the Company with increased headroom in the years ahead.

Conversion of the Existing Convertible Bond (SONG06)

All outstanding amounts under the USD 150m Existing Convertible Bonds shall be converted into new shares of the Company at NOK 0.176 (equivalent to a conversion of 85% of par value at a price of NOK 0.15 per share). As a result of the above conversion, the holders of the Existing Convertible Bonds will have an equity interest in the Company post-Conversion, but prior to any Equity Compensation, New Equity and conversion of the New Convertible Bond, of approx. 89.2%.

Amended bank financing

In connection with the Refinancing, covenants and other undertakings have been agreed amended across all bank facilities, including extensions of cross currency swaps related to SONG04 and SONG05.

New Equity

The Company intends to conduct an equity offering of up to USD 25 million (the "New Equity") for the purpose of giving existing shareholders the opportunity to subscribe for new shares of the Company (the "Equity Offering"). New investors shall be allowed to subscribe in the Equity Offering, but existing shareholders shall have preferred allocation rights. The subscription price in the Equity Offering shall be NOK 0.15.
The New Equity Offering will be launched following the requisite approval of the Refinancing by the Company's bondholders and shareholders, and subject to approval of relevant authorities of an offering and listing prospectus. The further terms and particulars of the Equity Offering will be announced in due course, and described in the prospectus to be prepared in connection therewith.

Share capital reduction

The current nominal value of the Company's Ordinary Shares is EUR 0.11. As the
Convertible Bond will be converted, and the New Convertible Bond and the New
Equity will be offered, at a conversion/subscription price of less than the
current nominal value of the Ordinary Shares, the Company intends to carry
out a reduction of the nominal value of the Ordinary Shares. This reduction
will be carried out as a reduction of share capital without distribution, and
will be proposed resolved by an extraordinary general meeting of the Company.
The proposed new nominal value will be EUR 0.001.

Due to the required capital reduction, the new shares to be issued as part of the Refinancing are expected to be issued in new separate share classes (Class A and Class B) on an interim basis, pending completion of the capital reduction and a subsequent merger of all shares to Ordinary Shares of new nominal value EUR 0.001. The Class A and Class B Shares will have equal rights as the Ordinary Shares (and each other), but will not be listed or admitted to trade on the Oslo Stock Exchange or any other exchange before conversion to Ordinary Shares.
Shares delivered to unsecured lenders and as a result of the conversion of the
Existing Convertible Bond will remains unlisted as a separate class of equity
until Songa Offshore has published its Q3 figures. The warrants will be
exercisable 12 to 36 months after issue.

Extraordinary General Meeting and Bondholders' Meetings

The actions contemplated in the Refinancing require approval by the Company's shareholders in an EGM, and by the Company's bondholders in bondholders' meetings for each of the SONG04, SONG05 and SONG06 bonds (the "Bondholders' Meetings"). Notice of such meetings and further details will be issued in due course.

Conditionality

The Refinancing is conditional upon inter alia the Bridge Bond having been issued and approval by sufficient majorities in the EGM and the respective Bondholders' Meetings.
In this respect, the Company has received irrevocable undertakings to vote in favour of the proposed Refinancing amounting to 71%, 72% and 78% of the voting bonds in SONG 04, SONG05 and SONG06 respectively. In addition, the Company's majority shareholder Perestroika AS and certain other shareholders have confirmed that they will vote in favour of the required resolutions at the EGM.
* * * *
For further details on the Refinancing, please refer to the detailed refinancing term sheet and the company presentation, both dated 15 March 2016 and attached hereto.
ABG Sundal Collier ASA and Swedbank Norge, branch of Swedbank AB (publ.), are acting as financial advisors to the Company in connection with the Refinancing. Schjødt is acting as Norwegian legal advisor to the Company.
The proposed transactions have been independently considered and approved by the directors of the board not related to the Company's majority owner Perestroika AS. As part of this consideration, the independent directors have received separate fairness advice on the Refinancing from Clarkson Platou Securities AS.

15 March 2016

Limassol, Cyprus

Board of Directors
Songa Offshore SE

Questions should be directed to:
Bjørnar Iversen, CEO (+357 99649152)
Jan Rune Steinsland, CFO (+47 97052533)

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

Press Release
http://hugin.info/136777/R/1994269/734350.pdf
Songa Offshore Refinancing Terms 15 March 2016
http://hugin.info/136777/R/1994269/734352.pdf
Investor Presentation 15 March 2016
http://hugin.info/136777/R/1994269/734348.pdf

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This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Songa Offshore SE via Globenewswire

HUG#1994269

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