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2016-11-25

Viking Supply Ships AB: Viking Supply Ships AB announces equity issues

Viking Supply Ships AB strengthens the group's financial position in
accordance with the agreement on financial restructuring; announces
fully guaranteed rights issue of approximately MSEK 207 as well as a
directed share issue and offset share issues together corresponding
to approximately MSEK 141.

This press release may not be disclosed, published or distributed,
directly or indirectly in or to the USA, Australia, Japan, Canada or
any other jurisdiction where such measure entirely or partially is
subject to legal restrictions.

Summary

· The Board of Directors of Viking Supply Ships AB ("Viking Supply
Ships" or the "Company") has, pursuant to the authorisation granted
by the annual general meeting, resolved on new share issues in the
Company to fulfil the conditions agreed upon with the Company's
lending banks and bondholders under the previously announced
financial restructuring

· As a result of the negotiations, the subscription price is SEK
1.50 per share in all the share issues which closely connects to the
market price for the Company's series B share

· A rights issue whereby the Company's existing shareholders have
preferential right to subscribe for new shares. For each existing
series A share held on the record date, seven (7) subscription rights
of series A are obtained and for each existing series B share, seven
(7) subscription rights of series B are obtained. The subscription
rights allow the holder to subscribe for new shares with primary
preferential rights, whereby nine (9) subscription rights of series A
and series B, respectively, give the right to subscribe for one (1)
new series A share and B share, respectively

· Full subscription in the rights issue corresponds to total issue
proceeds of approximately MSEK 207 before issue costs

· The record date for participation in the rights issue is 2
December 2016

· The subscription period (subscription through payment) will run
from 5 December 2016 up to and including 19 December 2016

· The rights issue is fully guaranteed through subscription and
guarantee undertakings from the Company's main shareholder Kistefos
AS (through the wholly-owned subsidiary Viking Invest AS)
("Kistefos")

· Offset of part of existing bond loan of approximately MSEK 56
against new shares in Viking Supply Ships

· Agreement reached with the bondholders regarding cash settlement
of approximately MNOK 35 corresponding to the remaining part of the
bond loan resulting in certain discount for Viking Supply Ships

· Directed share issue of approximately MSEK 42.5 of series B shares
in Viking Supply Ships to a subsidiary of Kistefos

· Offset of claims from Kistefos with subsidiaries of approximately
MSEK 42.1 against new series B shares in Viking Supply Ships

Background and reasons

As previously communicated, it became clear during the fourth quarter
of 2015 that the Company and its subsidiary Viking Supply Ships A/S
("VSS A/S") (the "Group") did not have sufficient liquidity.

In the light of this situation, the Group initiated a dialog with its
lenders in order to secure a long-term stable financial platform for
the Group. During most of 2016, VSS A/S has had discussions with
lending banks and other creditors, and has since February 2016 had a
"standstill" agreement with lending banks, resulting in that VSS A/S
has not amortised the loans.

In May 2016 VSS A/S and lending banks agreed on the main principles of
a restructuring agreement. An agreement was entered in July 2016
(the "Restructuring Agreement"), entailing, inter alia, that the loan
agreements' maturity is extended until 31 March 2020, that
amortisations for 2017 shall amount to approximately MUSD 6, after
which fixed quarterly amortisations of USD 750,000 shall apply from
2018, that VSS A/S's available liquid funds exceeding certain
thresholds shall be used for amortisations of loans and that extra
amortisations of the loans of a total amount of MUSD 23.7 shall be
made partially through liquid funds that have been made available by
an agreement with the Group's lending banks.

According to the Restructuring Agreement, VSS A/S shall also agree on
a loan restructuring with the holders of VSS A/S bonds 2012/2017 of
approximately MNOK 199. In August, VSS A/S entered into such an
agreement implying that 50 per cent shall be converted to new shares
of series B in the Company at a subscription price of SEK 1.50 per
share, the bonds being valued at 55% of the bonds nominal value, and
that the remaining 50 per cent of the bonds are redeemed at 35 per
cent of the bonds nominal value, corresponding to approximately MNOK
35. The cash redemption is financed partially through existing
disposable liquid funds, partially through a loan of MSEK 20 from an
existing creditor.

The Restructuring Agreement furthermore entailed that VSS A/S had to
reach a solution regarding the bareboat charter agreement with
Norseman Offshore AS for the vessel Odin Viking. In October this
year, Norseman Offshore AS was declared bankrupt. In November this
year Odin Viking SPV AS, a company wholly-owned by Kistefos, entered
into an agreement with the bankruptcy estate through which Odin
Viking SPV AS acquired Odin Viking and took over the bareboat charter
agreement. Furthermore in November, Odin Viking SPV AS and VSS A/S
entered into an agreement regarding amendments to the conditions in
the bareboat charter agreement entailing a reduced rent, expiry of a
put option for Odin Viking SPV AS and issuance of a call option of
USD 1 for VSS A/S. The renegotiation is estimated to correspond a
total value of approximately MUSD 18 in favour of VSS A/S, thus
resulting in that a corresponding claim arose for Odin Viking SPV A/S
against VSS A/S. According to the agreement, the claim shall be
converted to new series B shares in the Company at a subscription
price of SEK 1.50 per share with payment against setoff. At the
setoff, the claim is valued at approximately 13 per cent of its
nominal value, thus the total amount to setoff reaches MUSD 2.4.

The financial restructuring and the present rights issue and other new
share issues aim to strengthen the Group's balance sheet and
significantly reduce the need of assets for amortisations up to and
including the 1 January 2020.

The Restructuring Agreement is conditional up on the implementation of
the present rights issue and following capital increase from the
parent company to VSS A/S.

Otherwise, there are no additional conditions for the Restructuring
Agreement.

In connection with the return of two of TransAtlantic AB's previously
bareboat chartered vessels, there is an existing residual value
obligation of approximately MSEK 70 towards the financing bank. The
bank has acknowledged to postpone the payment until 31 December 2016.
In addition, there is a request for additional amortisation of
approximately MSEK 52. During 2016 the Company has decided to
dismantle the remaining business within TransAtlantic AB and a
process is in progress in connection hereto. After the end of the
third quarter the sale of the RoRo ship TransReel was made, and an
agreement has been signed regarding the sale of TransFighter. These
disposals are expected to, collectively, give the Company enough
liquidity to be able to fulfil TransAtlantic AB's remaining loan
facilities. The liquidity needed to be able to fully fulfil
TransAtlantic AB's residual value obligations requires that the
rights issue in Viking Supply Ships becomes fully subscribed.

Provided that the conditions of the Restructuring Agreement, including
the implementation of the rights issue, are fulfilled, the Company
deems that all material parts of the financial restructuring will be
completed during the fourth quarter of 2016. When the restructuring
has been completed, Viking Supply Ships expects to have enough
liquidity to maintain business, even if the market remains weak,
until 2019. The main risks and uncertainties in respect of these
considerations are a continued weakening of the market conditions.

The reasons for deviating from the shareholders' preferential rights
in the directed share issues, are to ensure the long-term financing
of the Company as the share issues are a step in the agreements the
Company has reached with its lenders regarding the financial
restructuring of the Group and are thereby necessary for the Company
not becoming insolvent as well as critical for the Group's recovery
and future development.

All negotiations in respect of the share issues have been made on
commercial terms, including determination of the subscription price
of SEK 1.50 (or the equivalent to the extent payment is made in
another currency) in all share issues, which closely connects to the
market price of the Company's series B shares.

The different parts of the package of measures are described in more
detail below.

The rights issue

The Board of Viking Supply Ships has on 25 November 2016, pursuant to
the authorisation granted by the annual general meeting on 30 June
2016, resolved on a rights issue of approximately MSEK 207 prior to
issue costs. The issue proceeds will be used to strengthen the
Group's balance sheet with the purpose of providing the Group with
satisfactory financing and liquidity up to and including 2019 and
shall also, to approximately 60 per cent, be transferred to VSS A/S
and thereby be used partly to fulfil interest and amortisation
obligations in accordance with renegotiated amortisation plans in the
Restructuring Agreement, and partly, together with the assets that
until now have been blocked, for additional amortisations in
accordance with the Restructuring Agreement. Furthermore,
approximately 40 per cent will transferred to TransAtlantic AB and
thereby be used to fulfil the residual value obligations.

For every existing series A share held on the record date, seven (7)
subscription rights of series A are obtained and for every existing
series B share, seven (7) subscription rights of series B are
obtained. The subscription rights allow the holder to subscribe for
new shares with primary preferential rights, whereby nine (9)
subscription rights of series A and series B, respectively, give the
right to subscribe for one (1) new series A share and B share,
respectively.

In the event not all of the shares are subscribed for by exercise of
subscription rights (primary preferential rights), the board of
directors shall determine the allotment of new shares within the
limit of the rights issue's maximum amount. Primarily, shares shall
then be offered to all shareholders (secondary preferential rights).
In the event that these shares are not sufficient for the
subscriptions made by secondary preferential rights, allotment shall
be made to the subscribers pro rata in prop...

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