Polarcus increases its financial flexibility
31 Jul 2009
Polarcus Limited (Norwegian OTC List: PLCS) announced today that it has entered into a transaction that will reduce the overall capital needs and consequently increase the Group's financial flexibility. Polarcus will sell two of the Group's six vessel owning companies and receive an option to repurchase them for a price equal to the cost incurred of completing each vessel. Polarcus will therefore maintain the ambition of being a 6 vessel company, but reduce its short term capital requirements.
The two vessel owning companies involved in the transaction are Polarcus 4, owning the rights to "Polarcus Selma", and Polarcus 6, owning the rights to "Polarcus Alima".
The transaction will significantly reduce the capital needs of the Polarcus Group going forward. The board of directors and the management of Polarcus are confident that by this action the Group will be able to raise the remaining equity and debt capital required, estimated at USD 170 million, to complete the four remaining vessels and meet working capital needs. Polarcus is actively pursuing a number of alternatives in respect of the remaining financing requirements.
Rolf Ronningen, CEO of Polarcus, commenting on the transaction said: "We are very pleased with the transaction and the contribution made by our founding shareholders as it will significantly reduce the financing risk of Polarcus. The fact that Polarcus gets an option to repurchase the vessels at cost means Polarcus will have an alternative to get a 6 vessel fleet without the short term capital requirements for the two vessels involved. Additionally, the transaction will have limited impact on the total cost of these vessels for Polarcus if we choose to exercise the option".
Polarcus 4 and Polarcus 6 will be sold to Zickerman Holding Limited and Zickerman Group Limited (together "ZL"), the founders of Polarcus Limited, for the sum of USD 1 each. ZL will complete the maritime work on "Polarcus Selma" and "Polarcus Alima" and include all fixed equipment that is required in order to qualify each vessel as a fully prepared seismic vessel.
Polarcus Limited will receive an option from ZL to repurchase each of "Polarcus Selma" and "Polarcus Alima" at a price equal to the total cost of completing each vessel for ZL. The options will be valid until delivery of each vessel and subsequently will be replaced with a right of first refusal to purchase each of the vessels. Polarcus has already invested USD 46 million in the two vessels which would be considered sunk costs if Polarcus does not exercise the options. Polarcus Limited will continue to supervise the ongoing construction of the vessels and liaise with the suppliers of equipment related to the vessels.
Polarcus has received pre-approval for the sale of Polarcus 4 and Polarcus 6 from lead suppliers and the vessel constructor. Both sales are made on an arm's length basis at terms which the Board believes reflect current market conditions.
Rolf Ronningen, CEO Polarcus, +971 4 436 0800 / +971 5 045 96982
Tom Henrik Sundby, CFO Polarcus, +971 4 436 0800 / +971 5 070 86480
Polarcus is a pure play marine geophysical company with a pioneering environmental agenda, specializing in high-end towed streamer data acquisition from pole to pole. Polarcus is launching an ultra-modern fleet of initially 4 advanced seismic vessels designed by Norway's Ulstein Design AS incorporating the innovative ULSTEIN X-BOW® hull, with the first vessels becoming operational in 2009. www.polarcus.com