Polarcus launches equity private placement and comprehensive financial restructuring with key stakeholder support


Polarcus Limited (“Polarcus” or the “Company”) (OSE: PLCS) is pleased to announce that the Company has obtained support for a restructuring of its balance sheet (the “Restructuring”) from key stakeholders of the Polarcus group. These stakeholders, being the Company’s banks, lease providers and certain bondholders and shareholders, have entered into documents with the Company to support the Restructuring.

In combination with the Restructuring, the Company proposes to issue shares with gross proceeds of approximately NOK 340 million (approximately USD 44 million) through a private placement of NOK 300 million (the “Private Placement”) and a fully underwritten repair issue of NOK 40 million (the “Repair Issue” and, together with the Private Placement, the “Equity Issues”). 

The Equity Issues together with the Restructuring and an increased working capital facility will improve the Company’s liquidity by approximately USD 221 million to 2022. This gives Polarcus a robust financial foundation to continue its focus on operational excellence, cost efficiency and backlog for the fleet, in addition to providing a platform to participate in market consolidation.


  • NOK 300 million Private Placement
  • Instalment runway and reduced interest to 2022
  • Acquisition of Nadia and Naila for USD 75 million fully financed and termination of current USD 90 million lease commitment
  • Increased Working Capital Facility of USD 40 million
  • Relaxed covenants to support trading through a flat market
  • Cash sweep mechanism to secured lenders only in the event of excess cash generation
  • Reduced par value and part conversion of unsecured bonds



Through implementation of the Restructuring, the Company’s financial situation will be significantly improved.  All of the comments on the particulars of the Restructuring in this release and the summary below are subject to and governed by the further and more detailed description in the restructuring term sheet attached to this stock exchange notice.

Fleet Bank Facility:  Polarcus has negotiated with the bank financing parties (the “Bank Lenders”) under its existing fleet bank facility (the “Fleet Bank Facility”) a general extension of the fixed amortization freeze until 1 January 2022 from the current 1 January 2019. During this period, the principal part of one loan within the Fleet Bank Facility will receive fixed amortisation for the period that “Ivan Gubkin” is on a long term bareboat charter. The reduction in fixed instalments between 2019 and 2021 improves the Company’s liquidity by approximately USD 79 million.   

The Bank Lenders will participate in the Cash Sweep, as described below; postponed amortisation payments will be added to the payment due on the maturity date.

The Bank Lenders have also agreed to reduced interest payable on the Fleet Bank Facility.  In addition, the debt service ratio, minimum equity ratio and minimum market value covenants will be removed.  Other covenants will be amended to provide the Company with greater operational flexibility, even in a flat market environment.  

N-Class Vessels:  Polarcus has reached an agreement with GSH2 Seismic Carrier I AS (“GSH”) to take ownership of “Polarcus Nadia” and “Polarcus Naila” which are currently operated under long-term leases with a remaining financial commitment of approximately USD 90 million (pre-Restructuring). The purchase will be fully financed by a new loan, maturing in 2024, on terms substantially similar to the Fleet Bank Facility (the “New Fleet Facility”).  The aggregate purchase price for the two vessels is USD 75 million and the existing long-term leases will be terminated.  GSH will receive warrants for 2.5% of the Company’s outstanding share capital after the Restructuring with a strike price equal to 3 times the subscription price in the Private Placement. The warrants are exercisable until 30 November 2022. The agreement with GSH also contains a profit split mechanism in case agreement to sell any of the N-class vessels is entered into by Polarcus on or before 31 December 2018.

Working Capital Facility:  Polarcus has also concluded negotiations with DNB Bank ASA to increase the working capital facility to USD 40 million from the current USD 25 million and to extend the facility to 30 June 2022 from the current 1 July 2019.

Secured Bonds:  Amendments to Tranche A under the Company’s convertible bond loan (the “Convertible Bond Loan”) include a reduction in fixed amortisation payments servicing Tranche A to USD 4.6 million per annum for the period that “Vyacheslav Tikhonov” remains on a long term bareboat charter. If the vessel is not on a bareboat charter, Tranche A bondholders will not receive fixed amortisation, but will receive interest at a reduced rate and participate in the Cash Sweep described below. Postponed amortisation payments will be added to the payment due on the maturity date. The maturity date will be extended to 1 July 2022 from current 30 March 2022.

Unsecured Bonds:  The amended terms of the Unsecured Bonds (as defined below) involve a reduction in principal value of the bonds to the applicable 2018 call price level, amendment of the interest to a rate of 5% payable in kind (bonds received as payment in kind fall due on the maturity date), maturity extended to 1 January 2025 from current 30 December 2022 and certain covenants and restrictions will be removed.

Holders of bonds in the Company’s two unsecured bond loans and Tranche B and C under the Convertible Bond Loan (the “Unsecured Bonds”) will also be offered the choice between two alternatives:

Alternative 1 involves choosing to hold Unsecured Bonds on amended terms as set out above.

Alternative 2 provides an opportunity to convert bonds into equity. Unsecured Bonds will be converted to equity after the reduction of principal as set out above has been carried out. Upon conversion, Unsecured Bonds to be converted will be valued at 70% of nominal value after the reduction of principal value. The conversion price will correspond to the subscription price in the Private Placement. The option to convert Unsecured Bonds to equity is limited to 50% of the total outstanding amount of the Unsecured Bonds.

Cash Sweep: A new cash sweep will be introduced in which the Bank Lenders, bondholders in Tranche A under the Convertible Bond Loan and lenders under the New Fleet Facility will be entitled to participate. Participation in the Cash Sweep will principally be based on the vessel which is the main collateral for the relevant loan not being on a bareboat charter. The Cash Sweep will only be triggered if the consolidated Excess Cash Flow (as defined in the term sheet for the Restructuring) from the Group is positive for the preceding financial year, in which case, 70% of the Excess Cash Flow will be distributed on an annual basis to eligible participants in proportion to the amount of each outstanding loan.  Excess Cash Flow is based on the annual net increase in cash and cash equivalents less proceeds from certain corporate activities. 

Swap termination: Polarcus has also concluded negotiations with DNB Bank ASA to terminate the Company’s swap and credit support arrangement including a cross currency swap provided thereunder. The Company is required to pay a termination fee which will be covered by a new facility provided by DNB Bank ASA in an amount limited to USD 7.832 million. Any excess amounts will be paid in cash by Polarcus and Polarcus may use any amounts posted as collateral to cover any excess amounts outstanding. The new facility will amortize by USD 2 million on 30 June 2019, USD 3 million on 30 June 2020 and USD 2.832 million on 30 June 2021 (adjusted for the actual cost of termination). Interest payable on the new facility will be USD LIBOR + 4%. Polarcus estimates that the termination costs will be approximately USD 7.5 million.

Shareholders: The Company’s shareholders will be invited to approve an increase of the authorized share capital to facilitate the Equity Issues, the potential conversion of Unsecured Bonds and to allow for the issuance of warrants awarded to GSH as part of the Restructuring.

Trade and non-finance creditors: All trade creditors of the Company and its subsidiaries shall remain unimpaired and will continue to be paid in full.

The completion of the Restructuring is subject to several terms and conditions, including inter alia, approval by the requisite bondholder meetings and by an Extraordinary General Meeting of the Company, final documentation and agreements with the relevant stakeholders and credit committee approvals by the Bank Lenders. While Polarcus is confident that the Restructuring proposal is the best available solution for all stakeholders and the Company, there can be no guarantee that final approvals, agreements and documentation will be reached or consummated.

ABG Sundal Collier and Wiersholm have been retained to advise on the Restructuring. 


ABG Sundal Collier ASA and DNB Markets, a part of DNB Bank ASA (the “Managers”) have been retained to advise on and effect the NOK 300 million Private Placement.

The subscription price and the number of new shares to be issued will be set through a book-building process. The minimum order in the Private Placement has been set at the NOK equivalent of EUR 100.000. The application period will commence at 16:30 CET on 25 January 2018 and close on 26 January 2018 at 08.00 CET. The board of directors of the Company (the “Board”) together with the Managers may, however, at any time resolve to close or extend the application period at their own discretion. In the event of an extension, the dates set out herein regarding the Private Placement will be adjusted correspondingly.

The Private Placement will be directed towards Norwegian and international investors, in each case subject to and in compliance with applicable exemptions from relevant prospectus and registration requirements.

Current shareholders and pre-sounded investors will be given preference in the allocation. The final allocation will be made at the Board’s sole discretion. The Company will announce the result of the Private Placement through a stock exchange notice expected to be published before opening of trading on the Oslo Stock Exchange tomorrow, 26 January 2018. Conditional notification of allotment will be sent to applicants on or about 26 January 2018.

Completion of the Private Placement is conditional upon the following (the “Closing Conditions”):

(i)           credit committee approvals and final documentation from the Bank Lenders including, among others, DNB Bank ASA, DVB Bank SE, Nordic Branch, Garanti-instituttet for Eksportkreditt (“GIEK”), Eksportkreditt Norge AS and Eksportfinans ASA;

(ii)          credit committee approval and final documentation from DNB Bank ASA in relation to the increased and amended working capital facility and the new facility following from the swap termination;

(iii)         approval by the bondholder meetings of the Company’s unsecured bond loans and the Convertible Bond Loan;

(iv)         credit committee approval and final documentation from DVB Bank SE, Nordic Branch and GIEK, among others, in relation to the New Fleet Facility; and

(v)          approvals by ordinary resolution at an Extraordinary General Meeting of the Company (the “EGM”).

The Private Placement will be cancelled if the Closing Conditions have not been fulfilled by 15 March 2018.

The EGM of the Company referred to above is expected to be held on or about 19 February 2018. Subject to satisfaction of the conditions for completion, the new shares are expected to be delivered as soon as possible after the Closing Conditions have been satisfied. The shares issued in the Private Placement will be issued under a separate ISIN number, being KYG7153K1408, pending approval of a listing prospectus. Listing of the new shares on Merkur Market, or alternatively N-OTC, as soon as practically possible after completion of the Private Placement will be sought until a listing prospectus has been approved.

In respect of the required approvals under the Bonds, the bondholders meetings are expected to be held on or about 12 February 2018.


The Board proposes to conduct a fully underwritten subsequent offering of NOK 40 million at the same subscription price as in the Private Placement (the “Repair Issue”). The Repair Issue will be directed to existing shareholders in the Company as of the end of trading on 25 January 2018, as registered in the VPS as of the end of 29 January 2018. Existing shareholders who were not invited to participate in the Private Placement and who are not resident in a jurisdiction where such offering would be unlawful or, for jurisdictions other than Norway, would require any prospectus, filing, registration or similar action will be allocated preference. Non-tradable subscription rights will be awarded. The existing shares in the Company will trade exclusive of the right to participate in the Repair Issue from and including 26 January 2018. Launch of the Repair Issue is subject to shareholders at the EGM voting in favour of an ordinary resolution to increase the authorized share capital required to carry out the Equity Issues and issue the necessary shares, completion of the Private Placement and approval of a prospectus.

The Repair Issue is fully underwritten by Bybrook Capital, currently holding 14.5% of the shares outstanding. Bybrook Capital will receive an underwriting fee of 5% of the gross proceeds from the Repair Issue. Bybrook Capital’s underwriting undertaking is subject to customary conditions.


The Company estimates Q4 2017 consolidated revenues of approximately USD 37 million. The estimated Q4 2017 EBITDA is approximately USD 0 million. The Q4 2017 EBIT is estimated to be approximately negative USD 20 million. The Company’s total cash balance at year end 2017 was USD 34 million (including USD 8 million restricted cash but excluding the undrawn USD 25m working capital facility).

The Q4 2017 statements contained in this announcement are only a preliminary assessment and exclude the accounting impact of any impairments or onerous contracts. Management’s preliminary assessment indicates there is a high risk of non-cash impairment charges to the carrying values of its property, plant and equipment and multi-client assets.  The Company has not completed all review and control procedures relating to its financial reporting and the financial statements contained in this announcement are unaudited. The estimates provided in this release are therefore subject to change and final results may deviate materially from the information herein.

As part of their support for the Restructuring, the Bank Lenders and GSH have each provided the Company with waivers of all financial covenants in, respectively, the Fleet Bank Facility and the leases for “Polarcus Nadia” and “Polarcus Naila” until 15 February 2018. The Company will shortly call for bondholder meetings to approve the Restructuring and provide certain waivers from relevant provisions in the bond agreements. If the necessary waivers are not granted by the bondholders, the Company may breach certain provisions of the bond agreements, including the existing equity ratio covenant, due to the potential impact of any non-cash impairment and onerous contract accounting adjustments. 

The Company will be releasing its Fourth Quarter 2017 Report on 27 February 2018.



Duncan Eley, CEO
+971 4 436 0915

Hans-Peter Burlid, CFO
+971 50 559 8175


About Polarcus

Polarcus (OSE: PLCS) is an innovative marine geophysical company with a pioneering environmental agenda, delivering high-end towed streamer data acquisition and imaging services from Pole to Pole. Polarcus operates a fleet of high performance 3D seismic vessels incorporating leading-edge maritime technologies for improved safety and efficiency. Polarcus offers contract seismic surveys and multi-client projects with advanced onboard processing solutions and employs over 400 professionals worldwide. The Company’s principal office is in Dubai, United Arab Emirates. For more information, visit www.polarcus.com



The information included herein may contain forward-looking statements. Forward- looking statements include all statements that are not historical facts, including but not limited to statements expressing or implying the Company’s intent, belief or current expectations with respect to, among other things, forecasts, estimates, and predictions. Such forward-looking statements necessarily involve risks and uncertainties and are dependent on assumptions, information, data or methods that may be incorrect or imprecise. Actual results could differ materially from expectations expressed in the forward-looking statements if one or more of the underlying assumptions or expectations proves to be inaccurate or is unrealized. Some factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, developments in the oil and gas industry, the demand for seismic services, the demand for data from the Company’s multi-client library, currency risks, political risks, regulatory risks, and unexpected operational setbacks. For a further description of other relevant risk factors we refer to our 2016 Annual Report. The reservation is also made that inaccuracies or mistakes may occur in the information given above concerning the current status of the Company or its business. Any reliance on the information given above is at the risk of the reader, and Polarcus disclaims any and all liability in this respect.

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