Shelf Drilling Successfully Placed Private Placement

Source: www.gulfoilandgas.com 6/23/2022, Location: Middle East

Reference is made to the stock exchange announcement made by Shelf Drilling, Ltd. (“Shelf Drilling”) earlier today regarding the acquisition of five North Sea capable jack-up rigs (the “Acquisition”) by Shelf Drilling (North Sea), Ltd. (“SDNS”), a wholly-owned subsidiary of Shelf Drilling, from Noble Corporation (“Noble”) and a contemplated private placement of new common shares in the form of depository receipts in Shelf Drilling (“PP1”) and SDNS (“PP2”) with total gross proceeds of the NOK equivalent of USD 50-70 million and up to USD 80 million, respectively (the “Private Placements”).

Shelf Drilling is pleased to announce that the Private Placements have been successfully placed, raising gross proceeds of approximately NOK 1.3 billion (equivalent to approximately USD 130 million at an exchange rate of NOK/USD 0.10) through the allocation of 38,400,000 new common shares in Shelf Drilling (the “PP1 Offer Shares”) at a price of NOK 13.00 (the “PP1 Offer Price”) (NOK 499.2 million) and 40,000,000 new common shares in SDNS (the “PP2 Offer Shares”) at a subscription price of USD 2 (USD 80 million).

The Private Placements took place through an accelerated book-building process managed by DNB Markets, a part of DNB Bank ASA, and SpareBank 1 Markets AS (jointly, the “Managers”) after close of markets today 23 June 2022.

The net proceeds from the Private Placements will be used, together with cash at hand and debt financing to be secured, to finance the purchase price for the Acquisition. The net proceeds from PP1 will be reinvested by Shelf Drilling into SDNS, for the sole purpose of financing the Acquisition. Shelf Drilling will hold approximately 60% of all outstanding common shares in SDNS following the completion of the Private Placements and investors allocated PP2 Offer Shares will hold approximately the remaining 40%. In the event the conditions for completion of PP2 are not met or waived and PP2 is cancelled, PP1 will still be completed and the net proceeds from PP1 will then be used by Shelf Drilling for other growth initiatives and general corporate purposes.

Completion of the Private Placements and the issuance and allocation of the PP1 Offer Shares and the allocation of the PP2 Offer Shares were resolved by the board of directors of Shelf Drilling (the “Shelf Drilling Board”) following advice from the Managers after the book-building process was completed.

Completion of PP1 is subject to the following conditions (the “PP1 Conditions”): (i) the Managers receiving existing and unencumbered shares in Shelf Drilling, in the form of depository receipts, equal to the allocated Borrowed PP1 Offer Shares (as defined below), (ii) the allocated Prefunded PP1 Offer Shares (as defined below) having been fully paid (facilitated by the PP1 Prefunding Agreement (as defined below)), and (iii) the issuance of the depository receipts for the newly issued Prefunded PP1 Offer Shares in the VPS having taken place.

Completion of PP2 is subject to the following conditions (the “PP2 Conditions”): (i) completion of PP1, (ii) the ongoing merger between Noble and The Drilling Company of 1972 A/S being unconditional and the Acquisition being approved by the UK Competition and Market Authority, (iii) the relevant corporate actions having been taken in order to consummate PP2 and to allocate and issue the PP2 Offer Shares, (iv) the allocated PP2 Offer Shares having been fully paid, and (v) the issuance of the depository receipts related to the PP2 Offer Shares in the VPS having taken place.

Notification of allocation, including settlement instructions are expected to be distributed by the Managers on or about 24 June 2022. Settlement of the PP1 Offer Shares will take place on a delivery versus payment (“DVP”) basis. Delivery of 27,243,432 of the PP1 Offer Shares (equivalent to approx. 19.87% of the issued and outstanding shares in Shelf Drilling) (the “Prefunded PP1 Offer Shares”) will be facilitated by a prepayment agreement entered into between Shelf Drilling and the Managers (the "PP1 Prefunding Agreement"). The remaining PP1 Offer Shares (the “Borrowed PP1 Offer Shares”) will be settled with existing and unencumbered shares that are already listed on the Oslo Stock Exchange to be borrowed from LR-Shelf Drilling International, L.P. (the “Share Lender”) by the Managers pursuant to a share lending agreement between the Managers, Shelf Drilling and the Share Lender (the “Share Lending Agreement”). Delivery of such existing shares shall constitute a full discharge of Shelf Drilling’s obligations to the applicant in respect of this portion of the PP1 Offer Shares. The share loan will be settled with new common shares in Shelf Drilling to be issued simultaneously with the Prefunded PP1 Offer Shares and pursuant to an authorization to increase the share capital of Shelf Drilling, and such new shares will be delivered to the Share Lender as unlisted common shares or in the form of depository receipts, which in case of the latter will be delivered on a separate and non-tradeable ISIN, pending approval by the Financial Supervisory Authority of Norway, and publication by Shelf Drilling, of a listing prospectus. The PP1 Offer Shares are tradeable upon issuance in VPS in the form of depository receipts, and following a stock exchange notice by Shelf Drilling, expected on 27 June 2022.

Settlement of the PP2 Offer Shares is expected to take place on a DVP basis, facilitated by a prepayment agreement to be entered into between SDNS and the Managers, and will take place as soon as practicably possible following satisfaction of the relevant conditions for PP2, currently expected during September 2022.

The Managers have entered into customary lock-up arrangements from the settlement date of PP1 with Shelf Drilling for 180 days and with Shelf Drilling’s executive management for 180 days, irrespective of the completion of PP2. The Managers will enter into customary lock-up arrangements regarding SDNS from the settlement date of PP2 with Shelf Drilling as majority owner for 180 days and SDNS executive management for 180 days.

As further described in the stock exchange announcement regarding the launch of the Private Placements on 23 June 2022, the Shelf Drilling Board has considered the structure of the Private Placements (including the placing of shares in SDNS) in light of relevant equal treatment obligations, including under the Norwegian Securities Trading Act and the rules on equal treatment under Oslo Rule Book II for companies listed on the Oslo Stock Exchange and the Oslo Stock Exchange's Guidelines on the rule of equal treatment, and is of the opinion that the Private Placements are in compliance with these requirements.

Furthermore, the Shelf Drilling Board intends following completion of the bookbuilding for the Private Placement, including but not limited to on the basis of the final PP1 Offer Price, to conduct a subsequent repair offering as further described below.

Following registration of the share capital increase pertaining to the Private Placements in the register of members in the Cayman Islands, Shelf Drilling will have 175,515,793 shares outstanding, each with a par value of USD 0.01, while the number of authorized shares will be 184,063,473.

As referred to above, the Shelf Drilling Board intends to implement a subsequent repair offering. Subject to approval of the prospectus required for such offering and absent a resolution by the Shelf Drilling Board to cancel the subsequent offering, the subsequent offering will be conducted at the PP1 Offer Price with non-tradeable subscription rights of up to 3,800,000 new shares in Shelf Drilling towards existing shareholders in Shelf Drilling as of 23 June 2022 (as registered in the VPS two trading days thereafter), who (i) were not included in the pre-sounding phase, (ii) were not allocated shares in either Private Placement, (iii) have waived their right to participate and (iv) are not resident in a jurisdiction where such offering would be unlawful or, would (in jurisdictions other than Norway) require any prospectus, filing, registration or similar action. Whether or not such subsequent offering will ultimately take place, will depend inter alia on the development of the price of the shares in Shelf Drilling after completion of PP1. When determining the size of the potential subsequent offering, the Shelf Drilling Board has also taken into consideration that a number of the larger existing shareholders have participated or waived their right to participate in the subsequent offering.

ADVISORS
DNB Markets, a part of DNB Bank ASA and SpareBank 1 Markets AS are acting as Joint Bookrunners in connection with the Private Placements.

Advokatfirmaet Thommessen AS is acting as Norwegian legal advisor to Shelf Drilling, Walkers (Cayman) LLP is acting as Cayman Islands legal advisor to Shelf Drilling and Advokatfirmaet BAHR AS is acting as Norwegian legal advisor to the Managers in connection with the Private Placements.


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