Odfjell Drilling looks at company split

Odfjell Drilling Ltd. is contemplating spinning off its Well Services and Energy segments into a newly established company, Odfjell Technology Ltd., and to list the shares in OTL on the Oslo Stock Exchange.

The Spin Off enables all parts of the business to think beyond their existing core activities, capabilities, markets, and competitive environment to evolve and strengthen their position to meet the needs of customers in the energy transition phase and towards the anticipated increasing activity levels in the global oil & gas industry.

During the last years' downturn in oil & gas, the Company and OTL's component parts have through this cycle delivered resilient operational and financial performance. Combined with the favourable underlying drivers and market outlook for both companies, the Spin Off is part of the Company's strategy to create further shareholder value. With an inherent commitment in the Company to safeguard the environment and pursue adjacent opportunities within energy transition, the Spin Off will enable increased focus in OTL on innovation and development of new services, technologies and products required in the energy transition, offering reduced emissions for customers through e.g., increased drilling efficiencies and by applying new technology. In addition, OTL will seek to further expand into green ventures, such as the current investment in Odfjell Oceanwind. OTL will seek to leverage its industrial heritage, specialistcompetence and long relationships from the offshore oil & gas industry to serve new energy markets in marine environment with mission critical equipment and services.

The Spin Off businesses comprise of the Company's current Well Services and Energy segments. The Energy segment consists of platform drilling and engineering & projects, as well as a 21% ownership in Odfjell Oceanwind, a company focused on developing mobile offshore wind units providing flexible energy solutions to offshore infrastructure.  Prior to executing the Spin Off, an internal reorganisation will be carried out and the relevant Well Services and Energy companies will become subsidiaries of OTL. Subject to completion of the Spin Off, the management of Odfjell Technology is expected to consist of Simen Lieungh (CEO), Jone Torstensen (CFO), George Taggart (EVP Well Services) and Elisabeth Haram (EVP Drilling Operations and Engineering), and the initial board of directors is expected to consist of Helene Odfjell, Alasdair Shiach, Susanne Munch Thore and one additional director to be announced at a later stage.

Following the Spin Off, Odfjell Drilling will continue to be the leading harsh environment offshore drilling company, providing superior and robust operational performance building long term client relationships in complex operational environments. Furthermore, Odfjell Drilling and Odfjell Technology will collaborate closely through strategic frame agreements to provide fully integrated services as valued by its clients. Odfjell Drilling has four fully owned high specification harsh environment semi-submersible drilling units, Deepsea Atlantic, Deepsea Stavanger, Deepsea Aberdeen and Deepsea Nordkapp. In addition, and on the back of the strong operational track record and marketing excellence in securing work, Odfjell Drilling now has a total of three harsh environment semi-submersible drilling units under marketing and management services, namely Deepsea Yantai, West Mira and West Bollsta. With an improving offshore drilling market, the contemplated Spin Off will simplify the corporate and capital structure, increase management focus, and allow for additional strategic flexibility whilst evaluating accretive growth opportunities.

Simen Lieungh, CEO of Odfjell Drilling AS, commented:

"Odfjell Drilling has through our people and assets demonstrated a strong track record for delivering safe, efficient and high-quality operations to our clients. Splitting the MODU and services segments into two groups, allows us greater flexibility to proactively respond to the changes and opportunities facing the industry. We strongly believe that the timing for this is good as the company is financially healthy and prepared to stand alone as two separate entities. Increased management focus within Odfjell Technology Ltd will further allow those segments to think beyond their existing core services and evolve for the future. We are excited about this next chapter in the Odfjell Drilling story and the possibilities it will bring."

In connection with the Spin Off, Odfjell Technology intends to issue 4-year, senior secured bonds (the "Bond Issue") through a private placement. The net proceeds from the Bond Issue will, together with a new USD 25 million super senior revolving credit facility, be used to carry out the internal reorganization and to repay the existing USD 150 million credit facility related to the Well Services and Energy segments.

The shares in Odfjell Technology, in its entirety, are expected to be distributed to the shareholders in the Company and admitted for trading on the Oslo Stock Exchange in Q1 2022 subject to certain conditions. These include a successful Bond Issue and other customary closing conditions; the Oslo Stock Exchange approving the Listing; and Odfjell Technology satisfying the relevant conditions for such Listing (including the publication of a listing prospectus to be approved by the Norwegian Financial Supervisory Authority). It is not contemplated to carry out any public offering of shares in Odfjell Technology in connection with the Listing. No assurance can currently be given that the Spin Off and the Listing will be completed.

Source: Odfjell

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