Flex LNG announces contemplated acquisition of two high-end MEGI LNGC newbuilds
Friday, Feb 17, 2017
Flex LNG Ltd. (“Flex” or the “Company”) is contemplating to enter into a transaction (the “Transaction”) for the acquisition of shipbuilding contracts for two high-end MEGI LNGC newbuilds at Daewoo Shipbuilding and Marine Engineering Co. Ltd. (“DSME”) with scheduled delivery in Q1 2018 currently held by affiliates of Geveran Trading Co. Ltd. (“Geveran”), the Company’s largest shareholder.

The Transaction will give the Company a uniform fleet of four LNG MEGI carriers with expected delivery in early 2018 with the most advanced propulsion and fuel efficiency technology compared to the existing LNG fleet. Furthermore, the Transaction will consolidate all Geveran’s LNG assets and activities in Flex, which will be positioned to capitalize on the expected tightening in the LNG shipping market, and on the expected strong growth in the markets for LNG shipping and FSRUs. The Company has in connection with the Transaction prepared preliminary unaudited financial figures for the fourth quarter of 2016, which are made available in the Company Presentation attached to this press release.

Parts of the consideration payable for the newbuilds will be settled by the Company through the issuance of 78 million new shares in the Company to Geveran. The remaining part of the consideration will be settled by a seller’s credit structured as a revolving credit facility (the “RCF”). The Company will also assume responsibility for the remaining newbuilding instalments payable to DSME amounting to approximately USD 20.4 million.

The RCF can be drawn and repaid partially or in full at any time at the Company's discretion and matures three years after delivery of the vessels. However, it is the Company’s intention to replace the RCF with bank financing at delivery of the vessels. The RCF carries a fixed interest cost of 1.00% p.a. until delivery of the vessels and LIBOR+3.00% p.a. after delivery of the vessels. The RCF structure allows the Company to minimize interest cost during construction while allowing the Company to take advantage of growth opportunities.

In addition, the Company is contemplating a USD 100 million offering of new shares against cash payment (the “Private Placement”, and together with the Transaction, the "Offering"). If completed, the Offering implies an issue of approximately 147–150 million new shares in total (the "New Shares").

The subscription price in the Offering will be set through an accelerated book-building process in the Private Placement within a range of NOK 11.50-12.00 per New Share (equaling USD 1.38-1.44 at a USDNOK exchange rate of 8.33).

The net proceeds from the Private Placement will be used for debt repayment under the RCF (at the Company’s full discretion), working capital and general corporate purposes.

The Company has retained Arctic Securities, DNB Markets, Fearnley Securities, Nordea Bank AB (publ), filial Norge and Pareto Securities as managers in the Private Placement (the “Managers”). The application period for the Private Placement will start 16 February 2017 at 16:30 hours (CET) and will close on 17 February 2017 at 08:00 hours (CET). The Company reserves the right to close or extend the application period at any time at its sole discretion, at short notice. The minimum subscription and allocation amount in the Private Placement will be the NOK equivalent of EUR 100,000. The Private Placement will be directed towards Norwegian investors and international institutional investors, in each case subject to and in compliance with applicable exemptions from relevant prospectus or registration requirements.

Completion of the Offering is subject to the Private Placement being fully subscribed and necessary corporate resolutions in the Company being made, including approval from shareholders at an Extraordinary General Meeting (“EGM”) expected to be held on or about 6 March 2017 and the New Shares having been fully paid and legally issued. The Offering will be cancelled if the conditions are not fulfilled, and may be cancelled by the Company in its sole discretion for any other reason. The conditional allocation of New Shares in the Private Placement will be made at the discretion of the Company's Board of Directors in consultation with the Managers, on or about 17 February 2017, subject to any shortening or extension of the application period.

Delivery of the New Shares allocated in the Private Placement is, in order to facilitate deliveryversus-payment and timely delivery of already listed shares, expected to be made by delivery of existing shares in the Company pursuant to a share lending agreement entered into between the the Managers, the Company and Geveran. The shares delivered to the subscribers will thus be tradable immediately upon settlement.

The Managers will settle the share loan with the New Shares in the Company issued in connection with the Private Placement. The New Shares will be registered under a separate ISIN pending approval of a listing prospectus by the Norwegian Financial Supervisory Authority (the “FSA”), and will not be listed or tradable on Oslo Axess until the listing prospectus has been approved by the FSA.

Subject to completion of the Private Placement and the prevailing market price of the Company’s shares, the Company intends to carry out a subsequent offering (the “Subsequent Offering”) of new shares in the Company. A Subsequent Offering will, on the basis of a prospectus approved by the FSA, and subject to shareholder approval at the EGM, be directed towards shareholders who (i) are shareholders in the Company as of 16 February 2017, as registered as shareholders in the Company's register of shareholders with the Norwegian Central Securities Depositary (Nw. Verdipapirsentralen) (the “VPS”) as of 20 February 2017, (ii) are not allocated shares in the Private Placement, and (iii) 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 (the “Eligible Shareholders”). The Eligible Shareholders will be granted non-tradable subscription rights. Thesubscription period in the Subsequent Offering is expected to commence shortly after publication of the prospectus. The subscription price in the Subsequent Offering will be the same as in the Private
#6980261/1 3 (3) Placement. The Company will issue a separate stock exchange notice including the ex. date, record date and other information for the participation in the Subsequent Offering if and when finally resolved.

Following completion of the Offering, the Company will consider applying to have the Company transferred from Oslo Axess to the Oslo Stock Exchange, subject to fulfilment of the Oslo Stock Exchange listing requirements and approval from the Oslo Stock Exchange.

For more information, please visit: http://www.flexlng.com

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