Oslo, 30 November 2023
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART DIRECTLY OR INDIRECTLY, IN OR INTO AUSTRALIA, CANADA, JAPAN, HONG KONG, THE UNITED STATES OR ANY OTHER JURISDICTION IN WHICH THE RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER TO BUY, SELL OR SUBSCRIBE FOR ANY SECURITIES DESCRIBED HEREIN.
Hunter Group ASA (the "Company") has today after close of trade entered into a three-year back-to-back charterparty on an eco-design and scrubber fitted Very Large Crude Carrier (“VLCC”) built in 2016 (the “Vessel”), with an internationally renowned counterparty (the “Charterparty”). The Company will charter in the Vessel on a fixed rate of USD 52,500 per day, and immediately charter the Vessel out on a floating index-linked spot rate. The index-linked spot rate, which on 29 November 2023 was USD 63,329 per day, is based on the recognized VLCC benchmark TD3C, and enables the Company to capture every daily VLCC spot market movement with maximum utilization. Delivery of the Vessel is expected to take place on or about 1 December 2023.
The order book for VLCCs is at the lowest level seen in more than 30 years. A substantial portion of the fleet is approaching retirement age. Oil demand is at record high levels and growing. Analysts expect scrubber-eco VLCC rates to average more than USD 80,000 per day for the next three years. Ship values are at relatively high levels, with Tradewinds reporting the latest rumoured sale of a 5-year old VLCC at USD 110m. Newbuilding and resale prices support the case for higher rates going forward. Yet, the three-year time-charter rate is currently below the 20-year average spot rate of approximately USD 42,000 per day for a benchmark vessel. The equivalent rate for a scrubber-eco VLCC is approx. USD 58,800 per day, adjusting for avg. scrubber-eco savings since IMO 2020. Using the current eco-scrubber saving translates the number to approx. USD 60,100 per day. The rationale behind the transaction is to capitalize on the dislocation between time-charter rates, ship values and the expected strong rate environment over the next three years. The Company will continue to monitor the tanker markets, HUNTing for accretive opportunities.
In connection with the Charterparty, and to facilitate the attractive terms therein, the Company has entered into pre-commitment agreements with certain investors for their conditional subscription for shares in a private placement (the “Private Placement”) whereby the Company will issue 14,333,333 new shares (the “New Shares”), each at a par value of NOK 0.038 (rounded), at a subscription price of NOK 1.50 (the “Subscription Price”), raising gross proceeds of NOK 21.5 million. The proceeds from the Private Placement will be used to strengthen the working capital base in connection with the Charterparty. Upon the conversion of these pre-commitment agreements to subscriptions, expected to take place immediately following this announcement, the Private Placement will be fully covered and allocated.
The New Shares will only be subscribed by: Surfside Holding AS, B.O. Steen Shipping AS, Apollo Asset Limited, and Green Highlander Holding AS.
The completion of the Private Placement is subject to (i) the Charterparty not being cancelled, and (ii) the registration of the Private Placement in the Norwegian Register of Business Enterprises, and the issuance of the New Shares in Euronext Securities Oslo (VPS) having taken place. The Company reserves the right, at any time and for any reason, to cancel and/or modify the terms of the Private Placement without notice. The Company will not be liable for any losses incurred if the Private Placement is cancelled or modified, irrespective of the reason for such cancellation or modification.
The Company’s board of directors (the “Board”) will today resolve the Private Placement, and the allocation and issue of the New Shares, pursuant to an authorization from the general meeting. The New Shares to be allocated in the Private Placement are expected to be settled on or about 4 December 2023. The Company’s share capital following settlement of the Private Placement will be NOK 1,648,060.75 divided into 43,101,434 shares, each at a par value of NOK 0.038 (rounded).
3,270,834 of the New Shares will be delivered on a separate, temporary ISIN pending approval of a prospectus by the Financial Supervisory Authority of Norway and will not be listed or tradable on Oslo Børs until the prospectus has been published. 5,500,000 New Shares will be delivered on the listed ISIN after the share capital increase has been registered in the Norwegian Business of Enterprises, pursuant to applicable exemptions from relevant prospectus and registration requirements pursuant to applicable regulations, including Regulation (EU) 2017/1129 (the EU prospectus regulation) and ancillary regulations. The remaining 5,562,499 New Shares are expected to be settled through a share lending agreement between the Company, DNB Markets, a part of DNB Bank ASA, and Sagittarius Capital Ltd., Lama Global AS, and Seal Invest AS (close associates of CEO Erik Frydendal, CFO Lars Brynildsrud, and COO Sujoy Seal) (the “Lenders”), with existing and unencumbered shares in the Company that are already listed on Euronext Expand Oslo. The share loan will be settled to the Lenders with new shares, delivered on a separate, temporary ISIN pending approval of the prospectus, to be resolved issued by the Board pursuant to an authorisation granted by the annual general meeting of the Company held on 30 June 2023.
The Private Placement represents a deviation from the shareholders’ pre-emptive right to subscribe for the New Shares. The Board has considered the Private Placement in light of the equal treatment obligations under the Norwegian Public Limited Companies Act, the Norwegian Securities Trading Act, 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 deems that the proposed Private Placement is in compliance with these obligations, taking into consideration the required timing coordination with the Charterparty. The Board is of the view that it is in the common interest of the Company and its shareholders to raise equity through a private placement. By structuring the equity raise as a private placement, the Company will raise equity efficiently and in a timely manner, with a lower discount to the current trading price, at a lower cost and with a significantly reduced completion risk compared to a rights issue.
Subject to, inter alia, completion of the Private Placement and approval by the general meeting to be summoned, approval and publication of a prospectus and prevailing market price of the Company's shares being higher than the Subscription Price as determined by the Board, the Board proposes to carry out a subsequent offering of up to NOK 10 million in new shares at the Subscription Price (the “Subsequent Offering”). A Subsequent Offering shall, if made, and on the basis of the prospectus, be directed towards existing shareholders in the Company as of 30 November 2023, as registered in the Company’s register of shareholders with Euronext Securities Oslo (VPS) on 4 December 2023, and who (i) were not allocated New Shares in the Private Placement, and (ii) 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 (the “Eligible Shareholders”). The Eligible Shareholders are expected to be granted non-tradable subscription rights. Oversubscription will be allowed. Subscription without subscription rights will not be allowed. The subscription period in a Subsequent Offering is expected to commence shortly after publication of the prospectus. The Company will issue a separate stock exchange notice with further details on the Subsequent Offering. The Company reserves the right in its sole discretion to not conduct or to cancel the Subsequent Offering.
DNB Markets, a part of DNB Bank ASA and Fearnley Securities AS are acting as Joint Bookrunners in connection with the Private Placement (the “Managers”). Ro Sommernes advokatfirma DA is acting as legal advisor to the Company.
This information is considered to be inside information pursuant to the EU Market Abuse Regulation and subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act. This stock exchange notice was published by Lars M. Brynildsrud, CFO, on the date and time as set out in the release.
Contact:
Erik A.S. Frydendal, CEO, ef@huntergroup.no, Ph.: +47 957 72 947
Lars M. Brynildsrud, CFO, lb@huntergroup.no, Ph.: +47 932 60 882
Forward looking statements: This announcement includes forward-looking statements, relating to the Charterparty, VLCC rates, prices, and values, the Private Placement, the New Shares, the conditions to the Private Placement, the use of proceeds therefrom and other non-historical statements, and the proposed Subsequent Offering. These forward-looking statements are subject to numerous risks, uncertainties and assumptions, changes in market conditions and other risks. Forward-looking statements reflect knowledge and information available at, and speak only as of, the date they are made. Except as required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date hereof or to reflect the occurrence of unanticipated events. Readers are cautioned not to place undue reliance on such forward-looking statements.
