Siem+Offshore+Inc Prospectus 26 May 2017
Siem+Offshore+Inc Prospectus 26 May 2017
Siem+Offshore+Inc Prospectus 26 May 2017
Each Existing Shareholder will be granted 0.1187 Subscription Rights for each share registered as held by such Existing
Shareholder as of 23 May 2017 (the "Record Date"). Each Subscription Right will give the right to subscribe for and be
allocated one New Share. The subscription period commences on 30 May 2017 and expires at 16:30 hours, Central European
Time ("CET"), on 12 June 2017 (the "Subscription Period"). The Subscription Rights will be listed and tradable on the Oslo
Børs (the "Oslo Stock Exchange") under the ticker code SIOFF T from 30 May 2017 until the end of trading on the Oslo
Stock Exchange on 8 June 2017.
Subscription Rights that are not used to subscribe for New Shares before the expiry of the Subscription Period,
or that are not sold before the end of trading on the Oslo Stock Exchange on 8 June 2017 will have no value and
will lapse without compensation to the holder.
After the expiry of the Subscription Period, any New Shares that have not been subscribed for and allocated in the Rights
Offering will be subscribed and paid for at the Subscription Price by Siem Europe S.a r.l (the "Underwriter"), subject to the
terms and conditions of the Underwriting Agreement between the Company and the Underwriter dated 15 May 2017 (the
"Underwriting Agreement").
The Company is not taking any action to permit a public offering of the Subscription Rights or the New Shares in any
jurisdiction outside of Norway. The New Shares are being offered only in those jurisdictions in which, and only to those
persons to whom, offers and sales of the New Shares (pursuant to the exercise of the Subscription Rights or otherwise) may
lawfully be made. The Subscription Rights and the New Shares have not been, and will not be, registered under the United
States Securities Act of 1933, as amended (the "US Securities Act"), or under the securities laws of any state of the United
States and may not be offered or sold (i) within the United States, except in transactions exempt from registration under
the US Securities Act, or (ii) outside the United States, except in offshore transactions in reliance on Regulation S. The Rights
Offering will not be made to persons who are residents of Australia, Canada, Hong Kong or Japan or in any jurisdiction in
which such offering would be unlawful. For more information regarding restrictions in relation to the Rights Offering pursuant
to this Prospectus, please see Section 14, "Selling and transfer restrictions" .
Investing in the Company’s shares (the "Shares"), including the New Shares, and trading in the Subscription
Rights involves certain risks. See Section 2, "Risk Factors" beginning on page 14.
The Company’s existing shares (the "Existing Shares") are listed on the Oslo Stock Exchange under the ticker code "SIOFF".
Manager
Swedbank
This Prospectus has been prepared solely for use in connection with the Rights Offering and the Listing. Please see Section
16, "Definitions and glossary" for definitions of terms used throughout this Prospectus.
The Prospectus has been prepared to comply with the Norwegian Securities Trading Act of 29 June 2007 No. 75 (the
"Norwegian Securities Trading Act") and related secondary legislation, including the Commission Regulation (EC) No.
809/2004 implementing Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2003 regarding
information contained in prospectuses, as amended, and as implemented in Norway (the "Prospectus Directive"). This
Prospectus has been prepared solely in the English language and in accordance with the minimum disclosure requirements
for rights issues, issued by the Financial Supervisory Authority of Norway (the "Norwegian FSA"). The Norwegian FSA has
reviewed and approved this Prospectus in accordance with sections 7-7 and 7-8 of the Norwegian Securities Trading Act on
date 26 May 2017. The Norwegian FSA has not controlled or approved the accuracy or completeness of the information
given in this Prospectus. The approval given by the Norwegian FSA only relates to the information included in accordance
with pre-defined disclosure requirements. The Norwegian FSA has not made any form of control or approval relating to
corporate matters described or referred to in this Prospectus.
The Company has engaged Swedbank as Manager in the Rights Offering. Swedbank is acting for the Company and no one
else in relation to the Rights Offering or the Listing. Swedbank will not be responsible to anyone other than the Company
for providing the protections afforded to their clients or for providing advice in relation to the listing.
No person is authorised to give information or to make any representation concerning the Group or in connection with the
Rights Offering other than as contained in this Prospectus. If any such information is given or made, it must not be relied
upon as having been authorised by the Company or the Manager or by any of the affiliates, advisors or selling agents of any
of the foregoing.
The distribution of this Prospectus and the offer and sale of the New Shares may be restricted by law in certain jurisdictions.
This Prospectus does not constitute an offer of, or an invitation to purchase, any of the New Shares in any jurisdiction in
which such offer or sale would be unlawful. No one has taken any action that would permit a public offering of the Shares
to occur outside of Norway. Accordingly neither this Prospectus nor any advertisement or any other offering material may
be distributed or published in any jurisdiction except under circumstances that will result in compliance with applicable laws
and regulations. Persons in possession of this Prospectus are required to inform themselves about, and to observe, any such
restrictions. In addition, the Shares are subject to restrictions on transferability and resale in certain jurisdictions and may
not be transferred or resold except as permitted under applicable securities laws and regulations. Investors should be aware
that they may be required to bear the financial risks of this investment for an indefinite period of time. Any failure to comply
with these restrictions may constitute a violation of applicable securities laws. For further information on the sale and transfer
restrictions of the Shares, see Section 14, "Selling and transfer restrictions".
The information contained herein is current as at the date hereof and subject to change, completion and amendment without
notice. In accordance with section 7-15 of the Norwegian Securities Trading Act, significant new factors, material mistakes
or inaccuracies relating to the information included in this Prospectus, which are capable of affecting the assessment of the
Shares between the time of approval of this Prospectus by the Norwegian FSA and the Listing of the Shares on the Oslo
Stock Exchange, will be included in a supplement to this Prospectus. The publication of this Prospectus shall not under any
circumstances create any implication that there has been no change in the Group's affairs or that the information herein is
correct as of any date subsequent to the date of this Prospectus.
Neither the Company nor the Manager, or any of their respective affiliates, representatives, advisers or selling agents, are
making any representation to any subscriber or purchaser of New Shares regarding the legality or suitability of an investment
in the New Shares. Each investor should consult with his or her own advisors as to the legal, tax, business, financial and
related aspects of a subscription or purchase of the New Shares.
In the ordinary course of their businesses, the Manager and certain of their respective affiliates have engaged, and may
continue to engage, in investment and commercial banking transactions with the Company and its subsidiaries.
This Prospectus and the terms and conditions of the Rights Offering as set out herein shall be governed by and construed in
accordance with Norwegian law. The courts of Norway, with Oslo as legal venue, shall have exclusive jurisdiction to settle
any dispute which may arise out of or in connection with the Rights Offering or this Prospectus.
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER
CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT
A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES
A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE,
COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS
AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON
THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR
TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR
CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
NOTICE TO INVESTORS IN THE UNITED STATES
Because of the following restrictions, prospective investors are advised to consult legal counsel prior to making any offer,
resale, pledge or other transfer of the Shares. The New Shares have not been and will not be registered under the U.S.
Securities Act or with any securities regulatory authority of any state or other jurisdiction in the United States and may not
be offered, sold, pledged or otherwise transferred within the United States except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the U.S. Securities Act and in compliance with any applicable
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state securities laws. Accordingly, the New Shares will not be offered or sold within the United States, except in reliance on
the exemption from the registration requirements of the U.S. Securities Act under Rule 144A. The New Shares will be offered
outside the United States in compliance with Regulation S. Prospective purchasers are hereby notified that sellers of New
Shares may be relying on the exemption from the provisions of Section 5 of the U.S. Securities Act provided by Rule 144A
under the U.S. Securities Act. See Section 14.2.1 "Selling and transfer restrictions — Selling restrictions — United States".
Any Shares offered or sold in the United States will be subject to certain transfer restrictions as set forth under Section
14.3.1 "Selling and transfer restrictions—Transfer restrictions—United States".
The securities offered hereby have not been recommended by any United States federal or state securities commission or
regulatory authority. Further, the foregoing authorities have not passed upon the merits of the Rights Offering or confirmed
the accuracy or determined the adequacy of this Prospectus. Any representation to the contrary is a criminal offense under
the laws of the United States.
In the United States, this Prospectus is being furnished on a confidential basis solely for the purposes of enabling a
prospective investor to consider purchasing the particular securities described herein. The information contained in this
Prospectus has been provided by the Company and other sources identified herein. Distribution of this Prospectus to any
person other than the offeree specified by the Manager or its representatives, and those persons, if any, retained to advise
such offeree with respect thereto, is unauthorised and any disclosure of its contents, without prior written consent of the
Company, is prohibited. This Prospectus is personal to each offeree and does not constitute an offer to any other person or
to the public generally to purchase New Shares or subscribe for or otherwise acquire any Shares.
NOTICE TO UNITED KINGDOM INVESTORS
This Prospectus is only being distributed to and is only directed at (i) persons who are outside the United Kingdom (the
"UK") or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005 (the "Order") or (iii) high net worth companies, and other persons to whom it may lawfully be
communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "Relevant
Persons"). The New Shares are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise
acquire such Shares will be engaged in only with, Relevant Persons. Any person who is not a Relevant Person should not act
or rely on this Prospectus or any of its contents.
NOTICE TO INVESTORS IN THE EEA
In any member state of the European Economic Area (the "EEA") that has implemented the Prospectus Directive, other than
Norway (each, a "Relevant Member State"), this communication is only addressed to and is only directed at qualified
investors in that Member State within the meaning of the Prospectus Directive. The Prospectus has been prepared on the
basis that all offers of New Shares outside Norway will be made pursuant to an exemption under the Prospectus Directive
from the requirement to produce a prospectus for offer of shares. Accordingly, any person making or intending to make any
offer within the EEA of New Shares which is the subject of the Rights Offering contemplated in this Prospectus within any
EEA member state (other than Norway) should only do so in circumstances in which no obligation arises for the Company
or the Manager to publish a prospectus or a supplement to a prospectus under the Prospectus Directive for such offer.
Neither the Company nor the Manager have authorised, nor do they authorise, the making of any offer of Shares through
any financial intermediary, other than offers made by the Manager which constitute the final placement of New Shares
contemplated in this Prospectus.
Each person in a Relevant Member State other than, in the case of paragraph (a), persons receiving offers contemplated in
this Prospectus in Norway, who receives any communication in respect of, or who acquires any New Shares under, the offers
contemplated in this Prospectus will be deemed to have represented, warranted and agreed to and with the Manager and
the Company that:
a) it is a qualified investor as defined in the Prospectus Directive, and
b) in the case of any New Shares acquired by it as a financial intermediary, as that term is used in Article 3(2) of the
Prospectus Directive, (i) such New Shares acquired by it in the Rights Offering have not been acquired on behalf
of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other
than qualified investors, as that term is defined in the Prospectus Directive, or in circumstances in which the prior
consent of the Manager has been given to the offer or resale; or (ii) where such New Shares have been acquired
by it on behalf of persons in any Relevant Member State other than qualified investors, the offer of those New
Shares to it is not treated under the Prospectus Directive as having been made to such persons.
For the purposes of this provision, the expression an "offer to the public" in relation to any of the New Shares in any Relevant
Member State means the communication in any form and by any means of sufficient information on the terms of the offer
and any Shares to be offered so as to enable an investor to decide to purchase any of the New Shares, as the same may be
varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State,
and the expression " Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including the 2010 PD
Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing
measure in each Relevant Member State and the expression "2010 PD Amending Directive" means Directive 2010/73/EU.
See Section 14, "Selling and Transfer Restrictions" for certain other notices to investors.
ENFORCEMENT OF CIVIL LIABILITIES
The Company is a company limited by shares incorporated under the laws of the Cayman Islands. As a result, the rights of
holders of the Company’s Shares will be governed by the laws of the Cayman Islands and the Company’s articles of
association (the "Articles of Association"). The rights of shareholders under the laws of the Cayman Islands may differ
from the rights of shareholders of companies incorporated in other jurisdictions. The majority of the members of the
Company’s board of directors (the "Board Members" and the "Board of Directors", respectively) and the members of the
senior management of the Group (the "Management") are not residents of the United States, and all of the Company’s
assets are located outside the United States. As a result, it may be difficult for investors in the United States to effect service
of process on the Company or its Board Members and members of Management in the United States or to enforce in the
United States judgments obtained in U.S. courts against the Company or those persons, including judgments based on the
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civil liability provisions of the securities laws of the United States or any State or territory within the United States.
Uncertainty exists as to whether courts in Norway will enforce judgments obtained in other jurisdictions, including the United
States, against the Company or its Board Members or members of Management under the securities laws of those
jurisdictions or entertain actions in the Cayman Islands against the Company or its Board Members or members of
Management under the securities laws of other jurisdictions. In addition, awards of punitive damages in actions brought in
the United States or elsewhere may not be enforceable in the Cayman Islands. The United States and the Cayman Islands
do not currently have a treaty providing for reciprocal recognition and enforcement of judgements (other than arbitral
awards) in civil and commercial matters.
AVAILABLE INFORMATION
The Company has agreed that, for so long as any of the New Shares are "restricted securities" within the meaning of Rule
144(a)(3) under the U.S. Securities Act, it will during any period in which it is neither subject to Sections 13 or 15(d) of the
U.S. Securities Exchange Act of 1934, as amended (the "U.S. Exchange Act"), nor exempt from reporting pursuant to Rule
12g3-2(b) under the U.S. Exchange Act, provide to any holder or beneficial owners of Shares, or to any prospective purchaser
designated by any such registered holder, upon the request of such holder, beneficial owner or prospective owner, the
information required to be delivered pursuant to Rule 144A(d)(4) of the U.S. Securities Act.
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TABLE OF CONTENTS
5
1. EXECUTIVE SUMMARY
Section B – Issuer
B.2 Domicile and Siem Offshore Inc. is an exempted company limited by shares
legal form, incorporated under the laws of the Cayman Islands with corporate
legislation registration no. 140468.
and country
of
incorporation
B.3 Current Siem Offshore’s primary activity is to own and operate offshore
operations, support vessels for the offshore energy service industry. The
principal Group's fleet comprises of platform supply vessels, anchor-
activities and handling, tug, supply vessels, offshore subsea construction
markets vessels, well-intervention vessels and a variety of other support
vessels.
1
In addition to its primary activity, the Company has also
established a business division for industrial investments. The
Group's industrial investment division includes the Group's services
as a contractor within the European offshore wind farm and
offshore cable lay market, the development of applications for
managed pressure drilling, a scientific core drilling vessel,
specialized engineering to develop and implement combat
management systems for navy vessels and certain other
investments.
B.4 Significant The North Sea PSV and AHTS vessel market continued to be
a recent trends depressed during the fourth quarter 2016 and the first quarter
affecting the 2017 with a number of vessels in lay-up. Low activity within the
Company and oil-service industry has led to reductions in chartering rates and
the industries increased idle periods.
in which it
operates Oversupply of vessels and reduced rig activity has put pressure on
vessel utilization and fixture rates.
The outlook for the OSV market is expected to remain soft for
several years due to reduced investments in the offshore oil and
gas industry following lower current and future commodity prices
for oil and gas, which again reduces the demand for vessels and
puts pressure on utilisation and fixture rates, coupled with excess
vessel capacity. Such imbalance between supply and demand will
continue to make the market difficult and might force owners to
put more vessels into lay-up. The obtainable charter rates and
margins are below what is sustainable for the industry in the long-
run.
In response to the soft OSV market, the Company has placed two
vessels out of operations and into lay-up.
2
B.5 Description of Siem Offshore Inc. is a holding company with no employees and is
the Group therefore dependent on service from its subsidiaries. These
services consist of administrative, operational and corporate
services provided by Siem Offshore Management AS and Siem
Offshore AS.
Siem Offshore Do Brazil S.A. owns the locally built Brazilian fleet.
Siem Offshore Canada Inc. owns Secunda Canada LP ("Secunda"),
which owns 5 Canadian flagged vessels. Siem Offshore Contractors
GmbH, which has the cable lay vessel (“CLV”) “Siem Aimery” and
the installation support vessel (“ISV”) “Siem Moxie” on a bareboat
charter, is owned 100% by Siem Offshore Invest AS. Siem AHTS
Pool AS is owned 78.16% by Siem Offshore Inc. and owns a fleet
of 10 high-end AHTS sister vessels.
B.7 Selected The table below sets out selected data from the Group’s
historical key consolidated income statement for the year ended 31 December
financial 2016 and for the three months period ended 31 March 2017.
information
2017 2016 2016
(Amounts in USD 1 000) 1Q 1Q Jan-Dec
Unaudited Unaudited Audited
Operating revenue 107 405 70 756 469 123
Operating expenses -68 312 -40 474 -307 769
Administration expenses -7 250 -6 378 -33 059
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Operating margin 31 842 23 905 128 295
Depreciation and
amortization -33 035 -25 526 -111 771
Weighted average
number of outstanding
shares('000) 842 021 842 021 842 021
Earnings(loss) per share
(basic and diluted) -0,02 -0,01 -0,17
Comprehensive
Income Statement 2017 2016 2016
(Amounts in USD 1
000) 1Q 1Q Jan-Dec
Unaudited Unaudited Audited
Net profit/(loss) -17 344 -9 570 -155 905
4
Other
comprehensive
income
Items that will not
be reclassified to
profit or loss:
Pension
remeasurement
gain/(loss) - - 230
Items that may be
subsequently
reclassified to profit
or loss:
The table below sets out selected data from the Group’s
consolidated statement of financial position as of 31 December
2016 and 31 March 2017.
Equity
Paid-in capital 625 219 625 219
Other reserves -47 110 -47 276
5
Retained earnings -42 162 -28 836
Shareholders´ equity 535 947 549 107
Non-controlling interest 94 864 98 878
Total equity 630 811 647 985
Liabilities
Borrowings 1 286 304 1 293 059
CIRR loan 1) 72 750 76 215
Other non-current liabilities 53 812 51 421
Total non-current
liabilities 1 412 866 1 420 695
Borrowings 118 726 177 834
Accounts payable and other
current liabilities 146 080 166 875
Total current liabilities 264 806 344 709
Total liabilities 1 677 672 1 765 404
Total equity and liabilities 2 308 483 2 413 390
The table below sets out selected data from the Group’s
consolidated statements of cash flows for the year ended 31
December 2016 and for the three months period ended 31 March
2017.
6
Effect of unreal. currency
exchange forward
contracts 61 -9 237 -871
Changes in short-term
receivables and payables 13 652 -1 999 -20 938
CIRR gain -92 -92 -368
Other changes 1 567 3 022 23 590
Net cash flow from
operations 34 675 2 955 73 343
The table below sets out selected data from the Group’s
consolidated statement of changes in equity for the year ended 31
December 2016 and for the three months period ended 31 March
2017.
7
Share Non-
(Amounts in USD 1 Total no. of Share premium Other Retained Shareholders' Controlling
000) shares capital reserves reserves earnings equity interest Total equity
Equity on 1 January
2017 842 021 380 8 420 616 799 -47 276 -28 837 549 106 98 879 647 985
Net profit to
shareholders -13 326 -13 326 -4 019 -17 344
Employee share scheme -Value of
employee services 61 61 61
Currency translation
differences 105 106 4 110
Total
comprehensive
income/(expense) - - 167 -13 326 -13 159 -4 015 -17 174
Share issue in partially
owned subsidiary - - - - - - -
Equity on 31 March
2017 842 021 380 8 420 616 799 -47 110 -42 162 535 947 94 864 630 811
Share Non-
(Amounts in USD 1 Total no. of Share premium Other Retained Shareholders' Controlling
000) shares capital reserves reserves earnings equity interest Total equity
Equity on 1 January
2016 842 021 380 8 420 616 799 -108 151 115 147 632 215 33 293 665 508
Change previous
periods - -1 682 -1 682 -100 -1 782
Net profit to
shareholders -142 436 -142 436 -13 469 -155 905
Employee share scheme -Value of
employee services 516 516 516
Pension
remeasurement 230 230 230
Currency translation
differences -23 - -23 -23
Reclassification to
profit or loss 60 319 60 319 60 319
Other 63 -96 -33 1 201 1 168
Total
comprehensive
income/(expense) - - 60 875 -143 984 -83 109 -12 368 -95 477
Share issue in partially
owned subsidiary - - - - - 77 953 77 953
Equity on 31
December 2016 842 021 380 8 420 616 799 -47 276 -28 837 549 106 98 879 647 985
(Amount in USD 1
000)
Equity on1 January
2015 387 591 380 3 876 522 361 -45 491 304 237 784 983 38 666 823 649
Change previous
periods -869 -869 -869
Net profit to
shareholders -186 687 -186 687 -9 729 -196 416
Value of employee
services -1 728 -1 728 -1 728
Pension
remeasurement 1 178 1 178 1 178
Currency revaluation -9 687 -2 710 -12 398 209 -12 189
Cash flow hedge -65 866 -65 866 -65 866
Reclassification to
profit or loss 14 621 14 621 14 621
Total
comprehensive
income / (expense) - - -62 660 -189 088 -251 749 -9 520 -261 270
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Share issues in
partially owned
subsidiaries - 6 276 6 276
Capital reduction in partially owned
subsidiaries - -4 811 -4 811
Impairment of excess value partially
owned subsidiaries - 2 682 2 682
Shares issues in Siem
Offshore Inc 454 430 000 4 544 94 438 98 983 - 98 983
Equity on31
December 2015 842 021 380 8 420 616 799 -108 151 115 147 632 215 33 293 665 508
B.8 Selected key Not applicable. There is no pro forma financial information.
pro forma
financial
information
B.9 Profit forecast Not applicable. No profit forecasts or estimates are made.
or estimate
B.1 Audit report Not applicable. There are no qualifications in the audit reports.
0 qualifications
B.1 Working The Company is of the opinion that the working capital available to
1 capital the Group is sufficient for the Company's present requirements, for
the period covering at least 12 months from the date of this
Prospectus.
Section C – Securities
C.1 Type and Listing of New Shares to be issued in the Rights Offering. The
class of Company has one class of Shares and all Shares are equal in all
securities respects.
admitted to
trading and The New Shares will have the same VPS registrar and the same
identification International Securities Identification Number (“ISIN”) as the
numbers Company’s other shares (ISIN KYG813131011). The Company's
Shares are listed on the Oslo Stock Exchange and are traded
under the ticker symbol "SIOFF".
9
C.5 Restrictions Not applicable. The Shares are freely transferable according to
on Cayman Islands law and the Company’s Articles of Association.
transferability
C.6 Admission to The Shares are listed on the Oslo Stock Exchange, under Oslo
trading Børs ticker symbol “SIOFF”. The listing on the Oslo Stock
Exchange of the New Shares is subject to the approval of the
Prospectus by the Norwegian Financial Supervisory Authority
(Norwegian: Finanstilsynet) under the rules of the Norwegian
Securities Trading Act. Such approval was granted on 26 May
2017. The first day of trading of the New Shares on the Oslo Stock
Exchange, will be on or about 23 June 2017.
C.7 Dividend The priorities for the use of Company funds are determined by
policy the Board of Directors and recommendations of Management
influenced by existing conditions. At present, priorities for use of
funds in order of importance are repayment of debt, investment
opportunities in the business, and the return of capital to the
shareholders in form of share buy-back or dividends.
Section D – Risks
D.1 Key risks Prospective investors should consider, among other factors, the
specific to the following financial risks relating to the Group:
Group or its
industry • The Group is financed by debt and equity. If the Group
requires additional equity financing, it may be unable to
raise new equity, or arrange new borrowing facilities, on
favorable terms and in amounts necessary to conduct its
ongoing and future operations.
10
not covered, in whole or in part, by the Group’s insurance
or that it is in excess of the limits of the Company’s
insurance coverage.
11
condition, results of operations, cash flows and/or prospects, which
could cause a decline in the value and trading price of the New
Shares, resulting in the loss of all or part of an investment in the
New Shares.
Section E – Offer
E.1 Net proceeds Subject to the completion of the Rights Offering, the Company will
and estimated raise gross proceeds of approximately NOK 190 million through
expenses issuance of the New Shares. The Rights Offering is fully
underwritten by Siem Europe S.a r.l.
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on 12 June 2017 at 16:30 hours (CET) or be sold before the end of
trading on the Oslo Stock Exchange on 8 June 2017. Acquired
Subscription Rights will give the same right to subscribe for and be
allocated New Shares as Subscription Rights held by Existing
Shareholders on the basis of their shareholdings on the Record
Date.
The Subscription Rights will be fully tradable and listed on the Oslo
Stock Exchange with ticker code "SIOFF T" from 30 May 2017 until
the end of trading on the Oslo Stock Exchange on 8 June 2017.
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2. RISK FACTORS
An investment in the Company and the New Shares involves inherent risks. Before making
an investment decision with respect to the New Shares, investors should carefully consider
the risk factors set forth below and all information contained in this Prospectus, including
the Financial Statements and related notes. The risks and uncertainties described in this
Section 2 are the principal known risks and uncertainties faced by the Group as of the date
hereof that the Company believes are relevant to an investment in the New Shares.
An investment in the New Shares is suitable only for investors who understand the risks
associated with this type of investment and who can afford to lose all or part of their
investment. The absence of negative past experience associated with a given risk factor
does not mean that the risks and uncertainties described in that risk factor are not a
genuine potential threat to an investment in the New Shares. If any of the following risks
were to materialise, individually or together with other circumstances, they could have a
material and adverse effect on the Group and/or its business, financial condition, results
of operations, cash flows and/or prospects, which could cause a decline in the value and
trading price of the New Shares, resulting in the loss of all or part of an investment in the
New Shares.
The order in which the risks are presented does not reflect the likelihood of their occurrence
or the magnitude of their potential impact on the Group’s business, financial condition,
results of operations, cash flows and/or prospects. The risks mentioned herein could
materialise individually or cumulatively. The information in this Section 2 is as of the date
of this Prospectus. Furthermore, risks that the Company currently feels are not material
could in the future prove to become significant to the Group.
The Group is exposed to changes in interest rates as a portion of the long-term interest-
bearing debt is subject to floating interest rates with the remaining amount subject to
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fixed interest rates. This may affect the Company’s financial results significantly.
15
The development of the Company is dependent on the ability of the senior management
to manage the current project portfolio and obtain new and profitable contracts. Although
no single person is solely instrumental in fulfilling either of these business objectives, there
is no guarantee that they will be achieved to the degree expected.
The Group’s business and prospects depend to a significant extent on the continued
services of its key personnel. Financial difficulties and other factors could negatively impact
the Group’s ability to retain key employees. The loss of any of the members of its senior
management or other key personnel or the inability to attract a sufficient number of
qualified employees could adversely affect its business and results of operations.
The Group’s ability to secure its intangible rights legally is important since the development
of the Group will to some extent depend on its technological advances. Third parties might
act in violation of these rights and it is not possible to achieve protection of intangible
rights in certain countries. There can be no assurance that the Group will be able to
sufficiently secure its intellectual property and other intangible rights. This is in particular
relevant for the PCD technology developed by Siem WIS AS.
The Group’s operations are moreover subject to laws, regulations and supervisory rules in
the country where the activity is performed. The operations of the Group may be
16
negatively affected by changes in environmental laws and other regulations that can result
in large expenses in, for example, modification of vessels and changes in the operation of
vessels.
17
The market price of the Shares could decline due to sales of large numbers of Shares in
the market or the perception that such sales could occur. Such sales could also make it
more difficult for the Company to offer equity securities in the future at a time and at a
price that are deemed appropriate.
In recent years, the securities markets in Norway and elsewhere in Europe, have
experienced a high level of price and volume volatility, and the market price of securities
of many companies have experienced wide fluctuations in price which have not necessarily
been related to the operating performance, underlying asset values or prospects of such
companies. There can be no assurance that continual fluctuations in price will not occur.
It is likely that the quoted market price for the Shares will be subject to market trends
generally, notwithstanding the financial and operational performance of the Company.
2.4.5 Difficulties for foreign investors to enforce civil liabilities in Cayman Islands
The Company is organized under the laws of Cayman Islands. The rights of holders of
Shares are governed by Cayman Islands law and by the Articles of Association. These
rights may differ from the rights of shareholders in other jurisdictions, including Norway.
As a result, it may, inter alia, be difficult for a shareholder to take legal action against the
Company and/or its directors in the investor’s own jurisdiction, or to enforce against them
judgments obtained in non-Cayman Islands courts.
2.4.6 Restrictions on ability to transfer or resell the Shares without registration under
applicable securities laws
The Shares are being offered and sold pursuant to an exemption from registration under
the U.S. and applicable state securities laws. Therefore, the Shares may only be
transferred or resold in the U.S. in a transaction registered under or exempt from the
registration requirements of the applicable securities laws, and U.S. Shareholders may be
required to bear the risk of their investment for an indefinite period of time. The Company
does not currently anticipate registering any resale transaction under applicable securities
laws.
The Company may in the future decide to offer additional Shares or other securities in
order to finance new capital-intensive projects, in connection with unanticipated liabilities
or expenses or for any other purposes. There is no assurance the Company will not decide
to conduct further offerings of securities in the future. Depending on the structure of any
future offering, certain existing shareholders may not have the ability to purchase
additional equity securities. If the Company raises additional funds by issuing additional
equity securities, the holdings and voting interests of existing shareholders could be
diluted.
18
3. RESPONSIBILITY FOR THE PROSPECTUS
This Prospectus has been prepared in connection with the Rights Offering described herein.
The Board of Directors of Siem Offshore Inc. accepts responsibility for the information
contained in this Prospectus. The members of the Board of Directors confirm that, after
having taken all reasonable care to ensure that such is the case, the information contained
in this Prospectus is, to the best of their knowledge, in accordance with the facts and
contains no omissions likely to affect its import.
26 May 2017
19
4. GENERAL INFORMATION
The Company confirms that where information has been sourced from a third party, such
information has been accurately reproduced and that as far as the Company is aware and
is able to ascertain from information published by that third party, no facts have been
omitted that would render the reproduced information inaccurate or misleading. Where
information sourced from third parties has been presented, the source of such information
has been identified. The Company does not intend, and does not assume any obligations
to, update industry or market data set forth in this Prospectus.
Industry publications or reports generally state that the information they contain has been
obtained from sources believed to be reliable, but the accuracy and completeness of such
information is not guaranteed. The Company has not independently verified and cannot
give any assurances as to the accuracy of market data contained in this Prospectus that
was extracted from these industry publications or reports and reproduced herein. Market
data and statistics are inherently predictive and subject to uncertainty and not necessarily
reflective of actual market conditions. Such statistics are based on market research, which
itself is based on sampling and subjective judgments by both the researchers and the
respondents, including judgments about what types of products and transactions should
be included in the relevant market.
As a result, prospective investors should be aware that statistics, data, statements and
other information relating to markets, market sizes, market shares, market positions and
other industry data in this Prospectus and projections, assumptions and estimates based
on such information may not be reliable indicators of the Company's future performance
and the future performance of the industry in which it operates. Such indicators are
necessarily subject to a high degree of uncertainty and risk due to the limitations described
above and to a variety of other factors, including those described in Section 2, "Risk
factors" and elsewhere in this Prospectus.
4.1.3 Rounding
Certain figures included in this Prospectus have been subject to rounding adjustments (by
rounding to the nearest whole number or decimal or fraction, as the case may be).
Accordingly, figures shown for the same category presented in different tables may vary
slightly. As a result of rounding adjustments, the figures presented may not add up to the
total amount presented.
20
4.2 Forward-Looking Statements
This Prospectus includes forward-looking statements, including, without limitation,
projections and expectations regarding the Group's future financial position, business
strategy, plans and objectives. All forward-looking statements included in the Prospectus
are based on information available to the Company, and views and assessments of the
Company, as at the date of this Prospectus. Except as required by the applicable stock
exchange rules or applicable law, the Company does not intend, and expressly disclaims
any obligation or undertaking, to publicly update, correct or revise any of the information
included in this Prospectus, including forward-looking information and statements,
whether to reflect changes in the Company's expectations with regard thereto or as a
result of new information, future events, changes in conditions or circumstances or
otherwise on which any statement in this Prospectus is based.
When used in this document, the words "anticipate", "assume", "believe", "can", "could",
"estimate", "expect", "intend", "may", "might", "plan", "should", "will", "would" or, in each
case, their negative, and similar expressions, as they relate to the Company, its
subsidiaries or its management, are intended to identify forward-looking statements. The
Company can give no assurance as to the correctness of such forward-looking statements
and investors are cautioned that any forward-looking statements are not guarantees of
future performance. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the actual results, performance or
achievements of the Company and its subsidiaries, or, as the case may be, the industry,
to materially differ from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such forward-looking statements are based
on numerous assumptions regarding the Group's present and future business strategies
and the environment in which the Company and its subsidiaries operate.
Factors that could cause the Company's actual results, performance or achievements to
materially differ from those in the forward-looking statements include but are not limited
to, the competitive nature of the markets, in which the Company operates, technological
developments, government regulations, changes in economic conditions or political
events. These forward-looking statements reflect only the Company's views and
assessment as at the date of this Prospectus. Factors that could cause the Company's
actual results, performance or achievements to materially differ from those in the forward-
looking statements include, but are not limited to, those described in Section 2, "Risk
factors" and elsewhere in the Prospectus.
Given the aforementioned uncertainties, prospective investors are cautioned not to place
undue reliance on any of these forward-looking statements.
21
5. PRESENTATION OF SIEM OFFSHORE INC.
5.1 Overview
The Group’s primary business activity is to own and operate offshore support vessels
("OSVs") for the offshore energy service industry. The OSV fleet comprises of platform
supply vessels ("PSVs"), anchor-handling, tug, supply vessels ("AHTS vessels"), offshore
subsea construction vessels ("OSCVs"), Well-intervention vessels ("WIVs") and a variety
of other support vessels.
In addition to its primary activity, the Company has also established a business division
for industrial investments. The Group's industrial investment division includes the Group's
services as a contractor within the European offshore wind farm and offshore cable lay
market, the development of applications for managed pressure drilling, a scientific core
drilling vessel, specialized engineering to develop and implement combat management
systems for navy vessels in Brazil and certain other investments.
22
Siem Offshore Inc. is a holding company with no employees and is therefore dependent
on service from its subsidiaries. These services consist of administrative, operational and
corporate services provided by Siem Offshore Management AS and Siem Offshore AS.
The Group's vessels are owned by several companies within the Group. Siem Offshore
Rederi AS currently owns all Norwegian, Polish and German built vessels, except the OSCV
“Siem Spearfish” which is owned by Siem Offshore Construction Vessels AS. Further, Siem
Offshore Rederi AS owns 51% of Siem Offshore Ghana International AS, which owns the
PSV “Siem Sasha”, and 51% of Siem Meling Offshore DA which owns two PSVs.
Siem Offshore Do Brazil S.A. owns the locally built Brazilian fleet. Siem Offshore Canada
Inc. owns Secunda Canada LP ("Secunda"), which owns 5 Canadian flagged vessels. Siem
Offshore Contractors GmbH, which has the cable lay vessel (“CLV”) “Siem Aimery” and
the installation support vessel (“ISV”) “Siem Moxie” on a bareboat charter, is owned 100%
by Siem Offshore Invest AS. Siem AHTS Pool AS is owned 78.16% by Siem Offshore Inc.
and owns a fleet of 10 AHTS sister vessels.
The Group's industrial investments business division consists of the subsidiaries Siem
Offshore Contractors GmbH and Siem WIS AS, Overseas Drilling Limited which owns the
scientific core drilling vessel “JOIDES Resolution” and certain other investments, which are
owned 100% by Siem Offshore Invest AS. In addition the combat management business
in Siem Offshore do Brazil SA is included in this business division.
Ownership and
Company Registered office voting share
23
SOC Equipment and Personnel Services Groningen, The
BV Netherlands 100 %
Groningen, The
Overseas Drilling Ltd Netherlands 100 %
Siem Offshore Canada Inc. Halifax, Canada 100 %
Siem Offshore Poland Sp.z.O.O Gdynia, Poland 100 %
Siem Offshore Australia Pty Ltd Perth, Australia 100 %
Siem Offshore Real Estate GmbH Leer, Germany 100 %
Siem Offshore Contractors UK Ltd London, UK 100 %
Siem Offshore Ghana International AS Kristiansand, Norway 51%
Siem Offshore LLC Delaware, USA 100%
Consub Defesa e Tecnologia SA Rio de Janeiro, Brazil 100%
Secunda Holdings SLH Halifax, Canada 100%
The Company also holds ownership interests in certain non-material subsidiaries and joint
ventures.
5.3 History
The Company traces its roots back to Det Søndenfjeldske-Norske Dampskipselskap AS
("DSND"), which was established in 1854. The main activity in DSND until 1964 was
shipping operations, with a focus on passenger transportation. In 1964, DSND’s passenger
lines service between Hamburg and Oslo was closed down, and DSND’s activity level was
then limited until 1985.
DSND operated as an investment company between 1985 and 1995, with investments
mostly in offshore related activities. By early 1990, DSND had taken ownership of several
dynamically positioned ("DP") offshore vessels. As a consequence, the board wanted to
cultivate DSND’s investment profile and strategy, and other non-offshore related
investments were gradually sold or spun-off from the company.
By 1995, the DSND owned six special offshore vessels, of which two were used for offshore
construction, two for well maintenance and two for geo-technical drilling. The company
planned for further expansion into these three business areas through the addition of
technology and human capital. DSND conducted eight acquisitions of assets or businesses
between 1995 and 2002, which gave the company a significant position within the area of
offshore maintenance and construction, both in terms of geography and resources. The
acquisition provided DSND the skills and equipment to complete total construction
contracts for deep water subsea installations, as well as the install of pipelines, floating
production, units and riser systems, and link-up and completion of subsea production
installations.
On 18 October 2001, DSND announced that they were in discussions with Halliburton on
combining their respective activities within subsea construction and related services. On
23 May 2002, the two companies announced that they had completed a final agreement
for the creation of the 50/50 joint venture company Subsea 7 Holding Inc. (formerly
named Subsea 7 Inc.), registered in the Cayman Islands. The agreement involved all
substantial subsea-related assets, personnel and existing contracts from both companies
to be included in the joint venture.
After the merger in May 2002, both Halliburton and DSND actively contributed to the
further industrial development of the Subsea 7 Holding Inc. business. During this period
Subsea 7 also consolidated its non-subsea activities through the divestment of loss-making
activities and by a more concentrated focus. The holding company was further relocated
from Norway to the Cayman Islands in the fourth quarter of 2002 through a share swap.
In 2002, DSND was renamed Siem Offshore Inc. which again subsequently changed its
24
name to Subsea 7 Inc. in 2005.
In 2002, DSND was renamed Siem Offshore Inc. which again subsequently changed its
name to Subsea 7 Inc. in 2005.
In 2004, the Company was incorporated under the name of Siem Supply Inc. as a
subsidiary of the company then named Siem Offshore Inc. (now Subsea 7 Inc.).
In July 2005, Subsea 7 decided that it would be beneficial for the further development of
both its subsea business and its non-subsea business, as well as enhance shareholder
value, to separate the subsea and the non-subsea business and give them the opportunity
to develop in distinct companies and under separate management. As a consequence, the
Company acquired the non-subsea assets of Subsea 7 not already held by the Company
and the Company was spun-off from Subsea 7.
The Company listed the Shares on the Oslo Stock Exchange in August 2005.
Early in 2006, the Company completed a merger with Rovde Shipping AS which owned or
operated six vessels, whereof three standby vessels which have subsequently been sold.
Also, during 2006, the Company acquired a majority shareholding in Siem WIS AS.
Further, the Company acquired the newbuilding contract for the vessel Siem Mariner from
OH Meling & Co AS, and entered into the joint venture Siem Meling Offshore DA which
controlled an additional two vessels. The Company also contracted four MRSVs from
Kleven Verft AS.
In 2010, Petrobras chartered four AHTS vessels from the Company for a firm period of
four years. The contract value for the firm period was approximately USD 285 million (NOK
1.9 billion), net of local taxes. The contracts for the four AHTS vessels were added to the
Brazilian activities of ten vessels in operation and eight vessels under construction at that
time. The contracts marked growth of operations in Brazil and an important step in
becoming a first class operator in Brazil.
In 2011, the company acquired the remaining 50% ownership interest in the shares of
ODL from a subsidiary of Transocean Ltd.
In the same year, the Company announced the entry into the business for submarine cable
installation, repair and maintenance projects. The Company and the shareholders of Five
Oceans Services ("FOS"), later to be renamed Siem Offshore Contractors GmbH, reached
an agreement whereby the Company acquired all shares in FOS. The transaction combined
the marine operating capacities of the Company with the engineering capabilities and
project execution expertise of FOS and formed a strong entity to meet the forecasted
market growth and customer requirements.
In 2012, Siem Offshore Contractors, the wholly owned subsidiary of the Company,
announced that it had been awarded the first contract for the renewable energy market
for the installation of the inner array grid cables as well as associated services for the
Amrumbank West offshore wind farm ("OWF") project. The contract award marked the
entry into the Offshore Renewable Energy Market for the Group. Subsequently, Siem
Offshore Contractors has been successful in winning additional contracts for OWF projects.
In 2013, the Company acquired 50% of Secunda. Secunda had more than two decades of
offshore experience in serving the oil and gas industry and at the time of the acquisition
Secunda owned and operated a fleet of six offshore support vessels on Canada’s east
coast. The ownership in Secunda provided the Company with a strategic position in
Canada’s east coast offshore sector with the aim to grow the business of Secunda and also
to develop the Company’s current business through the position represented by Secunda.
In 2014, the Company entered into agreements with a client to provide two well-
25
intervention vessels ("WIVs" or "Well-Intervention Vessels"). The vessels were
delivered in 2016 from a German yard and have an overall length of 158 meters, a beam
of 31 meters, and built in compliance with the MODU-class (Marine Offshore Drilling Units).
The agreements represented a targeted entry for the Company as vessel provider into the
segment for Well-Intervention Vessels.
In 2015, the Company decided to streamline its business by forming one dedicated
organisation for its core offshore vessel business named "Siem Offshore OSV". The
remaining business consisting of Siem Offshore Contractors, “JOIDES Resolution”, Siem
WIS, the combat management business in Brazil and certain other investments will be
organisationally separated and operated under the name of "Siem Offshore Industrial
Investments".
In the period 2006 to 2017, the fleet of vessels in operation has grown from 21 to 45
vessels. The fleet growth has mainly been achieved through the construction of vessels.
The Company has currently no vessels under construction.
The Company intends to pursue a strategy of continued consolidation and growth, with
the aim of becoming one of the leading owners and operators of high specification OSV’s
on a global basis, and the leading contractor for the Offshore Windfarm Renewable
Industry.
The Company aims at meeting the market’s demand for modern and advanced support
vessels for the global offshore oil and gas industry. This is supported by the newbuilding
activity undertaken by the Group over the last several years, which has strengthen the
Group’s offshore fleet with additional modern and, environmentally friendly and technically
advanced offshore support vessels.
Siem WIS AS has designed and developed a pressure control device ("PCD") which can
improve managed pressure drilling ("MPD") operations. These services are increasing due
to global challenges with depleted reservoirs, drilling of additional and infield wells, and
the demand to achieve a more constant well pressure during drilling and tripping
26
operations. Global energy demand growth, combined with an increasing number of deep
sea and high pressure high temperature ("HPHT") reservoirs, and increasing emphasis on
safety management will lead to increased demand for MPD services.
The “JOIDES Resolution” is a scientific core sampling research vessel. Its mission is to
explore the Earth below the oceans of the world in order to investigate the origin and the
evolution of the Earth. The ship is a dynamically positioned non-riser drilling/coring vessel
capable of operating in water depths of 7,000 meters, and with holes cored to depths of
2,000 meters below the seafloor.
The Company has, and will continue to have, a small team of dedicated staff focusing on
core activities such as marketing, chartering, technical supervision, finance, business
development and investor relations, and may outsource services within the areas of
technical management, construction supervision and certain administrative functions to
well-qualified suppliers of such services.
5.5.1 Introduction
The Company's business is split into two divisions:
• Siem Offshore OSV, which comprises the Group's core offshore vessel business
Fleet
The average age of main vessel types in operation are seven years for AHTS vessels, five
years for OSCVs, six years for PSVs and half a year for WIVs.
The below table summarizes the main characteristics of the Group’s current fleet:
27
28
29
30
Contract coverage and operations of current fleet
The Group’s vessels are currently operating in the North Sea, of the Brazilian coast, of
east coast of Canada, of the coast of Argentina, of the coast of West Africa, of the coast
of Australia and in the Gulf of Mexico/the US Golf.
Below is an overview of the firm contracts and options for the Group’s fleet of PSVs, OSCVs,
AHTSs, ISV, CLV and WIVs in operation as of end first quarter 2017:
Secunda Canada LP
The wholly-owned company, Secunda, has ownership in a fleet of five offshore support
vessels which operate offshore Canada. Secunda is engaged in support services for
platform supply, anchor handling, rescue standby and towage in its primary area of
operation outside the coast of Eastern Canada.
The Company has a 41%-ownership in the "Big Orange XVIII", which is a DP-2 well
stimulation vessel.
31
The Company’s subsidiary Siem Consub SA in Brazil is an owner and operator of offshore
support vessels and crew boats in the Brazilian market. Siem Consub’s head office is
located in Rio de Janeiro in addition to bases located along the Brazilian coast. With more
than 27 years of experience in Brazil, Siem Consub is focused on offshore support
operations, submarine cable maintenance and installation, engineering and systems
integration for the defence market. Siem Consub further undertakes projects that
comprise underwater and naval technology, high quality resources and qualified
professionals. Unique solutions have been implemented but each new project brings new
challenges to overcome.
Below is an overview of the firm contracts and options for Big Orange XVIII, five Canadian
flagged vessels currently in operation and the smaller Brazilian flagged vessels as of end
first quarter 2017:
SOC is an experienced submarine cable and umbilical installation, repair and maintenance
contractor serving the worldwide offshore oil and gas as well as renewable energy
industries. SOC, a German company with its head office situated in the City of Leer, was
formed in 2003. SOC has gained experience in providing its service to the demanding
worldwide offshore oil and gas industry, meeting industry standards for quality, health,
safety and environmental protection. This has been of value when winning contracts in the
renewable energy sector. Based on its in-house resources as well as experience, SOC can
install, maintain and repair submarine cables as well as subsea umbilical, in many water
depths and geographical areas.
Below is an overview of the main projects of SOC as if end first quarter 2017:
32
1) The project reached financial close in April 2015.
The vessel “JOIDES Resolution” is owned 100% by Overseas Drilling Limited, of which the
Company owns 100%. The vessel is a highly specialized research drill ship, whose primary
33
mission is to recover core samples for scientific purposes. The vessel is currently on
contract with Texas A&M Research Foundation ("TAMRF") for the use as a scientific core
drilling vessel for the International Ocean Discovery Program. The operational firm phase
of the contract ended in fourth quarter 2013, and TAMRF has since then exercised three
of the initial 10 yearly options. In May 2016, TAMRF declared their options for the fourth
time, for a period of three times one year for the vessel, and the current option period
under the existing contract will expire at the end of September 2019. A series of four 1-
year option periods is still to be exercised by the TAMRF.
Below is an overview of the firm contracts and options for “JOIDES Resolution” as of end
first quarter 2017:
Siem WIS AS
Siem WIS AS is 60% owned by Siem Offshore, and is a Norwegian Oil Service Company
which has developed and commercialized new unique drilling technology for
Underbalanced Operations ("UBO") and MPD. Subject to a successful development, the
products will enable safer and more efficient drilling and well maintenance services,
including riser-less subsea intervention services from vessels.
With the technology, challenging reservoirs such as HPHT (High Pressure High
Temperature) and ERD (Extended Reach Drilling) wells, will be drilled with better control
of your first barrier. These companies services are increasing due to global challenges with
depleted reservoirs, drilling of additional and infield wells, and the demand to achieve a
more constant well pressure during drilling and tripping operations.
The total contract backlog for the Company at 31 March 2017 was USD 1.14 billion and is
allocated as follows:
2019
(Amounts in USD millions) 2017 2018 onwards
OSVs 153 162 576
Siem Offshore Contractors 74 87 28
Other 20 26 19
Total Backlog 247 275 623
The backlog of Siem Offshore Contractors is normally based on lump sum contracts, while
the backlog of “JOIDES Resolution” included under Other is based on a firm contract period
with an agreed charter rate per day.
34
any contract in particular. The contract with Helix for the two well-intervention vessels
operating in Brazil is however of material important.
Oversupply of vessels and reduced rig activity has put pressure on vessel utilization and
fixture rates.
The market for OSVs in Brazil has significantly softened following lower demand activity
from Petroleo Brasileiro SA (“Petrobras”). When disclosing its five-year business plan in
2015, Petrobras announced reduced capital expenditures and highlighted cost cutting
measures with the intension to reduce leverage going forward. In order for Petrobras to
reduce its cost base, Petrobras has initiated renegotiation of existing contracts with several
suppliers, including vessel owners. It is in the opinion of the Company that an increased
risk of such contract renegotiations or even contract cancellations for certain vessels of
the Company exists.
Going forward, the Company believes that the excess vessel capacity will last for several
years and continue to make the market difficult and might force owners to put more
vessels into lay-up. The charter rates and margins are below what is sustainable for the
industry in the long-run.
The outlook for the OSV market is expected to remain soft for several years due to reduced
investments in the offshore oil and gas industry following lower current and future
commodity prices for oil and gas, which again reduces the demand for vessels and puts
pressure on utilisation and fixture rates, coupled with excess vessel capacity. Such
imbalance between supply and demand will continue to make the market difficult and
might force owners to put more vessels into lay-up. The obtainable charter rates and
margins are below what is sustainable for the industry in the long-run.
In response to the soft OSV market, the Company has placed two AHTS vessels, “Siem
Pearl” and “Siem Diamond”, out of operations and into lay-up.
Siem Offshore Contractors continues to experience a high level of tendering activity for
EPIC-based contracts for both medium- and high-voltage submarine power cables in the
offshore windfarm market with scheduled marine installation activities to commence in
2019, 2020 and 2021 using the cable-lay vessel “Siem Aimery” and the installation support
vessel “Siem Moxie”, now referred to as the “Siem Duo” vessels by the industry.
There has been no significant change in the financial or trading position of the Group since
the end of the last financial period for which interim financial information has been
published. The Group has in connection with preparing the reporting of its fourth quarter
2016 results considered the fair value of its assets versus the respective book values. Such
considerations resulted in impairments on vessel values, intangibles and long term
receivables in the fourth quarter 2016 results.
In connection with release of the results for the fiscal 2016, the Group recorded a loss of
approximately USD 60.3 million in relation to prior years’ currency losses in a cash flow
hedge that had accumulated in other comprehensive income in the financial statements of
its wholly-owned Brazilian subsidiary, Siem Offshore Do Brazil.
After considering the ability of Siem Offshore Do Brazil to reverse the balance of
accumulated translation differences in other comprehensive income, it was concluded that
the recent termination of vessel contracts and loss of highly-probable USD cash flows and
35
the continued devaluation of the Brazilian real made it unlikely that the accumulated
balance would naturally reverse during operations. Therefore, USD 60.3 million related to
the accumulated translation differences in other comprehensive income was recognized
through profit or loss. Consequently, other comprehensive income was increased by the
removal of the USD 60.3 million and retained earnings was decreased by the same amount
of USD 60.3 million that was recorded in profit and loss; therefore, shareholders' equity
remains unchanged and there is no cash effect.
There has been no significant change in the financial or trading position of the Group since
the end of the last financial period for which interim financial information has been
published. The Group has in connection with preparing the reporting of its fourth quarter
2016 results considered impairment for its vessels. Based on the impairment assessment
as December 31, 2016, some vessels were impaired based on the difference between
carrying amount and recoverable amount (higher of fair value or value in use calculation).
5.8 Investments
At the end of 2015 the Company had approximately USD 396 million in unpaid instalments
on 8 vessels under construction. During 2016 the Company took delivery of one oil-spill
recovery vessel, one AHTS vessel, one Cable Lay vessel, one PSV and two well-intervention
vessels.
The shipbuilding contracts for 2 PSVs were cancelled in fourth quarter 2016 and first
quarter 2017 respectively. The Company has been repaid all pre-delivery instalments
made under these contracts, including interest.
As of the date of this prospectus, the Company has no vessels under construction, and is
only exposed to regular maintenance capex in its ordinary course of business.
5.9.2 Brazil
General
36
The Brazilian market is highly regulated and only locally established companies are allowed
to operate there. Currently there are approximately 387 vessels in Brazilian Waters, of
which approximately 79% is Brazilian flagged, while the foreign vessels are all under
temporary import conditions.
There are offshore drilling and production activities all along the thousands of miles of the
Brazilian coast, but the main oil provinces are Campos Basin, offshore Macaé (by far the
largest), Sergipe Basin offshore Aracaju and Rio Grande do Norte, offshore Guamaré. Siem
Offshore do Brazil has onshore facilities in Macaé and Aracaju. Promising new areas are
Santos Basin and Vitória Basin.
The main client is Petrobras, the state-controlled oil company, but there are other oil
companies expanding its offshore activities in Brazil, among them Shell, TOTAL, CHEVRON,
STATOIL, Queiroz Galvão, etc. Most of the contracts are long term, being up to eight years
term for new building vessels to two/four years for foreign vessels. However, due to the
current market scenario, and the availability of Brazilian tonnage, it is expected the next
bids considering 1-2 years contract period and focused on Brazilian flagged vessels or
foreign vessels under REB regime. The spot market is very limited. There are currently
140 Offshore Support Shipping companies duly authorized by ANTAQ governmental
agency, however, the main players are in the number of 50 companies and several are
subsidiary of major international players.
The Company has during 2016 scaled down its operations in Brazil following one AHTS,
four PSV vessels ending firm contracts with Petrobras without further extension.
Currently, Siem Offshore fleet in Brazil is composed of eight vessels.
Engineering Services
Siem Offshore Do Brazil is also a main provider of specialized engineering services to the
Brazilian Navy acting in this sector with its subsidiary Consub Defesa e Tecnologia. Among
its successfully contracts are: the Combat Management Systems supply for six frigates of
Niteroi class, the Combat Management Systems supply for the Barroso corvette, the
Combat Management Systems supply for the aircraft carrier São Paulo, and several other
jobs related to system integration, simulators and navy specialized training. Besides, there
are actions on course to apply these engineering capabilities on the oil and gas market,
seeking future opportunities.
5.9.3 The Gulf of Mexico, east coast of Canada, Australia and West Africa
The Company has successfully entered into the market in east coast of Canada, West
Africa and Australia, which is expected to grow over the coming years, with demand for
different types of vessels for general support, maintenance and special services.
The Company has successfully operated in the market in the Gulf of Mexico for about four
years. It is expected that this market will grow over the coming years, with demand for
different types of vessels for general support, maintenance and special services.
37
6. INDUSTRY OVERVIEW
This section discusses the industry in which the Group operates, which is the offshore
support vessel industry. Certain parts of the information in this Section relating to market
environment, market developments, growth rates, market trends, industry trends,
competition and similar information are estimates based on data compiled by professional
organizations, consultants and analysts; in addition to market data from other external
and publicly available sources, and the Company's knowledge of the markets, see Section
4.1.2 "General information—Industry and market data". The following discussion contains
Forward-looking Statements, see Section 4.3 "General information—Forward-looking
statements". Any forecast information and other Forward-looking Statements in this
Section are not guarantees of future outcomes and these future outcomes could differ
materially from current expectations. Numerous factors could cause or contribute to such
differences, see Section 2 "Risk factors" for further details.
6.1 Introduction
Offshore support vessels perform a wide range of services related to construction and
decommissioning work, pipe laying, support of drilling rigs and floating and fixed
installations. Offshore service vessels can be divided into three main segments; AHTS
vessels, PSVs, and various types of subsea vessels (OSCVs), which are further described
in Section 6.3—"The Offshore Support Vessel Market". The Company owns vessels in all
of the above-mentioned segments. In addition, there are various niche segments being
more specialized, such as oil spill response vessels, OSRVs and other types of vessels.
Demand for PSVs are mainly related to support of offshore platforms, rigs and floating
production units, with respect to transporting cargo between such installations/units and
supply bases onshore. PSVs have liquid tanks, dry bulk tanks and deck area for
transportation of various cargoes such as mud, brine, cement, water, oil, diesel, pipes
food, and other supplies related to production/operation of the offshore rigs/platforms.
AHTS vessels can perform the same duties, but are equipped with winches and towing
capacity, enabling them to lift and position anchors, tow rigs and floating production units
that either cannot propel themselves, or where towing is more economical due to fuel
costs. Towing of new fixed platforms or cargo barges are also relatively frequent tasks for
these vessels. A large portion of AHTS vessels' duties is related to anchoring up offshore
rigs and floating production units. Even though many new rigs have dynamic positioning
("DP") systems that enable them to hold their position using navigation systems and own
thrusters, and thus do not necessarily require the use of anchors, such DP systems require
the constant use of the rig's engines it is often more economical to be anchored up,
especially if the rig is expected to be in the same position for several weeks.
CSVs comprise of pipelay vessels, dive support vessels, heavylift / derrick barges, offshore
construction vessels, subsea vessels, seismic support vessels, well intervention vessels
and survey vessels. These types of vessels are normally utilized in the installation, light
construction, inspection, maintenance and decommissioning of subsea equipment related
to the development of oil and gas offshore. The vessels may also be utilized within certain
non-oil and gas related segments, e.g. the offshore wind industry.
38
The below chart shows the Brent oil price development since 2010 as well as the forward
curve.
Source: Macrobond (series: Crude Oil, Brent, Spot, FOB North Sea, ICE, Close, USD), Bloomberg (series: Brent oil forward curve,
consensus estimates) (Both series from April 2017. The data is not freely available to the public, and require a valid account at
Macrobond and Bloomberg respectively). Note: Dotted lines show average actual Brent price for the year.
In the years 2011 to 2013, oil prices (Brent) traded in the USD 90/bbl to USD 120/bbl
range, with yearly averages being stable around USD 110/bbl. This was a supportive level
for an increasing spending environment. In mid 2014 the oil price peaked at around USD
115/bbl and from there the oil price saw a dramatic fall amid an oversupplied global oil
market due to, among other thing, a rapid growth in US shale oil production. The Brent oil
price have recovered from the trough in January 2016 of about USD 27/bbl and is trading
around 55/bbl in early April 2017. The forward curve indicates a flat development for oil
prices over the next years, with an average price Brent price of USD 53.7, 53.4 and
53.6/bbl for 2018, 2019 and 2020 respectively. Consensus estimates are slightly more
positive with an estimated Brent price of USD 61/bbl and 62/bbl for 2018 and 2019,
respectively.
The level of E&P spending is a function of the prevailing oil prices. Naturally, the dramatic
fall in the oil price forced oil companies to reduce their investments and overall offshore
activity. With years of stable oil prices above USD 100/bbl, the oil companies budgeting
prices increased and hence, when the oil price dropped many projects that previously were
profitable came under review and were postponed. The low oil price environment during
2015 and 2016 has increased focus on cost efficiency among oil companies and suppliers,
leading to reduced break-even prices on many projects. Combined with increasing oil
prices, this should provide support for increased investment activity.
The graph below shows the historic global E&P spending growth:
39
30%
25%
21%
18% 18% 18% 18% 19% 19%
20%
15% 15%
12%
12%
12%
9% 9% 9%10% 8%
10%
10% 6%
3% 3%2% 3%
1% 0%
0%
1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017e
-3%
-6% -5%
-10% -8%
-12%
-20%
-21%
-23%
-25%
-30%
-33%
-40%
Source: Manager's research, based on Schlumberger, Citigroup, companies, and WoodMac (March 2017). Please note that the
above chart has been compiled for illustrative purposes only, and may not perfectly depict the actual development in global E&P
spending. The Manager’s research analysts have used a number of sources, including annual and quarterly reports from
Schlumberger (the world's largest oilfield services company) which are freely available at the company's investor website:
http://investorcenter.slb.com/phoenix.zhtml?c=97513&p=irol-reportsannual. Additionally, part of the data has been based on
industry research published by Citigroup analysts. Some data has also been gathered from the Wood Mackenzie database, which
is not freely available, and can only be accessed through a valid account.
As seen in the above chart one saw strong growth in E&P spending in the years prior to
the financial crisis with annual growth rates of 15-21% in the period 2005-2008. Following
the financial crisis E&P spending saw a 12% decline in 2009 before bouncing back to double
digit growth in the period between 2010 and 2012. In 2014 E&P spending growth was flat,
before 2015 and 2016 showed decline of approximately 23% and 25%, respectively. 2017
is expected to show a decline of approximately 5%.
Going forward, E&P spending growth is naturally dependent on the development in oil
prices. The recent sharp oil price drop combined with the market’s expectations of a more
modest recovery supports an increasing focus on preserving cash flow for oil companies,
and heightened cost focus on new projects. The sharp capex cut in 2015 and 2016 is
therefore likely to be followed by a single digit reduction of E&P spending also in 2017.
This view is underpinned by already announced capex guidance from approximately 40 oil
companies, both majors, onshore, IOCs and NOCs.
Another key driver for the offshore support vessel market is the offshore drilling activity.
The demand for drilling rigs witnessed a sharp increase in the years leading up to the peak
in 2014, but has declined substantially since the sudden oil price drop. The decline
accelerated during 2015 and into 2016, and has continued over the last months, although
at a slightly slower pace. The prolonged weakness in demand for drilling rigs provides a
challenging market backdrop for offshore support vessels.
40
6.3 The Offshore Support Vessel market
Brazil is one of the key markets for offshore support vessels. The market is characterized
by the national oil company Petrobras being the dominant player and historically offering
long-term contract opportunities in various segments, attracting operators on a global
basis. The region has a limited spot market and term contracts have been in the range of
1-8 years. The country offers preference towards locally built tonnage both on contract
duration and by differentiating tender processes. Brazil is also highly regulated in terms of
local content requirements. Brazilian flagged vessels are also in a position to block foreign
flagged vessels when these are up for their annual “Certification of Charter Authorization”
renewal. Given the declining activity in the region and an increasing number of Brazilian
flagged vessels becoming available, a number of foreign flagged vessels have seen their
contracts cancelled over the last year. Siem Offshore is no exception, and the company
has experienced vessels being blocked by local tonnage and consequently lost contracts.
Currently, the Brazilian fleet consists of 8 vessels in operation.
The US Gulf of Mexico is characterized by the Jones Act regulation for the PSV and AHTS
segment, since operators need to comply with this act to be able to qualify for operations
in this region. According to the Jones Act, goods and passengers can only be transported
between U.S. ports by water in U.S. made ships that are owned by U.S. citizens and crewed
by U.S. citizens. Consequently, the region is only served by US operators. With the Jones
Act follows also a large domestic shipbuilding industry. The region holds a large spot market
as well as a term market with various contract durations.
West Africa holds various regional markets related to each country in the region, the largest
markets being Angola and Nigeria. Each market is unique in terms of local content
requirements. The region offers smaller spot markets, but by nature is characterized as
various terms markets. The region may offer certain challenges related to logistics,
including dry-docking and maintenance of vessels/equipment.
Asia is similar to West Africa in terms of various local/regional markets. While the port of
Singapore provides a regional hub for vessels standing idle or in-between contracts, there
is no single spot market in the region and also term markets are characterized by the
41
country of operation. The market is also characterized by being the largest new build
market in the offshore support vessel industry with the key build country being China.
The market for offshore vessels was very strong in most of 2005-2008, reaching record
levels in the North Sea. The market has been more volatile since 2009 with generally lower
and more fluctuating fleet utilization, and as a result, also fluctuating day rates for the
vessels.
PSVs are specifically designed for transport of all required supplies, either as deck cargo
or under deck in dedicated tank systems to and from offshore installations. On deck the
vessels may carry containers, drill pipes and other equipment. Under deck the vessels may
carry a variety of different fluids in separate tanks, like mud & brine, cement or other dry
bulk, fresh water, fuel and/or special products like methanol and drill cuttings for the
drilling program.
− Type and capacity of special tanks carrying mud & brine, fuel, dry bulk, methanol
etc.
Historically, a PSV with dwt above 2,000 has been considered large. However, as the trend
continues towards larger and larger vessels, PSVs with dwt between 3,000 and 4,000 are
now considered medium-sized and vessels with a carrying capacity above 4,000 dwt are
considered large. Classified by deck area, this corresponds to approximately 500-800 m2
for medium-sized vessels, and above 800 m2 for large vessels.
Siem Offshore currently has 9 fully owned PSVs as well as 3 that are partially owned. Of
the fully owned vessels, 7 have carrying capacity above 4,000 dwt and 5 have capacity
between 3,000 and 4,000 dwt. Siem currently has no PSVs under construction.
The PSV segment has seen substantial contracting of new builds in the years leading up to
the oil price collapse in 2014, and there are quite a large number of vessels scheduled for
delivery in 2017. However, the low delivery rates in 2015/2016 emphasize the fact that
the order book remains overstated and it is also worth mentioning that a substantial part
of the order book consists of smaller and less advanced vessels mainly under construction
in the Far East. A significant part of these vessels may be subject to significant delays as
well as potential cancellations. Potentially mitigating the order book is the relatively
significant number of vessels built in the 1980s still in service. We have already seen an
increasing number of older vessels being phased out and given the current challenging
market, this trend is likely to continue. It should also be taken into consideration the
uncertainty related to vessels currently cold-stacked. Depending on the length of the
42
downturn and the maintenance on the vessels, this may be a source to both supply side
reduction (vessels not able to return to active service) or extended oversupply (vessels
able to return to the market through re-activation and investments). As to YTD deliveries
in the PSV segment, we have seen a similar trend as in 2016 with actual deliveries running
significantly behind the planned deliveries.
As oil activity has moved into deeper waters, the main focus has been on the vessels' winch
and engine capacities, in order to offer the oil companies a safe and efficient operation in
the challenging conditions of the deepwater area. AHTS vessels are classified mainly
according to their towing capacity, but other parameters are also considered:
Brake horse power (BHP) is the most common parameter for categorizing AHTS vessels.
The AHTS fleet is normally divided into vessels with less than 12,000 BHP (small sized),
between 12,000 and 16,000 BHP (medium size), between 16,000 and 20,000 BHP (large)
and above 20,000 BHP (very large). Owners have traditionally focused on vessels with
between 12,000 and 18,000 BHP, but with a push in recent years for the larger high-end
vessels above 20,000 BHP due to the fact that the offshore industry has increased its
presence in deeper water and outer areas where more and special capacity are required.
Siem Offshore has decided to focus on the high-end of the AHTS market, i.e. vessels above
20,000 BHP.
In 2011 Siem Offshore completed a new build program of ten AHTS vessels in the category
"very large", of which eight vessels are owned by Siem Offshore. The AHTS newbuilds are
of VS 491 design, which meets the current and future requirements of the industry serving
the next generation of drilling rigs and floaters for global offshore and deep water work.
The AHTS vessels are of designs promoting favourable fuel consumption and consequently
low emissions as a result of their optimal hull lines, Selective Catalysts Reduction (SCR)
and hybrid propulsion, high speed and large all round capacities. The AHTS newbuilds have
bollard pull of 275 tons, prepared for ROV operations, 60 men accommodation and have a
lot of optionality such as A-frame (300t), large AHC crane (300t) etc. Today, the company
owns these ten high-end AHTS vessels in addition to four other Canadian flagged AHTS
vessels that are 100% owned.
43
Similar to the PSV market, there are also quite a number of AHTS vessels under
construction. However, a large number of the AHTS vessels are smaller and less
sophisticated vessels being built in the Far East where one should expect delays and
potential cancellations. There are also a large number of AHTS vessels that are built from
mid 1970s to mid 1980s, which are obvious phase out candidates under the current market
environment. The normal lifetime of an AHTS vessel is generally considered to be around
30 years. As for deliveries YTD in the AHTS segment, the manger has have seen a similar
trend as in 2016 with actual deliveries running significantly behind the planned deliveries.
- Pipelay Vessels
- Dive Support Vessels
- Heavylift/Derrick Barges
- Offshore Construction Vessels
- Seismic Support Vessels
- Well-Intervention Vessels
- Survey Vessels
Siem Offshore currently has a wide range of vessels in the OSCV category, including a
series of five vessels operating in the subsea support/IMR role along with two MRSV
(Multipurpose field & ROV support vessels). The company also has certain vessels in
operation targeting the offshore wind market and the well intervention market. Siem
Offshore’s current OSCV fleet includes Siem Marlin, Siem Helix 1, Siem Helix 2, Siem
Stingray, Siem N-Sea, Siem Spearfish and Siem Baracuda (previously Siem Daya 2).
The OSCV segment in today’s form is a relatively new segment as the majority of vessels
have been ordered since the mid 2000s following the oil companies’ focus on subsea
solutions. There are however quite a few older vessels, but these are generally less
sophisticated and not comparable to standards seen on modern vessels. Prior to the
financial crisis there was large ordering activity with vessels being delivered in 2008 and
2010.
Over the last years there has been a lot of subsea activity. The below chart shows the total
subsea order intake for the three major subsea contractors from 2003 to 2017, and this
gives a good indication of the demand for subsea vessels. As seen from the chart, their
order intake was relatively stable at around USD 15 billion per year in the period between
2006 and 2010 while increasing to around USD 26 billion in 2014. Following the collapse
in oil prices lately, 2015 showed a significant decline of 58% year-on-year. For 2016, order
intake was up 9% to approximately USD 12bn.
44
Source: Manager’s research (April 2017)
− Cable Lay Vessel Siem Aimery: the vessel was purpose built to work for the wholly
owned subsidiary Siem Offshore Contractors (SOC) and performs project work
within the offshore renewable wind industry with specialized capabilities towards
cable laying.
− Installation Support Vessel Siem Moxie: the vessel was built to work for the wholly
owned subsidiary SOC and performs project work within the offshore renewable
wind industry with specialized capabilities within cable pull-in, termination and
testing activities, including motion-compensated gangway.
− Well stimulation vessel Big Orange XVIII: DP2 well stimulation vessel with capability
to increase production from oil and gas wells.
− Well Intervention Vessels, Siem Helix 1 and Siem Helix 2: the vessels are in
compliant with the mobile offshore drilling unit (MODU) and well intervention unit
2 class notations. The Siem Helix vessels are equipped with a dynamic positioning
system (Dynpos Autro) and a subsea crane with a capacity of 250 tonnes at a depth
of 3000m. Accommodation is provided for 150 people. The vessels will perform well
intervention services.
− Small vessels in Brazil: the Company operates a fleet of smaller, Brazilian built
vessels with the majority of vessels operating under long-term contracts with
Petrobras.
45
6.4 Rate development and utilisation
The offshore support vessel market is cyclical, and spot market rates in the North Sea
region are characterized by significant volatility. This relates mostly to the underlying
cyclicality of the business, but also to variations between summer and winter season and
to changes within shorter time periods. In particular, the summer season is generally
characterized by high activity levels. To a large extent, this can be attributed to the weather
conditions in the North Sea Region. The current spot rates for PSVs in the North Sea are
very low and insufficient to cover costs. The weak market has triggered several operators
to lay up vessels in order to cut losses. Rates for longer contracts generally fluctuate less,
but are highly correlated with the spot market. As mentioned above, the regions outside
the North Sea do not have as visible and efficient spot market. The development and status
in the North Sea region gives a good indication of the conditions of charters elsewhere in
the world. Other regions are characterized more by medium to long term charters, but
facing the same negative trends on both rates and utilization as seen in the North Sea
area.
While the industry trend has been operators having preference for newer and more efficient
vessels (both fuel and operational) and consequently improving utilization vs. older
tonnage, the weak market trends are seen across vessel segments (size and age). The PSV
spot market has been weak since late 2014 and North Sea PSV rates have bottomed out
at a level barely covering operating expenses. With softer activity levels, market
participants cut costs by stacking vessels there is no employment for / cover its own costs.
The challenging market conditions are also weighing on the market for long term contracts.
In general, PSV contracts that extend throughout 2016 and 2017 have a very low EBITDA-
margin. This is similar for the AHTS segment, although some good contracts have been
entered into in specific markets (for example Brazilian flagged vessels, which, as a general
rule, have priority over foreign vessels in Brazilian jurisdictional waters under the Brazilian
Shipping Act (Brazilian Law 9.432/97). However, this should be viewed as a special case
since the law of supply and demand does not necessarily work in such situations). The
overall picture is that utilization and rates are down across the board, regardless of the
segment and region. Day rates for subsea/construction tonnage have generally held up
well for the vessels that have been able to find work due to the more specialized / fit for
purpose nature of the business and generally healthier supply/demand balance than the
commoditized AHTS/PSV segments.
Offshore installation campaigns for projects in tender stage are now mainly for 2018 start-
up. Subsea tie-back and maintenance activity is expected to pick up during 2017, coming
from an absolute minimum activity level. This is especially visible for the North Sea, where
aging infrastructure means that new developments in many cases will require modification
and maintenance activity. In Norway, two thirds of the new development projects the
manager has identified are tie-backs or upgrades of existing fields, which is expected to
drive maintenance activity for years after original life-of-field estimates. While smaller tie-
back projects could drive an uptick in activity level already in 2017, larger standalone
projects that are being sanctioned in 2017 will typically have most of their offshore work
in 2018-2020. The Manager expects spending levels in 2017 to be below 2016, but
improved economics could mean the activity level could be flat or increase. The early
recovery is likely to be slow, and a meaningful uptick in activity is not expected until 2018.
46
7. CAPITALISATION AND INDEBTEDNESS
The information presented below should be read in conjunction with the other parts of
this Prospectus, in particular Section 8 "Selected financial and other information", and
the Group's financial statements and the notes related thereto, included in Appendix B of
this Prospectus.
Other than as set forth as above, there has been no material change to the Group’s
unaudited consolidated capitalisation and net financial indebtedness since 31 March
2017.
7.1 Capitalisation
The following table sets forth information about the Group’s consolidated capitalisation as
at 31 March 2017.
As of
31 March
2017
In USD 1000 (unaudited)
Indebtedness
Total current debt: 264 806
Guaranteed and secured ………………………………………………………….. 118 726
Guaranteed but unsecured ……………………………………………………….
Secured but unguaranteed ……………………………………………………….
Unguaranteed and unsecured ………………………………………………….. 146 080
Shareholders’ equity
Paid in capital ……………………………………………………………………….... 625 219
Other reserves ………………………………………………………………………… -47 110
Retained earnings ………………………………………………………………….. -42 162
Non-controlling interests ……………………………………………………….. 94 864
Total shareholders’ equity ……………………………………... 630 811
Total capitalisation ……………………………………………….. 2 308 483
47
7.2 Net financial indebtedness
The following table sets forth information about the Group’s net financial indebtedness as
at 31 March 2017.
31 March
Net financial indebtedness 2017 31 Dec 2016
The loan facilities established to finance the construction and acquisitions of the Company's
vessels are secured by, a first priority mortgage on the applicable vessels, and in most
cases also security in earnings, charter contracts, insurance and hedging arrangements.
As of end first quarter 2017, the Company had approximately USD 160 million in
outstanding unsecured bond debt with maturity in January 2018 and March 2019.
(E) Current Financial Receivables include trade receivables (USD 34 757) and other
receivables (USD 88 435) less prepaid expenses (USD 27 708) and inventories (USD
7 268).
(M) Other Current Financial Debt include trade payables (USD 22 350) and other current
liabilities (USD 116 092) less prepaid revenues (USD 7 638).
7.4 Debt instalments falling due over the next 5 years, as of April 2017.
48
PARENT COMPANY CONSOLIDATED
Instalments falling due Mortgage Other interest
(Amounts in USD 1,000) over the next 5 years debt bearing debt Total
The book value of mortgaged assets consisted of non-current tangible assets and portion
of the accounts receivables and amounted to USD 1,395 million at year end 2016.
Current cost of debt is approximately 3.9% p.a., including the effect of interest rate
derivatives.
1) Contractual guarantees to the Brazilian Navy are issued by Siem Offshore do Brasil SA.
2) Guarantees related to disputes and ongoing tax-cases have been raised per request from Brazilian tax-
authorities.
3) Contractual guarantees provided by Parent are security to clients of Siem Offshore Contractors GmbH.
49
8. SELECTED FINANCIAL INFORMATION
50
8.3 Consolidated Income Statements
The table below sets out selected data from the Group’s consolidated income statements
for the year ended 31 December 2016 and for the three months period ended 31 March
2017.
Weighted average number of outstanding shares('000) 842 021 842 021 842 021
Earnings(loss) per share (basic and diluted) -0,02 -0,01 -0,17
51
Comprehensive Income Statement 2017 2016 2016
(Amounts in USD 1 000) 1Q 1Q Jan-Dec
Unaudited Unaudited Audited
Net profit/(loss) -17 344 -9 570 -155 905
Other comprehensive income
Items that will not be reclassified to profit or loss:
Pension remeasurement gain/(loss) - - 230
Items that may be subsequently reclassified to profit or
loss:
Cash flow hedges - 34 038 60 319
Currency translation differences 11 -26 642 -23
Total comprehensive income for the period -17 333 -2 174 -95 379
Attributable to non-controlling interest -4 015 -592 -9 729
Attributable to shareholders of the Company -13 319 -1 583 -85 650
Equity
Paid-in capital 625 219 625 219
Other reserves -47 110 -47 276
Retained earnings -42 162 -28 836
Shareholders´ equity 535 947 549 107
Non-controlling interest 94 864 98 878
Total equity 630 811 647 985
Liabilities
Borrowings 1 286 304 1 293 059
CIRR loan 1) 72 750 76 215
Other non-current liabilities 53 812 51 421
52
Total non-current liabilities 1 412 866 1 420 695
Borrowings 118 726 177 834
Accounts payable and other current liabilities 146 080 166 875
Total current liabilities 264 806 344 709
Total liabilities 1 677 672 1 765 404
Total equity and liabilities 2 308 483 2 413 390
1) Commercial Interest Reference Rate
53
Cash flow from financing activities
Contribution from non-controlling interests of consolidated
subsidiaries - - 885
Proceeds from new long-term borrowing - 623 455 706
Repayment of long-term borrowing -67 864 -55 011 -188 360
Cash flow from financing activities -67 864 -54 388 268 232
Cash at bank start of period 101 323 148 753 148 753
Effect of exchange rate differences 11 547 18 720 12 934
Cash at bank at end of period 81 004 97 441 101 323
Share Non-
(Amounts in USD 1 Total no. of Share premium Other Retained Shareholders' Controlling
000) shares capital reserves reserves earnings equity interest Total equity
Equity on 1 January
2017 842 021 380 8 420 616 799 -47 276 -28 837 549 106 98 879 647 985
Net profit to
shareholders -13 326 -13 326 -4 019 -17 344
Employee share scheme -Value of
employee services 61 61 61
Currency translation
differences 105 106 4 110
Total
comprehensive
income/(expense) - - 167 -13 326 -13 159 -4 015 -17 174
Share issue in partially
owned subsidiary - - - - - - -
Equity on 31 March
2017 842 021 380 8 420 616 799 -47 110 -42 162 535 947 94 864 630 811
Share Non-
(Amounts in USD 1 Total no. of Share premium Other Retained Shareholders' Controlling
000) shares capital reserves reserves earnings equity interest Total equity
Equity on 1 January
2016 842 021 380 8 420 616 799 -108 151 115 147 632 215 33 293 665 508
Change previous
periods - -1 682 -1 682 -100 -1 782
Net profit to
shareholders -142 436 -142 436 -13 469 -155 905
Employee share scheme -Value of
employee services 516 516 516
Pension
remeasurement 230 230 230
Currency translation
differences -23 - -23 -23
Reclassification to
profit or loss 60 319 60 319 60 319
Other 63 -96 -33 1 201 1 168
54
Total
comprehensive
income/(expense) - - 60 875 -143 984 -83 109 -12 368 -95 477
Share issue in partially
owned subsidiary - - - - - 77 953 77 953
Equity on 31
December 2016 842 021 380 8 420 616 799 -47 276 -28 837 549 106 98 879 647 985
(Amount in USD 1
000)
Equity on1 January
2015 387 591 380 3 876 522 361 -45 491 304 237 784 983 38 666 823 649
Change previous
periods -869 -869 -869
Net profit to
shareholders -186 687 -186 687 -9 729 -196 416
Value of employee
services -1 728 -1 728 -1 728
Pension
remeasurement 1 178 1 178 1 178
Currency revaluation -9 687 -2 710 -12 398 209 -12 189
Cash flow hedge -65 866 -65 866 -65 866
Reclassification to
profit or loss 14 621 14 621 14 621
Total
comprehensive
income / (expense) - - -62 660 -189 088 -251 749 -9 520 -261 270
Share issues in
partially owned
subsidiaries - 6 276 6 276
Capital reduction in partially owned
subsidiaries - -4 811 -4 811
Impairment of excess value partially
owned subsidiaries - 2 682 2 682
Shares issues in Siem
Offshore Inc 454 430 000 4 544 94 438 98 983 - 98 983
Equity on31
December 2015 842 021 380 8 420 616 799 -108 151 115 147 632 215 33 293 665 508
Under Siem Offshore OSV, the PSV segment includes twelve Platform Supply Vessels. The
OSCV and WIV segment includes three Offshore Subsea Construction Vessels, two
Multipurpose field and ROV Support Vessels and two Well-Intervention vessels. The AHTS
segment includes ten Anchor Handling Tug Supply Vessels. The Segment of Other Vessels
in Brazil consists of two Oil Spill Recovery Vessel and four smaller Platform Supply Vessels.
55
Under Siem Offshore Industrial Investments, the Submarine Power Cable Installation
comprises the activities of installation and maintenance of subsea power cables for offshore
windfarms. Combat Management Systems is the activity of supplying software for a
management system to the Brazilian Navy. Scientific Core-Drilling is comprised of the
activity of the scientific drillship, “JOIDES Resolution” which performs core drilling. Siem
WIS develops applications for MPD, and certain other investments.
The Company uses two measures of segment results, operating revenue and operating
profit. Intersegment sales and transfers reflect arm’s length prices as if sold or transferred
to third parties at the time of inception of the internal contract, which may cover several
years. Transfers of businesses or fixed assets within or between the segments are reported
without recognizing gains or losses. Results of activities not considered part of the
Company’s main operations as well as unallocated revenues, expenses, liabilities and
assets are reported together with Other under the caption Other and intercompany
eliminations.
The following tables include information about the Company’s operating segments.
56
Other/Intercompany eliminations -594 -231 -11 996
Operating profit, OSV segment -1 769 1 334 -68 244
(1) Platform Supply Vessel category and Anchor Handling Tug Supply Vessel category
include Intercompany revenue from contracting work for the 100% owned subsidiary
"Siem Offshore Contractors GmbH" which is included in the Intercompany eliminations
in the table above.
8.8 Auditor
The Company’s auditor is PriceWaterhouseCoopers AS, with registration number 987 009
713 and business address at Dronning Eufemias gate 8, 0191 Oslo, Norway.
PriceWaterhouseCoopers AS is a member of Den Norske Revisorforeningen (The Norwegian
Institute of Public Accountants). PriceWaterhouseCoopers AS has been the Group’s auditor
throughout the period covered by financial information included in the Prospectus.
PriceWaterhouseCoopers AS' audit reports on the annual financial statements for the
Company for 2016 are included in Appendix B. PriceWaterhouseCoopers AS has not
audited, reviewed or produced any report on any other information provided in this
Prospectus.
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9. BOARD OF DIRECTORS, MANAGEMENT, EMPLOYEES AND CORPORATE
GOVERNANCE
As at the date of this Prospectus, the Company's Board of Directors consists of the
following:
Eystein Eriksrud, Kristian Siem and Michael Delouche represent the Company's main
shareholders, Siem Europe S.a r.l., and are not considered as independent. Alexander
Monnas and John C. Wallace are both considered as independent Board Members.
The following serves as the business address for the members of the Board of Directors in
relation to their directorships in the Company:
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Mr. Siem is chairman of Siem Industries Inc., Subsea 7 S.A., and Siem Shipping Inc. and
a director of Flensburger Schiffbau-Gesellschaft mbH & Co. KG, North Atlantic Smaller
Companies Investment Trust plc. and Frupor S.A. Mr. Siem is a Norwegian citizen.
Michael Delouche (born 1957), Board member
Mr. Delouche is the president and the secretary of Siem Industries Inc. and is in charge
of the Company's operations at the registered office in George Town, Cayman Islands.
He is a director of Siem Shipping Inc. and a former director of Subsea 7 Inc. Mr. Delouche
received degrees in civil engineering (structural) and business and was previously an
audit manager with KPMG Peat Marwick LLP. Mr. Delouche is a US citizen.
Alexander Monnas (born 1951), Board member
Mr. Monnas is a non-executive advisor to Daiwa Capital Markets Europe Ltd., and is a
member of the Board risk Committee and the Audit Committee. He is also an advisor on
investment and financial matters in Geneva, and on the board of a private trust company.
He has spent 40 years in the commercial and investment banking industries, starting his
career in 1974 with the UK merchant bank Hill Samuel & Co. Limited and later specialising
in financial markets. He was CEO of Daiwa Securities' European operations from 1994 to
2001, and was a board member of Veripos Inc. from 2012 to 2014. He has a degree in
Chemistry. Mr. Monnas is a British citizen.
John C. Wallace (born 1938), Board member
John C. Wallace is a Chartered Accountant having qualified with PricewaterhouseCoopers
in Canada in 1963, after which he joined Baring Brothers & Co., Limited in London,
England. Prior to his retirement in 2010, he served for over twenty-five years as Chairman
of Fred. Olsen Ltd., a London-based corporation that he joined in 1968 and which
specializes in the business of shipping, renewable energy and property development. He
received his B. Comm degree majoring in Accounting and Economics from McGill
University in 1959. In November 2004, he successfully completed the International
Uniform Certified Public Accountant Qualification Examination and has received a CPA
Certificate from the State of Illinois. Mr. Wallace also retired from the board of directors
of Bonheur ASA, Oslo, a publicly traded shipping company with interests in offshore
energy services and renewable energy. He is a Director of Callon Petroleum Co, USA
where he is Chairman of the Audit Committee. He was inducted as a 2011 Industry
Pioneer by the Offshore Energy Centre in Houston. Mr. Wallace is a Canadian citizen.
9.1.3 Remuneration
The remuneration paid to the members of the Board of Directors (acting in capacity as
board members) in 2016 was USD 407,000.
9.1.4 Shares and options held by members of the Board of Directors
As at the date of this Prospectus, the Chairman Eystein Eriksrud holds 145,000 Shares in
the Company through his wholly owned company Laburnum AS. None of the other
members of the Board of Directors holds any Shares or options for Shares in the
Company.
The main shareholder of the Company, Siem Europe S.a r.l. is controlled by a trust where
certain members of Kristian Siem’s family are potential beneficiaries.
9.2 Management
9.2.1 Overview
The senior management of the Company consists of four individuals. The names of the
members of the Management as at the date of this Prospectus, and their respective
positions, are presented in the table below:
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Name Position Served since
Bernt Omdal Chief Executive Officer May 2017
Dagfinn B. Lie Chief Financial Officer May 2010
Tore Lillestø Chief Operating Officer May 2017
Tore B. Johannessen CHRO/ Senior Vice President HR& May 2012
Organization
The following serves as the business address for the members of Management in relation
to their positions in the Company:
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9.2.3 Remuneration and benefits
The remuneration paid to the members of the Management in 2016 was TUSD 1,558 The
table below sets out salaries and other benefits to the members of the Management in
2016 (all in USD 1,000).
On the 13 January 2013, the Company entered into Share option agreement with selected
employees. The Board of Directors awarded 14,000,000 share options to eight key
employees of the Company. The exercise price is NOK 8.45 per share. The exercise price
of the granted options is equal to the market price of the shares on the date of the grant.
On the 2 April 2014, the Company entered into Share option agreement with selected
employees. The Board of Directors awarded 3,000,000 share options to ten key employees
of the Company. The exercise price is NOK 9.07 per share. The exercise price of the granted
options is equal to the market price of the shares on the date of the grant.
As of the date of this Prospectus, a total of 9,800,000 share options are outstanding in the
Company.
9.3 Directorships and management positions held by the Board Members and
the senior management
The following table sets forth all companies and partnerships in which the members of the
Board of Directors and senior management have been members of the administrative,
management and supervisory bodies in the previous five years (not including subsidiaries
within the Group).
Overview Board Members
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Name of Positions Company or partnership
officer
Kristian Siem Current:
Director Siem Offshore Inc.
Chairman Siem Industries Inc.
Director Frupor S.A
Chairman Siem Shipping Inc.
Chairman Subsea 7 S.A
Director North Atlantic Smaller Companies Investment
Trust plc
Director
Flensburger Schiffbau-Gesellschaft mbH & Co. KG
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Eystein Eriksrud Current:
Chairman Siem Offshore Inc.
Director Subsea 7 S.A
Chairman Electromagnetic Geoservices ASA
Chairman Siem Kapital AS
Chairman Flensburger Schiffbau-Gesellschaft mbH & Co. KG
Director VSK Finance Ltd.
Director VSK Holdings Ltd
Director Ember VRM S.a r.l.
Director Siem Car Carriers AS
Chairman Laburnum AS
Director Siem Europe S.a r.l.
Director Siem Capital UK Ltd.
Director Epistates Ltd.
Director SCC Shipowning II DA
Chairman SCC Shipowning I AS
Director Star Reefers AS
Chairman Venn Partners LLP
Director Siem Oil Service Invest Holding Limited
Director Siem Oil Service Invest Limited
Chairman Seven Yield AS
Chairman Seven Yield 7500 PCTC 1 AS
Chairman Seven Yield 7500 PCTC 2 AS
Chairman Siem Oil Service Invest Norway
Deputy Chief Siem Industries Inc.
Executive Officer
Terminated:
Veripos Inc.
Chairman
Siem WIS AS
Director
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John Wallace Current:
Director Siem Offshore Inc.
Director Callon Petroleum Co.
Director LNG Direct Rail Ltd.
Terminated:
Director Secunda Holdings GP Inc.
Director Secunda Operations GP Inc.
Director Bonheur ASA
Director Fred. Olsen Ltd.
Alexander Current:
Monnas
Director Siem Offshore Inc.
Terminated:
Director Veripos Inc.
Michael Current:
Delouche
Director Siem Offshore Inc.
Director Siem Shipping Inc.
President Siem Industries Inc.
Manager A Siem Europe S.a r.l.
Director Deep Seas Insurance Ltd.
Director VSK Holdings Inc.
Director VSK Finance Inc.
Director Various Cayman Islands subsidiaries of Subsea 7
S.A.
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Overview Senior Management
Terminated:
Senior Vice
President HR &
TTS Energy, division of TTS Group ASA
Organization
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The loans are repayable by the employee when the employee's shares in the Company are
realized or if the employee leaves the Company.
9.7 Audit committee
The following Directors are currently members of the Company’s audit committee:
• John C. Wallace
• Michael Delouche
The agenda for each audit committee meeting is pre-planned to ensure that each aspect
of the committee’s responsibilities is discharged as part of an annual cycle.
• monitor the integrity and clarity of the financial information and of the major financial
statements of the Company, and to review any significant financial reporting issues
and judgments those statements contain;
• approve the annual external audit plan and to review with the external auditors the
nature, scope and results of their audit, and any control issues raised by them;
• review the consistency of and any changes to accounting policies, the application of
appropriate accounting standards, and the methods used to account for significant
or unusual transactions;
• review the Company’s internal controls and systems and practices for the
identification and management of risk; and
• monitor compliance with the Company’s policies to prevent illegal and questionable
corporate conduct and to review arrangements for ‘whistle-blowing’.
The external auditors attend meetings of the committee, other than when their
appointment or performance is being reviewed, and the chief financial officer and members
of the finance function attend as appropriate. It is the intention of the committee to meet
with the auditors in the absence of management at least twice a year.
The external auditors are appointed annually at the annual general meeting. The Board
audit committee considers the reappointment of the auditors and reports its findings to the
Board. The Board audit committee periodically considers the performance, cost and
independence of the external auditors, including a comparison of audit fees with similar
trading companies and reviews the level of service provided by the audit team throughout
the Group.
9.8 Compensation Committee
The Compensation Committee consists of two Directors, Kristian Siem and Eystein
Eriksrud. The mandate of the committee is to review and approve the compensation of the
CEO and any bonuses to all executive personnel.
9.9 Conflicts of interests
The main shareholder of the Company, Siem Europe S.a r.l. is controlled by a trust where
certain members of Kristian Siem’s family are potential beneficiaries. Kristian Siem, who is
a member of the Board of the Company, is also inter alia the chairman of the board of
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directors of Siem Industries Inc. and of Subsea 7 S.A., the charterer of the OSCV "Siem
Stingray". The contract between the Company and Subsea 7 S.A. is made on arm's length
terms.
At the end of 2014 a short term loan of USD 60 million was drawn by the Company under
a credit facility provided by Siem Industries Inc. The short term loan is on market terms.
Except from the above, there are no potential conflicts of interest between the Directors
and members of managements’ duties to the Company and their private interests and
other duties.
9.10 Convictions for fraudulent offences, bankruptcy etc.
None of the members of the Board of Directors or the Management have during the last
five years preceding the date of this Prospectus:
9.11 Employees
9.11.1 Overview
As at the date of this Prospectus, the Group had a total of 1058 employees.
The following table illustrates the number of employees as per the end of each calendar
year for 2016, 2015, 2014 and 2013 and 2012 split by the geographical areas.
Geographical
2016 2015 2014 2013 2012
area
Norway 397 388 333 468 451
Germany 87 76 82 66 21
Holland 57 56 58 54 70
Brazil 201 316 552 514 525
Poland 265 169 9 4 0
Australia 49 2 1 1 0
Ghana 0 2 N/A N/A 5
USA 2 3 3 3 4
India 0 0 0 0 2
Total 1,058 1,012 1,038 1,110 1,078
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with respect to corporate governance. Cayman Islands corporate law is to a great extent
based on English Law. In addition, due to the Company’s listing on the Oslo Stock
Exchange, certain aspects of Norwegian Securities law apply to the Company and there is
a requirement to adhere to the Corporate Governance Code. Due to new provisions
implemented in the Norwegian Accounting Act, compliance with the regulations for
corporate governance reporting is now a legal requirement provided that it does not conflict
with the Cayman Islands laws and regulations. The Company endeavours to maintain high
standards of corporate governance and is committed to ensuring that all shareholders of
the Company are treated equally and the same information is communicated to all
shareholders at the same time. Corporate governance is subject to annual assessment and
review by the Board of Directors.
Code of Conduct
It is the policy of the Company to conduct its business in accordance with all applicable
laws and regulations and in an ethically responsible manner.
The Company’s code of conduct guidelines applies to all directors, officers, hired staff,
temporary employees and employees of the Company.
It enables the Company to continue to operate ethically, honestly and to comply with law.
The Company’s code of conduct guidelines sets out minimum required standards and it is
a line management responsibility to communicate and implement the Company’s code of
conduct guidelines and associated Siem Offshore policies.
The Company has a policy of zero tolerance for corruption and other illegal business means,
and will not accept that our people use improper influence on any individual or entity. Due
to the international nature of our business, we are subject to several anti-corruption laws.
Corruption is a threat to fair business, it undermines legitimate business activities, and any
violation within our organisation will be a threat to our reputation and credibility in the
market.
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10. CORPORATE INFORMATION
The Company and its activities are primarily governed by the Cayman Islands Companies
Law (2016 Revision) and the Company’s Memorandum and Articles of Association. The
Company’s Shares have been created pursuant to the terms of the Company’s
Memorandum and Articles of Association and subject to the Cayman Islands Companies
Law (2016 Revision) pursuant to section 8 and 13. Certain elements of Norwegian
securities law regulations will apply in addition, since the Company’s shares are listed on
the Oslo Stock Exchange.
The Company maintains executive offices in the Cayman Islands at the following address:
The Company’s headquarter and corporate management team is located at the following
address:
The Shares are registered in the Norwegian Central Securities Depository (VPS). The
Company's registrar is Nordea Bank Norge ASA, Oslo, Norway, Middelthunsgate 17, 0368
Oslo, Norway. The Shares carry the ISIN number KYG813131011.
10.3 Share capital and Share capital history
The authorized share capital of the Company is USD 12,500,000 divided into
1,250,000,000 common shares of a nominal value of USD 0.01 each.
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The issued share capital of the Company as of the date of this Prospectus is USD
8,420,213.80 divided into 842,021,380 Shares each with a nominal value of USD 0.01. All
the Shares are validly issued and fully paid.
On 5 May 2017 the Company's annual general meeting resolved to increase the Company's
authorised share capital from USD 10,000,000 divided into 1,000,000,000 Shares with a
nominal value of USD 0.01 each to USD 12,500,000 by the creation of an additional
250,000,000 Shares with a nominal value of USD 0.01 each.
On 12 May 2017 the Company’s board of directors resolved to issue 100,000,000 New
Shares in the Company with a nominal value of USD 0.01 each at a subscription price of
NOK 1.90 per New Shares in connection with the Rights Offering.
Following the Rights Offering, the issued share capital will be USD 9,420,213.80 divided
into 942,021,380 Shares.
There has not been any development in the Company's issued share capital for the periods
covered by the historical financial information included in the Prospectus as Appendix B.
The Board of Directors of Siem Offshore Inc. has authorized the award of 14,000,000 share
options to eight key employees of the Company. The exercise price is NOK 8.45 per share.
The exercise price of the granted options is equal to the market price of the shares on the
date of the grant.
2015: 40% of the total number beginning on January 18th 2015, less any options previously
issued.
2016: 60% of the total number beginning on January 18th 2016, less any options previously
issued.
2017: 80% of the total number beginning on January 18th 2017, less any options previously
issued.
2018: 100% of the total number beginning on June 18th 2018, less any options previously
issued.
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The exercise period shall in no event be later than the date falling 10 years after the award
date.
The group has no legal or constructive obligation to repurchase or settle the options in
cash.
On 2 April 2014, the Company entered into a second Share option agreement with selected
employees. The Board of Directors has authorized the award of 3,000,000 share options
to ten key employees of the Company. The exercise price is NOK 9.07 per share. The
exercise price of the granted options is equal to the market price of the shares on the date
of the grant.
2017: 60% of the total number beginning on 2 April 2017, less any options previously
issued.
2018: 80% of the total number beginning on 2 April 2018, less any options previously
issued.
2019: 100% of the total number beginning on 2 April 2019, less any options previously
issued.
The exercise period shall in no event be later than the date falling 10 years after the award
date.
As stated above in Section 9.2.4 “Long-term incentive program”, a total of 9,800,000 share
options are outstanding in the Company as of the date of this Prospectus.
Except as set out above, neither the Company nor any of its subsidiaries has issued any
options, warrants, convertible loans or other instruments that would entitle a holder of any
such instrument to subscribe for any shares in the Company or its subsidiaries. Further,
neither the Company nor any of its subsidiaries has issued subordinated debt or
transferable securities other than the Shares and the shares in its subsidiaries which will
be held, directly or indirectly, by the Company.
10.8 Dividend policy
The priorities for the use of Company funds are determined by the Board of Directors and
recommendations of Management influenced by existing conditions. At present, priorities
for use of funds in order of importance are repayment of debt, investment opportunities in
the business, and the return of capital to the shareholders in form of share buy-back or
dividends.
The Company paid out NOK 0.10 per Share (approximately NOK 38.8 million in total) in
respect of 2013.
10.9 Shareholders
The table below sets out the top 20 shareholders registered in the VPS as of 22 May 2017:
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Number of shares Share % Name of Shareholder Account Nationality
The Company has one class of Shares, and each Share carries one vote and has equal
rights to dividend. All the Shares are validly issued and fully paid. All of the Company’s
shareholders have equal voting rights.
Siem Europe S.a r.l. currently owns 699,110,008 shares in the Company, equal to 83.03%
of the issued Shares. Siem Europe S.a r.l. is the main shareholder of Siem Offshore Inc.
and is controlled by a trust whose potential beneficiaries include members of Kristian
Siem’s immediate family. Kristian Siem is a Board Member of the Company.
Siem Europe S.a r.l. has underwritten the Rights Offering as further described in Section
13.20, "The Rights Offering—The Underwriting".
The Company is not aware of any agreements that at a later stage may lead to change of
control of the Company.
10.10 The Articles of Association and certain aspects of Cayman Islands law
The Company is an exempted company incorporated with limited liability in the Cayman
Islands. This means that the Company may not trade in the Cayman Islands with any
person, firm or corporation, except in furtherance of the business of the Company carried
on outside of the Cayman Islands.
The Company and its activities are primarily governed by the Companies Law (2016
Revision), the Company's memorandum of association and the Articles of Association. As
the Company is listed on the Oslo Stock Exchange, certain aspects of its activities are
governed by Norwegian law.
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extensive than the articles of association of a Norwegian company. The Articles of
Association deal primarily with the Company's administration, internal regulation and the
distribution of rights and authorities between the shareholders and the directors.
Company objective
General Meeting
Under Cayman Islands law, there is no requirement to hold an annual general meeting.
However, pursuant to the Articles of Association, the Company shall hold annual General
Meetings each year. Any annual General Meeting shall be held at the time and place as
decided by the board of directors.
All General Meetings other than annual General Meetings shall be called extraordinary
General Meetings.
The Annual General Meeting shall be called by the board of directors. Additionally, the
Board of Directors shall, on the requisition of a shareholder or shareholders’ holding in
aggregate no less than 10% of the issued Shares which as at that date carry the right to
vote at the General Meeting, forthwith proceed to convene an extraordinary General
Meeting.
A General Meeting shall be called by not less than 14 clear days notice in writing, except
when consent to a shorter period is given in accordance with the provisions set out in the
Articles of Association. The notice shall specify the time, place, and agenda of the meeting,
particulars of the resolutions to be considered at the meeting and the general nature of
that business to be conducted at the General Meeting. The notice convening a General
Meeting to pass a special resolution shall specify the intention to propose the resolution as
a special resolution.
For all purposes a quorum for a General Meeting is constituted by one or more members
present in person holding not less than one third of the issued shares of the Company.
"Special Resolution" means a resolution passed by a majority of at least two thirds of the
shareholders as, being entitled to do so, vote in person or by proxy, at a General Meeting.
Each of the Shares represents one vote on a poll in a General Meeting. Shareholders may
be represented in person or by proxy.
In the case of an equality of votes the chairman of the meeting shall be entitled to a second
or casting vote.
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Subject to the provisions of the Companies Law (2016 Revision) and the provisions of the
Articles of Association as regards the matters to be dealt with by ordinary resolution, the
Articles of Association may be amended by the passing of a special resolution.
The Companies Law, the Company's memorandum of association and the Articles of
Association draws a distinction between authorised and issued share capital.
The Company’ authorised share capital dictates the maximum number of shares which the
Company is authorised to issue and such information is set out in the Articles of
Association. The authorised share capital of the Company may be increased by the passing
of an ordinary resolution at the General Meeting. The Board of Directors may allot, issue,
grant options over or otherwise dispose of shares to such persons, at such times and on
such other terms as they think proper (subject to the Companies Law (2016 Revision) and
the Articles of Association) without any further consent or approval by the shareholders.
Shareholders in the Company do not have pre-emptive rights in later capital increases.
Capital reductions
A reduction of the share capital is subject to the passing of a special resolution at the
General Meeting. The same majority is required for a reduction of the Company’s capital
redemption reserve fund.
Classes of shares
The Shares are currently not divided into different classes. However, the Articles of
Association establish a right to divide the share capital into different classes of shares with
varied rights attaching to the shares of such different classes. According to the Articles of
Association, modifications in the rights attached to the Shares, such as dividing the shares
into different classes of shares with different rights attached, require the written consent
of at least 2/3 of the holders of the issued shares of that class or the passing of a resolution
passed by a majority of not less than two thirds of the votes cast at a separate meeting of
the holders of the shares of the applicable class.
Purchase of shares
Subject to the Companies Law (2016 Revision), to relevant regulations of any securities
exchange or other system on which the shares of the Company may be listed or otherwise
authorised for trading (an, "Exchange"), and to any rights conferred on the holders of any
class of shares, the Company has the power:
(i) to purchase or otherwise acquire any of its own shares, provided either:
(a) the manner of purchase has first been authorised by the Company
in general meeting;
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(d) such purchases may be effected from time to time, as authorised by
the Company in general meeting at a price per share in excess of
the Average Market Price, provided that: the shares to be purchased
shall be in blocks consisting of a number equal to or greater than
five per cent. of the number of shares then outstanding and the price
to be paid therefore shall have been found to be fair in a written
opinion of independent investment bankers who have been selected
for the purpose by a disinterested committee of Directors; or
provided that, the Company shall not, in any 12-month period, purchase in
aggregate more than such number of shares as shall be equal to 10 per
cent of the lowest number of shares in issue during such period except to
the extent authorised by special resolution;
Transfer of shares
The Shares are generally freely transferable and there are no restrictions on trading in the
Shares. The Shares are registered in the VPS, and are tradable in the same manner as
other VPS registered shares.
The Board of Directors may, however, in its absolute discretion, refuse to register a transfer
of any shares which are not fully paid up or on which the Company has a lien. In accordance
with the Articles of Association, the board of directors shall decline to register the transfer
of any share to a person where the board of directors is of the opinion that such transfer
might breach any law or requirement of any authority or any approved stock exchange
until it has received such evidence as it may require satisfying itself that no such breach
would occur.
Dividends
Subject to the Companies Law (2016 Revision) and the Articles of Association, the Board
of Directors may declare dividends and distributions on the Company’s issued Shares and
authorise payment of the same out of the funds which are lawfully available. Dividends or
75
distributions are payable only out of the profits, realised or unrealised, or out of the share
premium account or as otherwise permitted by law. Each of the Shares carries equal rights
to dividend and equal rights to any surplus in the event of liquidation. The Shares will be
eligible for any dividends being declared and paid immediately upon the share issue. A
Share will be deemed to be issued at the time that the Company's register of shareholders
is updated to reflect such issue and the details of the applicable shareholder.
The Articles of Association provide that the Company may deduct from any dividend or
distribution payable to any shareholder all sums of money (if any) presently payable by
him to the Company on account of calls or otherwise.
The Companies Law (2016 Revision) and the Articles of Association do not provide for any
time limit after which entitlement to dividends lapses. Subject to various exceptions,
Cayman Islands law provides a limitation period of three years from the date on which an
obligation is due.
Any future payments of dividends on the Shares will be denominated in NOK, and will be
paid to the shareholders through the VPS.
Board of directors
According to the Articles of Association, the Board of Directors shall consist of not less than
three or more than seven persons (exclusive of alternate directors). The Company may,
by ordinary resolution, increase or reduce the limits in the number of directors and may
appoint and remove any director from the Board of Directors.
A resolution in writing (in one or more counterparts) signed by each and every one of the
Directors or all the members of a committee of the Directors shall be as valid and effectual
as if it had been passed at a meeting of the Directors, or committee of Directors as the
case may be, duly convened and held.
Subject to limitations in the Companies Law (2016 Revision), the Articles of Association
and any direction given by special resolution by the General Meeting, the business of the
Company shall be managed by the board of directors who may exercise all the powers of
the Company.
A duly convened meeting of the Board of Directors at which a quorum is presented may
exercise all powers exercisable by the Board of Directors. The Board of Directors has full
power to charge any of the Company’ assets and to borrow money without any sanction
by the members at a General Meeting.
The Board of Directors may, by power of attorney or otherwise, appoint a company, firm,
person or body of persons to be the attorney or authorised signatory of the Company for
such purposes and with such powers, authorities and discretions as the Board of Directors
thinks fit, provided however that this does not exceed the powers vested in the Board of
Directors by the Articles of Association. The Board of Directors may also authorise any
attorney or authorised signatory to sub-delegate any or all powers, authorities and
discretions vested in him.
Furthermore, the Board of Directors may delegate any of its powers, authorities and
discretions, including the power to sub-delegate, to any committees consisting of one or
more directors. Every committee so formed shall conform to any regulations that may from
time to time be imposed upon it by the Board of Directors.
Directors’ interests
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A Director may be engaged by the Company for the purpose of performing services which
go beyond his ordinary duties as a director, but he may not be the auditor of the Company.
The director performing such services for the Company is entitled to such extra
remuneration as the board of directors may decide.
A Director or a company owned by him may also enter into commercial agreements with
the Company provided that the relevant Director declares his interest in such contract at
the board meeting where the contract is first considered. Subject to the provisions of the
Articles of Association, a Director (or his alternate director in his absence) shall be at liberty
to vote in respect of any contract or transaction in which he is interested provided that the
nature of the interest of any director or alternate director in any such contract or
transaction shall be disclosed by him at or prior to its consideration and any vote thereon.
The management of the business of the Company is vested in the Board of Directors, whom
may establish any committees or any person to be manager or agent for the Company’
affairs. Furthermore, the Board of Directors may appoint a secretary for such term, at such
remuneration and upon such conditions as it may think fit, and any secretary so appointed
may be removed by the Board of Directors.
Annual accounts
According to the Articles of Association, the financial year shall end on 31 December and
begin on 1 January in each year, unless otherwise prescribed by the Board of Directors.
The auditor shall audit the profit and loss account and the balance sheet of the Company
and shall prepare a report which shall be laid before the shareholders at the annual General
Meeting each year. The auditor’s report shall be open for inspection by any shareholder.
Winding up
The Companies Law (2016 Revision) of the Cayman Islands allow for schemes of
arrangement. A scheme of arrangement is a flexible form of corporate restructuring and
involves a range of transactions aimed to reorganise Cayman Islands companies. The
schemes may be effected by a court-supervised scheme if an amalgamation or
reconstruction is required or schemes of arrangement can be put in place either between a
company and its shareholders in various forms, including takeovers, spin-offs,
amalgamations, mergers, de-mergers, re-domicilings, restating net asset values, de-
mutualisations, and/or between a company and its creditors, also in various forms such as
debt-for-debt, debt-for-equity and debt-for-assets swaps, and the re-organisations of
options and warrants.
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A scheme is a collective procedure. It operates both as a contract and a court order and
has statutory effect. Provided the necessary majorities are obtained, the terms of a scheme
become binding on all members of shareholders/creditors of the company, whether or not
they (i) received notice of the scheme; (ii) voted at the meeting; (iii) voted for or against
the scheme; and (iv) changed their minds afterwards. The range of possible objections
that can be raised is very narrow. Dissenting shareholders have no statutory rights in any
scheme, however, if such rights are thought desirable then the terms of the scheme itself
may make such provision. The required majority is a super-majority of each class of
members voting at the meeting (present in person or by proxy) being: 50% + one in
number (i.e. a headcount vote); and 75% in value (i.e. the number of shares voted).
Where a notice has been given by the transferee company and the Grand Court of the
Cayman Islands has not, on an application made by the dissenting shareholder, ordered to
the contrary, the transferee company shall, on the expiration of one month from the date
on which the notice has been given or, if an application to the Grand Court of the Cayman
Islands by the dissenting shareholder is then pending, after that application has been
disposed of, transmit a copy of the notice to the transferor company and pay or transfer
to the transferor company the amount or other consideration representing the price
payable by the transferee company for the shares which that company is entitled to
acquire, and the transferor company shall thereupon register the transferee company as
the holder of those shares.
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11. SECURITIES TRADING IN NORWAY
This Section 11 includes certain aspects of rules pertaining to securities trading in Norway
in a Norwegian incorporated company pursuant to Norwegian legislation, but is however
not a full or complete description of the matters described herein. The following summary
does not purport to be a comprehensive description of all the legal considerations that may
be relevant to a decision to purchase, own or dispose of Shares. Investors are advised to
consult their own legal advisors concerning the overall legal consequences of their
ownership of Shares.
11.1 Introduction
Oslo Børs was established in 1819 and is the principal market in which shares, bonds and
other financial instruments are traded in Norway. Oslo Børs is operated by Oslo Børs ASA,
which also operates the regulated marketplace Oslo Axess.
Oslo Børs has entered into a strategic cooperation with the London Stock Exchange group
with regards to, inter alia, trading systems for equities, fixed income and derivatives.
11.2 Trading and settlement
Trading of equities on Oslo Børs is carried out in the electronic trading system Millenium
Exchange. This trading system was developed by the London Stock Exchange and is in use
by all markets operated by the London Stock Exchange as well as by the Borsa Italiana
and the Johannesburg Stock Exchange.
Official trading on Oslo Børs takes place between 09:00 hours (CET) and 16:20 hours (CET)
each trading day, with pre-trade period between 08:15 hours (CET) and 09:00 hours (CET),
closing auction from 16:20 hours (CET) to 16:25 hours (CET) and a post-trade period from
16:25 hours (CET) to 17:30 hours (CET). Reporting of after exchange trades can be done
until 17:30 hours (CET).
The settlement period for trading on Oslo Børs is two trading days (T+2). This means that
securities will be settled on the investor’s account in the VPS two days after the transaction,
and that the seller will receive payment after two days.
Oslo Clearing ASA, a wholly-owned subsidiary SIX x-clear Ltd, a company in the Six Group,
has a license from the Norwegian FSA to act as a central clearing service, and has since
18 June 2010 offered clearing and counterparty services for equity trading on Oslo Børs.
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11.3 Information, control and surveillance
Under Norwegian law, Oslo Børs is required to perform a number of surveillance and control
functions. The Surveillance and Corporate Control unit of Oslo Børs monitors market
activity on a continuous basis. Market surveillance systems are largely automated,
promptly warning department personnel of abnormal market developments.
The Norwegian FSA controls the issuance of securities in both the equity and bond markets
in Norway and evaluates whether the issuance documentation contains the required
information and whether it would otherwise be unlawful to carry out the issuance. Under
Norwegian law, a company that is listed on a Norwegian regulated market, or has applied
for listing on such market, must promptly release any inside information directly
concerning the company (i.e. precise information about financial instruments, the issuer
thereof or other matters which are likely to have a significant effect on the price of the
relevant financial instruments or related financial instruments, and which are not publicly
available or commonly known in the market). A company may, however, delay the release
of such information in order not to prejudice its legitimate interests, provided that it is able
to ensure the confidentiality of the information and that the delayed release would not be
likely to mislead the public. Oslo Børs may levy fines on companies violating these
requirements.
11.4 The VPS and transfer of Shares
The Company's shareholder register is operated through the VPS. The VPS is the Norwegian
paperless centralised securities register. It is a computerised bookkeeping system in which
the ownership of, and all transactions relating to, Norwegian listed shares must be
recorded. All transactions relating to securities registered with the VPS are made through
computerised book entries. No physical share certificates are, or may be, issued. The VPS
confirms each entry by sending a transcript to the registered shareholder irrespective of
any beneficial ownership. To give effect to such entries, the individual shareholder must
establish a share account with a Norwegian account agent. Norwegian banks, authorised
securities brokers in Norway and Norwegian branches of credit institutions established
within the EEA are allowed to act as account agents.
The entry of a transaction in the VPS is generally prima facie evidence in determining the
legal rights of parties as against the issuing company or any third party claiming an interest
in the given security.
The VPS is liable for any loss suffered as a result of faulty registration or an amendment
to, or deletion of, rights in respect of registered securities unless the error is caused by
matters outside the VPS’ control which the VPS could not reasonably be expected to avoid
or overcome the consequences of. Damages payable by the VPS may, however, be reduced
in the event of contributory negligence by the aggrieved party.
The VPS must provide information to the Norwegian FSA on an on-going basis, as well as
any information that the Norwegian FSA requests. Further, Norwegian tax authorities may
require certain information from the VPS regarding any individual’s holdings of securities,
including information about dividends and interest payments.
11.5 Foreign investment in shares listed in Norway
Foreign investors may trade shares listed on Oslo Børs through any broker that is a member
of Oslo Børs, whether Norwegian or foreign.
11.6 Disclosure obligations
If a person's, entity's or consolidated group's proportion of the total issued shares and/or
rights to shares in an issuer with its shares listed on a regulated market in Norway (with
Norway as its home state, which will be the case for the Company) reaches, exceeds or
falls below the respective thresholds of 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 or 90%
of the share capital or the voting rights of that issuer, the person, entity or group in
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question has an obligation under the Norwegian Securities Trading Act to notify Oslo Børs
and the issuer immediately. The same applies if the disclosure thresholds are passed due
to other circumstances, such as a change in the Company's share capital.
11.7 Insider trading
According to Norwegian law, subscription for, purchase, sale or exchange of financial
instruments that are listed, or subject to the application for listing, on a Norwegian
regulated market, or incitement to such dispositions, must not be undertaken by anyone
who has inside information, as defined in section 3-2 of the Norwegian Securities Trading
Act. The same applies to the entry into, purchase, sale or exchange of options or
futures/forward contracts or equivalent rights whose value is connected to such financial
instruments or incitement to such dispositions.
11.8 Mandatory offer requirement
The Norwegian Securities Trading Act requires any person, entity or consolidated group
that becomes the owner of shares representing more than one-third of the voting rights of
a Norwegian issuer with its shares listed on a Norwegian regulated market to, within four
weeks, make an unconditional general offer for the purchase of the remaining shares in
that issuer. A mandatory offer obligation may also be triggered where a party acquires the
right to become the owner of shares that, together with the party's own shareholding,
represent more than one-third of the voting rights in the issuer and Oslo Børs decides that
this is regarded as an effective acquisition of the shares in question.
The mandatory offer obligation ceases to apply if the person, entity or consolidated group
sells the portion of the shares that exceeds the relevant threshold within four weeks of the
date on which the mandatory offer obligation was triggered.
When a mandatory offer obligation is triggered, the person subject to the obligation is
required to immediately notify Oslo Børs and the issuer in question accordingly. The
notification is required to state whether an offer will be made to acquire the remaining
shares in the issuer or whether a sale will take place. As a rule, a notification to the effect
that an offer will be made cannot be retracted. The offer is subject to approval by Oslo
Børs before the offer is submitted to the shareholders or made public.
The offer price per share must be at least as high as the highest price paid or agreed to be
paid by the offeror for the shares in the six-month period prior to the date the threshold
was exceeded. If the acquirer acquires or agrees to acquire additional shares at a higher
price prior to the expiration of the mandatory offer period, the acquirer is required to
restate its offer at such higher price. A mandatory offer must be in cash or contain a cash
alternative at least equivalent to any other consideration offered.
In case of failure to make a mandatory offer or to sell the portion of the shares that exceeds
the relevant mandatory offer threshold within four weeks, Oslo Børs may force the acquirer
to sell the shares exceeding the threshold by public auction. Moreover, a shareholder who
fails to make an offer may not, as long as the mandatory offer obligation remains in
unfulfilled, exercise rights in the issuer, such as voting on shares at general meetings of
the issuer's shareholders, without the consent of a majority of the remaining shareholders.
The shareholder may, however, exercise its rights to dividends and pre-emption rights in
the event of a share capital increase. If the shareholder neglects his duty to make a
mandatory offer, Oslo Børs may impose a cumulative daily fine that accrues until the
circumstance has been rectified.
Any person, entity or consolidated group that owns shares representing more than one-
third of the votes in a Norwegian issuer with its shares listed on a Norwegian regulated
market is required to make an offer to purchase the remaining shares of the issuer
(repeated offer obligation) if the person, entity or consolidated group through acquisition
becomes the owner of shares representing 40% or more of the votes in the issuer. The
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same applies correspondingly if the person, entity or consolidated group through
acquisition becomes the owner of shares representing 50% or more of the votes in the
issuer. The mandatory offer obligation ceases to apply if the person, entity or consolidated
group sells the portion of the shares which exceeds the relevant threshold within four
weeks of the date on which the mandatory offer obligation was triggered.
Any person, entity or consolidated group that has passed any of the above mentioned
thresholds in such a way as not to trigger the mandatory bid obligation, and has therefore
not previously made an offer for the remaining shares in the company in accordance with
the mandatory offer rules is, as a main rule, required to make a mandatory offer in the
event of a subsequent acquisition of shares in the company.
11.9 Foreign exchange controls
There are currently no foreign exchange control restrictions in Norway that would
potentially restrict the payment of dividends to a shareholder outside Norway, and there
are currently no restrictions that would affect the right of shareholders of a Norwegian
issuer who are not residents in Norway to dispose of their shares and receive the proceeds
from a disposal outside Norway. There is no maximum transferable amount either to or
from Norway, although transferring banks are required to submit reports on foreign
currency exchange transactions into and out of Norway into a central data register
maintained by the Norwegian customs and excise authorities. The Norwegian police, tax
authorities, customs and excise authorities, the National Insurance Administration and the
Norwegian FSA have electronic access to the data in this register.
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12. TAXATION
The summary is based on applicable Norwegian laws, rules and regulations as they exist
in force as of the date of this Prospectus. Such laws, rules and regulations may be subject
to changes after this date, possibly on a retroactive basis for the same tax year. The
summary is of a general nature and does not purport to be a comprehensive description of
all the tax considerations that may be relevant to the Shareholders and does not address
foreign tax laws.
As will be evident from the description, the taxation will differ depending on whether the
investor is a limited liability company or a natural person
Please note that special rules apply for shareholders that cease to be tax resident in Norway
or that for some reason are no longer considered taxable to Norway in relation to their
shareholding.
Each Shareholder should consult with and rely upon their own tax advisor to determine the
particular tax consequences for him or her and the applicability and effect of any Norwegian
or foreign tax laws and possible changes in such laws.
For the purpose of the summary below, a reference to a Norwegian or foreign shareholder
or company refers to tax residency rather than nationality.
However, Norwegian Shareholders who are corporations that fall within the scope of the
exemption method and have an ownership stake in excess of 90% of the limited liability
company, is not taxed upon the receipt of dividends from this company.
The repayment of paid-up share capital and paid-up share premium of each share is not
regarded as dividend for tax purposes and thus not subject to tax.
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treasury bills (Norwegian: "statskasseveksler") with three months maturity. The
Directorate of Taxes announces the risk free-interest rate in January the year after the
income year. The risk-free interest rate for 2016, was 0.4%. The risk free interest rate for
2017 will be published mid January 2018.
The allowance is allocated to the Norwegian Shareholder owning the share on 31 December
in the relevant income year. Norwegian Shareholders who are natural persons and who
transfer shares during an income year will thus not be entitled to deduct any calculated
allowance related to the year of transfer. Any part of the calculated allowance one year
exceeding dividend distributed on the same share ("excess allowance") can be carried
forward and set off against future dividends received on, or capital gains upon realization
of the same share. Furthermore, excess allowance can be added to the cost price of the
share and included in basis for calculating the allowance on the same share the following
year.
The repayment of paid-up share capital and paid-up share premium of each share is not
regarded as dividend for tax purposes and thus not subject to tax. Such repayment will
lead to a reduction of the tax input value of the shares corresponding to the repayment.
Non-Norwegian Shareholders who are exempt from withholding tax and Shareholders who
have been subject to a higher withholding tax than applicable in the relevant tax treaty,
may apply to the Norwegian tax authorities for a refund of the excess withholding tax. The
application is to be filed with COFTA.
Non-Norwegian Shareholders should consult their own advisers regarding the availability
of treaty benefits in respect of dividend payments, including the ability to effectively claim
refunds of withholding tax.
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shall pay the lesser amount of (i) withholding tax according to the rate in an applicable tax
treaty or (ii) withholding tax at 25% of taxable dividends after deduction for the tax free
allowance. Non-Norwegian Shareholders being natural persons resident within the EEA
may carry forward any unused allowance, if the allowance exceeds the dividends.
Non-Norwegian Shareholders that are corporations tax-resident within the EEA for tax
purposes are exempt from Norwegian tax on dividends distributed from Norwegian limited
liability companies, provided that the Non-Norwegian Shareholder in fact is genuinely
established within the EEA and performs real economic activity there.
12.2 Taxation upon realization of shares
12.2.1 Norwegian Shareholders being corporations
Norwegian Shareholders being corporations are generally exempt from tax on capital gains
upon the realization of shares in Norwegian limited liability companies in accordance with
the Norwegian exemption method. Losses upon the realization and costs incurred in
connection with the purchase and realization of such shares are not deductible for tax
purposes.
The taxable gain or loss is calculated per share as the difference between the consideration
received and the cost price of the share, including any costs incurred in relation to the
acquisition or realization of the share. Any unused allowance on a share (ref. above) may
be set off against capital gains related to the realization of the same share, but may not
lead to or increase a deductible loss i.e. any unused allowance exceeding the capital gain
upon the realization of the share will be lost. Furthermore, unused allowance may not be
set of against gains from realization of other shares.
If a Shareholder disposes of shares acquired at different times, the shares that were first
acquired will be deemed as first sold (the FIFO-principle) when calculating a taxable gain
or loss.
(i) the shares are effectively connected with business activities carried out in or
managed from Norway (in which case capital gains will generally be subject to the
same taxation as that of Norwegian Shareholders, cf. the description of tax issues
related to Norwegian Shareholders above), or
(ii) the shares are held by a natural person who has been a resident of Norway for tax
purposes with unsettled/postponed exit tax calculated on the shares at the time of
cessation as Norwegian tax resident.
12.3 Net wealth tax
Norwegian Shareholders being limited liability companies and certain similar entities are
exempt from Norwegian net wealth tax.
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For other Norwegian Shareholders (i.e. Shareholders who are natural persons), the shares
will form part of the basis for the calculation of net wealth tax. The current marginal net
wealth tax rate is 0.85% of taxable values (subject to a basic allowance).
Listed shares are valued at 100% of their quoted value on 1 January in the assessment
year (the year following the relevant income year).
12.4 Inheritance tax
Norway does not impose inheritance tax on assignment of shares by way of inheritance or
gift. If any shares of the Company are assigned by way of inheritance or gift, the tax input
value of such shares on the part of the originator of such inheritance or gift will be
attributed to the recipient of said inheritance or gift (based on continuity). Thus, the heir
will, upon realization of the shares, be taxable for any increase in value in the donor's
ownership. However, the principles of continuity only apply if the donor was taxable into
Norway. In the case of gifts distributed to other persons than heirs according to law or
testament, the recipient will be able to revalue the received shares to market value. The
same apply if the recipient receives shares from a foreign donor and the assets are included
in the Norwegian tax jurisdiction.
12.5 Stamp duty
There is currently no Norwegian stamp duty or transfer tax on the transfer or issuance of
shares.
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13. THE RIGHTS OFFERING
13.1 Overview
The Rights Offering consists of an offer by the Company to issue 100,000,000 New Shares
at a Subscription Price of NOK 1.90 per New Share, thereby raising gross proceeds of
approximately NOK 190 million.
The Company intends to use the net proceeds for working capital purposes and some minor
capital investments and to serve interest and instalments on its debt in accordance with
its repayment schedules and thereby continue to reduce the Company's debt leverage.
The largest shareholder of the Company, Siem Europe S.a r.l., has entered into an
underwriting agreement with the Company, whereby it will subscribe for any New Shares
not otherwise subscribed for in the Rights Offering. See Section 13.20, "The Underwriting"
for more details.
No action will be taken to permit a public offering of the New Shares in any jurisdiction
outside of Norway.
On 12 May 2017, the Board of Directors passed the following resolution to issue New Shares
in connection with the Rights Offering:
Pursuant to the Rights Issue, the Company will offer 100,000,000 new Common
Shares in the Company (the "New Shares") with a nominal value of USD 0.01
each, at a subscription price of NOK 1.90 per New Share (the "Subscription
Price"). It was also noted that holders of the Company’s shares registered in the
Norwegian Central Securities Depository as of 22 May 2017 (the "Existing
Shareholders") are being granted transferable subscription rights (the
"Subscription Rights") that, subject to applicable law, provide preferential rights
to subscribe for and be allocated New Shares at the Subscription Price.
The Rights Issue will be fully underwritten by Siem Europe S.a r.l. (the
“Underwriter”) pursuant to a separate underwriting agreement to be entered into
between the Company and the Underwriter (the “Underwriting Agreement”). The
draft of the Underwriting Agreement has been separately considered and approved
by John Wallace and Alexander Monnas acting in their respective capacities as
Independent Directors and, further, the Independent Directors recommended that
the full Board of Directors accept their approval and grant authorization for the
execution of the Underwriting Agreement.
Each Existing Shareholder will be granted 0.1187 Subscription Rights for each
Common Share registered as held by such Existing Shareholder in the capital of the
Company as of 22 May 2017 (the "Record Date"). Further, each Subscription Right
will give the right to subscribe for and be allocated one New Share.
The Company has proposed that the subscription period in respect of the Rights
Issue shall commence on 29 May 2017 and expire at 16:30 hours, Central European
Time ("CET"), on 9 June 2017 (the "Subscription Period"). If the Prospectus is
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approved in time for the Subscription Period to commence on 29 May 2017, the
Subscription Period shall commence on the second trading day following approval
of the Prospectus and end at 16:30 CET on the 14th day thereafter. Any New Shares
which shall be subscribed for by the Underwriter shall be subscribed for within two
trading days after expiry of the Subscription Period.
The Subscription Rights will be listed and tradable on the Oslo Børs (the "Oslo
Stock Exchange") under the ticker symbol SIOFF T from 29 May 2017 until the
end of trading on the Oslo Stock Exchange on 7 June 2017, subject to postponement
if the Subscription Period is postponed as noted above.
The allocation of New Shares shall be made by the Directors and that the following
allocation criteria shall apply:
(i) the allocation will be made to subscribers on the basis of granted and acquired
Subscription Rights which have been validly exercised during the Subscription
Period. Each Subscription Right will give the right to subscribe for and be
allocated 1 New Share;
(ii) if not all Subscription Rights are validly exercised in the Subscription Period,
subscribers having exercised their Subscription Rights and who have over-
subscribed will have the right to be allocated the remaining New Shares pro rata
based on the number of Subscription Rights exercised by the subscriber. In the
event that pro rata allocation is not possible, the Company will determine the
allocation by lot drawing;
(iii) any remaining New Shares not allocated pursuant to the criteria in items (i)
and (ii) above, will be allocated to subscribers not holding Subscription Rights.
Allocation will be made pro rata based on the respective subscription amounts,
provided, however, that such allocation may be rounded down; and
(iv) if the subscription amount of approximately NOK 190 million has not been
subscribed and allocated pursuant to the criteria in items (i), (ii) and (iii) above,
the outstanding amount will be subscribed by and allocated to the Underwriter.
The Underwriter will receive a guarantee commission of 1% on the guaranteed
amount.
The due date for payment of the New Shares is 16 June 2017 or the third trading
day on Oslo Børs after expiry of the Subscription Period if the Subscription Period is
postponed as noted above.
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Offering is fully subscribed, the Underwriting Agreement remaining in full force and effect.
Please refer to Section 13.20 "—The Underwriting" below for a description of the
underwriting and the Underwriting Agreement and the Shareholder Commitments,
including the conditions and termination rights to which the underwriting is subject.
If it becomes clear that the above conditions will not be fulfilled, the Rights Offering will be
withdrawn. If the Rights Offering is withdrawn, all Subscription Rights will lapse without
value, any subscriptions for, and allocations of, New Shares that have been made will be
disregarded and any payments for New Shares made will be returned to the subscribers
without interest or any other compensation. The lapsing of Subscription Rights shall be
without prejudice to the validity of any trades in Subscription Rights, and investors will not
receive any refund or compensation in respect of Subscription Rights purchased in the
market.
13.4 Timetable
The timetable set out below provides certain indicative key dates for the Rights Offering:
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Provided that the delivery of traded Shares is made with ordinary T+2 settlement in the
VPS, Shares that are acquired until and including 19 May 2017 will give the right to receive
Subscription Rights, whereas Shares that are acquired from and including 22 May 2017
will not give the right to receive Subscription Rights.
The Subscription Rights will be credited to and registered on each Existing Shareholder’s
VPS account on or about 23 May 2017 under the International Securities Identification
Number (ISIN) KYG812291170. The Subscription Rights will be distributed free of charge
to Existing Shareholders.
The Subscription Rights may be used to subscribe for New Shares in the Rights Offering
before the expiry of the Subscription Period on 12 June 2017 at 16:30 hours (CET) or be
sold before the end of trading on the Oslo Stock Exchange on 8 June 2017. Acquired
Subscription Rights will give the same right to subscribe for and be allocated New Shares
as Subscription Rights held by Existing Shareholders on the basis of their shareholdings on
the Record Date.
The Subscription Rights, including acquired Subscription Rights, must be used to subscribe
for New Shares before the end of the Subscription Period (i.e., 12 June 2017 at 16:30
hours (CET)) or be sold before the end of trading on the Oslo Stock Exchange on 8 June
2017. Subscription Rights which are not sold before the end of trading on the Oslo Stock
Exchange on 8 June 2017 or exercised before 12 June 2017 at 16:30 hours (CET) will have
no value and will lapse without compensation to the holder. Holders of Subscription Rights
(whether granted or acquired) should note that subscriptions for New Shares must be made
in accordance with the procedures set out in this Prospectus.
The Company will instruct the Manager to, as far as possible, withdraw the Subscription
Rights from such Ineligible Shareholders’ VPS accounts, and, as far as commercially
reasonable, sell them from and including 30 May 2017 until the end of trading on the Oslo
Stock Exchange on 8 June 2017 for the account and risk of such Ineligible Shareholders,
unless the relevant Subscription Rights are held through a financial intermediary.
The Manager will use commercially reasonable efforts to procure that the Subscription
Rights withdrawn from the VPS accounts of Ineligible Shareholders (and that are not held
through financial intermediaries) are sold on behalf of, and for the benefit of, such Ineligible
Shareholders during said period, provided that (i) the Manager is able to sell the
Subscription Rights at a price at least equal to the anticipated costs (including costs relating
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to "know your customer checks" under applicable legislation) related to the sale of such
Subscription Rights, (ii) the relevant Ineligible Shareholder has not by 16:30 hours (CET)
on 7 June 2017 documented to the Company through the Manager a right to receive the
Subscription Rights withdrawn from its VPS account, in which case the Manager shall re-
credit the withdrawn Subscription Rights to the VPS account of the relevant Ineligible
Shareholder, and (iii) that the net proceeds (after taking into account of costs as referred
to in (i) above) from the sale are likely to exceed NOK 500.
The proceeds from the sale of the Subscription Rights (if any), after deduction of customary
sales expenses, will be credited to the Ineligible Shareholder’s bank account registered in
the VPS for payment of dividends, provided that the net proceeds attributable to such
Ineligible Shareholder amount to or exceed NOK 500. If an Ineligible Shareholder does not
have a bank account registered in the VPS, the Ineligible Shareholder must contact the
Manager to claim the proceeds. If the net proceeds attributable to an Ineligible Shareholder
are less than NOK 500, such amount will be retained for the benefit of the Company. There
can be no assurance that the Manager will be able to withdraw and/or sell the Subscription
Rights at a profit or at all. Other than as explicitly stated above, neither the Company nor
the Manager will conduct any sale of Subscription Rights not utilised before the end of the
Subscription Period.
The Subscription Rights will hence only be tradable during part of the
Subscription Period.
Persons intending to trade in Subscription Rights should be aware that the exercise of
Subscription Rights by holders who are located in jurisdictions outside Norway may be
restricted or prohibited by applicable securities laws. Please refer to Section 14, "Selling
and transfer restrictions" for a description of such restrictions and prohibitions.
Existing Shareholders will receive Subscription Forms that include information about the
number of Subscription Rights allocated to the Existing Shareholder and certain other
matters relating to the shareholding.
Subscriptions for New Shares by subscribers who are not Existing Shareholders must be
made on a Subscription Form in the form included in Annex 2 "Form of Subscription Form".
Existing Shareholders may also choose to use such a Subscription Form.
Correctly completed Subscription Forms must be received by the Manager no later than
16:30 hours (CET) 12 June 2017 at the following addresses or fax numbers:
Swedbank Norway
Filipstad Brygge 1
P.O. Box 1441 Vika
91
N-0115 Oslo
Norway
Tel.: +47 23 23 80 00
Fax: +47 23 23 80 11
www.swedbank.no
emisjon@swedbank.no
Subscribers who are residents of Norway with a Norwegian personal identification number
(Nw. personnummer) are encouraged to subscribe for New Shares through the VPS online
subscription system (or by following the links on www.swedbank.no which will redirect the
subscriber to the VPS online subscription system).
Neither the Company nor the Manager may be held responsible for postal delays,
unavailable fax lines, internet lines or servers or other logistical or technical problems that
may result in subscriptions not being received in time or at all by the Manager. Subscription
Forms received after the end of the Subscription Period and/or incomplete or incorrect
Subscription Forms and any subscription that may be unlawful may be disregarded at the
sole discretion of the Company and/or the Manager without notice to the subscriber.
Subscriptions are binding and irrevocable, and cannot be withdrawn, cancelled or modified
by the subscriber after having been received by the Manager. The subscriber is responsible
for the correctness of the information filled into the Subscription Form. By signing and
submitting a Subscription Form, the subscribers confirm and warrant that they have read
this Prospectus and are eligible to subscribe for New Shares under the terms set forth
herein.
There is no minimum subscription amount for which subscriptions in the Rights Offering
must be made. Oversubscription (i.e., subscription for more New Shares than the number
of Subscription Rights held by the subscriber entitles the subscriber to be allocated) and
subscription without Subscription Rights will be permitted. However, in each case there
can be no assurance that New Shares will be allocated for such subscriptions.
Multiple subscriptions (i.e., subscriptions on more than one Subscription Form) are allowed.
Please note, however, that two separate Subscription Forms submitted by the same
subscriber with the same number of New Shares subscribed for on both Subscription Forms
will only be counted once unless otherwise explicitly stated in one of the Subscription
Forms. In the case of multiple subscriptions through the VPS online subscription system or
subscriptions made both on a Subscription Form and through the VPS online subscription
system, all subscriptions will be counted.
13.11 Mandatory Anti-Money Laundering Procedures
The Rights Offering is subject to the Norwegian Money Laundering Act No. 11 of 6 March
2009 and the Norwegian Money Laundering Regulations No. 302 of 13 March 2009
(collectively the "Anti-Money Laundering Legislation").
Subscribers who are not registered as existing customers of the Manager must verify their
identity to the Manager in accordance with requirements of the Anti-Money Laundering
Legislation, unless an exemption is available. Subscribers who have designated an existing
Norwegian bank account and an existing VPS account on the Subscription Form are
exempted, unless verification of identity is requested by the Manager. Subscribers who
have not completed the required verification of identity prior to the expiry of the
Subscription Period will not be allocated New Shares.
Furthermore, participation in the Rights Offering is conditional upon the subscriber holding
a VPS account. The VPS account number must be stated in the Subscription Form. VPS
accounts can be established with authorised VPS registrars, who can be Norwegian banks,
authorised securities brokers in Norway and Norwegian branches of credit institutions
92
established within the EEA. However, non-Norwegian investors may use nominee VPS
accounts registered in the name of a nominee. The nominee must be authorised by the
NFSA. Establishment of a VPS account requires verification of identification to the VPS
registrar in accordance with the Anti-Money Laundering Legislation.
13.12 Financial Intermediaries
All persons or entities holding Shares or Subscription Rights through financial
intermediaries (i.e., brokers, custodians and nominees) should read this Section 13.12. All
questions concerning the timeliness, validity and form of instructions to a financial
intermediary in relation to the exercise, sale or purchase of Subscription Rights should be
determined by the financial intermediary in accordance with its usual customer relations
procedure or as it otherwise notifies each beneficial shareholder.
The Company is not liable for any action or failure to act by a financial intermediary through
which Shares are held.
Existing Shareholders who hold their Shares through a financial intermediary and who are
Ineligible Shareholders will not be entitled to exercise their Subscription Rights but may,
subject to applicable law, instruct their financial intermediaries to sell their Subscription
Rights transferred to the financial intermediary. As described in Section 13.8, "—
Subscription Rights", neither the Company nor the Manager will sell any Subscription Rights
transferred to financial intermediaries.
13.12.3 Subscription
Any Existing Shareholder who is not an Ineligible Shareholder and who holds its
Subscription Rights through a financial intermediary and wishes to exercise its Subscription
Rights, should instruct its financial intermediary in accordance with the instructions
received from such financial intermediary. The financial intermediary will be responsible
for collecting exercise instructions from the Existing Shareholders and for informing the
Manager of their exercise instructions.
93
A person or entity who has acquired Subscription Rights that are held through a financial
intermediary should contact the relevant financial intermediary for instructions on how to
exercise the Subscription Rights.
Please refer to Section 14, "Selling and transfer restrictions" for a description of certain
restrictions and prohibitions applicable to the exercise of Subscription Rights in certain
jurisdictions outside Norway.
ii. If not all Subscription Rights are exercised, subscribers having exercised their
Subscription Rights and who have oversubscribed will be allocated additional New
Shares on a pro rata basis based on the number of Subscription Rights exercised
by each such subscriber. To the extent that pro rata allocation is not possible, the
Company will determine the allocation by the drawing of lots.
iii. New Shares not allocated pursuant to (i) and (ii) above will be allocated to
subscribers not holding Subscription Rights. Allocation will be sought made on a pro
rata basis based on the relevant subscription amounts.
iv. New Shares not allocated pursuant to (i), (ii) and (iii) above will be subscribed by,
and allocated to, the Underwriter.
No fractional New Shares will be allocated. The Company reserves the right to round off,
reject or reduce any subscription for New Shares not covered by Subscription Rights.
Allocation of fewer New Shares than subscribed for by a subscriber will not impact on the
subscriber’s obligation to pay for the number of New Shares allocated.
The result of the Rights Offering is expected to be published on or about 13 June 2017 in
the form of a stock exchange notification from the Company through the Oslo Stock
Exchange information system and at the Company’s website
(http://www.siemoffshore.com/). Notifications of allocated New Shares and the
corresponding subscription amount to be paid by each subscriber are expected to be
distributed in a letter on or about 15 June 2017. Subscribers having access to investor
services through their VPS account manager will be able to check the number of New
Shares allocated to them from 12:00 hours (CET) on 14 June 2017. Subscribers who do
not have access to investor services through their VPS account manager may contact the
Manager from 14:00 hours (CET) on 14 June 2017 to get information about the number of
New Shares allocated to them.
94
13.14 Payment for the New Shares
The payment for New Shares allocated to a subscriber falls due on the Payment Date (19
June 2017). Payment must be made in accordance with the requirements set out in
Sections 13.14.1 "—Subscribers who have a Norwegian bank account" or 13.14.2 "—
Subscribers who do not have a Norwegian bank account" below.
The specified bank account is expected to be debited on or after the Payment Date. The
Manager is only authorised to debit such account once, but reserves the right to make up
to three debit attempts, and the authorisation will be valid for up to seven working days
after the Payment Date.
The subscriber furthermore authorises the Manager to obtain confirmation from the
subscriber’s bank that the subscriber has the right to dispose over the specified account
and that there are sufficient funds in the account to cover the payment.
If there are insufficient funds in a subscriber’s bank account or if it for other reasons is
impossible to debit such bank account when a debit attempt is made pursuant to the
authorisation from the subscriber, the subscriber’s obligation to pay for the New Shares
will be deemed overdue.
Payment by direct debiting is a service that banks in Norway provide in cooperation. In the
relationship between the subscriber and the subscriber’s bank, the standard terms and
conditions for "Payment by Direct Debiting – Securities Trading", which are set out on page
2 of the Subscription Form, will apply, provided, however, that subscribers who subscribe
for an amount exceeding NOK 5 million by signing the Subscription Form provide the
Manager with a one-time irrevocable authorisation to directly debit the specified bank
account for the entire subscription amount.
Prior to any such payment being made, the subscriber must contact the Manager for further
details and instructions.
95
Shares will be listed on the Oslo Stock Exchange as soon as the New Shares have been
issued and registered in the VPS. This is expected to take place on or about 23 June 2017.
The listing of the New Shares on the Oslo Stock Exchange is expected to take place on the
same day.
The New Shares may not be transferred or traded before they are fully paid and said
registration the VPS has taken place.
13.17 The rights conferred by the New Shares
The New Shares issued in the Rights Offering will be ordinary shares in the Company having
a nominal value of USD 0.01 each and will be issued electronically in registered form.
The New Shares will rank pari passu in all respects with the Existing Shares and will carry
full shareholder rights in the Company from the time of issue. The New Shares will be
eligible for any dividends which the Company may declare after said registration. Please
refer to Section 10, "Corporate information", for a more detailed description of the Shares.
For information on taxes on the income from the securities, please refer to Section 12.1
and 12.2 above. The Company assumes responsibility for the withholding of taxes at the
source according to Norwegian Law.
13.18 VPS registration
The Subscription Rights will be registered with the VPS under the International Securities
Identification Number (ISIN) KYG812291170. The New Shares will be registered in the VPS
with the same International Securities Identification Number as the Existing Shares, being
ISIN KYG813131011.
The Company’s registrar in the VPS is Nordea Bank Norge ASA, Postboks 1166 Sentrum,
0107 Oslo, Norway.
13.19 Dilution
The Rights Offering will result in an immediate dilution of approximately 10.62% for
Existing Shareholders who do not participate in the Rights Offering. The dilution of
approximately 10.62% is calculated on the basis of the closing price of NOK 2.05 per Share
as quoted on 16 May 2017.
13.20 The Underwriting
The largest shareholder of the Company, Siem Europe S.a r.l., having its registered address
on 11-13, Boulevard de la Foire, L-1528 Luxembourg, Grand Duchy of Luxembourg, has
on 15 May 2017 entered into the Underwriting Agreement with the Company whereby they
undertake to guarantee for the subscription of all New Shares not subscribed for by other
subscribers. Siem Europe S.a r.l. will receive an underwriting commission of 1.00% of the
underwriting obligation.
The underwriting obligation of Siem Europe S.a r.l. is conditional upon no change, event,
effect, or condition (which shall result not only from events occurring after the signing of
the Underwriting Agreement, but also as a result of, separately or in combination with, any
previously undisclosed circumstances) occurring prior to such time as payment for the
Offer Shares is due, that has or would be expected to have, in the opinion of Siem Europe
S.a r.l., acting in good faith, individually or in the aggregate, a material adverse effect on
the conditions, assets, operations, results or prospectus of the Company and its
subsidiaries taken as a whole.
13.21 Net proceeds and expenses relating to the Rights Offering
The Company will bear the fees and expenses related to the Rights Offering, which are
estimated to amount to approximately NOK 2.7 million, consisting of fees to the Manager
and other fees and expenses related to the Rights Issue, and the underwriters' commission
96
of 1% of the underwriting obligation as described in Section 13.20, "—The Underwriting"
above. No expenses or taxes will be charged by the Company or the Manager to the
subscribers in the Rights Offering.
Total net proceeds from the Rights Offering are estimated to amount to approximately
USD 187 million.
13.22 Interests of natural and legal persons involved in the Rights Offering
The Manager or its affiliates, have provided from time to time, and may provide in the
future, investment and commercial banking services to the Company and its affiliates in
the ordinary course of business, for which they may have received and may continue to
receive customary fees and commissions. The Manager, its employees and any affiliate
may currently own Existing Shares in the Company. Further, in connection with the Rights
Offering, the Manager, its employees and any affiliate acting as an investor for its own
account may receive Subscription Rights (if they are Existing Shareholders) and may
exercise its right to take up such Subscription Rights and acquire New Shares, and, in that
capacity, may retain, purchase or sell Subscription Rights or New Shares and any other
securities of the Company or other investments for its own account and may offer or sell
such securities (or other investments) otherwise than in connection with the Rights
Offering. The Manager does not intend to disclose the extent of any such investments or
transactions otherwise than in accordance with any legal or regulatory obligation to do so.
The Manager will receive a management fee in connection with the Offering and, as such,
have an interest in the Offering. The management fee is a fixed amount.
Siem Europe S.a r.l. has underwritten the Rights Offering as further described in Section
13.20, "The Rights Offering—The Underwriting".
The Chairman Eystein Eriksrud holds 145,000 shares in the Company through his wholly
owned company Laburnum AS. The Company Laburnum AS intends to oversubscribe
allocated New Shares.
13.24 Publication of information relating to the Rights Offering
In addition to press releases which will be posted on the Company’s website, the Company
will use the Oslo Stock Exchange information system to publish information relating to the
Rights Offering.
13.25 Governing law and jurisdiction
This Prospectus, the Subscription Forms and the terms and conditions of the Rights Offering
shall be governed by and construed in accordance with Norwegian law. Any dispute arising
out of, or in connection with, this Prospectus or the Rights Offering shall be subject to the
exclusive jurisdiction of the courts of Norway, with Oslo as legal venue.
13.26 Manager and advisors
The Rights Issue is managed by Swedbank Norway, Filipstad Brygge 1, P.O Box 1441 Vika,
N-0115 Oslo, Norway.
Advokatfirmaet Wiersholm AS has acted as the Company's legal adviser in connection with
the Rights Issue.
13.27 How to proceed
97
The below instructions apply to subscriptions for New Shares on the basis of Subscription
Rights. Please see above for further details of the Rights Offering, including details on
oversubscription and subscription without Subscription Rights.
Terms and conditions For each Existing Shares you own, you will
receive 0.1187 Subscription Rights. Each
Subscription Right gives an entitlement to
subscribe for and to be allocated one New
Share.
Subscription Price NOK 1.90 per New Share.
Record Date for determining the right to 23 May 2017 (i.e. shareholders who are
receive Subscription Rights registered in the Company’s shareholder
register in the VPS as of 23 May 2017 will
receive Subscription Rights).
Trading in Subscription Rights 30 May 2017 to the end of trading on the
Oslo Stock Exchange on 8 June 2017.
Subscription Period 30 May 2017 to 12 June 2017 at 16:30
hours (CET).
98
14. SELLING AND TRANSFER RESTRICTIONS
14.1 General
As a consequence of the following restrictions, prospective investors are advised to consult
legal counsel prior to making any offer, resale, pledge or other transfer of the Shares
offered hereby.
Other than in Norway, the Company is not taking any action to permit a public offering of
the Shares in any jurisdiction. Receipt of this Prospectus will not constitute an offer in those
jurisdictions in which it would be illegal to make an offer and, in those circumstances, this
Prospectus is for information only and should not be copied or redistributed. Except as
otherwise disclosed in this Prospectus, if an investor receives a copy of this Prospectus in
any jurisdiction other than Norway, the investor may not treat this Prospectus as
constituting an invitation or offer to it, nor should the investor in any event deal in the
Shares, unless, in the relevant jurisdiction, such an invitation or offer could lawfully be
made to that investor, or the Shares could lawfully be dealt in without contravention of
any unfulfilled registration or other legal requirements. Accordingly, if an investor receives
a copy of this Prospectus, the investor should not distribute or send the same, or transfer
Shares, to any person or in or into any jurisdiction where to do so would or might
contravene local securities laws or regulations.
14.2 Selling restrictions
99
whole or in part) or disclosed by recipients to any other person in the United Kingdom.
Persons who are not Relevant Persons should not take any action on the basis of this
Prospectus and should not rely on it.
100
document being a "prospectus" within the meaning of the Companies Ordinance (Cap. 32)
of Hong Kong, and no advertisement, invitation or document relating to the New Shares
may be issued or may be in the possession of any person for the purposes of issue (in each
case whether in Hong Kong or elsewhere), which is directed at, or the contents of which
are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so
under the securities laws of Hong Kong) other than with respect to New Shares which are
or are intended to be disposed of only to persons outside Hong Kong or only to "professional
investors" within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong
Kong and any rules made thereunder.
Singapore
This Prospectus has not been registered as a prospectus with the Monetary Authority of
Singapore. Accordingly, this Prospectus and any other document or material in connection
with the offer or sale, or invitation for subscription or purchase, of the New Shares may
not be circulated or distributed, nor may they be offered or sold, or be made the subject
of an invitation for subscription or purchase, whether directly or indirectly, to persons in
Singapore other than (i) to an institutional investor under Section 274 of the Securities
and Futures Act, Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person, or any
person pursuant to Section 275(1A), and in accordance with the conditions, specified in
Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions
of, any other applicable provision of the SFA.
101
• The purchaser is not an affiliate of the Company or a person acting on behalf of
such affiliate, and is not in the business of buying and selling securities or, if it is in
such business, it did not acquire the New Shares from the Company or an affiliate
thereof in the initial distribution of such Shares.
• The purchaser is aware of the restrictions on the offer and sale of the New Shares
pursuant to Regulation S described in this Prospectus.
• The New Shares have not been offered to it by means of any "directed selling
efforts" as defined in Regulation S.
• The Company shall not recognise any offer, sale, pledge or other transfer of the
New Shares made other than in compliance with the above restrictions.
• The purchaser acknowledges that the Company, the Manager and their respective
advisers will rely upon the truth and accuracy of the foregoing acknowledgements,
representations and agreements.
Each purchaser of the New Shares within the United States pursuant to Rule 144A will be
deemed to have acknowledged, represented and agreed that it has received a copy of this
Prospectus and such other information as it deems necessary to make an informed
investment decision and that:
• The purchaser is authorised to consummate the purchase of the New Shares in
compliance with all applicable laws and regulations.
• The purchaser acknowledges that the New Shares have not been and will not be
registered under the U.S. Securities Act or with any securities regulatory authority
of any state of the United States and are subject to significant restrictions to
transfer.
• The purchaser (i) is a QIB (as defined in Rule 144A), (ii) is aware that the sale to it
is being made in reliance on Rule 144A and (iii) is acquiring such New Shares for its
own account or for the account of a QIB, in each case for investment and not with
a view to any resale or distribution to the New Shares.
• The purchaser is aware that the New Shares are being offered in the United States
in a transaction not involving any public offering in the United States within the
meaning of the U.S. Securities Act.
• If, in the future, the purchaser decides to offer, resell, pledge or otherwise transfer
such New Shares, as the case may be, such Shares may be offered, sold, pledged
or otherwise transferred only (i) to a person whom the beneficial owner and/or any
person acting on its behalf reasonably believes is a QIB in a transaction meeting
the requirements of Rule 144A, (ii) in accordance with Regulation S, (iii) in
accordance with Rule 144 (if available), (iv) pursuant to any other exemption from
the registration requirements of the U.S. Securities Act, subject to the receipt by
the Company of an opinion of counsel or such other evidence that the Company
may reasonably require that such sale or transfer is in compliance with the U.S.
Securities Act or (v) pursuant to an effective registration statement under the U.S.
Securities Act, in each case in accordance with any applicable securities laws of any
state or territory of the United States or any other jurisdiction.
• The purchaser is not an affiliate of the Company or a person acting on behalf of
such affiliate, and is not in the business of buying and selling securities or, if it is in
such business, it did not acquire the New Shares from the Company or an affiliate
thereof in the initial distribution of such Shares.
• The New Shares are "restricted securities" within the meaning of Rule 144(a) (3)
and no representation is made as to the availability of the exemption provided by
Rule 144 for resales of any New Shares, as the case may be.
• The Company shall not recognise any offer, sale pledge or other transfer of the New
Shares made other than in compliance with the above-stated restrictions.
102
• The purchaser acknowledges that the Company, the Manager and their respective
advisers will rely upon the truth and accuracy of the foregoing acknowledgements,
representations and agreements.
103
15. ADDITIONAL INFORMATION
The main shareholder of the Company, Siem Europe S.a r.l. is controlled by a trust where
certain members of Kristian Siem’s family are potential beneficiaries. Kristian Siem, who is
a member of the Board of the Company, is also inter alia the chairman of the board of
directors of Siem Industries Inc. and of Subsea 7 S.A., the charterer of the OSCV "Siem
Stingray". The contract between the Company and Subsea 7 S.A is made on arm's length
terms.
At the end of 2014 a short term loan of USD 60 million was drawn by the Company under
a credit facility provided by Siem Industries Inc. The short term loan is on market terms.
15.4 Documents on display
Copies of the following documents will be available for inspection at the Company's offices
and at the offices of Siem Offshore Management AS at Nodeviga 14, 4610 Kristiansand,
during normal business hours from Monday to Friday each week (except public holidays)
for a period of twelve months from the date of this Prospectus.
• The Group's audited consolidated annual financial statement for the year ended 31
December 2016 and the Group’s interim financial statements for the three months
periods ended 31 March 2017.
• This Prospectus.
15.5 Statement regarding sources
The Company confirms that when information in this Prospectus has been sourced from a
third party it has been accurately reproduced and as far as the Company is aware and is
able to ascertain from the information published by that third party, no facts have been
omitted which would render the reproduced information inaccurate or misleading.
104
16. DEFINITIONS AND GLOSSARY
The following definitions and glossary apply in this Prospectus unless otherwise dictated by
the context, including the foregoing pages of this Prospectus.
DP Dynamically positioned.
105
FCV Fast crew vessel.
Manager Swedbank.
106
The Financial Supervisory Authority of Norway (Nw.:
Norwegian FSA
Finanstilsynet).
Shareholders who are limited liability companies and
Norwegian corporate
certain similar corporate entities resident in Norway for
shareholders
tax purposes.
Norwegian personal Personal shareholders resident in Norway for tax
shareholders purposes.
Norwegian Securities The Norwegian Securities Trading Act of 29 June 2007 no.
Trading Act 75 (Nw.: verdipapirhandelloven).
Oslo Børs ASA or, as the context may require, Oslo Børs,
Oslo Stock Exchange a Norwegian regulated stock exchange operated by Oslo
Børs ASA.
107
Persons in the UK that are (i) investment professionals
falling within Article 19(5) of the Order or (ii) high net
Relevant Persons worth entities, and other persons to whom the Prospectus
may lawfully be communicated, falling within Article
49(2)(a) to (d) of the Order.
Unique sealing technology for the existing PCD products
RPCD and other arising applications, for example a seal to be
used from floating drilling units.
Subscription Period From 30 May 2017 to 16:30 hours (CET) on 12 June 2017.
UK United Kingdom.
U.S. Securities Act The United States Securities Act of 1933, as amended.
108
Appendix A: Memorandum and Articles of Association
109
Appendix B: Annual financial statements 2016
110
ANNUAL
REPORT 2016
Highlights 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Key Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
New Vessels Delivered in 2016 .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Vessels in the Fleet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Auditor’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Responsibility Statement .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
REVENUE USD 1,000 • Agreed a 6-month extension of the contract for the PSV “Siem Pilot”.
469 123
• SOC was awarded a turnkey supply and installation of the inner
array grid cable system for the Beatrice Offshore Wind Farm
project. The Company acquired 50% of Secunda Canada LP (“Se-
cunda”) as part of the recapitalization of Secunda and increased
its ownership to 100%.
• Secunda took delivery of the AHTS “Avalon Sea” from a yard in
OPERATING MARGIN USD 1,000 Poland in May and commenced a 6-year contract with an inter-
128 295
national oil company.
• Terminated charter party for the OSCV “Siem Spearfish” due to
default by the charterer.
• Took delivery of the cable-lay vessel (“CLV”) “Siem Aimery” from
a yard in Poland in April and commenced employment with Siem
Offshore Contractors for project work within the submarine power
EMPLOYEES
cable installation, repair and maintenance segment.
1 058
• Took delivery of the first of two Well-Intervention Vessels (“WIV”)
from a yard in Germany and commenced a 7-year contract.
VESSELS IN OPERATION • Received approval from all of its financing banks for a financial
46
platform to position the Company for the challenging market
expected in the coming years.
• Established a stand-alone AHTS vessel company, Siem AHTS
Pool AS (“SAP”), holding ownership in 10 AHTS vessels and in
which Siem Offshore holds a 78.16% interest.
• Secunda was awarded 3-year term contracts plus options for two
of its PSVs, the “Venture Sea” and the “Siem Hanne”.
• Sold and delivered the PSV “Siem Carrier”.
• Extended the bareboat contract for MV “Hugin Explorer” by 15
months to 1 July 2019 and agreed a purchase obligation by the
charterer at the end of the period.
Highlights for the First Quarter Highlights for the Fourth Quarter
• The Oil spill recovery vessel (“OSRV”) “Siem Marataizes” was • Siem Offshore Contractors (“SOC”) was awarded a contract for the
delivered from a yard in Brazil and commenced an 8-year firm transportation and installation of a portion of the inner array grid
contract with options for Petrobras. cable system of the Hornsea Offshore Wind Farm, Project One in
• Agreed a 18-month contract with options for the AHTS vessel UK waters. SOC was awarded a turnkey contract for the supply
“Siem Topaz” for operations in Australia. and installation of the inner array grid cable system contract for
• Siem Offshore Contractors was awarded a contract for the provi- the Trianel Windpark Borkum II.
sion of a walk-to-work service operations vessel for the windfarm • Cancelled a shipbuilding contract with Remontowa S.A. in Poland
sector of the North Sea. The firm charter period is 700 days with for the 3rd dual fuel PSV in a series of four vessels due to delay
options to extend the charter period by up to three additional years. in delivery.
• Took delivery of the second of two well-intervention vessels (“WIV”)
Highlights tor the Second Quarter built at a German shipyard and commenced a 7-year contract.
• Took delivery of the dual fuel PSV “Siem Thiima” from a Polish
• Agreed a 5-year term contract with 2 x 1-year options for one shipyard and the vessel commenced a 5-year contract with an
dual-fuelled PSV for operation in Australia. international oil company for operation in Australian waters.
• Extension of charter for the scientific research vessel “Joides Reso- • Conducted a periodic review of vessel values, receivables and
lution” until 30 September 2019. The charterer has further options investments in subsidiaries and recorded aggregate impairments
to extend charter until 30 September 2023 on an annual basis. of USD 74.0 million.
Definitions
(1) Earnings before interests, tax, depreciation and amortization (EBITDA)
(2) Earnings before interests and taxes (EBIT)
(3) Total current assets less total current liabilities
(4) See Statements of Cash Flows for details
(5) Net cash flow from operation divided on weighted average number of shares outstanding
(6) Stock Exchange price on December 31 divided on earnings per share
(7) Stock Exchange price on December 31 divided on cash flow per share
(8) Shareholders’ equity divided on number of outstanding shares
(9) Operating margin divided on weighted average number of outstanding shares
(10) Book equity divided on total assets
(11) Current assets divided on current liabilities
VESSELS 31/12/2016
31/12/2015
46 TOTAL
51 TOTAL
Newbuildings
Vessels in operation 31/12/2014 55 TOTAL
31/12/2013 55 TOTAL
31/12/2012 47 TOTAL
31/12/2011 45 TOTAL
31/12/2010 42 TOTAL
31/12/2009 44 TOTAL
31/12/2008 40 TOTAL
31/12/2007 32 TOTAL
31/12/2006 34 TOTAL
31/12/2005 27 TOTAL
OWNERSHIP 31/12/2016
31/12/2015
46 TOTAL
51 TOTAL
0-79%
100% 31/12/2014 55 TOTAL
31/12/2013 55 TOTAL
31/12/2012 47 TOTAL
31/12/2011 45 TOTAL
31/12/2010 42 TOTAL
31/12/2009 44 TOTAL
31/12/2008 40 TOTAL
31/12/2007 32 TOTAL
31/12/2006 34 TOTAL
31/12/2005 27 TOTAL
Siem Helix 1
Delivered June 2016
Siem Helix 2
Delivered December 2016
Siem Marataizes
Delivered February 2016
Siem Aimery
Delivered April 2016
Avalon Sea
Delivered May 2016
Siem Pride Siem Symphony Siem Atlas Siem Giant Siem Hanne Siem Louisa
Built 2015 2014 2013 2014 2007 2006
Design VS 4411 DF VS 4411 DF STX PSV 4700 STX PSV 4700 VS 470 MK II VS 470 MK II
Dp Class 2 2 2 2 2 2
LOA 89.20 m 89.20 m 87.90 m 87.90 m 73.40 m 73.40 m
Breadth 19.00 m 19.00 m 19.00 m 19.00 m 16.60 m 16.60 m
Draught 7.40 m 7.40 m 6.60m 6.60 m 6.42 m 6.42 m
Dwt 5,500 t 5,500 t 4700 T 4,700 T 3570 T 3570 T
Accommodation 28 25 34 34 34 34
Cargo Deck Area 980 m2 980 m2 1000 m2 usable 1000 m2 usable 680 m2 usable 680 m2 usable
Ownership 100% 100% 100% 100% 100% 100%
Siem Amethyst Siem Opal Siem Garnet Siem Sapphire Siem Aquamarine Siem Topaz
Built 2011 2011 2010 2010 2010 2010
Design VS 491 CD VS 491 CD VS 491 CD VS 491 CD VS 491 CD VS 491 CD
Dp Class 2 2 2 2 2 2
LOA 91.00 m 91.00 m 91.00 m 91.00 m 91.00 m 91.00 m
Breadth 22.00 m 22.00 m 22.00 m 22.00 m 22.00 m 22.00 m
Draught 7.95 m 7.95 m 7.95 m 7.95 m 7.95 m 7.95 m
Dwt 3800 T 3800 T 3800 T 3800 T 3800 T 3800 T
Accommodation 60 60 60 60 60 60
Cargo Deck Area 800 m2 800 m2 800 m2 800 m2 800 m2 800 m2
BHP 28000 28000 28000 28000 28000 28000
Offshore Subsea Construction Vessel (OSCV) & Multipurpose field & ROV Support Vessel (MRSV)
Siem Marlin Siem N-Sea Siem Barracuda Siem Spearfish Siem Stingray
Built 2009 2009 2013 2014 2014
Design MT 6017 MK II MT 6017 MK II STX OSCV 11L STX OSCV 03 STX OSCV 03
Dp Class 2 2 2 2 2
LOA 93.60 m 93.60 m 120.80 m 120.80 m 120.80 m
Breadth 19.70 m 19.70 m 22.00 m 23.00 m 23.00 m
Draught 6.30 m 6.30 m 6.60 m 6.60 m 6.60 m
Dwt 4.500 t 4.500 t 5.000 t 5.000 t 5.000 t
Accommodation 68 68 110 110 110
Cargo Deck Area 1046 m2 1046 m2 1300 m2 1,300 m2 1,300 m2
Crane 100 t Offshore/Subsea crane 100 t Offshore/Subsea 250 t Offshore/Subsea 1 X 250 t AHC, 3,000 m 1 X 250 t AHC, 3,000 m
ROV Moonpool - - 7.2 X 7.2 7.2 X 7.2 m 7.2 X 7.2 m
Ownership 100% 100% 100% 100% 100%
Sophie Siem Siem Sasha Siddis Mariner Siem Pilot Hugin Explorer Siem Supplier Siem Thiima
2006 2005 2011 2010 2006 1999 2016
VS 470 MK II VS 470 MK II VS 485 VS 485 MT 6000 MK II MT 6000 VS 4411 DF
2 1 2 2 2 2 2
73.40 m 73.40 m 88.3 m 88.3 m 86.20 m 83.70 m 89.2 m
16.60 m 16.60 m 20 m 20 m 19.70 m 17.70 m 19.00 m
6.42 m 6.42 m approx 7.0 m approx 7.0 m 6.18 m 6.10 m 7.40 m
3570 T 3570 T 4500 T 4500 T 3236 T 4250 T 5500 T
34 34 64 64 56 20 25
680 m2 usable 680 m2 usable 970 m2 970 m2 935 m2 912 m2 980 m2
100% 51% 51% 51% 100% 100% 100%
Siem Ruby Siem Diamond Siem Pearl Siem Emerald Siem Helix 1 Siem Helix 2
2010 2010 2009 2009 Built 2016 2016
VS 490 CD VS 491 CD VS 491 CD VS 491 CD Design Salt 307 WIV Salt 307 WIV
2 2 2 2 Dp Class 3 3
91.00 m 91.00 m 91.00 m 91.00 m LOA 158.65 m 157.60 m
22.00 m 22.00 m 22.00 m 22.00 m Breadth 31.00 m 31.00 m
7.95 m 7.95 m 7.95 m 7.95 m Draught 8.50 m 8.50 m
3800 T 3800 T 3800 T 3800 T Dwt 12500 t 12500 t
60 60 60 60 Accommodation 150 150
800 m2 800 m2 800 m2 800 m2 BHP 36000 35000
28000 28000 28000 28000 Ownership 100% 100%
310 Te 284 Te 285 Te 281 Te
Design SX 163 X-Bow Design Vard CLV01 Fast supply vessel AHTS/PSV/Field
Type OSRV/FCS/FSV
Dp Class 2 Dp Class 2 (FSV) support
LOA 74.00 m LOA 95.3 m Ownership 100% owned 100% owned 100% owned
Breadth 17.00 m Breadth 21.5 m
Draught 6.40 m Draught 7.1 m
Dwt 2.835 t Dwt 5,417 t
Accommodation 60 Accommodation 60
Cargo Deck Area 200 m2 usable Cargo Deck Area 350 m2
Joides Resolution Big Orange XVIII
Ownership 100% Ownership 100%
Scientific Core Drilling Well Stimulation Vessel
Type
Vessel (SCDV) (WSV)
Ownership 100% owned 41.3% owned
Geographical
footprint
Kristiansand (HQ)
Leer
Groningen
Gdynia
Halifax
St. John´s
Houston
Accra
Siem Offshore offices
• Kristiansand (Norway)
• Rio de Janeiro, Macaé, Aracaju (Brazil)
• Leer (Germany) Macaé
Aracaju
• Groningen (The Netherlands)
• Houston (USA) Rio de Janeiro
• Accra (Ghana)
• Perth (Australia)
• Gdynia (Poland)
• St. John´s, Halifax (Canada)
1058
TOTAL NUMBER OF VESSELS
46
VESSELS IN OPERATION
46
PSVs: 13
WIVs: 2
AHTs: 10
OSCVs: 5
CANADIAN FLEET: 5
OTHER: 11
Perth
Siem Offshore owns and operates one of the world’s most modern
fleet of offshore support vessels, equipped to meet the increased
requirements from clients and demands from operation in the
harshest environments. The Company has a strong involvement
in the renewable energy market as a contractor for installation of
submarine power cables for offshore wind farms.
S
iem Offshore had 46 vessels in operation and had one most attractive employer offering marine services to the offshore
vessel under construction by year-end 2016. energy service industry. The Company shall deliver quality and
By end March 2017, the total fleet comprised of 45 reliable contracted services in a timely manner by executing cost-
vessels, including, among others the following owned ves- efficient solutions developed in active collaboration and cooperation
sels, thirteen Platform Supply Vessels (PSVs), five Offshore Subsea with our customers.
Construction Vessels (OSCVs), ten Anchor Handling, Tug and Supply Siem Offshore commenced operations with effect from 1 July
vessels (AHTS), two Well-Intervention Vessels (WIVs), one Installa- 2005. The Company is registered in the Cayman Islands and is listed
tion Support Vessel (ISV), one Cable Lay Vessel (CLV), six Brazilian on the Oslo Stock Exchange (OSE Symbol: SIOFF). The Company’s
flagged vessels and five Canadian flagged vessels comprising of headquarters is located in Kristiansand, Norway and additional
both AHTS vessels and PSVs. The fleet provides a broad spectrum subsidiary offices are located in Brazil, Germany, the Netherlands,
of services offered by a highly experienced and competent crew Ghana, USA, Poland, Canada and Australia. The Company is tax
with a strong focus on Health, Safety, Environment and Quality. resident in Norway.
The Company’s vision is to become the leading provider and the
Values
2016 469 123
2015 422 449
2014 491 312
2013 363 955
We continuously work to 2012 368 213
make the values part of the 2011 340 628
2010 228 302
daily life of the Company,
2009 183 558
in particular in training of 2008 192 773
leaders throughout the 2007 159 342
2006 73 554
organization. The values
are established to support
OPERATING MARGIN Amounts in USD 1,000
our present and future
2016 128 295
business. 2015 118 548
2014 194 125
2013 122 663
2012 110 348
CARING 2011 122 952
We encourage team spirit and knowl-
2010 74 641
edge sharing. We strive to perform our
daily work correctly, safely and without 2009 57 934
causing damage to people, environment 2008 87 738
and equipment.
2007 79 799
2006 20 480
COMPETITIVE
We behave in a pro-active manner and we
are innovative in our way of thinking. Con-
EMPLOYEES
tinuous improvement is our key to success.
2016 1058
2015 949
COMMITTED 2014 1 073
We are driven by integrity. We step up and
2013 1 110
take charge to fulfil given promises.
2012 1 078
2011 1 073
2010 828
2009 762
2008 642
2007 600
2006 527
The Company Siem WIS AS, a 60%-owned subsidiary of the Company, devel-
ops applications for managed-pressure drilling (“MPD”) based on
All references to “Siem Offshore” and the “Company” shall mean a patented seal technology.
Siem Offshore Inc. and its subsidiaries and associates unless the Overseas Drilling Limited (“ODL”) is a wholly-owned subsidiary
context indicates otherwise. All references to “Parent” shall mean and the owner of the drillship, the “JOIDES Resolution”. The “JOIDES
Siem Offshore Inc. as the Parent Company only. Resolution” is used in scientific research to drill core samples in the
Siem Offshore is registered in the Cayman Islands and is listed ocean floor during expeditions for an international research program.
on the Oslo Stock Exchange (OSE Symbol: SIOFF). The Company’s Siem Offshore do Brasil S.A. is the Company’s wholly-owned
headquarters are located in Kristiansand, Norway and additional Brazilian subsidiary which owns and operates a fleet of eight OSVs
subsidiary offices are located in Brazil, Germany, the Netherlands, in Brazil and provides specialized engineering applications to de-
Poland, Ghana, United States, Canada, Cayman Islands and Australia. velop and implement combat management systems for vessels in
The Company is tax domiciled in Norway. the Brazilian navy.
The Company’s primary activity is the ownership and operation
of offshore support vessels (“OSVs”) for the offshore energy service Financial Results, Position And Risks
industry. Other significant activities include the installation, trench-
ing, termination and testing of inner-array cables for the offshore IFRS
renewable energy industry. The financial statements for the Company and the Parent are pre-
The Company operated a fleet of 46 vessels at year-end, includ- pared in accordance with the International Financial Reporting
ing partly-owned vessels and ten vessels in lay-up. During 2016, Standards (“IFRS”) as adopted by the European Union.
the total fleet of OSVs conducted operations in the North Sea, West
Africa, Argentina, Australia, the U.S. Gulf, Canada and Brazil. Going-Concern
Secunda Holding Limited (“Secunda”) is now a wholly-owned The financial statements have been prepared under the assumption
subsidiary following the Company’s acquisition of the remaining 50% that the Company and the Parent are going-concerns. This assump-
ownership during the year. Secunda owns and operates a harsh- tion is based on the Company’s level of cash and cash equivalents
weather fleet of five offshore support vessels and is a leader in sup- at year-end, forecasted cash-flows, available credit facilities, agree-
port services for platform supply, anchor-handling, rescue standby ments with finance creditors and bondholders and the market value
and towage in its primary area of operation offshore Eastern Canada of its assets.
NOK, EUR and BRL. During 2016, the USD weakened by 2.15% to and two WIVs in operation at end of the year (2015: five).The OSCV
the NOK, 16.54% to the BRL and strengthened by 3.59% to EUR. and WIV fleet earned operating revenues of USD97.2 million and
The average recorded exchange rates were NOK/USD 0.1186, EUR/ had 92% utilisation (2015: USD111.3 million and 94%). The operat-
USD 1.1022 and BRL/USD 0.287 (2015: NOK/USD 0.1236, EUR/ ing margin before administrative expenses was USD44.5 million
USD 1.1134 and BRL/USD 0.3002). (2015: USD69.6 million) and the operating margin as a percentage
of revenue was 46% (2015: 63%). The contract backlog was 55%
Financial Risks for 2017, 43% for 2018 and 29% for 2019 (2015: 88% for 2016, 83%
— — INTEREST RISK for 2017 and 77% for 2018).
The Company is exposed to changes in interest rates as approxi- The Company had ten AHTS vessels in operation at end of the
mately 69% of the interest-bearing debt is based on floating interest year (2015: ten). The AHTS fleet earned operating revenues of
rates and primarily denominated in USD and NOK. The average USD48.3 million and had 39% utilisation (2015: USD54.7 million
3-month USD LIBOR was 0.7444% p.a. during 2016 (0.31583% p.a. and 55% utilization). The operating margin before administrative
in 2015) and the average 3-month NIBOR was 1.0674% p.a. during expenses was USD10.8 million (2015: USD(1.4) million) and the
2016 (1.29% p.a. in 2015). The Company held USD70 million in operating margin as a percentage of revenue was 22% (2015: (3)%).
interest rate swap agreements at year-end. The contract backlog is 8% for 2017, and 0% for 2018 (2015: 11%
for 2016, 0% for 2017 and 0% for 2018).
— — CURRENCY RISK The Company had a fleet of five Canadian-flagged offshore
The Company is exposed to currency risk as revenue and costs support vessels at the end of the year. The Canadian fleet earned
are denominated in various currencies. The Company is also ex- operating revenue of USD24.5 million and had 73% utilization. The
posed to currency risk due to future yard instalments in relation operating margin before administrative expenses was USD12.5
to shipbuilding contracts and long-term debt in various currencies. million and the operating margin as a percentage of revenue was
Forward exchange contracts are entered into in order to reduce 51%. The results for Secunda were recorded in accordance with
the currency risk related to future cash flows. the equity method for the first five months and were fully consoli-
dated commencing with effect from 1 June 2016, post-acquisition
— — LIQUIDITY RISK of 100% ownership in Secunda. The contract backlog was 48% for
The Company is financed by a combination of debt and equity. If the 2017, 45% for 2018 and 26% for 2019.
Company fails to repay or refinance its credit facilities, additional The Company had a fleet of six smaller Brazilian-flagged vessels
equity financing may be required. There can be no assurance that at end of the year (2015: seven).This fleet earned operating revenue
the Company will be able to repay its debts or extend the debt of USD20.1 million and had 73% utilisation (2015: USD21.3 million
repayment schedule through re-financing of credit facilities. There and 86%). The operating margin before administrative expenses
is no assurance that the Company will not experience cash flow was USD8.6 million (2015: USD7.1 million) and the operating margin
shortfalls exceeding the Company’s available funding sources as a percentage of revenue was 43% (2015: 33%). The contract
or to remain in compliance with minimum cash requirements or backlog was 69% for 2017, 41% for 2018 and 33% for 2019 (2015:
other covenants. Further, there is no assurance that the Company 57% for 2016, 57% for 2017 and 49% for 2018).
will be able to raise new equity or arrange new credit facilities on The research vessel “Joides Resolution” recorded operating
favourable terms and in amounts necessary to conduct its ongoing revenues of USD26.4 million (2015: USD26.2 million) with an op-
and future operations should this be required. erating margin before administrative expenses of USD15.1 million
(2015: USD14.5 million) and the operating margin as a percentage
Operations of revenue was 57% (2015: 55%). The contract backlog was 100%
for 2017, 100% for 2018 and 75% for 2019. (2015: 73 % for 2016,
Fleet, Performance and Employment 0% for 2017 and 0% for 2018).
The fleet in operation at end of year 2016 totalled 46 vessels (2015: Siem Offshore Contractors (SOC) recorded operating revenues
45 vessels), including partly owned vessels and vessels in lay-up. of USD193.8 million (2015: USD132.3 million). The projects within
The Company had 13 PSVs in operation at end of the year. The SOC are accounted for using the percentage-of-completion method
PSV fleet earned operating revenues of USD62.1 million and had and profit margins are not recorded until the respective project’s
77% utilisation (2015: USD76.5 million and 75%). The operating offshore operation has reached a minimum of 25% technical com-
margin before administrative expenses was USD28.1 million (2015: pletion. This has an impact on the overall percentage of operating
USD38.7 million) and the operating margin as a percentage of rev- margin for Siem Offshore on a consolidated basis. Total project
enue was 45% (2015: 51%). The contract backlog at 31 December margin before administrative expense of USD30.0 million (2015:
2016 is 51% for 2017, 36% for 2018 and 23% for 2019 (2015: 60% USD17.5million) was recognized on projects.
for 2016, 31% for 2017 and 24% for 2018). The total firm contract backlog for all OSV vessels at 31 Decem-
The Company had five OSCVs in operation at end of the year ber 2016 was USD0.9 billion (2015: USD1.2 billion), including the
Siem WIS of Directors and day-to-day Management beyond what follows from
the legislation. A detailed summary of our corporate governance
Siem WIS has designed and developed a pressure control device principles may be found in a separate section of the annual report.
(“PCD”) which can improve managed-pressure drilling (“MPD”)
operations. MPD has the capability to mitigate drilling hazards by The Working Environment And The Employees
improving drilling performance and increasing the performance
rate. In offshore application, they solve various complex challenges The Company provides a workplace with equal opportunities. We
such as reducing lost circulation, extensive mud cost, stuck pipe treat current and prospective employees fairly with respect to sala-
and well pressure surges. The global managed pressure drilling ries, promotions and recruitment. The Company offers its employees
(MPD) market was valued at USD3.7 billion in 2015 and is expected a sound working environment. We also give possibilities for profes-
to reach USD5 billion by 2024. sional development where men and women are treated equally and
Siem WIS delivered five successful PCD operations in 2016. Four where there is no discrimination.
operations were for Statoil on the Gullfaks field and one operation The sick leave for the onshore and offshore employees was 1.9
on the ultra-high pressure/high temperature (“HP/HT”) well “Sola- and 3.46% respectively.
ris” was for Total. The operations have been delivered without any The development of the onshore and offshore organizations
non-productive time. continues in order to prepare for increased future activities. The
In December 2016, Siem WIS entered into a frame agreement knowledge of the crew is vital for a safe and secure operation of any
with Statoil. Two contracts have been received to date for comple- vessel. Such knowledge includes good seamanship and understand-
tion in 2017. ing of the demanding assignments to be executed.
Idar Hillersøy
Chief Executive Officer
(Sign.)
As a company incorporated in the Cayman Islands, Siem Offshore to provide cost-efficient solutions to its customers by understanding
Inc. is an exempted company duly incorporated under the laws their operation and applying technology and experience.
of the Cayman Islands and subject to Cayman Islands laws and The Company builds its business around a motivated workforce
regulations with respect to corporate governance. Cayman Islands with the appropriate technical solutions. This creates sustainable
corporate law is to a great extent based on English Law. In addition, value for all shareholders.
due to the Company’s listing on the Oslo Stock Exchange, certain Reference is made to the Board of Directors’ report for detailed
aspects of Norwegian Securities law apply to the Company and information.
there is a requirement to adhere to the Norwegian Code of Practice
for the Corporate Governance. The Norwegian Code of Practice Equity and Dividends
for Corporate Governance is publicly available at www.nues.no
in both Norwegian and English languages. Due to new provisions The priorities for the use of Company funds are determined by the
implemented in the Norwegian Accounting Act, compliance with Board of Directors and recommendations of Management influenced
the regulations for Corporate Governance reporting is now a legal by existing conditions. At present, priorities for use of funds in order
requirement provided that it does not conflict with the Cayman of importance are investment opportunities in the business, repay-
Islands laws and regulations. The Company endeavours to main- ment of debt and the return of capital to the shareholders in form
tain high standards of corporate governance and is committed to of share buy-back or dividends.
ensuring that all shareholders of the Company are treated equally The Board’s mandate to increase the Company’s share capital
and the same information is communicated to all shareholders at is limited only to the extent of the authorized share capital of the
the same time. Company with certain pre-emption rights for shareholders and in
Corporate Governance is subject to annual assessment and accordance with the Company’s Memorandum and Articles of As-
review by the Board of Directors. sociation which comply with Cayman Islands law.
The Board of Directors has reviewed this statement. It is the Under the Articles of Association, the Board can issue new shares,
opinion of the Board of Directors that the Company complies with convertible bonds or warrants at any time within the limits of the
the Norwegian Code of Practice for Corporate Governance. authorized capital without the consent of the general meeting but
This statement is structured in accordance with The Norwegian with pre-emption rights for shareholders. A General Meeting has
Code of Practice for Corporate Governance. further authorized the Board to issue new shares without pre-emption
rights to all shareholders up to a limit of 50% of Siem Offshore’
Business shares at the time the authorization was given. The authority gives
the Board flexibility to finance investments, acquisitions and other
Cayman Islands laws and regulation do not require the objects business combinations on short notice through the issue of shares
clause of the Companies Memorandum and Articles of Association or certain other equity instruments in the Company. Furthermore,
to be clearly defined. The Company has however adopted clear the Board considers the granting of a new standing authority at the
objectives and strategies for its business. time of holding an Annual General Meeting rather than convening
Siem Offshore aims to grow the company within offshore support an Extraordinary General Meeting at some future time to be in the
vessels, both organically and through combination with other opera- best interests of the Company, as this will result in cost savings and
tors, in order to achieve economies of scale and stronger presence more effective time management for both the Company’s senior
in the market. management and its Shareholders.
Siem Offshore aims to become a preferred supplier of marine An extraordinary general meeting was held on 14th of Au-
services to the energy industry based on quality and reliability and gust 2015 resolving as a Special Resolution that the Company
The executive management of each subsidiary is responsible for risk Information and Communications
management and internal control in the subsidiary with a view to
ensuring 1) optimizing of business opportunities, 2) targeted, safe, The Company has a policy of treating all its shareholders and other
high-quality and cost-effective operations, 3) reliable financial report- market participants equally, and communicates relevant and objective
ing, 4) compliance with current legislation and regulations and 5) information on significant developments which impact the Company
operations in accordance with the Company’s governing documents, in a timely manner.
including ethical and social responsibility standards. The Company’s The Company also seeks to ensure that its accounting and fi-
risk management system is fundamental to the achievement of nancial reporting are to the standards of our investors, and the
these goals. Company presents its financial statements in accordance with the
International Financial Reporting Standards (IFRS). The Audit Com-
Financial reporting process mittee of the Board of Directors monitors the company’s reporting
Financial information from subsidiaries is received each month in on behalf of the Board.
a reporting package in standard format accommodated necessary Notices to the Oslo Stock Exchange and placements of notices
information for preparing the consolidated financial statement for and other information, including quarterly and annual reports, may
the Company. The reporting from the subsidiaries is extended in the be found on the Company’s website (www.siemoffshore.com).
year-end reporting process to meet various requirements for sup-
plementary information. There are established routines to check the Take-overs
financial data in the received reporting packages to ensure the best
quality for the consolidated figures for the Company. The shares in the Company are freely tradable and the Articles of
Training and further development of accounting experience within Association of the Company does not hold specific defence mecha-
the Company is provided locally by participating on various external nisms against take-over situations. In a take-over situation, the Board
courses on a regular basis. of Directors will comply with relevant legislation.
The remuneration of the Board members reflect their experience The Auditor of the Company is elected at the Annual General Meet-
and responsibilities, and is adopted by the annual general meeting ing which also approves its remuneration. Details of the Company’s
based on the recommendation from the Board. The Board members remuneration of the external auditor are given in the notes to the
do not have share options or profit-based remuneration. accounts.
The responsibility statement of the Board of Directors in this report The auditor reports to the Audit Committee twice a year at a
and the notes to the accounts include information about the remu- minimum, but more often if necessary. During the latter half of
neration of the Board of Directors. the year, the external auditor presents to the Audit Committee his
assessment of risks, internal controls, risk areas and improvement
Remuneration of the Executive Management potential in control systems and his audit plan for the following
year. The second report to the Audit Committee is the presentation
The Company has a Compensation Committee which reviews and of Year-End Audit. The external auditor presents a summary of
approves the compensation of the CEO and the bonuses to all execu- the audit process, including comments on audited internal control
tive personnel. The Articles of Association of the Company permit procedures and key issues in the financial reporting.
the Board to approve the granting of share options to employees. The Audit Committee also receives an annual independence report
A long-term Employee share scheme for 8 key employees of the from the external auditor, confirming the external auditor’s independ-
company was introduced in Q1 2013. A second Employee share ence with respect to the Company, within the meaning of the Nor-
scheme was implemented in Q2 2014 for 10 key employees of the wegian Act on Auditing and Auditors. The confirmation also includes
company. The remuneration of the CEO and the share option scheme services delivered to the Company other than mandatory audit.
are disclosed in the notes to the accounts. Three key employees
have left the Company since the implementation of the Employee
share schemes.
The Board of Director’s statement on the remuneration of execu-
tive personnel is presented as a separate appendix to the agenda
for the general meeting. The remuneration statement clearly states
which aspects of the guidelines are advisory and which, if any, are
binding. The general meeting will vote separately on each of these
aspects of the guidelines.
-14,765 -16,196 Total comprehensive loss for the year -95,379 -258,526
- - Attributable to non-controlling interest -9,729 -9,520
CURRENT ASSETS
- - Accounts receivable 2,29 48,230 46,147
5,697 4,169 Other current receivables 9,14,23,29 120,977 60,657
- - Inventories 30 9,109 7,739
- - Derivative financial instruments 15,28,29 - 1,451
195,433 269,293 Cash 2,10,29 101,323 148,753
201,130 273,463 Total current assets 279,639 264,747
- - Asset held for sale 24,25,29 1,099 3,459
1,076,397 1,086,664 Total assets 2,413,390 2,035,122
EQUITY
625,219 625,219 Paid-in capital 625,219 625,219
-22,302 -22,303 Other reserves -107,490 -108,151
240,158 249,671 Retained earnings 31,378 115,147
843,075 852,587 Shareholders' equity 26 549,107 632,215
- - Non-controlling interest 98,878 33,293
843,075 852,587 Total equity 647,985 665,508
LIABILITIES
NON-CURRENT LIABILITIES
210,807 207,852 Borrowings 2,12,14 1,293,059 1,007,925
14,300 19,208 CIRR Loan 12.29 76,215 88,002
- 4,258 Tax liabilities 11 1,298 5,483
1,050 1,418 Deferred CIRR gain 12 1,050 1,418
- - Pension liabilities 8 1,692 2,195
- - Other non-current liabilities 47,382 34,142
226,157 232,736 Total non-current liabilities 1,420,695 1,139,165
CURRENT LIABILITIES
56 144 Accounts payable 2.29 20,783 8,395
- - Borrowings 2,12,14,29 177,834 114,660
- - Derivative financial instruments 15,28,29 8,358 12,896
-292 -150 Taxes payable 11 2,868 3,496
7,401 1,347 Other current liabilities 13,14,23 134,868 91,001
7,165 1,341 Total current liabilities 344,710 230,448
233,323 234,077 Total liabilities 14 1,765,405 1,369,614
CONSOLIDATED
Total no. Share Share premium
(Amounts in USD 1,000) of shares capital reserves
2016 2015
885 1,336
77,068 -
77,953 1,336
PARENT COMPANY
Share Exchange
Share premium rate Other Retained Shareholders’
(Amounts in USD 1,000) Total no. of shares capital reserves differences reserves earnings equity
Equity as of December 31, 2014 387,591,380 3,876 522,360 -100 -22,203 258,675 762,609
Equity as of December 31, 2016 842,021,380 8,420 616,799 -100 -22,203 240,158 843,075
1.1 General listed on the Oslo Stock Exchange. The Company’s headquarters is
located in Kristiansand, Norway and the Company is tax domiciled in
Siem Offshore owns and operates a fleet of offshore support vessels, Norway. All references to “Siem Offshore Inc.”, “Consolidated” and
including Platform Supply Vessels, Offshore Subsea Construction “Company” shall mean Siem Offshore Inc. and its subsidiaries and
Vessels, Anchor Handling Tug Supply Vessels and Well-Intervention associates unless the context indicates otherwise. All references
Vessels. Siem Offshore Inc. commenced operations 1 July 2005, and to “Parent” or “Parent Company” shall mean Siem Offshore Inc. as
is an exempted company under the laws of the Cayman Islands and a parent company only.
If the business combination is achieved in stages, fair value of has been identified as the executive management team consisting
the acquirer’s previously held equity interest in the acquiree is re- of the CEO, CFO, CCO and CHRO.
measured to fair value at the acquisition date through profit or loss. The Company is organized into nine different segments, plat-
Any contingent consideration to be transferred by the Company is form supply vessels (“PSVs”), offshore subsea construction vessels
recognized at fair value at the acquisition date. Subsequent changes (“OSCVs”), anchor-handling tug supply vessels (“AHTS Vessels”),
to the fair value of the contingent consideration of an asset or li- Other Vessels in Brazil (consisting of fast crew vessels (“FCVs”),
ability are recognized in profit or loss. Contingent consideration fast supply vessels (“FSVs”) and oil spill recovery vessels (“OSRVs”),
that is classified as equity is not remeasured and its subsequent Combat Management Systems (“CMS”), Submarine Power Cable
settlement is accounted for within equity. Installation, Scientific Core-Drilling and Other.
Assets designated for long-term ownership or use and receivables (ii) income and expenses for each income statement are translated
due later than one year after drawdown are classified as non-current at average exchange rates (unless this average is not a reasonable
assets. Other assets are classified as current assets. Liabilities due approximation of the cumulative effect of the rates prevailing on the
later than one year after the end of the reporting period are clas- transaction dates, in which case income and expenses are translated
sified as non-current liabilities. Other liabilities are classified as at the dates of the transactions); and
current liabilities. All derivative financial instruments are classified
as current assets or current liabilities. (iii) all resulting exchange differences are recognized in other com-
prehensive income.
1.6 Segment reporting
As part of the consolidation process, exchange differences arising
Operating segments are reported in a manner consistent with the from the translation of the net investment in foreign operations is
internal reporting provided to the chief operating decision-maker. recognized directly in Other Comprehensive Income (OCI). When a
The chief operating decision-maker, who is responsible for allocating foreign operation is sold, exchange differences previously recognized
resources and assessing performance of the operating segments,
1.8 Non-current tangible assets and 1.9 Newbuild contracts and borrowing costs
maintenance costs
Instalments on newbuild contracts are classified as non-current
Land and Buildings and Vessels are stated at their historical cost tangible assets. Direct costs related to the on-site supervision and
less accumulated depreciation and net of any impairment losses. other pre-delivery construction costs are capitalized per vessel.
All non-current tangible assets (excluding Land and Vessels un- General and specific borrowing costs directly related to the
der construction) are depreciated on a straight-line basis over the acquisition, construction or production of qualifying vessels are
estimated remaining useful economic life of the asset. The vessel added to the cost of those vessels, until such time as the vessels
residual value is the estimated future sales price for steel less the are substantially ready for their intended use or sale. All other
estimated costs associated with scrapping a vessel. The residual borrowing costs are recognized in the profit or loss in the period in
value and expected useful life for all non-current tangible assets is which they are incurred.
reviewed annually and, where they differ significantly from previous Interest expense eligible for capitalization is only adjusted for
estimates, the rate of depreciation charges is changed accordingly. the effect of interest rate or cross-currency interest rate swaps that
The vessels presently owned by the Company have an estimated are designated and qualify as an accounting hedge under IAS 39.
economic life of 30 years. Some components of the vessels have a Currently the Company does not have any interest rate or cross-
shorter economic life than 30 years. Such components are depreci- currency swap contracts designated as hedges.
ated over their individual useful life. Each part of a vessel that is
significant to the total cost of the vessel is separately identified and 1.10 Impairment of non-financial assets
depreciated over that component’s useful lifetime. Components with
similar useful lives are included in one component. The Company Intangible assets that have an indefinite useful life or intangible
has identified nine significant components relating to its different assets not ready to use are not subject to amortization and are
types of vessels. See note 5 for additional information. Dry-docking tested annually for impairment.
- In accordance with IAS 16 and the cost model, dry-docking costs Assets that are subject to amortization are reviewed for impair-
are a separate component of the ship’s cost at purchase with a ment whenever events or changes in circumstances indicate that
different pattern of benefits and are therefore initially recognized the carrying amount may not be recoverable. An impairment loss
as a separate depreciable asset. Subsequently, the cost of major is recognized for the amount by which the asset’s carrying amount
renovations and periodic maintenance costs are capitalized as a exceeds its recoverable amount. The recoverable amount is the
dry-docking asset and depreciated over the useful life of the parts higher of an asset’s fair value less costs of disposal and value in
replaced. The useful life of the dry-docking costs will be the period use. The recoverable amount is established individually for all as-
until the next docking, normally between two to three years. Day- sets. In assessing value in use, the estimated future cash flows
to-day maintenance costs are immediately expensed during the are discounted to their present value using a pre-tax discount rate
reporting period in which they are incurred. that reflects current market assessments of the time and the risk
Capitalized project cost - Certain vessel contracts require an specific to the asset that is considered impaired.
Prior impairments of non-financial assets (other than goodwill) monitored for internal management purposes. Goodwill is monitored
are reviewed for possible reversal at each reporting date. A previously at the operating segment level.
recognized impairment loss is reversed if there has been a change in Goodwill impairment reviews are undertaken annually or more
the estimates used to determine the recoverable amount. Reversal frequently if events or changes in circumstances indicate a poten-
of a previously recognized impairment is limited to an amount that tial impairment. The carrying value of goodwill is compared to the
would make the carrying value of the asset equal to what it would recoverable amount, which is the higher of value in use and the fair
have been had the initial impairment charge not occurred. value less costs to sell. Any impairment is recognized immediately
as an expense and is not subsequently reversed.Trademarks and
1.11 Intangible assets licenses - Separately acquired trademarks and licenses are shown
at historical cost. Trademarks and licenses acquired in a business
Intangible assets that are acquired separately are measured on initial combination are recognized at fair value at the acquisition date.
recognition at cost. The cost of intangible assets acquired in a busi- Trademarks and licenses have a finite useful life and are measured
ness combination is recognized at fair value at the date of acquisition. at cost less accumulated amortization. Amortization is calculated
Following initial recognition, intangible assets are carried at cost less using the straight-line method to allocate the cost of trademarks and
any accumulated amortization and any accumulated impairment licenses over their estimated useful lives of three to seven years.
losses. Internally-generated intangible assets, excluding capitalized Research and development - Research and Development (R&D)
development costs, are not capitalized and expenditure is charged relates to the development of a production method for drilling pro-
against profits in the year in which the expenditure is incurred. The cess; this R&D is part of the Other Segment.
useful lives of intangible assets are assessed to be either finite or
indefinite. Intangible assets with finite lives are amortized over 1.12 Financial assets
the useful economic life and assessed for impairment whenever
there is an indication that the intangible asset may be impaired. 1.12.1 Classification
The amortization period and the amortization method are reviewed The Company classifies its financial assets in the following two
annually. Changes in the expected useful life or the expected pattern categories: Financial assets at fair value through profit or loss and
of consumption of future economic benefits embodied in the asset Loans and receivables. The classification depends on the purpose for
is accounted for by changing the amortization period or method, as which the financial assets were acquired. Management determines
appropriate, and treated as a change in accounting estimate. The the classification of its financial assets at initial recognition and
amortization expense on intangible assets with finite lives is recog- re-evaluates this designation at every reporting date.
nized in the income statement in the expense category consistent
with the function of the intangible asset. (a) Financial assets at fair value through profit or loss
Intangible assets with indefinite useful lives are tested for impair- Financial assets at fair value through profit or loss are financial
ment annually either individually or at the cash-generating unit level. assets held for trading. The only financial assets in this category
Such intangibles are not amortized. The useful life of an intangible are derivative contracts, which are categorized as held for trading
asset with an indefinite life is reviewed annually to determine whether unless designated as hedges. Derivatives in this category are clas-
the indefinite life assessment continues to be supportable. If not, sified as current assets.
the change in the useful life assessment from indefinite to finite is
made on a prospective basis. (b) Loans and receivables
Goodwill - Goodwill arises on the acquisition of subsidiaries and Loans and receivables are non-derivative financial assets with fixed
represents the excess of the consideration transferred, the amount or determinable payments that are not quoted in an active market.
of any non-controlling interest in the acquiree and the acquisition- They are included in current assets, except for assets with maturities
date fair value of any previous equity interest in the acquiree over greater than 12 months after the reporting date. These are classified
the fair value of the identifiable net assets acquired. If the total of as non-current financial assets. The Company’s loans and receivables
consideration transferred, non-controlling interest recognized and include accounts receivable, cash, short and long-term financial
previously held interest measured at fair value is less than the receivables and the CIRR loan deposit.
fair value of the net assets of the subsidiary acquired, in the case
of a bargain purchase, the difference is recognized directly in the 1.12.2 Recognition and measurement
income statement.
For the purpose of impairment testing, goodwill acquired in a Regular purchases and sales of financial assets are recognized
business combination is allocated to each of the CGUs, or groups of on the trade-date – the date on which the Company commits to
CGUs, that is expected to benefit from the synergies of the combina- purchase or sell the asset. Investments are initially recognized at
tion. Each unit or group of units to which the goodwill is allocated fair value plus transaction costs for all financial assets not carried
represents the lowest level within the entity at which the goodwill is at fair value through profit or loss. Financial assets carried at fair
against the tax reducing temporary differences are recognized as benefit obligation at the end of the reporting period less the fair
intangible assets. Deferred tax assets and deferred tax liabilities value of the pension fund assets. The defined benefit obligation is
are recognized independently of when the differences will be re- calculated annually by an independent actuary on the basis of a
versed and, as a rule, at nominal value. Deferred tax assets and tax linear model. The present value of the defined benefit obligation
liabilities are measured on the basis of estimated future tax rate. is determined by discounting the estimated future cash outflows
Part of the Company’s activities under the Norwegian subsidi- based on the interest rate for covered bond rate. Since Norwegian
aries are structured to be in compliance with the regulations for government bonds are not issued for terms exceeding 10 years, a
the Norwegian Tonnage Tax Regime. The Company has estimated supplement to this bond rate is calculated by means of estimation
a tax rate of 0% for the companies subject to Norwegian Tonnage techniques to establish a discount rate that is approximately the
Tax Regime. Financial income within the regime is taxable at a rate same as the term of the pension obligation.
of 25%. For companies not included in the tonnage tax regime, the Past service costs are recognized immediately in income.
Company applies a tax rate of 2%. The tax expense consists of taxes Actuarial gains and losses arising from experience adjustments
payable and changes in deferred tax assets/liabilities. and changes in actuarial assumptions are charged or credited to eq-
Deferred income tax is recognized on temporary differences uity in other comprehensive income in the period in which they arise.
arising between the tax bases of assets and liabilities and their car-
rying amounts in the consolidated financial statements. Deferred 1.22 Derivative financial instruments and hedging
income tax is determined using tax rates (and laws) that have been activities
enacted or substantively enacted by the balance sheet date and are
expected to apply when the related deferred income tax asset is The Company enters into derivative instruments, primarily foreign
realized or the deferred income tax liability is settled. currency contracts and interest rate swaps, to hedge foreign currency
Deferred income tax assets are recognized only to the extent exposures, for example related to operating expenses and vessel
that it is probable that future taxable profit will be available against purchase commitments, and interest rate exposures primarily related
which the temporary differences can be utilized. to long-term borrowings.
Deferred income tax liabilities are provided on taxable temporary Derivatives are initially recognized at fair value on the date a
differences arising from investments in subsidiaries and associates, derivative contract is entered into and are subsequently re-measured
except for deferred income tax liability where the timing of the at their fair value. The method of recognizing the resulting gain or
reversal of the temporary difference is controlled by the Company loss depends on whether the derivative is designated as a hedging
and it is probable that the temporary difference will not reverse in instrument, and if so, the nature of the item being hedged.
the foreseeable future. Generally the Company is unable to control Management designates loans in foreign currencies as hedges
the reversal of the temporary difference for associates. of a particular risk associated with a highly probable forecast trans-
Deferred income tax assets are recognized on deductible action (cash flow hedge), specifically the contractual future sales
temporary differences arising from investments in subsidiaries related to vessels chartered by the Brazilian subsidiary. As of 1 Janu-
and associates only to the extent that it is probable the temporary ary 2016 the functional currency of the Brazilian entity was changed
difference will reverse in the future and there is sufficient taxable from BRL to USD, and as a consequence the hedge accounting was
profit available against which the temporary difference can be utilized. discontinued. Further, some contracts in USD that was previously
Deferred income tax assets and liabilities are offset when there designated as hedge objects were terminated. This resulted in the
is a legally enforceable right to offset current tax assets against reclassification of USD60.3m of hedge loss. See note 21.
current tax liabilities and when the deferred income taxes assets and The fair values of the foreign currency derivative instruments
liabilities relate to income taxes levied by the same taxation authority used for hedging purposes are disclosed in note 15. The full fair
on either the same taxable entity or different taxable entities where value of a hedging derivative is classified as a non-current asset or
there is an intention to settle the balances on a net basis. liability when the remaining hedged item is more than 12 months,
and as a current asset or liability when the remaining maturity of
1.21 Pension costs and obligations the hedged item is less than 12 months.
The effective portion of changes in the fair value of derivatives that
The Company has a defined benefit plan for its employees in are designated and qualify as cash flow hedges is recognized in other
Norway. The pension scheme is financed through contributions compre hensive income. The gain or loss relating to the ineffective
to insurance companies or pension funds. A defined benefit plan portion is recognized immediately in the income statement.
defines the amount of pension benefit that an employee will receive Amounts accumulated in equity are reclassified to profit or loss in
on retirement, usually dependent on one or more factors such as the periods when the forecast sale that is hedged takes place. When
age, years of service and compensation. a hedging instrument expires or is sold, or when a hedge no longer
The liability recognized in the statement of financial position meets the criteria for hedge accounting, any cumulative gain or loss
relating to defined benefit plans is the present value of the defined existing in equity at that time remains in equity and is recognized
the Company; options vest over a five-year period after grant date.
1.28 Government grants At the end of each reporting period, the Company revises its
estimates of the number of options that are expected to vest based
Grants related to net wages arrangement in Norway are recognized on the non-market vesting conditions. It recognizes the impact of
as a reduction of wage cost. the revision to original estimates, if any, in the income statement,
with a corresponding adjustment to equity. Each option gives the
1.29 Operating leases holder the right, but not the obligation, to acquire one share at the
exercise price on the terms and subject to the conditions set out
Leases in which a significant portion of the risks and rewards of in the Stock Option Plan.
ownership still remains with the lessor are classified as operat- When the options are exercised, the Parent issues new shares
ing leases. Payments made under operating lease agreements or re-issues treasury shares. The proceeds received net of any
are classified in the income statement as operating expenses and directly attributable transaction costs are credited to share capital
recognized straight-line over the period of the lease. (nominal value) and share premium.
The grant by the Company of options over its equity instruments
1.30 Share-based payments to the employees of subsidiary undertakings in the Company is
treated as a capital contribution. The fair value of employee ser-
The Company operates an executive management equity-settled, vices received, measured by reference to the grant date fair value,
share-based compensation plan, under which the entity receives is recognized over the vesting period as an increase to investment
services from ten top management employees as consideration in subsidiary undertakings, with a corresponding credit to equity
for equity instruments (share-options) of the Company. The fair in the parent entity accounts.
value of the employee services received in exchange for the grant The social security contributions payable in connection with the
of the options is recognized as an Operating Expense. For additional grant of the share options is considered an integral part of the grant
information see note 31 Share-based payments. itself, and the charge will be treated as a cash-settled transaction.
The total amount to be expensed is determined by reference to the
fair value of the options granted at grant date, as determined using
a Black-Scholes model. Exercise price is the stock price at date of
the exercise. The total expense is recognized over the vesting period,
which is the period over which all of the specified vesting conditions
are to be satisfied. The only condition for vesting is employment with
2.1 Financial risk factors risks can be divided into transaction risk from paying and receiving
The Company is exposed to a variety of financial risks through its foreign currency and translation risk due to recognizing assets and
ordinary operations and debt financing. Such risks include foreign liabilities in USD. The Company had in 2016 mainly USD, NOK,
exchange risk, interest rate risk, credit risk and liquidity risk. To EUR, GBP, BRL, CAD and AUD revenue and expenses, compared
manage these risks, management reviews and assesses its primary to mainly USD, NOK, EUR, GBP and BRL for 2015.
financial and market risks. Once risks are identified, appropriate action At year-end, the Company had a shipbuilding contract with
is taken to mitigate the identified risk. The Company’s risk manage- Polish yard for the construction of one PSV. The contract with the
ment is exercised in line with guidelines approved by the Board. Polish yard is in EUR. After year-end the contract was cancelled
due to delayed delivery from yard. The Company has been repaid
2.2 Foreign exchange risks all pre-delivery instalments related to the cancelled contract.
USD is the reporting currency for the Company. Functional cur- Further information regarding the contract is set out in Note 2.5
rency for the parent company is USD, and for the vessel-operating and Note 17.
subsidiaries USD, NOK, AUD and CAD are the functional currency. The Company is exposed to foreign exchange risk of its subsidi-
Remaining subsidiaries use NOK and EUR as functional currency. aries, in particular the development of the Brazilian Real.
The Company operates internationally and is exposed to foreign The following sensitivity table demonstrates the impact on the
exchange risks arising from various currency exposures primary Company’s profit and equity before tax from potential changes to
with respect to NOK, GBP, EUR, CAD and AUD. Foreign exchange the exchange rates, all other variables held constant.
Financial assets
Cash and cash equivalent 101,323 6,798 6,798 -6,798 -6,798
Derivaties - - - - -
Accounts receivable 48,230 3,519 3,519 -3,519 -3,519
Impact on financial assets before tax 149,553 10,317 10,317 -10,317 -10,317
Financial liabilities
Accounts payable 20,783 -1,646 -1,646 1,646 1,646
Derivatives 8,358 -1,040 -1,040 1,040 1,040
Borrowings 1,470,893 -51,111 -51,111 51,111 51,111
Impact on financial liabilities before tax 1,500,033 -53,797 -53,797 53,797 53,797
Income statement
Operating revenue 469,123 33,889 33,889 -33,889 -33,889
Operating expenses 340,829 -25,938 -25,938 25,938 25,938
Impact on operating result before tax 128,295 7,951 7,951 -7,951 -7,951
Total increase/decrease before tax -35,528 -35,528 35,528 35,528
Financial assets in 2016 and 2015 include derivatives related to hedging of foreign exchange risks. The derivatives in the sensitivity table
include path-dependent options in which the value of the derivatives is influenced when the underlying reaches or fluctuates within, below
or above specific barrier levels. The change in value of these derivatives will impact the profit of the Company.
Financial liabilities in 2016 and 2015 consist of interest rate derivatives and are not influenced by movements in foreign exchange rates.
Financial assets
Cash and cash equivalent 148,753 7,839 7,839 -7,839 -7,839
Derivaties 1,451 - - - -
Accounts receivable 46,147 2,162 2,162 -2,162 -2,162
Impact on financial assets before tax 196,351 10,000 10,000 -10,000 -10,000
Financial liabilities
Accounts payable 8,395 -823 -823 823 823
Derivatives 12,896 14,093 14,093 -14,093 -14,093
Borrowings 1,122,585 -51,906 -51,906 51,906 51,906
Impact on financial liabilities before tax 1,143,877 -38,635 -38,635 38,635 38,635
Income statement
Operating revenue 422,449 23,242 23,242 -23,242 -23,242
Operating expenses 303,901 -24,224 -24,224 24,224 24,224
Impact on operating result before tax 118,548 -982 -982 982 982
Total increase/decrease before tax -29,617 -29,617 29,617 29,617
Financial assets
Cash and cash equivalent 195,433 9,006 9,006 -9,006 -9,006
Accounts receivable - - - - -
Impact on financial assets before tax 195,433 9,006 9,006 -9,006 -9,006
Financial liabilities
Accounts payable 56 -4 -4 4 4
Derivatives - - - - -
Borrowings 210,807 -16,553 -16,553 16,553 16,553
Impact on financial liabilities before tax 210,863 -16,558 -16,558 16,558 16,558
Income statement
Operating revenue 865 22 22 -22 -22
Operating expenses 13,187 -1,298 -1,298 1,298 1,298
Impact on operating result before tax -12,321 -1,275 -1,275 1,275 1,275
Total increase/decrease before tax -8,827 -8,827 8,827 8,827
Financial assets
Cash and cash equivalent 269,293 15,060 15,060 -15,060 -15,060
Accounts receivable - - - - -
Impact on financial assets before tax 269,293 15,060 15,060 -15,060 -15,060
Financial liabilities
Accounts payable 144 -14 -14 14 14
Derivatives - - - - -
Borrowings 207,582 -16,678 -16,678 16,678 16,678
Impact on financial liabilities before tax 207,996 -16,693 -16,693 16,693 16,693
Income statement
Operating revenue 145 15 15 -15 -15
Operating expenses 9,240 -885 -885 885 885
Impact on operating result before tax -9,095 -871 -871 871 871
Total increase/decrease before tax -2,503 -2,503 2,503 2,503
2.3 Credit risks, Concentration risks debtors are mainly major oil companies and offshore service com-
The Company’s credit risk is primarily attributable to its trade and panies, which are considered to be creditworthy third parties. His-
other short-term receivables and asset derivative positions. The torically, the loss percentage has been low but due to the market
derivative counterparties are large established financial institu- development caused by the low oil price, the counterparty risk
tions, and the counterparty risk for the asset derivative positions has increased significantly during the year. Ongoing provisions are
are regarded as limited. made and, on December 31, 2016, the provision for certain accounts
The exposure to credit risk for trade and other short-term re- receivables which may not be paid in full was USD 23.9 million for
ceivables is measured on an ongoing basis and credit evaluations the Company (2015: USD 13.4 million) and USD 0 for the Parent
are performed for customers identified to be risky. The Company’s (2015: USD 261K).
The table below presents the concentration risks for 2016 and 2015.
The carrying amounts of the Company’s and Parent’s accounts receivables are denominated in the following currencies:
The maximum exposure to credit risk at the reporting date is the carrying value of each class of accounts receivables mentioned above.
2.4 Cash flow, interest risk and fair value Company’s profit before tax and equity from a potential shift in
The Company is financed by debt and equity. The Company is interest rates, all other variables held constant.Borrowings in the
moreover exposed to changes in interest rates, which may affect tables above (both for 2016 and 2015) include only borrowings with
the Company’s financial results. floating interest.
These risks are mainly related to the Company’s long term bor- Above movements also include the effect of interest rate swaps
rowings with floating interest rates. entered into in order to hedge the floating interest risk. Market-to-
Further details of the Company’s borrowings are set out in Note 12. market effects in relation to the interest rate swaps impacts the
The Company has no significant interest-bearing assets other profit and loss following a change of +/- 1% in the interest rate.
than cash and cash equivalents and therefore the Company’s income For more details, see Note 12.
and operating cash flows are substantially independent of changes Above movements also include the effect of interest rate swaps
in market interest rates. Cash and cash equivalents are invested for entered into in order to hedge the floating interest risk. Market-to-
short maturity periods, generally from 1 day to 3 months, which market effects in relation to the interest rate swaps impacts the
mitigates some of the potential interest rate risk. profit and loss following a change of +/- 1% in the interest rate.
The following sensitivity tables demonstrate the impact on the For more details, see Note 12.
Financial liabilities
Borrowings 1,023,997 12,687 12,687 -19,507 -19,507
Impact on financial liabilities before tax 1,023,997 12,687 12,687 -19,507 -19,507
Total increase/decrease before tax 11,674 11,674 -18,494 -18,494
Financial liabilities
Borrowings 657,317 5,782 5,782 -5,770 -5,770
Impact on financial liabilities before tax 657,317 5,782 5,782 -5,770 -5,770
Total increase/decrease before tax 4,294 4,294 -4,282 -4,282
Financial liabilities
Borrowings 210,807 2,108 2,108 -2,108 -2,108
Impact on financial liabilities before tax 210,807 2,108 2,108 -2,108 -2,108
Total increase/decrease before tax 154 154 -154 -154
Financial liabilities
Borrowings 207,852 2,079 2,079 -2,079 -2,079
Impact on financial liabilities before tax 207,852 2,079 2,079 -2,079 -2,079
Total increase/decrease before tax -614 -614 614 614
The Company’s financial assets are classified into the categories: Because of the short term to maturity, the value of cash and
assets at fair value through the profit and loss, loans and receivables, cash equivalents entered into the Statements of Financial Position
and available for sale. Financial liabilities are classified as liabilities is almost the same as the fair value of these. Accordingly, the values
at fair value through the profit and loss, and other financial liabilities. of accounts receivable and accounts payable are almost the same
For further information about comparison by category, see Note 29. as their fair values since they are entered on “normal” conditions.
The value of forward exchange contracts is set by comparing The fair value of the Company’s non-current liabilities subjected
forward exchange rate and the rate on the reporting date. The to fixed interest rates is calculated by comparing the Company’s
Company’s following financial instruments are not evaluated at terms and market terms for liabilities with the same terms to ma-
fair value: accounts receivable, cash and cash equivalents, other turity and credit risk.
short-term receivables, accounts payable and long-term liabilities The following tables display the booked value and the fair value
with floating interest. of financial assets and obligations.
CONSOLIDATED
(Amounts in USD 1,000) 12/31/2016 12/31/2015
Financial assets Book value Fair value Book value Fair value
CIRR loan deposit 76,215 79,511 88,002 92,159
Long-term receivables 31,168 31,168 51,598 51,598
Accounts receivables 48,230 48,230 46,147 46,147
Other short-term receivables 120,977 120,977 60,657 60,657
Financial assets held for sale 1,099 1,099 3,459 3,459
Derivative financial instruments - - 1,451 1,451
Cash and cash equivalents 101,323 101,323 148,753 148,753
Total 379,012 382,307 400,066 404,224
Financial liabilities
Borrowings 1,470,893 1,483,834 1,122,585 1,162,291
CIRR loan 76,215 92,580 88,002 92,159
Other non-current liabilities 47,382 47,382 34,142 34,142
Accounts payable 20,783 20,783 8,395 8,395
Derivative financial instruments 8,358 8,358 12,896 12,896
Other current liabilities 134,868 134,868 91,001 91,001
Total 1,758,498 1,774,734 1,357,022 1,400,884
Financial assets Book value Fair value Book value Fair value
CIRR loan deposit 14,300 15,343 19,208 20,215
Long-term loan 59,868 59,868 25,867 25,867
Accounts receivable - - - -
Other short-term receivables 6,298 6,298 4,169 4,169
Cash and cash equivalents 195,433 195,433 269,293 269,293
Total 275,900 276,943 318,538 319,544
Financial liabilities
CIRR loan 14,300 20,636 19,208 20,215
Accounts payable 56 56 144 144
Other current liabilities 7,401 7,401 1,347 1,347
Total 21,757 22,800 20,698 21,706
2.5 Liquidity risk rowing facilities, on favourable terms and in amounts necessary to
The Company monitors its cash flow from operations closely and conduct its ongoing and future operations, should this be required.
optimizes the working capital level of the individual companies and If the Company fails to repay or refinance its loan facilities, additional
the Company as a whole. The Company funds are used for investment equity financing may be required. There can be no assurance that
opportunities in the business, yard instalments, scheduled repayments the Company will be able to repay its debts or extend re-payment
and repayments of debt and to general working capital purposes. schedules through re-financing of its loan agreements or avoid net
The Company seeks to fix the majority of its fleet on long-term cash flow shortfalls exceeding the Company’s available funding
contracts. Vessels not fixed on long-term contracts are typically sources or comply with minimum cash requirements. In the event
exposed to the volatility in the in the short to medium term market. of insolvency, liquidation or similar event relating to a subsidiary
The Company will from time to time require additional capital of the Company, all creditors of such subsidiary would be entitled
to take advantage of business opportunities. to payment in full out of the assets of such subsidiary before the
The tables below summarize the maturity profile of the Company’s Company, as a shareholder, would be entitled to any payments.
financial liabilities including interest, and future commitments to Defaults by, or the insolvency of, a subsidiary of the Company could
the newbuilding program. Further, there can be no assurance that result in the obligation of the Company to make payments under
the Company will be able to raise new equity, or arrange new bor- parent company guarantees issued in favour of such subsidiary.
CONSOLIDATED
Less than 3 3 to 12 1 to 2 2 to 5
(Amounts in USD 1,000) months months years years Thereafter Total
CONSOLIDATED
Less than 3 3 to 12 1 to 2 2 to 5
(Amounts in USD 1,000) months months years years Thereafter Total
PARENT COMAPNY
Less than 3 3 to 12 1 to 2 2 to 5
(Amounts in USD 1,000) months months years years Thereafter Total
No yard instalments falling due for the parent company as there were no vessels under construction year-end 2016 and 2015.
Estimated total
December 31, 2016 revenue Profit/(loss) Equity Profit/(loss) Equity
Total value of contracts 512,811
Progress reporting, effect from movement 5,128 5,128 -5,128 -5,128
Margin estimate, effect from movement - 5,128 5,128 -5,128 -5,128
Estimated total
December 31, 2015 revenue Profit/(loss) Equity Profit/(loss) Equity
Total value of contracts 334,093
Progress reporting, effect from movement 3,341 3,341 -3,341 -3,341
Margin estimate, effect from movement - 3,341 3,341 -3,341 -3,341
IFRS requires management to make estimates and judgments that the estimated stage.
affect the reported amounts of assets and liabilities, as well as in- Periodic project margin is only recorded when the overall project
come and expenses in the financial statements. The final reported margin is forecasted to be positive, and when the execution of the
outcomes may deviate from the original estimates. project has reached such level of technical completion beyond 25
Certain amounts included in, or that have an effect on, the ac- percent that the management is comfortable to assess the financial
counts and the associated notes require estimation, which in turn outcome of the project.
entails that the Company must make assessments related to values The sensitivity of the recorded revenue on long-term construc-
and circumstances that are not known at the point in time when tion contracts would be +/- USD 8.9 million in 2016 (2015: USD 8.9
the accounts are prepared. million) if management had estimated a 10% better/worse progress
A significant accounting estimate is an estimate that is important on the contracts ongoing at year-end 2016.
to provide a complete picture of the Company’s financial position,
which at the same time is the result of difficult, subjective and com- Vessels
plex assessments performed by the management. Such estimates
are often uncertain by nature. Impairment of vessels
Management evaluates such estimates continuously based on On the reporting date, the Company has assessed whether there
historical data and experience, consultation with experts, trend are any indications that it may be necessary to write down a vessel.
analysis and other factors that are relevant for the individual esti- Indicators include external broker estimates, significant changes
mate, including expectations of future events that are believed to in charter hire contracts, day rates, operating costs or adverse
be reasonable under the circumstances. market conditions.
Estimates and assumptions that have a significant risk of caus- When such indications exist, an impairment test is performed in
ing a material adjustment to the carrying amounts of assets and accordance with Company policy.The recoverable value of the vessel
liabilities within the next financial year, as well as judgments made is estimated, and if the recoverable amount is less than the current
by management, in the process of applying the Company’s account- carrying value, an impairment loss is recognized in the amount of
ing policies, that have the most significant effect on the amounts the difference between carrying value and net realizable value.
recognized in the financial statements, are discussed below. The recoverable amount for vessels is estimated by means of
broker estimates and value in use calculations based on projected
Revenue recognition – percentage-of-completion for discounted cash flows for the remaining charter hire period or over
off-shore cable contracts the next four years if no charter contract exists, together with an
assumption of a terminal value of the vessel.
The Company uses the percentage-of-completion method in ac- The market for offshore service vessels is expected to remain
counting for its fixed price construction contracts related to the weak for several years. For vessels fixed on firm contracts during
segment Submarine Power Cable Installation. the period from 2017 until 2019, the assumption is that the contract
One significant estimate is an estimate of the percent complete. remains unchanged during the remaining contract period, and that
Management estimates completion based on an assessment of the rate level are reduced thereafter until the end of 2019. Options
certain technical criteria in the project execution plan that have to be included in charter hire agreements are not considered in the value
met in order to achieve a certain level of percentage of completion, in use calculations.
as opposed to using costs incurred as a measure of completion. The key assumptions used to determine the recoverable amount
The primary risk in the execution of projects relates to the off- for the different CGUs, including a sensitivity analysis, are disclosed
shore installation phase. Hence, profit margin is not recorded until and further explained in Note 5.
the progress of the project has reached a stage of minimum 25
percent technical completion and that the offshore installation Impairment of goodwill
phase has commenced.
The project shall need to progress into the cable-laying phase The Company tests whether goodwill and intangible assets have
before the minimum 25 percent age of technical completion is suffered any impairment in accordance with the accounting policy
reached. Prior to reaching a progress of minimum 25 percent techni- stated in note 1.11. The recoverable amounts of cash-generating
cal completion, and subject to a foreseen positive project margin, unit have been determined based on value-in-use calculation. This
project revenue is accrued to match the actual costs incurred at calculation requires the use of estimates (Note 5).
Hedge accounting
The Company identifies its reportable segments and disclose segment of two Oilspill Recovery Vessels and four smaller fast supply ves-
information under IFRS 8 Operating Segments which requires Siem sels and crew vessels.
Offshore Inc. to identify its segments according to the organization Combat Management Systems is the activity of supplying soft-
and reporting structure used by management. Operating Segments ware for a management system to the Brazilian Navy. Submarine
are components of a business that are evaluated regularly by the chief Power Cable Installation comprises the activities of installation and
operating decision maker for the purpose of assessing performance maintenance of subsea power cables for offshore windfarms. Scien-
and allocating resources. tific Core-Drilling is comprised of the activity of a scientific drillship
The Company’s chief operating decision maker is the management which performs core-drilling. The segment Siem WIS is comprised of
board, comprised of the CEO, CFO, CCO and CHRO. Generally, finan- the ownership of Siem WIS that develops applications for managed
cial information is required to be disclosed on the same basis that is pressure drilling (“MPD”), and certain other activities. Siem Offshore
used by the chief operating decision maker. The Company’s operating Inc. uses three measures of segment results, Operating Revenue,
segments represent separately managed business areas with unique Operating Margin and Net Profit.
products serving different markets. The reportable business areas are Intersegment sales and transfers reflect arm’s length prices
OSV with the segments PSV, OSCV and WIV, AHTS Vessels, Canadian as if sold or transferred to third parties at the time of inception of
fleet and Other Vessels in Brazil, and Industrial with the segments the internal contract, which may cover several years. Transfers of
Combat Management Systems, Submarine Power Cable Activities, business or fixed assets within or between the segments are re-
Scientific Core-Drilling and Siem WIS. ported without recognizing gains or losses. Results of activities not
The PSV segment includes 13 Platform Supply Vessels. The considered part of Siem Offshore Inc.’s main operations as well as
OSCV and WIV segment includes five Offshore Subsea Construc- unallocated revenues, expenses, liabilities and assets are reported
tion Vessels and two Well Intervention Vessels. The AHTS segment together with Other under the Caption Other and eliminations. The
includes ten Anchor Handling and Tug Supply Vessels. The Canadian following tables include information about the Company’s operat-
fleet Segment consist of five offshore support vessels operating ing segments.
offshore Canada. The Segment of Other Vessels in Brazil consists
CONSOLIDATED
(Amounts in USD 1,000) 2016 2015
CONSOLIDATED
(Amounts in USD 1,000) 2016 2015
Operating profit/(loss) by business area
PSV -43,081 -28,980
OSCV and WIV 7,406 19,998
AHTS Vessels -29,496 -134,230
Other Vessels in Brazil 3,184 3,478
Canadian fleet 5,739 -
Other/Intercompany elimination -11,996 -3,413
Operating profit OSV segment -68,244 -143,147
Combat Management Systems 31 -208
Submarine Power Cable Installation 30,540 15,856
Scientific Core-Drilling 11,391 10,709
Siem WIS -710 720
Other/Intercompany elimination - -
Operating profit Industrial segment 41,253 27,076
Other operating profit/(loss) includes, among others, gain of sale of interest rate derivatives (CIRR), gain/(loss) on currency exchange
forward contracts and general and administration expenses.
CONSOLIDATED
Land and Vessels under Vessels and Capitalised
(Amounts in USD 1,000) buildings construction equipment Drydocking project cost
Purchase cost on January 1, 2015 4,128 145,015 2,084,094 54,855 17,597
Correction opening balance January 1, 2015 3,656 2,669 1,821
Capital expenditure 63 122,614 8,282 19,495 461
Movements between groups 1,024 -1,024
Vessels delivered in 2015 - -62,970 62,970 - -
The year's disposal at cost -3,805 - -151,452 -4,032 -6,179
Effect of exchange rate differences -75 -12,095 -78,085 -1,001 -
Purchase cost on December 31, 2015 310 192,563 1,930,488 71,986 12,676
Accumulated depreciation on January 1, 2015 -433 - -351,882 -32,569 -6,632
Accumulated impairment on January 1, 2015 -14,500 -14,500
Correction opening balance January 1, 2015 -1,501 -687
The year's depreciation -2 - -84,954 -16,318 -4,813
Impairment - -159,465
Movements between groups, impairment 7,000 -7,000 - -
The year's disposal of accumulated depreciation 410 - 43,186 3,722 4,836
Effect of exchange rate differences 5 - 9,611 603 -
Accumulated depreciation on December 31, 2015 -20 -7,500 -566,506 -44,563 -7,296
Net book value on December 31, 2015 291 185,063 1,363,982 27,423 5,380
Purchase cost on January 1, 2016 310 192,563 1,930,488 71,986 12,676
Capital expenditure 3 333,544 69,690 9,444 2,083
Business combinations - - 183,631 - -
Vessels delivered in 2016 - -505,685 505,018 666 -
The year's disposal at cost - -10,424 -47,073 -11,683 -27
Effect of exchange rate differences -11 25 -2,675 -84 -
Purchase cost on December 31, 2016 302 10,024 2,639,079 70,328 14,732
Accumulated depreciation on January 1, 2016 -20 - -392,540 -44,563 -7,296
Accumulated impairment on January 1, 2016 - -7,500 -173,965 - -
Movements between groups - 7,500 -7,500 - -
The year's depreciation -13 - -96,747 -12,645 -1,873
Impairment of vessels - -1,766 -58,414 - -
The year's disposal of accumulated depreciation - - 21,435 11,005 59
The year's disposal of accumulated impairment - - 24,433 - -
Effect of exchange rate differences 1 - 71 -12 -
Accumulated depreciation on December 31, 2016 -32 -1,766 -683,233 -46,216 -9,111
Net book value on December 31, 2016 270 8,258 1,955,845 24,112 5,623
The balance of capitalized project costs relate to specific contracts. The costs are amortized over the term of the specific charter
contracts.
INTANGIBLE ASSETS
INTANGIBLE ASSETS
Research and Trademarks
(Amounts in USD 1,000) Goodwill development and licences Total
Balance on January 1, 2016 15,555 12,025 381 27,961
Business combinations 1,123 - - 1,123
Investments - 38 - 38
Effect of exchange rate differences -581 61 7 -513
Purchase cost on December 31, 2016 16,097 12,125 387 28,608
Trademarks and licences refer to Siem WIS AS patented technology for the drilling industry. The figures include assets under development
and developed assets, and the depreciation refers to developed assets that are not yet commercialized.
Sensitivities approximately USD 39.6 million, relevant for only 10 of the vessels.
Impairment of USD 60.2 million was recognized as of December 31, With an increase in freight rate assumptions of USD 1,000 day, VIU
2016. The VIU calculation is mainly affected by changes in WACC would become higher than FVLCOD for certain vessels.
and freight rate assumptions. An increase in WACC of 0.5% would increase the total impairment
A reduction of freight rate assumption of USD 1,000 per day by approximately USD 12.6 million. A decrease in WACC of 0.5%
for remaining life for each vessel would increase the total impair- would imply an impairment of approximately USD 48.3 related to
ment by approximately USD 21.6 million. An increase in freight rate only 11 of the vessels. With a decrease in WACC of 0.5%, VIU would
assumption of USD 1,000 per day would imply an impairment of become higher than FVLCOD for certain vessels.
COMPANY (Amounts in USD 1,000) Registered office Ownership and voting share
The book value in Siem Offshore do Brasil SA was increased with USD 12.2 million, Siem Offshore Rederi AS reduced by USD 272.9 million,
Siem Offshore Construction Vessels increased by USD 11.4 million, Siem Offshore Management AS increased by USD 1.6 million, Siem
AHTS Pool AS increased by USD 275.8 million and Siem Offshore Invest AS increased by USD 0.1 in 2016.
The above companies are owned by the Parent. In addition, the subsidiaries own the following companies:
Figures for associated companies included in the consolidated accounts based on the equity accounting.
Of which:
Adjustments IFRS and fair value in
excess of book value for vessel and 0 314 123 120 2,874 0 3,431
goodwill as of January 1
Capital increase, correction previ-
- - - - - -
ous year
Adjustment for depreciation IFRS - 4 - - - - 4
Amortisation of fair value in excess
of book value for vessels and - - - -120 -2,834 - -2,954
goodwill
Effect of exchange rate differences 15 6 1 - -40 -18
Fair value in excess of book value
for vessels and goodwill as of
December 31 15 324 124 0 0 0 463
Of which:
Adjustments IFRS and fair value in
excess of book value for vessel and - 373 157 144 482 1,156
goodwill as of January 1
Capital increase, correction previ-
- - - - 2,427 2,427
ous year
Adjustment for depreciation IFRS - - -9 - -274 -283
Amortisation of fair value in excess
of book value for vessels and - - - - -1,443 -1,443
goodwill
Effect of exchange rate differences - -59 -25 -24 1,682 1,574
Fair value in excess of book value
for vessels and goodwill as of
December 31 - 314 123 120 2,874 - 3,431
CONSOLIDATED
(Amounts in USD 1,000) 2016 2015
CONSOLIDATED
(Amounts in USD 1,000) 2016 2015
Financial assumptions:
Discount rate 2.60% 2.70%
Expected return on funds 2.60% 2.70%
Expected wage adjustment 2.50% 2.50%
Adjustm. of the basic National Insur. amount 2.25% 2.25%
Expected pension increase 0.00% 0.00%
Number of employees in defined benefit scheme 326 334
Long-term receivables
4,136 3,997 Employee loans, see Note 19 4,136 3,997
55,732 21,870 Intercompany receivables - -
- - Loan to Group of Parent Company - 17,069
- - Other long term receivables 12,924 1,462
- - Convertible loan to Customer (1) 14,107 29,070
59,868 25,867 Total long-term receivables 31,168 51,598
(1) The sale of “Siem Daya 1” was partly financed by a Seller’s credit from Siem Offshore Inc. in the form of a Convertible Bond with four
years duration. Following an impairment test of the Convertible Bond, an impairment at USD 14.0 million was recorded.
(2) Outstanding insurance claims refer to breakdown expenses qualifying for insurance cover. The amount is less own deduction.
USD 5.8 million of the Company’s cash balance at year end was restricted funds of which USD 1.2 million was for tax withholdings and
USD 4.6 million represented security for bank guarantees and loans.
Note 11 – Taxes
CONSOLIDATED
(Amounts in USD 1,000) 2016 2015
Temporary differences
Deferred tax
Participation in limited liability companies -2,701 -2,701
Operating assets -30,927 -34,497
Pension funds/obligations -1,493 -2,601
Other long-term differences 6,517 4,605
Net temporary differences as of December 31 -28,604 -35,194
Tonnage tax in subsidiaries, as of December 31
(Amounts in USD 1,000) 2016 2015
Tonnage tax regime in subsidiaries, as of January 1 5 22
Tax charge -4
Paid -16
Effect of exchange rate differences 4
Total tonnage tax in subsidiaries, as of December 31 5 5
12/21/2015
Total tax liabilities CONSOLIDATED
(Amounts in USD 1,000) Tonnage tax regime Other tax regime Total tax expense
Long term tax liabilities falling due after 1 year - 5,483 5,483
Payable taxes falling due within 1 year 5 3,491 3,496
Tax liabilities 5 8,974 8,979
Tax expense
(Amounts in USD 1,000) Tonnage tax regime Other tax regime Total tax expense
Taxes payable -4 -4,506 -4,510
Change in deferred tax/deferred tax asset - -227 -227
Total -4 -4,734 -4,737
Note 12 – Borrowings
The Company has a portfolio of bank loans secured with mortgage in vessels. The creditor and guarantors are in general first class com-
mercial banks and state owned financial institutions with ratings on or above BBB- and AAA.
As of year-end, the Company had issued two high yield unsecured bonds of NOK 600 million and NOK 700 million respectively. It is
agreed with the bondholders that its two high yield bonds shall be extended with additional 2.75 years from original maturity date The
high yield unsecured bonds are listed on Oslo Stock Exchange, have no amortization and matures in 2020 and 2021.
The book value of mortgaged assets consist of non-current tangible assets and portion of the accounts receivables and amounts to USD
1,395 million at year end.
There are various financial covenants related to the Company’s debt agreements. The main prevailing covenants are:
• Value Adjusted Equity Ratio
• A ratio of Financial Indebtedness to EBITDA
• Free cash covenant
• The Company and Parent are in compliance with the financial covenants as per 31 December 2016.
Prior to ordering vessels from Norwegian yards, the Company applied for fixed 12-year interest rate options related to the long-term
financing of such vessels. The Company was granted such options for each of the relevant vessel by the Norwegian Export Credit Agency.
The Company made certain sale of the right to exercise such options to a first class international bank (the “Bank”). Long-term loans
drawn from the Norwegian Export Credit Agency are placed as corresponding deposits in the Bank as financial security for the loans
drawn. Recognition of the gain, related to each option, is recorded over the term of any drawn loans. In relation to sale of a vessel in 2015
which had a fixed 12-year USD interest rate associated with its mortgage debt financing, the proceeds from the sale equivalent to the
respective remaining amount of the outstanding long-term loan from the Norwegian Export Credit Agency were placed on deposit in the
Bank as financial security for the drawn loan at the date when the sale was concluded.
The Company’s largest shareholder, Siem Europe S.a r.l, with a holding of 83 %, and its parent company, Siem Industries Inc., are defined
as related parties. The Company has an obligation to Siem Industries Inc., for a fee of USD 250K for 2016 (2015: USD 300K). This fee is the
remuneration for the services of the two of the Board members. This fee also covers office in the Cayman Islands and administrative costs.
Details related to transactions, loans and remuneration to the Executive Management and the Board of Directors are set out in Note 19.
For the Parent, all subsidiaries listed in Note 6 are also defined as related parties.
For other related parties, the following transactions were carried out:
Above service is provided to companies in which a Board member has an interest. Kristian Siem is the Chairman of Siem Industries Inc.,
which is controlled by a trust whose potential beneficiaries include members of Kristian Siem’s immediate family. Siem Industries holds
an interest in Subsea 7. Siem Offshore LLC, 100% owned by the Company and Siem AHTS Pool AS, 78% owned by the Company, have
charted vessels to Subsea 7 during 2016. The amount for 2016 also include management services delivered to Siem Industries and to
subsidiaries of Siem Europe S.A R.L.
Service delivered from related parties is mainly cost for technical management, corporate management and delivered crew. The service
is supported to Siem Meling Offshore DA, 51% owned by the Company, and is delivered by its partner in Siem Offshore DA.
Service from entity where director has ownership consist of instalment according to shipbuilding contracts with Flensburger Schiffbau-
Gesellschaft and management fee from Siem Capital UK Ltd, both owned 100% by Siem Europe; S.a.r.l.
The Company holds a long-term loan to Rovde Industripark AS and a long-term loan to Siem Industries Inc.The loan to Siem Industries
Inc was repaid end of 2016. Siem Offshore Invest AS owns 50% of Rovde Industripark AS.
In 2015 the Company provided a short-term loan to Research Developement & Financial Consultant Ltd. The borrower is the 49% owner
of Siem Offshore Ghana International AS. The loan is on markets term of interest.
Long-term liability
The long-term liability consist of two fasilities. The Company has a long-term credit facility provided by Siem Industries Inc. and Siem
Meling Offshore DA has drawn a long-term liability from its partner in Siem Meling Offshore DA.
Short-term liability
End of 2014, a short-term liability of USD 60 million was drawn by Siem Offshore Inc. under a credit facility provided by Siem Industries
Inc. In 2015, the parties have agreed to change the terms of the liability from a short-term liability to a long-term liability. This is reflected
in the tables above as reclassification.
The liability is on market term of interest.
Following transactions with related parties were carried out for the parent company
Sales to subsidiaries and associates consists of guarantee provisions to Siem Offshore Rederi AS, Siem Offshore Contractors GmbH and
Secunda Canada LP.
Service from subsidiaries consists of administrative and corporate services provided by Siem Offshore Management AS. All terms used
for above transactions are at arms’ length.
The long-term loan to subsidiaries on 31 December 2016, is held against Siem Offshore do Brasil SA and Siem AHTS Pool AS.
Loan provided to associates, Siem Offshore Contractors GmbH, a company owned 100% by the subsidiary Siem Offshore Invest AS, was
repaid during 2015.
All loans are on market terms of interest.
The short-term loan to related parties on 31 December 2016, is held against Siem Offshore do Brasil SA and Research Developement &
Financial Consultant Ltd. The borrower is 49% owner of Siem Offshore Ghana International AS.
All loans are on market terms of interest.
Note 16 – Guarantees
Contractual guarantees to Brazilian Navy are issued by Siem Offshore do Brasil SA. Guarantees related to disputes and ongoing tax-cases
have been raised per request from Brazilian tax authorities. Contractual guarantees provided by Parent are security for clients of Siem
Offshore Contractors GmbH.
Note 17 – Commitments
Capital expenditures contracted for at the reporting date but not yet paid are as follows:
PARENT COMPANY Instalments falling due over the next 2 years CONSOLIDATED
12/31/2016 12/31/2015 (Amounts in USD 1,000) 12/31/2016 12/31/2015
- - 2016 - 395,900
- - 2017 - -
- - Total - 395,900
(1) As at 31 December 2016, the Company had one vessel under construction at a Polish yard. After year-end, the contract was cancelled
due to delayed delivery. All prepayments have been refunded from refund guarantees.
(1) Personnel expenses includes vessel crew expenses and part of general and administrative expenses, see Note 18.
Government grants are a special Norwegian seaman payroll and tax refund given to Norwegian shipping companies.
The average number of employees in the Company was 1,058 for 2016 (2015: 949), including onshore and offshore employees. There
are no employees in the Parent Company.
Corporate management salaries and other benefits are presented in the table below:
Name Salary paid Pension premium Other benefits Share options held
Shares in the Company held by members of corporate management in 2016 were 1,538,161 (2015: 1,538,161).
1) Idar Hillersøy replaced Terje Sørensen as CEO with the effect from July 2015.
2) COO Svein Erik Mykland left the Company with the effect from December 2015.
The Board of Directors of Siem Offshore Inc. has authorized the award of two programs of Stock Options to seven employees of the Com-
pany. See Note 31 for more information.
Loan on December 31, 2016 (Amounts in USD 1,000) Amount Interest Terms
Loan to executive management 727 11 Share loan (1)
Total 727 11
Loan on December 31, 2015 (Amounts in USD 1,000) Amount Interest Terms
Loan to executive management 716 9 Share loan (1)
Total 716 9
The Remuneration paid to the Board of Directors in 2016 was USD 407K (2015: USD 430K).
Auditor’s remuneration
PARENT COMPANY CONSOLIDATED
2016 2015 (Amounts in USD 1,000) 2016 2015
87 96 Audit Fee 452 484
15 101 Audit Fee Other 212 226
10 11 Tax/Legal Assistance 10 41
13 6 Other consultants, Fees 41 259
126 214 Total auditor’s remuneration 715 1,010
The Company has entered into different operating leases for office premises, office machines and communication satellite equipment for
the vessels. The lease period for the lease agreements varies and most of the leases contain an option for extention.
The lease costs were as follows:
As of 31 December 2016, the Company had some commitments relating to lease agreements which fall due as follows:
Net present value of future commitments relating to lease agreements are calculated to be USD 3,838 thousand for the Company. There
are no lease agreements for the Parent. The interest rate in the calculation of net present value is 5%.
Financial income
4,499 3,491 Interest income 8,487 4,223
3,308 - Other financial income 3,984 6,961
7,807 3,491 Total financial income 12,471 11,184
Financial expenses
-12,752 -12,210 Interest expenses -50,146 -51,149
-73 -16 Other financial expenses -5,166 -3,529
-12,825 -12,225 Total financial expenses -55,312 -54,677
Net currency gain/(loss) includes an unrealized loss of USD 3.8 million related to intercompany transactions and USD 60.3 million related
to a terminated hedge accounting program for the Brazilian subsidiary..
The net currency gain/(loss) for the Parent of USD 64 thousand includes an intercompany gain of USD 563 thousand.
The weighted average cost of debt for the Company was approximately 3.9% p.a. at 31 December 2016, including the effect of fixed
interest rate swap agreements.
2016 2015
Weighted average number of shares outstanding (1,000) 842,021 518,318
Weighted average number of shares diluted (1,000) 842,021 757,123
Result attributable to shareholders (USD 1,000) -142,436 -186,687
Loss per share attributable to equity shareholders -0.17 -0.36
Loss per share diluted attributable to equity shareholders -0.17 -0.36
CONSOLIDATED
Recognized Accumulated per
(Amounts in USD 1,000) 2016 December 31 2016
Revenue 177 572 241 696
Cost 129 439 145 064
Total 48 133 96 632
Assets/liabilities
December 31 2016
Prepaid project cost Unearned revenue Accrued project cost Unbilled revenue
Revenue 19 296 - 47 192
Cost 16 624 51 577 -
Total 16 624 19 296 51 577 47 192
Assets / liabilities
December 31 2015
Prepaid project cost Unearned revenue Accrued project cost Unbilled revenue
Revenue - 28 378 - 3 510
Cost 14 918 - 9 867 -
Total 14 918 28 378 9 867 3 510
Contracts in progress refer to activity within the Power Cable Installation Segment and Combat Management Systems (CMS), see Note 4.
The activity within Power Cable Installation segment included six projects in progress at year-end 2016. These projects are in an various
phases, and margin for 2016 is recognized only on projects with progress exceeding 25 %.
At year-end 2016, the activity within CMS had two projects in progress. The degree of completion varies from 29% to 94%. Margin for
2016 is recognized only on projects with progress exceeding 25%.
All projects in progress at year-end 2016 are estimated to generate a positive contribution over the total project period.
There are no contracts in progress in the Parent Company.
See note 2.9 for analysis of sensitivity.
CONSOLIDATED
(Amounts in USD 1,000) 2016 2015
Purchase cost per January 1 3,459 -
Moved from Fixed asset 1,099 3,459
The year’s disposal at cost -3,459 -
Purchase cost on December 31 1,099 3,459
Booked value for the vessel “Siem Supplier” was transferred from fixed assets to asset held for sale in December 2016.
Booked value for the vessel “Siem Carrier” was transferred from fixed assets to asset held for sale in December 2015.
2016
The net loss for the Company on sale of assets of USD 0.4 million consists of loss from the sale of the “Panuke” and other equipment.
2015
The net gain for the Company on sale of asses of USD 16.3 million consist of gain from the sale of the OSCV “Siem Daya 1” by USD 16.6
million, and a loss on sale of other equipment of USD 0.3 million.
Siem Europe S.a r.l. is the main shareholder of Siem Offshore Inc. and is controlled by a trust whose potential beneficiaries include mem-
bers of Kristian Siem’s immediate family. Kristian Siem, who is Director of the Company, is also the Chairman of Siem Industries Inc., who
is the parent company of Siem Europe S.a r.l.
Further details related to the currency derivative contracts are set out in Note 15.
Below is a comparison by category for carrying amounts and fair values of all of the Company’s financial instruments.
CONSOLIDATED
(Amounts in USD 1,000) Loans and Assets at fair value through Available for
December 31, 2016 receivables the profit or loss sale Total
Assets as per statement of financial position
Derivative financial instruments 48,230 - - 48,230
Other short term receivables (1) 69,917 - - 69,917
CIRR Loan deposit 76,215 - - 76,215
Long term receivables 31,168 - - 31,168
Cash and cash equivalents 101,323 - - 101,323
Total 326,853 - - 326,853
(1) Prepayments do not qualify as a financial instrument and are not included in above amount. Excluded prepayments amount to USD
51,060, see Note 9.
CONSOLIDATED
(Amounts in USD 1,000) Liabilities at fair value through Other financial
December 31, 2016 the profit or loss liabilities Total
(1) Non-financial liabilities do not qualify as a financial instrument and are not included in above amount. Excluded liabilities amount to
USD 31,790 consisting of USD 2,868 in Taxes Payable, USD 1,692 in Pension Liability, USD 3,042 in Social Security Payable and USD
24,188 in Unearned Income. See Note 13 for information about Social Security Payable and Unearned Income.
CONSOLIDATED
(Amounts in USD 1,000) Loans and Assets at fair value through Available for
December 31, 2015 receivables the profit or loss sale Total
(1) Prepayments do not qualify as a financial instrument and are not included in above amount. Excluded prepayments amount to USD
18,387, see Note 9.
CONSOLIDATED
(Amounts in USD 1,000) Liabilities at fair value through Other financial
December 31, 2015 the profit or loss liabilities Total
(1) Non-financial liabilities do not qualify as a financial instrument and are not included in above amount. Excluded liabilities amount to
USD 12,802 consisting of USD 3,496 in Taxes Payable, USD 2,258 in Pension Liability, USD 3,552 in Social Security Payable and USD
3,496 in Unearned Income. See Note 13 for information about Social Security Payable and Unearned Income.
PARENT COMPANY
(Amounts in USD 1,000) Loans and Assets at fair value through Available for
December 31, 2016 receivables the profit and loss sale Total
(1) Prepayments do not qualify as a financial instrument and are not included in above amount. Excluded prepayments amount to USD
278. See Note 9.
PARENT COMPANY
(Amounts in USD 1,000) Loans and Assets at fair value through Available for
December 31, 2015 receivables the profit and loss sale Total
(1) Prepayments do not qualify as a financial instrument and are not included in above amount. Excluded prepayments amount to USD
4, see Note 9.
PARENT COMPANY
Liabilities at fair value through Other financial
(Amounts in USD 1,000) the profit and loss liabilities Total
Note 30 – Inventories
The Company has entered into two Employee share schemes with Value of employee services as per December 31, 2016 are recognized
selected employees. under Retained earnings at USD 3,125.
On the 13 January 2013, the Company entered into a Share option On the 2 April 2014, the Company entered into a Share option agree-
agreement as follows: The Board of Directors of Siem Offshore ment with selected employees. The Board of Directors of Siem Off-
Inc. has authorized the award of 14,000,000 share options to eight shore Inc. has authorized the award of 3,000,000 share options to
key employees of the Company. The exercise price is NOK 8.45 ten key employees of the Company. The exercise price is NOK 9.07
per share. The exercise price of the granted options is equal to the per share.The exercise price of the granted options is equal to the
market price of the shares on the date of the grant. market price of the shares on the date of the grant.
The Options can be exercised as follows: The Options can be exercised as follows:
2014 2017
20% of the total number beginning on January 18th 2014. 60% of the total number beginning on April 2nd 2017, less any op-
tions previously issued.
2015
40% of the total number beginning on January 18th 2015, less any 2018
options previously issued. 80% of the total number beginning on April 2nd 2018, less any op-
tions previously issued.
2016
60% of the total number beginning on January 18th 2016, less any 2019
options previously issued. 100% of the total number beginning on April 2nd 2019, less any
options previously issued.
2017
80% of the total number beginning on January 18th 2017, less any The exercise period shall in no event be later than the date falling 10
options previously issued. years after the award date. The group has no legal or constructive
obligation to repurchase or settle the options in cash. The weighted
2018 average fair value of options granted during the period determined
100% of the total number beginning on June 18th 2018, less any using the Black-Scholes valuation model was NOK 3.65 per option.
options previously issued. The significant inputs into the model were weighted average
share price of NOK 9.07 at the grant date, exercise price of NOK 9.07,
The exercise period shall in no event be later than the date falling volatility of 25.92%, dividend yield of 0%, an expected option life of
10 years after the award date.The group has no legal or constructive 10 years and an annual risk-free interest rate of 2.90%. The volatility
obligation to repurchase or settle the options in cash. No options measured at the standard deviation of continuously compounded
were exercised during 2015 or 2016. share returns is based on statistical analysis of daily share prices
The weighted average fair value of options granted during the over the last five years.
period determined using the Black-Scholes valuation model was During 2015 three members of the option program left the
NOK 3.72 per option. Company. They have been taken out of the progam and previously
The significant inputs into the model were weighted average expensesd option costs are reversed. See Note 19 for the total ex-
share price of NOK 8.45 at the grant date, exercise price of NOK pense recognised in the income statement for share options granted
8.45, volatility of 23%, dividend yield of 0%, an expected option life to certain employees.Value of employee services as per December
of 10 years and an annual risk-free interest rate of 2.32% (4.13%). 31, 2016 are recognized under Retained earnings at USD 0.391.
The volatility measured at the standard deviation of continuously
compounded share returns is based on statistical analysis of daily
share prices over the last three years.
See Note 19 for the total expense recognised in the income
statement for share options granted to certain employees.
At the end of May 2016, Siem Offshore Inc. acquired the remaining From the date of acquisition, revenues of USD 27,5 million and a
50% of the shares in Secunda. Following this transaction, Siem loss of USD -1,2 million is included in these consolidated financial
Offshore Inc. owned and controlled 100% of the shares in Secunda. statements related to the acquisition of Secunda.
Details of the purchase consideration, the net assets acquired and Under the assumption that the acquisition had taken place on
bargain gain recognized are as follows: January 1, 2016, revenue and loss of the combined group would
have been USD 480,1 million and USD -155,9 million respectively
Purchase consideration for the remaining 50% shares was USD 1. (unaudited amounts).
A bargain purchase gain was recorded at USD 18.3 million fol-
The assets and liabilities recognized as a result of the acquisition lowing the acquisition of the remaining 50% shares in Secunda.
are as follows; The Bargain Gain has been tested against fair market value for
the previous held 50% shares in Secunda, the fair market value of
(Amounts in USD 1,000) the individual vessels and the fair market value of the contracts.
Based on such analysis management has concluded to recognize
Cash 4,599
a bargain gain of USD 18.3 million in the income statement.
Accounts receivable 4,750
The acquisition of the remaining 50% shares was a consequence
Other current receivables 977 of the previous owner’s decision not to contribute to further funding
Vessels and equipment including favorable of Secunda following certain circumstances when Secunda took
110,849
time charter contracts delivery a new PSV in May 2016.
Other non-current assets 1,194 Secunda had a contract with a Polish yard for the delivery of a
Accounts payable -1,649 highly specialized newbuilt PSV that was to commence operations
Other current liabilities -3,122 for a major oil-company offshore Canada.
Borrowings -84,480
As the vessel was delayed from the yard in Poland, the client noti-
Other non-current liabilities -51
fied Secunda that it intented to cancel the charter party due to
Net identifiable assets acquired 33,067
the delayed delivery. Following this information, the financing bank
Gross bargain gain recognized 33,067 informed Secunda that the financing commitment for the vessel
was terminated with immediate effect.
Business combination was achieved in stages and the following Siem, as the most active owner of Secunda, managed to get
information explains the loss recognized on equity interest held im- a tender for a alternative financing package in place, however at
mediately before the acquisition and the net bargain gainrecognized: less favorable terms than the original financing. Further, the import
duty that would be payable to Canandian customs was no longer
Loss on equity interest held immediately considered as being a part of the vessel purchase price, and had to
-14,755 be financed by funds provided by the owners of Secunda.
before the acquisition
Gross bargain gain recognized 33,067 At this stage, the previous owner declared that he did not accept
the increased risk following the delayed delivery of the vessel and
Net bargain gain recognized 18,312
that he would not contribute with shareholder’s funding that was
a term under the debt agreement.
Further, the previous owner declared that his investment in Se-
cunda was not regarded as part of his core business.
C
ayman Islands corporate law
is to a great extent based
on English Law. In addition,
due to the Company being a
Norwegian Tax Resident, the Norwegian
Accounting law applies to the Company.
According to the Norwegian Accounting
Act $3-3c the Company should provide
a statement on social responsibility. The
statement should include which actions
are taken by The Company to integrate
human rights, employee’s rights and so-
cial conditions, external environment and
the fight against corruption in its business
strategies, daily operations and in relation
to its interested parties.
The Board of Directors has reviewed
this statement. It is the opinion of the
Board of Directors that the Company
complies with regulations in the Nor-
wegian Accounting law with respect to
Social Responsibility reporting.
The Company has also entered into shipbuilding contracts with The Company is dedicated in creating a high-quality working
high standard shipbuilding yards in Norway, Poland and Germany. environment under which its people respect and trust each other
These subcontractors are subject to review on an ongoing basis. such that everyone acts in an honest, friendly and proactive way
The Company expects that all of its business partners have the with a responsible attitude and high moral standards. The Company
same approach to business dealing. prohibits bullying and harassment in any form including sexual,
racial, ethnic, and other forms of harassment.
Improper payments At Christmas 2012 The Company donated funds to Jaynii Street-
The Code of Business Conduct does also include policies on improper wise in Ghana. No funds have been donated in 2016. Jaynii Streetwise
payments. The Company does not tolerate any actions / payments is a charity and non-governmental organization founded in Ghana by
which could be viewed as improper payments. Jay Borquaye and Emmanuel (Nii) Quartey in the deprived area of
No gift, hospitality or travel benefit may be offered to or requested Jamestown (Accra) with the aim of improving the lives of children
or accepted from any third party if that benefit could be seen to be and youth. Jaynii Streetwise was born out of their Jaynii Cultural
disproportionately generous or otherwise be seen as something Troupe, a traditional music and dance group which has performed
which may induce or make the recipient feel obliged to reciprocate at countless functions locally and internationally.
by way of improperly performing his or her function. Over time, Jaynii has identified the need to support ongoing
The Company and its directors, officers and employees will efforts by government and civil society to keep children off the
not accept any gift, hospitality or travel benefit either directly or streets and in school. As a poor, marginalized and deprived area,
indirectly from business partners, against making commitment, many children are found walking on the beach and in the streets
recommending or promoting a certain conduct or position by the during school hours. Most of these children come from very deprived
Company or otherwise seek to gain personal benefit in relation to homes. So far Jaynii has identified fifty children aged between 4 to
twhe Company’s business dealings. 16 years who have been enrolled into the Streetwise Project, based
Likewise, the Company does not itself offer inducements to at Jaynii Beach, a small stretch of beach just below the Jamestown
anyone associated with business partners to promote a certain lighthouse which is now their centre.
conduct or position by such business partner. These 24 girls and 26 boys, who were spending their childhood
The Company and any of its people shall not pay money or provide walking aimlessly on the Jamestown Beach, are now enrolled at
gifts, entertainment, hospitality or any other thing or service of value schools in the communities- Accra Sempe Primary School in Classes
to any Government Official. This prohibition extends to payments to 1 to 6 and St. Thomas Day Care Centre. Jaynii, without assistance
consultants, agents or other intermediaries when the payer knows from parents, buys them school uniforms, shoes, bags and exercise
or has reason to believe that some part of the payment will be used books and registers them in school. After school hours, the children
to bribe or otherwise influence a public official. go to Jaynii Beach where they get fed as well as get extra classes,
Political contributions are not authorized. homework help and afternoon activities and entertainment.
During 2013 the Company has also donated funds for the funeral
Corporate Social Responsibility and family support of passed away gardener of the Company’s
The Company respects and promotes harmonious working rela- office in Ghana.
tionship with the local communities where it operates, but refrains The Company has furthermore previously donated funds to Pro
from participating in local politics. The Company seeks to foster a Criança Cardíaca in Rio de Janeiro, Brasil, a non-profit organiza-
sustainable business for its many stakeholders. tion helping children with heart diseases. Pro Criança Cardíaca is
The Company is fully committed to comply with local laws and a hospital founded in 1996 by Cardiologist Doctor Celia Rose. The
regulations throughout its global operations. mission of the organization is to provide medical care to cardiac
The Company is committed to employ local staff where applicable children focusing in cardiac surgery and any other procedure that
and possible in all countries where it is operating and conducting requires high technology treatment to children. No funds have been
business. The Company is committed to providing equal opportunity donated in 2016
and fair treatment to all individuals on the basis of merit, without The Company has also in previous years made donations to
discrimination on the grounds of race, colour, religion, national origin, the Norwegian Salvation Army, Redningsselskapet and the street
sex, pregnancy, age, disability, marital status or other characteristics magazine “Klar”. No donations have been made in 2016.
protected by applicable law.
19 April 2017
Eystein Eriksrud (born 1970), Chairman John C. Wallace (born 1938), Board member
Mr Eriksrud joined the Board of Directors of Siem Offshore in May John C. Wallace is a Chartered Accountant having qualified with
2010 and became Chairman in May 2012. Mr Eriksrud is the Deputy PricewaterhouseCoopers in Canada in 1963, after which he joined
CEO of the Siem Industries Group. Prior to joining Siem Industries Baring Brothers & Co., Limited in London, England. Prior to his re-
in October 2011, Mr Eriksrud was a partner in the Norwegian law tirement in 2010, he served for over twenty-five years as Chairman
firm Wiersholm Mellbye & Bech, from 2005, working as a business of Fred. Olsen Ltd., a London-based corporation that he joined in
lawyer, particularly in the shipping, offshore and oil service sectors. 1968 and which specializes in the business of shipping, renewable
Mr Eriksrud was Group Company Secretary of the Kvaerner Group energy and property development. He received his B. Comm degree
from 2000–2002 and served as Group General Counsel of the Siem majoring in Accounting and Economics from McGill University in
Industries Group from 2002–2005. He is a candidate of jurisprudence 1959. In November 2004, he successfully completed the International
from the University of Oslo. Mr Eriksrud has served on the boards Uniform Certified Public Accountant Qualification Examination and
of Privatbanken ASA and Tinfos AS as well as a number of other has received a CPA Certificate from the State of Illinois. Mr. Wallace
boards. He is the Chairman of Flensburger Schiffbau-Gesellschaft also retired from the board of directors of Ganger Rolf ASA and
mbH & Co. KG and Electromagnetic Geoservices ASA and a Director Bonheur ASA, Oslo, both publicly-traded shipping companies with
of Subsea 7 SA and a director of several subsidiaries in the Siem interests in offshore energy services and renewable energy. He is a
Industries Group. Mr Eriksrud is a Norwegian citizen. Director of Callon Petroleum Co , USA where he is Chairman of the
Audit Committee. He is a former director of Secunda Holdings LP.
Kristian Siem (born 1949), Board member He was inducted as a 2011 Industry Pioneer by the Offshore Energy
Centre in Houston. Mr. Wallace is a Canadian citizen.
Mr. Siem is the Chairman of Siem Industries Inc., Subsea 7 SA and
Siem Shipping Inc. (former Star Reefers Inc.) and is a Director of Alexander Monnas (born 1951), Board Member
Siem Offshore Inc., Flensburger Schiffbau Gesellschaft mbH, North
Atlantic Smaller Companies Investment Trust plc. and London and Mr. Monnas is a non-executive advisor to Daiwa Capital Markets
Frupor S.A., Portugal. Mr Siem is a Norwegian citizen. Europe Ltd., and attends the Board Risk Committee and the Audit
Committee. Mr. Monnas is also an advisor on investment and finan-
Michael Delouche (born 1957), Board Member cial matters in Geneva, and on the board of a private trust company.
He is a board member of Siem Offshore Inc. Mr. Monnas has spent
Mr. Delouche is the president and the secretary of Siem Industries over 40 years in the commercial and investment banking industries,
Inc. and is in charge of the Company’s operations at the head office specialising in financial markets. He was CEO of Daiwa Securities’
in George Town, Cayman Islands. He is a director of Siem Shipping European operations from 1994 to 2001, and was a board member
Inc. Mr. Delouche received degrees in civil engineering (structural) of Veripos Inc. from 2012 to 2014. He has a degree in Chemistry.
and business and was previously an audit manager with KPMG Peat Mr. Monnas is a British citizen.
Marwick LLP. Mr. Delouche is a US citizen.
Siem Offshore Inc. will release financial figures on the following dates in 2017:
The Annual General Meeting of the Company will be held on Friday 5 May 2017.
POSTAL ADDRESS
P.O. Box 425
N-4664 Kristiansand S, Norway
TELEPHONE
+47 38 60 04 00
TELEFAX
+47 37 40 62 86
E-MAIL
siemoffshore@siemoffshore.com
www.siemoffshore.com
General information: The terms and conditions of the Rights Issue by Siem Offshore Inc.
(the “Company”) are set out in the prospectus dated 26 May 2017 (the “Prospectus”). Terms
defined in the Prospectus shall have the same meaning in this Subscription Form. All
announcements referred to in this Subscription Form will be made through Oslo Børs’
information system under the Company’s ticker “SIOFF”.
Subscription procedures: The subscription period is from 30 May 2017 to 16:30 hours
(CET) on 12 June 2017 (the “Subscription Period”). Correctly completed Subscription Forms
must be received by the Manager before the end of the Subscription Period at the following
address: Swedbank, P.O Box 1441 Vika, N-0115 Oslo, Norway, telefax +47 23 23 80
11 (the “Subscription Office”). The subscriber is responsible for the correctness of the
information filled in on the Subscription Form. Subscription Forms that are incomplete or
incorrectly completed, or that are received after the end of the Subscription Period, and any
subscription that may be unlawful, may be disregarded, at the discretion of the Manager on
behalf of the Company. Subscribers who are residents of Norway with a Norwegian
personal identification number may also subscribe for Offer Shares through the VPS
online subscription system by following the link on the following website:
www.swedbank.no. Subscriptions made through the VPS online subscription system must
be duly registered before the expiry of the Subscription Period. Neither the Company nor the
Manager may be held responsible for postal delays, unavailable fax lines, internet lines or
servers or other logistical or technical problems that may result in subscriptions not being
received in time or at all by the Subscription Office. Subscriptions are irrevocable and binding
upon receipt and cannot be withdrawn, cancelled or modified by the subscriber after having
been received by an Subscription Office, or in the case of subscriptions through the VPS online
subscription system, upon registration of the subscription.
Subscription Price: The Subscription Price in the Rights Issue is NOK 1.90 per Offer Share.
Subscription Rights: Registered holders of the Company’s shares (the “Existing
Shareholders”) as appearing in the VPS as of 23 May 2017 (the “Record Date”) will be granted
Subscription Rights giving a preferential right to subscribe for, and be allocated, the Offer
Shares. Each Existing Shareholder will be granted 0.1187 Subscription Rights per existing
share registered with the respective Existing Shareholder on the Record Date. The number of
Subscription Rights issued to each Existing Shareholder will be rounded down to the nearest
whole Subscription Right. Each Subscription Right will, subject to applicable securities laws,
give the right to subscribe for and be allocated one Offer Share in the Rights Issue. Over-
subscription and subscription without Subscription Rights is permitted. Subscription Rights
not used to subscribe for Offer Shares before 12 June 2017 will lapse without
compensation to the holder, and, consequently, will be of no value from that point
in time.
Allocation of Offer Shares: The Offer Shares will be allocated to the subscribers based on
the allocation criteria set out in the Prospectus. The Company reserves the right to reject or
reduce any subscription for Offer Shares not covered by Subscription Rights. The Company
will not allocate fractional Offer Shares. Allocation of fewer Offer Shares than subscribed for
does not impact on the subscriber’s obligation to pay for the Offer Shares allocated.
Notification of allocated Offer Shares and the corresponding subscription amount to be paid by each subscriber is expected to be distributed in a letter on or about 15
June 2017. Subscribers who have access to investor services through an institution that operates the subscriber’s VPS account should be able to see how many Offer
Shares they have been allocated from 12:00 hours (CET) on or about 14 June 2017.
Payment: In completing this Subscription Form, or registering a subscription through the VPS online subscription system, subscribers authorise Swedbank to debit
the subscriber’s Norwegian bank account for the total subscription amount payable for the Offer Shares allocated to the subscriber. Accounts will be debited on or
about 19 June 2017 (the “Payment Date”), and there must be sufficient funds in the stated bank account from and including the date falling 2 banking day prior to the
Payment Date. Subscribers who do not have a Norwegian bank account must ensure that payment for the allocated Offer Shares is made on or before the Payment
Date. Details and instructions can be obtained by contacting Swedbank, telephone: +47 23 23 80 00. Swedbank is only authorized to debit each account once, but
reserves the right (but has no obligation) to make up to three debit attempts through 27 June 2017 if there are insufficient funds on the account on the Payment Date.
Should any subscriber have insufficient funds in his or her account, should payment be delayed for any reason, if it is not possible to debit the account or if payments
for any other reasons are not made when due, overdue interest will accrue and other terms will apply as set out under the heading “Overdue and missing payments”
below.
PLEASE SEE PAGE 2 OF THIS SUBSCRIPTION FORM FOR OTHER PROVISIONS THAT ALSO APPLY TO THE SUBSCRIPTION
IRREVOCABLE AUTHORIZATION TO DEBIT ACCOUNT (MUST BE COMPLETED BY SUBSCRIBERS WITH A NORWEGIAN BANK ACCOUNT)
Norwegian bank account to be debited for the payment for Offer Shares allocated (number of
Offer Shares allocated x NOK 1.90).
(Norwegian bank account no.)
I/we hereby irrevocably (i) subscribe for the number of Offer Shares specified above subject to the terms and conditions set out in this Subscription Form and in the
Prospectus, (ii) authorize and instruct the Manager (or someone appointed by any of them) acting jointly or severally to take all actions required to transfer such Offer
Shares allocate to me/us to the VPS Registrar and ensure delivery of the beneficial interests to such Offer Shares to me/us in the VPS, on my/our behalf, (iii) authorize
Swedbank to debit my/our bank account as set out in this Subscription Form for the amount payable for the Offer Shares allotted to me/us, and (iv) confirm and warrant
to have read the Prospectus and that I/we are eligible to subscribe for Offer Shares under the terms set forth therein.
111
Place and date Binding signature
must be dated in the Subscription Period. The subscriber must have legal capacity. When signed on
behalf of a company or pursuant to an authorization,
documentation in the form of a company certificate or
power of attorney must be enclosed.
Surname/company
Street address
Post code/district/
country
Personal ID number/ organization
number
Nationality
E-mail address
112
ADDITIONAL GUIDELINES FOR THE SUBSCRIBER
Regulatory issues: In accordance with the Markets in Financial Instruments Directive (“MiFID”) of the European Union, Norwegian law imposes
requirements in relation to business investments. In this respect, the Manager must categorize all new clients in one of three categories: eligible
counterparties, professional clients and non-professional clients. All subscribers in the Rights Issue who are not existing clients of the Manager will be
categorized as non-professional clients. Subscribers can, by written request to the Manager, ask to be categorized as a professional client if the
subscriber fulfils the applicable requirements of the Norwegian Securities Trading Act. For further information about the categorization, the subscriber
may contact Swedbank (Swedbank, Filipstad Brygge 1, P.O Box 1441 Vika, N-0115 Oslo, Norway). The subscriber represents that he/she/it is
capable of evaluating the merits and risks of a decision to invest in the Company by subscribing for Offer Shares, and is able to bear
the economic risk, and to withstand a complete loss, of an investment in the Offer Shares.
Selling Restrictions: The attention of persons who wish to subscribe for Offer Shares is drawn to Section 14 “Selling and transfer restrictions” of the
Prospectus. The Company is not taking any action to permit a public offering of the Subscription Rights or the Offer Shares (pursuant to the exercise
of the Subscription Rights or otherwise) in any jurisdiction other than Norway. Receipt of the Prospectus will not constitute an offer in those jurisdictions
in which it would be illegal to make an offer and, in those circumstances, the Prospectus is for information only and should not be copied or redistributed.
Persons outside Norway should consult their professional advisors as to whether they require any governmental or other consent or need to observe
any other formalities to enable them to subscribe for Offer Shares. It is the responsibility of any person wishing to subscribe for Offer Shares under
the Rights Issue to satisfy himself as to the full observance of the laws of any relevant jurisdiction in connection therewith, including obtaining any
governmental or other consent which may be required, the compliance with other necessary formalities and the payment of any issue, transfer or
other taxes due in such territories. The Subscription Rights and Offer Shares have not been registered, and will not be registered, under the United
States Securities Act of 1933, as amended (the “U.S. Securities Act”) and may not be offered, sold, taken up, exercised, resold, delivered or transferred,
directly or indirectly, within the United States, except pursuant to an applicable exemption from the registration requirements of the U.S. Securities
Act and in compliance with the securities laws of any state or other jurisdiction of the United States. The Subscription Rights and Offer Shares have
not been and will not be registered under the applicable securities laws of Australia, Canada or Japan and may not be offered, sold, taken up, exercised,
resold, delivered or transferred, directly or indirectly, in or into Australia, Canada or Japan. This Subscription Form does not constitute an offer to sell
or a solicitation of an offer to buy Offer Shares in any jurisdiction in which such offer or solicitation is unlawful. A notification of exercise of Subscription
Rights and subscription of Offer Shares in contravention of the above restrictions may be deemed to be invalid. By subscribing for the Offer Shares,
persons effecting subscriptions will be deemed to have represented to the Company that they, and the persons on whose behalf they are subscribing
for the Offer Shares, have complied with the above selling restrictions.
Execution Only: The Manager will treat the Subscription Form as an execution-only instruction. The Manager is not required to determine whether
an investment in the Offer Shares is appropriate or not for the subscriber. Hence, the subscriber will not benefit from the protection of the relevant
conduct of business rules in accordance with the Norwegian Securities Trading Act.
Information exchange: The subscriber acknowledges that, under the Norwegian Securities Trading Act and the Norwegian Commercial Banks Act
and foreign legislation applicable to the Manager there is a duty of secrecy between the different units of the Manager as well as between the other
entities in its respective groups. This may entail that other employees of the Manager or the its respective groups may have information that may be
relevant to the subscriber and to the assessment of the Offer Shares, but which the Manager will not have access to in their capacity as Manager for
the Offering.
Information barriers: The Manager is a securities firm that offer a broad range of investment services. In order to ensure that assignments
undertaken in the Manager's corporate finance departments are kept confidential, the Manager's other activities, including analysis and stock broking,
are separated from the its respective corporate finance departments by information walls. Consequently the subscriber acknowledges that the
Manager's analysis and stock broking activity may conflict with the subscriber’s interests with regard to transactions in the Shares, including the Offer
Shares.
VPS account and mandatory anti-money laundering procedures: The Offering is subject to the Norwegian Money Laundering Act of 6 March
2009 No. 11 and the Norwegian Money Laundering Regulations of 13 March 2009 No. 302 (collectively, the “Anti-Money Laundering Legislation”).
Subscribers who are not registered as existing customers of the Manager must verify their identity to one of the Manager and the Receving Agent in
accordance with requirements of the Anti-Money Laundering Legislation, unless an exemption is available. Subscribers who have designated an existing
Norwegian bank account and an existing VPS account on the Subscription Form are exempted, unless verification of identity is requested by the
Manager. Subscribers who have not completed the required verification of identity prior to the expiry of the Subscription Period will not be allocated
Offer Shares. Participation in the Offering is conditional upon the subscriber holding a VPS account. The VPS account number must be stated in the
subscription form. VPS accounts can be established with authorized VPS registrars, who can be Norwegian banks, authorized securities brokers in
Norway and Norwegian branches of credit institutions established within the EEA. Establishment of a VPS account requires verification of identity to
the VPS registrar in accordance with the Anti-Money Laundering Legislation. However, non-Norwegian investors may use nominee VPS accounts
registered in the name of a nominee. The nominee must be authorized by the Financial Supervisory Authority of Norway.
Terms and conditions for payment by direct debiting - securities trading: Payment by direct debiting is a service the banks in Norway provide
in cooperation. In the relationship between the payer and the payer’s bank the following standard terms and conditions apply:
a) The service “Payment by direct debiting – securities trading” is supplemented by the account agreement between the payer and the
payer’s bank, in particular Section C of the account agreement, General terms and conditions for deposit and payment instructions.
b) Costs related to the use of “Payment by direct debiting – securities trading” appear from the bank’s prevailing price list, account
information and/or information given in another appropriate manner. The bank will charge the indicated account for costs incurred.
c) The authorization for direct debiting is signed by the payer and delivered to the beneficiary. The beneficiary will deliver the instructions to
its bank that in turn will charge the payer’s bank account.
d) In case of withdrawal of the authorization for direct debiting the payer shall address this issue with the beneficiary. Pursuant to the
Norwegian Financial Contracts Act the payer’s bank shall assist if the payer withdraws a payment instruction that has not been
completed. Such withdrawal may be regarded as a breach of the agreement between the payer and the beneficiary.
e) The payer cannot authorize payment of a higher amount than the funds available on the payer’s account at the time of payment. The
payer’s bank will normally perform a verification of available funds prior to the account being charged. If the account has been charged
with an amount higher than the funds available, the difference shall immediately be covered by the payer.
f) The payer’s account will be charged on the indicated date of payment. If the date of payment has not been indicated in the authorization
for direct debiting, the account will be charged as soon as possible after the beneficiary has delivered the instructions to its bank. The
charge will not, however, take place after the authorization has expired as indicated above. Payment will normally be credited the
beneficiary’s account between one and three working days after the indicated date of payment/delivery.
g) If the payer’s account is wrongfully charged after direct debiting, the payer’s right to repayment of the charged amount will be governed
by the account agreement and the Norwegian Financial Contracts Act.
113
Overdue and missing payments: Overdue payments will be charged with interest at the applicable rate under the Norwegian Act on Interest on
Overdue Payment of 17 December 1976 No. 100; 9.00% per annum as of the date of the Prospectus. If the subscriber fails to comply with the terms
of payment or should payments not be made when due, the subscriber will remain liable for payment of the Offer Shares allocated to it and the Offer
Shares allocated to such subscriber will not be delivered to the subscriber. In such case the Company and Swedbank reserve the right to, at any time
and at the risk and cost of the subscriber, re-allot, cancel or reduce the subscription and the allocation of the allocated Offer Shares, or, if payment
has not been received by the third day after the Payment Date, without further notice sell, assume ownership to or otherwise dispose of the allocated
Offer Shares in accordance with applicable law. If Offer Shares are sold on behalf of the subscriber, such sale will be for the subscriber’s account and
risk and the subscriber will be liable for any loss, costs, charges and expenses suffered or incurred by the Company and/or Swedbank as a result of,
or in connection with, such sales. The Company and/or Swedbank may enforce payment for any amounts outstanding in accordance with applicable
law.
114
Siem Offshore Inc. Siem Offshore Management AS
Harbour Place 5th Floor Nodeviga 14
P.O.Box 10718 4610 Kristiansand
George Town Norway
Grand Cayman KY1-1006
Cayman Islands
Manager
Swedbank
Filipstad Brygge 1
P.O Box 1441 Vika
N-0115 Oslo
Norway
Tel: +47 23 23 80 00
Fax: +47 23 23 80 11
www.swedbank.no
Legal counsel
Advokatfirmaet Wiersholm AS
Dokkveien 1
Postboks 1400 Vika, 0115 Oslo
Norway
Tel: +47 21 02 10 00
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