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Polarcus completes USD 410 million bank loan facility

Reference is made to the announcement on 21 July 2011 regarding the USD 410 million bank loan facility.

Polarcus Limited is pleased to announce that the Company has signed the loan documentation for a bank loan facility of USD 410 million with DnB NOR Bank ASA and DVB Bank SE, Nordic Branch, together with Garanti-instituttet for Eksportkreditt (GIEK) and Eksportfinans ASA (the “Fleet Bank Facility”). The loan documentation replaces the committed term sheet that was announced on 21 July 2011 and there has been no material change to what was agreed under the term sheet. The Company has also signed an amended and restated bond agreement for the Polarcus Alima AS 10/15 12.5 percent USD 80 million second lien bond issue (ISIN: NO0010590300) (the “Bond Issue”) and entered into an intercreditor agreement coordinating the security interests between the Fleet Bank Facility and the Bond Issue.

The Fleet Bank Facility will be drawn down in 5 tranches and used to refinance existing debt related to POLARCUS ALIMA, POLARCUS ASIMA and POLARCUS SAMUR, and to finance the newbuildings POLARCUS AMANI and POLARCUS ADIRA. The two newbuildings are currently under construction at Ulstein Verft AS and are expected to be delivered in Q1 and Q2 2012 respectively.

As part of the Fleet Bank Facility, the Company will take advantage of the USD 260 million proposals from Eksportfinans ASA for long term financing of POLARCUS AMANI and POLARCUS ADIRA, as announced on 18 November 2010, at a fixed interest rate of 2.85 percent in addition to 2.75 percent guarantee commission to GIEK and the commercial banks. After the Fleet Bank Facility is drawn down the total average interest rate for the entire Polarcus debt will be less than 7.5 percent.

The Fleet Bank Facility will be subject to customary covenants, including minimum liquidity reserve (USD 25 million), minimum equity ratio (25 percent equity to total assets), minimum working capital (USD 22 million) and a lock up clause for sales of shares currently belonging to the Zickerman family.
The senior debt on POLARCUS ALIMA and POLARCUS ASIMA will be refinanced through the Fleet Bank Facility as well as the funding for POLARCUS SAMUR and the Company therefore expects to call the Polarcus Ltd 08/13 13.0 percent USD 55 million first lien bond issue (ISIN: NO0010445935) within Q2/Q3 2012.

The Fleet Bank Facility is a milestone for Polarcus as it introduces a corporate debt structure that increases the financial flexibility of the Company. The facility extends the Company’s debt maturity profile and reduces the overall interest rate.

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