US-based Pointillist Partners questions legality of Solstad Offshore’s restructuring plan

The debt restructuring plan for the Company announced on 23 October 2023 (the “Plan”) does not treat shareholders equally and enriches one shareholder, Aker Capital AS and its affiliates (“Aker”), at the expense of the Solstad Offshore shareholder community.

Pointillist questions the legality of the Plan. In the Plan, 35 out of 43 of Solstad Offshore’s ships are transferred to a new company, Solstad Maritime. The ships are transferred at NOK ca. 7 billion discount compared to average broker values.

The Plan causes a direct transfer of assets and control from Solstad Offshore to Aker, leaving Solstad Offshore short NOK ca. 5-7 billion. Considering future earnings and value increases of the fleet, the value transfer could be significantly higher.

As part of the proposed deal, NOK 4 billion will be raised in the new company, Solstad Maritime. Solstad Offshore shareholders, except for Aker, own 77.1 percent of the Company, but will only be invited to subscribe for 18.7 percent of the equity private placement in Solstad Maritime. Aker, however, will subscribe for 81.3 percent of such equity private placement. Aker will go from owning 22.9 percent of Solstad Offshore, to owning at least 65.3 percent of Solstad Maritime (including the ownership of Aker’s close associated company AMSC), the future location of the most valuable assets. Pointillist does not understand how the transfer of most of the assets from Solstad Offshore to a new entity controlled by a single shareholder, without compensation the other shareholders, is anything other than hugely unfair and prejudicial.

Solstad Offshore and Aker have claimed that the restructuring described above was needed – and was the only way – to refinance Solstad Offshore’s debt on time. That claim is not credible. Throughout 2023 Pointillist has repeatedly contacted Solstad Offshore's management and advisors conveying its desire to contribute substantial equity to the Company. Despite making clear and consistent overtures as regards to its participation in a prospective restructuring, Pointillist was ignored. Pointillist has also become aware that other large shareholders in the Company, have offered substantial capital.

“As a significant shareholder, we expected that an investment bank advising Solstad Offshore on the debt restructuring would reach out to us and ask for a commitment of equity. We do not understand how other viable and more equitable alternatives were properly examined if large shareholders were not contacted at all,” says Jorey Chernett of Pointillist.

The failure to involve large shareholders in a debt restructuring with such massive transfer of power and assets is a grave breach of basic market principles of equal treatment of shareholders. It shocks us that this can be carried out without the interference of the Oslo Stock Exchange or the Financial Supervisory Authority of Norway.

It is also worth noting that the two financing institutions behind the deal, Export Finance Norway and DNB Bank ASA, are respectively fully and partly owned by the Norwegian government. We find it difficult to believe that two governmental owned banks in Norway have pressured Aker to discriminate against all other Solstad Offshore shareholders.

“This deal is beyond anything we have seen. Aker must have been completely in control of the entire process. One shareholder, Aker, owning 22.9 percent of a company, literally assumes control of assets worth hundreds of millions of dollars right in front of existing shareholders’ noses. This is the kind of deal you would see in a corrupt emerging market, not in Norway where there is law and order and trust among people. We still find it hard to believe that this is allowed. If it is, there are reasons to warn investors about investing in companies listed on the Oslo Stock Exchange”, says Daniel Herr of Pointillist.

Pointillist Partners, LLC supports Kistefos’ request for an extraordinary general meeting and proposed resolutions.

Pointillist Partners, LLC is a global investment fund based in the United States.