Dockwise offer 'not fair from a financial point of view' say Fairstar advisers

The two advisers were appointed by the Fairstar Heavy Transport Board as financial advisers following the mandatory offer made by Dockwise White Marlin bv (Dockwise) to acquire all outstanding shares in Fairstar pursuant to the offer document of May 14, 2012.

Fairstar says that after careful consideration by its Board of the terms and conditions of the offer, as well as the conclusions of ABG Sundal Collier and SEB Enskilda , the Board has unanimously resolved to recommend that the company's shareholders do not accept the offer and do not tender their shares pursuant to the offer; a recommendation fully and unanimously approved by the supervisory board of Fairstar.

In a further intriguing development, Fairstar says that on the basis of Dutch corporate law, the authority on the strategy and policies of Fairstar is vested solely with the Board under supervision of the supervisory board of Fairstar.

In this respect, Fairstar says that the Dutch Corporate Governance Code in "best practice provision" IV.4.4 stipulates that if one or more shareholders intend to request that an item be put on the agenda that may result in a change of the company's strategy, the management board shall be given the opportunity to stipulate a reasonable period in which to respond to this request (the response time). The shareholder shall respect the response time stipulated by the management board within the meaning of best practice provision II.1.9.

According to Fairstar, best practice provision II.1.9 includes that if the management board invokes a response time within the meaning of best practice provision IV.4.4, such period may not exceed 180 days from the moment the management board is informed by one or more shareholders of their intention to put an item on the agenda to the day of the general meeting at which the item is to be dealt with.

"These provisions are", says Fairstar, "along with other provisions of the Dutch Corporate Governance Code and Dutch corporate law, of significance to, amongst others, minority shareholders and will play a crucial role in preventing Dockwise from attempting to re-structure Fairstar, pool the vessels, release key members of the Fairstar team and/or de-list Fairstar or any of the other legal devices implied in the Dockwise Offer Document to intimidate shareholders into accepting the current NOK9.3 offer per share."

In a clear escalation of this increasingly bitter war of words, Fairstar adds that: "A successful acquisition of Fairstar by Dockwise serves to eliminate Dockwise's most dangerous competitor, rebuild its inefficient and aged fleet and potentially enjoy the benefits of the Fairstar order book of high value, long term, multi-voyage contracts.

"The economic reasoning behind the NOK9.3 per share offer has not been advanced by Dockwise in any way. It is clear, by any standard, that Fairstar is significantly more valuable than NOK9.3 per share."

An official Fairstar statement states: "Dockwise has made an unsolicited, opportunistic and hostile approach to Fairstar. The tone and content in the Dockwise Offer Document makes clear the aggressive and punitive nature of Dockwise's intentions. The Board and supervisory board of Fairstar assure shareholders of their conviction to defend Fairstar against a hostile predator while acting in good faith to achieve a final resolution at a price per share that properly reflects the true value of Fairstar. The Board and supervisory board of Fairstar will continue to comply with their fiduciary duties to fully protect the interests of Fairstar and its stakeholders, including its minority shareholders."

Fairstar says that it has established itself as a significant participant in the marine heavy transport industry in the last five years and claims to have consistently won contracts, at higher day rates, in tenders against the Dockwise group; stating that the reasons behind Fairstar's competitive success against Dockwise in particular are attributable to a number of factors, including a significant disparity in average fleet age, as well as Fairstar's highly focussed strategy of concentrating on a select group of EPCs and energy majors.

The company claims that the EBITDA contribution per employee at Fairstar is the highest in the industry and that the competitive threat posed by Fairstar is a significant factor in Dockwise's interest in acquiring Fairstar.

Fairstar notes that since the announcement was made by Dockwise of its 54 percent stake in Fairstar, the daily share price quoted on the Oslo Stock Exchange has been higher than the Dockwise offer price of NOK9.3 per share, adding that this market view confirms the observation of Fairstar and its independent advisors that the NOK9.3 offer by Dockwise is significantly below the true value of Fairstar.

Commenting on the comment in the Dockwise offer document which expresses "significant doubt about the company's (Fairstar's) ability to continue as a going concern", Fairstar says that Dockwise makes no mention of the fact that the cash flows associated with the Gorgon contract commenced in June 2012 and it has received the first monthly payment for the Fjord within the Gorgon project. Fairstar also notes that the document does not advise that Fairstar has signed a new banking facility with ING and met all of its current financial obligations.

These omissions say Fairstar, are evidence that: "The significant doubt Dockwise is trying to amplify as a reason for not making a properly valued offer, had it ever existed, no longer exists."

Fairstar concludes that the Dockwise offer document "disregards minority interests and abuses its dominant position."

www.fairstar.com

www.dockwise.com