Fairstar rejects Dockwise take over bid

In response, Fairstar says the conditional offer significantly undervalues the business and has recommended that shareholder do not accept, adding that enter into conditional agreements may limit their opportunities to accept an alternative proposal at a higher offer.

Fairstar says that it considers the Dockwise offer to be opportunistic and overlooks a number of significant aspects of Fairstar's business, notably the replacement cost of the Fairstar fleet, the value of the company's order book and the reputation Fairstar has established as a provider of high value marine transportation services for energy infrastructure projects involving the world's major energy and EPC companies.

Philip Adkins, chief executive officer of Fairstar, stated: "Fairstar has demonstrated remarkable success building an order book of almost USD300 million with a modern, four vessel fleet. We have been awarded a series of high value, multi voyage contracts for energy infrastructure projects for onshore LNG, as well as offshore field developments.

"In every single contract award, we have competed against Dockwise and won.

"The Fairstar "Red Box Strategy" has built the foundation of a business that has clear, sustainable returns to shareholders for the next five years.

"The Dockwise offer is a clear confirmation of their failure to compete at the high value segment of the market. It is no surprise that they would try to capture the benefits of high value, multi voyage contracts by trying to buy our company.

"However, the conditional nature of their proposal as well as the significant discount to the true value of Fairstar that they are offering should be treated with suspicion by shareholders. Consolidation in the marine heavy transport industry is not limited to the potential combinations the market is now aware of.

"After the Dockwise offer was published on the evening of April 22, Fairstar has been contacted by a number of shareholders who have informed us that they will not accept the conditional offer and have encouraged management to explore alternatives that will realise a more appropriate level of value for the company."

In its own announcement, Dockwise says it has entered into share purchase agreements for the acquisition of approximately 54 percent of the shares in Fairstar, adding that certain of these agreements, representing approximately 19 percent of the shares in Fairstar have become unconditional and will be completed shortly.

The Dockwise statement also adds that the proposed purchase will enable it to better serve rapidly growing and evolving customer demand in the global oil and gas industry; and help it to reduce dependence on short term upstream contracts; whilst advancing its fleet rejuvenation plan, with associated capes savings.

Dockwise chief executive officer, André Goedée, said: "The proposed acquisition of Fairstar, and the integration of their four vessels into our fleet significantly accelerates progress towards our strategic objectives. Fairstar's growing position in downstream processing projects, including LNG module transportation developments such as Gorgon and Ichthys, is highly complementary to Dockwise's existing market strengths. The transaction powerfully enhances our ability to provide our clients throughout the oil and gas industry with the diverse and project specific services they require. Next and of equal importance is the fundamental increase in size of Dockwise, reinforcement of its balance sheet and increased earnings potential. An important step forward at the right time.

Dockwise says that through the proposed acquisition of Fairstar, it intends to accelerate its strategy to be a more diversified heavy marine transportation, installation and logistical management service provider, adding that the proposed combination of Dockwise with Fairstar would create an enhanced presence against a background of expected market growth in the medium term, through the expansion of remote processing facilities for hydrocarbon liquids, LNG and FLNG.

To finance the proposed transaction, Dockwise says it will use available cash reserves and, subject to AGM approval, intends to raise new equity in the amount of USD250 - 300 million, through a rights issue and the issue of bridge equity in the form of financial preference shares.

www.fairstar.com

www.dockwise.com