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May 13, 2019

For further information, please contact:

Endre Johansen, Corporate Communications AS
Telephone: +47 41 61 06 05
Email: endre.johansen@corpcom.no

About ABL Group ASA

ABL Group (OSE: ABL Group ASA – ticker code “ABL”) is a leading independent global consultancy delivering energy, marine, engineering and digital solutions to drive safety and sustainability in renewables, maritime and oil & gas sectors. The group has offices in 39 countries worldwide and operates under four brands: ABL, OWC, Longitude and AGR.

Aqualis and Braemar Technical to join forces

Aqualis ASA (“Aqualis”) and Braemar Shipping Services plc (“Braemar“) today entered into an agreement whereby Aqualis will acquire three business lines (Adjusting, Marine and Offshore, jointly “BTS”) representing the majority of the Braemar Technical Services division (the “Transaction”). The combined company, to be renamed AqualisBraemar, will be a leading adjusting, marine, offshore and renewables consultancy with a broadened service offering across all major basins.

Through the transaction, existing and potential clients of AqualisBraemar will be able to benefit from gaining access to new capabilities and broader suite of services on offer as well as increased manpower and geographical footprint to enable even quicker and more cost-efficient operational support at or in close proximity to clients’ offices and assets.

The combined company will operate under the united brand AqualisBraemar and will have four main business lines, each with a global offering and strong presence in their respective markets: Adjusting, Marine, Offshore and Renewables. The consideration in the transaction comprises a combination of Aqualis shares and performance-based warrants, making Braemar the largest shareholder in Aqualis. Further details regarding the Transaction are described below.

Highlights

  • The combined company’s revenue for the twelve months ended December 31, 2018 was approximately USD 76 million, with Aqualis and BTS representing approximately USD 36 million and USD 40 million respectively
  • The combination is expected to result in significant benefits for stakeholders, including creation of significant shareholder value through estimated run rate EBITDA synergies of approximately USD 2.0 million, expected to be implemented in full by year-end 2021
  • Braemar will become the largest shareholder in Aqualis, with an initial shareholding of approximately 26%, potentially increasing to 33% depending on business performance
  • The combined company’s executive management will consist of CEO David Wells (Aqualis), CFO Kim Boman (Aqualis), Group and Offshore COO Reuben Segal (Aqualis) and COO Insurance Services Grant Smith (Braemar), with other senior divisional management selected from top talent within both companies. The head office will be located in London
  • Completion of the transaction is subject to the approval by Aqualis’ shareholders at the Annual General Meeting (the “AGM”), expected to be held on or about 11 June
  • Certain existing Aqualis shareholders have undertaken to support the Transaction by way of voting in favour at the AGM, including election of Braemar CEO James Kidwell to the Board of Directors. Braemar have undertaken to support the re-election of Glen Rødland to the board of directors
  • The combined company’s name is suggested to be changed to AqualisBraemar ASA at the AGM conditional upon the completion of the Transaction. Its shares will continue to be listed on Oslo Stock Exchange under the ticker AQUA
  • To expand the combined company’s liquidity buffer during the integration phase, Aqualis proposes fully underwritten equity issues raising gross proceeds of approximately USD 6 million, of which USD 2 million will be provided by Braemar
  • The previously announced proposal for ordinary dividend of NOK 0.10 per Aqualis share will be withdrawn because of the contemplated Transaction

David Wells, CEO of Aqualis, comments: “Aqualis and Braemar Technical Services are two of the leading marine consulting companies globally. By joining forces, we create a more sustainable business with strong platform for international growth. We will be better able to support our clients’ growth by offering our joint and enhanced leading expertise. With our larger scale, more resources and our engaged and talented people, we will improve our ability to meet our clients’ needs globally” Through the Transaction, Aqualis will acquire the majority of the Braemar Technical Services division, specifically the three business lines Adjusting, Marine and Offshore. Braemar has a leading brand name in the industry, with BTS entities having operated in the markets for more than 150 years. Marine and Adjusting are global market leaders in their respective niches, while Offshore has a global service offering with a particularly strong position in the Asia Pacific region. Key financial figures and other information regarding BTS can be found in the attached presentation.

James Kidwell, CEO of Braemar, comments: “We are delighted to be announcing the sale of substantially all of Braemar’s Technical division to Aqualis ASA in exchange for an equity stake in the enlarged group. Our respective businesses fit well together and the combination will create a market leading position in Offshore, Marine, Adjusting and Renewables services with global coverage which will enable the stronger combined business to unlock significant revenue and cost synergies.

We strongly believe that the enlarged Aqualis group, which will retain the Braemar name and trade as AqualisBraemar, will bring numerous benefits and opportunities to both clients and employees going forward.

As the largest shareholder in AqualisBraemar we look forward to developing the business with the management team, which has an excellent track record of growing businesses in these sectors.”

Overview of the combined company

The combined company will operate under the united brand AqualisBraemar and will be divided into four divisions, each with a strong presence in their respective markets: Offshore, Marine, Adjusting and Renewables. The combined company’s revenue for the twelve months ended December 31, 2018 was approximately USD 76 million, with Aqualis and BTS representing approximately USD 36 million and USD 40 million respectively, and at the end of Q1 2019 it had on average a combined total of approximately 432 full-time equivalent (“FTE”) employees globally. The combined company’s name is suggested to be changed to AqualisBraemar ASA at the AGM, conditional upon the completion of the Transaction. After the completion of the Transaction, AqualisBraemar’ shares will continue to be listed on Oslo Stock Exchange under the ticker AQUA.

Corporate governance

Grant Smith, the current Managing Director of Braemar Technical Services, will join AqualisBraemar’s executive management as COO Insurance Services. Aqualis COO Reuben Segal will continue as Group COO and COO Offshore. David Wells and Kim Boman will continue as CEO and CFO, respectively. Other senior divisional management will be selected from top talent within both companies.

Gross Management AS, a company controlled by Aqualis Chairman Glen Rødland and holding approximately 17.4% of the outstanding shares of Aqualis, Alsto Consultancy Ltd, a company controlled by Aqualis CEO David Wells and holding approximately 1.9% of the outstanding shares of Aqualis, AmAn Marine Limited, a company controlled by Aqualis COO Reuben Segal and holding 3.3% of the outstanding shares of Aqualis, as well as Aqualis CFO Kim Boman holding 1.2% of the outstanding shares of Aqualis have all undertaken to support the Transaction by way of voting in favour at the AGM, including election of Braemar CEO James Kidwell to the Board of Directors of the combined company. Braemar has undertaken to support the re-election of Glen Rødland to the board of directors.

The company’s head office will be located in London.

Employees At the end of March 31, 2019, Aqualis employed approximately 187 FTE employees and BTS employed approximately 245 FTE employees. Aqualis and Braemar believe that the biggest strength of the combined company will be the combined competence and experience of the two groups of employees, and intend to continue to build on that strength. The Transaction will be mutually beneficial for employees of both companies, providing improved opportunities for further competence development.

Rationale and key benefits of the combination

1) Broader service offering and increased scale – a stronger partner for clients Through the combination of Aqualis and BTS, the combined company will be the largest independent, global marine consultancy, by staff numbers, with focus upon the servicing the international insurance markets. It will also be a leading supplier of consulting and advisory services within four complementary business segments, enabling delivery of a more extensive range of services with access to leading competence and knowhow. This will create value for both its clients and shareholders.

2) Combining two highly complementary businesses – building on unique strengths of both organizations and brands The combined company will have leading market positions within all four business segments. Within existing Renewables, Adjusting and Marine business lines, there is minimal overlap between the two companies. Within Offshore, the two companies are highly complementary in terms of geographical footprint, given Aqualis’ leading position in the Middle East, Braemar’s leading position in Asia Pacific, as well as both companies’ strong presence in Europe and North America. Such a position is a hugely beneficial starting point for both companies since it largely avoids the need for sensitive realignment in competing areas. As such immediate opportunities for enhanced growth can be considered.

3) Strengthened global presence The Transaction creates a highly competitive player with a significant international reach. Together the two companies will create a stronger international platform based on the strengths of both Aqualis and BTS. The complementary geographical profile will increase critical mass in all key regions, allow migration of technical expertise and the enlarged office network will improve local presence across the globe. The combined company have a physical presence on all five continents, with 61 offices in 33 countries worldwide.

4) Unlocking considerable synergies The combination is expected to generate significant shareholder value through estimated run rate EBITDA synergies of approximately USD 2.0 million, expected to be implemented in full by year-end 2021. Estimated run rate cost synergies of USD 1.1 million will be driven by more efficient use of facilities, improved operating structure, administrative efficiencies, information system efficiencies and other economies of scale effects. Revenue synergies are estimated to have a run-rate EBITDA effect of USD 0.9m, driven by the strengthened offering and market position enabling cross-selling across services and geographies.

Integration costs are estimated to amount to approximately USD 2.0 million, expected to be incurred in 2019 and 2020.

5) Becoming an even more attractive employer The Transaction combines two talent-rich organizations with similar core values. The enlarged company will have more sustainability and a widened technical expertise and give a strong platform on which to build further.The strengthened global and diversified organization will focus on professional development, securing strong career prospects to attract and retain top professionals.

6) New major shareholder with a long-term industrial perspective Following the Transaction, Braemar will become the company’s largest shareholder, and will enter into a 24-month lock-up agreement for the consideration shares, as described below. Furthermore, Braemar has committed to subscribe for approximately USD 2 million in the proposed equity issues.

Aqualis and Braemar have entered into a long-term licensing agreement enabling the use of the Braemar brand, which is anticipated to remain in place for at least three years. The combined company and Braemar expect to refer business to each other, and will enter into a preferred supplier agreement.

Key transaction terms and financing

If completed, the Transaction will be implemented through an acquisition of 100% of the shares in Braemar Technical Services Holdings Limited, a company established as the holding company for BTS, against the issuance of new shares and performance-based warrants in Aqualis as follows:

  • 14,865,621 ordinary Aqualis shares to be issued on completion of the Transaction, representing approximately 26% of the outstanding shares upon issuance
  • Two equal tranches of performance-based warrants to potentially take Braemar’s holding to approximately 33% ownership, with performance measured over a two year period from 1 April 2019
  • 2,986,778 Tranche 1 Warrants: Based on the combined company’s average annual EBITDA over two years, adjusted for certain one-off items, with an average EBITDA performance floor of USD 4.5 million and a ceiling of USD 7.5 million for proportional minimum / maximum vesting
  • 2,986,778 Tranche 2 Warrants: Based on average annual, aggregate, gross profit for the former Braemar Adjusting and Marine divisions over two years, adjusting for certain one-off items, with a performance floor of USD 12.6 million and a ceiling of USD 14.3 million for proportional minimum / maximum vesting
  • The warrants will be issued on completion of the Transaction, and will be exercisable in a two year period after the date of vesting, which will follow the determination of the EBITDA and gross profit for the two year period. The exercise price will be NOK 0.10 per warrant, being the nominal value per Aqualis ordinary share

Based on a share price of NOK 4.14 per Aqualis share and a USD/NOK exchange rate of 8.64, the consideration represents an equity purchase price for BTS of between USD 7.1 million and USD 9.9 million, depending on the numbers of warrants vesting. The agreed consideration is based on a “locked box” balance sheet as of 28 February 2019, which includes a net cash balance of USD 0.9 million in BTS.

Braemar has entered into a 24-month lock-up agreement with Aqualis for the consideration shares and warrants. The lock-up will not apply if the volume weighted average share price for Aqualis over a 20 trading day period exceeds NOK 8, and certain other customary exceptions. Gross Management AS has entered into a corresponding lock-up agreement with Braemar.

The Equity Issues

To expand the combined company’s liquidity buffer during the integration phase, Aqualis will propose fully underwritten equity issues (the “Equity Issues”) raising gross proceeds of approximately USD 6 million. The Equity Issues consist of two elements: (i)A private placement of approximately USD 2m directed towards Braemar (the “Private Placement”. Braemar has committed to subscribe for the full amount of the Private Placement. The Private Placement represents approximately 33% of the Equity Issues, corresponding to Braemar’s potential ownership stake in Aqualis if all performance-based warrants vest and are exercised. (ii) A fully underwritten rights issue of approximately USD 4m towards existing Aqualis shareholders (the “Rights Issue”).

The Rights Issue is fully underwritten by a syndicate consisting of Gross Management AS and certain other major shareholders of Aqualis (the “Underwriters”). The Underwriters, representing approximately 21% of the shares in Aqualis, have undertaken to vote in favor of the Transaction at the AGM.

The Equity Issues are conditional upon approval by the Aqualis AGM, and on all closing conditions for the Transaction having been met.

Dividend proposal withdrawn In light of the Transaction and the Equity Issues, the previously announced proposal for ordinary dividend of NOK 0.10 per Aqualis share will be withdrawn.

Employee retention and incentive program Following completion of the transaction, the company intends to implement a new management incentive program for the employees of the combined group.

Conditions and timetable

Completion of the Transaction is subject to customary closing conditions, including the approval by Aqualis’ shareholders at the AGM, expected to be held on or about 11 June. The transaction is not subject to any regulatory approvals. Given approval at the AGM, the Transaction is expected to close by the end of June 2019. Aqualis will publish a prospectus with further information regarding the Transaction and the Equity Issues within 30 business days. The Rights Issue and the Private Placement are expected to take place during July.

Advisors

In connection with the Transaction and the Equity Issues, Aqualis is advised by SpareBank 1 Markets AS as sole financial advisor and book runner, Advokatfirmaet Haavind AS as legal advisor, and Corporate Communications AS as communication advisor.

Invitation to investor and analyst conference call At 10:30 am CET on May 13, 2019, Aqualis will host a conference call about the company’s first quarter results and the proposed transaction, followed by a question and answer session.

The recording of the presentation will be available on the company website. To join this event, please use the dial in details below 5- 10 minutes prior to start time.

Dial in details:
Local – USA +1 929-477-0448
Local – UK +44 (0)330 336 9411
Local – Norway +47 2350 0296

Confirmation code: 6598983

AqualisBraemar presentation

For further information, please contact:

Investors and financial media

Kim Boman, CFO, Aqualis ASA
Telephone: +47 959 63 912
Email: kim.boman@aqualis.no

Other media enquiries

Endre Johansen, Corporate Communications AS
Telephone: +47 41 61 06 05
Email: endre.johansen@corpcom.no

About Aqualis ASA

Aqualis ASA (OSE: Aqua) is a public company that, through its subsidiaries and associates, offers energy consultancy services to the offshore oil, gas and renewables sectors globally. The group employs experienced consultants across 19 offices in 15 countries worldwide. Aqualis ASA operates under two different brands: AqualisBraemar and Offshore Wind Consultants. AqualisBraemar is a specialized offshore marine and engineering consultancy firm, focusing on the shallow and deep-water offshore segments of the oil and gas industry. Offshore Wind Consultants is a globally focused consultancy providing independent services to the offshore renewables industry.

Important notice This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act and section 3.4 of the Continuing Obligations for Listed Companies.

This announcement is not an offer for sale of securities in the United States or any other country. The securities referred to herein have not been registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), and may not be sold in the United States absent registration or pursuant to an exemption from registration under the U.S. Securities Act. Aqualis does not intend to register any portion of the offering of the securities in the United States or to conduct a public offering of the securities in the United States. Copies of this announcement are not being made and may not be distributed or sent into the United States, Canada, Australia, Japan or any other jurisdiction in which such distribution would be unlawful or would require registration or other measures. Certain statements included within this announcement contain forward-looking information, including, without limitation, those relating to) forecasts, projections and estimates, statements of management’s plans, objectives and strategies for Aqualis, such as planned expansions, investments or other projects, management, as well as statements preceded by “expected”, “scheduled”, “targeted”, “planned”, “proposed”, “intended” or similar statements. Although Aqualis believes that the expectations reflected in such forward-looking statements are reasonable, these forward-looking statements are based on a number of assumptions and forecasts that, by their nature, involve risk and uncertainty. Various factors could cause our actual results to differ materially from those projected in a forward-looking statement or affect the extent to which a particular projection is realized.

No assurance can be given that such expectations will prove to have been correct. Aqualis disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.