This statement was issued by the Board of Directors of GC Rieber Shipping ASA ('RISH' or 'the Company') in connection with a voluntary takeover bid from GC Rieber AS ('GCR') for all the outstanding shares in the Company in return for a cash compensation of NOK 31 per share.
The voluntary takeover bid from GCR is not a bid that is regulated by the Securities Trading Act section 16-19, as GCR is currently free to acquire shares in RISH without triggering an obligation to make a bid pursuant to the Securities Trading Act sections 6-1 and 6-6. The statement from the board of RISH is therefore not a statement issued pursuant to the Securities Trading Act section 6-16 fourth paragraph, and the role of the Board has therefore not been considered by Oslo Børs.
The statement from the board of RISH is issued in accordance with the Norwegian Code of Practice for Corporate Governance Article 14 fifth paragraph. Chair of the Board Paul-Christian Rieber has not participated in the Board's consideration of the statement. Paul-Christian Rieber is the CEO of GCR. The board members who participated in the consideration of this statement do not currently own shares in RISH, neither directly nor indirectly.
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On 24 August 2011, GCR announced that a voluntary takeover bid would be made for the purchase of all the shares in RISH. Ongoing negotiations concerning a possible merger were concluded. At the time this statement is issued, GCR owns 23,749, 810 shares, corresponding to an ownership interest in RISH of 54.21%.
The bid was made through an offer document dated 9 September 2011 ('the Bid'). GCR offers a cash compensation of NOK 31 per share ('the Bid Price'). The deadline for accepting the Bid is 30 September 2011. The Bid is contingent upon GCR achieving an ownership interest of minimum 90% in RISH and upon no unexpected circumstances arising that can be expected to have a material impact on the valuation of RISH. GCR can unilaterally waive these conditions in whole or in part.
RISH has no employees. The group's employees are employed in the subsidiaries GC Rieber Shipping AS, GC Rieber Shipping Ltd, GC Rieber Shipping Asia Pte Ltd or GC Rieber Crewing AS. The majority of the employees have specialised work tasks that are directly linked to the operation of vessels, and it is not expected that their functions will be affected if GCR's bid is accepted. A minority of the employees work in accounting and in administrative functions. It can be expected that GCR will wish to transfer these employees to GCR, where the group's other joint services are located.
The Board of RISH has retained Carnegie ASA ('Carnegie') as financial adviser. Carnegie has submitted a valuation dated 21 September 2011. Carnegie has carried out a valuation of RISH based on an assessment of net asset value (NAV), a present value calculation of future cash flows for the company (DCF analysis), market valuations of comparable companies (multiple valuation), the development of the RISH share etc. On this basis, Carnegie concludes that the Bid Price is not reasonable or in line with the market value from a financial point of view in the present situation. Particular emphasis is placed on the large discount in relation to NAV, valuations of other comparable listed companies, and the fact that the Bid Price is 22% below the book value per share.
On the basis of the broker estimates of the fleet that have been obtained, Carnegie calculates a NAV of NOK 69 per share. Carnegie concludes that the fair value is between NOK 50 and NOK 70 per share, with a median value of NOK 60 per share. The book equity is NOK 40 per share. There is always great uncertainty attached to estimates and projections, but the board would like to remark that, according to the current forecasts, the company is expected to have a strong cash flow in the years ahead due to contracts that it, for the most part, has already entered into. With the current plan, the company will be almost net debt-free in 2014 and have a net cash balance of more than NOK 200 million in 2015. This leaves room for considerable dividend and/or growth investments that, in the board's view, are not sufficiently reflected in the Bid Price.
As stated above, GCR reserves the right to accept received acceptances even if it does not achieve a 90% acceptance rate. The Board finds it relevant to point out that, if such a situation arises, the liquidity of the share could be further weakened. The shareholders should take this into consideration when considering the Bid. The liquidity of the share could also be weakened if GCR receives acceptances that result in an ownership interest of minimum 90%. In such case, the remaining shareholders will be free to demand the compulsory takeover of shares pursuant to the Public Limited Liability Companies Act section 4-25.
Based on a review of the conditions of the Bid, the valuation from Carnegie and the Board's knowledge of the Company, the Board is of the opinion that the Bid Price does not reflect the underlying values and appears to be low.
The board believes that the Bid does not provide sufficient compensation to the shareholders of RISH. On that basis, the board unanimously recommends RISH's shareholders not to accept the Bid. However, the individual shareholders must consider the Bid in light of their own strategic position and their liquidity situation.
Bergen, 22 September 2011
The Board of Directors of GC Rieber Shipping ASA
Attachment: Fairness opinion from Carnegie