Sinoceanic Shipping ASA : REFINANCING, PRIVATE PLACEMENT AND CAPITAL REDUCTION

Refinancing overview

Reference is made to the stock exchange notice dated 19 April 2013, the Board of Directors' Report for 2012 and today's notice for an extraordinary general meeting (the "EGM") to be held on 26 June 2013. The notice for the EGM is available on www.sinoceanic.no and www.newsweb.no.

SinOceanic Shipping ASA ("SinOceanic" or the "Company") and its subsidiaries SinOceanic I AS ("SinO I"), SinOceanic II AS ("SinO II") and SinOceanic III AS ("SinO III") have for some time needed to restructure their debt and raise new equity. The board has now concluded its negotiations for the refinancing of SinO I, which will be the first step of the refinancing of the group.

The refinancing plan for SinOceanic and SinO I-III and the share capital reduction and private placement as described below, is further described in the notice for the EGM. The refinancing steps of SinO I may be summarized as follows:

1.       SinO I will enter into a sale lease back arrangement for the MSC Vega with Grand Indus Shipping Limited, Hong Kong ("Grand Indus Shipping"):

As contemplated, the MSC Vega will be sold from SinO I to Grand Indus Shipping against a purchase price of USD 154,425,000. At the same time, the parties will enter into a bare boat charter agreement pursuant to which SinO I will charter the MSC Vega from Grand Indus Shipping for a period of 15 years at a charter hire covering the repayment installments payable by Grand Indus Shipping to a major Chinese bank under a USD 105,000,000 loan agreement plus interest equal to 3 months LIBOR Rate and a margin of 6.45% p.a. USD 105,000,000 of the purchase price for the MSC Vega will be payable on completion, while the remaining part of the purchase price shall be left outstanding as pre-paid charter hire under the charter party agreement.

SinO I may at any time exercise an option to re-purchase MSC Vega. If the purchase option is exercised, the option price is equal to the outstanding principle plus accrued interest under the loan agreement with the relevant Chinese bank. If the option is exercised during the first three years, a declining fee of 1.5%, 1.0% and 0.5% of the outstanding amount will also be payable. The Company considers that the sale lease back arrangement constitutes a financial lease under IFRS.

2.       In connection with the completion of the sale lease back arrangement, all security related to SinO I's junior loan with Oceanus International Investment AS ("Oceanus") will be released. At the same time, the Junior Loan will be split in two tranches with effect from 1 June 2013. Tranche 1 will be equal to USD 20,000,000 and will not carry interest. Tranche 2 will comprise all other amounts outstanding under the Junior Loan as per 1 June 2013 (being USD 60,000,000 plus accrued interest of USD 1,187,842). Tranche 2 will rank pari passu with all other unsecured debt of SinO I, and continue to be interest bearing with LIBOR + 10% p.a. Tranche 2 will fall due for payment 90 days after the lender's demand after 6 January 2020. Accrued interest on Tranche 2 shall be paid every three months in arrears subject to SinO I having available cash. Accrued but unpaid interest shall be compounded and added to the principal amount at year end every year.

3.     The proceeds from the sale lease back arrangement that is received by SinO I on completion of the sale lease back arrangement will be used inter alia to repay SinO I's existing senior debt to Deutsche Bank in full, and to repay Tranche 1 of the Junior Loan.

4.       Oceanus will transfer its rights under Tranche 2 of the Junior Loan to Sinindo.

5.       The Company will carry out a private placement of shares to Sinindo Holdings Limited ("Sinindo") in the amount of USD 58,300,000, at a share price of NOK 5.25. In payment for the shares, Sinindo will transfer its rights under Tranche 2 of the Junior Loan to the Company. Further information regarding the private placement is set out below.

6.       The Company will convert a part of Tranche 2 of the Junior Loan into equity in SinO I.

Although neither the Chinese bank financing the sale lease back arrangement nor Oceanus have finally confirmed their willingness and ability to complete all their necessary steps in the contemplated refinancing, the Company expects to receive such confirmations before the Company undertakes any financial obligations related to the sale- and leaseback arrangement and before the extraordinary general meeting to take place on 26 June 2013.

Concluding the negotiations for the refinancing of SinO II and SinO III will require some more time. The refinancing of the junior loans of SinO II and SinO III are however expected to take place by the end of Q3 or in Q4 2013. As previously communicated to the market, the refinancing of the two Subsidiaries' senior debt is expected to take place before their respective maturities in Q1 2015 and Q2 2014, respectively.

Private placement and capital reduction

In order to complete the refinancing of SinO I as set out above, the board has proposed that the Company carry out a private placement directed to the Company's majority shareholder Sinindo in the total amount of USD 58,300,000 at a subscription price of NOK 5.25 per share. As proposed, the private placement will entail an issue of 65,009,409 new shares in the Company to Sinindo, and an increase in the Company's share capital of NOK 195,028,491.  After completion of the private placement, the share capital of the Company will be NOK 235,292,328, divided on 78,430,776 shares. In payment for the shares, Sinindo will transfer its rights under Tranche 2 of the Junior Loan to the Company as a contribution in kind.

The private placement will result in Sinindo holding 96.92% of the outstanding shares in the Company. However, pursuant to a separate undertaking from Sinindo ("Sinindo's Undertaking"), the board may instruct Sinindo to offer shares corresponding to a proportionate part of the issued shares to the other shareholders of the Company.  Sinindo's shareholding in the Company could therefore decrease after completion of the private placement.

Section 4-25 of the NPLCA stipulates that if shareholder such as Sinindo holds 90% or more of the shares of a public limited liability company:

• That shareholder has the right to demand that the other shareholders sell their shares in the Company to the relevant shareholder; and
• Each of the other shareholders have an individual right to demand that the relevant shareholder purchases their shares.

The board expects that Sinindo will exercise any such right to purchase the other shareholders' shares in the company. However, if the Board instructs Sinindo to offer shares to the other shareholders in accordance with Sinindo's Undertaking, Sinindo has undertaken not to without prior approval from the board make use of any such right before any such offer (and any resulting share sale) has been completed in accordance with its terms.

As the nominal value of the Company's shares is below par value (NOK 5.25 vs. NOK 6), the board has proposed that the Company shall carry out a capital reduction immediately prior to the private placement.  More specifically, the board has proposed that the nominal value of the shares in the Company be reduced from NOK 6 to NOK 3 per share. The amount of the capital reduction will be allocated to a fund to be used as decided by the General Meeting.

Kjelstrup & Wiggen Consulting AS ("KWC") and DNB Market have assisted the board in its valuation of the Remaining Junior Loan Claim and of the consideration shares to be issued to Sinindo. Kjelstrup & Wiggen has also confirmed that the agreed value of the Remaining Junior Loan Claim of USD 58,300,000 in their opinion is fair. The board's valuation considerations and the treatment of the Company's minority shareholders are further described in the notice for the EGM.

This information is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian
Securities Trading Act.

Reference is made to the notice of the EGM for further information on the refinancing, the private placement and the capital reduction. For further details please contact Garup Meidell, Deputy CEO, on phone [phone].