Vallianz : Proposed Debt Restructuring

Vallianz Holdings Limited	1 Harbourfront Avenue #06-08 Keppel Bay Tower Singapore 098632
Co Reg No. 199206945E	Tel: [phone] Fax: [phone]
www.vallianzholdings.com
PROPOSED DEBT RESTRUCTURING

• 1. INTRODUCTION

• 1.1 The board of directors ("Board" or "Directors") of Vallianz Holdings Limited (the "Company", and together with its subsidiaries, the "Group") refers to the announcement dated 10 March 2017 in respect of a framework agreement ("Framework Agreement") entered into by the Company with DBS Bank Ltd. ("DBS") and Malayan Banking Berhad, Singapore Branch ("Maybank") (collectively, "Lenders") to refinance certain of the Group's borrowings with the Lenders ("Existing Borrowings"). The Framework Agreement sets out the terms of the debt restructuring exercise which is due to expire by 2022.

• 1.2 The Board is pleased to announce ("Announcement") that the Company has entered into a restructuring agreement with the Lenders dated 19 February 2021 ("Restructuring Agreement") which modifies and supplements certain of the terms of the Framework Agreement in relation to the debt restructuring exercise, including the proposed settlement terms with the Lenders for the outstanding amounts under the Existing Borrowings owed by certain subsidiaries of Group namely Vallianz Marine Pte. Ltd., Samson Marine Pte. Ltd., Holmen Arctic Pte. Ltd. ("HAR"), Holmen Atlantic Pte. Ltd. ("HAT") and Holmen Pacific LLC ("HP") (collectively, "Borrowers") ("Proposed Restructuring").

• 1.3 The Board wishes to highlight that the following proposals are to ensure the successful Proposed Restructuring of the Company. In connection with the Proposed Restructuring, the Company is proposing to undertake the following transactions ("Proposed Transactions") for which approval of shareholders of the Company ("Shareholders") is required:

(a)of the outstanding principal amount under the Existing Borrowings, being US$145,099,134 as at 30 November 2020 ("Initial Outstanding Principal/Cost Price Amount") owed by the Borrowers to the Lenders, US$50,000,000 ("Convertible Bond Portion") will be novated from the Borrowers to the Company ("Proposed Novation"), and which will be dealt with as set out in points (b) and (c) below.

Of the Proposed Novation, a total amount of US$30,725,116 involves the novation of borrowings from HAR, HAT and HP to the Company ("Holmen Group Novation"). HAR, HAT and HP are wholly-owned subsidiaries of Holmen Heavylift Offshore Pte. Ltd. ("HOL") ("Holmen Group"), which is in-turn 75% owned by the Group and 25% owned by Swiber Holdings Limited (Judicial Managers Appointed) ("SHL"). The Holmen Group Novation is considered as an interested person transaction ("IPT") as the Holmen Group is deemed an interested person ("Interested Person") under Chapter 9 of the Singapore Exchange Securities Trading Limited ("SGX-ST") Listing Manual Section B: Rules of Catalist ("Listing Manual"), and hence the Holmen Group Novation is subject to the approval of the independent Shareholders.

For the avoidance of doubt, the novation of the rest of the amount of the Proposed Novation is not subject to Shareholders' approval.

Shareholders shall note that without Shareholders' approval for the Proposed Novation, the Proposed Restructuring will not proceed;

• (b) the proposed issue of US$43,766,662 principal amount of Series A convertible bonds due 2029 ("Series A Convertible Bonds") by the Company to DBS which are convertible into up to 581,571,405 new ordinary shares in the capital of the Company ("Shares") based on the issue price of S$0.10 for each Share and the agreed exchange rate of US$1:S$1.3288 as at 18 February 2021, with the interest rate fixed at USD LIBOR or such other benchmark rate to be agreed with the Lenders ("Series A Conversion Shares") ("Proposed Issuance of Series A Convertible Bonds");

• (c) the proposed issue of US$6,233,338 principal amount of Series B convertible bonds due 2029 ("Series B Convertible Bonds") by the Company to Maybank which are convertible into up to 82,828,594 new Shares based on the issue price of S$0.10 for each Share and the agreed exchange rate of US$1:S$1.3288 as at 18 February 2021, with the interest rate fixed at USD LIBOR or such other benchmark rate to be agreed with the Lenders ("Series B Conversion Shares") ("Proposed Issuance of Series B Convertible Bonds"); and

• (d) in conjunction with the Proposed Restructuring, the Company is also proposing the proposed issue of up to US$125,000,000 principal amount of Series C which are convertible bonds due 2029 ("Series C Convertible Bonds") by the Company to Rawabi Holding Company Limited ("RHC") which are convertible into up to1,661,000,000 new Shares based on the issue price of S$0.10 for each Share and the agreed exchange rate of US$1:S$1.3288 as at 18 February 2021, with the interest rate fixed at USD LIBOR or such other benchmark rate to be agreed with the Lenders ("Series C Conversion Shares") ("Proposed Issuance of Series C Convertible Bonds"). These Proposed Issuance of Series C Convertible Bonds to RHC will be used to repay in whole or in part the outstanding advances from RHC ("RHC Advances"), which amounted to US$90.2 million as at 30 September 2020.

  The Proposed Issuance of Series C Convertible Bonds to RHC is an IPT as RHC is considered as an Interested Person under the Listing Manual.

In addition, Series A Convertible Bonds, Series B Convertible Bonds and Series C Convertible Bonds (collectively the "Convertible Bonds") may include potential issuance of additional Series A Convertible Bonds, Series B Convertible Bonds and Series C Convertible Bonds, to the extent that the accrued interests on these Convertible Bonds are not paid in cash on the due date and pursuant to the terms of these respective Convertible Bonds, these accrued interests are capitalized into additional Convertible Bonds on the same respective terms of these Convertible Bonds ("Additional Convertible Bonds") These Additional Convertible Bonds will result in the issuance of additional Conversion Shares ("Additional Conversion Shares").

Application will be made to the SGX-ST for the listing and quotation of the Conversion Shares and Additional Conversion Shares. The agreed exchange rate of US$1:S$1.3288 for the Convertible Bonds above is the US$1:S$ rate published by Bloomberg at close of business on the day prior to the date of the Series A CB Subscription Agreement, Series B CB Subscription Agreement, and Series C CB Subscription Agreement.

1.4

The Company will be seeking the approval of the Shareholders at an extraordinary general meeting ("EGM") for the Proposed Transactions in compliance with Chapter 8 of the Listing Manual in respect of the proposed issuance of the Convertible Bonds to the Lenders, and Chapter 9 of the Listing Manual in respect of the Holmen Group Novation and the Proposed Issuance of Series C Convertible Bonds. The Proposed Transactions are inter-conditional upon each other. If any of the Proposed Transactions is not approved, no part of the Proposed Restructuring will be proceeded with.

Further details on the Proposed Restructuring will be set out in a circular to Shareholders ("Restructuring Circular") in due course.

2. 2.1

OVERVIEW AND RATIONALE OF THE PROPOSED RESTRUCTURING Overview of the Proposed Restructuring

The Proposed Restructuring involves the Proposed Novation of US$50,000,000 out of the Initial Outstanding Principal/Cost Price Amount of US$145,099,134 as at 30 November 2020 which are owed by the Group to the Lenders. The above amount novated will be reconstituted as Series A Convertible Bonds and Series B Convertible Bonds. Accordingly, the Initial Outstanding Principal/Cost Price Amount under each facility with the Lenders shall be reduced pro rata between each Lender by the aggregate amount of US$50,000,000.

A summary of the terms and conditions of Series A Convertible Bonds and Series B Convertible Bonds is set out in Section3and Section 4 below, respectively.

The balance of the Initial Outstanding Principal/Cost Price Amount of US$95,099,134 ("Remaining Principal Amount") shall continue to be serviced by the Borrowers in accordance with the terms of the existing Facility Agreements and the Framework Agreement, except as amended by the Restructuring Agreement, and except that a total amount of US$5,347,440 will be repaid by the Borrowers to the Lenders from funds to be advanced by RHC to the Company (by way of Shareholder's Advances or otherwise) in such agreed tranches during the period until 31 March 2022 ("Rawabi Contribution Amount") pursuant to the shareholder support agreement dated 19 February 2021 between RHC and the Lenders ("Shareholder Support Agreement"). Upon utilizing the full amount from the Rawabi Contribution Amount for the repayment to the Lenders, the Initial Outstanding Principal/Cost Price Amount would be reduced to US$89,751,694.

The principal terms of the Restructuring Agreement are set out in Appendix 1 to this Announcement.

In brief, under the Restructuring Agreement, the Remaining Principal Amount will have a final maturity date of 96 months (or 8 years) from the effective date or such later date as may be agreed with the Lenders. Further, there shall be a principal moratorium period of 2 years for the period commencing retrospectively from 1 April 2020 (as some of the Existing Borrowings were due for repayment since 1 April 2020) and ending on 31 March 2022 ("Moratorium Period"). During the Moratorium Period, the Borrowers are not required to make any principal payment to the Lenders, except for the repayment using the Rawabi Contribution Amount. Commencing from 1 April 2022 and until the date on which the Remaining Principal Amount is repaid and discharged in full, the Borrowers shall repay such Surplus Cash generated from the Singapore Fleet to the Lenders as determined by the Independent Accountant (to be appointed and agreed with the Lenders) ("Cash Sweep"). The Independent Accountant has been identified and agreed with the Lenders to be Ernst & Young LLP.

Pursuant to the Proposed Restructuring, RHC has under the Shareholder Support Agreement undertaken to the Lenders to provide various financial support for so long as any of the Remaining Principal Amount is still outstanding.

The Company understands that RHC has also entered into a call option and right of first refusal agreement with the Lenders ("RHC Call Option") whereby RHC shall have the option to purchase all or part of the outstanding Series A Convertible Bonds and/or Series B Convertible Bonds at par at any timeduring the Conversion Period (as defined in Appendices 2 and 3 of this Announcement). Further, if any Lender wishes to sell or transfer any of its Series A Convertible Bonds and/or Series B Convertible Bonds, such Lender shall give RHC not less than 21 business days' prior written notice of its intention to sell and offer such Convertible Bonds ("Proposed Sale") to RHC on substantially the same terms as the Proposed Sale.

• 2.2 Rationale of the Proposed Restructuring

  The Proposed Restructuring is to extend the Group's debt maturity profile by 8 years which will provide sufficient operational and financial flexibility to better enable the Group to ride out the challenging market conditions in the offshore sector, as well as the global economic uncertainty following the COVID-19 pandemic, both of which may persist on a prolonged basis, and to allow the Group to service its debts based on its expected future cash flows.

  The Group believes that the Proposed Restructuring is beneficial to the Group as it allows the Group to restructure part of its Existing Borrowings as Convertible Bonds which will, upon conversion into new Shares, reduce its borrowings and enhance its equity base; and interest savings as the interest rates on the Series A Convertible Bonds and Series B Convertible Bonds are lower than the current interest rates on the Existing Borrowings.

  The Proposed Issuance of Series C Convertible Bonds is being proposed in conjunction with the Proposed Restructuring as it will provide an alternative option for the Company to settle the RHC Advances as RHC continues to be the major Shareholder. The key terms of the Series C Convertible Bonds are similar to those of Series A Convertible Bonds and Series B Convertible Bonds.

  The Company is preparing an IPT circular (see paragraph 5.1 below) to obtain Shareholders' approval to, inter alia, enter into a loan agreement with RHC of up to US$125 million at the interest rate of 5% per annum with retrospective effect from 1 April 2020, in compliance with the by-laws of the Kingdom of Saudi Arabia, as the RHC Advances were previously extended to the Company interest free. When the Series C Convertible Bonds are used to repay in whole or in part the RHC Advances, the Group will benefit from some interest savings as the interest rate on the Series C Convertible Bonds are lower than the interest rate on the proposed loan agreement with RHC.

• 2.3 Use of Proceeds

  No fresh proceeds are raised from the Proposed Restructuring of the Existing Borrowings, and when the Proposed Issuance of Series C Convertible Bonds are being issued as settlement of any existing RHC Advances.

• 3. THE PROPOSED ISSUANCE OF SERIES A CONVERTIBLE BONDS TO DBS

• 3.1 Background

  DBS and the Company have entered into the convertible bond subscription agreement dated 19 February 2021 ("Series A CB Subscription Agreement") setting out the terms of the Series A Convertible Bonds. The Borrowers are guarantors of the Series A Convertible Bonds pursuant to the Series A CB Subscription Agreement.