Arrow Prospectus - PGS

More documents

Recommendations

Info

ARROW SEISMIC ASA – INITIAL PUBLIC OFFERING 8.3.21 Use of estimates in the preparation of the annual financial statements The management has used estimates and assumptions that have affected the assets, liabilities, income, expenses and information on potential obligations. The estimates may change as a result of future events. The changes will be recorded in the accounts when new estimates can reliably be made. Changes in accounting estimates are recognised in income statement in the period the changes arise. If the changes also relates to future periods, the effect are distributed over present and future periods. 8.4 INDEPENDENT AUDITOR Ernst & Young AS, Bergen, has been the auditor for Arrow Seismic Group for all accounting periods. Ernst & Young AS has its registered address at Lars Hillesgate 20A, 5008 Bergen. For 2005 and 2006 Ernst & Young AS has been the auditor of GC Rieber Shipping ASA which includes Arrow Seismic Group in their consolidated financial statements. Ernst & Young AS has issued an unqualified auditor’s report for the Company’s annual accounts for both the financial years 2005 and 2006. Ernst & Young AS has also performed a review in accordance with the International Standard on Review Engagements (ISRE), 2410 “Review of Financial Information Performed by the Independent Auditor of the Entity”, of the Company’s interim accounts for the first quarter of 2007. See Appendices 2, 3, 4 and 5 for further information. Ernst & Young AS is member of The Norwegian Institute of Public Accountants. 8.5 TRENDS The seismic market is developing positively, driven by increased E&P spending by oil companies. Arrow’s contract situation makes the group well positioned to take advantage of an expected continued strong seismic market over the next couple of years. The contract and letters of intent with seismic majors WesternGeco and CGGVeritas for the first three high capacity new buildings due for delivery in 2008 and 2009, confirm Arrow’s position as a leading supplier of high capacity seismic vessels to the marine seismic industry with cost efficient design and focus on safe and cost efficient operations. For the three second hand vessels recently purchased, Arrow plans to convert the vessels to 2D/source vessels of high standard with delivery in 2008 and believes there is strong demand for such vessels going forward. 8.6 SIGNIFICANT CHANGES IN THE COMPANY’S FINANCIAL OR TRADING POSITION SINCE 31 MARCH 2007 In April 2007, the company issued a six month NOK 275 million commercial paper. The commercial paper was drawn on 16 April 2007 as a bridge to equity. The loan is senior unsecured, carries a coupon of 7.00% p.a. and has final maturity date 16 October 2007. The loan was arranged by DnB NOR Bank ASA. Since 31 March 2007 and up to the date of this Prospectus, the Company has made some USD 20 million in investments related to the newbuilds and some USD 5 million in investments related to the 2D/source vessels. 63
ARROW SEISMIC ASA – INITIAL PUBLIC OFFERING 9. THE CAPITAL OF THE COMPANY 9.1 CASH FLOWS 9.1.1 Background Arrow will require capital to fund newbuildings, conversions, debt service and potential acquisitions. Arrow anticipates that by taking into account generally expected market conditions, internally generated cash flow, funds raised from the Offering and borrowings under the bank facilities, the funds will be sufficient to fulfil the commitments referred to under section 9.6 “Investments”. It is the Company’s intention to fund its future capital requirements initially through borrowings under the Company’s bank facilities and to repay those borrowings from time to time with funds from operations. The Company believes that funds from operations, funds available under its bank facilities and funds from the Offering will be sufficient to support the Company’s growth strategy, which may, in addition to newbuildings and conversions, include the acquisition of existing vessels. The adequacy of available funds will depend on many factors, including the further growth of the business, capital expenditures, market development, competition and potential acquisitions. Accordingly, the Company may require additional funds and seek to raise such funds through issuing new equity and debt. Arrow aims to have a stable, long-term funding structure, which is based on mortgage loans to the vessel-owning companies backed by parent company guarantees, in order to secure competitive margins. The funding of the Company is described in detail in section 9.3 “Capitalisation and indebtedness”, section 9.4 “Changes in capitalisation since 31 March 2007” and section 9.5 “Borrowings”. Arrow Seismic has since inception been in an investment phase and has during 2006 responded to a strong growth in the marine seismic market growing its fleet of vessels and new buildings from three to nine vessels, whereof four state-of-the-art high capacity new buildings due for delivery in 2008/09 and three cargo vessels planned converted into 2D/Source vessels in 2007/08, bringing the total investment programme to about USD 600 million since incorporation. To supply Arrow with the equity required to finance the investment in the two first new buildings, Arrow arranged a private offering of about USD 50 million in February 2006. Late 2005 the Group entered into an agreement for USD 170 million in long-term mortgage financing of the “Geo Atlantic” and the two first seismic new buildings due for delivery in 2008. In September 2006, the Group entered into an agreement for USD 13.5 million in long-term mortgage financing of the acquired vessel “CGG Laurentian”. By the end of the first half of 2007 the Group expects to sign agreements for the refinancing of the above mentioned facilities and long term financing of the last two new buildings expected for delivery in 2009 and the three cargo vessels planned for conversion to 2D/Source in 2007/2008. The Company has mid April issued a six month NOK 275 million commercial paper. The company expects to refinance the commercial paper partly through a share issue in combination with an IPO. Based on these funding activities, the Group will secure full financing of its newbuilding and conversion programme. The debt will be based on a long-term funding structure with an average duration of about 9 years which is based on mortgage loans to the vessel-owning companies backed by parent company guarantees from the Company. The lenders are reputable Norwegian and international shipping banks. Based on existing long term charter parties for “Geo Atlantic” and “CGG Laurentian”, the Company expects that it from Q1 2007 will have a solid cash flow from operating activities of about USD 15 million per year. This cash flow will be further improved from Q1 2008 when the company expects to take delivery of newbuild 532 on a 3 year time charter. Finally, the Company expects to secure employment for vessels currently open for contract at rates which further will improve the operating cash flow. 64
Page 1 and 2:
Prospectus Arrow Seismic ASA Offeri
Page 3 and 4:
The contents of this Prospectus are
Page 5 and 6:
7.2 OVERVIEW OF THE GLOBAL SEISMIC
Page 7 and 8:
1. SUMMARY The following summary sh
Page 9 and 10:
• Geopolitical risks - Changes in
Page 11 and 12:
Summary of comparison of three mont
Page 13 and 14: Subscription Period: From and inclu
Page 15 and 16: 1.11.5 Statements from experts refe
Page 17 and 18: ARROW SEISMIC ASA - INITIAL PUBLIC
Page 63: ARROW SEISMIC ASA - INITIAL PUBLIC
Page 103 and 104: ARROW SEISMIC ASA - APPENDICES APPE
Page 105 and 106: ARROW SEISMIC ASA - APPENDICES APPE
Page 107 and 108: ARROW SEISMIC ASA - APPENDICES 106
Page 115 and 116:
ARROW SEISMIC ASA - APPENDICES 114
Page 117 and 118:
Page 119 and 120:
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Page 129 and 130:
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
Page 137 and 138:
Page 139 and 140:
ARROW SEISMIC ASA - APPENDICES APPE
Page 141 and 142:
Page 143 and 144:
Page 145 and 146:
Page 147 and 148:
Page 149 and 150:
Page 151 and 152:
Page 153 and 154:
Page 155 and 156:
Page 157 and 158:
Page 159 and 160:
Page 161 and 162:
Page 163 and 164:
ARROW SEISMIC ASA - APPENDICES APPE
Page 165:
Solheimsgt 13, PB 1114 Sentrum, N-5
show all

Arrow Prospectus - PGS

Create successful ePaper yourself

Delete template?

Save as template?