Seadrill Takeover Offer Too Low, Sevan Drilling Directors Say

Sevan Drilling directors Kristian Johansen and Benedicte Schilberd Fasmer have issued a statement in which they advise the company’s shareholders not to accept the mandatory offer issued by Seadrill for the remaining shares of the company.

Sevan Drilling, a Norway-based drilling contractor, admits that the price offered by Seadrill of NOK 3.95 per share represents a premium of 16.2% to the closing share price of NOK 3.40 on 26 June 2013, the last closing price prior to the Seadrill’s announcement that it would make the Offer, and a premium of 18.3% and 5.9% over the volume weighted average price of the Company’s shares for the last three and six month periods, respectively, prior to announcement of the intention to make the Offer.

However, the statement says, the Offer Price made by Seadrill, which already owns a 50.1% stake in Sevan Drilling, represents a negative premium (discount) to more recent and current trading prices.

“In our opinion, the Offer Price is significantly below the fair market value of Sevan Drilling. Furthermore, it is further assumed that Seadrill’s increased vested interest in the Company and potential operational and marketing synergies going forward, together with the new, Seadrill supported financing being put in place and the delivery of Sevan Louisiana (expected to come into operations in Q1 2014) and Sevan Driller 4, may imply that the Company’s shares may represent an attractive financial opportunity for Sevan Drilling’s shareholders,” said the two directors in a statement.

The statement further reads:

“The Offer Price of NOK 3.95 is believed to undervalue Sevan Drilling’s assets and prospects, and represents a significant discount to analyst consensus (before and after announcement of the Offer and subsequent releases),  net asset value estimates and target prices. In our opinion, the Offer Price is significantly below the fair market value of Sevan Drilling. Furthermore, it is further assumed that Seadrill’s increased vested interest in the Company and potential operational and marketing synergies going forward, together with the new, Seadrill supported financing being put in place and the delivery of Sevan Louisiana (expected to come into operations in Q1 2014) and Sevan Driller 4, may imply that the Company’s shares may represent an attractive financial opportunity for Sevan Drilling’s shareholders.

The directors have decided to recommend the shareholders of Sevan Drilling not to accept the Offer.

However, as Seadrill regardless of the outcome of the Offer has a controlling stake in the Company, cf above, and as there can be no assurances as to the price at which the Company’s shares will trade once the Offer is completed, shareholders are encouraged to make their own considerations of the factors listed herein, and make their own assessments with respect to their ownership in the Company.

The Company’s CEO Scott Kerr and CFO Jon Willmann, as well as those board members holding shares, have all informed that they will not accept the Offer for their shares.”

  August 8, 2013

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