CH OFFSHORE LTD (Incorporated in the Republic of Singapore) Company Registration No. 197600666D BAREBOAT CHARTER OF VESSEL WITH CHARTERER S OPTION TO PURCHASE 1. INTRODUCTION 1.1 Disposal. The Board of Directors of CH Offshore Ltd (the Company ) is pleased to announce that the Company has entered into a bareboat charter agreement with a third party (the Buyer ), pursuant to which the Buyer will charter from the Company, the Pearl, a 2008-built 12,240 brake horsepower anchor-handling tug supply vessel (the Vessel ), which is registered in the ownership of the Company under the laws and flag of Singapore at a charter hire of US$10,750 per day for a period of one year, with an option for the Buyer to extend the charter for an additional six-year period ( Extension Charter Period ) at the charter hire of US$10,750 per day, as well as an option (the Purchase Option ) for the Buyer to purchase the Vessel at the purchase price of US$16 million at the expiration of the Extension Charter Period (the seven-year charter and the sale of the Vessel together referred to as the Disposal ). 1.2 Consideration. The aggregate consideration of US$43.49 million (the Consideration ), comprising the charter hire of US$27.49 million for the seven-year charter period and the purchase price for the Vessel of US$16 million, was arrived at on a willing seller and willing buyer basis after taking into account future prospects, cash flow and potential earnings of the Vessel. 1.3 Asset Value. The Company had engaged R.S. Platou (Asia) Pte Ltd (the Valuer ) to undertake an independent valuation of the Vessel. As at 8 February 2011, the market valuation of the Vessel was estimated at US$32 million. The valuation is based on the Valuer s opinion of the conditions prevailing on the sale and purchase market and in the charter market at the time mentioned. 1.4 Gain on Disposal. The net book value of the Vessel as at 30 June 2010 is US$23.76 million. In the event the Disposal proceeds to completion, the Group will realise a gain of approximately US$ 19.73 million, (based on the charter hire for seven years and the purchase price for the Vessel). 2. PRINCIPAL TERMS OF THE DISPOSAL 2.1 Payment of Consideration. The Buyer will pay the Consideration to the Company in the following manner: Charter hire of US$10,750 per day will be paid by the Buyer by way of telegraphic transfer to the Company s account not later than every thirty (30) running days in arrears; and upon completion of the Extension Charter Period and if the Buyer exercises the Purchase Option, US$16 million will be paid by the Buyer by way of telegraphic transfer to the Company s account. 1
2.2 Other Terms of the Disposal. The Disposal will be subject to, inter alia, the following terms and conditions: Delivery The Company shall give the Buyer 7-days of preliminary and 3-days definite notices of delivery after Buyer s declared exact date of delivery within February 2011. Should the Vessel not be delivered by latest 15 March 2011, the Buyer shall have the option of cancelling the charter by giving the Company notice of cancellation within 36 running hours after 15 March 2011. On expiration of the Extension Charter Period and on exercise of the Purchase Option by the Buyer, the Vessel shall be delivered by the Company and taken over by the Buyer. Encumbrances The Company warrants that the Vessel will, at the time of delivery, be free from all encumbrances, mortgages and maritime liens or any other debts whatsoever. The Company further undertakes to indemnify the Buyer against all consequences of claims made against the Vessel which have been incurred prior to the time of delivery. (c) Buyer s Default The Company shall be entitled to withdraw the Vessel from the service of the Buyer and terminate the charter with immediate effect by written notice to the Buyer if the Buyer fails to pay hire, comply with trading restrictions, comply with insurance requirements or comply with maintenance and repair requirements in accordance with the terms of the charter. (d) Company s Default If the Company shall by any act or omission be in breach of its obligations under the charter to the extent that the Buyer is deprived of the use of the Vessel and such breach continues for a period of fourteen (14) running days after written notice thereof has been given by the Buyer to the Company, the Buyer shall be entitled to terminate the charter with immediate effect by written notice to the Company. (e) Governing Law and Arbitration The charter agreement shall be governed by and construed in accordance with English law and any dispute arising out of the charter agreement shall be referred to arbitration in Singapore. 2
3. DISCLOSEABLE TRANSACTION Relative Figures under Rule 1006. The relative figures for the Disposal computed on the bases set out in Rule 1006 ( Rule 1006 ) of the SGX-ST Listing Manual, based on the last audited consolidated financial statements of the Company for the financial year ended 30 June 2010, are set out below: Rule 1006 Bases Disposal (US$ million) Group (US$ million) Relative Figures (%) Net asset value of the Vessel to be disposed of compared with net asset value of the Company and its subsidiaries ( Group ) 23.76 216.97 10.95 (c) Net profits attributable to the Vessel to be disposed of compared with net profits of the Group The Consideration compared with market capitalisation of the Company (2) 2.47 37.34 6.61 43.49 268.00 16.23 (d) Number of equity securities issued by the Company as consideration for an acquisition, compared with the number of equity securities previously in issue. NA NA NA Notes: The Consideration comprises the charter hire for seven years (US$27.49 million) and the purchase price for the Vessel (US$16 million). (2) The market capitalisation of the Company is based upon 705,090,514 Shares in issue as at 16 February 2011 at the volume-weighted average price of S$0.485 per Share (equivalent to US$0.38009 per Share based on the exchange rate US$1:S$1.276) transacted on 16 February 2011. 4. RATIONALE FOR THE DISPOSAL 4.1 The Directors believe that the Disposal is in the interests of Shareholders. The charter hire rate is very attractive, especially in view of the current chartering environment, which is very competitive. The Group will realize a gain of approximately 83% of the net book value of the Vessel on the disposal of the Vessel, (based on the charter hire for seven years and the purchase price for the Vessel). The proceeds of the Disposal will be used for capital expenditure and working capital purposes. 3
5. USE OF PROCEEDS The proceeds of the Disposal will be used for capital expenditure for the future expansion of the Company as well as for working capital purposes. 6. FINANCIAL EFFECTS 6.1 Assumptions. For illustrative purposes only, the financial effects of the Disposal on the share capital, net tangible assets ( NTA ) per share and earnings per share of the Company, based on the last audited consolidated financial statements of the Company for the financial year ended 30 June 2010 are set out below. 6.2 Share capital. The Disposal will not have any impact on the issued and paid-up share capital of the Company. 6.3 NTA. Assuming that the Disposal had been completed on 30 June 2010, being the end of the most recently completed financial year, the effect on the NTA per share of the Group as at 30 June 2010 is as follows: Before the Disposal After the Disposal NTA (US$ million) 216.97 236.70 NTA per share (US cents) 30.77 33.57 Note: Based on the Consideration of US$43.49 million, comprising the charter hire for seven years of US$27.49 million and the purchase price for the Vessel of US$16 million. 6.4 Earnings. Assuming that the Disposal had been completed on 1 July 2009, being the beginning of the most recently completed financial year, the effect on the earnings per share of the Group for the financial year ended 30 June 2010 is as follows: Before the Disposal After the Disposal Profit attributable to shareholders of the Company (US$ million) Weighted average number of shares of the Company (million) 37.34 53.58 705.09 705.09 Earnings per share (US cents) 5.30 7.60 Note: Based on the Consideration of US$43.49 million, comprising the charter hire for seven years of US$27.49 million and the purchase price for the Vessel of US$16 million. 4
7. DIRECTORS INTERESTS AND CONTROLLING SHAREHOLDERS INTEREST None of the Directors or controlling shareholders of the Company have any interest, direct or indirect, in the Disposal. 8. SERVICE CONTRACTS No person is proposed to be appointed as a director of the Company in connection with the Disposal. Accordingly, no service contract is proposed to be entered into between the Company and any such person. 9. DOCUMENTS FOR INSPECTION Copies of the charter agreement and the valuation certificate are available for inspection at the registered office of the Company during normal business hours for a period of 3 months from the date of this Announcement. BY THE ORDER OF THE BOARD Valerie Tan May Wei Company Secretary 17 February 2011 5