22 Dec 2015

Norske Skog agrees with major holders of 2016 and 2017 notes for new exchange offer

Norske Skog has reached an agreement for new exchange offer and refinancing terms with GSO Capital Partners L.P. (GSO) and Cyrus Capital Partners, L.P. (Cyrus), which through their funds hold a substantial part of the outstanding 2016 and 2017 notes. The purpose of the new exchange offer and refinancing is to strengthen the group's financial position through maturity extension and debt reduction. Under the agreement, Norske Skog will terminate the exchange offer launched on November 17, 2015, and launch a new exchange offer.

Upon completion of definitive documentation, Norske Skog will launch a new exchange offer to holders of the senior notes due in 2016 and 2017. The exchange consideration will consist of a mix of qualified securitization financing (QSF) notes due in 2026, new unsecured notes due in June 2019 (2016 notes) and December 2026 (2017 notes), perpetual notes and an offer to subscribe for new equity. The subscription rights for new equity will not be transferable among holders. The nominal consideration to be offered to 2016 note holders is above par at 108% (of which half in QSF notes), whereas the 2017 note holders will be offered a nominal consideration of 83% (of which 20% in QSF notes). The new exchange offer will realize a reduction in net debt in the range of NOK 1 billion and reduce annual cash interest payments by around NOK 150 million if all note holders participate.

The QSF notes, amounting to EUR 110 million at 100% participation, will be secured by collateral in receivables in Norway, inventories in Norway and France and certain bank accounts, and will bear interest of 6% cash and 6% PIK. The new unsecured notes due in 2019 and 2026 will be on materially the same terms as those applying to the 2019 and 2026 exchange notes described in the existing exchange offer. The perpetual notes will receive cash interest of 2%, which can be deferred in whole or in part, and mature in 2114. GSO and Cyrus have agreed to purchase (and exchange in the new exchange offer) the group's treasury 2016 and 2017 notes. GSO and Cyrus have also committed to refinance the existing receivables facility with the SpareBank 1 Alliance (which is due to expire in November 2016) with a new receivables facility for the Norwegian mills. The offer to subscribe for new equity, limited to EUR 15 million of new ordinary shares of Norske Skog, will apply to participating 2016 and 2017 note holders at a price of NOK 2.24 per share. To address dilution effects, Norske Skog intends to commence, upon completion of the new exchange offer, a repair offering to existing equity holders to subscribe for up to EUR 15 million of new ordinary shares of Norske Skog at a price of NOK 2.24 per share.

Under the agreement, the new exchange offer terms will specify high minimum participation levels of 90% for the 2016 notes and 75% for the 2017 notes. There is not expected to be adequate liquidity available to fund repayment of the 2016 and 2017 notes held by investors who choose not to participate in the new exchange offer if these levels are not met.

- We are pleased to have reached an agreement with GSO and Cyrus for a new exchange offer, which will protect value for all stakeholders by creating an opportunity for the group to benefit from an expected cyclical improvement and enable further work to restructure and consolidate the European publication paper industry. An unsuccessful exchange offer would raise the prospect of the contingency plan for a comprehensive balance sheet restructuring to be implemented, with the potential for significant loss in value for all stakeholders, explained Mr. Sven Ombudstvedt, President and CEO of Norske Skog.

- A successful completion of the new exchange offer would materially strengthen our medium-term capital structure by realizing immediate de-leveraging, substantially improve our equity position, reduce the cash interest level and materially extend debt maturities. If the transaction is successfully completed, we can avoid a comprehensive balance sheet restructuring, said Mr. Ombudstvedt.

The commitments of GSO and Cyrus under the agreement with Norske Skog are several and not joint and subject to the agreement of definitive documentation. The commitments of GSO and Cyrus will be terminated if the new exchange offer is abandoned or not implemented.

Norske Skog will make a separate announcement as to the formal commencement of the new exchange offer and the termination of the existing exchange offer in early January 2016.  Once formally commenced, copies of the New Exchange Offer and Consent Solicitation Memorandum will be made available for eligible holders of 2016 and 2017 notes from the Exchange and Tabulation Agent, Lucid Issuer Service (for information by telephone: +44 20 7704 0880; Attention: Thomas Choquet/Yves Theis; Email: norskeskog@lucid-is.com). A separate stock exchange release is available on www.newsweb.no under the Norske Skogindustrier ASA ticker "NSG" (IssuerID).

An extraordinary general meeting will be held on 6 January, 2016. The invite and press release to the EGM was sent and published on 16 December, 2015. Information about the EGM can be found on the company website, www.norskeskog.com

This information is not for distribution in the United States and is subject of the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

Norske Skog
Communications and Public Affairs

For further information:

Norske Skog media:
Vice President Corporate Communication 
Carsten Dybevig
Mob: +47 917 63 117

Norske Skog financial markets:
Vice President Investor Relations
Tom Rogn
Mob: +47 948 55 659

This press release may include projections and other "forward-looking" statements within the meaning of applicable securities laws. Any such projections or statements reflect the current views of Norske Skogindustrier ASA or its subsidiaries ("Norske Skog") about further events and financial performance. Although Norske Skog believes that these views and assumptions are reasonable, the statements are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. No assurances can be given that such events or performance will occur as projected and actual results may differ materially from these projections.

This press release shall not constitute an offer to sell or a solicitation of an offer to purchase any securities in the Unites States, and shall not constitute an offer, solicitation or sale in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful. The securities have not been and will not be registered under the Securities Act of 1933 (the "Securities Act").  The securities may not be offered or sold in the United States absent registration under the Securities Act or an applicable exemption from registration requirements. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the issuer and that will contain detailed information about the company and management, as well as financial statements. This press release is being issued pursuant to and in accordance with Rule 135e under the Securities Act.

In member states of the European Economic Area, this press release (and any offer of the securities referred to herein if made subsequently) is only addressed to and directed at persons who are "qualified investors" within the meaning of Article 2(1)(e) of the Prospectus Directive.

This press release is directed only at (i) persons who are outside the United Kingdom or (ii) persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2) of the Order or (iv) persons to whom an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (the "FSMA")) in connection with the issue or sale of any notes may otherwise be lawfully communicated or caused to be communicated (all such persons together being referred to as "relevant persons"). Any investment activity to which this communication relates will only be available to and will only be engaged with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

This press release does not constitute an offer to sell or buy or the solicitation of an offer to sell or buy the existing bonds  and/or the new unsecured notes, as applicable (and offers of existing bonds for exchange pursuant to the offers will not be accepted from holders), in any circumstances in which such offer or solicitation is unlawful.