powerpoint pres

1
General information on financing process and
current status
24rd September 2009
2
Disclaimer

• The information and views presented in this
  report are prepared by Arctic Securities ASA
  (Arctic) and Pareto Private Equity AS
  (Pareto) two investment banking firms domiciled
  in Norway, under the supervision of The Financial
  Supervisory Authority of Norway (Kredittilsynet),
  and member of The Oslo Stock Exchange. This
  document has been prepared in accordance with the
  guidelines from the Norwegian Securities Dealers
  Association.
• The information contained herein is based on our
  analysis and upon sources that we consider
  reliable. We, however, do not vouch for the
  accuracy or the completeness thereof. This
  material is for personal information and we are
  not responsible for any loss incurred based upon
  it. The investments discussed or recommended in
  this report may not be suitable for all
  investors. Investors must make their own
  investment decisions based on their specific
  investment objectives and financial position and
  using such independent advice, as they believe
  necessary. While acting upon any information or
  analysis mentioned in this report, investors may
  please note that neither Arctic and Pareto nor
  any person connected with Arctic and Pareto
  accepts any liability arising from the use of
  this information and views mentioned in this
  document.
• Arctic and Pareto may have holdings in the
  companies described herein as a result of market
  making operations and/or underlying shares as a
  result of derivatives trading. Arctic and Pareto
  may buy or sell such shares both for own account,
  and as a principal agent.
• There are no agreements or understandings in
  force between Arctic and Pareto and the companies
  mentioned above i.e. related to market making
  activities.
• This report is produced and distributed for the
  eyes of Norwegian physical and judicial persons
  only, and is governed and construed solely on
  Norwegian law. The report is confidential and may
  not be reproduced, redistributed or republished
  by any recipient for any purpose or to any
  person. If you are not a client of Arctic and
  Pareto, you are not entitled to this report.
• This report does not constitute or form any part
  of any offer for sale or subscription of or
  solicitation of any offer to buy or subscribe for
  any securities nor shall it or any part of it
  form the basis of or be relied on in connection
  with any contract or commitment whatsoever.

3
Background

• Master Marine ASA (MAMA) is in the process of
  building two service vessels at Drydock World
  Graha shipyard in Batam, Indonesia
• The vessels are at 75 and 67 completion,
  respectively, and have planned delivery from yard
  in Q1 and Q3 2010
• Both vessels have employment contracts at a total
  value of EUR 341 mill
• Unit 1 3 years firm 2 x 1 year (EUR 263 mill
  for fixed period)
• Unit 2 210 days/ 88 wind mills fixed (EUR 78
  mill)
• So far the vessels have been financed by EUR 207
  mill as follows
• Equity EUR 101 mill
• Convertible EUR 46 mill
• HY Bond EUR 60 mill
• A further financing gap of EUR 300 mill still
  remains
• To be covered by senior secured loan / bond loan
  and new equity
• HY and Convertible to be renegotiated
• Requires negotiated solution with other
  stakeholders
• Arctic and Pareto Private Equity appointed as
  financial advisors to the Company

() NOK 420m at NOKEUR 9.08
4
Company overview

• Company established in 1997
• Specialised in transportation and installation of
  heavy structures in the marine environment
• Construction of 2 high-end Service Jacks at
  Drydocks World Graha, Batam, Indonesia
  (previously Labroy)
• Experienced sub-suppliers
• Scheduled delivery Q1 and Q3 2010
• Exposure to attractive offshore wind market in
  addition to traditional oil gas market
• Master Marines vessels are highly capable of
  serving both these markets
• Management with more than 25 years of experience
  from complex marine operations and offshore
  transportation and installation projects. Fully
  developed and capable organization of 29
  permanent employees and 59 project consultants
• 54 at headquarters in Oslo
• Site team of 34 at the yard
• In-house operating team in place fully capable of
  serving both units post delivery
• Frame agreements in place with experienced
  players
• SEMAR AS for engineering support services
• Maritime GMC for offshore labour support
• Classification ABS

5
Construction update and contract overview
Service Jack II (L206) construction update
Service Jack I (L205) construction update

• Currently reported 75 mechanically complete
• Contract delivery date from yard 30 Jan 2010,
  mobilization originally planned July 2010
• Temporary stop in payments to contracting parties
  initiated as of 1st September 2009, now causing
  delays and cost increases
• Delay currently estimated 11 weeks
• Mitigating actions initiated to minimize delay
  cost impact

• Currently 67 mechanically complete
• To be delivered 3Q 2010
• Mobilization planned 4Q 2010

Service Jack II contract overview
Service Jack I contract overview

• Counterparty ConocoPhillips
• Field Ekofisk, North Sea
• 3 years starting 1 July 2009 2 x 12 months
  options (for the client)
• Contract value of EUR 263 mill incl. EUR 86 mill
  fixed payment from COP
• Day rate of EUR 164,000 excl. the fixed payment
  from COP
• Contractual Mobilization start 1 July 2010
• Grace period 80 days
• LD per day EUR 135,000 for 180 days, capped at
  EUR 22.3m
• COP termination right after 245 days
• Delays may have significant cost impact for MaMa

• Counterparty Scira Offshore Energy (50/50 JV
  between Statoil and Statkraft)
• Project Sheringham Shoal (UK)
• Installation of 88 wind turbines and 2 substation
  modules
• Project engineering started 2Q 2009 with a
  planned 7 months installation campaign, to be
  completed during 3Q 2011
• Contract value EUR 78 mill

6
Unique resources with exceptional experience
Master Marine and resources behind the company
have more than 25 years experience from complex
marine operations all over the world for clients
such as ExxonMobil, Statoil, ConocoPhillips,
Bergesen, etc.

• Offshore lifting and installation of large
  modules (up to 10,000 T)
• Topside mating operations of deck structures up
  to 50,000 T(ex. Hibernia, Gullfaks, Snorre A,
  etc)
• Load out operations by trailers and skidding
• Heavy transport of drilling rigs and other large
  structures
• Sub sea installation
• Towage and positioning
• Pre installation of suction anchors and mooring
  spreads
• Salvage operations
• Decommissioning

7
Organization for construction follow up and
operations fully developed

• Organisation in place
• Fully developed and capable organization of 29
  permanent employees and 59 project consultants
• 54 at headquarters in Oslo
• Site team of 34 at the yard
• In-house operating team in place fully capable of
  serving both units post delivery
• Sales and marketing
• Operations planning and preparations
• Field operations and project execution
• Frame agreements in place with experienced
  players
• SEMAR AS for engineering support services
• Maritime GMC for offshore labor support

• Results delivered
• Two strong contracts with tier 1 clients
• 3 year ( 2 x 1 year options) contract with
  ConocoPhillips for accommodation services
• 210 day contract with Statoil/ Statkraft
• Very demanding clients with strict requirements
  with respect to
• Quality
• Workmanship
• Experience and expertise
• HSE
• The established contracts demonstrate that the
  Master Marine organizations qualities and
  capabilities are well perceived and appreciated
  in the market

8
Master Marine - general situation

• The Company is running out of cash
• Current prognosis is that existing EUR 1.9
  million in a best case can be stretched to
  30.09.09
• Outstanding capital requirements EUR 126 million
  of payments over-due and falling due in Sep/ Oct
  2009
• Company failed to meet interest payment on the
  EUR 60m bond loan in Sep 09, and is currently in
  breach of the loan agreement
• Yard, suppliers and other creditors were notified
  in writing on 1st September that the Company is
  not in position to meet its payment obligations
  going forward, and has requested
• Acceptance of postponement of payments until 15th
  October
• Minimal stop or slowdown in critical activities
• L205 is currently on critical line and any delay
  will be value destructive
• Delays in L 205 increase risk for LDs from COP
  (gt 80 days delay)
• Delays in L 205 increase risk of cancellation by
  COP(gt 245 days)

As per 23rd September 2009
9
An extensive process has been conducted in search
of financial or strategic solutions

• The Company has together with its financial
  advisors explored all possible alternatives
• Bank financing (including GIEK contribution)
• Sale of assets
• Merger / combination of businesses
• Industrial sponsors
• Financial sponsors
• Debt and equity providers
• Clients
• As of 24rd September this process has been
  ongoing for 14 weeks
• More than 50 potentially interested parties have
  been contacted
• Should an unconditional solution for the
  recapitalisation of the Company not be in place
  on 28 September 2009, the Board will have to
  consider whether continued operation of the
  company is prudent or if the company immediately
  will have to file for bankruptcy

10
Summary of market feedback

• Generally positive feedback on MaMas vessels,
  personnel, commercial contracts, concept and
  strategy
• However, the total financing need is very large
  and the transaction risk is considered to be high
• Complete corporate re-financing is complex and
  challenging within required timeline
• Sale of assets depends on consent from yard, COP
  and/or StatoilHydro
• Fear of renegotiation of terms
• Makes simple novation sale relatively difficult
• Perception that remaining construction risk is
  still high
• Specialized vessels, additional engineering
  content in contracts
• Organisation and competence key to secure
  delivery of units of time and cost
• Risk that delays will negatively impact earnings
  from COP-contract
• Cost of cash is very high in todays market
• High degree of risk aversion
• Potentially interested parties may depend on
  expensive (external) financing as well
• Even parties with financial capacity are very
  cautious and restrained with respect to new
  projects
• Bank debt very difficult to get banks to accept
  pre-delivery financing in current market
• After 9 months of actively seeking bank
  financing, only one bank and GIEK finally
  submitted firm term sheets against very strict
  terms

11
Status as of 24rd September

• Indicative non-binding offer for
  re-capitalisation of the Company received from
  Nordic Capital on 4th September
• Financing in place, with funds readily available
• As per 24th September, the Board has not received
  confirmation from Nordic Capital that conditions
  have been lifted
• Industrial operator re-confirmed interest 23th
  September
• Still uncertainty related to financing, subject
  to full due diligence
• Tentative closing 7th October, funds available
  from 15th October
• Offer for the vessel L205 received from a
  financial consortium
• Deemed legally not feasible according to Legal
  opinion from Advokatfirmaet Selmer,
  discrimination of creditors
• Will give close to zero for Convertholders and
  Shareholders, and remaining MaMa will go bankrupt
  if Offer accepted
• Offeror lacks financing to meet remaining
  commitments, depends on transferring MaMa bank
  financing (which is not generally transferable,
  will require new round of bank negotiations)
• Subject to full due diligence, not feasible given
  critical timing of MaMas funding need
• No other formal offer or indication of interest
  received
• Discussions have been held with industrials
  regarding potential interest for L205
• No offers or proposals received
• Limited interest for acquiring L206
• Short contract duration seen as main challenge,
  not bankable
• Pre delivery financing a major challenge
• Sustainability of achieved rate levels questioned

12
Indication of interest from Nordic Capital

• Indicative, non-binding offer for full
  recapitalisation of Company was received on 4th
  September
• EUR 130 million in new equity at NOK 0.60 per
  share
• EUR 150 million in senior secured loan at 12
  interest
• High Yield bond including accrued interest to be
  bought by Nordic Capital at an aggregate price of
  EUR 20 million
• Convertible bond to be converted into 140 million
  new shares in the Company _at_ NOK 3.436/ share (no
  cash)
• Transaction completed within September 2009 with
  following main subjects (which have not yet been
  lifted)
• Satisfactory DD and no MAC
• Approval of bondholders and EGM
• Due Diligence subject to be lifted by 22th
  September (still not lifted)
• Exclusivity granted to 25th September
• Break fee of EUR 2.5 million agreed
• Shall not be applicable in a situation of
  bankruptcy or compulsory composition of Company
• Provided that the transaction is completed as
  planned, the Company will have funds available
  immediately after closing

13
Rationale for granting of exclusivity

• Only alternative that can lead to a successfully
  completed transaction within the end of September
• Financing in place funds can be supplied within
  end of September
• Not dependant upon banks or any other form of
  external financing (bond or equity issues)
• No consent from COP/ Statoil/ Statkraft required
• Uncertainty related to the other alternative (the
  Industrial solution)
• Dependent upon a EUR 170 million bank facility
• EUR 70 million from GIEK
• EUR 100 million from commercial bank

14
Summary of Nordic Capitals offer to stakeholders
according to LoI
15
Comparison of alternatives
16
Offer received for L205 - evaluation

• Legally not feasible, discrimination of creditors
• Bondholders only have assignment over the yard
  contracts and certain original OFE-contracts.
  Bondholders do not have assignment over the COP
  charter and the related subsequent OFE-contracts,
  incl living quarters and footings
• Following the proposed sale, the Company will be
  insolvent. The Company cannot undertake a sale of
  assets and let only a limited number of creditors
  benefit from the proceeds from such a sale
• Financing not in place, lack of documentation
  regarding ability to finance remaining
  commitments
• Subject to transfer of debt facility with DVB and
  GIEK (which is not generally transferable, will
  require new round of bank negotiations)
• Still major outstanding issues
• Outstanding commitments for L206 of EUR 116m
  HQ/ overhead commitments not covered
• Conditional on COP release of award payments of
  EUR 85.9 million
• Subject to release of key MaMa personnel
• Offer will require consent from yard and COP
• Offer subject to due diligence

17
Summary recommendation from MaMa Board of
Directors

• Proposal from NC secures MaMas EUR 300m capital
  need, and is the only feasible solution currently
  available
• Voting YES in EGM/ bondholder meeting will secure
  MaMa with necessary financing until delivery
• Voting NO in EGM/ bondholder meeting will put
  MaMa in a very difficult situation, and the Board
  will have to consider whether continued operation
  of the company is prudent or if the company
  immediately will have to file for bankruptcy
• This will be value destructive for all involved
  parties
• Existing employment contracts will be cancelled
• Disintegration of MaMa organisation with
  implications for yard follow-up and approval
  processes
• Loss of progress for construction projects, which
  may increase construction costs

18
Contact
Master Marine ASA Drammensveien 288 NO-0283
Oslo Geir Sandvik Chairman of the Board
Mobile [phone]E-mail geir.sandvik_at_sanco
consult.no
Master Marine ASA Drammensveien 288 NO-0283
Oslo Per Johansson CEO Mobile 47 9174
3860E-mail per.johansson_at_master-marine.no

• Pareto Private Equity AS Dronning Mauds gate 3
  PO Box 1411 Vika NO-0115 Oslo
• Christian Jomaas Corporate Finance Direct 47
  2201 5804 Fax [phone] Mobile 47 9019
  8406E-mail christian.jomaas_at_pareto.no

• Arctic Securities ASA Haakon VIIs gt. 5 P.O.
  Box 1833 Vika NO-0123 Oslo
• Arne Wenger Corporate Finance Direct 47 2101
  3116 Fax [phone] Mobile [phone]
  E-mail arne.wenger_at_arcticsec.no