VOLUNTARY EXCHANGE OFFER TO ACQUIRE THE ISSUED AND OUTSTANDING SHARES IN
AURORA LPG HOLDING ASA
made by
AVANCE GAS HOLDING LTD
Exchange ratio:
0.574 shares in Avance Gas Holding Ltd for each share in Aurora LPG Holding ASA.
Offer Period:
From and including 17 November 2015 to and including 16 December 2015 at 16:30 hours (CET).
This offer document and information memorandum containing equivalent information as a prospectus (the “Offer Document”) has
been prepared by Avance Gas Holding Ltd (“Avance Gas”), an exempted company limited by shares incorporated under the laws of
Bermuda (together with its consolidated subsidiaries, the “Avance Gas Group”), in connection with (i) its voluntary offer (the “Offer”)
for the shares in Aurora LPG Holding ASA (“Aurora LPG” and together with its consolidated subsidiaries, the “Aurora LPG Group”),
against consideration in new shares in Avance Gas, each with a nominal value of USD 1.00 (the “Consideration Shares”) and (ii) the
listing of the Consideration Shares on Oslo Børs, a stock exchange operated by Oslo Børs ASA (the “Oslo Stock Exchange”).
Avance Gas‟ existing shares (the “Shares”) are, and the Consideration Shares will be, listed on the Oslo Stock Exchange under ticker
code “AVANCE”.
All of the Shares are, and the Consideration Shares will be, registered in the Norwegian Central Securities Depository (the “VPS”) in
book-entry form. All of the Shares, and the Consideration Shares will, rank pari passu with one another and each carry one vote.
Except where the context otherwise requires, reference in this Offer Document to the Shares will be deemed to include the
Consideration Shares.
The Offer is not being made and does not constitute an offer or solicitation in any jurisdiction or to any person where the
making, solicitation or acceptance of the Offer would be subject to restrictions or in violation of the laws or regulations of
such jurisdiction.
Investing in the Consideration Shares involves a high degree of risk. See Section 1 “Risk Factors” beginning on page 6.
Financial Adviser and Receiving Agent
Danske Bank
The date of this Offer Document is 16 November 2015
Avance Gas Holding Ltd – Offer Document
IMPORTANT INFORMATION
This Offer Document has been prepared in connection with the Offer and the listing of the Consideration Shares on the Oslo Stock Exchange (the “Listing”).
For definitions of certain other terms used throughout this Offer Document, see Section 13 “Definitions and Glossary”.
This Offer Document has been prepared to comply with the requirements regarding voluntary offers set out in Chapter 6 of the Norwegian Securities Trading
Act of 2007 (the “Norwegian Securities Trading Act”). This Offer Document contains information which is regarded as “equivalent” to that of a prospectus,
pursuant to Sections 7-4 no 6 and 7-5 no 7 of the Norwegian Securities Trading Act. This Offer Document has therefore been submitted to Oslo Stock
Exchange, the Norwegian Takeover Supervisory Authority, for inspection and review before publication. This Offer Document is not a prospectus (as defined in
Directive 2003/71/EC) and has neither been inspected nor approved by the Oslo Stock Exchange or the Financial Supervisory Authority of Norway in
accordance with the rules that apply to a prospectus. By publishing an information memorandum containing equivalent information as a prospectus within the
deadline for publishing an information memorandum pursuant to Section 3.5.4 of the continuing obligations of stock exchange listed companies issued by the
Oslo Stock Exchange (the “Continuing Obligations”), an issuer is exempted from the requirement to publish an information memorandum in relation to the
transaction in question, cf. Section 3.5.6 of the Continuing Obligations.
This Offer Document has been prepared in an English version only.
Avance Gas is incorporated under the laws of Bermuda. In order to facilitate the registration and trading of the Shares on the Oslo Stock Exchange, Avance
Gas has entered into a registrar agreement (the “Registrar Agreement”) with DNB Bank ASA (the “VPS Registrar”) for the registration of the beneficial
interests in the Shares in book-entry form with the VPS. Under the Registrar Agreement, the VPS Registrar is, registered as the holder of the existing Shares,
and will be registered as the holder of the Consideration Shares, in the Register of Members of Avance Gas that Avance Gas is required to maintain in
Bermuda pursuant to the Companies Act 1981 of Bermuda, as amended (the “Bermuda Companies Act”). Unless indicated otherwise, or the context
otherwise requires, references in this Offer Document to “Shares” or “Consideration Shares” are to the beneficial interests in the Shares registered in bookentry form with the VPS. For a further description of the VPS registration of the Shares, see Section 6.12 “VPS registration of the Shares”.
All inquiries relating to this Offer Document must be directed to Avance Gas. No other person is authorised to give any information about, or to make any
representations on behalf of, Avance Gas in connection with the Offer and the Listing or matters described herein. If any such information is given or
representation made, it must not be relied upon as having been authorised by Avance Gas.
Unless otherwise indicated, Avance Gas is the source of the information included in this Offer Document. The information contained herein pertaining to the
Aurora LPG Group has been prepared based on publicly available information, including annual reports, interim reports, investor information and stock
exchange notices published by Aurora LPG and the listing prospectus issued by Aurora LPG dated 24 September 2014. Consequently, Avance Gas cannot
accept any liability for the accuracy or completeness of any information in this Offer Document regarding the Aurora LPG Group.
The information contained herein is as of the date hereof and is subject to change, completion and amendment without further notice. There may have been
changes affecting the Avance Gas Group or the Aurora LPG Group subsequent to the date of this Offer Document. The delivery of this Offer Document at any
time after the date hereof shall not, under any circumstances, imply that there has been no change in the Avance Gas Group‟s or the Aurora LPG Group‟s
affairs or that the information set forth herein is correct as of any date subsequent to the date hereof.
This Offer Document, the Offer and the Listing shall be governed by and construed in accordance with Norwegian law. The courts of Norway, with Oslo as legal
venue, shall have exclusive jurisdiction to settle any dispute which may arise out of, or in connection with, the Offer, the Listing or this Offer Document.
In making an investment decision, prospective investors must rely on their own examination, and analysis of, and enquiry into the Avance
Gas Group, including the merits and risks involved. Neither Avance Gas, nor any of its representatives or advisers, is making any representation to any
offeree or purchaser of the Shares regarding the legality of an investment in the Shares by such offeree or purchaser under the laws applicable to such offeree
or purchaser. Each reader of this Offer Document should consult with his or her own advisors as to the legal, tax, business, financial and related aspects of a
purchase of the Shares.
All Sections of the Offer Document should be read in context with the information included in Section 3 “General Information”.
Consent under the Exchange Control Act 1972 (and its related regulations) has been obtained from the Bermuda Monetary Authority for the
issue and transfer of the Shares to and between residents and non-residents of Bermuda for exchange control purposes provided that the
Shares are listed on the Oslo Stock Exchange. In granting such consent, neither the Bermuda Monetary Authority nor any other relevant
Bermuda authority or government body accepts any responsibility for Avance Gas’ financial soundness or the correctness of any of the
statements made or opinions expressed in this Offer Document.
Investing in the Shares involves a high degree of risk. See Section 1 “Risk Factors” beginning on page 6.
Avance Gas has engaged Danske Bank as its financial adviser (the “Financial Adviser”) and receiving agent (“Receiving Agent”) in connection with the
Offer. The Financial Adviser is not acting on behalf of any other person in connection with the Offer and will not be responsible to any party other than Avance
Gas for providing protections normally granted to its customers or advice in relation to the Offer. In the ordinary course of business, the Financial Adviser and
certain of its affiliates have engaged, and may continue to engage, in investment and commercial banking transactions with Avance Gas, Aurora LPG and their
respective subsidiaries.
The distribution of this Offer Document, any separate summary documentation regarding the Offer and the making of the Offer may be
restricted by law in certain jurisdictions and neither this Offer Document nor any such summary, nor the Offer discussed herein or therein,
constitutes an offer to sell or the solicitation of an offer to buy securities in any jurisdiction in which such an offer or solicitation would be
unlawful. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdictions. Avance Gas and
the Financial Adviser do not accept or assume any responsibility or liability for any violation by any person whomsoever of any such
restriction. The Offer Document is not directed to persons whose acceptance of the Offer requires that (i) further documents are issued in
order for the Offer to comply with local law or (ii) registration or other measures are taken pursuant to local law. No document or material
relating to the Offer may be distributed in or into any country where such distribution or offering requires any of the aforementioned
measures to be taken or would be in conflict with any law or regulation of such country. In the event such distribution or offering
nevertheless is made, an acceptance form sent from such a country may be regarded as non-binding on Avance Gas. The Offer is not being
made in or into Australia, Canada or Japan or, subject to the exceptions described in Section 11.2 “United States”, the United States, and will
not be permitted to be accepted in or from these jurisdictions.
The Offer is being made for shares of Aurora LPG, a public limited liability company organised and registered under the laws of Norway, and is subject to
Norwegian disclosure, takeover laws and regulations, and procedural requirements that are different from those of the United States. The shares of Aurora
LPG have not been registered under the U.S. Securities Exchange Act of 1934, as amended (the “U.S. Exchange Act”) (and Aurora LPG is not subject to the
periodic reporting requirements of the U.S. Exchange Act and is not required to, and does not, file any reports with the U.S. Securities and Exchange
Commission (“SEC”) thereunder), and are not listed or traded on any stock exchange in the United States. The Offer is being made in the United States in
compliance with Section 14(e) of, and Regulation 14E under, the U.S. Exchange Act, subject to the exemptions provided by Rule 14d-1(d) under the U.S.
Exchange Act and otherwise in accordance with the requirements of Norwegian law, the applicable rules and regulations of the Oslo Stock Exchange and
Avance Gas Holding Ltd – Offer Document
certain other applicable laws. Accordingly, the Offer will be subject to disclosure and other procedural requirements, including with respect to withdrawal
rights, the Offer timetable, settlement procedures and timing of payments that are different from those applicable under U.S. domestic tender offer
procedures and laws. Financial information included in this Offer Document has been prepared in accordance with International Financial Reporting Standards
(“IFRS”) that may not be comparable to the financial statements of United States companies. See Section 11.2 “United States” for further information
applicable to shareholders in the United States.
Neither the SEC nor any U.S. states securities commission or regulatory authority has approved or disapproved of this Offer Document, passed
upon the fairness or merits of the Offer or determined whether this Offer Document is accurate or complete. Any representation to the
contrary is a criminal offense in the United States.
Avance Gas is an exempted company limited by shares incorporated under the laws of Bermuda. As a result, the rights of holders of the Shares will be
governed by Bermuda law and Avance Gas‟ memorandum of association and bye-laws (the “Bye-laws”). The rights of shareholders under Bermuda law may
differ from the rights of shareholders of companies incorporated in other jurisdictions. It may be difficult for investors to effect service of process on Avance
Gas or its directors and executive officers or to enforce judgments obtained in courts in other jurisdictions than Bermuda against Avance Gas or those
persons, including judgments based on the civil liability provisions of the securities laws of other jurisdictions. It is doubtful whether courts in Norway or
Bermuda will enforce judgments obtained in other jurisdictions, including the United States, against Avance Gas or its directors or officers under the securities
laws of those jurisdictions or entertain actions in Norway or Bermuda against Avance Gas or its directors or officers under the securities laws of other
jurisdictions. In addition, awards of punitive damages in actions brought in the United States or elsewhere may not be enforceable in Norway or Bermuda. As
an example, the United States does not currently have a treaty providing for reciprocal recognition and enforcement of judgements (other than arbitral
awards) in civil and commercial matters with either Norway or Bermuda.
Avance Gas Holding Ltd – Offer Document
TABLE OF CONTENTS
1
RISK FACTORS ................................................................................................................................ 6
2
RESPONSIBILITY FOR THE OFFER DOCUMENT ................................................................................... 21
3
GENERAL INFORMATION ................................................................................................................. 22
4
TERMS AND CONDITIONS OF THE OFFER .......................................................................................... 26
5
THE LPG SHIPPING INDUSTRY ......................................................................................................... 35
6
DESCRIPTION OF THE AVANCE GAS GROUP ...................................................................................... 41
7
AVANCE GAS FINANCIAL INFORMATION ........................................................................................... 58
8
DESCRIPTION OF THE AURORA LPG GROUP ...................................................................................... 68
9
UNAUDITED PRO FORMA FINANCIAL INFORMATION ........................................................................... 75
10
TAXATION ..................................................................................................................................... 80
11
RESTRICTIONS .............................................................................................................................. 83
12
ADDITIONAL INFORMATION ............................................................................................................ 86
13
DEFINITIONS AND GLOSSARY ......................................................................................................... 88
APPENDICES
APPENDIX A
ACCEPTANCE FORM, INCLUDING U.S. INVESTOR REPRESENTATION LETTER .............................................
A1
APPENDIX B
INDEPENDENT PRACTITIONER‟S ASSURANCE REPORT ON THE COMPILATION OF UNAUDITED
PRO FORMA FINANCIAL INFORMATION .................................................................................................
B1
5
Avance Gas Holding Ltd – Offer Document
1
RISK FACTORS
An investment in the Shares involves inherent risks. Before making an investment decision with respect to the Shares,
investors should carefully consider the risk factors and all information contained in this Offer Document, including the
financial statements and related notes. The risks and uncertainties described in this Section 1 are the principal known
risks and uncertainties faced by the Avance Gas Group that Avance Gas as at the date hereof believes are relevant to
an investment in the Shares. An investment in the Shares is suitable only for investors who understand the risks
associated with this type of investment and who can afford to lose all or part of their investment. The absence of
negative past experience associated with a given risk factor does not mean that the risks and uncertainties described
are not a genuine potential threat to an investment in the Shares. If any of the following risks were to materialise,
individually or together with other circumstances, they could have a material adverse effect on the Avance Gas Group
and/or its business, results of operations, cash flow, financial condition and/or prospects, which may cause a decline in
the value and trading price of the Shares, resulting in the loss of all or part of an investment in the same.
The order in which the risks are presented does not reflect the likelihood of their occurrence or the magnitude of their
potential impact on the Avance Gas Group’s business, results of operations, cash flow, financial condition and/or
prospects. The risks mentioned herein may materialise individually or cumulatively. The information in this Section 1 is
as at the date of this Offer Document.
1.1
Risk factors relating to the Offer
The Offer is subject to several conditions, which if not satisfied or waived, will result in the cancellation of
the Offer
The Offer is subject to several conditions that need to be satisfied or waived by Avance Gas before completion of the
Offer. These conditions relate to (i) Avance Gas becoming the owner of more than 90% of the shares in Aurora LPG on
a fully diluted basis through the Offer; (ii) governmental and regulatory approval required for the consummation of the
Offer having been obtained; (iii) no intervention impeding on the Offer; (iv) other third party consents required for the
consummation of the Offer without any adverse effects having been obtained; (v) no material adverse change
occurring with respect to the Aurora LPG Group or the shares in Aurora LPG; (vi) the Aurora LPG Group operating in
ordinary course of business; and (vii) no issue of shares or equity instruments by any member of the Aurora LPG
Group and no distributions by Aurora LPG. For further details regarding the conditions of the Offer, see Section 4.7
“Conditions for completion of the Offer”.
There can be no assurance that the above conditions will be satisfied or waived by Avance Gas. Should any of the
above conditions not be satisfied or waived, Avance Gas will not be required to complete the Offer.
The expected benefits associated with a combination of the Avance Gas Group and the Aurora LPG Group
may not be realised
Following the completion of the Offer, Avance Gas intends to integrate the two companies that have previously
operated independently (the “Combination”). There can be no assurances that Avance Gas will not encounter
difficulties in integrating the respective operations of the Avance Gas Group and the Aurora LPG Group or that the
benefits expected from the integration will be realised. Further, completion of the Offer may trigger change of control
provisions in agreements entered into by the Aurora LPG Group. If the benefits are not achieved, or only partly
achieved, or if the Avance Gas Group fails to obtain third party consents where required, this could adversely affect
the Avance Gas Group‟s business, financial condition, results of operations and prospects.
Fluctuations in the market price of the Shares could have an impact on the implied consideration in the
Offer
The implied consideration in the Offer could vary significantly due to price fluctuations in the Shares. Should the
market price of the Shares develop more negatively or less positively than the market price of the Aurora LPG shares
from the last trading day prior to the announcement of the Offer until completion of the Offer, this will have a negative
impact on the implied consideration in the Offer.
Risks relating to the Aurora LPG Group
There are a number of risks related to the business and operations of the Aurora LPG Group, its markets and
financing. As the Avance Gas Group and the Aurora LPG Group operate in the same market, the risk factors set out in
this Section 1 “Risk Factors” may also apply to the Aurora LPG Group.
6
Avance Gas Holding Ltd – Offer Document
1.2
Risks related to the industry in which the Avance Gas Group operates
The Avance Gas Group’s business, financial condition and results of operations depend on the level of
activity in the LPG industry
The Avance Gas Group‟s financial performance depends on the continued growth in global and regional shipments of
liquefied petroleum gas (“LPG”). The level of activity in the LPG industry is affected by a number of factors, including,
but not limited to the following factors:

Worldwide demand for and production of LPG;

Increase in the cost of LPG relative to the cost of naphtha and other competing feedstocks;

The availability of additional sources of LPG closer to the areas of LPG consumption (reduction in tonnemiles);

The availability of alternative energy sources;

Expectations regarding future energy prices;

Government laws and regulations, including environmental protection laws and regulations;

Weather conditions;

Political and military conflicts;

Negative global or regional economic or political conditions, particularly in LPG consuming regions, which
could reduce energy consumption or growth in energy consumption; and

Technological changes that could make other sources of energy more competitive than LPG.
If the demand for LPG products and LPG shipping does not grow, or decrease, the Avance Gas Group‟s business,
financial condition and results of operations could be materially and adversely affected.
A worsening in global economic conditions could materially and adversely affect the Avance Gas Group’s
business, financial condition and results of operations
Demand for LPG products fluctuates with changes in global economic activity, which in turn affects demand for LPG
ships. Slowdowns in global economic activity, particularly in LPG consuming regions, may materially and adversely
impact the LPG industry, including, among other things:

Reducing the demand for LPG products and LPG shipping and hence charter rates or the availability of new
charters for ships;

Decreasing the market values of ships;

Reducing the availability of financing for ships; and

Slowing the second-hand market for the sale of ships.
Any of the above events could materially and adversely affect the Avance Gas Group‟s business, financial condition
and results of operations.
The state of the global financial markets may materially and adversely impact the Avance Gas Group’s
ability to obtain financing
Credit markets were distressed in 2008 and 2009, and have been volatile since that time. A worsening in the credit
markets may materially and adversely affect the Avance Gas Group‟s ability to obtain additional financing on
favourable terms or at all, and could have a material and adverse effect on the Avance Gas Group‟s business, financial
condition and results of operations, and may also negatively impact the Avance Gas Group‟s operations by affecting
the solvency of its suppliers and/or customers, which could lead to disruptions in the delivery of supplies, cost
increases for supplies, accelerated payments to suppliers, customer bad debts or reduced revenues.
7
Avance Gas Holding Ltd – Offer Document
A substantial number of VLGCs are on order which is expected to lead to an increase in the global VLGC
fleet, and which may lead to a reduction in LPG freight rates and materially and adversely impact the
Avance Gas Group’s business, financial condition and results of operations
If the number of LPG ships delivered exceeds the number of ships being recycled, the global ship capacity will
increase. There is currently a substantial number of very large gas carriers (“VLGCs”) on order, which is expected to
lead to an increase in the global VLGC fleet of approximately 37% from the date of the Offer Document (such figure is
an estimate only and may change as a result of pre-cancellations and/or additional orders). The VLGC order book can
also increase further. If the demand for ships does not increase correspondingly with the future increase in the number
of ships, freight rates and ship utilisation could materially decline. Lower utilisation and freight rates due to an oversupply of LPG ships could materially and adversely affect the Avance Gas Group‟s business, financial condition and
results of operations. Prolonged periods of low utilisation and charter hire, which the LPG market has experienced in
the past, could also have a material and adverse effect on the value of the Avance Gas Group‟s ships.
Competition within the LPG shipping industry may materially and adversely affect the Avance Gas Group’s
ability to market its services
The Avance Gas Group‟s ships are employed in a highly competitive market that is capital intensive and fragmented.
Competition for charters is intense, and at times the Avance Gas Group may potentially compete against other ship
owners who have greater resources than the Avance Gas Group. Competition for LPG shipping depends on price,
location, size, age, condition and the acceptability of the ship and its operators to prospective charterers. Due in part
to the fragmented nature of the market, competitors with greater resources could enter and operate larger fleets that
may be able to offer lower charter rates and higher quality ships than the Avance Gas Group is able to offer. The
Avance Gas Group‟s operations may be materially and adversely affected if its current competitors or new market
entrants introduce new offerings with better features, performance, prices or other characteristics than the Avance
Gas Group can offer.
Increases in bunker fuel prices and other operating costs may significantly increase the Avance Gas
Group’s voyage expenses relating to the operation of its LPG ships
In accordance with industry practice, the Avance Gas Group is responsible for voyage expenses, including bunker fuel
costs, when operating its LPG ships. Increases in the cost of bunker fuel are subject to a number of economic, natural
and political factors affecting the level of crude oil prices in global markets that are beyond the Avance Gas Group‟s
control, including worldwide demand and supply imbalances, political instability and natural disasters in oil-producing
regions. An increase in the cost of bunker fuel could significantly increase voyage expenses for the Avance Gas Group‟s
ships, which could have a material and adverse effect on the Avance Gas Group‟s results of operation to the extent
that it is not able to increase its freight rates commensurately or otherwise to recover bunker fuel cost increases from
its customers. Other operating expenses, such as for example crew costs, may also fluctuate and affect the Avance
Gas Group‟s profitability.
Charter rates may fluctuate substantially and if rates stay low for a prolonged period, the Avance Gas
Group’s revenues and cash flows may be adversely affected
The Avance Gas Group operates its ships predominantly in the spot market where charter rates and cargo availability
fluctuates significantly and where seasonality can adversely impact the Avance Gas Groups earnings from time to
time. Being dependent on the spot market may leave the Avance Gas Group particularly vulnerable to short or long
term swings in the freight market. There have been periods when spot charter rates have declined below the operating
costs of ships.
The spot charter market may fluctuate significantly based upon LPG supply and demand. In addition, VLGC spot rates
are highly seasonal. The successful operation of the Avance Gas Group‟s ships in the competitive and highly volatile
spot market depends on, among other things, obtaining profitable spot charters, which depends greatly on ship supply
and demand, and minimising, to the extent possible, time spent waiting for charters and time spent travelling
unloaded to pick up cargo.
If charter rates are low when the Avance Gas Group is seeking a new charter, it may only be able to enter into new
charters at unprofitable rates. Prolonged periods of low charter hire rates or low ship utilisation could also have a
material and adverse effect on the value of the Avance Gas Group‟s ships.
The Avance Gas Group is exposed to the risk of acts of piracy, which could result in increasing costs of
operations and ship loss
Although acts of piracy on ocean-going ships have decreased in frequency in recent years in the Gulf of Aden off the
8
Avance Gas Holding Ltd – Offer Document
coast of Somalia, there has been an increase in attacks in West Africa‟s Gulf of Guinea. Since 2008, there have been
continuous piracy threats and there may be future attempted attacks on the Avance Gas Group‟s fleet in such high-risk
areas. Aside from the threat of ship loss, piracy also increases the cost of insurance for the Avance Gas Group and
increased operating costs incurred to pay for armed security personnel travelling onboard the ships to the extent that
voyages travel through high-risk areas, and costs associated with the disruption in trade and scheduling of ships.
Although insurance coverage has improved, there are still limitations to the coverage available in connection with
piracy attacks, which could lead to unrecoverable losses. The foregoing could have a material and adverse effect on
the Avance Gas Group‟s business, financial condition, results of operations and cash flows.
The Avance Gas Group may not be able to obtain supplies and services when needed, at an acceptable
cost, or at all
The Avance Gas Group relies, and will in the future rely, on a significant supply of consumables, spare parts and
equipment to operate, maintain, repair and upgrade its fleet of ships. Cost increases, delays or unavailability could
negatively impact the Avance Gas Group‟s operations and result in down-time due to delays in the repair and
maintenance of the Avance Gas Group‟s ships.
The Avance Gas Group’s operations may be affected by political, governmental and economic instability
which may adversely affect the Avance Gas Group’s business
The Avance Gas Group‟s operations may be affected by political, governmental and economic conditions in countries
where the Avance Gas Group engage in business. Any disruption caused by these factors could adversely affect the
Avance Gas Group‟s business, including by reducing the levels of oil and gas exploration, development and production
activities in these areas. In addition, political instability, terrorist or other attacks, war or international hostilities may
contribute to further world economic instability and uncertainty in global financial markets, which may adversely affect
the LPG industry and the Avance Gas Group‟s business. In particular, terrorist attacks, or the perception that LPG
facilities and carriers are potential terrorist targets, could materially and adversely affect expansion of LPG
infrastructure and LPG shipping.
Requisition of the ships could have a material and adverse effect on the Avance Gas Group’s business,
results of operations, cash flow and financial condition
The government of a ship‟s registry could requisition for title or seize the Avance Gas Group‟s ships. Requisition for
title occurs when a government takes control of a ship and becomes the owner. A government could also requisition
the Avance Gas Group‟s ships for hire. Requisition for hire occurs when a government takes control of a ship and
effectively becomes the charterer at dictated charter rates. Generally, requisitions occur during a period of war or
emergency. Government requisition of one or more of the Avance Gas Group‟s ships could have a material and
adverse effect on the Avance Gas Group‟s business, financial condition, results of operations and cash flows.
1.3
Risks related to the Avance Gas Group
The Avance Gas Group may not be able to successfully implement its strategies
The Avance Gas Group‟s strategy is to contribute to consolidation of the VLGC industry; grow the fleet; have a
chartering strategy focused on spot market exposure; and maintain a strong balance sheet with attractive financing
terms. Maintaining and expanding the Avance Gas Group‟s operations and achieving its other objectives involve
inherent costs and uncertainties and there is no assurance that Avance Gas will achieve its objectives or other
anticipated benefits. Further, there is no assurance that the Avance Gas Group will be able to undertake the
contemplated activities within its expected time frame, that the cost of any of the Avance Gas Group‟s objectives will
be at expected levels or that the benefits of its objectives will be achieved within the expected timeframe or at all. The
Avance Gas Group‟s strategy may also be affected by factors beyond its control, such as the speed of the economic
recovery in its market and the availability of acquisition opportunities in the market. Any failures, material delays or
unexpected costs related to implementation of the Avance Gas Group‟s strategies, including the amount already
invested, could have a material and adverse effect on its business, financial condition, results of operations and cash
flows.
Due to the Avance Gas Group’s unilateral exposure towards the LPG market, adverse developments in the
LPG shipping industry would have a significantly greater impact on the Avance Gas Group’s financial
condition, results of operations and cash flows than if the Avance Gas Group maintained a more diverse
fleet of ships
The Avance Gas Group relies exclusively on the cash flow generated from spot trades and charters for its LPG ships.
Due to the Avance Gas Group‟s lack of diversification, an adverse development in the LPG shipping industry would
have a significantly greater impact on the Avance Gas Group‟s financial condition, results of operations and cash flows
9
Avance Gas Holding Ltd – Offer Document
than if the Avance Gas Group maintained a more diverse fleet of ships.
The Avance Gas Group’s earnings and business are subject to risk caused by counterparties in contracts,
including credit risk, and failure and misrepresentation of such counterparties causing them not to meet
their obligations could cause loss to the Avance Gas Group or otherwise materially and adversely affect
the business of the Avance Gas Group
The ability of each counterparty to perform its obligations under a contract with the Avance Gas Group will depend on
a number of factors that are beyond the Avance Gas Group‟s control and may include, among other things:

General economic conditions;

The condition of the maritime and other industries to which the counterparty is exposed;

The overall financial condition of the counterparty;

Charter rates received for specific types of ships; and

Various expenses.
The Avance Gas Group‟s ships may from time to time be chartered out on time charters. In depressed market
conditions, charterers may no longer need a ship that is currently under time charter or may be able to obtain a
comparable ship at lower rates. As a result, charterers may seek to re-negotiate the terms of their existing time
charters or avoid their obligations under those contracts. Future contracts could permit a customer to terminate its
contract early subject to the payment of a termination fee. Such fee may not fully compensate for the loss sustained
by the Avance Gas Group. Should a counterparty fail to honour its obligations under its agreements with the Avance
Gas Group, the Avance Gas Group could sustain significant losses, which could have a material and adverse effect on
the Avance Gas Group‟s business, financial condition, results of operations and cash flows. Further, the Avance Gas
Group‟s shipping services are subject to the risks associated with having limited customers for its services.
The market value of the Avance Gas Group’s current ships and those it acquires in the future may
decrease, which could, among other things, cause the Avance Gas Group to be in non-compliance with its
loan covenants or to incur losses if it decides to sell them following a decline in their market values
Ship values are both cyclical and volatile, and may fluctuate due to a number of different factors, including, but not
limited to:

General economic and market conditions affecting the LPG shipping industry, including competition from
other shipping companies;

Availability of credit and other forms of financial liquidity;

Charterers‟ preferences with respect to ship design, types, sizes and ages of available ships;

The availability of other modes of transportation;

Increases in the supply of ship capacity;

Prevailing charter and freight rates;

The cost of LPG newbuildings;

Changes to governmental, laws and regulations, including environmental protection laws and regulations
and or class rules; and

The need to upgrade ships as a result of charterer requirements, technological advances in ship design or
equipment or otherwise.
A decline in the fair market values of the Avance Gas Group's ships could result in the Avance Gas Group not being in
compliance with its loan covenants.
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Avance Gas Holding Ltd – Offer Document
The Avance Gas Group‟s credit facilities include covenants pursuant to which the minimum fair market value of the
Avance Gas Group‟s existing fleet financed under its credit facilities shall at all times cover at least 130% of the
outstanding facility amounts. Consequently, a decline in the market value of the Avance Gas Group‟s ships financed
under the credit facilities may lead to a breach of such covenants, which again may lead to the Avance Gas Group
being required to provide cash or other security to the lenders or reduce the outstanding and available amount under
the facilities to restore the ratio to its required level, or to sell ships, or the lenders may accelerate the loans under the
facilities. As a result, the Avance Gas Group‟s business, financial condition, results of operations and cash flow could be
materially and adversely affected.
In addition, a decline in the fair market values of the Avance Gas Group's ships may result in impairment adjustments
in the Avance Gas Group's financial statements, which would adversely affect its financial results, and if for any reason
the Avance Gas Group find it necessary to sell any of its ships at a time when prices are depressed, the Avance Gas
Group could incur a significant loss.
The Avance Gas Group may not be able to keep pace with technological developments in the LPG shipping
market
Future technological developments for LPG ships may result in substantial improvements in ships equipment functions
and performance. As a result, the Avance Gas Group‟s future success and profitability may be dependent in part upon
its ability to:

Maintain existing ships and related equipment and services;

Cost effectively address the increasingly sophisticated needs of its customers; and

Anticipate changes in technology and industry standards and respond to technological developments on a
timely basis.
If the Avance Gas Group is not successful in timely responding to technological developments or changes in industry
standards, on a cost-effective basis, this could have a material and adverse effect on the Avance Gas Group‟s
business.
The Avance Gas Group has entered into related party transactions and may enter into related party
transactions in the future
The Avance Gas Group has entered into a secondment agreement for the Avance Gas Group‟s President, Christian
Andersen, with Stolt-Nielsen Gas Ltd (“Stolt-Nielsen Gas”). Further, on 18 November 2013, the Avance Gas Group
entered into a newbuilding acquisition agreement with Frontline 2012 Ltd (“Frontline 2012”), regarding the postdelivery acquisition of Frontline 2012‟s VLGC newbuilding program, comprising eight VLGCs built at the Jiangnan
shipyard in China. All of the VLGCs have been delivered and acquired by the Avance Gas Group prior to the date of this
Offer Document. Although the Avance Gas Group believes that the transactions with its affiliates are on arm‟s length
terms, the Avance Gas Group cannot assure potential investors that conflicts of interest may not arise in the future in
relation to these agreements, or as a result of new business opportunities.
1.4
Risks related to the Avance Gas Group’s operations
The Avance Gas Group’s operating and maintenance costs may not necessarily fluctuate in proportion to
changes in operating revenues
The Avance Gas Group‟s operating and maintenance costs will not necessarily fluctuate in proportion to changes in
operating revenues. Operating revenues may fluctuate as a function of changes in supply and demand for LPG
shipping services, which in turn affect charter rates. In addition, equipment maintenance costs fluctuate depending
upon the type of activity the ship is performing and the age and condition of the equipment. In a situation where a
ship faces longer idle periods, reductions in costs may not be immediate as some of the crew may be required to
prepare ships for stacking and maintenance in the stacking period. Should ships be idle for a longer period, the Avance
Gas Group may seek to redeploy crew members, who are not required to maintain the ships, to active units to the
extent possible. However, there can be no assurance that the Avance Gas Group will be successful in reducing its
costs.
The Avance Gas Group’s business involves numerous operating hazards and the Avance Gas Group’s own
insurance may not be adequate to cover the Avance Gas Group’s losses
The operations of the Avance Gas Group‟s ships are subject to hazards inherent in the industry where it operates,
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Avance Gas Holding Ltd – Offer Document
service down time on its ships, equipment defects, fires, explosions and pollution. These hazards can cause personal
injury or loss of life, severe damage to or destruction of property and equipment, pollution or environmental damage,
claims by employees, third parties or customers and suspension of operations. The operation of the Avance Gas
Group‟s ships is also subject to hazards inherent in marine operations, such as capsizing, sinking, grounding, collision,
damage from severe weather and marine life infestations. Operations may also be suspended because of machinery
breakdowns, abnormal conditions, and failure of subcontractors to perform or supply goods or services, or personnel
shortages.
Damage to the environment could also result from the Avance Gas Group‟s operations, particularly through spillage of
fuel, lubricants or other chemicals and substances used in operations, or extensive uncontrolled fires. Although the
Avance Gas Group carries protection and indemnity insurance, all risks may not be adequately insured against, and
any particular claim may not be paid. Any claims covered by insurance would be subject to deductibles, and since it is
possible that a large number of claims may be brought, the aggregate amount of these deductibles could be material.
The Avance Gas Group may be unable to procure adequate insurance coverage at commercially reasonable rates in the
future. For example, more stringent environmental regulations have led in the past to increased costs for, and in the
future may result in the lack of availability of, insurance against risks of environmental damage or pollution. Any
uninsured or underinsured loss could harm the Avance Gas Group‟s business, financial condition and operating results.
In addition, the Avance Gas Group‟s insurance may be voidable by the insurers as a result of certain of the Avance Gas
Group‟s actions, such as the Avance Gas Group‟s ships failing to maintain certification with applicable maritime selfregulatory organisations.
The Avance Gas Group‟s insurance coverage will not in all situations provide sufficient funds to protect the Avance Gas
Group from all liabilities and losses that could result from its operations. The amount of the Avance Gas Group‟s
insurance cover may be less than the related impact on enterprise value after a loss. The Avance Gas Group‟s
coverage includes policy limits. As a result, the Avance Gas Group retains the risk for any losses in excess of these
limits. Any such lack of reimbursement may cause the Avance Gas Group to incur substantial losses and costs. In
addition, the Avance Gas Group could decide to retain substantially more risk in the future. Moreover, no assurance
can be made that the Avance Gas Group has, or will maintain in the future, adequate insurance against certain risks.
If a significant accident or other event occurs and is not fully covered by the Avance Gas Group‟s insurance or any
enforceable or recoverable indemnity from, or claim against, a third party, it could adversely affect the Avance Gas
Group‟s business, financial position, results of operations or cash flows.
The Avance Gas Group’s ships are exposed to technical risk and down-time or off-hire
In respect of both the ships operating in the spot market and the ships from time to time chartered out under time
charter arrangements, the Avance Gas Group carries the costs and risks of operational and technical problems. In
respect of ships operating in the spot market, ship down-time could increase the Avance Gas Group‟s costs and will
reduce its earnings. In respect of ships chartered out under time charter arrangements, ship down-time may result in
increased costs, as well as off-hire (i.e. non-payment of daily charter hire under the time charter). Any ship down-time
or off-hire could adversely affect the Avance Gas Group‟s financial condition, results of operations and cash flows.
The Avance Gas Group is exposed to risks related to any newbuilding projects
The expected delivery dates under any shipbuilding contracts that the Avance Gas Group may enter into in the future,
may be delayed for reasons not under the Avance Gas Group‟s control, including, among other things, unforeseen
quality or engineering problems, work stoppages, weather interference, unanticipated cost increases, delays in receipt
of necessary equipment, and inability to obtain the requisite permits or approvals. No assurances can be given that the
Avance Gas Group will have sufficient remedies in the event of a breach of a shipbuilding contract by the shipyard. For
example, failure by a shipyard to construct or deliver the ships or any significant delays could increase the Avance Gas
Group‟s expenses, diminish the Avance Gas Group‟s net income and may result in a material and adverse effect on the
Avance Gas Group‟s business.
Failure to secure future employment for the Avance Gas Group’s ships could materially and adversely
affect the Avance Gas Group’s results of operation, cash flow and financial condition
No assurance can be given as to whether future employment for the Avance Gas Group‟s ships can be secured on
terms, rates and with charterers, which are acceptable. Failure to secure future employment for the Avance Gas
Group‟s ships could materially and adversely affect the Avance Gas Group‟s results of operation, cash flow and
financial condition.
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Avance Gas Holding Ltd – Offer Document
The required maintenance and dry-docking of the Avance Gas Group’s ships could be more expensive and
time consuming than originally anticipated
Maintenance and dry-dockings of the Avance Gas Group‟s ships require significant capital expenditures and result in
loss of revenue while such ships are out of service. Any significant increase in either the number of days ships are out
of service due to such maintenance or dry-dockings or in the costs of any repairs carried out could have a material and
adverse effect on the Avance Gas Group‟s profitability and cash flows. The Avance Gas Group may not be able to
precisely predict the time required to maintain or dry-dock any of its ships and unanticipated problems may arise.
General increases in demand for dry-docking services in the shipping industry could result in increased costs, delays or
unavailability related to dry-docking for Avance Gas Group‟s ships. If a ship is dry-docked longer than expected or if
the cost of repairs or maintenance is greater than budgeted, the Avance Gas Group‟s results of operations, financial
condition and cash flows could be materially and adversely affected. Generally, ships dry-dock every five years. None
of the Avance Gas Group‟s ships are scheduled for maintenance dry-docking in 2015 or 2016 and only one ship is
scheduled for maintenance dry-docking in 2017.
Failure to obtain or retain highly skilled personnel could materially and adversely affect the Avance Gas
Group’s operations
The successful development and performance of the Avance Gas Group‟s business depends on the Avance Gas Group‟s
ability to attract and retain skilled professionals with appropriate experience and expertise. Any loss of the services of
any of the senior management or key personnel could have a material and adverse effect on the Avance Gas Group‟s
business and operations. Obtaining charters with leading industry participants depends on a number of factors,
including the ability to man ships with suitably experienced, high-quality masters, officers and crews. In recent years,
the limited supply of and increased demand for well-qualified crew has created upward pressure on crewing costs,
which the Avance Gas Group bear both in respect of its ships operating in the spot market and its ships that from time
to time are chartered out under time charters. Increases in crew costs may adversely affect the Avance Gas Group‟s
profitability. In addition, if the Avance Gas Group cannot retain sufficient numbers of quality on-board seafaring
personnel, the Avance Gas Group‟s fleet utilisation will decrease, which could have a material and adverse effect on
the Avance Gas Group‟s business, financial condition, results of operations and cash flows.
The Avance Gas Group may face labour disruptions that could interfere with its operations and have a
material negative effect on the Avance Gas Group’s business, financial condition, result of operations and
cash flows
If not resolved in a timely and cost-effective manner, industrial action or other labour unrest could prevent or hinder
the Avance Gas Group‟s operations from being carried out normally and could have a material negative effect on the
Avance Gas Group‟s business, financial condition, results of operations and cash flows.
The Avance Gas Group uses information technology systems to communicate with its ships and conduct its
business, and disruption, failure or security breaches of these systems could materially and adversely
affect its business and results of operations
The Avance Gas Group uses information technology (“IT”) systems in order to communicate with its ships and achieve
its business objectives. The Avance Gas Group uses industry accepted security measures and technology such as
access control systems to securely maintain confidential and proprietary information maintained on its IT systems, and
market standard virus control systems. However, the Avance Gas Group‟s portfolio of hardware and software products,
solutions and services and its enterprise IT systems may be vulnerable to damage or disruption caused by
circumstances beyond its control, such as catastrophic events, power outages, natural disasters, computer system or
network failures, computer viruses, cyber attacks or other malicious software programmes. The failure or disruption of
the Avance Gas Group‟s IT systems to perform as anticipated for any reason could disrupt the Avance Gas Group‟s
business and result in decreased performance, significant remediation costs, transaction errors, loss of data,
processing inefficiencies, down-time, litigation, and the loss of suppliers or customers. A significant disruption or
failure could have a material and adverse effect on the Avance Gas Group‟s business and results of operations.
The ageing of the Avance Gas Group’s fleet may result in increased operating costs in the future and a less
competitive fleet
In general, the cost of maintaining a ship in good operating condition increases with the age of the ship. As the Avance
Gas Group‟s fleet ages, the Avance Gas Group will incur increased costs. Older ships are typically less fuel efficient and
more costly to maintain than more recently constructed ships due to gradual improvements in engine technology and
other design features. Cargo insurance rates increase with the age of a ship, making older ships less desirable to spot
customers and charterers. Governmental regulations and safety or other equipment standards related to the age of
ships may also require expenditures for alterations or the addition of new equipment to the Avance Gas Group‟s ships
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Avance Gas Holding Ltd – Offer Document
and may restrict the type of activities in which the Avance Gas Group‟s ships may engage. The Avance Gas Group
cannot assure that, as the Avance Gas Group ships age, market conditions will justify those expenditures or enable the
Avance Gas Group to operate its ships profitably during the remainder of their useful lives.
Avance Gas is a holding company and is dependent upon cash flow from subsidiaries to meet its
obligations and in order to pay dividends to its shareholders
The Avance Gas Group currently conducts its operations through, and most of the Avance Gas Group‟s assets are
owned by, Avance Gas‟ subsidiaries. As such, the cash that the Avance Gas Group obtains from its subsidiaries is the
principal source of funds necessary to meet its obligations. Contractual provisions or laws, as well as the Avance Gas
Group‟s subsidiaries‟ financial condition, operating requirements, restrictive covenants in its debt arrangements and
debt requirements, may limit the Avance Gas Group‟s ability to obtain cash from subsidiaries that it requires to pay its
expenses or meet its current or future debt service obligations or to pay dividends to its shareholders.
The inability to transfer cash from the Avance Gas Group‟s subsidiaries may mean that the Avance Gas Group may not
be permitted to make the necessary transfers from its subsidiaries to meet its obligations or to pay dividends to its
shareholders. A payment default by the Avance Gas Group, or any of the Avance Gas Group‟s subsidiaries, on any debt
instrument would have a material and adverse effect on the Avance Gas Group‟s business, financial condition, results
of operations and cash flows.
The Avance Gas Group’s financial condition may be materially and adversely affected if the Avance Gas
Group fails to successfully integrate acquired assets or businesses, or is unable to obtain financing for
acquisitions on acceptable terms
The Avance Gas Group believes that acquisition opportunities may arise from time to time, and that any such
acquisition could be significant. At any given time, discussions with one or more potential sellers may be at different
stages. However, any such discussions may not result in the consummation of an acquisition transaction, and the
Avance Gas Group may not be able to identify or complete any acquisitions or make assurances that any acquisitions
the Avance Gas Group makes will perform as expected or that the returns from such acquisitions will support the
investment required to acquire or develop them. The Avance Gas Group cannot predict the effect, if any, that any
announcement or consummation of an acquisition would have on the trading price of the Shares.
Any future acquisitions could present a number of risks, including:

The risk of using management time and resources to pursue acquisitions that are not successfully
completed;

The risk of failing to identify material problems during due diligence;

The risk of over-paying for assets;

The risk of failing to arrange financing for an acquisition as may be required or desired;

The risk of incorrect assumptions regarding the future results of acquired operations;

The risk of failing to integrate the operations or management of any acquired operations or assets
successfully and timely; and

The risk of diversion of management‟s attention from existing operations or other priorities.
In addition, the integration and consolidation of acquisitions requires substantial human, financial and other resources,
including management time and attention, and may depend on the Avance Gas Group‟s ability to retain the acquired
business‟ existing management and employees or recruit acceptable replacements. Ultimately, if the Avance Gas
Group is unsuccessful in integrating any acquisitions in a timely and cost-effective manner, the Avance Gas Group‟s
financial condition, results of operations and cash flows could be materially and adversely affected.
Seasonal fluctuations could have a material and adverse effect on the Avance Gas Group’s business,
financial condition, results of operations and cash flows
The export volumes coming out of the Middle East LPG market, which has historically been the Avance Gas Group‟s
primary market, have traditionally been lower during the late fourth and the beginning of the first calendar quarters
than at other times of the year. This is mainly because of lower production in combination with somewhat higher local
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Avance Gas Holding Ltd – Offer Document
demand. This normally results in an oversupply of shipping capacity and higher volatility which consequently results in
lower freight rates during this period.
1.5
Risks related to laws, regulations and litigation
The Avance Gas Group may be subject to litigation and disputes that could have a material and adverse
effect on the Avance Gas Group’s business, financial condition, results of operations and cash flows
The Avance Gas Group may in the future be involved from time to time in litigation and disputes. The operating
hazards inherent in the Avance Gas Group‟s business may expose the Avance Gas Group to, amongst other things,
litigation, including personal injury litigation, environmental litigation, contractual litigation with customers, intellectual
property litigation, tax or securities litigation, and maritime lawsuits including the possible arrest of the Avance Gas
Group‟s ships, as well as other litigation and disputes that arises in the ordinary course of business.
The Avance Gas Group is currently not involved in any litigation and disputes. However, it may in the future be
involved in litigation matters from time to time. Avance Gas cannot predict with certainty the outcome or effect of any
claim or other litigation matter. The ultimate outcome of any litigation matter and the potential costs associated with
prosecuting or defending such lawsuits and claims, including the diversion of the management‟s attention to these
matters, could have a material and adverse effect on the Avance Gas Group‟s business, financial condition, results of
operations and cash flows.
Laws and regulations could hinder or delay the Avance Gas Group’s operations, increase the Avance Gas
Group’s operating costs, reduce demand for its services and restrict its ability to operate its ships or
otherwise
The Avance Gas Group is subject to complex laws and regulations, including environmental regulations that can
adversely affect the cost, manner or feasibility of doing business. The operation of the Avance Gas Group‟s ships is
subject to government oversight and regulation in the form of international conventions, sanctions, national, state and
local laws and regulations in force in the jurisdictions in which the ships operate, as well as in the country or countries
of their registration. Because such conventions, laws and regulations are often revised, the Avance Gas Group cannot
predict the ultimate cost of complying with such conventions, laws and regulations or the impact thereof on the re-sale
prices or useful lives of the Avance Gas Group‟s ships. The Avance Gas Group may also incur additional costs in order
to comply with other existing and future regulatory obligations, including, but not limited to, costs relating to: air
emissions, including greenhouse gases; the management of ballast waters; maintenance and inspection; development
and implementation of emergency procedures; and insurance coverage or other financial assurance of the Avance Gas
Group‟s ability to address pollution incidents. In addition, environmental or other legislation establishing additional
regulation or restrictions on LPG production and transportation, including the adoption of climate change legislation or
regulations, or legislation in the United States placing additional regulation or restrictions on LPG production from
shale gas could result in reduced demand for LPG shipping.
A change in tax laws of any country in which the Avance Gas Group operates from time to time, or
complex tax laws associated with international operations which the Avance Gas Group may undertake
from time to time, could result in a higher tax expense or a higher effective tax rate on the Avance Gas
Group’s earnings
The Avance Gas Group will from time to time conduct operations through various subsidiaries in countries throughout
the world and the Avance Gas Group‟s ships will have voyages to and from, and will call on ports, in countries
throughout the world. The Avance Gas Group may, for example, be exposed to tax liability in countries where its ships
operate, computed on the basis of a percentage of its charter revenue and the number of days spent in that country.
The Avance Gas Group and Avance Gas shareholders may also become subject to Controlled Foreign Corporations
(CFC) taxation. Tax laws and regulations are highly complex and subject to interpretation and change. For example, if
Norwegian shareholders control a company (i.e. directly or indirectly own or control at least 50% of the shares or the
capital of the company) resident in a low tax jurisdiction, such Norwegian shareholders may be subject to Norwegian
taxation according to the Norwegian Controlled Foreign Corporations regulations (Norwegian CFC-regulations). Such
taxation could apply with respect to certain of the Avance Gas Group‟s subsidiaries if the Avance Gas Group becomes
subject to the control of Norwegian shareholders. If Avance Gas‟ Norwegian shareholders are subject to Norwegian
CFC taxation, such Norwegian shareholders are taxed in Norway on their proportionate share of the net profits
generated by the relevant foreign company, calculated according to Norwegian tax regulations.
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Avance Gas Holding Ltd – Offer Document
A loss of a major tax dispute or a successful tax challenge to the Avance Gas Group’s operating structure
from time to time or other disputes related to or challenges to the Avance Gas Group’s tax payments could
result in a higher tax rate on the Avance Gas Group’s earnings
From time to time the Avance Gas Group‟s tax payments may be subject to review or investigation by tax authorities
of the jurisdictions in which the Avance Gas Group operates from time to time. If any tax authority successfully
challenges the Avance Gas Group‟s operational structure, intercompany pricing policies, the taxable presence of its
subsidiaries in certain countries, or if the Avance Gas Group looses a material tax dispute in any country, or any tax
challenge of the Avance Gas Group‟s tax payments is successful, its effective tax rate on its earnings could increase
substantially.
1.6
Risks related to financing and market risk
The Avance Gas Group will require additional capital in the future in order to execute its growth strategy,
which may not be available on favourable terms, or at all
The Avance Gas Group may require additional funds in order to execute its growth strategy, or for other purposes. The
Avance Gas Group‟s business is capital intensive and, to the extent the Avance Gas Group does not generate sufficient
cash from operations, the Avance Gas Group or its subsidiaries may need to raise additional funds through public or
private debt or equity financing to fund capital expenditures. Adequate sources of funds may not be available when
needed or may not be available on acceptable terms. If the Avance Gas Group raises additional funds by issuing
additional equity securities, the existing shareholders may be diluted. If funding is insufficient at any time in the
future, the Avance Gas Group may be unable to fund maintenance requirements and acquisitions, take advantage of
business opportunities or respond to competitive pressures, any of which could adversely impact the Avance Gas
Group‟s business, financial condition and results of operations.
The Avance Gas Group’s existing or future debt arrangements could limit the Avance Gas Group’s liquidity
and flexibility in obtaining additional financing, in pursuing other business opportunities or corporate
activities or Avance Gas’ ability to declare dividends to its shareholders
The Avance Gas Group‟s 450 million credit facility and 200 million credit facility contain, and any future bank loan
agreements may contain, certain covenants and event of default clauses, including cross default provisions and
restrictive covenants and performance requirements, such as loan-to-fleet value requirements and change of control
provisions, which may affect operational and financial flexibility of the Avance Gas Group. The satisfaction of these
restrictive covenants and performance requirements may be outside of the Avance Gas Group‟s control. Such
restrictions could affect, and in many respects limit or prohibit, among other things, the Avance Gas Group‟s ability to
pay dividends, incur additional indebtedness, create liens, sell assets, or engage in mergers or acquisitions. These
restrictions could further limit the Avance Gas Group‟s ability to plan for or react to market conditions or meet
extraordinary capital needs or otherwise restrict corporate activities. There can be no assurance that such restrictions
will not materially and adversely affect the Avance Gas Group‟s ability to finance its future operations or capital needs.
The Avance Gas Group‟s future cash flows may be insufficient to meet all of its debt obligations and contractual
commitments. To the extent that the Avance Gas Group is unable to repay its indebtedness as it becomes due or at
maturity, the Avance Gas Group may need to refinance its debt, raise new debt, sell assets or repay the debt with the
proceeds from equity offerings. See Section 7.2.3 “Material borrowings” for a description of the covenants applicable
under the Avance Gas Group‟s credit facilities.
Additional indebtedness or equity financing may not be available to the Avance Gas Group in the future for the
refinancing or repayment of existing indebtedness, and the Avance Gas Group may not be able to complete asset sales
in a timely manner sufficient to make such repayments.
Risks related to a refinancing of the existing financing commitments of the Aurora LPG Group
The existing USD 350 million financing commitments of the Aurora LPG Group (covering the existing fleet and five of
the six newbuildings) contain a change of control provision which may be triggered as a result of the completion of the
Offer. The Offer is subject to waivers being obtained from the banks. No assurance can be given that such waivers will
be obtained. Avance Gas has obtained financing commitments regarding a back-stop facility for the refinancing of the
Aurora LPG Group‟s financing commitments, if required. As of the date of this Document, Aurora LPG does not have
any financing commitment for the last newbuilding.
Interest rate fluctuations could affect the Avance Gas Group’s cash flow and financial condition
The Avance Gas Group has incurred, and may in the future incur, significant amounts of debt. The Avance Gas Group
is exposed to interest rate risk primarily in relation to its long-term borrowings issued at floating interest rates. If the
16
Avance Gas Holding Ltd – Offer Document
Avance Gas Group were to hedge some or all of its interest rate exposure, there can be no assurance that such
hedging arrangements will be effective. As such, movements in interest rates could affect the Avance Gas Group‟s
cash flow and financial condition.
Fluctuations in exchange rates could affect the Avance Gas Group’s cash flow and financial condition
The Avance Gas Group has currency exposure to both transaction risk and translation risk related to its operating
expenses.
Transaction risk arises when future commercial transactions or recognised assets or liabilities are denominated in a
currency that is not the entity‟s functional currency. The Avance Gas Group is exposed to transaction risks due to
fluctuations in exchange rates as it receives revenue primarily in USD but a portion of its operating and administrative
and general expenses are in local currencies. In certain markets where the Avance Gas Group operates, it may
experience currency exchange losses when revenue is received and expenses are paid in non-convertible currencies or
when the Avance Gas Group does not hedge an exposure to the relevant foreign currency.
Translation risk arises due to the conversion of amounts denominated in foreign currencies to USD, the Avance Gas
Group‟s reporting and functional currency. One of the Avance Gas Group‟s subsidiaries has NOK as its reporting and
functional currency. Consequently, any change in exchange rates between its operating subsidiary‟s functional
currency and USD affect its consolidated income statement and balance sheet when the result of that operating
subsidiary is translated into USD for reporting purposes.
1.7
Risks related to the Shares
The price of the Shares may fluctuate significantly
The trading price of the Shares could fluctuate significantly in response to a number of factors beyond the Avance Gas
Group‟s control, including, but not limited to, quarterly variations in operating results, adverse business developments,
changes in financial estimates and investment recommendations or ratings by securities analysts, or any other risk
discussed herein materialising or the anticipation of such risk materialising.
In recent years, the global stock markets have experienced extreme price and volume fluctuations. This volatility has
had a significant impact on the market price of securities issued by many companies, including companies in the
shipping industry. Those changes may occur without regard to the operating performance of these companies. The
price of the Shares may therefore fluctuate based upon factors that have little or nothing to do with the Avance Gas
Group, and these fluctuations may materially affect the price of the Shares.
Future sales, or the possibility for future sales, of substantial numbers of Shares may affect the Shares’
market price
Avance Gas cannot predict what effect, if any, future sales of the Shares, or the availability of Shares for future sales,
will have on their market price. Sales of substantial amounts of the Shares in the public market, or the perception that
such sales could occur, may adversely affect the market price of the Shares, making it more difficult for holders to sell
their Shares or Avance Gas to sell equity securities in the future at a time and price that they deem appropriate. For
example, should the Aurora LPG shareholders who accept the Offer decide to sell a significant number of Consideration
Shares post completion of the Offer, this could adversely affect the Shares‟ market price.
Future issuances of Shares or other securities may dilute the holdings of shareholders and could
materially affect the price of the Shares
It is possible that Avance Gas may in the future decide to offer additional Shares or other securities in order to finance
new capital-intensive projects, in connection with unanticipated liabilities or expenses or for any other purposes. There
can be no assurance Avance Gas will not decide to conduct further offerings of securities in the future. Depending on
the structure of any future offering, certain existing shareholders may not be able to purchase additional equity
securities. If Avance Gas raises additional funds by issuing additional equity securities, holdings and voting interests of
existing shareholders may be diluted.
Exchange rate fluctuations could adversely affect the value of the Shares and any dividends paid on the
Shares for an investor whose principal currency is not NOK
The Shares are, and the Consideration Shares will be, priced and traded in NOK on the Oslo Stock Exchange and,
although any future payments of dividends on the Shares will be denominated in USD, such dividends will be
distributed through the VPS in NOK. Investors registered in the VPS whose address is outside Norway and who have
not supplied the VPS with details of any NOK account, will however receive dividends by cheque in their local currency,
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Avance Gas Holding Ltd – Offer Document
as exchanged from the NOK amount distributed through the VPS. If it is not practical in the sole opinion of DNB Bank
ASA, being Avance Gas‟ VPS registrar, to issue a cheque in a local currency, a cheque will be issued in USD. The
issuing and mailing of cheques will be executed in accordance with the standard procedures of DNB Bank ASA, Foreign
Payments Department. The exchange rate(s) that is applied will be DNB Bank ASA‟s rate on the date of issuance.
Exchange rate movements of NOK will therefore affect the value of these dividends and distributions for investors
whose principal currency is not NOK. Furthermore, the market value of the Shares as expressed in foreign currencies
will fluctuate in part as a result of foreign exchange fluctuations. This could affect the value of the Shares and of any
dividends paid on the Shares for an investor whose principal currency is not NOK.
Beneficial interests in the Shares are recorded in book-entry form with the VPS on the basis of the
Registrar Agreement with the VPS Registrar. Avance Gas cannot guarantee that the VPS Registrar will
fulfil its obligations and duties under the Registrar Agreement, which may lead to shareholders not being
able to exercise their rights as beneficial holders of the underlying Shares.
For the purpose of enabling trading in the Shares on the Oslo Stock Exchange, the VPS Registrar has registered the
beneficial interests in the Shares in book-entry form with the VPS under the Registrar Agreement. The VPS Registrar is
registered as holder of the Shares in Avance Gas register of members that Avance Gas is required to maintain in
Bermuda. Under the Registrar Agreement, the VPS Registrar has registered (and will register in respect of the
Consideration Shares) the beneficial interests in such Shares in book-entry form in the VPS. Accordingly, it is not the
Shares issued in accordance with the Bermuda Companies Act that will be subject to trading on the Oslo Stock
Exchange, but the beneficial interests in such Shares registered in the VPS. In accordance with market practice in
Norway and system requirements of the VPS, the beneficial interests in the Shares are, and with respect to the
Consideration Shares will be, registered in the VPS under the category of a “share”. Although each “share” registered
with the VPS will represent evidence of beneficial ownership of one common share in Avance Gas, such beneficial
ownership would not necessarily be recognised by a Bermuda court. As such, investors may have no direct rights
against Avance Gas and its officers and directors and may be required to obtain the co-operation of the VPS Registrar
in order to assert claims against Avance Gas and its officers and directors, and to look solely to the VPS Registrar for
the payment of any dividends, for exercise of voting rights attaching to the underlying common shares and for all
other rights arising in respect of the underlying common shares. Exercising such shareholder rights through the VPS
Registrar is subject to certain terms and conditions, as further described in Section 6.12.2 “The Registrar Agreement”.
Avance Gas cannot guarantee that the VPS Registrar will be able to execute its obligations under the Registrar
Agreement, including that the beneficial owners of the Shares will receive the notice of a general meeting in time to
instruct the VPS Registrar to either effect a re-registration of their Shares or otherwise vote their Shares in the manner
desired by such beneficial owners. Any such failure may inter alia, limit the access for, delay or prevent, the beneficial
shareholders being able to exercise the rights attaching to the underlying Shares.
The VPS Registrar may terminate the Registrar Agreement by giving not less than three months prior written notice.
Further, the VPS Registrar may terminate the Registrar Agreement with immediate effect if Avance Gas does not
perform its payment obligations to the VPS Registrar or commits any other material breach of the Registrar
Agreement. In the event that the Registrar Agreement is terminated, Avance Gas will use its reasonable best efforts to
enter into a replacement agreement for purposes of permitting the uninterrupted trading of the Shares on the Oslo
Stock Exchange. There can be no assurance, however, that it would be possible to enter into such an agreement on
substantially the same terms or at all. A termination of the Registrar Agreement could, therefore, have a material and
adverse effect on Avance Gas and the beneficial shareholders.
The Registrar Agreement limits the VPS Registrar‟s liability for any loss suffered by Avance Gas. The VPS Registrar
disclaims any liability for any loss attributable to circumstances beyond the VPS Registrar‟s control, including, but not
limited to, errors committed by others. The VPS Registrar is liable for direct losses incurred as a result from events
within the VPS Registrar‟s control. Thus, Avance Gas may not be able to recover its entire loss if the VPS Registrar
does not perform its obligations under the Registrar Agreement.
Investors may not be able to exercise their voting rights for Shares registered in a nominee account
Beneficial owners of the Shares that are registered in a nominee account (such as through brokers, dealers or other
third parties) may not be able to instruct the VPS Registrar to vote such Shares unless their ownership is re-registered
in their names with the VPS prior to the general meetings. The Avance Gas Group can provide no assurances that
beneficial owners of the Shares will receive the notice of a general meeting in time to instruct their nominees to either
effect a re-registration of the beneficial interests registered in the VPS or otherwise instruct the VPS Registrar to vote
their Shares in the manner desired by such beneficial owners.
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Avance Gas Holding Ltd – Offer Document
The transfer of Shares is, and the Consideration Shares will be, subject to restrictions under the securities
laws of the United States and other jurisdictions
The Shares have not been, and the Consideration Shares will not be, registered under the U.S. Securities Act of 1933,
as amended (the “U.S. Securities Act”) or any U.S. state securities laws or any other jurisdiction outside Norway and
are not expected to be registered in the future. As such, the Shares may not be offered or sold except pursuant to an
exemption from the registration requirements of the U.S. Securities Act and applicable U.S. state securities laws or
pursuant to an effective registration statement under the U.S. Securities Act. In addition, there can be no assurance
that shareholders residing or domiciled in the United States will be able to participate in future capital increases or
rights offerings.
Bermuda law permits the transfer of shares listed or admitted to trading on an appointed stock exchange (as such
term is defined in the Bermuda Companies Act (an “Appointed Stock Exchange”)) such as the Oslo Stock Exchange,
to be effected in accordance with the rules of such stock exchange without a written instrument of transfer. Further,
the Bermuda Monetary Authority has, pursuant to the Exchange Control Act 1972 of Bermuda and associated
regulations, granted its consent for the issue and transfer of the Shares to residents and non-residents of Bermuda for
exchange control purposes provided that the Shares are listed on the Oslo Stock Exchange or any other Appointed
Stock Exchange on or within fourteen days or the relevant issue or transfer. Accordingly, the Shares can be registered
in the VPS and title to the Shares can be evidenced and transferred without a written instrument and the consent of
the Bermuda Monetary Authority for the issuance and transfer of shares shall apply as long as the Shares are listed
and traded on the Oslo Stock Exchange. If the Shares are no longer listed or admitted to trading on the Oslo Stock
Exchange or any other Appointed Stock Exchange, or if the Oslo Stock Exchange ceases to be an Appointed Stock
Exchange, the Shares may only be transferred by written instrument in accordance with the terms of the Bye-laws of
Avance Gas and with the prior consent of the Bermuda Monetary Authority.
Avance Gas may be unwilling or unable to pay any dividends in the future
Avance Gas may choose not, or may be unable, to pay dividends in future years. The amount of dividends paid by
Avance Gas, if any, for a given financial period, will depend on, among other things, Avance Gas‟ future operating
results, cash flows, financial condition, capital requirements, the sufficiency of its distributable reserves, the ability of
Avance Gas‟ subsidiaries to pay dividends to Avance Gas, credit terms, general economic conditions, legal restrictions
and other factors that Avance Gas may deem to be significant from time to time.
1.8
Risks related to Avance Gas’ incorporation in Bermuda
Investors may have difficulty enforcing any judgment obtained in other jurisdictions than Bermuda
against Avance Gas or its directors or executive officers
Avance Gas is an exempted company limited by shares incorporated under the laws of Bermuda. As a result, the rights
of holders of the Shares will be governed by Bermuda law and Avance Gas‟ memorandum of association and Bye-laws.
The rights of shareholders under Bermuda law may differ from the rights of shareholders of companies incorporated in
other jurisdictions. It may be difficult for investors to effect service of process on Avance Gas or its directors and
executive officers or to enforce judgments obtained in courts in other jurisdictions against Avance Gas or those
persons, including judgments based on the civil liability provisions of the securities laws of other jurisdictions than
Bermuda. It is doubtful whether courts in Norway or Bermuda will enforce judgments obtained in other jurisdictions,
including the United States, against Avance Gas or its directors or officers under the securities laws of those
jurisdictions or entertain actions in Norway or Bermuda against Avance Gas or its directors or officers under the
securities laws of other jurisdictions. In addition, awards of punitive damages in actions brought in the United States
or elsewhere may not be enforceable in Norway or Bermuda. As an example, United States does not currently have a
treaty providing for reciprocal recognition and enforcement of judgements (other than arbitral awards) in civil and
commercial matters with either Norway or Bermuda.
Avance Gas has anti-takeover provisions in its Bye-laws that may discourage a change of control
The Bye-laws contain provisions that could make it more difficult for a third party to acquire Avance Gas without the
consent of the board of directors of Avance Gas (the “Board of Directors”). These provisions provide, among other
things, that:
•
the Board of Directors may refuse to register and may direct the VPS Registrar to decline to register certain
transfers of shares where the transfer would likely result in 50% or more of the issued and outstanding
shares or votes of Avance Gas being held, or owned directly or indirectly by individuals or legal persons
resident for tax purposes in Norway or such shares being effectively connected to a Norwegian business
activity, or Avance Gas being deemed a “Controlled Foreign Company” pursuant to Norwegian tax
19
Avance Gas Holding Ltd – Offer Document
legislation; and
•
the Board of Directors may issue any authorised but unissued Shares of Avance Gas, subject to any
resolution of Avance Gas‟ shareholders to the contrary.
These provisions could make it more difficult for a third party to acquire Avance Gas, even if the third party‟s offer
may be considered beneficial by many shareholders.
Various conditions may cause an adverse tax effect for the shareholder if Avance Gas pays dividends
Dividends declared and paid by a Bermuda company may be subject to local tax in the investor‟s home country, and
each investor should make such investigations for himself/herself. Norwegian investors will be subject to taxation as
dividends will be deemed as taxable income for the receiver. See Section 10 “Taxation” for further information.
Potential new or amended Bermuda tax rules resulting in potential Bermuda taxation
At the present time, there is no Bermuda income or profits tax, withholding tax, capital gains tax, capital transfer tax,
estate duty or inheritance tax payable by Avance Gas or by Avance Gas‟ shareholders in respect of the Avance Gas‟
Shares. The Minister of Finance of Bermuda, under the Exempted Undertakings Tax Protection Act 1966 of Bermuda,
as amended, has given Avance Gas an assurance that in the event that any legislation is enacted in Bermuda imposing
any tax computed on profits or income, or computed on any capital asset, gain or appreciation, or any tax in the
nature of estate duty or inheritance tax, such tax shall not until 31 March 2035 be applicable to Avance Gas or any of
its operations, or its shares, debentures or other obligations, except insofar as such tax applies to persons ordinarily
resident in Bermuda or is payable by Avance Gas in respect of real property owned or leased by Avance Gas in
Bermuda. Given the limited duration of the Minister of Finance of Bermuda‟s assurance, it cannot be assured that
Avance Gas will not be subject to any Bermuda tax after 31 March 2035.
Avance Gas’ Bye-laws restrict shareholders from bringing legal action against its officers and directors
Avance Gas‟ Bye-laws contain a broad waiver by Avance Gas‟ shareholders of any claim or right of action, both
individually and on Avance Gas‟ behalf, against any of Avance Gas‟ officers or directors. The waiver applies to any
action taken by an officer or director, or the failure of an officer or director to take any action, in the performance of
his or her duties, except with respect to any matter involving any fraud or dishonesty on the part of the officer or
director. This waiver limits the right of shareholders to assert claims against Avance Gas‟ officers and directors unless
the act or failure to act involves fraud or dishonesty.
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Avance Gas Holding Ltd – Offer Document
2
RESPONSIBILITY FOR THE OFFER DOCUMENT
2.1
The Board of Directors of Avance Gas Holding Ltd
This Offer Document has been prepared in connection with the Offer made by Avance Gas to acquire all the shares in
Aurora LPG, and the offer and Listing of the Consideration Shares to be issued by Avance Gas to the shareholders of
Aurora LPG accepting the Offer.
The Board of Directors of Avance Gas Holding Ltd hereby declares that, having taken all reasonable care to ensure that
such is the case, the information contained in this Offer Document is, to the best of their knowledge, in accordance
with the facts and contains no omission likely to affect its import.
16 November 2015
The Board of Directors of Avance Gas Holding Ltd
Niels G. Stolt-Nielsen
Jan Chr. Engelhardtsen
François Sunier
Chairman
Director
Director
Jan Kastrup-Nielsen
Kate Blankenship
Erling Lind
Director
Director
Director
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Avance Gas Holding Ltd – Offer Document
3
GENERAL INFORMATION
3.1
Presentation of financial and other information
3.1.1
Financial information
Historically, the Avance Gas Group has reported its consolidated financial statements on the basis of a financial year
which ends on 30 November each year. For the financial year 2014, the Avance Gas Group changed its financial year
end date to 31 December. As a result, the financial statements for the year 2014 covers a thirteen month period
starting on 1 December 2013 and ending on 31 December 2014. This Offer Document includes (i) the audited
consolidated annual financial statements for the Avance Gas Group as of and for the thirteen month period ended 31
December 2014 and (ii) the audited consolidated annual financial statements for the Avance Gas Group as of and for
the twelve month periods ended 30 November 2013 and 2012 (the “Financial Statements”). The Financial
Statements have been prepared in accordance with IFRS as adopted by the European Union (the “EU”). The Financial
Statements for the financial years 2013 and 2012 have been audited by PricewaterhouseCoopers LLP, as set forth in
their reports thereon included therein. The Financial Statements for the financial year 2014 have been audited by
PricewaterhouseCoopers AS, as set forth in their report thereon included therein.
Avance Gas‟ unaudited interim financial statements (i) as of and for the three and nine month periods ended 30
September 2015, with comparable figures as of and for the three and nine month periods ended 31 August 2014, (the
“Interim Q3 Financial Statements”) and (ii) as of and for the six month period ended 30 June 2015, with
comparable figures as of and for six month period ended 31 May 2014 (the “Interim Q2 Financial Statements”)
have been prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting” as adopted
by the EU (“IAS 34”). The Financial Statements, the Interim Q3 Financial Statements and the Interim Q2 Financial
Statements are together referred to as the “Financial Information”. The Financial Information is incorporated by
reference hereto, see Section 12.3 “Incorporation by reference”.
Avance Gas has, in addition to the Financial Information, included unaudited condensed pro forma financial information
(the “Pro Forma Financial Information”) in this Offer Document to show how the Combination could have affected
(i) Avance Gas‟ unaudited consolidated income statement for the six month period ended 30 June 2015 as if the
transaction had taken place on 1 January 2015 and (ii) Avance Gas‟ unaudited consolidated interim balance sheet as of
30 June 2015 as if the transaction had taken place on 30 June 2015. Aurora LPG‟s unaudited consolidated financial
statements as of and for the six month period ended 30 June 2015, with comparable figures as of and for the period
ended 30 June 2014, have been prepared in accordance with IAS 34 (the “Aurora LPG Interim Financial
Statements”). The Aurora LPG Interim Financial Statements are incorporated by reference hereto, see Section 12.3
“Incorporation by reference”.
The unaudited Pro Forma Financial Information is presented for illustrative purposes only and does not purport to
represent what Avance Gas‟ actual income statement and balance sheet would have been had the events which were
the subject of the adjustments occurred on the relevant dates. The unaudited Pro Forma Financial Information does
not include all of the information required for financial statements under IFRS and should be read in conjunction with
the Financial Information and the Aurora LPG Interim Financial Statements. See Section 9 “Unaudited Pro Forma
Financial Information” for further information about the basis of preparation of the Pro Forma Financial Information.
Avance Gas presents the Financial Information and Aurora LPG presents the Aurora LPG Interim Financial Statements
in USD (presentation currency).
3.1.2
Industry and market data
This Offer Document contains statistics, data, statements and other information relating to markets, market sizes,
market shares, market positions and other industry data pertaining to the Avance Gas Group‟s future business and the
industries and markets in which it may operate in the future. Unless otherwise indicated, such information reflects
Avance Gas‟ estimates based on analysis of multiple sources, including data compiled by professional organisations,
consultants and analysts and information otherwise obtained from other third party sources, such as annual financial
statements and other presentations published by listed companies operating within the same industry as Avance Gas
may do in the future. While Avance Gas has compiled, extracted and reproduced industry and market data from
external sources, Avance Gas has not independently verified the correctness of such data. Avance Gas cautions
prospective investors not to place undue reliance on the above mentioned data. Unless otherwise indicated in the Offer
Document, the basis for any statements regarding the Avance Gas Group‟s competitive position is based on Avance
Gas‟ own assessment and knowledge of the market in which it operates.
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Avance Gas Holding Ltd – Offer Document
Although the industry and market data is inherently imprecise, Avance Gas confirms that where information has been
sourced from a third party, such information has been accurately reproduced and that as far as Avance Gas is aware
and is able to ascertain from information published by that third party, no facts have been omitted that would render
the reproduced information inaccurate or misleading. Where information sourced from third parties has been
presented, the source of such information has been identified.
Industry publications or reports generally state that the information they contain has been obtained from sources
believed to be reliable, but the accuracy and completeness of such information is not guaranteed. Avance Gas has not
independently verified and cannot give any assurances as to the accuracy of market data contained in this Offer
Document that was extracted from these industry publications or reports and reproduced herein. Market data and
statistics are inherently predictive and subject to uncertainty and not necessarily reflective of actual market conditions.
Such statistics are based on market research, which itself is based on sampling and subjective judgments by both the
researchers and the respondents, including judgments about what types of products and transactions should be
included in the relevant market.
As a result, prospective investors should be aware that statistics, data, statements and other information relating to
markets, market sizes, market shares, market positions and other industry data in this Offer Document (and
projections, assumptions and estimates based on such information) may not be reliable indicators of the Avance Gas
Group‟s future performance and the future performance of the industry in which it operates. Such indicators are
necessarily subject to a high degree of uncertainty and risk due to the limitations described above and to a variety of
other factors, including those described in Section 1 “Risk Factors” and elsewhere in this Offer Document.
3.1.3
Other information
In this Offer Document, all references to “NOK” are to the lawful currency of Norway, all references to “USD” are to
the lawful currency of the United States and Bermuda and all references to “EUR” are to the lawful common currency
of the EU member states who have adopted the Euro as their sole national currency.
3.1.4
Rounding
Certain figures included in this Offer Document have been subject to rounding adjustments (by rounding to the
nearest whole number or decimal or fraction, as the case may be). Accordingly, figures shown for the same category
presented in different tables may vary slightly. As a result of rounding adjustments, the figures presented may not add
up to the total amount presented.
3.2
Cautionary note regarding forward-looking statements
This Offer Document includes forward-looking statements that reflect Avance Gas current views with respect to future
events and financial and operational performance. These forward-looking statements may be identified by the use of
forward-looking terminology, such as the terms “anticipates”, “assumes”, “believes”, “can”, “could”, “estimates”,
“expects”, “forecasts”, “intends”, “may”, “might”, “plans”, “should”, “projects”, “will”, “would” or, in each case, their
negative, or other variations or comparable terminology. These forward-looking statements are not historic facts. They
appear in the following Sections in this Offer Document, Section 5 “The LPG Shipping Industry”, Section 6 “Description
of the Avance Gas Group” and Section 7 “Avance Gas Financial Information”, and include statements regarding Avance
Gas‟ intentions, beliefs or current expectations concerning, among other things, financial strength and position of the
Avance Gas Group, operating results, liquidity, prospects, growth, the implementation of strategic initiatives, as well
as other statements relating to the Avance Gas Group‟s future business development and financial performance, and
the industry in which the Avance Gas Group operates, such as, but not limited to, with respect to the demand for LPG
ships in the future and the level of activity in the LPG industry.
Prospective investors in the Shares are cautioned that forward-looking statements are not guarantees of future
performance and that the Avance Gas Group‟s actual financial position, operating results and liquidity, and the
development of the industry in which the Avance Gas Group operates, may differ materially from those made in, or
suggested, by the forward-looking statements contained in this Offer Document. Avance Gas cannot guarantee that
the intentions, beliefs or current expectations upon which its forward-looking statements are based will occur.
By their nature, forward-looking statements involve, and are subject to, known and unknown risks, uncertainties and
assumptions as they relate to events and depend on circumstances that may or may not occur in the future. Because
of these known and unknown risks, uncertainties and assumptions, the outcome may differ materially from those set
out in the forward-looking statements. Important factors that could cause those differences include, but are not limited
to:
23
Avance Gas Holding Ltd – Offer Document

the effect of changes in demand, pricing and competition for the Avance Gas Group‟s existing and future
LPG ships;

demand for LPG ships in the future;

the building of new LPG ships and the yard capacity for building new LPG ships in the future;

the competitive nature of the business the Avance Gas Group operates in and the competitive pressure and
changes to the competitive environment in general;

a deterioration in global economic conditions;

the earnings, cash flow, dividends and other expected financial results and conditions;

the price volatility of gas and oil products;

increases in bunker fuel prices;

competition in the LPG industry;

the ability of the Avance Gas Group to implement its business strategy successfully or manage its growth
effectively;

the Avance Gas Group‟s lack of diversification;

the Avance Gas Group‟s exposure to the risk of acts of piracy;

the ability to secure sufficient employment for the Avance Gas Group‟s LPG ships;

the utilisation level for the Avance Gas Group‟s existing LPG ships;

the state of the Avance Gas Group‟s relationships with major clients, suppliers and joint venture partners;

the quality of goods and services provided to or on behalf of the Avance Gas Group by suppliers, joint
venture partners and subcontractors;

the level of required repair, maintenance expenditures and replacement costs on the existing and new LPG
ships of the Avance Gas Group;

the required dry-docking of the Avance Gas Group‟s ships;

technological changes in the Avance Gas Group‟s market and industry;

fluctuations of interest and exchange rates;

changes in general economic and industry conditions, including changes to tax rates and regimes;

inadequacy of the Avance Gas Group‟s insurance to cover the Avance Gas Group‟s losses;

political, governmental, social, legal and regulatory changes (including regulations relating to bribery and
corruption, health, safety and the environment);

dependence on and changes in management and failure to retain and attract a sufficient number of skilled
personnel;

the ageing of the fleet;

off-hire or performance claims by the Avance Gas Group‟s customers;

substantial fluctuation in ships values;

delays in deliveries, or cost overruns in relation to, newbuildings or deliveries of ships with significant
defects;

the capability of the ship design to deliver fuel efficiency benefits;

failure to successfully integrate assets or businesses acquired from third parties;

changes in and compliance with law and regulation;

compliance with safety and other ships requirements imposed by classification societies;

significant exchange rate fluctuations;

Avance Gas is a holding company and is dependent on cash flow from its subsidiaries;

access to funding, including refinancing of existing loan facilities;
24
Avance Gas Holding Ltd – Offer Document

the inability to realise the expected benefits associated with a combination of the Avance Gas Group and the
Aurora LPG Group;

fluctuations in the market price of the Shares and the shares in Aurora LPG;

the cancellation of the Offer should any of the conditions of the Offer not be satisfied or waived; and

legal proceedings and disputes.
Some of the risks that could affect the Avance Gas Group‟s future results and could cause results to differ materially
from those expressed in the forward-looking statements are discussed in Section 1 “Risk Factors”.
The information contained in this Offer Document, including the information set out under Section 1 “Risk Factors”,
identifies additional factors that could affect the Avance Gas Group‟s financial position, operating results, liquidity and
performance. Prospective investors in the Shares are urged to read all Sections of this Offer Document and, in
particular, Section 1 “Risk Factors” for a more complete discussion of the factors that could affect the Avance Gas
Group‟s future performance and the industry in which the Avance Gas Group operates when considering an investment
in Avance Gas.
These forward-looking statements speak only as at the date on which they are made. Avance Gas undertakes no
obligation to publicly update or publicly revise any forward-looking statement, whether as a result of new information,
future events or otherwise. All subsequent written and oral forward-looking statements attributable to Avance Gas or
to persons acting on Avance Gas behalf are expressly qualified in their entirety by the cautionary statements referred
to above and contained elsewhere in this Offer Document.
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Avance Gas Holding Ltd – Offer Document
4
TERMS AND CONDITIONS OF THE OFFER
4.1
General
Avance Gas hereby offers to acquire all issued shares in Aurora LPG not owned by persons in or from jurisdictions
where making of the Offer is unlawful, in exchange for a consideration consisting of 0.574 new shares in Avance Gas
per share in Aurora LPG, on the terms set out in this Offer Document. If all the shareholders in Aurora LPG accept the
Offer, 16,547,490 Consideration Shares will be issued by Avance Gas (taking into account the 850,000 shares held in
treasury by Aurora LPG as of the date hereof). As of the date of this Offer Document, neither Avance Gas nor any of
its affiliates own any shares or loans convertible into shares in Aurora LPG, cf Section 2-5 of the Norwegian Securities
Trading Act.
4.2
The offeror – Avance Gas
The Offer is made by Avance Gas, with registered office at Thistle House, 4 Burnaby Street, Hamilton HM 11,
Bermuda. Avance Gas‟ registration number is 43939. Avance Gas is an exempted company limited by shares
incorporated and governed by the laws of Bermuda. The Shares are registered in the VPS under ISIN BMG067231032,
and are listed on the Oslo Stock Exchange under the ticker code “AVANCE”. For further information about Avance Gas
and its business, see Section 6 “Description of the Avance Gas Group”.
4.3
The offeree – Aurora LPG
Aurora LPG is a public limited liability company (Nw.: allmennaksjeselskap) organised and registered under the laws of
Norway with company registration number 913 064 801. The company was incorporated on 3 January 2014. The
registered office and headquarter of Aurora LPG is at Dronningen 1, 0287, Oslo, Norway. Aurora LPG had a registered
share capital of NOK 2,967,837.9, divided into 29,678,379 shares, each with a par value of 0.10, as of 9 November
2015. The shares in Aurora LPG are registered in the VPS under ISIN NO0010701279 and are listed on Oslo Axess
under the ticker code “AURLPG”. For further information about the Aurora LPG Group and its business, see Section 8
“Description of the Aurora LPG Group”.
4.4
Background and reasons for the Offer
Avance Gas sees a strong rationale for consolidation in the LPG shipping industry:

The combined company will have the world‟s second largest VLGC fleet of 23 ships (when all newbuildings
have been delivered under the existing newbuilding programme of the Aurora LPG Group), increasing the
potential to provide global LPG freight services;

Increased scale will drive improved access to financing; and

Increased scale will increase liquidity in the stock. Avance Gas‟ average daily trading volume for the one
month period prior to the announcement of the Offer was USD 3.0 million, while Aurora LPG‟s average daily
trading volume for the same period was USD 0.5 million. Increased liquidity will give better access to and
over time better pricing in the capital markets.
Please see the unaudited Pro Forma Financial Information included in Section 9 “Unaudited Pro Forma Financial
Information” for an illustration of the Combination‟s significance for the Avance Gas Group‟s earnings, assets and
liabilities for the six month period ended 30 June 2015.
Avance Gas is of the opinion that the Combination will create a player with the size, presence, financial scale and
competence to play an even more significant role in the LPG shipping industry than the Avance Gas Group and the
Aurora LPG Group can do on their own. This has the potential to enhance value for both groups of shareholders.
4.5
Consideration
The consideration in the Offer consists of 0.574 new common shares in Avance Gas for each Aurora LPG share
(rounded down to the nearest whole number of shares to each accepting shareholder) (the “Consideration”). On the
basis of the closing share price of Avance Gas as quoted on the Oslo Stock Exchange on 13 November 2015, the
implied consideration is NOK 60.0 for each share in Aurora LPG (the “Implied Consideration”). The one month
volume weighted average share price of Aurora LPG as quoted on Oslo Axess for the period ending on 13 November
2015, the last day prior to Avance Gas‟ public announcement of the Offer, was NOK 48.9493 per share, while the
volume weighted average share price of Avance Gas for the corresponding time period was NOK 114.9400 per share.
Hence, the Offer represents a premium of 34.8% using both volume weighted average share prices.
26
Avance Gas Holding Ltd – Offer Document
The rights of the Consideration Shares will in all respects be equal to those of the existing Shares from the time of
issue and registration of the beneficial interests in the Consideration Shares in the VPS.
The Consideration has been determined on the basis of an overall evaluation, including consideration of the valuation
of Avance Gas and Aurora LPG in the equity market, the two companies‟ historic and expected earnings and future
market prospects and a comparison of these factors with the equity market valuation of comparable companies, a
careful assessment of the asset values of each company, positioning in the relevant markets, tax positions, the
organisations of the two companies, possible synergies, and the Avance Gas Group‟s business goals and strategic gain,
before adding a substantial premium to facilitate the transaction.
If Aurora LPG should decide to (i) change Aurora LPG‟s share capital, the number of shares issued or the nominal value
of the shares, (ii) resolve to distribute dividend or to make other distributions to the company‟s shareholders, (iii)
issue instruments which give the right to require shares issued, or (iv) announce that the company has decided on any
such measures, Avance Gas may, in accordance with the procedures set out in Section 4.11 “Amendments to the
Offer”, adjust the Consideration and/or other terms and conditions of the Offer to compensate for the economic effects
of such decisions (provided that the condition in Section 4.7 “Conditions for completion of the Offer” item (vii) is
waived). If such adjustment is made, acceptances of the Offer received prior to the adjustments shall be deemed an
acceptance of the Offer as revised.
To the extent the Consideration is adjusted pursuant to item (ii) of the preceding paragraph, the adjustment shall be
based on the following parameters:
(i)
The Implied Consideration;
(ii)
The exchange ratio of 0.574 new common shares in Avance Gas (rounded down to the nearest whole
number of shares to each accepting shareholder) for each share in Aurora LPG; and
(iii)
The per share value of the dividend or other distribution resolved by Aurora LPG, in or converted to NOK (if
applicable) as of the date the relevant resolution is made by Aurora LPG.
No interest or other compensation other than the Consideration will be paid by Avance Gas to shareholders tendering
shares in the Offer. Further, no interest or other compensation will be paid by Avance Gas to tendering shareholders in
the event the Offer is not completed.
Avance Gas will not during the Offer Period acquire or agree to acquire shares in Aurora LPG (or rights thereto) at a
consideration higher than the value of the Consideration, without increasing the Consideration to be at least equal to
such higher consideration.
4.6
Offer Period
The shareholders of Aurora LPG may accept the Offer in the period from and including 17 November 2015 to and
including 16 December 2015 at 16:30 (CET) (the “Offer Period”). Avance Gas may in its sole discretion extend the
Offer Period (one or more times), however not beyond 26 January 2016 at 16:30 (CET). Any extensions of the Offer
Period will be announced in the manner described in Section 4.12 “Notices” no later than prior to expiry of the Offer
Period. When referring to the Offer Period in this Offer Document, this refers to the Offer Period as extended from time
to time. If the Offer Period is extended, the other dates referred to herein may be changed accordingly and any
received Acceptance Forms will remain binding and irrevocable for the length of the extension.
4.7
Conditions for completion of the Offer
The completion of the Offer is subject to the following conditions, each of which may be waived in whole or in part by
Avance Gas at its sole discretion:
(i)
Minimum acceptance of more than 90%. The Offer shall prior to the expiry of the Offer Period have been
accepted by the Aurora LPG shareholders for the number of shares in Aurora LPG required in order for
Avance Gas to obtain a shareholding of more than 90% of the shares and votes in Aurora LPG (including
shares held in treasury by Aurora LPG) on a fully diluted basis (i.e. calculated based on the assumption that
any and all outstanding options, warrants and other instruments convertible into or otherwise giving rights
to new shares in Aurora LPG have been exercised in full, regardless of the conditions for such exercise). As
of the date of this Offer Document, as far as Avance Gas is aware based on publicly available information,
27
Avance Gas Holding Ltd – Offer Document
Aurora LPG (a) has issued 375,000 warrants, each convertible into one new share in the company and (b)
holds 850,000 shares in treasury.
(ii)
Governmental and regulatory approvals. Any governmental, regulatory or other official approval and/or
clearance under applicable laws necessary for the consummation of the Offer, including but not limited to
applicable competition laws, shall have been duly obtained without any conditions or on conditions that are
acceptable to Avance Gas in its sole discretion. As far as Avance Gas is aware as of the date of this Offer
Document, no governmental, regulatory or other official approval and/or clearance under applicable laws
will be required for the consummation of the Offer, but this will have to be assessed and confirmed based on
information to be requested from Aurora LPG.
(iii)
No intervention. No national or international authority or court of law shall have taken any form of legal
action (whether temporary, preliminary or permanent) that restrains or prohibits the consummation of the
Offer, and no conditions shall have been imposed by any national or international authority or court of law
in connection with the Offer that Avance Gas, in its sole discretion, determines to be unduly burdensome.
(iv)
Third party consents. The Avance Gas Group and/or the Aurora LPG Group shall have received any third
party consents and/or waivers necessary for the completion of the Offer without any adverse effects for the
Avance Gas Group and/or the Aurora LPG Group, including, without limitation, such consents and/or waivers
as may be required from Aurora LPG Group‟s lenders and Hyundai Heavy Industries, see Section 8.4.4.3
“Shipbuilding contracts”. As far as Avance Gas is aware as of the date of this Offer Document, the USD 350
million financing commitments of the Aurora LPG Group contain change of control provisions which may be
triggered by the completion of the Offer. Avance Gas has obtained financing commitments regarding a backstop facility for the refinancing of the Aurora LPG Group‟s financing commitments, if required. As of the date
of this Offer Document, Avance Gas is not aware of any other third party consents or waivers necessary for
the completion of the Offer without any adverse effects for the Avance Gas Group and/or the Aurora LPG
Group, but this will have to assessed and confirmed based on information to be requested from Aurora LPG.
(v)
No material adverse change. Prior to completion of the Offer there shall have been no change, event, effect
or condition (which shall result not only from events occurring after the date hereof but also as a result of,
separately or in combination with, any previously undisclosed circumstances) that has or would reasonably
be expected to have, individually or in the aggregate, a material adverse effect on the business, assets,
liabilities, condition (financial or otherwise), results or operation of the Aurora LPG Group or any of its
subsidiaries, including a material depletion of cash on hand, the incurring or commitment to incur any
material indebtedness, or the making or the commitment to make a material expenditure of capital.
(vi)
Ordinary conduct of business. Aurora LPG and its subsidiaries, in the period from the announcement of the
Offer and until the settlement of the Offer, shall have conducted their business only in the ordinary course
and in all material respects in accordance with applicable laws, regulations and decisions of any
governmental body, and have not entered into any material contracts, commitments or undertakings,
including, without limitation, directly or indirectly committed to any material projects in respect of purchase,
production, conversion or leasing of vessels, or otherwise changed in any material respect the manner in
which they currently conduct their business or operations.
(vii)
No issue of shares or equity instruments and no distributions. There shall have been no changes or
decisions to make changes to the share capital of Aurora LPG or its subsidiaries, and no issue or decision to
issue any rights which entitle the holder to any form of equity interest in Aurora LPG or its subsidiaries, and
Aurora LPG shall not have declared or made any dividends or other forms of distributions, in each case from
the date of announcement of the Offer.
As soon as each of the conditions above have been met, waived or failed to be met, Avance Gas will issue a
notification to that effect in accordance with the procedures set out in Section 4.12 “Notices” below.
4.8
Drop-dead Date
If (i) Avance Gas has not within five Business Days of the expiry of the Offer Period (as extended, if applicable)
publicly announced in accordance with 4.12 “Notices” fulfilment or waiver of the condition in Section 4.7 “Conditions
for completion of the Offer” item (i) relating to minimum acceptance level or (ii) Avance Gas has not on or prior to 29
February 2016 (the “Drop-dead Date”) publicly announced in accordance with 4.12 “Notices” that the other
28
Avance Gas Holding Ltd – Offer Document
conditions of the Offer have been met or waived, the Offer shall lapse and any tendered shares shall be released by
Avance Gas.
No interest or other compensation will be paid to shareholders who have tendered shares in the Offer if the Offer is not
completed. No interest will be paid to shareholders for the period between the expiry of the Offer Period (as extended,
if applicable) and the Drop-dead Date.
4.9
Procedures for accepting the Offer
Shareholders who wish to accept the Offer must complete and sign the acceptance form enclosed with this Offer
Document as Appendix A (the “Acceptance Form”) and return it to the Receiving Agent prior to the expiration of the
Offer Period on 16 December 2015 at 16:30 hours (CET) (or such time that the Offer Period may be extended to). The
Acceptance Form can be submitted by fax, hand delivery, e-mail or by mail. As the Acceptance Form must be received
by the Receiving Agent before 16 December 2015 at 16:30 hours (CET) (or such time that the Offer Period may be
extended to).
An acceptance of the Offer will, in addition to the shares in Aurora LPG the shareholder has registered on the VPS
account stated in the Acceptance Form, cover all shares in Aurora LPG the shareholder holds or acquires and that are
registered on the VPS account stated in the Acceptance Form before the VPS account is debited.
Shareholders who own shares in Aurora LPG registered on more than one VPS account must submit a separate
Acceptance Form for each such account.
The correctly completed and signed Acceptance Form shall be sent by fax, delivered by hand, e-mail or sent by mail to
the Receiving Agent at the following address:
Danske Bank
Bryggetorget 4
P.O. Box 1170 Sentrum
N-0107 Oslo
Norway
Fax: +47 85 40 79 92
Email: [email protected]
Any Acceptance Form that is not correctly completed or that is received after the expiration of the Offer Period can be
rejected without further notice. Avance Gas reserves the right to approve acceptances that are received after the
expiration of the Offer Period or that are not correctly completed within the limits of the requirements in Section 6-10
(9) of the Securities Trading Act for equal treatment of shareholders.
Shareholders who own shares in Aurora LPG registered in the name of brokers, banks, investment companies or other
nominees, must contact such persons to accept the Offer with respect to such shares. Acceptance of the Offer for
shares in Aurora LPG registered in the name of an investment manager must be done by the manager on behalf of the
shareholder.
All shares in Aurora LPG tendered in the Offer are to be transferred free of any encumbrances and any other third
party rights whatsoever and with all shareholder rights attached to them. Any third party with registered
encumbrances or other third-party rights over the relevant VPS account(s) must sign the Acceptance Form and
thereby waive its rights in the shares sold in the Offer and approve the transfer of the shares to Avance Gas free and
clear of any such encumbrances and any other third-party rights. Acceptances will be treated as valid only if any such
rights holder has consented in signing on the Acceptance Form for the sale and transfer of the shares free of
encumbrances to Avance Gas.
No confirmation of receipt of Acceptance Forms or other documents will be made on behalf of Avance Gas. All
notifications, documents and remittance that shall be delivered by or sent to or from the shareholders who accept the
Offer (or their representatives) will be sent to or delivered by them at their own risk.
The acceptance of the Offer is irrevocable, and may not be withdrawn, in whole or in part, once the
Receiving Agent has received the Acceptance Form.
29
Avance Gas Holding Ltd – Offer Document
By delivering a duly executed Acceptance Form, shareholders irrevocably authorise the Receiving Agent to
block the shares to which the Acceptance Form relates (see Section 4.10 “Blocking of tendered shares and
shareholder rights”), debit such accepting shareholder’s VPS account and transfer the shares to Avance
Gas against settlement of the Consideration upon completion of the Offer.
In accordance with the Securities Trading Act, the Receiving Agent must categorise all new customers in one of three
customer categories. All shareholders delivering the Acceptance Form and which are not existing clients of the
Receiving Agent will be categorised as non-professional clients. For further information about the categorisation, the
shareholder may contact the Receiving Agent (telephone +47 85 40 54 57). The Receiving Agent will treat the delivery
of the Acceptance Form as an execution only instruction from the shareholder to sell his/her/its shares in Aurora LPG
under the Offer, since the Receiving Agent is not in the position to determine whether the acceptance of the Offer and
the selling of the shares in Aurora LPG is suitable or not for the relevant shareholder.
The Offer is only being made, and the Consideration Shares are being offered, outside the United States in an
“offshore transaction” within the meaning of, and in compliance with, Regulation S under the U.S. Securities Act
(“Regulation S”) and inside the United States only to persons reasonably believed to be “qualified institutional
buyers” (as defined in Rule 144A under the U.S. Securities Act) pursuant to an exemption from the registration
requirements of the U.S. Securities Act. Any “U.S. person”, as defined in Regulation S, or a person within the United
States wishing to accept the Offer must together with the Acceptance Form submit a duly executed U.S. Investor
Representation Letter, which is attached to the Acceptance Form as Exhibit 1. Any person who submits the Acceptance
Form without a U.S. Investor Representation Letter will be deemed to have represented and warranted to Avance Gas
and the Receiving Agent that (i) it is not a U.S. person and (ii) it is accepting the Offer in an “offshore transaction”
within the meaning of Regulation S under the U.S. Securities Act and in compliance with such regulation.
4.10
Blocking of tendered shares and shareholder rights
By delivering a duly executed Acceptance Form, shareholders give the Receiving Agent an authorisation to block the
shares to which the Acceptance Form relates, in favour of the Receiving Agent. The Receiving Agent is at the same
time authorised to transfer the shares to Avance Gas against settlement of the Consideration (see Section 4.9
“Procedures for accepting the Offer” above and Section 4.13 “Settlement” below). In the event that the Offer is
cancelled, the blocking will be terminated. The shareholder undertakes, from the time of delivering a duly executed
Acceptance Form, not to, and it will, from the time of blocking, not be possible to sell or in any other way dispose
over, use as security, pledge, encumber or transfer to another VPS account, the shares covered by the Acceptance
Form. The shareholder is free to dispose over any other securities registered in the same VPS account as the blocked
shares.
Shareholders that accept the Offer will, to the extent permitted under Norwegian law, remain the legal owners of their
shares and retain voting rights and other shareholder rights related thereto until settlement has taken place.
4.11
Amendments to the Offer
Avance Gas reserves the right to amend the Offer, including, but not limited to by way of extending the Offer Period
and changing the Consideration, in its sole discretion and in accordance with this Offer Document and applicable rules
and regulations at any time during the Offer Period, provided, however, that Avance Gas may not amend the Offer in a
manner which disadvantages the shareholders. Amendments to the terms of the Offer are subject to approval from the
Oslo Stock Exchange. The adjustment of the Consideration in accordance with Section 4.5 “Consideration” shall in no
event be deemed to be a disadvantage to the shareholders. Any amendments are binding on Avance Gas once a notice
is published through the Oslo Stock Exchange‟s information system in accordance with the procedures set out in
Section 4.12 “Notices” below. Any acceptance received by the Receiving Agent is binding even if the Offer Period is
extended and/or the Offer is otherwise amended in accordance with the terms of this Offer Document. Shareholders
who have already accepted the Offer in its original form or with previous amendments will be entitled to any benefits
arising from such amendments.
4.12
Notices
Notices in connection with the Offer will be published by notification to the Oslo Stock Exchange. Notices will be
deemed made when the Oslo Stock Exchange has published the notice. Avance Gas will without undue delay notify the
Oslo Stock Exchange if the conditions of the Offer are met or waived or if the Offer is cancelled.
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Avance Gas Holding Ltd – Offer Document
4.13
Settlement
4.13.1
General
Transfer of the shares in Aurora LPG to Avance Gas and the delivery of the Consideration Shares as settlement of the
Offer will be made as soon as possible after the expiry of the Offer Period (as extended, if applicable), subject to, and
no later than 14 days after, the satisfaction or waiver of the conditions to the Offer. Shareholders who have tendered
shares in the Offer remain bound by their acceptance until settlement has occurred or the Offer has lapsed.
On settlement, the relevant number of Consideration Shares will be transferred to the VPS account of each
shareholder who has accepted the Offer against transfer to Avance Gas of the shares in Aurora LPG tendered by such
shareholder. The last possible date for settlement will be the 14th day after the Drop-dead Date (i.e. the last possible
date for settlement is 14 March 2016).
4.13.2
Share issue by Avance Gas
As at the date of this Offer Document, Avance Gas‟ authorised share capital is USD 200,000,000 consisting of
200,000,000 Shares with a par value of USD 1.00 each, of which 35,277,972 Shares have been issued and fully paid.
The Board of Directors may issue any authorised but unissued shares of Avance Gas subject to any resolution of
Avance Gas‟ shareholders to the contrary. As of the date of this Offer Document, no such resolution has been passed
by the shareholders. The Board of Directors will issue the Consideration Shares in connection with the settlement. The
Consideration Shares will be common shares in Avance Gas, each with a par value of USD 1.00 and are expected to be
issued on or about 21 December 2015 (assuming the conditions of the Offer are satisfied or waived upon expiry of the
Offer Period).
4.13.3
Registration in the VPS
The Consideration Shares will, when issued, be registered in Avance Gas‟ Register of Members in the name of the VPS
Registrar, which will hold such Consideration Shares as nominee on behalf of the shareholders in Aurora LPG accepting
the Offer. The beneficial interest in the Consideration Shares will be registered in the VPS, and will be tradable on the
Oslo Stock Exchange.
4.13.4
Trading in the Consideration Shares
The Consideration Shares will be tradable on the Oslo Stock Exchange when registered on the accepting shareholders‟
VPS accounts. It is expected that admission to trading and listing will take place on or about 21 December 2015
(assuming the conditions of the Offer are satisfied or waived upon expiry of the Offer Period).
4.13.5
The rights of the Consideration Shares
The Consideration Shares will have equal rights in all respects as the existing Shares.
4.14
Acquisition of Aurora LPG shares outside the Offer
During and after the Offer Period, Avance Gas and/or its affiliates or their brokers (acting as agents) can purchase or
make arrangements to purchase Aurora LPG shares or other securities that are immediately convertible into,
exchangeable for, or exercisable for, shares, other than pursuant to the Offer, on or off the Oslo Stock Exchange or
otherwise outside the United States and in accordance with applicable regulation. The consequences of any such share
purchases or arrangements at a higher price than the consideration are described in Section 4.5 “Consideration”
above.
4.15
Restrictions
The distribution of this Offer Document, any separate summary documentation regarding the Offer and the making of
the Offer may be restricted by law in certain jurisdictions and neither this Offer Document nor any such summary, nor
the Offer discussed herein or therein, constitutes an offer to sell or the solicitation of an offer to buy securities in any
jurisdiction in which such an offer or solicitation would be unlawful. Any failure to comply with these restrictions may
constitute a violation of the securities laws of such jurisdictions. Avance Gas and the Financial Adviser do not accept or
assume any responsibility or liability for any violation by any person whomsoever of any such restriction. See Section
11 “Restrictions” for further information.
By accepting the Offer by delivery of a duly executed Acceptance Form to the Receiving Agent, the accepting
shareholder certifies that such accepting shareholder:
(i)
has not received the Offer Document, the Acceptance Form or any other document relating to the Offer in
Canada, Australia or Japan or any other jurisdiction in which it may not lawfully do so, nor to have mailed,
31
Avance Gas Holding Ltd – Offer Document
transmitted or otherwise distributed any such document in or into the Canada, Australia or Japan or any
other jurisdiction in which it may not lawfully do so;
(ii)
has not utilised, directly or indirectly, the mails, or any means or instrumentality of commerce, or the
facilities of any national securities exchange, of Canada, Australia or Japan or any other jurisdiction in which
it may not lawfully do so in connection with the Offer;
(iii)
is not and was not located in Canada, Australia or Japan at the time of accepting the terms of the Offer or at
the time of returning the Acceptance Form, or in any other jurisdiction in which it may not lawfully do so;
(iv)
if acting in a fiduciary, agency or other capacity as an intermediary, then either (i) has full investment
discretion with respect to the securities covered by the Acceptance Form or (ii) the person on whose behalf
acting was located outside Canada, Australia or Japan at the time of instructing acceptance of the Offer, or
any other jurisdiction in which it may not lawfully do so; and
(v)
is (1) a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act) (or is acting on
behalf of a “qualified institutional buyer”) or (2) acquiring the Consideration Shares in an “offshore
transaction” outside the United States within the meaning of, and pursuant to, Regulation S .
4.16
Expenses
Avance Gas‟ estimated expenses related to the Offer are USD 2.5 million (exclusive of VAT). Avance Gas‟ expenses
incurred in connection with the Offer will be borne by Avance Gas.
Shareholders who accept the Offer will not have to pay brokerage fees. Avance Gas will pay VPS transaction costs that
may occur as a direct consequence of the shareholder accepting the Offer. Avance Gas will not cover any other costs
that a shareholder may incur in connection with acceptance of the Offer.
4.17
Tax
Each shareholder of Aurora LPG is responsible for any taxes it incurs as a consequence of accepting the Offer.
Shareholders of Aurora LPG are advised to seek advice from their own tax consultants in order to determine the
particular tax consequences to them from their acceptance of the Offer and the relevance or effect of any domestic or
foreign tax treaties.
4.18
Dilution
The existing shareholders in Avance Gas will be diluted by up to 31.9% as a consequence of the Offer and issuance of
the Consideration Shares to the Aurora LPG shareholders, assuming that all Aurora LPG shareholders accept the Offer.
4.19
Additional information
4.19.1
Contact with Aurora LPG prior to release of the Offer
There has been no contact between Avance Gas and Aurora LPG with respect to the Offer. However, the chairman of
the board of directors of Aurora LPG was informed about the Offer on a confidential basis on 15 November 2015.
No payments, special advantages or prospects of special advantages of any kind have been or will be offered by
Avance Gas to the management and/or the board of directors of Avance Gas or Aurora LPG or any of their subsidiaries
in connection with the Offer (other than receiving the Consideration, if they are shareholders of Aurora LPG and accept
the Offer in their capacity as shareholders in accordance with this Offer Document).
4.19.2
Financing of the Offer
The Consideration Shares will be issued through an increase in the issued share capital of Avance Gas. The Offer is not
subject to any financing condition.
4.19.3
Impact on employees
Avance Gas expects that the Combination will result in positive synergies, e.g. through streamlining of the combined
operations. Although Avance Gas has not determined the organisational structure of the combined entity, this may
affect the total number of employees in the combined group, including the place of work. The Combination is expected
to create one of the leading players in the VLGCs sector and therefore significant opportunities for the employees of
the combined group. Other than this, Avance Gas does not currently expect that the implementation of the
32
Avance Gas Holding Ltd – Offer Document
Combination will have any legal, financial or work related effects for the Aurora LPG Group‟s or Avance Gas‟
employees.
4.19.4
Legal implications
The completion of the Offer is inter alia subject to the third party consents and governmental and regulatory approvals
being obtained by the Aurora LPG Group and/or the Avance Gas Group, see Section 4.7 “Conditions for completion of
the Offer”. Avance Gas currently expects that all such third party consents and governmental and regulatory approvals
will be obtained.
From the point in time Aurora LPG was informed that the Offer would be launched and until expiry of the Offer Period
and publication of the results of the Offer, Aurora LPG is subject to certain restrictions on its freedom of action
pursuant to Section 6-17 of the Norwegian Securities Trading Act.
To Avance Gas‟ knowledge, other than as set forth above, it is not expected that the Offer and Avance Gas becoming
the owner of all shares in Aurora LPG validly tendered under the Offer will have any legal implications for the Aurora
LPG Group.
4.19.5
Statement by the board of directors of Aurora LPG
The board of directors of Aurora LPG is required to announce its view on the Offer in accordance with Section 6-16 of
the Norwegian Securities Trading Act no later than one week prior to the expiration of the Offer Period. The statement
must set out the opinion of the Offer and the reasons on which it is based, including its views on the effects of
implementation of the Offer on Aurora LPG‟s interests, and on Avance Gas‟ strategic plans for Aurora LPG and their
likely repercussions on employment and the locations of Aurora LPG‟s places of business. Should the board of directors
consider itself unable to make a recommendation to the shareholders on whether they should or should not accept the
Offer, the board of directors shall explain the reason for this. Information shall also be given about the views, if any, of
the board members and the CEO in their capacity as shareholders of Aurora LPG. If a separate opinion is issued from
the employees on the effects of the Offer on employment, that opinion shall be appended to or included in the
statement.
Pursuant to Rule 14e-2 of the U.S. Exchange Act, the board of directors of Aurora LPG is required to disclose to its
shareholders whether it recommends, expresses no opinion position or is unable to take a position with respect to the
Offer no later than 10 business days after this Offer Document is disseminated to shareholders. In the event of any
material change in such position, Aurora LPG must promptly disseminate a statement to shareholders noting the
material change.
4.19.6
Mandatory offer
If the Offer is completed and Avance Gas, as a result of the Offer or otherwise, becomes the owner of Aurora LPG
shares representing more than 1/3 of the voting rights, Avance Gas will be required under Chapter 6 of the Securities
Trading Act to make a mandatory cash offer for the remaining shares, unless Avance Gas following completion of the
Offer holds more than 90% of the shares and votes in Aurora LPG and within four weeks resolve a compulsory
acquisition (squeeze-out) as described in Section 4.19.7 “Compulsory acquisition” below.
The offer price for the mandatory offer must be equal to, or higher than, the highest price paid, or agreed to be paid,
by Avance Gas for the Aurora LPG shares during the six month period prior to the date on which the obligation to
make a mandatory offer is triggered. Neither Avance Gas nor its affiliates have acquired or agreed to acquire shares in
Aurora LPG in the six month period prior to the date of this Offer Document. The offer price in a subsequent
mandatory offer, if the Offer is completed, will be equal to the value of the Consideration, unless the Consideration is
increased, in which case the mandatory offer price will be equal to the value of such increased Consideration. In
exchange offers involving companies listed on Oslo Stock Exchange and Oslo Axess, it is customary to calculate the
value of the consideration shares based on the volume weighted average share price of the offeror during the last
three trading days prior to the announcement by the offeror that the relevant and material conditions have been met
or waived, unless there are reasons for calculating the value based on the volume weighted average share price during
a shorter or longer period.
4.19.7
Compulsory acquisition
If, as a result of the Offer, a subsequent mandatory offer or otherwise, Avance Gas acquires and holds, alone and not
calculated together with any other parties, shares representing 90% or more of the total issued shares and voting
rights in Aurora LPG, then Avance Gas will have the right (and each remaining shareholder in Aurora LPG would have
the right to require Avance Gas) to initiate a compulsory acquisition (squeeze-out) of the remaining shares in Aurora
33
Avance Gas Holding Ltd – Offer Document
LPG not owned by Avance Gas pursuant to Section 4-25 of the Norwegian Public Limited Companies Act of 1997 and
6-22 of the Norwegian Securities Trading Act.
A mandatory offer will not be required by law if Avance Gas at the completion of the Offer holds more than 90% of the
voting rights in Aurora LPG and within four weeks of completion of the Offer initiates a compulsory acquisition offering
a purchase price equal to, or higher than the price that would have been offered in a mandatory offer (see Section
4.19.6 “Mandatory offer” above) and issuing the necessary security for payment of the settlement amount in
accordance with Section 6-22 of the Norwegian Securities Trading Act. If Avance Gas presents such offer in writing to
all of the remaining shareholders with a known address, and the offer is announced in the Norwegian Register of
Business Enterprises‟ electronic bulletin for public announcement, Avance Gas may set a time limit for each
shareholder to contest or refuse the offer price. Once a compulsory acquisition is resolved, Avance Gas will be
registered as the owner of the remaining shares in Aurora LPG not owned by Avance Gas. If the minority shareholders
do not accept the offered price, then each shareholder has the right to require the price to be paid per share settled
through judicial assessment at the cost of offeror. However, if there are particular grounds, it can be resolved that the
cost shall be covered by the other party.
If, as a result of the Offer, a subsequent mandatory offer or otherwise, Avance Gas acquires and holds 90% or more of
the total issued Aurora LPG shares representing 90% or more of the voting rights in Aurora LPG, Avance Gas intends
to carry out a compulsory acquisition of the remaining shares in Aurora LPG in accordance with the procedures
outlined above.
4.19.8
Delisting from Oslo Børs
Following completion of the Offer, dependent upon the number of shares acquired by Avance Gas pursuant to the
Offer, Avance Gas intends to propose to the general meeting of Aurora LPG to apply to the Oslo Stock Exchange for a
delisting of the shares in Aurora LPG. Such proposal requires the approval of a 2/3 majority at the general meeting to
be adopted. Any application for delisting will be approved or rejected by the Oslo Stock Exchange in accordance with
the Continuing Obligations, taking into account, among other things, the interests of the minority shareholders. The
Oslo Stock Exchange may also decide on its own initiative to delist the shares in Aurora LPG should the conditions for
listing no longer be fulfilled, for instance following initiation of a compulsory acquisition.
4.19.9
Advisors
The Financial Adviser and Receiving Agent in connection with the Offer is Danske Bank. Advokatfirmaet Thommessen
AS is acting as Norwegian legal counsel to Avance Gas and MJM Limited is acting as special Bermuda legal counsel to
Avance Gas.
4.19.10
Choice of law and legal venue
The Offer, this Offer Document and all acceptances of the Offer shall be governed by Norwegian law with the Oslo
District Court as legal venue. Shareholders accepting the Offer agree that any dispute arising out of or in connection
with the Offer, this Offer Document or any acceptances of the Offer is subject to Norwegian law and shall exclusively
be settled by Norwegian courts and with the Oslo District Court as legal venue.
4.19.11
Miscellaneous
Subject to the restriction for certain jurisdictions described in Section 11 “Restrictions”, this Offer Document is sent to
all shareholders in Aurora LPG of record as of 17 November 2015, to the address recorded on each shareholder‟s VPS
account.
Additional copies of this Offer Document will be available on request from the Receiving Agent during normal business
hours at Danske Bank, Bryggetorget 4, N-0107 Oslo, Norway.
34
Avance Gas Holding Ltd – Offer Document
5
THE LPG SHIPPING INDUSTRY
5.1
Introduction
LPG (liquefied petroleum gas) comprises two products, propane and butane, both of which are gaseous at ambient
temperature and pressure. To store and transport LPG in liquefied form, the products require either pressure or
refrigerated tanks. For the last five decades, the very large gas carrier (VLGC) has been the standard form of longhaul LPG trade.
LPG is mainly produced as a by-product in conjunction with oil and gas development, making the LPG value chain
more supply-driven than demand-driven by nature. LPG is also selectively produced in refineries, but these volumes
are only shipped to a limited extent.
The chart below shows the evolution and expectation of LPG freight transportation and LPG tonne-miles. As can be
seen, tonne-miles have grown even faster than the tonne-growth, driven by increased long-haul shipping to the Far
East from the Middle East and the US.
Figure 1 – Seaborne LPG trading, volume
120
Million tonnes
100
80
60
40
20
0
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2013
2014
2015
2016
2017
2018
Source: Danske Bank, not publicly available information
Figure 2 – Seaborne LPG trading, tonne-miles
Billion tonne.miles
500
400
300
200
100
0
2009
2010
2011
2012
Source: Danske Bank, not publicly available information
5.2
Supply and demand of LPG
5.2.1
LPG supply
Seaborne LPG shipping is dominated by LPG production from major gas plants, representing about 60% of LPG
production globally. LPG produced in refineries is mainly consumed domestically as the volumes are in general smaller
than the production from the gas plants.
Historically, LPG has mainly been produced and exported out of the Middle East, with Abu Dhabi, Qatar and Saudi
Arabia being the main LPG suppliers. Iranian LPG exports have been reduced due to sanctions since 2012, but has the
past year been 60-70% of full capacity.
Historically, U.S. LPG production has been consumed domestically, and the U.S. has even been an LPG importer. The
main development over the recent years have been the development from the U.S. being a major LPG importer to the
emergence of the U.S. as the largest LPG exporter measured by volume per country, and potentially also surpassing
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Avance Gas Holding Ltd – Offer Document
the Middle Eastern region as a whole over the next years. The shale gas revolution has driven rising quantities of LPG
exports, and the incremental volume have to a large extent moved to Asia.
Some of the US production of LPG production will continue to go into domestic use, either for residential purposes, for
the petrochemical industry or for gasoline blending, but the vast majority of the incremental production has been, and
is expected to continue to be, exported. LPG, unlike liquefied natural gas (“LNG”), requires no governmental
regulatory approval to proceed with export projects, as LPG is classified as a processed product rather than as a
valuable raw material.
The widening of the Panama Canal, expected in 2016 but with continued potential delays, will contribute further to the
accessibility of the trade route from the U.S. into Asia. However the pricing of transiting the canal and the potential
associated congestion costs remains uncertain, and hence, the actual usage of the Panama Canal and its impact on the
LPG freight market remains uncertain.
The chart below outlines the build-out of the US LPG export terminal capacity.
Figure 3 – US LPG export capacity
Million tonnes
40
30
20
10
0
2012
2013
Enterprise
2014
Targa
2015
Sunoco
Philips 66
Occidental
2016
2017
Other
Source: Danske Bank, not publicly available information
LPG terminals on the Gulf Coast, which were once import terminals, have now become export terminals. When LPG
exports began five years ago, there was only one real player in the game, Enterprise Products from their LPG terminal
at Oil Tanking on the Houston Ship Channel. In September 2013, Targa completed the first phase of their expansion
program at Galena Park in Texas. The Sunoco/ETP Nederland Terminal went on stream in early 2015 and the Philips
66 terminal is expected to come on stream in 2016. Enterprise is currently in the process of significantly expanding its
Houston loading facility. Planned to be completed by year-end 2015, Enterprise will increase its loading capabilities to
up to around 29 ships per month. Occidental‟s Ingleside Terminal and some other smaller export facilities for smaller
ships are expected to drive the total US LPG export capacity to between 35 and 40 million tons by 2017. A large
portion of these volumes are already contracted through “take or pay contracts”.
Elsewhere, there is limited production capacity growth in the Middle East, while supplies from the North Sea are
declining. Africa remains a sizeable LPG exporter and Australian exports are expected to grow as well.
5.2.2
LPG demand
LPG is a versatile fuel with many uses. By end-use, the largest consumers are the retail market, including cooking and
heating in households (approximately 50%), transportation fuel (approximately 10%) and the petrochemical industry
(approximately 25%). Asia remains the biggest LPG importing region, driven primarily by the petrochemical industry
(primarily in China) and growing retail demand in Japan, Korea and China. In some regions, retail consumption has
been subsidised, such as in India, Indonesia and Thailand. Retail consumption growth has been particularly strong in
the rural areas. Population growth and economic growth across Asia is expected to result in continued growth in retail
demand.
An important source of future demand growth area in Asia is expected to be in the petrochemical sector, in particular
for PDH (propane dehydrogenation) use in China, used to cover the substantial propylene deficit.
The table below shows the PDH plants currently on stream in China:
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Avance Gas Holding Ltd – Offer Document
Figure 4 – China PDH plants
Propylene capacity
(000s tons / year)
Propane requirement
(000s tons / year)
Oriental Energy
600
720
Tianjin Bohai Chemical Industry (Group)
600
720
Shaoxing Sanyuan
450
540
Zhejiang Satellite
450
540
Ningbo Haiyue New Materials Co
600
720
Yantai Wanhua
750
900
3,450
4,140
Total
Source: Danske Bank, not publicly available information
As can be seen, these six plants have a combined propylene capacity of 3.45 million tons per year, and a propane
requirement of 4.14 million tons per year, all of if assumed to be imported as domestic supplies are of a lower quality.
In addition, there are multiple other PDH plants which are planned or rumoured, including ZOUEC Oriental Energy,
Fujian Meide, Zhanghiahang Yangzijang, Haiwai Group, Shangdong Haili and Changjiang Gas Chemical, which may
increase the LPG demand in China substantially over the next few years.
PDH plants in Korea and Turkey, steamcrackhers in Taiwan, as well as other petrochemical and industrial sectors
across Asia will also be key sources of demand growth for LPG going forward.
Other buyers of LPG include the European petrochemical sector, the retail sector in the Mediterranean region, and the
Latin American region.
5.3
LPG shipping
The net result of increasing LPG supply and increasing LPG demand has resulted in an increasing demand for LPG
freight. In addition to increased volumes, increased freight distances have led to a firm freight market over the last 18
months.
5.3.1
LPG trading patterns
LPG is mainly produced as a by-product and hence the LPG market is a supply-driven market more than a demanddriven market. Pricing of LPG and freight will determine where the LPG will go. Historically, the freight market has
been dividended between the East of Suez and the West of Suez basins. However, this has to a large extent changed
as incremental U.S. exports to a large extent have been shipped to Asia and the Far East.
The chart below shows the destination of U.S. VLGC loadings in 2015. U.S.-LAM (Latin America) includes U.S. –
Panama trades where a minority share is being shipped to Latin America. US-FAE (far East Asia) includes Panama
exports to Asia. These loadings are deducted from US-LAM and included in US-FAE.
Figure 5 – US VLGC loadings by destination
91
99
90
14 - 15%
10 - 11%
38
42%
46
51%
39
43%
34
38%
Q1 15
Q2 15
US-FAE
US-LAM
17 - 17%
36
36%
46
46%
Q3 15
US-EUR
Source: Danske Bank, not publicly available information
5.3.2
Vessel supply
LPG shipping comes in a variety of types and sizes, from large refrigerated VLGCs (very large gas carriers) to smaller
pressurised ships. The main categories of these ships are:
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Avance Gas Holding Ltd – Offer Document

VLGCs (75-85,000 cbm size fully-ref) in LPG trading;

LGCs (50-60,000 cbm size fully-ref) in LPG and ammonia trading;

MGCs (30-40,000 cbm size fully-ref) in LPG and ammonia trading;

Larger semi-refs (15-22,000 cbm size semi-ref) in LPG and petchem gas trading;

Smaller semi-refs (5-12,000 cbm size semi-ref) in LPG and petchem gas trading; and

Pressure LPG ships (up to 12,000 cbm size pressure) in LPG and petrochemical gas trading.
The Avance Gas Group and Aurora LPG Group are both focused on the VLGC segment, the largest ship size within LPG
shipping accounting for about 75% of global LPG seaborne trade.
The current VLGC vessel fleet consists of 192 ships. In the chart below, the existing fleet on water is shown by year of
delivery. 18% of the VLGC fleet is built in 1995 or before, and hence represents the most likely potential scrapping
candidates in the coming years, in particular as modern vessels are somewhat more fuel-efficient compared to older
vessels. However, the current strong freight market is expected to limit scrapping in the near term.
Figure 6 – VLGC fleet by year of delivery
Number of VLGCs
30
25
20
15
10
5
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
0
Source: Danske Bank, not publicly available information
The VLGC orderbook consists of 82 vessels. The chart below shows the current delivery schedule. In total, the
orderbook represents 43% of the total current fleet on water. The vessels on order are mainly in yards in Korea, with
some few units in China or Japan. No slippage in delivery dates is expected.
Figure 7 – VLGC newbuilding delivery schedule
Number of deliveries
20
16
12
8
4
0
Q4-15
Q1-16
Q2-16
Q3-16
Q4-16
Q1-17
Q2-17
Q3-17
Q4-17
Beyond
Source: Danske Bank, not publicly available information
As can be seen in the table below, the 11 largest shipowners counted 138 ships or 50% of the total VLGC fleet
(including newbuildings). Consolidation efforts over the last years has included Frontline 2012‟s eight VLGC ship orders
being sold to the Avance Gas Group against a share consideration, Scorpio Tankers combining its VLGCS fleet with
Dorian LPG and Maersk Group selling its fleet to BW LPG. In addition to the top VLGC owners shown below, there are
LPG traders such as Petredec, who combine LPG ship ownership with LPG trading.
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Avance Gas Holding Ltd – Offer Document
Figure 8 – Top VLGC owners
Number of VLGCs
33
7
22
4
14
11
1
26
18
BW LPG
14
Dorian LPG
Avance
Gas
11
10
9
8
6
3
3
9
1
7
7
7
3
5
2
5
2
5
3
4
KSS Line
Solvang
ASA
Mitsui
O.S.K.
Latsco
Shipping
8
JX Holdings Shangdong Aurora LPG
Ocean
Owned fleet
8
Nippon
Yusen
Kaisha
Orderbook
Source: Danske Bank, not publicly available information
The chart below shows the development in newbuilding prices. The newbuilding activity of 2012/2013 was partly
driven by lower yard prices. Prices recovered somewhat from late 2013 on the back of increasing interest and also
because Chinese buying interest for second hand tonnage.
Figure 9 – VLGC newbuilding prices
USD millions
120
100
80
60
40
20
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Source: Danske Bank, not publicly available information
5.3.3
VLGC charter types
LPG vessels are employed in the market through a number of different arrangements. The general terms typically
found in these types of contracts are described below.

Voyage Charter. A voyage charter is typically a single round trip that is priced on a current or spot market
value. The owner of the vessel receives one payment derived by multiplying the tons of cargo loaded on
board by the agreed upon freight rate expressed on a per cargo ton basis. The owner is responsible for the
payment of all expenses including voyage expenses (including bunker fuel, agency, security and port costs),
operating expenses and capital costs of the vessel.

Time Charter. Under time charters, vessels are chartered to customers for fixed periods of time (which can
range from a few months to more than fifteen years) at rates that are generally fixed. The charterer pays all
voyage costs. The owner of the vessel receives monthly charter payments on a per day or per month basis
and is responsible for the payment of all operating expenses (including manning, maintenance, repair and
docking) and capital costs of the vessel.

Bareboat Charter. Owner charters vessel to another company (the charterer) for a pre-agreed period and a
daily rate. The charterer is responsible for operating the vessel, including crewing, maintenance and
insurance and for paying charter rate.

Contract of Affreightment (CoA). Under a CoA, the ship-owner provides capacity to transport a certain
amount of cargo within a specified period from one place to a destination designated by the customer. All of
the vessel‟s operating, voyage and capital costs are borne by the ship owner. The freight rate is normally
agreed on a per cargo ton basis. The freight rate can be fixed or floating, or a combination of both.
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Avance Gas Holding Ltd – Offer Document
5.3.4
VLGC charter rates
Shipping rates are in general a function of the underlying demand and supply for LPG shipping. The demand for
shipping is driven by both the number of tones to be transported and the distance of transportation. VLGC rates have
been, and are expected to remain, volatile. In general, time-charter rates are less volatile than spot rates. The chart
below shows the development of the Avance Gas spot index since January 2012. The Avance Gas spot index is
prepared by Avance Gas weekly and published on its website. The index is calculated on the basis of the Baltic Index,
assuming weekly average of Baltic Index Bunkers prices quoted every Friday (lowest price of Singapore or Fujairah).
The ship used for the calculations is Iris Glory, assuming 15 knots sailing speed. The voyage used for the calculations
is the Ras Tanura to Chiba voyage (13,642 nautical miles), assuming 29 hours for bunkering and a sea margin of 3%.
Figure 10 – Avance Gas spot index
Source: Avance Gas
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Avance Gas Holding Ltd – Offer Document
6
DESCRIPTION OF THE AVANCE GAS GROUP
6.1
Corporate information
Avance Gas‟ registered name is Avance Gas Holding Ltd. Avance Gas was incorporated on 29 January 2010 by StoltNielsen Gas as an exempted company limited by shares under the laws of Bermuda and in accordance with the
Bermuda Companies Act. Avance Gas‟ registration number is 43939. Avance Gas‟ registered office is at Thistle House,
4 Burnaby Street, Hamilton HM 11, Bermuda, telephone: + 1 441 295 9671 and facsimile: +1 441 292 5962. Avance
Gas‟ website is www.avancegas.com. Neither the content of www.avancegas.com nor of the Avance Gas Group‟s other
websites, is incorporated by reference into or otherwise forms part of this Offer Document.
As at the date of this Offer Document, Avance Gas‟ authorised share capital is USD 200,000,000 consisting of
200,000,000 Shares with a par value of USD 1.00 each, of which 35,277,972 Shares have been issued and fully paid.
The Board of Directors may issue any authorised but unissued shares of Avance Gas subject to any resolution of
Avance Gas‟ shareholders to the contrary. As of the date of this Offer Document, no such resolution has been passed
by the shareholders.
The Shares have been created under the Bermuda Companies Act and are registered in the VPS under ISIN
BMG067231032. All the Shares rank in parity with one another and carry one vote per share.
Avance Gas has one class of shares. The Shares are equal in all respect and each Share carries one vote at the general
meetings of shareholders. Except as set out in Section 6.8.5 “Share option plan for Management”, there are no share
options or other rights to subscribe or acquire Shares issued by Avance Gas.
Pursuant to the Bye-laws, Avance Gas may purchase its own shares for cancellation or acquire them as treasury
shares on such terms and in such manner as may be authorised by the Board of Directors, subject to the Bermuda
Companies Act. The Board of Directors may exercise all the powers of Avance Gas to purchase its own Shares. As of
the date of this Offer Document, Avance Gas owns 906,639 shares in Avance Gas. Pursuant to the Bye-laws, the rights
attached such shares are suspended and shall not be exercised by Avance Gas while it holds such shares in treasury.
The table below shows the development in Avance Gas‟ authorised share capital for the period from its incorporation to
the date hereof:
Date
29 January 2010
Type of change
Change in
New authorised
authorised share
share capital
No. of authorised
Par value per
capital (USD)
(USD)
shares
share (USD)
Authorised on
-
10,010
incorporation
24 November 2010
Subdivision,
1,000 class B shares
10.00
and 1 class A share
9,989,990
10,000,000
10,000,000 common
redesignation,
1.00
shares
variation of rights &
increase in authorised
share capital
23 September 2011
Increase in authorised
5,000,000
15,000,000
15,000,000
1.00
185,000,000
200,000,000
200,000,000
1.00
share capital
25 September 2013
Increase in authorised
share capital
The table below shows the development in Avance Gas‟ issued share capital for the period from incorporation to the
date hereof:
Date
29 January 2010
Type of change
Incorporation
1
Change in issued
New issued
share capital
share capital
No. of issued
Par value per
(USD)
(USD)
shares
share (USD)
-
10,010
1,000 class B shares
10.00
and 1 class A share
24 November 2010
Subdivision,
-
10,010
redesignation,
10,010 common
1.00
shares
variation of rights
24 November 2010
Share issuance2
4,989,990
5,000,000
5,000,000
1.00
1 December 2010
Share issuance3
5,000,000
10,000,000
10,000,000
1.00
26 June 2012
Share issuance4
5,000,000
15,000,000
15,000,000
1.00
15 August 2013
Share purchase5
5,000,000
10,000,000
10,000,000
1.00
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Avance Gas Holding Ltd – Offer Document
Date
Change in issued
New issued
share capital
share capital
No. of issued
Par value per
(USD)
(USD)
shares
share (USD)
Type of change
2 October 2013
Share issuance
6
6,000,000
16,000,000
16,000,000
1.00
15 October 2013
Share issuance7
8,501,358
24,501,358
24,501,358
1.00
20 November 2013
Share issuance8
5,882,786
30,383,710
30,383,710
1.00
14 April 2014
Share issuance9
4,894,262
35,277,972
35,277,972
1.00
1
The Shares were subscribed at a price of USD 10.00 each.
2
The Shares were subscribed at a price of USD 11.34 each.
3
The Shares were subscribed at a price of USD 11.34 each.
4
The Shares were subscribed at a price of USD 10.04 each.
5
The Shares were repurchased at a price of USD 10.59 each.
6
The Shares were subscribed at a price of USD 11.78 each.
7
The Shares were subscribed at a price of USD 11.78 each.
8
The Shares were subscribed at a price of USD 17.00 each.
9
The Shares were subscribed at a price of NOK 122 each (less a retail discount of NOK 1,500 to each of the 3,640 retail investors in the offering).
6.2
Historical background and development
The Avance Gas Group was established by Stolt-Nielsen Gas to exploit opportunities in the fast growing global LPG
market, mainly driven by associated natural gas and liquefied natural gas (LNG) based LPG production and exports in
the Middle East. The Avance Gas Group acquired its first VLGC early 2010 (Stolt Avance). The Avance Gas Group‟s
strategy was to offer consolidation opportunities to shipowners and thereby being able to offer its customers more
efficient and flexible freight solutions.
Late 2010, the Avance Gas Group acquired three VLGCs in a share/cash transaction, and Sungas Holdings Ltd
(“Sungas”) became a 50% shareholder in Avance Gas, alongside Stolt-Nielsen Gas. In the summer of 2012, the
Avance Gas Group acquired Maran Gas‟ VLGCs in a cash transaction, adding two ships to the fleet, then consisting of
six modern VLGCs.
In June 2012, Avance Gas reached agreement with Transpetrol Shipping Ltd. (“Transpetrol”) whereby Transpetrol
sold its two VLGCs, Prospect and Progress, to the Avance Gas Group in return for cash and 1/3 shareholding in Avance
Gas. In July 2013, Transpetrol exercised a call option to buy back the two VLGCs previously sold to the Avance Gas
Group, and a put option to simultaneously sell its shares in Avance Gas back to Avance Gas. The ship sale and share
purchase was completed in August 2013.
In August 2013, Avance Gas entered into an agreement with Frontline 2012, pursuant to which Frontline 2012 would
become a shareholder in Avance Gas alongside Stolt-Nielsen Gas and Sungas. The transaction was finalised on 2
October 2013 with Frontline 2012 subscribing for Shares bringing its shareholding in Avance Gas to 37.5% in a USD
70 million share issue.
On 16 October 2013, Stolt-Nielsen Gas, Sungas and Frontline 2012 agreed to convert each of their shareholder loans
outstanding to equity at USD 11.78 per Share. Avance Gas issued approximately 2.8 million Shares to each of the
shareholders.
On 17 October 2013, Frontline 2012 distributed 12.5% of the shares to its shareholders as a dividend in specie,
reducing its holding in Avance Gas to 25%. On the same day, Avance Gas‟ Shares were registered on the N-OTC list
with ticker symbol “AGHL”.
In November 2013, Avance Gas completed a USD 100 million private placement of approximately 5.9 million new
Shares at a price of USD 17.00 per share. Following the private placement, the shareholdings of Stolt-Nielsen Gas and
Sungas were reduced to 25.8% each, and Frontline 2012‟s shareholding was reduced to 22.6%. Avance Gas also
entered into the newbuilding acquisition agreement with Frontline 2012 regarding the post-delivery acquisition of
Frontline 2012‟s VLGC newbuilding program, comprising eight VLGCs built at the Jiangnan shipyard, expanding the
fleet to 14 ships.
On 9 April 2014, Avance Gas announced the successful completion of a USD 275 million initial public offering, of which
Avance Gas received gross proceeds of USD 100 million. The first day of listing on the Oslo Stock Exchange was 15
April 2015.
During 2015, the Avance Gas Group has taken delivery of all eight newbuildings under the newbuilding acquisition
agreement.
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Avance Gas Holding Ltd – Offer Document
6.3
Current legal structure
Avance Gas, the parent company of the Avance Gas Group, is a holding company and the operations of the Avance
Gas Group are carried out through the operating subsidiaries of Avance Gas. The figure below sets out the legal
structure of the Avance Gas Group as of 16 November 2015:
Avance Gas
Holding Ltd
100%
Avance Gas
Ltd
100%
Avance
Mistral
Ltd
Avance
Gas AS
100%
”Mistral”
100%
Avance
Ltd
Avance
Monsoon
Ltd
‟‟Stolt
Avance‟‟
100%
”Monsoon”
Avance
Thetis
Glory Ltd
Avance
Pampero
Ltd
‟‟Thetis
Glory‟‟
100%
100%
100%
100%
100%
100%
100%
”Pampero”
Avance
Venus
Glory Ltd
Avance
Passat
Ltd
‟‟Venus
Glory‟‟
”Passat”
Avance
Breeze
Ltd
Avance
Promise
Ltd
”Breeze”
”Promise”
Avance
Chinook
Ltd
Avance
Providence
Ltd
”Chinook”
”Providence”
Avance
Iris Glory
Ltd
Avance
Sirocco
Ltd
‟‟Iris Glory‟‟
”Sirocco”
Avance
Levant
Ltd
Delta
Shipping
Ltd
”Levant”
”Gaea”
100%
100%
100%
100%
100%
Other than Avance Gas Ltd (which is incorporated in Bermuda) and Avance Gas AS (which is incorporated in Norway),
all the subsidiaries of Avance Gas are incorporated in the Marshall Islands. However, as of the date of this Offer
Document, Avance Gas has six dormant wholly-owned subsidiaries incorporated in Liberia which are in the process of
being liquidated.
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Avance Gas Holding Ltd – Offer Document
6.4
Business overview
6.4.1
General
The Avance Gas Group is one of the leading providers of marine transportation of fully refrigerated LPG. As of the date
of this Offer Document, the Avance Gas Group owns and operates a fleet consisting of 14 VLGCs. The business is
currently focused on the transportation of LPG for oil and gas majors, LPG importers and LPG traders.
6.4.2
Competitive strengths
The Avance Gas Group believes it possesses a number of strengths which will enable the Avance Gas Group to
capitalise on the fast-growing LPG shipping market and create shareholder value. These strengths include:

Large, homogenous fleet. The Avance Gas Group has a large, homogenous and modern fleet of VLGCs
and is thus well positioned to take advantage of the expected strengthening in the LPG freight market. The
size provides the Avance Gas Group with flexibility to pursue an aggressive chartering policy for its ships
and the ability to provide its customers reliable LPG shipping services worldwide.

Leading operational platform. The Avance Gas Group has one of the most experienced chartering and
operation teams with relevant backgrounds from LPG trading, chartering of VLGCs and sailing onboard
VLGCs as senior officers and masters. This will enable the Avance Gas Group to increase fleet utilisation and
provide its customers first class LPG freight chartering and operations.

Strong management team. The Avance Gas Group has a strong management team with significant
experience from the LPG shipping industry as well as relevant financial institutions. The management team
has strong relationships with oil and gas majors as well as leading LPG importers and traders, shipyards and
other LPG shipping players. In sum, this will contribute to the implementation of the Avance Gas Group‟s
chartering and consolidation strategies.
6.4.3
Strategy
The Avance Gas Group‟s strategy is to further develop as a significant participant in the global VLGC freight market
and to consolidate a fragmented industry.

Contribute to consolidation of the VLGC industry. The Avance Gas Group believes that in order to
capitalise on the growing and improving LPG shipping markets, the VLGC market will benefit from being
consolidated further. This will enable VLGC owners to provide worldwide shipping services with sufficient
chartering flexibility, in particular considering the current VLGC orderbook. The Avance Gas Group intends to
actively contribute to consolidation of the VLGC industry.

Grow the fleet. The Avance Gas Group considers consolidation opportunities continuously and based on
prevailing market conditions. The Avance Gas Group will consider acquisitions of existing fleets or
companies as well as buying secondhand ships. However, the Avance Gas Group may also utilise
opportunities for sale of existing ships in order to maximise shareholder value.

Chartering strategy focused on spot market exposure. The chartering strategy of the Avance Gas
Group, as directed by its Board of Directors, will continuously be evaluated on the basis of the prevailing
market conditions and market outlook. In the near term, the Avance Gas Group intends to operate primarily
in the spot market, capitalising on a strengthening market. As the fleet grows and based on prevailing
market conditions, the Avance Gas Group aims to combine spot market exposure with a portfolio of contract
of affreightments, primarily with floating, market related pricing formulas, to ensure maximum utilisation of
its fleet. Strategic customers may be offered time charter contracts as well, if and when terms and
conditions are deemed attractive.

Maintain a strong balance sheet with attractive financing terms. The Avance Gas Group will
continuously seek to maintain a strong balance sheet with sufficient flexibility for operations and further
growth. As of the date of this Offer Document, financing is in place for the existing fleet. Further, the board
of directors will consider utilising the equity and debt capital markets, if deemed attractive.
6.4.4
The fleet
The following table presents certain information with respect to the VLGCs in the Avance Gas Group‟s fleet.
44
Avance Gas Holding Ltd – Offer Document
Capacity
Name
Stolt Avance
Ownership
Classification
Year built
Shipyard
(cbm)
Charter type
Flag
(%)
society
2003
KHI
82,557
Spot market
Marshall
100%
ABS
100%
DNV GL
100%
DNV GL
100%
DNV GL
100%
DNV GL
100%
DNV GL
100%
Lloyds
100%
Lloyds
100%
Lloyds
100%
Lloyds
100%
Lloyds
100%
Lloyds
100%
Lloyds
100%
Lloyds
Island
Iris Glory
2008
DSME
83,783
Spot market
Marshall
Island
Thetis Glory
2008
DSME
83,783
Spot market
Marshall
Island
Venus Glory
2008
DSME
83,765
Time charter
Marshall
Island
Providence
2008
DSME
84,597
Spot market
Marshall
Island
Promise
2009
DSME
84,597
Spot market
Marshall
Island
Mistral
2015
Jiangnan
83,000
Spot market
Marshall
Island
Monsoon
2015
Jiangnan
83,000
Spot market
Marshall
Island
Breeze
2015
Jiangnan
83,000
Spot market
Marshall
Island
Passat
2015
Jiangnan
83,000
Spot market
Marshall
Island
Sirocco
2015
Jiangnan
83,000
Spot market
Marshall
Island
Levant
2015
Jiangnan
83,000
Spot market
Marshall
Island
Chinook
2015
Jiangnan
83,000
Spot market
Marshall
Island
Pampero
2015
Jiangnan
83,000
Spot market
Marshall
Island
Total (14 ships)
1,167,082
In July 2015, Avance Gas acquired a 1980-built LNG carrier for USD 19.4 million, with plans to develop new
commercial LPG projects. The LNG carrier is held by Delta Shipping Ltd. The value of the vessel is depreciated over a
four year period which is considered to be estimated useful life. The vessel is managed by Golar Wilhelmsen
Management AS.
6.4.5
Management of the fleet
The Avance Gas Group outsources technical and crew management of its fleet. Stolt Avance, Mistral, Monsoon, Breeze,
Passat, Sirocco and Levant are managed by Exmar Shipmanagement NV, while Iris Glory, Thetis Glory, Venus Glory,
Providence, Promise, Chinook and Pampero are operated by Northern Marine Management Ltd, a company in the
Stena group.
The Avance Gas Group‟s technical department has one employee and one consultant working with the external
technical managers.
6.4.5.1
Exmar Shipmanagement NV
The Avance Gas Group has entered into a management agreement with Exmar Shipmanagement NV relating to Stolt
Avance, dated 14 January 2010. The agreement is based on the “Shipman 98” standard ship management agreement.
Exmar Shipmanagement NV provides both crew management and technical management services under the
agreement. The annual management fee under the agreement is EUR 180,000. The agreement may be terminated by
either party with two months written notice, and with immediate effect in the event of inter alia default of certain
provisions of the agreement or in case of a sale of the ship or if the ship becomes a total loss, is declared as a
constructive, compromised or arranged total loss or is requisitioned, or in the event of liquidation or bankruptcy of
either party.
The Avance Gas Group has further entered into management agreements with Exmar Shipmanagement NV relating to
Mistral, Monsoon, Breeze and Passat, dated 25 June 2014, and for Sirocco and Levant, dated 15 September 2014. The
agreements are based on “Shipman 98” standard ship management agreement. Exmar Shipmanagement NV provides
both crew management and technical management services under the agreements. The annual management fee
under the agreement is EUR 205,000. The agreements may be terminated by either party with two months written
notice, and with immediate effect in the event of inter alia default of certain provisions of the agreement or in case of
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Avance Gas Holding Ltd – Offer Document
a sale of the ship or if the ship becomes a total loss, is declared as a constructive, compromised or arranged total loss
or is requisitioned, or in the event of liquidation or bankruptcy of either party.
6.4.5.2
Northern Marine Management Ltd
The Avance Gas Group has entered into management agreements with Northern Marine Management Ltd relating to
Iris Glory, Thetis Glory and Venus Glory, all dated 29 November 2010. The agreements are based on the “Shipman 98”
standard ship management agreement. Northern Marine Management Ltd provides both crew management and
technical management services under the agreements. The annual management fee under each agreement is USD
220,000. Each agreement may be terminated by either party with two months written notice, and with immediate
effect in the event of inter alia default of certain provisions of the agreement or in case of a sale of the ship or if the
ship becomes a total loss, is declared as a constructive, compromised or arranged total loss or is requisitioned or in
the event of liquidation or bankruptcy of either party.
The Avance Gas Group has further entered into management agreements with Northern Marine Management Ltd
relating to Providence and Promise, dated 16 September 2013 and relating to Chinook and Pampero dated 17
September 2014. The agreements are based on the “Shipman 2009” standard ship management agreement. Northern
Marine Management Ltd provides both crew management and technical management services under the agreements.
The annual management fee under each agreement is USD 220,000. The duration of each agreement is one year, and
each agreement may thereafter be terminated by either party with two months written notice. Each agreement may
be terminated with one month written notice in the event the parties fail to agree on the annual budget, any change of
the ship‟s flag or a reduction in the management fee in the event of a lay-up, the result of which will be the expiry of
the agreement at the end of the current budget period or on expiry of the notice period (whichever is the later). Each
agreement may be terminated with immediate effect in the event of inter alia default of certain provisions of the
agreement or in case of a sale of the ship or if the ship becomes a total loss, is declared as a constructive,
compromised or arranged total loss, is requisitioned, has been declared missing, or in the event of liquidation or
bankruptcy of either party.
6.5
Legal proceedings
From time to time, Avance Gas and other companies in the Avance Gas Group could be involved in litigation, disputes
and other legal proceedings arising in the normal course of its business.
Neither Avance Gas nor any other company in the Avance Gas Group is, nor has been, during the course of the
preceding twelve months involved in any legal, governmental or arbitration proceedings which may have, or have had
in the recent past, significant effects on Avance Gas‟ and/or the Avance Gas Group‟s financial position or profitability,
and Avance Gas is not aware of any such proceedings which are pending or threatened.
6.6
Material contracts outside the ordinary course of business
Neither the Avance Gas Group nor any member of the Avance Gas Group has entered into any material contracts
outside the ordinary course of business for the two years prior to the date of this Offer Document. Further, the Avance
Gas Group has not entered into any other contract outside the ordinary course of business which contains any
provision under which any member of the Avance Gas Group has any obligation or entitlement.
6.7
Dependency on contracts, patents, licenses etc.
It is Avance Gas‟ opinion that the Avance Gas Group‟s existing business or profitability is not dependent upon any
contracts. It is further the opinion of Avance Gas that the Avance Gas Group‟s existing business or profitability is not
dependent on any patents or licences.
6.8
Board of Directors and Management
6.8.1
Board of directors
The Board of Directors is responsible for the overall management of Avance Gas and may exercise all of the powers of
Avance Gas not reserved to Avance Gas‟ shareholders by its Bye-laws or Bermuda law. As of the date of this Offer
Document, Avance Gas has a Board of Directors composed of six Directors. The Directors have been elected for a term
which will expire at the annual general meeting in 2016.
Pursuant to the Norwegian Code of Practice for Corporate Governance dated 30 October 2014 (the “Corporate
Governance Code”) (i) the majority of the shareholder-elected members of the Board of Directors should be
independent of Avance Gas‟ executive management and material business contacts, (ii) at least two of the
shareholder-elected members of the Board of Directors should be independent of Avance Gas‟ main shareholder, and
46
Avance Gas Holding Ltd – Offer Document
(iii) no members of Avance Gas‟ executive management should serve on the Board of Directors. As of the date of this
Offer Document, the Board of Directors is in compliance with these recommendations.
As at the date of this Offer Document, none of the members of the Board of Directors hold any options or other rights
to acquire Shares.
The names and positions, current term of office and shareholding in Avance Gas of the members of the Board of
Directors as at the date of this Offer Document are set out in the table below.
Name
Position
Served since
Term expires
Shares
Niels G. Stolt-Nielsen ...........................................................
Chairman and Director
2010
AGM 2016
50,000
Jan Chr. Engelhardtsen .........................................................
Director
2014
AGM 2016
-
François Sunier....................................................................
Director
2010
AGM 2016
-
Kate Blankenship .................................................................
Director
2013
AGM 2016
-
Erling Lind ..........................................................................
Director
2013
AGM 2016
-
Jan Kastrup-Nielsen .............................................................
Director
2014
AGM 2016
2,800
Avance Gas‟ registered office address at Thistle House, 4 Burnaby Street, Hamilton HM 11, Bermuda, serves as the
business address for the members of the Board of Directors in relation to their directorships of Avance Gas.
Niels G. Stolt-Nielsen, Chairman
Niels G. Stolt-Nielsen has served as a Director of Avance Gas since 18 March 2010. He has served as a Director of
Stolt-Nielsen Limited since 1996 and as Chief Executive Officer since 2000. He served as Interim Chief Executive
Officer of Stolt Offshore S.A. from September 2002 until March 2003. He was the President of Stolt Sea Farm from
1996 until 2000. In 1994 he opened and organised Stolt-Nielsen Limited‟s representative office in Shanghai. He joined
the company in 1990 in Greenwich, Connecticut, working for Stolt Tankers. Mr Niels G. Stolt-Nielsen graduated from
Hofstra University in 1990 with a BS degree in Business and Finance. Mr. Stolt-Nielsen also serves as a director of
Golar LNG Limited. Mr Stolt-Nielsen is a Norwegian citizen, and resides in the United Kingdom.
Jan Chr. Engelhardtsen, Director
Jan Chr. Engelhardtsen has served as a Director of Avance Gas since 5 February 2014. He has served as Chief
Financial Officer of Stolt-Nielsen Limited since 1991. He served as Interim Chief Financial Officer, Stolt Offshore S.A.
from September 2002 until March 2003. He served as President and General Manager of Stolt-Nielsen Singapore Pte.
Ltd. from 1988 through 1991. He has been associated with Stolt-Nielsen since 1974. Mr Engelhardtsen holds an MBA
from the Sloan School at the Massachusetts Institute of Technology, as well as undergraduate degrees in Business
Administration and Finance. Mr Engelhardtsen is a Norwegian citizen, and resides in the United Kingdom.
François Sunier, Director
François Sunier has served as a Director of Avance Gas since 1 December 2010. He has been the CEO and Managing
Directors of Suntrust Investment Co. S.A. since January 2002. Prior to Suntrust Investment Co. S.A., Mr Sunier
worked as an Executive Director at Goldman Sachs, London, as First Vice President (bonds markets) at UBS Philips &
Drew, London. François Sunier was educated at the University of Geneva, from which he graduated with a bachelor in
political sciences. Mr Sunier is a Swiss citizen, and resides in Switzerland.
Kate Blankenship, Director
Kate Blankenship has served as a Director of Avance Gas since 2 October 2013. Mrs Blankenship has also served as a
director of Frontline Ltd since 2003 and Frontline 2012 since December 2011. Mrs Blankenship joined Frontline Ltd in
1994 and served as its Chief Accounting Officer and Secretary until October 2005. Mrs Blankenship has been a director
of Ship Finance International Limited since October 2003, Golden Ocean Group Limited since November 2004, Golar
LNG Limited from July 2003 to September 2015, Golar LNG Partners from September 2007 to September 2015,
Seadrill Limited since May 2005, Seadrill Partners LLC since June 2012, North Atlantic Drilling Ltd from February 2011
to September 2015, Independent Tankers Corporation Limited since February 2008 and Archer Limited since its
incorporation in 2007. Mrs Blankenship is a member of the Institute of Chartered Accountants in England and Wales.
Mrs Blankenship is a British citizen, and resides in the United Kingdom.
Erling Lind, Director
Erling Lind has served as a Director of Avance Gas since 1 October 2013, and is a partner in the Oslo based law firm
Wiersholm. He graduated from the Faculty of Law at the University of Oslo in 1982 and has, since then, worked as a
lawyer at Wiersholm. He became a partner in 1987. Mr Lind specialises in Corporate Finance and Mergers &
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Avance Gas Holding Ltd – Offer Document
Acquisitions, and has advised clients in the shipping and oil service sectors throughout his career. Mr Lind is a
Norwegian citizen, and resides in Oslo, Norway.
Jan Kastrup-Nielsen, Director
Jan Kastrup-Nielsen has served as a Director of Avance Gas since 14 April 2014. He is currently the President and CEO
of J. Lauritzen. He joined J. Lauritzen in 2000 and prior to becoming the CEO, Jan Kastrup-Nielsen held the position as
COO, and headed both Lauritzen Kosan and Lauritzen Tankers. Prior to joining J. Lauritzen, Mr Kastrup-Nielsen worked
for Trammogas Ltd from 1993 to 2000 in various positions, including as head of chartering and operation from 1993,
as general manager from 1995 and as managing director from 1998, with responsibilities for the total activities
including the global trading. As from 1998, he also served on the board of directors of Transammonia Inc. Mr KastrupNielsen started his shipping career with A.P. Moller working there from 1978 to 1986, primarily involved with
chartering of ULCC/VLCC and product carriers. He also serves on the board of directors of the Danish Shipowners
Association. Jan Kastrup-Nielsen has through the years attended a number of programs at Insead, IMD and IESE. Mr
Kastrup-Nielsen is a Danish citizen, and resides in Denmark.
6.8.2
Management
Avance Gas‟ senior management team (the “Management”) consists of two individuals, the President and the Chief
Financial Officer. As at the date of this Offer Document, no member of Management holds any Shares, options or other
rights to acquire Shares, except as set out in Section 6.8.5 “Share option plan for Management”. The names of the
members of Management as at the date of this Offer Document, and their respective positions, are presented in the
table below:
Employed with
the Avance Gas Group
Name
Current position within the Avance Gas Group
since
Christian Andersen .........................................................
President
2010
Peder Carl Gram Simonsen .............................................
Chief Financial Officer
2014
Avance Gas‟ office address at Grev Wedels plass 7, N-0101 Oslo, Norway, serves as the business address for the
members of Management in relation to their employment with Avance Gas.
Christian Andersen, President
Christian Andersen founded Avance Gas in September 2007 together with Stolt-Nielsen Gas. He is an employee of
Stolt-Nielsen Gas and is seconded to Avance Gas. Mr. Andersen holds a masters degree in business and marketing
from the Oslo Business School. He has 25 years of experience in the industry and has previously worked as Head of
LNG at BW Gas and as founding partner of Amanda LPG Trading. Mr Andersen is a Norwegian citizen, and resides in
Norway.
Peder Carl Gram Simonsen, Chief Financial Officer
Peder Carl Gram Simonsen joined the Avance Gas Group in January 2014 as Chief Financial Officer. Mr Simonsen holds
a B.A. (Hons) in Business Administration from the University of Stirling and a Master of Business degree (Nw.:
Siviløkonom) (2000). He previously held the position of First Vice President at Nordea Bank Norge ASA, where he
worked as senior client executive for large shipping and offshore companies. Mr Simonsen is a Norwegian citizen, and
resides in Norway.
6.8.3
Board committees
6.8.3.1
Audit committee
Avance Gas has, in line with the recommendations in the Corporate Governance Code, appointed an audit committee,
which consists of two members of the Board of Directors. The audit committee comprises Mrs Kate Blankenship (chair)
and Mr Jan Chr. Engelhardtsen. The members of the audit committee shall serve while they remain members of the
Board of Directors, or until the Board of Directors decides otherwise or they wish to retire.
The primary purposes of the audit committee are to assist the Board of Directors in discharging its responsibilities in
respect of understanding, assessing and monitoring business risks and financial risks; monitoring annual and interim
financial reporting; overseeing internal control, risk management, internal audit and external audit activities;
overseeing legal and regulatory compliance; overseeing compliance with Avance Gas‟ governance policies; and
assessing the performance of internal control and external auditor.
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Avance Gas Holding Ltd – Offer Document
The audit committee reports and makes recommendations to the Board of Directors, but the Board of Directors retains
responsibility for implementing such recommendations.
6.8.3.2
Remuneration committee
The Board of Directors has, in line with the recommendations in the Corporate Governance Code, established a
remuneration committee amongst the members of the Board of Directors. The remuneration committee comprises Mr
Niels G. Stolt-Nielsen (chairman) and Mrs Kate Blankenship. The members of the remuneration committee shall serve
while they remain members of the Board of Directors, or until the Board of Directors decides otherwise or they wish to
retire.
The primary purpose of the remuneration committee is to prepare the basis for decisions of the Board of Directors in
respect of guidelines for the remuneration of the executive personnel of the Avance Gas Group; the President‟s and
the Chief Financial Officer‟s fixed and performance based remuneration; the review of the performance of the
executive personnel versus the adopted objectives and recruitment policies, career planning and management
development plans; and the review of other matters relating to material employment issues in respect of the executive
personnel, including the benefits strategy of Avance Gas.
6.8.4
Benefits upon termination
No employee, including any member of Management, has entered into service contracts with Avance Gas or any of its
subsidiaries which provide for any benefits upon termination. None of the members of the Board of Directors or the
nomination committee have entered into service contracts with Avance Gas or any of its subsidiaries and none will be
entitled to any benefits upon termination of office.
6.8.5
Share option plan for Management
On 15 October 2013, the Avance Gas Group established a share option plan for members of the Management and
other key employees (in total seven persons) covering 1.0 million Shares. A total of 160,000 options, all granted on 15
October 2013, have been granted as of the date of this Offer Document. The share option plan is administered by the
Board of Directors and the exercise price is set at the market rate on the day that the Board of Directors approved the
awards. The options granted on 16 October 2013 were based on the share price of the most recent equity transaction
with Frontline 2012 as there were no Shares being traded on 15 October 2013. Options granted under the share option
plan vest 25% on the first anniversary of the grant date (unless otherwise noted), with an additional 25% vesting on
each subsequent anniversary of continuing employment. Options may be exercisable within five years from the date of
vesting. Options are forfeited by employees upon termination of employment in most circumstances. The Avance Gas
Group has no legal or constructive obligation to repurchase or settle the options in cash.
The table below sets out the options granted to members of the Management:
Name
Date of grant
Subscription price1
Vesting date(s)
15,000
USD11.78
16 October 2014
15,000
USD 11.78
16 October 2015
15,000
USD 11.78
16 October 2016
15,000
USD 11.78
16 October 2017
6,000
NOK 118
18 June 2016
6,000
NOK 118
18 June 2017
6,000
NOK 118
18 June 2018
6,000
NOK 118
18 June 2019
5,000
USD 11.78
2 January 2015
5,000
USD 11.78
2 January 2016
5,000
USD 11.78
2 January 2017
5,000
USD 11.78
2 January 2018
4,000
NOK 118
18 June 2016
4,000
NOK 118
18 June 2017
4,000
NOK 118
18 June 2018
4,000
NOK 118
18 June 2019
Number of options
Christian Andersen ....................................................
16 October 2013
18 June 2015
84,000
Peder Carl Gram Simonsen ........................................
16 October 2013
18 June 2015
36,000
1
Subscription is adjusted for any dividends following the grant date.
49
Avance Gas Holding Ltd – Offer Document
6.9
Employees
As of the date of this Offer Document, the Avance Gas Group had 13 employees.
6.10
Corporate governance
Avance Gas has adopted and implemented a corporate governance regime which complies with the Corporate
Governance Code, with the following exceptions:
Deviation from section 2 “Business”: In accordance with common practice for Bermuda incorporated companies,
Avance Gas‟ objects as set out in the memorandum of association are wider and more extensive than recommended in
the Corporate Governance Code.
Deviation from section 3 “Equity and dividends”: Pursuant to Bermuda law and common practice for Bermuda
incorporated companies, the Board of Directors has wide powers to issue any authorised but unissued shares on such
terms and conditions as it may decide, subject to any resolution of Avance Gas‟ shareholders to the contrary.
Deviation from section 5 “Freely negotiable shares”: The Shares are freely negotiable and Avance Gas‟ constitutional
documents do not impose any transfer restrictions on the shares other than as set out below. The Bye-laws include a
right for the Board of Directors to decline to register the transfer of any Share in the register of members, or instruct
any registrar appointed by Avance Gas to decline, to register the transfer of any interest in a Share held through the
VPS where such transfer is likely to result in 50% or more of the Shares or votes being held or owned directly or
indirectly by individuals or legal persons resident for tax purposes in Norway or being effectively connected to a
Norwegian business activity or Avance Gas otherwise being deemed a “Controlled Foreign Company” as defined
pursuant to Norwegian tax legislation. The purpose of this provision is to avoid that Avance Gas is deemed a
“Controlled Foreign Company”.
Deviation from section 6 “General meetings”: The Bye-laws of Avance Gas provide, as is common under Bermuda law,
that the Chairman of the Board of Directors shall chair the general meetings, unless otherwise approved with a
majority vote.
6.11
Major shareholders
As of 9 November 2015, Avance Gas had 3,827 shareholders. Avance Gas‟ 20 largest shareholders as of the same date
are set out in the table below:
#
Shareholders
Number of Shares
Percent
1
Stolt-Nielsen Gas Limited ...........................................................................
2,478,799
7.03%
2
Sungas Holding Ltd ...................................................................................
2,478,799
7.03%
3
Hemen Holding Limited ..............................................................................
2,410,251
6.83%
4
Folketrygdfondet .......................................................................................
1,496,843
4.24%
5
Pioneer Multi-Asset Income FND .................................................................
953,089
2.70%
6
Avance Gas Holding Ltd .............................................................................
906,639
2.57%
7
J.P. Morgan Bank Ireland plc ......................................................................
906,366
2.57%
8
Verdipapirfondet DNB Norge (IV) ................................................................
856,408
2.43%
9
Skandinaviska Enskilda Banken AB ..............................................................
842,662
2.39%
10
Barclays Capital Inc ...................................................................................
750,000
2.13%
11
Fidelity Funds ...........................................................................................
705,796
2.00%
12
Morgan Stanley & Co. International .............................................................
637,757
1.81%
13
The Bank of New York Mellon .....................................................................
612,913
1.74%
14
The Bank of New York Mellon SA/NV ...........................................................
572,709
1.62%
15
Verdipapirfondet Alfred Berg Norge .............................................................
469,297
1.33%
16
Goldman Sachs & Co Equity Segregat ..........................................................
469,106
1.33%
17
Danske Bank A/S ......................................................................................
439,067
1.24%
18
Euroclear Bank S.A./N.V. („BA‟) ..................................................................
431,405
1.22%
19
Verdipapirfondet Alfred Berg Gamba ............................................................
399,896
1.13%
20
DNB NOR Markets, Aksjeanalyse .................................................................
368,921
1.05%
Top 20 shareholders ..............................................................................
19,186,723
54.39%
Others ....................................................................................................
16,091,249
45.61%
Total ......................................................................................................
35,277,972
100.0%
Shareholders owning 5% or more of the Shares have an interest in Avance Gas‟ share capital which is notifiable
pursuant to the Norwegian Securities Trading Act. As of 9 November 2015, no shareholder, other than Stolt-Nielsen
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Avance Gas Holding Ltd – Offer Document
Gas Limited (7.03%), Sungas Holding Ltd (7.03%) and Hemen Holding Limited (6.83%) held 5% or more of the issued
Shares.
6.12
VPS registration of the Shares
6.12.1
Introduction
In order to facilitate registration of the beneficial interests in the Shares with the VPS, including the Consideration
Shares, Avance Gas has entered into the Registrar Agreement with the VPS Registrar DNB Bank ASA, who operates
Avance Gas‟ VPS share register. Pursuant to the Registrar Agreement, the VPS Registrar is registered as holder of the
Shares in the register of members in Bermuda that Avance Gas is required to maintain pursuant to Bermuda law. The
VPS Registrar registers the beneficial interests in the Shares, including the Consideration Shares, in book-entry form
with the VPS. Therefore, it is not the Shares, including the Consideration Shares, in registered form issued in
accordance with the Bermuda Companies Act, but the beneficial interests in such Shares in book-entry form that are
registered with the VPS.
At the date of this Offer Document, Avance Gas has only one class of Shares. The Shares have ISIN BMG067231032.
The beneficial interests in the Shares are, and the Consideration Shares will be, registered in book-entry form with
VPS under the category of a “share” and it is such interest in the Shares that will be registered and traded on the Oslo
Stock Exchange. Each such share registered with the VPS will represent beneficial ownership of one Share. The
beneficial interests registered with the VPS are freely transferable, with delivery and settlement through the VPS
system.
6.12.2
The Registrar Agreement
Beneficial shareholders must look solely to the VPS Registrar for the payment of dividends, for the exercise of voting
rights attaching to the Shares and for all other rights arising in respect of the Shares. In order to exercise any rights
as shareholder under Bermuda law or the Bye-laws, a VPS shareholder must transfer his shareholding from the VPS to
the register of members held in Bermuda. Such transfer will disable trading on the Oslo Stock Exchange, until the
Shares are transferred back to the VPS. Shareholders who wish to transfer their Shares from the VPS to their name in
the register of members must contact the VPS Registrar.
Avance Gas will pay dividends directly to the VPS Registrar, which in turn has undertaken to distribute the dividends to
the beneficial shareholders in accordance with the Registrar Agreement. Beneficial shareholders who maintain a
Norwegian address in the VPS Register or have supplied VPS with details of their NOK account shall receive their
dividend payment in NOK to such account. Dividends will however be resolved and paid by Avance Gas in USD as the
accounting currency of Avance Gas. Beneficial shareholders whose address registered with the VPS is outside Norway
and who have not supplied the VPS with details of any NOK account, will receive dividends by cheque in their local
currency. If it is not practical in the VPS Registrar‟s sole opinion to issue a cheque in a local currency, a cheque will be
issued in USD. The exchange rate(s) that will be applied will be DNB Bank ASA‟s exchange rate on the date of
issuance.
Other than in accordance with proxies from beneficial holders of Shares registered in the VPS, the VPS Registrar has
undertaken not to attend or vote at Avance Gas‟ general meeting of shareholders. The VPS Registrar is only liable for
direct financial loss (limited to NOK 500 million for any individual error) which is due to negligence on the part of the
VPS Registrar.
Each of Avance Gas and the VPS Registrar may terminate the Registrar Agreement at any time with a minimum of
three months‟ prior written notice, or immediately upon written notice of a material breach by the other party of the
Registrar Agreement. In the event that the Registrar Agreement is terminated, Avance Gas will use its reasonable best
efforts to enter into a replacement agreement for purposes of permitting the uninterrupted trading of the Shares on
the Oslo Stock Exchange.
6.13
The memorandum of association, Bye-laws and Bermuda law
Below is a summary of provisions of the Bye-laws and certain aspects of applicable Bermuda law. The Bye-laws are
available at www.avancegas.com.
6.13.1
Objective of Avance Gas
The objectives of Avance Gas‟ business, as set out in paragraph 6 of its memorandum of association, are wide and
unrestricted. Avance Gas can therefore, subject to the Board of Directors‟ opinion, undertake activities without
restriction on its capacity.
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Avance Gas Holding Ltd – Offer Document
6.13.2
Board of Directors
The Bye-laws provide that Avance Gas shall be managed by the Board of Directors subject to the Bermuda Companies
Act and the Bye-laws. Generally, the Board of Directors may exercise the powers of Avance Gas, except to the extent
the Bermuda Companies Act or the Bye-laws reserve such power to the shareholders.
The Board of Directors shall consist of not less than three Directors and not more than nine Directors as the Board of
Directors may determine or such other minimum and maximum numbers as the shareholders of Avance Gas may from
time to time determine.
Directors are elected by the shareholders, except in the case of a casual vacancy, at the annual general meeting or at
any special general meeting called for that purpose, for such term of office as the shareholders determine, or, in the
absence of such determination, until the next annual general meeting or until their successors are elected or appointed
or their office is otherwise vacated. If there is a vacancy of the Board of Directors occurring as a result of the death,
disability, disqualification or resignation of any Director or as a result of an increase in the size of the Board of
Directors, the shareholders of Avance Gas or the Board of Directors has the power to appoint a Director to fill the
vacancy.
A Director may resign by providing notice in writing to Avance Gas of such resignation. A Director may be removed at
any general meeting convened and held in accordance with the Bye-laws, provided that the notice of any such meeting
convened for the purpose of removing a Director contains a statement of the intention to remove the Director and
must be served on the Director not less than 14 days before the meeting. The Director shall be entitled to attend the
meeting and be heard on the motion for such Director‟s removal. The office of a Director of Avance Gas shall be
vacated if he or she (i) is removed from office pursuant to the Bye-laws or is prohibited from being a Director by law;
(ii) is or becomes bankrupt, or makes any arrangement or composition with his creditors generally; (iii) is or becomes
of unsound mind or dies, or (iv) resigns his office by notice to Avance Gas.
A Director may hold any office or act for Avance Gas in any capacity (except as auditor). Provided a Director discloses
a direct or indirect interest in any contract or arrangement with Avance Gas as required by Bermuda law, such Director
is entitled to vote in respect of any such contract or arrangement in which he or she is interested unless he or she is
disqualified from voting by the chairman of the relevant Board meeting. Notwithstanding the previous sentence and
save as provided in the Bye-laws, a Director may not vote, be counted in the quorum or act as chairman at a meeting
in respect of (i) his appointment to hold any office or place of profit with Avance Gas or any body corporate or other
entity in which Avance Gas owns an equity interest or (ii) the approval of the terms of any such appointment or of any
contract or arrangement in which he is materially interested (otherwise than by virtue of his interest in shares,
debentures or other securities of Avance Gas), provided that, a Director is entitled to vote (and be counted in the
quorum and act as chairman) in respect of any resolution concerning any of the following matters, namely: (a) the
giving of any security, guarantee or indemnity to him in respect of money lent or obligations incurred by him for the
benefit of Avance Gas; or (b) any proposal concerning any other body corporate in which he is interested directly or
indirectly, whether as an officer, shareholder, creditor or otherwise, provided that he is not the holder of or beneficially
interested (other than as a bare custodian or trustee in respect of shares in which he has no beneficial interest) in
more than 1% of any class of the issued share capital of such body corporate (or of any third body corporate through
which his interest is derived) or of the voting rights attached to all of the issued shares of the relevant body corporate
(any such interest being deemed for the purpose of the Bye-laws to be a material interest in all circumstances); and
(c) in the case of an alternate Director, an interest of a Director for whom he is acting as alternate shall be treated as
an interest of such alternate Director in addition to any interest which the alternate Director may otherwise have. If
any question arises at a meeting as to the materiality of a Director‟s interest or as to the entitlement of any Director to
vote, and such question is not resolved by such Director voluntarily agreeing to abstain from voting and not be
counted in the quorum of such meeting, such question shall be referred to the chairman of the meeting (except in the
event the Director is also the chairman of the meeting, in which case the question shall be referred to the other
Directors present at the meeting) and his (or their, as the case may be) ruling in relation to such Director shall be final
and conclusive, except in a case where the nature or extent of the interest of the Director concerned has not been fully
disclosed.
6.13.3
Share rights
The holders of Shares have no pre-emptive, redemption, conversion or sinking fund rights. The holders of Shares are
entitled to one vote per Share on all matters submitted to a vote of the holders of Shares. Unless a different majority
is required by law or by the Bye-laws, resolutions to be approved by the holders of Shares require approval by the
affirmative votes of a majority of votes cast at a meeting at which a quorum is present.
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Avance Gas Holding Ltd – Offer Document
In the event of the liquidation, dissolution or winding up of Avance Gas, the holders of Shares are entitled to share
equally and rateably in its assets, if any, remaining after the payment of all of Avance Gas‟ debts and liabilities.
6.13.4
Variation of share rights
Subject to the Bermuda Companies Act, all or any of the rights attached to any class of Shares issued may (whether
or not Avance Gas is being wound up) be varied with the consent in writing of the holders of not less than 75% of the
issued Shares of that class or with the sanction of a resolution passed by a majority of the votes cast at a separate
general meeting of the holders of such Shares voting in person or by proxy. To any such separate general meeting, all
the provisions of the Bye-laws as to general meetings of Avance Gas shall apply, but so that the necessary quorum is
two or more persons holding or representing by proxy at least one third of the issued Shares of the relevant class, that
every holder of Shares of the relevant class shall be entitled on a poll to one vote for every such Share held by him
and that any holder of Shares of the relevant class present in person or by proxy and holding at least 10% of the total
voting rights of the Shares of the relevant class in person or by proxy, may demand a poll; provided, however, that if
Avance Gas or a class of shareholders shall have only one shareholder, one shareholder present in person or by proxy
shall constitute the necessary quorum. The Bye-laws specify that the creation or issue of Shares ranking equally with
existing Shares will not, unless expressly provided by the terms of issue of existing Shares, vary the rights attached to
existing Shares.
6.13.5
Voting rights
At any general meeting, every holder of Shares present in person and every person holding a valid proxy shall have
one vote on a show of hands. On a poll, every such holder of Shares present in person or by proxy shall have one vote
for every Share held.
Except where a greater majority is required by the Bermuda Companies Act or the Bye-laws, any question proposed
for the consideration of the shareholders at a general meeting shall be decided by the affirmative votes of a majority
of the votes cast in accordance with the provisions of the Bye-laws and in case of an equality of votes, the resolution
shall fail.
6.13.6
Amendment of the memorandum of association and the Bye-laws
The Bye-laws provide that the memorandum of association of Avance Gas may not be altered or amended, unless it
shall have been approved by a resolution by the Board of Directors and by a resolution passed with the affirmative
vote of a majority of the votes cast at a general meeting of shareholders. The Bye-laws further provide that no byelaw shall be rescinded, altered or amended, and no new bye-law shall be made, unless it shall have been approved by
a resolution of the Board of Directors and by a resolution of the shareholders with the affirmative vote of a majority of
the votes cast at a general meeting of shareholders.
Under the Bermuda Companies Act, the holders of an aggregate of not less than 20% in par value of Avance Gas‟
issued share capital or any class thereof have the right to apply to the Supreme Court of Bermuda for an annulment of
any amendment of the memorandum of association adopted by shareholders at any general meeting, other than an
amendment which alters or reduces a company‟s share capital as provided in the Bermuda Companies Act. Where such
an application is made, the amendment becomes effective only to the extent that it is confirmed by the Supreme Court
of Bermuda. An application for an annulment of an amendment of the memorandum of association must be made
within 21 days after the date on which the resolution altering Avance Gas‟ memorandum of association is passed and
may be made on behalf of persons entitled to make the application or by one or more of their number as they may
appoint in writing for the purpose. No application may be made by shareholders voting in favour of the amendment.
6.13.7
General meetings of shareholders
The annual general meeting of Avance Gas shall be held once in every year at such time and place as the Chairman (if
any) or the Board of Directors shall appoint. The Chairman (if any) or the Board of Directors may whenever they think
fit convene special general meetings of Avance Gas. The Board of Directors shall on the requisition of shareholders
holding at the date of the deposit of the requisition not less than one-tenth of the paid-up voting share capital of
Avance Gas, forthwith proceed to convene a special general meeting of Avance Gas.
At least 21 days‟ notice of an annual general meeting shall be given to each shareholder entitled to attend and vote
thereat, stating the date, place and time at which the meeting is to be held, that the election of directors will take
place thereat and, as far as practicable, the other business to be conducted at the meeting. At least 21 days‟ notice of
a special general meeting shall be given to each shareholder entitled to attend and vote thereat, stating the date,
place and time and the general nature of the business to be considered at the meeting. The Board may fix any date as
the record date for determining the shareholders entitled to receive notice of and to vote at any general meeting,
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Avance Gas Holding Ltd – Offer Document
provided that the Board of Directors may specify in the notice of any meeting sent to the shareholders a time and a
date for determining shareholders entitled to vote at that general meeting which is not more than five days before the
date fixed for the meeting. A general meeting of Avance Gas shall notwithstanding that it is called on shorter notice
than that specified in the Bye-laws, be deemed to have been properly called if it is agreed by (i) in the case of an
annual general meeting by all of the shareholders entitled to attend and vote at such meeting; or (ii) in the case of a
special general meeting by a majority in number of the shareholders having the right to attend and vote at the
meeting being a majority together holding not less than 95% in nominal value of the shares entitled to attend and
vote at such meeting.
The accidental omission to give notice of a general meeting to, or the non-receipt of a notice of a general meeting by,
any person entitled to receive notice shall not invalidate the proceedings at that meeting. Notwithstanding any other
provision of the Bye-laws, no shareholder shall be entitled to attend any general meeting unless notice in writing of
the intention to attend and vote in person or by proxy signed by or on behalf of the shareholder (together with a
power of attorney or other authority, if any, under which it is signed or a notarially certified copy thereof) addressed to
the secretary of Avance Gas is deposited (by post, courier, facsimile transmission or other electronic means) at the
registered office of Avance Gas at least 48 hours before the time appointed for holding the general meeting or the
adjournment thereof.
Shareholders may participate in any general meeting by means of such telephonic, electronic or other communication
facilities or means as permits all persons participating in the meeting to communicate with each other simultaneously
and instantaneously, and participation in such meeting shall constitute presence in person at such meeting. Except as
otherwise provided in the Bye-laws, the quorum at any general meeting of Avance Gas shall be constituted by two or
more persons, present in person and representing in person or by proxy, in excess of one-third of the total issued
voting shares throughout the meeting.
6.13.8
Dividend rights
Under Bermuda law, a company may not declare or pay dividends if there are reasonable grounds for believing that:
(i) the company is, or would after the payment be, unable to pay its liabilities as they become due; or (ii) that the
realisable value of its assets would thereby be less than its liabilities. Under the Bye-laws, each of the Shares is
entitled to such dividends as the Board of Directors may from time to time declare.
6.13.9
Transfer of Shares
The Bye-laws provide that the Board of Directors may refuse to register the transfer of any interest in any Share in the
register of members and may direct any registrar to decline to register the transfer where such transfer would result in
50% or more of the shares or votes in Avance Gas being held or owned directly or indirectly by individuals or legal
persons resident for tax purposes in Norway or connected to a Norwegian business activity or Avance Gas otherwise
being deemed a “Controlled Foreign Company” as such term is defined under the Norwegian tax rules.
Subject to the above, but notwithstanding anything to the contrary in the Bye-laws, shares that are listed or admitted
to trading on an appointed stock exchange may be transferred in accordance with the rules and regulations of such
exchange. Where applicable, all transfers of uncertificated shares shall be made in accordance with and be subject to
the facilities and requirements of the transfer of title to shares in that class by means of the VPS or any other relevant
system concerned and, subject thereto, in accordance with any arrangements made by the Board of Directors in
accordance with the Bye-laws. The Board of Directors shall refuse any transfer unless the registration of such transfer
satisfies all applicable consents, authorisations and permissions of any governmental body or agency in Bermuda. The
Board of Directors may also refuse to recognise an instrument of transfer of a share unless it is accompanied by the
relevant share certificate (if one has been issued) and such other evidence of the transferor's right to make the
transfer as the Board of Directors shall reasonably require. Subject to these restrictions, a holder of Shares may
transfer the title to all or any of his Shares by completing an instrument of transfer in the usual common form or in
any other form as the Board of Directors may approve. The instrument of transfer must be signed by the transferor
and transferee, although in the case of a fully paid share the Board of Directors may accept the instrument signed only
by the transferor. Shares may be transferred without a written instrument if transferred by an appointed agent or
otherwise in accordance with the Bermuda Companies Act.
In accordance with Bermuda law, share certificates are only issued in the names of companies, partnerships or
individuals. In the case of a shareholder acting in a special capacity (for example as a trustee), certificates may, at the
request of the shareholder, record the capacity in which the shareholder is acting. Notwithstanding such recording of
any special capacity, Avance Gas is not bound to investigate or see to the execution of any such trust. Avance Gas will
take no notice of any trust applicable to any of the Shares, whether or not Avance Gas has been notified of such trust.
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Avance Gas Holding Ltd – Offer Document
See Section 1.8 “Risks related to Avance Gas‟ incorporation in Bermuda” for a summary of the provisions in the Byelaws that contain provisions that could make it more difficult for a third party to acquire Avance Gas without the
consent of the Board of Directors.
6.13.10
Amalgamations and mergers
The amalgamation or merger of a Bermuda company with another company or corporation (other than certain
affiliated companies) requires the amalgamation or merger agreement to be approved by the company‟s board of
directors and by its shareholders. Unless the bye-laws provide otherwise, the approval of 75% of the shareholders
voting at such meeting is required to approve the amalgamation or merger agreement, and the quorum for such
meeting must be two persons holding or representing more than one-third of the issued shares of the company. On
the date hereof Avance Gas‟ Bye-laws does not deviate from these requirements.
6.13.11
Appraisal rights and other shareholder suits
Under the Bermuda Companies Act, in the event of an amalgamation or merger of a Bermuda company with another
company or corporation, a shareholder of the Bermuda company who is not satisfied that fair value has been offered
for such shareholder‟s shares may, within one month of notice of the general meeting, apply to the Bermuda Supreme
Court to appraise the fair value of those shares.
Class actions and derivative actions are generally not available to shareholders under Bermuda law. The Bermuda
courts, however, would ordinarily be expected to permit a shareholder to commence an action in the name of a
company to remedy a wrong to the company where the act complained of is alleged to be beyond the corporate power
of the company or is illegal or would result in the violation of the company‟s memorandum of association or bye-laws.
Furthermore, consideration would be given by a Bermuda court to acts that are alleged to constitute a fraud against
the minority shareholders or, for instance, where an act requires the approval of a greater percentage of the
company‟s shareholders than that which actually approved it.
When the affairs of a company are being conducted in a manner which is oppressive or prejudicial to the interests of
some part of the shareholders, one or more shareholders may apply to the Supreme Court of Bermuda, which may
make such order as it sees fit, including an order regulating the conduct of the company‟s affairs in the future or
ordering the purchase of the shares of any shareholders by other shareholders or by the company.
6.13.12
Capitalisation of profits and reserves
Pursuant to the Bye-laws, the Board of Directors may (i) capitalise any part of the amount of Avance Gas‟ share
premium or other reserve accounts or any amount credited to Avance Gas‟ profit and loss account or otherwise
available for distribution by applying such sum in paying up unissued shares to be allotted as fully paid bonus shares
pro-rata (except in connection with the conversion of shares of one class to shares of another class) to the
shareholders; or (ii) capitalise any sum standing to the credit of a reserve account or sums otherwise available for
dividend or distribution by paying up in full, partly paid or nil paid shares of those shareholders who would have been
entitled to such sums if they were distributed by way of dividend or distribution.
6.13.13
Untraced shareholders
The Bye-laws provide that the Board of Directors may forfeit any dividend or other monies payable in respect of any
shares which remain unclaimed for six years from the date when such monies became due for payment. In addition,
Avance Gas shall be entitled to cease sending dividend warrants and cheques by post or otherwise to a shareholder if
such instruments have been returned undelivered to, or left uncashed by, such shareholder on at least two
consecutive occasions or, following one such occasion, reasonable enquires have failed to establish the shareholder‟s
new address. This entitlement ceases if the shareholder claims a dividend or cashes a dividend cheque or a warrant.
6.13.14
Access to books and records and dissemination of information
Members of the general public have the right to inspect the public documents of a Bermuda company available at the
office of the Registrar of Companies in Bermuda. These documents include Avance Gas‟ memorandum of association,
including its objects and powers, and certain alterations to its memorandum of association. The shareholders have the
additional right to inspect the Bye-laws of Avance Gas, minutes of general meetings and the company‟s audited
financial statements, which must be laid before at the annual general meeting. The register of members of a Bermuda
company is also open to inspection by shareholders and by members of the general public without charge. The register
of members is required to be open for inspection for not less than two hours in any business day (subject to the ability
of a company to close the register of shareholders for not more than thirty days in a year). A company is required to
maintain its share register in Bermuda but may, subject to the provisions of the Bermuda Companies Act, establish a
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Avance Gas Holding Ltd – Offer Document
branch register outside Bermuda. A company is required to keep at its registered office a register of directors and
officers that is open for inspection for not less than two hours in any business day by members of the public without
charge. Bermuda law does not, however, provide a general right for shareholders to inspect or obtain copies of any
other corporate records. Where a company, the shares of which are listed on an Appointed Stock Exchange, sends its
summarised financial statements to its shareholders pursuant to Section 87A of the Bermuda Companies Act, a copy of
the full financial statements (as well as the summarised financial statements) must be available for inspection by the
public at the company‟s registered office.
6.13.15
Winding-up
A company may be wound up by the Bermuda court on application presented by the company itself, its creditors
(including contingent or prospective creditors) or its contributories. The Bermuda court has authority to order winding
up in a number of specified circumstances including where it is, in the opinion of the Bermuda court, just and equitable
to do so.
A company may be wound up voluntarily when the members so resolve in general meeting, or, in the case of a limited
duration company, when the period fixed for the duration of the company by its memorandum expires, or the event
occurs on the occurrence of which the memorandum provides that the company is to be dissolved. In the case of a
voluntary winding up, the company shall, from the commencement of the winding up, cease to carry on its business,
except so far as may be required for the beneficial winding up thereof.
Where, on a voluntary winding up, a majority of directors make a statutory declaration of solvency, the winding up will
be deemed a “members' voluntary winding up”. In any case where such declaration has not been made, the winding
up will be deemed a “creditors' voluntary winding up”.
In the case of a members‟ voluntary winding up of a company, the company in general meeting must appoint one or
more liquidators within the period prescribed by the Bermuda Companies Act for the purpose of winding up the affairs
of the company and distributing its assets. If the liquidator is at any time of the opinion that the company will not be
able to pay its debts in full in the period stated in the directors‟ declaration of solvency, he is obliged to summon a
meeting of creditors and lay before the meeting a statement of the assets and liabilities of the company.
As soon as the affairs of the company are fully wound up via a members' voluntary winding up, the liquidator must
make up an account of the winding up, showing how the winding up has been conducted and the property of the
company has been disposed of, and thereupon call a general meeting of the company for the purposes of laying before
it the account, and giving any explanation thereof. This final general meeting shall be called by advertisement in an
appointed newspaper, published at least one month before the meeting. Within one week after the meeting the
liquidator shall notify the Registrar of Companies in Bermuda that the company has been dissolved and the Registrar
of Companies in Bermuda shall record that fact in accordance with the Bermuda Companies Act.
In the case of a creditors‟ voluntary winding up of a company, the company must call a meeting of the creditors of the
company to be summoned for the day, or the next day following the day, on which the meeting of the members at
which the resolution for voluntary winding up is to be proposed is held. Notice of such meeting of creditors must be
sent at the same time as notice is sent to members. In addition, the company must cause a notice to appear in an
appointed newspaper on at least two occasions.
The creditors and the members at their respective meetings may nominate a person to be liquidator for the purposes
of winding up the affairs of the company and distributing the assets of the company, provided that if the creditors and
the members nominate different persons, the person nominated by the creditors shall be the liquidator. If no person is
nominated by the creditors, the person (if any) nominated by the members shall be liquidator. The creditors at the
creditors‟ meeting may also appoint a committee of inspection consisting of not more than five persons.
If a creditors‟ voluntary winding up continues for more than one year, the liquidator is required to summon a general
meeting of the company and a meeting of the creditors at the end of each year and must lay before such meetings an
account of his acts and dealings and of the conduct of the winding up during the preceding year.
As soon as the affairs of the company are fully wound up via a creditors' voluntary winding up, the liquidator must
make up an account of the winding up, showing how the winding up has been conducted and the property of the
company has been disposed of, and thereupon call a general meeting of the company and a meeting of the creditors
for the purposes of laying the account before the meetings, and giving any explanation thereof. Each such meeting
shall be called by advertisement in an appointed newspaper, published at least one month before the meeting. Within
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Avance Gas Holding Ltd – Offer Document
one week after the date of the meetings, or if the meetings are not held on the same date, after the date of the later
meeting, the liquidator is required to send to the Registrar of Companies in Bermuda a copy of the account and make
a return to him in accordance with the Bermuda Companies Act. The company will be deemed to be dissolved on the
expiration of three months from the registration by the Registrar of Companies in Bermuda of the account and the
return. However, a Bermuda court may, on the application of the liquidator or of some other person who appears to
the court to be interested, make an order deferring the date at which the dissolution of the company is to take effect
for such time as the court thinks fit.
6.13.16
Indemnification of Directors and officers
The directors, secretary and other officers shall be indemnified and secured harmless out of the assets of Avance Gas
from and against all actions, costs, charges, losses, damages and expenses which they or any of them, their heirs,
executors or administrators, shall or may incur or sustain by or by reason of any act done, concurred in or omitted in
or about the execution of their duty, or supposed duty, provided that this indemnity shall not extend to any matter in
respect of any fraud or dishonesty which may attach to any of the said persons. Section 98A of the Bermuda
Companies Act permits Avance Gas to purchase and maintain insurance for the benefit of any officer or director in
respect of any loss or liability attaching to him in respect of any negligence, default, breach of duty or breach of trust,
whether or not we may otherwise indemnify such officer or director.
Under the Bye-laws, each shareholder agrees to waive any claim or right of action such shareholder might have,
whether individually or in the right of Avance Gas, against any director or officer on account of any action taken by
such director or officer, or the failure of such director or officer to take any action in the performance of his duties with
or for Avance Gas or any subsidiary thereof. Such waivers do not extend to any liability arising from any matter in
respect of any fraud or dishonesty in relation to Avance Gas which may attach to such director or officer.
Avance Gas may advance moneys to a director or officer for the costs, charges and expenses incurred by the director
or officer in defending any civil or criminal proceedings against him, on condition that the director or officer shall repay
the advance if any allegation of fraud or dishonesty is proved against him.
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Avance Gas Holding Ltd – Offer Document
7
AVANCE GAS FINANCIAL INFORMATION
7.1
Historical financial information and summary of accounting policies
The following selected financial information has been extracted from the Avance Gas Group‟s unaudited interim
consolidated financial statements as of and for the three and nine month periods ended 30 September 2015, with
comparable figures as of and for the three and nine months ended 31 August 2014 (the Interim Q3 Financial
Statements), the Avance Gas Group‟s unaudited interim consolidated financial statements as of and for the six months
ended 30 June 2015, with comparable figures as of and for the six months ended 31 May 2014 (the Interim Q2
Financial Statements) and the Avance Gas Group‟s audited consolidated annual financial statements as of and for the
thirteen month period ended 31 December 2014 and Avance Gas Group‟s audited consolidated annual financial
statements as of and for the twelve month periods ended 30 November 2013 and 2012 (the Financial Statements).
The Avance Gas Group‟s Financial Statements have been prepared in accordance with IFRS. The Avance Gas Group‟s
Interim Q3 Financial Statements and Interim Q2 Financial Statements have been prepared in accordance with IAS 34.
The Financial Information is incorporated by reference hereto, see Section 12.3 “Incorporation by reference”.
The selected consolidated financial information included herein should be read in connection with, and is qualified in its
entirety by reference to, the Financial Information incorporated by reference hereto, see Section 12.3 “Incorporation
by reference.
For information regarding accounting policies and the use of estimates and judgements, please refer to Note 2 of the
Financial Statements.
7.1.1
Selected statement of income data
The table below sets out selected data from Avance Gas‟ unaudited consolidated interim income statement for the
three and nine month periods ended 30 September 2015, with comparable figures for the three and nine month
periods ended 31 August 2014, its unaudited consolidated income statement for the six month period ended 30 June
2015, with comparable figures for the six month period ended 31 May 2014, and its audited consolidated income
statement for the thirteen month period ended 31 December 2014 and the twelve month periods ended 30 November
2013 and 2012.
Three
In USD thousand
Nine
Thirteen
months
Three
months
Nine
ended
months
ended
months
Six
Six
30
ended
30
ended
months
months
31
Septem-
31
Septem-
31
ended 30
ended 31
Decem-
ended
ber
August
ber
August
June
May
ber
30 November
2015
2014
2015
2014
2015
2014
(un-
(un-
(un-
(un-
(un-
(un-
2014
2013
2012
audited)
audited)
audited)
audited)
audited)
audited)
(audited)
(audited)
(audited)
months
ended
Twelve months
Operating
revenue ..............................................................
109,943
55,846 226,751
116,006
116,808
60,160
180,406
115,000
97,559
Voyage expenses ...................................................
(15,499)
(10,460)
(33,188)
(27,732)
(17,689)
(17,272)
(41,837)
(41,226)
(49,237)
(15,477)
(11,833)
(10,432)
(21,597)
(22,809)
(18,400)
(5,380)
(4,316)
(3,724)
(7,842)
(4,125)
(3,749)
67,417
82,970
28,732
109,130
46,840
26,173
(8,833)
(4,885)
(21,751)
expense................................................................
(14,451)
(12,918)
(9,566)
(20,938)
(23,667)
(16,498)
Operating profit ..................................................
76,475
33,800 146,527
52,966
70,052
19,166
88,192
23,173
9,675
Finance expense ....................................................
(3,587)
(1,443)
(8,612)
(3,015)
(5,025)
(1,572)
(4,693)
(12,623)
(9,918)
Finance income .....................................................
31
54
141
183
110
129
302
25
-
(1,915)
-
(1,915)
(1,915)
(1,205)
-
Operating
expenses ..............................................................
(7,727)
(5,045)
(19,560)
Administrative and
(1,409)
(1,656)
(5,725)
general expenses ...................................................
Operating profit
before
depreciation
expense ..............................................................
85,308
38,685 168,278
Depreciation and
amortisation
Non-operating
income
(expenses):
Loss on early
-
-
-
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Avance Gas Holding Ltd – Offer Document
Three
In USD thousand
Nine
Thirteen
months
Three
months
Nine
ended
months
ended
months
Six
Six
30
ended
30
ended
months
months
31
Septem-
31
Septem-
31
ended 30
ended 31
Decem-
ended
ber
August
ber
August
June
May
ber
30 November
2015
2014
2015
2014
2015
2014
(un-
(un-
(un-
(un-
(un-
(un-
2014
2013
2012
audited)
audited)
audited)
audited)
audited)
audited)
(audited)
(audited)
(audited)
months
ended
Twelve months
extinguishment of
debt .....................................................................
Other nonoperating income ...................................................
-
-
-
-
-
-
1,881
-
(88)
50
(27)
(loss) ...................................................................
(12)
61
(62)
91
251
49
48,207
65,198
15,746
81,977
11,502
(194)
Foreign currency
exchange gain
Profit (loss)
before income
tax ......................................................................
72,831
32,461 138,029
Income tax
(143)
(7)
expense................................................................
(143)
-
-
(210)
-
(88)
72,831
32,318 138,022
Net profit (loss) ..................................................
48,064
65,198
15,746
81,767
11,502
(282)
Earnings per share .................................................
2.12
0.92
4.02
1.46
1.90
0.48
2.43
0.73
(0.02)
1.46
1.90
0.48
2.43
0.73
(0.02)
(3)
38
21
(96)
(50)
(37)
(10,169)
-
(300)
-
-
-
-
(9,896)
(24)
(10,158)
income (loss) ........................................................
(3)
(262)
21
(96)
(50)
(37)
48,061
64,936
15,767
81,671
11,452
(319)
Earnings per share
(diluted) ..............................................................
2.11
0.91
4.01
Other
comprehensive
income (loss):
Exchange
differences arising
on translation of
(27)
(24)
11
foreign operations ..................................................
Net loss on
financial
derivatives
(9,869)
-
Other
comprehensive
Total
comprehensive
62,935
32,294 127,864
income (loss) ......................................................
7.1.2
Selected balance sheet data
The table below sets out selected data from Avance Gas‟ unaudited consolidated interim balance sheet as at 30
September 2015, its unaudited consolidated interim balance sheet as at 30 June 2015 and its audited consolidated
balance sheet as at 31 December 2014 and 30 November 2013 and 2012.
In USD thousand
As at
As at
As at
As at
30 September
30 June
31 December
30 November
2015
2015
2014
2013
2012
(unaudited)
(unaudited)
(audited)
(audited)
(audited)
ASSETS
Current assets:
Cash and cash equivalents ...........................................................................
63,347
99,022
162,279
199,883
30,232
-
-
-
10,798
9,082
Receivables ..........................................................................................
69,049
52,236
21,509
6,654
4,875
Related party receivables balances..........................................................130
109
445
450
1,771
Inventory ............................................................................................
4,795
4,167
3,546
4,605
8,953
Prepaid expenses ..................................................................................440
364
974
691
1,386
Derivative financial instruments ..............................................................
-
553
-
-
-
2,078
Other current assets .............................................................................
767
1,275
1,119
306
139,839
Total current assets ...........................................................................
157,218
190,028
224,200
56,605
Restricted cash .....................................................................................
59
Avance Gas Holding Ltd – Offer Document
In USD thousand
As at
As at
As at
As at
30 September
30 June
31 December
30 November
2015
2015
2014
2013
2012
(unaudited)
(unaudited)
(audited)
(audited)
(audited)
529,160
Property, plant and equipment ...............................................................
896,560
657,354
365,669
378,711
Newbuilding deposit ..............................................................................
17,475
69,700
139,200
-
-
2,290
Goodwill and intangible assets ................................................................
2,318
2,374
1,886
1,886
916,325
Total non-current assets ....................................................................
729,372
507,243
380,597
531,046
1,056,164
Total assets .......................................................................................
886,590
697,271
604,797
587,651
Current portion of long-term debt ..............................................................
39,806
31,5561
18,055
69,218
310,939
Accounts payable .....................................................................................
1,138
1,809
327
1,952
3,336
Derivative financial instruments .................................................................
10,169
853
-
-
-
Related party payable balances .................................................................
692
939
495
399
1,214
Accrued voyage expenses .........................................................................
5,201
3,362
453
2,095
2,983
Accrued expenses ....................................................................................
477
2,424
3,356
3,787
1,262
Put option liability ....................................................................................-
-
-
-
54,822
1,280
Other current liabilities .............................................................................
1,802
691
1,237
2,244
58,763
Total current liabilities ..........................................................................
1
42,745
23,377
78,688
376,800
Long-term debt .......................................................................................
473,062
341,2711
165,391
133,744
-
Shareholder loans ....................................................................................-
-
-
-
98,646
473,062
Total non-current liabilities ..................................................................
341,2711
165,391
133,744
98,646
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Shareholders’ equity
Common shares ......................................................................................
35,278
35,278
35,278
30,384
15,000
Paid-in capital .........................................................................................
350,359
350,359
350,359
260,408
98,780
Contributed capital...................................................................................
94,779
94,776
94,673
94,373
2,677
Retained earnings (deficit) ........................................................................
66,661
35,081
28,392
7,303
(4,199)
Treasury shares .......................................................................................
(12,381)
(12,459)
-
-
-
10,357
Other reserves ........................................................................................
(461)
(199)
(103)
(53)
524,339
Total shareholders’ equity ....................................................................
502,574
508,503
392,365
112,205
1,056,164
Total liabilities and shareholders’ equity ..............................................
886,590
697,271
604,797
587,651
1
Classification between non-current debt and current portion of long term debt is revised in line with payment schedule.
Current portion of long term debt is revised to 31,556 from 55,545, and non-current debt is revised to 341,271 from 317,282.
7.1.3
Selected statement of cash flow data
The table below sets out selected data from Avance Gas‟ unaudited consolidated interim statement of cash flow for the
nine month period ended 30 September 2015, with comparable figures for the nine month period ended 31 August
2014, and its audited consolidated statement of cash flow for the thirteen month period ended 31 December 2014 and
the twelve month periods ended 30 November 2013 and 2012.
In USD thousand
Nine months
Nine
ended
months
Thirteen
30
ended
months ended
September
31 August
31 December
2015
2014
2014
2013
2012
(unaudited)
(unaudited)
(audited)
(audited)
(audited)
Twelve months ended
30 November
Cash generated from operations ...............................................
124,308
58,950
102,002
48,750
22,130
Debt issuance costs ..................................................................... (1,932)
(5,926)
(8,268)
(260)
(2,493)
Interest paid ............................................................................... (5,914)
(5,635)
(7,028)
(12,790)
(7,566)
-
-
-
-
(28)
116,192
Net cash generated by operating activities ...............................
47,389
86,706
35,700
12,043
Income taxes paid .......................................................................
Cash flows (used in) provided by investing activities:
Capital expenditures ....................................................................
(433,850)
(2,124)
(4,770)
(6,124)
(234,077)
Sale of assets ..............................................................................
-
-
-
132,880
-
Deposit for newbuildings ...............................................................
-
(139,200)
(139,200)
-
-
60
Avance Gas Holding Ltd – Offer Document
Nine months
Nine
ended
months
Thirteen
30
ended
months ended
September
31 August
31 December
2015
2014
2014
2013
2012
(unaudited)
(unaudited)
(audited)
(audited)
(audited)
In USD thousand
(433,850)
Net cash provided by (used in) investing activities ..................
(141,324)
(143,970)
Twelve months ended
30 November
126,756 (234,077)
Cash flows from financing activities:
Proceeds from issuance of long-term debt ......................................350,000
200,000
200,000
-
157,600
Dividends ...................................................................................
(99,753)
(28,223)
(60,678)
-
-
Repayment of shareholder loans ....................................................
-
-
-
(63,379)
-
Increase in shareholder loans ........................................................
-
-
-
64,879
83,882
Repayment of long-term debt ........................................................
(18,973)
(209,730)
(214,491)
(109,833)
(14,584)
Issuance of shares .......................................................................
-
94,845
94,845
168,511
-
Exercise of share options ..............................................................
221
-
-
-
-
(12,757)
Repurchase of shares ...................................................................
-
-
(52,941)
-
218,738
Net cash from financing activities .............................................
56,892
19,676
7,237
226,898
(12)
(5)
(16)
(42)
(42)
(98,932)
Net (decrease) increase in cash and cash equivalents ..............
(37,048)
(37,604)
169,651
4,822
162,279
Cash and cash equivalents at beginning of period ....................
199,883
199,883
30,232
25,410
Cash and cash equivalents at end of period .............................. 63,347
162,835
162,279
199,883
30,232
Effect of exchange rate changes on cash ........................................
7.1.4
Selected statement of changes in equity data
The table below sets out selected data from Avance Gas‟ unaudited consolidated interim statement of changes in
equity for the nine month period ended 30 September 2015 and its audited consolidated statement of changes in
equity for the thirteen month period ended 31 December 2014 and the twelve month periods ended 30 November
2013 and 2012.
In USD thousand
Retained
Foreign
Common
Paid-in
Contribut-
earnings
currency
Fair value
Treasury
shares
capital
ed capital
(deficit)
reserve1
reserve
shares
Total
Balance at 30
10,000
November 2011 ...........................
103,410
2,677
(3,917)
(16)
-
-
112,154
-
-
(282)
-
-
-
(282)
-
-
(282)
(37)
-
-
(319)
Issuance of shares ..........................
5,000
50,192
-
-
-
-
-
55,192
Put option ......................................-
(54,822)
-
-
-
-
-
(54,822)
(4,630)
-
-
-
-
-
370
98,780
2,677
(4,199)
(53)
-
-
112,205
-
-
11,502
-
-
-
11,502
-
-
11,502
(50)
-
-
11,452
156,628
-
-
-
-
-
168,511
-
91,645
-
-
-
-
100,146
-
51
-
-
-
-
51
5,000
-
-
-
-
-
-
Comprehensive loss:
Net loss .........................................Total comprehensive
loss ..............................................Transactions with
shareholders:
Total transactions
5,000
with shareholders ........................
Balance at 30
November 2012
15,000
(audited) .....................................
Comprehensive
income (loss):
Net profit .......................................Total comprehensive
income (loss) ..............................Transactions with
shareholders:
Issuance of shares ..........................
11,883
Conversion of
shareholders‟ loans .........................
8,501
Compensation expense
for share options ............................Reclassification due to
(5,000)
exercise of put option......................
61
Avance Gas Holding Ltd – Offer Document
In USD thousand
Retained
Foreign
Common
Paid-in
Contribut-
earnings
currency
Fair value
Treasury
shares
capital
ed capital
(deficit)
reserve1
reserve
shares
Total
Total transactions
15,384
with shareholders ........................
161,628
91,696
-
-
-
-
268,708
260,408
94,373
7,303
(103)
-
-
392,365
-
-
81,767
-
-
-
81,767
-
-
81,767
(96)
-
-
81,671
Issuance of shares ..........................
4,894
89,951
-
-
-
-
-
94,845
Dividends ......................................-
-
-
(60,678)
-
-
-
(60,678)
-
300
-
-
-
-
300
89,951
300
(60,678)
-
-
-
34,467
350,359
94,673
28,392
(199)
-
-
508,503
-
-
138,022
-
-
-
138,022
-
-
138,022
11
(10,169)
-
127,864
-
-
(99,753)
-
-
-
(99,753)
-
261
-
-
-
-
261
Balance at 30
November 2013
30,384
(audited) .....................................
Comprehensive
income (loss):
Net profit .......................................Total comprehensive
income (loss) ..............................Transactions with
shareholders:
Compensation expense
for share options ............................Total transactions
4,894
with shareholders ........................
Balance at 31
December 2014
35,278
(audited) .....................................
Comprehensive
income (loss):
Net profit .......................................Total comprehensive
income (loss) ..............................Transactions with
shareholders:
Dividends ......................................Compensation expense
for share options ............................Purchase of treasury
shares ...........................................-
-
-
-
-
-
(12,757)
(12,757)
Exercise of share options .................-
-
(155)
-
-
-
376
221
-
106
(99,753)
-
-
(12,381)
(112,028)
350,359
94,779
66,661
(188)
(10,169)
(12,381)
524,339
Total transactions
with shareholders ........................Balance at 30
September 2015
35,278
(unaudited) .................................
1
Other components of equity on the balance sheet are composed of the foreign currency reserve.
7.1.5
Sales revenues by geographic area
All but an immaterial amount of freight revenue was generated in the Middle East for the nine month period ended 30
September 2015 and the thirteen month period ended 31 December 2014 and the twelve month periods ended 30
November 2013 and 2012, when based on the region in which the cargo is loaded. For time charter revenue, while the
Avance Gas Group is aware that the chartered ships have loaded in geographic regions other than the Middle East,
such as the U.S. Gulf, the Avance Gas Group is unaware of the geographic location from which the ships generated
their revenue. The Avance Gas Group expects an increase in cargo loading in the US Gulf going forward.
7.1.6
Avance
Auditor
Gas‟
auditor
is
PricewaterhouseCoopers
AS,
Dronning
Eufemias
gate
8,
N-0191
Oslo,
Norway.
PricewaterhouseCoopers AS is a member of The Norwegian Institute of Public Accountants (Nw.: Den Norske
Revisorforening).
PricewaterhouseCoopers
AS
has
been
Avance
Gas‟
auditor
since
2014.
Prior
to
this,
PricewaterhouseCoopers LLP was Avance Gas‟ auditor. PricewaterhouseCoopers LLP is registered to carry out audit
work by The Institute of Chartered Accountants in England and Wales (ICAEW). Avance Gas resolved to change its
auditor to PricewaterhouseCoopers AS due to the listing of its shares on the Oslo Stock Exchange and the
management being situated in Oslo, Norway. The Financial Statements for the financial years 2013 and 2012 have
been audited by PricewaterhouseCoopers LLP, as set forth in their reports thereon included therein. The Financial
Statements for the financial year 2014 have been audited by PricewaterhouseCoopers AS, as set forth in their report
62
Avance Gas Holding Ltd – Offer Document
thereon included therein. The auditor‟s reports on the Financial Statements are incorporated by reference hereto
together with the Financial Statements. Neither PricewaterhouseCoopers LLP nor PricewaterhouseCoopers AS has
audited, reviewed or produced any report on any other information provided in this Offer Document.
The audit opinion for the financial year ended 30 November 2012 included the following emphasis of matter from
PricewaterhouseCoopers LLP:
“In forming our opinion on the non-statutory financial statements, which is not modified, we have considered the
adequacy of the disclosures made in note 2 to the non-statutory financial statements concerning the Group’s ability to
continue as a going concern. These disclosures indicate that the Group is subject to financial covenants which, if not
complied with, could result in the acceleration of repayment of amounts due which might result in the Group becoming
insolvent. These circumstances indicate the existence of a material uncertainty which may cast significant doubt about
the Group’s ability to continue as a going concern. The financial statements do not include adjustments that would
result if the Group was unable to continue as a going concern.”
The Board of Directors stated the following in Note 2 to the financial statements for the financial year ended 30
November 2012 (which is of relevance for the emphasis of matter):
“The shareholders regularly review the cash requirements of the Group and under the Shareholders' Agreement will
take all reasonable endeavours to procure that financing is available to meet the Group's working capital needs. The
term loans contain various financial covenants, which, if not complied with, could result in the acceleration of
repayment of amounts due. Should a breach of financial covenants occur or be forecast to occur, the Board of
Directors or the President may request that the shareholders provide further funding to the Group in order to maintain
its going concern status. Failure of the shareholders to do this, could result in a material uncertainty over the Group's
ability to continue as a going concern.
Management believes that the Group’s cash flow from operations and available credit facilities will continue to provide
the cash necessary to satisfy the Group’s working capital requirements and capital expenditures, as well as to make
scheduled long-term debt and shareholder loan payments and satisfy the Group’s other financial commitments. The
Group therefore adopted the going concern basis in preparing its non-statutory consolidated financial statements.”
With
respect
to
the
unaudited
Pro
Forma
Financial
Information
included
in
the
Offer
Document,
PricewaterhouseCoopers AS has applied assurance procedures in accordance with the International Standard on
Assurance Engagements 3420, Assurance Engagements to Report on the Compilation of Pro Forma Financial
Information in order to express an opinion as to whether the unaudited Pro Forma Financial Information has been
properly compiled on the basis stated, and that such basis is consistent with the accounting policies of Avance Gas.
PricewaterhouseCoopers AS‟ report on the unaudited Pro Forma Financial Information is included in Appendix B.
7.2
Liquidity and capital resources
7.2.1
Sources and uses of cash
The Avance Gas Group‟s principal sources of liquidity are cash flows from operations and financing activities. Financing
for the Avance Gas Group has historically been provided through issuance of long-term debt and common shares and
through shareholder loans. In 2013, the Avance Gas Group also received cash from the sale of two ships.
As of 30 September 2015, the Avance Gas Group had USD 63.3 million in cash and cash equivalents and USD 50
million unutilised under its USD 450 million credit facility. The Avance Gas Group primarily uses cash to invest in ships
and newbuildings, for voyage expenses, for the repayment of borrowings and payment of dividend to its shareholders.
The existing USD 350 million financing commitments of the Aurora LPG Group (covering the existing fleet and five of
the six newbuildings) contain change of control provisions which may be triggered as a result of the completion of the
Offer. The Offer is subject to waivers being obtained from the banks and no assurance can be given that such waivers
will be obtained. Avance Gas has obtained financing commitments regarding a back-stop facility for the refinancing of
the Aurora LPG Group‟s financing commitments, if required.
The Management believes that cash from operations is adequate to support the liquidity need for a period of at least
twelve months following the date of this Offer Document. Depending on market conditions in the LPG transportation
industry and acquisition opportunities that may arise, the Avance Gas Group may seek to obtain additional debt or
equity financing.
63
Avance Gas Holding Ltd – Offer Document
Other than the covenants set forth in Section 7.2.3 “Material borrowings”, there are no restrictions on the use of
capital resources that have materially affected, or could materially affect, directly or indirectly, the Avance Gas Group‟s
operations.
7.2.2
Cash received from subsidiaries
Avance Gas does not believe that there are significant obstacles or barriers to transfer funds to it from its subsidiaries
that may affect its ability to meet or fulfil its financial or other obligations.
7.2.3
Material borrowings
The table below sets out the Avance Gas Group‟s material borrowings as of the date of this Offer Document.
In USD million
Facility
Total
Utilised
Unutilised
Interest
Maturity
facility
facility
facility
rate
date
USD 450 million credit facility .........................
450.0
400.0
50.0
LIBOR + 2.50%
March 2020
USD 200 million credit facility ..........................
200.0
200.0
0.0
LIBOR + 2.00%
May 2021
Total ................................................................
650.0
600.0
50.0
USD 450 million credit facility
The maturity profile and estimated interest costs for the credit facility for each financial year from 30 September 2015
until maturity are as follows:
In USD million
2015
2016
2017
2018
2019
2020
Repayment ...........................................................................................................
7.9
31.6
31.6
31.6
31.6
238.5
Estimated interest .................................................................................................
3.1
12.0
15.3
16.7
17.7
17.9
Note
Assuming the facility is fully utilised and the LIBOR is 2.31% on average for the term of the loan, on a floating rate basis.
The facility is repaid in quarterly instalments. From the fourth quarter of 2015, Avance Gas repays approximately USD
7.9 million of the facility each quarter in addition to the interest accrued for the period.
The credit facility is secured by ten VLGCs. The credit facility contains certain ship covenants. The key ship covenants
are as follows:

Minimum value to outstanding loan under the facility of 130% at all times; and

A change of control provision which will be triggered if other than Frontline 2012, Hemen Holding Ltd, StoltNielsen Gas or Sungas, gains control, directly or indirectly, of 1/3 or more of the voting and/or Shares of
Avance Gas.
Further, Avance Gas is required to comply with a number of financial covenants. The financial covenants are as
follows:

Minimum free liquidity: Cash and cash equivalents shall at all times be at least the higher of (i) USD 35
million and (ii) 7.5% of the consolidated gross interest bearing debt of the Avance Gas Group;

Working capital: Working capital shall at all times be positive;

Equity: The book equity shall at all times be equal to or higher than USD 250 million; and

Equity ratio: The ratio of book equity to book value of total assets shall at all times be minimum 30%.
The USD 450 million credit facility is secured by the following VLGCs:
Ownership
Classification
Name
Type
Year built
Shipyard
Capacity
(cbm)
Flag
(%)
society
Stolt Avance
VLGC
2003
KHI
82,557
Marshall Island
100%
ABS
Iris Glory
VLGC
2008
DSME
83,783
Marshall Island
100%
DNV GL
Thetis Glory
VLGC
2008
DSME
83,783
Marshall Island
100%
DNV GL
64
Avance Gas Holding Ltd – Offer Document
Ownership
Classification
Name
Type
Year built
Shipyard
Capacity
(cbm)
Flag
(%)
society
Venus Glory
VLGC
2008
DSME
83,765
Marshall Island
100%
DNV GL
Providence
VLGC
2008
DSME
84,597
Marshall Island
100%
DNV GL
Promise
VLGC
2009
DSME
84,597
Marshall Island
100%
DNV GL
Mistral
VLGC
2015
Jiangnan
83,000
Marshall Island
100%
Lloyds
Monsoon
VLGC
2015
Jiangnan
83,000
Marshall Island
100%
Lloyds
Breeze
VLGC
2015
Jiangnan
83,000
Marshall Island
100%
Lloyds
Passat
VLGC
2015
Jiangnan
83,000
Marshall Island
100%
Lloyds
USD 200 million credit facility
The maturity profile and estimated interest costs for the credit facility for each financial year from 30 September 2015
until maturity are as follows:
In USD million
2015
2016
2017
2018
2019
2020
2021
Repayment ...........................................................................................................
2.3
12.5
12.5
12.5
12.5
12.5
64.8
Estimated interest .................................................................................................
3.1
6.2
7.6
8.7
9.6
9.6
8.7
Note
Assuming the facility is fully utilised and the LIBOR is 2.31% on average for the term of the loan, on a floating rate basis.
The facility is repaid in quarterly instalments. From the fourth quarter of 2015, Avance Gas repays approximately USD
3.1 million of the facility each quarter in addition to the interest accrued for the period.
The credit facility is secured by four VLGCs. The credit facility contains certain ship covenants. The key ship covenants
are as follows:
•
Minimum value to outstanding loan under the facility of 130% at all times; and
•
A change of control which will be triggered if other than Frontline 2012, Hemen Holding Ltd, Stolt-Nielsen
Gas or Sungas, gains control, directly or indirectly, of 1/3 or more of the voting and/or Shares of Avance
Gas.
Further, Avance Gas is required to comply with a number of financial covenants. The financial covenants are as
follows:
•
Minimum free liquidity: Cash and cash equivalents shall at all times be at least the higher of (i) USD 35
million and (ii) 7.5% of the consolidated gross interest bearing debt of the Avance Gas Group;
•
Working capital: Working capital shall at all times be positive;
•
Equity: The book equity shall at all times be equal to or higher than USD 250 million; and
•
Equity ratio: The ratio of book equity to book value of total assets shall at all times be minimum 30%.
The USD 200 million credit facility is secured by the following VLGCs:
Ownership
Classification
Type
Year built
Shipyard
Capacity
(cbm)
Flag
(%)
society
Sirocco
VLGC
2015
Jiangnan
83,000
Marshall Island
100%
Lloyds
Levant
VLGC
2015
Jiangnan
83,000
Marshall Island
100%
Lloyds
Chinook
VLGC
2015
Jiangnan
83,000
Marshall Island
100%
Lloyds
Pampero
VLGC
2015
Jiangnan
83,000
Marshall Island
100%
Lloyds
Name
7.2.4
Capitalisation and net financial indebtedness
The information presented below should be read in conjunction with the other parts of this Offer Document and the
Financial Statements and Interim Q3 Financial Statements and the notes related thereto, incorporated by reference
hereto, see Section 12.3 “Incorporation by reference”. This Section provides information about the Avance Gas
Group‟s unaudited capitalisation and net financial indebtedness on an actual basis as of 30 September 2015. There has
been no material change in the Avance Gas Group‟s capitalisation and net financial indebtedness since 30 September
2015.
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Avance Gas Holding Ltd – Offer Document
7.2.4.1
Capitalisation
As of
30 September 2015
In USD thousand
(unaudited)
Indebtedness
Total current debt:
Guaranteed and secured1 .......................................................................................................................
39,806
Guaranteed but unsecured .....................................................................................................................
-
Secured but unguaranteed .....................................................................................................................
-
Unguaranteed and unsecured .................................................................................................................
-
Total non-current debt:
Guaranteed and secured1 .......................................................................................................................
473,062
Guaranteed but unsecured .....................................................................................................................
-
Secured but unguaranteed .....................................................................................................................
-
Unguaranteed and unsecured .................................................................................................................
Total indebtedness ............................................................................................................................
512,868
Shareholders’ equity
Share capital ........................................................................................................................................
35,278
Other contributed capital .......................................................................................................................
445,1382
Other reserves .....................................................................................................................................
(22,738)3
66.661
Retained earnings .................................................................................................................................
Total shareholders’ equity .................................................................................................................
Total capitalisation ............................................................................................................................
1
Guaranteed by the Avance Gas and Avance Gas Ltd, and secured by the Avance Group‟s VLGCs.
2
Other contributed capital consists of paid-in capital and contributed capital.
3
Other reserves consists of foreign currency reserve, fair value reserve and treasury shares.
7.2.4.2
524,339
1,037,207
Net financial indebtedness
As of
30 September 2015
In USD thousands
(unaudited)
(A) Cash ................................................................................................................................................
63,347
(B) Cash equivalents ...............................................................................................................................
-
(C) Trading securities ..............................................................................................................................
(D) Liquidity (A)+(B)+(C) ...................................................................................................................
(E) Current financial receivables .........................................................................................................
63,347
69,619
(F) Current bank debt .............................................................................................................................
-
(G) Current portion of non-current debt .....................................................................................................
39,806
(H) Other current financial debt ................................................................................................................
(I) Current financial debt (F)+(G)+(H) ...............................................................................................
(J) Net current financial indebtedness (I)-(E)-(D) ..............................................................................
-7,508
47,314
(85,652)
(K) Non-current bank loans ......................................................................................................................
473,062
(L) Bonds issued .....................................................................................................................................
-
(M) Other non-current loans.....................................................................................................................
-
(N) Non-current financial indebtedness (K)+(L)+(M) .........................................................................
473,062
(O) Net financial indebtedness (J)+(N) ...............................................................................................
387,410
7.2.4.3
Contingent and indirect indebtedness
As of 30 September 2015 and as of the date of this Offer Document, the Avance Gas Group did not have any
contingent or indirect indebtedness.
7.2.4.4
Working capital statement
Avance Gas is of the opinion that the working capital available to the Avance Gas Group is sufficient for the Avance
Gas Group‟s present requirements.
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Avance Gas Holding Ltd – Offer Document
7.3
Trend information
Other than as stated in Section 5 “The LPG shipping industry”, Avance Gas has not experienced any trends or events
materially affecting the LPG market or Avance Gas‟ financial prospects. The Avance Gas Spot Index (as included in
Section 5 “The LPG shipping industry”) was quoted at USD 49,762 per day, as of 13 November 2015. Avance Gas
remains positive to VLGC utilisation and freight rates going forward, but the market is expected to remain volatile.
7.4
Significant changes since 30 September 2015
The last newbuilding, Pampero, was delivered to the Avance Gas Group on 19 October 2015. Other than this, there
have been no significant changes in the financial or trading position of the Avance Gas Group since the date of the
Interim Q3 Financial Statements as of and for the three and nine months ended 30 September 2015, which have been
incorporated by reference hereto, see Section 12.3 “Incorporation by reference”.
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Avance Gas Holding Ltd – Offer Document
8
DESCRIPTION OF THE AURORA LPG GROUP
The following is a short summary description of the Aurora LPG Group as of the date of this Offer Document prepared
based on publicly available information. The summary is not complete and does not contain all the information that
should be considered in connection with a decision of whether to accept the Offer or not. Further information on the
Aurora LPG Group, including annual reports, interim reports, investor information and previously issued prospectuses,
may be found on the company’s web address: www.auroralpg.com. The information in this Section has been prepared
in accordance with publicly available information, including annual reports, interim reports, investor information and
stock exchange notices published by Aurora LPG and the prospectus issued by Aurora LPG dated 24 September 2014.
Consequently, Avance Gas cannot accept any liability for the accuracy and completeness of the information in this
Offer Document regarding the Aurora LPG Group.
8.1
Corporate information
Aurora LPG is a public limited liability company (Nw.: allmennaksjeselskap) incorporated under the laws of Norway
with company registration number 913 064 801. The registered office and headquarter of Aurora LPG is at Dronningen
1, 0287, Oslo, Norway, telephone: +47 21 65 93 70. Aurora LPG had a registered share capital of NOK 2,967,837.9,
divided into 29,678,379 shares, each with a par value of 0.10 on 9 November 2015. The company‟s shares are
registered in the VPS under ISIN NO 001 0701279 and are listed on Oslo Axess under the ticker code “AURLPG”. The
company was incorporated 3 January 2014. As of the date of this Offer Document, as far as Avance Gas is aware
based on publicly available information, Aurora LPG has issued 375,000 warrants, each convertible into one new share
in the company. The strike price for the warrants is NOK 47, adjusted for dividend payments. According to Aurora
LPG‟s financial statements for the year ended 31 December 2014, the warrants vest as follows: (i) 35% vest if the
Aurora LPG share price reaches NOK 60, (ii) 35% vest if the share the Aurora LPG share price reaches NOK 70 and (iii)
30% vest if the Aurora LPG share price reaches NOK 80. Further, based on the said annual report 35% of the warrants
have vested, but are not yet exercised.
Aurora LPG is the parent company of Aurora Shipping Holding AS (“Aurora Shipping”), a provider of marine
transportation of fully refrigerated LPG in the VLGC segment. Aurora Shipping is in turn the sole shareholder of ten
companies whose purpose is to own the Aurora Group‟s vessels and newbuildings with all the operational activity
therein.
8.2
Legal structure
The figure below sets out the legal structure of the Aurora LPG Group as disclosed in the prospectus issued by Aurora
LPG dated 24 September 2014:
Aurora LPG
Holding ASA
100%
Aurora Shipping
Holding ASA
100%
100%
100%
100%
100%
100%
100%
100%
100%
Aurora
Shipping
I AS
Aurora
Shipping
II AS
Aurora
Shipping
III AS
Aurora
Shipping
IV AS
Aurora
Shipping
V AS
Aurora
Shipping
VI AS
Aurora
Shipping
VII AS
Aurora
Shipping
VIII AS
Aurora
Shipping
IX AS
”Taurus”
”Leo”
Newbuild 1
Newbuild 2
Newbuild 3
Newbuild 4
Newbuild 5
”Capricon”
Newbuild 6
100%
Aurora
Shipping
X AS
No
Material
Assets
Aurora LPG also holds, via its subsidiaries, an aggregate 6% minority interest in Inter Carib II DIS. The ownership in
Inter Carib II DIS is not strategic. Pursuant to the prospectus issued by Aurora LPG on 24 September 2014, the
uncalled capital for the combined ownership by the Aurora LPG Group is 6% of approximately USD 1,500,000.
8.3
Historical background and development
Aurora LPG was established on 3 January 2014 and acquired by Eureka Invest AS, a company controlled by Børge
Faanes Johansen, Sundt AS and certain employees of Oslo Asset Management AS, on 15 January 2014. The company
was registered with the Norwegian Register of Business Enterprises on the 13 January 2014.
The company raised approximately USD 150 million on 29 January 2014, at a price of NOK 41 per share, for the
purpose of partly finance the acquisition of two secondhand vessels and a newbuilding program, see Section 8.4.2
“The fleet” and Section 8.4.3 “The newbuilding programme”. In addition, Aurora LPG raised approximately USD 50
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Avance Gas Holding Ltd – Offer Document
million in June 2014, at a price of NOK 47 per share, to finance the acquisition of a third secondhand vessel, see
Section 8.4.2 “The fleet” below.
Aurora LPG was listed on Oslo Axess on 26 September 2014 under the ticker code “AURLPG”.
8.4
Business of the Aurora LPG Group
8.4.1
General
The Aurora LPG Group is a provider of marine transportation of fully refrigerated LPG in the VLGC segment. The
company owns and operates a fleet consisting of three VLGCs. The company‟s fleet operates on a global basis,
carrying fully refrigerated LPG for a variety of customers. Aurora LPG is currently focusing on operating the vessels in
the spot market.
8.4.2
The fleet
The Aurora LPG Group‟s fleet had a total carrying capacity of approximately 246,000 cbm as of 30 June 2015. The
following table presents certain information with respect to the VLGCs in the Aurora LPG Group‟s fleet.
Capacity
Name
Taurus
Ownership
Year built
Shipyard
(cbm)
Charter type
Flag
(%)
2008
HHI
82,000
Spot
Marshall
100%
Island
Leo
2008
HHI
82,000
Spot
Marshall
100%
Island
Capricorn
2009
HHI
82,000
Time charter
Marshall
100%
Island
Total (3 ships)
8.4.3
246,000
The newbuilding programme
In January 2014, the Aurora LPG Group entered into a memorandum of understanding with Hyundai Heavy Industries
(“HHI”) for the construction of four 84,000 cbm LPG carriers with delivery in 2016, including options for additional two
+ two vessels. On 29 January 2014 and 10 February 2014, the company and HHI entered into firm contracts for the
said newbuildings. In April and June 2014, Aurora LPG exercised two of the options, bringing the total of firm
newbuildings to six and reducing the number of options to two.
The following table presents certain information with respect to the Aurora LPG Group‟s newbuildings:
Name
Expected delivery
Shipyard
Capacity (cbm)
Flag
Ownership (%)
Newbuild 1
Q1 2016
HHI
84,000
TBD
100%
Newbuild 2
Q2 2016
HHI
84,000
TBD
100%
Newbuild 3
Q2 2016
HHI
84,000
TBD
100%
Newbuild 4
Q3 2016
HHI
84,000
TBD
100%
Newbuild 5
Q1 2016
HHI
84,000
TBD
100%
Newbuild 6
Q1 2016
HHI
84,000
TBD
100%
Following the delivery of the newbuildings in 2016, the Aurora LPG Group will have a fleet of nine modern VLGCs.
8.4.4
Management of the fleet
8.4.4.1
Commercial management of the vessels – the Pool
Aurora LPG and Aurora LPG AS operate their vessels in a pool known as the “Atlantic Tankers Pool” (the “Pool”).
Aurora LPG AS, a company in which Sundt AS, where Aurora LPG‟s chairman Mr. Askvig is the chief executive officer,
and companies controlled by Mr. Johansen (Aurora LPG‟s CEO) have invested, have four VLGCs on time charter. It is
noted in the listing prospectus dated 24 September 2014 that there are no legal ties between Aurora LPG and Aurora
LPG AS. The pool arrangement is regulated by a pool agreement entered into on 11 August 2014 and effective from 1
October 2014. The Pool is managed by a wholly owned subsidiary of ISCO Management AS, Atlantic Tankers AS. ISCO
Management AS is a company owned by Mr. Johansen (Aurora LPG‟s CEO) and Mr. Jebsen (Aurora LPG‟s CFO).
According to the pool agreement, Atlantic Tankers AS shall facilitate the commercial operation, employment and
marketing of the vessels in the Pool, including, but not limited to, Aurora Leo, Aurora Taurus, Aurora Capricorn, the
newbuildings currently on order by Aurora LPG‟s subsidiaries as well as vessels controlled by Aurora LPG AS. The net
pool result is calculated quarterly and distributed in accordance with a formula determined by the Pool members. Ships
may be withdrawn from the Pool by three months‟ notice.
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Avance Gas Holding Ltd – Offer Document
8.4.4.2
Technical management of the vessels
Aurora LPG has a technical management contract with Anglo-Eastern Shipmanagement (Singapore) Pte. Ltd. for the
management of Aurora Taurus and Aurora Leo in the amount of approximately USD 2,200,000 per year per vessel,
excluding insurance and dry-dock provisions. The contract with Anglo Eastern Shipmanagement (Singapore) Pte. Ltd.
has a 3-month termination period with no fixed expiry. A technical management contract for Aurora Capricorn has
been signed with Wilhelmsen Ship Management Ltd in the amount of approximately USD 2,200,000 per year. The
contract with Wilhelmsen Ship Management Ltd has a 3-month termination period with no fixed expiry, in line with
industry standards.
Aurora LPG is subject to rules and regulations which may cause variations in the cost of technical management.
8.4.4.3
Shipbuilding contracts
Aurora LPG has entered into firm newbuilding contracts with HHI for delivery of six 84,000 cbm LPG carriers in 2016 at
a total price of USD 77,225,000 per vessel, including additional equipment. The yard price for HHI‟s standard
specification VLGC was USD 76,000,000.
The payment schedule for each vessel, as presented in Aurora LPG‟s listing prospectus dated 24 September 2014, is
4x10% instalments during construction and the remaining 60% to be paid at delivery of each vessel. Aurora LPG paid
the initial 10% instalments on four of the newbuilding vessels at time of order in January 2014. The first 10% for the
last two newbuildings was paid in the second quarter of 2014. As of 30 June 2015, the remaining capital expenditure
under the newbuilding programme was USD 342 million. Aurora LPG has provided a parent company guarantee for the
performance of the special purpose companies under the shipbuilding contracts entered into with HHI by the said
special purpose companies.
The Aurora LPG Group has received refund guarantees from Shinhan Bank as security for pre-delivery instalments paid
by the Aurora LPG Group to the yard with respect to the VLGC newbuildings. The refund guarantees are limited to an
amount equal to the pre-delivery instalments. The refund guarantees from Shinhan Bank are in favour of each special
purpose company, guaranteeing the refund of the pre-delivery instalments of the contract price if the builder defaults
(the refund guarantees respond to certain specific situations described in the contract).
8.5
Board of directors, management and employees
8.5.1
Board of directors
The board of directors of Aurora LPG consists of five members: Leiv Askvig (Chairman), Jan Håkon Pettersen, Nils
Eivind Breivik, Astrid Evenseth Sørgaard and Ingrid Elvira Leisner.
8.5.2
Management
The management of Aurora LPG consists of Børge Faanes Johansen (CEO), Nikolai Jebsen (CFO), Sujoy K. Seal (COO),
Kjell Notvik (Chief Accountant) and Leif Arthur Andersen (Technical advisor). Based on the listing prospectus of Aurora
LPG dated 24 September 2014, the CEO, CFO and COO have the right to receive 24 months‟ severance pay in the
event of a change of control.
8.5.3
Employees
As of 31 December 2014, Aurora LPG had 5 employees.
8.6
Share capital and shareholders
8.6.1
Share capital
As of 9 November 2015, Aurora LPG‟s registered share capital was NOK 2,967,837.9, divided into 29,678,379 shares
with a par value of NOK 0.10.
8.7
Major shareholders
As of 9 November 2015, Aurora LPG had 646 shareholders. Aurora LPG‟s 20 largest shareholders as of the same date
are set out in the table below:
#
Shareholders
Number of Shares
1
Transpetrol Shipping Ltd ............................................................................
2,919,655
9.8%
2
Euroclear Bank S.A./N.V. („BA‟) ..................................................................
2,686,603
9.1%
3
QVT Fund V LP ..........................................................................................
2,145,659
7.2%
4
Merril Lynch, Pierce, Fenne R&S. Inc ...........................................................
1,856,229
6.3%
70
Percent
Avance Gas Holding Ltd – Offer Document
#
Shareholders
5
Skandinaviska Enskilda Banken AB ..............................................................
Number of Shares
1,686,393
Percent
5.7%
6
Sundt AS .................................................................................................
1,302,937
4.4%
7
KLP Alfa Global Energi ...............................................................................
1,163,616
3.9%
8
The Bank of New York Mellon SA/NV ...........................................................
1,005,982
3.4%
9
Merril Lynch Prof. Clearing Corp ..................................................................
1,005,789
3.4%
10
The Bank of New York Mellon .....................................................................
957,110
3.2%
11
Aurora LPG Holding ASA ............................................................................
850,000
2.9%
12
Morgan Stanley & Co. LLC ..........................................................................
729,240
2.5%
13
J.P. Morgan Chase Bank N.A. London...........................................................
682,657
2.3%
14
Verdipapirfondet KLP Aksjenorge ................................................................
508,000
1.7%
15
QVT Fund IV LP ........................................................................................
504,924
1.7%
16
State Street Bank & Trust Company ............................................................
440,699
1.5%
17
Bojo Industries AS ....................................................................................
401,372
1.4%
18
Swedbank Generator .................................................................................
396,315
1.3%
19
Skandinaviska Enskilda Banken S.A. ............................................................
385,000
1.3%
20
Goldman Sachs & Co Equity Segregat ..........................................................
378,003
1.3%
Top 20 shareholders ..............................................................................
22,006,183
74.1%
Others ....................................................................................................
7,672,196
25.9%
Total ......................................................................................................
29,678,379
100.0%
Based on publicly available information, no shareholder of Aurora LPG, other than QVT Financial LP (more than 15%),
Dalton Investments LLC (more than 15%), Transpetrol Shipping Ltd (9.8%) and Fonden Zenit (more than 5%) held
5% or more of the issued shares as of 9 November 2015.
8.8
Selected financial information
The following selected financial information has been extracted from Aurora LPG‟s unaudited interim consolidated
financial statements as of and for the three and six month periods ended 30 June 2015, with comparable figures as of
and for the three and six month periods ended 30 June 2014 (the Aurora LPG Interim Financial Statements).
The Aurora LPG Interim Financial Statements have been prepared in accordance with IAS 34. The Aurora LPG Interim
Financial Statements are incorporated by reference hereto, see Section 12.3 “Incorporation by reference”. The Aurora
LPG Interim Financial Statements are unaudited.
The auditor of Aurora LPG is PricewaterhouseCoopers AS, Postboks 748 Sentrum, N-0106 Oslo, Norway.
8.8.1
Selected statement of income data
The table below sets out selected data from Aurora LPG‟s unaudited consolidated interim income statement for the
three and six month periods ended 30 June 2015, with comparable figures as of and for the three and six month
periods ended 30 June 2014.
In USD thousand
Three months ended
Six months ended
30 June
30 June
2015
2014
2015
2014
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Voyage revenue ............................................................
-
7,384
9,721
7,384
Time charter revenue .....................................................
-
3,388
6,140
3,388
Pool revenue .................................................................
23,675
-
29,475
-
Total revenue ..............................................................
23,675
10,772
45,336
10,772
Voyage expenses ...........................................................
-
(2,131)
(3,200)
(2,131)
Ship operating expenses .................................................
(1,977)
(722)
(3,918)
(722)
Commercial management expenses .................................
(204)
(166)
(415)
(166)
Loss on receivables ........................................................
-
-
-
-
Administrative expenses .................................................
(574)
(566)
(1,075)
(1,003)
Depreciation..................................................................
(2,197)
(815)
(4,392)
(815)
Total operating expenses ............................................
(4,953)
(4,402)
(13,000)
(4,839)
Other gain ....................................................................
-
-
784
-
Operating profit ..........................................................
18,722
6,370
33,120
5,933
Finance income .............................................................
88
119
228
152
Finance expenses ..........................................................
(202)
(150)
(815)
(1,285)
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Avance Gas Holding Ltd – Offer Document
In USD thousand
Three months ended
Six months ended
30 June
30 June
2015
2014
2015
2014
(unaudited)
(unaudited)
(unaudited)
(unaudited)
Profit before income tax expense ...............................
18,609
6,339
32,533
Tax expense..................................................................
-
-
-
4,800
-
Net income .................................................................
18,609
6,339
32,533
4,800
Earnings per share .........................................................
0.63
0.26
1.10
0.23
Earnings per share (diluted) ...........................................
0.63
0.26
1.10
0.23
Other comprehensive income:
Reclassification of gain previously recognised in other
comprehensive income related to sale of available-for-sale
financial assets ..............................................................
-
-
(142)
-
Total comprehensive income ......................................
18,609
6,339
32,392
4,800
8.8.2
Selected balance sheet data
The table below sets out selected data from Aurora LPG‟s unaudited consolidated interim balance sheet as at 30 June
2015.
As at
In USD thousand
30 June
2015
(unaudited)
ASSETS
Newbuildings ...................................................................................................................................................
119,675
Vessels and equipment .....................................................................................................................................
227,887
Other non-current assets ..................................................................................................................................
164
Total non-current assets ...............................................................................................................................
347,725
Cash and cash equivalents ................................................................................................................................
13,157
Derivative financial asset ..................................................................................................................................
80
Inventories .....................................................................................................................................................
323
Accounts receivable .........................................................................................................................................
19,742
Other current assets ........................................................................................................................................
829
Total current assets .....................................................................................................................................
34,131
Total assets .................................................................................................................................................
381,856
EQUITY AND LIABILITIES
Share capital ..................................................................................................................................................
482
Share premium ...............................................................................................................................................
191,955
Treasury shares ...............................................................................................................................................
(2,100)
Retained earnings ...........................................................................................................................................
76,285
Total equity .................................................................................................................................................
266,622
Borrowings .....................................................................................................................................................
97,468
Total non-current liabilities ..........................................................................................................................
97,468
Borrowings, current portion ..............................................................................................................................
10,568
Accounts payable .............................................................................................................................................
2
Dividends .......................................................................................................................................................
2,968
Other current liabilities .....................................................................................................................................
4,229
Total current liabilities ..................................................................................................................................
17,767
Total equity liabilities ...................................................................................................................................
381,856
8.8.3
Selected statement of cash flow data
The table below sets out selected data from Aurora LPG‟s unaudited consolidated interim statement of cash flow for
the six month period ended 30 June 2015, with comparable figures as of and for the six month period ended 30 June
2014.
72
Avance Gas Holding Ltd – Offer Document
Six months ended
In USD thousand
30 June
2015
2014
(unaudited)
(unaudited)
Operating activities
Profit before income tax expense ...........................................................................................
32,534
Other gain ..........................................................................................................................
(784)
4,800
-
Depreciation........................................................................................................................
4,392
815
Other non-cash ...................................................................................................................
179
-
Other ..............................................................................................................................
(80)
-
Amortisation fees ..............................................................................................................
259
-
Change in working capital .....................................................................................................
(5,227)
54
Inventories ......................................................................................................................
1,886
(1,149)
Voyage in progress ...........................................................................................................
397
-
Receivables and other current assets ...................................................................................
(6,237)
(6,846)
Accounts payable ..............................................................................................................
(1,796)
1,518
Deferred revenue ..............................................................................................................
(1,774)
5,531
Other current liabilities ......................................................................................................
2,296
1,000
Net cash from operating activities ....................................................................................
31,095
5,669
Investing activities
Proceeds from available-for-sale financial assets ......................................................................
5,235
-
Purchase of vessels and equipment ........................................................................................
(43)
(151,004)
Additions to newbuildings .....................................................................................................
(25,009)
(46,523)
Net cash from investing activities .....................................................................................
(19,816)
(197,527)
Equity issuance net ..............................................................................................................
-
194,525
Purchase of treasury shares ..................................................................................................
(2,100)
-
Repayment of long term debt ................................................................................................
(6,222)
-
Net proceed from issuance of debt ........................................................................................
-
73,537
Net cash from financing activities .....................................................................................
(8,321)
268,064
Net increase in cash and cash equivalents ........................................................................
2,959
76,204
Cash and cash equivalents at beginning of period ....................................................................
10,198
-
Cash and cash equivalents at the end of period ................................................................
13,157
76,204
Financing activities
8.8.4
Selected statement of changes in equity data
The table below sets out selected data from Aurora LPG‟s unaudited consolidated interim statement of changes in
equity for the six month period ended 30 June 2015.
In USD thousand
Share capital
Share
Treasury
premium
shares
Retained
earnings
482
194 922
-
43 894
Net income ...............................................................................
-
-
-
32,533
Other comprehensive income ......................................................
-
-
-
(142)
Dividend ...................................................................................
-
2,968
-
-
Purchase of treasury shares ........................................................
-
-
(2,100)
-
Shareholders’ equity as of 30 June 2015 (unaudited) ............
482
191,955
(2,100)
76,285
Shareholders’ equity as of 1 January 2015
8.9
Significant changes since 30 June 2015
There have been no significant changes in the financial or trading position of the Aurora LPG Group since the date of
the Aurora LPG Interim Financial Statements as of and for the three and six months ended 30 June 2015, which have
been incorporated by reference hereto, see Section 12.3 “Incorporation by reference”.
8.10
Legal proceedings
Neither Aurora LPG nor any other company in the Aurora LPG Group is, nor has been, during the course of the
preceding twelve months involved in any legal, governmental or arbitration proceedings which may have, or have had
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Avance Gas Holding Ltd – Offer Document
in the recent past, significant effects on Aurora LPG‟s and/or the Aurora LPG Group‟s financial position or profitability,
and Avance Gas is not aware of any such proceedings which are pending or threatened.
8.11
Material contracts outside the ordinary course of business
Neither Aurora LPG nor any member of the Aurora LPG Group has entered into any material contracts outside the
ordinary course of business for the two years prior to the date of this Offer Document. Further, the Aurora LPG Group
has not entered into any other contract outside the ordinary course of business which contains any provision under
which any member of the Aurora LPG Group has any obligation or entitlement.
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Avance Gas Holding Ltd – Offer Document
9
UNAUDITED PRO FORMA FINANCIAL INFORMATION
9.1
General information and purpose of the unaudited Pro Forma Financial Information
The unaudited Pro Forma Financial Information set out below has been compiled by Avance Gas to illustrate the impact
of the offer to acquire all the issued shares in Aurora LPG (the “Contemplated Transaction”), as described in Section
4 “Terms and conditions of the Offer”, on Avance Gas‟ financial position as at 30 June 2015 and Avance Gas‟ financial
performance for the six month period ended 30 June 2015, as if the Contemplated Transaction had taken place on 30
June 2015 and 1 January 2015, respectively. As part of this process, information about Avance Gas‟ financial position
and financial performance has been extracted by Avance Gas from Avance Gas‟ unaudited interim financial statements
for the period ended 30 June 2015. However, there can be no guarantee that the Contemplated Transaction will be
accepted by the shareholders in Aurora LPG, or that the terms of any final offer will be in line with the assumptions
used in preparing the unaudited Pro Forma Financial Information. The unaudited Pro Forma Financial Information has
been prepared based on the Q2 financial information given that Aurora LPG has not released its Q3 financial
information as of the date of this Offer Document.
The unaudited Pro Forma Financial Information is based on certain management assumptions and adjustments. These
assumptions might not necessarily have applied had Aurora LPG been consolidated into Avance Gas for the purposes of
financial reporting in such period. Because of its nature, the unaudited Pro Forma Financial Information included herein
addresses a hypothetical situation and, therefore, does not represent the actual financial results for the Avance Gas
Group for the periods presented. The Pro Forma Financial Information is prepared for illustrative purposes only. It does
not purport to present what the Avance Gas Group‟s income statement or balance sheet would actually have been had
the Contemplated Transaction been completed on 1 January 2015 or 30 June 2015, respectively. Investors are
cautioned against placing undue confidence on this unaudited Pro Forma Financial Information.
The unaudited Pro Forma Financial Information has been compiled in connection with the Offer to comply with the
Continuing Obligations and the Norwegian Securities Trading Act. The unaudited Pro Forma Financial Information has
been prepared in accordance with Annex II of Regulation (EC) 809/2004. It should be noted that the unaudited Pro
Forma Financial Information is not prepared in connection with an offering registered with the US SEC under the U.S.
Securities Act and consequently is not compliant with the requirements of Regulation S-X promulgated by the SEC. In
particular, the Pro Forma Financial Information does not, and is not intended to, comply with Article 11 of Regulation
S-X and it could differ materially from pro forma financial information prepared in compliance therewith. As such, a
U.S. investor should not place reliance on the unaudited Pro Forma Financial Information included in this Offer
Document.
The assumptions underlying the pro forma adjustments for the purpose of deriving the unaudited Pro Forma Financial
Information are described in the notes to the unaudited Pro Forma Financial Information. Neither these adjustments
nor the resulting unaudited Pro Forma Financial Information have been audited in accordance with Norwegian,
International or United States generally accepted auditing standards, and the unaudited Pro Forma Financial
Information has not been prepared in accordance with the requirements of Regulation S-X of the SEC or generally
accepted practice in the United States. In evaluation the unaudited Pro Forma Financial Information, each reader
should carefully consider the Financial Information and the Aurora LPG Interim Financial Statements and the notes
thereto and the notes to the unaudited Pro Forma Financial Information.
The unaudited Pro Forma Financial Information does not include all of the information required for financial statements
under IFRS. The unaudited Pro Forma Financial Information does not represent the actual combination of the financial
statements of Avance Gas and Aurora LPG in accordance with IFRS, since certain simplifications and assumptions have
been made as discussed in this Section 9 “Unaudited Pro Forma Financial Information”. Furthermore, the unaudited
Pro Forma Financial Information is based on certain assumptions that would not necessarily have been applicable if
Avance Gas had ownership of these assets from the beginning of the periods presented in the pro forma financial
information.
The information describes a hypothetical situation. The unaudited Pro Forma Financial Information has been prepared
for illustrative purposes only to show how the Contemplated Transaction might have affected the Avance Gas Group‟s
unaudited consolidated income statement for the period presented if the acquisition had occurred at an earlier point in
time, and the unaudited consolidated balance sheet as of 30 June 2015, as if the acquisition had occurred at the
balance sheet date. Because of its nature, the unaudited pro forma financial information addresses a hypothetical
situation and, therefore, does not represent the Avance Gas Group‟s actual financial position or results if the
Contemplated Transaction had in fact occurred on those dates, and is not representative of the results of operations
for any future periods. Investors are cautioned not to place undue reliance on this unaudited Pro Forma Financial
Information.
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Avance Gas Holding Ltd – Offer Document
The unaudited Pro Forma Financial Information therefore does not reflect Avance Gas or the Avance Gas Group‟s
actual financial position and results. The pro forma information must not be considered final or complete, and may be
amended in future publications of accounts. The Pro Forma Financial Information has not been audited.
9.2
Basis of preparation
9.2.1
General
Both the Interim Q2 Financial Information and the Aurora LPG Interim Financial Statements have been prepared in
accordance with IAS 34.
With
respect
to
the
unaudited
Pro
Forma
Financial
Information
included
in
this
Offer
Document,
PricewaterhouseCoopers AS has applied assurance procedures in accordance with International Standards on
Assurance Engagements 3420, Assurance Engagements to Report on the Compilation of Pro Forma Financial
Information Included, in order to express an opinion as to whether the unaudited Pro Forma Financial Information has
been properly compiled on the basis stated, and that such basis is consistent with the accounting policies of the
Avance Gas Group. PricewaterhouseCoopers AS‟ report is included in Appendix B to this Offer Document.
9.2.2
Basis and source for the unaudited Pro Forma Financial Information
The unaudited Pro Forma Financial Information giving effect to the Contemplated Transaction has been prepared on
the basis of the IFRS accounting principles applied by Avance Gas. Please refer to the Financial Statement for the year
ended 31 December 2014 for a description of Avance Gas‟ accounting policies. Avance Gas has performed an analysis
of potential differences between the accounting principles adopted by Avance Gas and those adopted by Aurora LPG.
The result of that analysis did not identify any material differences in accounting principles.
The unaudited Pro Forma Financial Information is based on and derived from:

The Interim Q2 Financial Statements (prepared in accordance with IAS 34), incorporated by reference
hereto, see Section 12.3 “Incorporation by reference”; and

The Aurora LPG Interim Financial Statements (prepared in accordance with IAS 34), incorporated by
reference hereto, see Section 12.3 “Incorporation by reference”.
The unaudited Pro Forma Financial Information is presented in USD, which is also Avance Gas‟ and Aurora LPG‟s
functional currency and presentation currency.
9.3
Purchase accounting
The combination of the Avance Gas Group and the Aurora LPG Group will legally take place as an acquisition by
Avance Gas of the shares in Aurora LPG, whereby Avance Gas will compensate the shareholders of Aurora LPG by
issuing 16,547,490 Consideration Shares for each share in Aurora LPG, giving an implied consideration of USD 220.0
million (based on the one month volume weighted average share price for the period ending on 13 November 2015).
For further details on the Contemplated Transaction and the terms of the Offer, refer to Section 4 “Terms and
conditions of the Offer”.
IFRS 3 requires an acquirer to be identified for all business combinations. Avance Gas is the company that acquires
Aurora LPG for legal purposes and is assumed to be the acquirer also for accounting purposes. The unaudited Pro
Forma Financial Information has been prepared under this assumption. According to IFRS 3, the acquisition date is the
date on which Avance Gas obtains control of Aurora LPG. The fair value of the acquiree will be assessed at the same
date. This is the assumed basis of preparation for the unaudited Pro Forma Financial Information. The unaudited Pro
Forma Financial Information presented below reflects fair value as of 13 November 2015 (in which the share prices of
Avance Gas and Aurora LPG was NOK 104.5 and NOK 50.0, respectively), and assuming a NOK/USD exchange rate of
8.65.
For historical accounting purposes, however, the fair value will be the actual value at the date control is obtained, and
will reflect changes in the value of the Consideration until the Offer becomes unconditional. This may have a material
effect on the cost of the business combination for accounting purposes, and differ from the amounts included in the
unaudited Pro Forma Financial Information. The effects of a change in fair value of the share price of Avance Gas are
presented in Section 9.4 “Preliminary purchase price allocation” below.
The acquirees‟ assets and liabilities will be stated at fair value as of date of acquisition. The acquirer‟s assets and
liabilities remain at book value.
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Avance Gas Holding Ltd – Offer Document
9.4
Preliminary purchase price allocation
As of the date of this Offer Document, Avance Gas does not have full access to Aurora LPG‟s accounting records, which
will only be available after the completion of the Contemplated Transaction. As a result, a final purchase price
allocation has not been prepared at this time. However, a preliminary purchase price allocation has been prepared
identifying Aurora LPG‟s assets, liabilities and contingent liabilities. The preliminary purchase price allocation in the
unaudited Pro Forma Financial Information is based on Aurora LPG‟s unaudited interim consolidated balance sheet as
at 30 June 2015. The final purchase price allocation used for the final accounting of the Contemplated Transaction in
Avance Gas‟ consolidated IFRS financial statements may vary from the preliminary purchase price allocation which is
presented in the unaudited Pro Forma Financial Information.
9.5
Unaudited Pro Forma Financial Information
9.5.1
Unaudited pro forma balance sheet as at 30 June 2015
The table below sets out Avance Gas‟ unaudited pro forma balance sheet as at 30 June 2015, as if the Contemplated
Transaction had taken place on 30 June 2015.
In USD thousand
Historic
Historic
Pro Forma
Avance Gas
Aurora LPG
adjustments
Holding Ltd
Holding ASA
(unaudited)
(unaudited)
Notes
Pro Forma
ASSETS
Current assets:
Cash and cash equivalents ...........................................................................
99,022
13,157
-
Receivables ..........................................................................................
52,236
19,742
(1,795)
112,179
Related party receivables balances..........................................................
109
-
-
109
Inventory ............................................................................................
4,167
323
-
4,490
Prepaid expenses ..................................................................................
364
-
-
364
Derivative financial instruments ..............................................................
553
80
-
633
767
Other current assets .............................................................................
829
-
1,596
157,218
Total current assets ...........................................................................
34,131
(1,795)
189,554
1
70,183
Non-current assets:
Property, plant and equipment ...............................................................
657,354
227,887
13,113
2
898,354
Newbuilding deposit ..............................................................................
69,700
119,675
(42,150)
3
147,225
2,318
Goodwill and intangible assets ................................................................
164
(164)
4
729,372
Total non-current assets ....................................................................
347,726
(29,201)
1,047,897
886,590
Total assets .......................................................................................
381,857
(30,996)
1,237,451
Current portion of long-term debt ..............................................................
31,556
10,568
-
42,124
Accounts payable .....................................................................................
1,809
2
-
1,811
Derivative financial instruments .................................................................
853
-
-
853
Related party payable balances .................................................................
939
-
-
939
Accrued voyage expenses .........................................................................
3,362
-
-
3,362
Accrued expenses ....................................................................................
2,424
-
-
Unfavourable time charter contracts...........................................................
-
-
3,017
Dividends ...............................................................................................
-
2,968
-
1,802
Other current liabilities .............................................................................
4,229
-
6,031
42,745
Total current liabilities ..........................................................................
17,767
3,017
63,529
2,318
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
2,424
5
3,017
2,968
Non-current liabilities:
341,271
Long-term debt .......................................................................................
97,468
-
438,739
341,271
Total non-current liabilities ..................................................................
97,468
-
438,739
Common shares ......................................................................................
35,278
482
16,065
6
51,825
Paid-in capital .........................................................................................
350,359
191,955
11,493
6
553,807
Shareholders’ equity:
Contributed capital...................................................................................
94,776
-
-
Retained earnings ....................................................................................
35,081
76,285
(63,671)
Treasury shares .......................................................................................
(12,459)
(2,100)
2,100
(12,459)
Fair value reserve ....................................................................................
(300)
-
-
(300)
77
94,776
6
47,695
Avance Gas Holding Ltd – Offer Document
In USD thousand
Historic
Historic
Pro Forma
Avance Gas
Aurora LPG
adjustments
Holding Ltd
Holding ASA
(unaudited)
(unaudited)
Notes
Pro Forma
(161)
Foreign currency reserve ..........................................................................
-
-
(161)
502,574
Total shareholders’ equity ....................................................................
266,622
(34,012)
735,184
886,590
Total liabilities and shareholders’ equity ..............................................
381,857
(30,996)
1,237,451
9.5.2
Unaudited pro forma income statement for the six months ended 30 June 2015
The table below sets out Avance Gas‟ unaudited pro forma income statement for the six month period ended 30 June
2015, as if the Contemplated Transaction had taken place on 1 January 2015.
In USD thousand
Historic
Historic
Pro Forma
Avance Gas
Aurora LPG
adjustments
Holding Ltd
Holding ASA
(unaudited)
(unaudited)
Notes
Pro Forma
Voyage revenue ...................................................................................
116,808
9,721
-
Time charter revenue ............................................................................
-
6,140
-
126,529
6,140
Pool revenue ........................................................................................
29,475
-
29,475
116,808
Total revenue .....................................................................................
45,336
-
162,144
Voyage expenses ..................................................................................
(17,689)
(3,200)
-
(20,889)
Operating expenses ..............................................................................
(11,833)
(3,918)
-
(15,751)
Commercial management expenses ........................................................
-
(415)
-
(415)
(4,316)
Administrative and general expenses ......................................................
(1,075)
-
(5,391)
Operating profit before depreciation expense
82,970
and other gain ...................................................................................
36,728
-
Depreciation expense ......................................................................
(12,918)
(4,392)
(364)
Other gain ..............................................................................................
784
-
784
70,052
Operating profit ....................................................................................
33,120
(364)
102,808
Bargain purchase gain ..............................................................................
-
-
12,614
Finance expense ......................................................................................
(5,025)
228
-
(4,797)
Finance income .......................................................................................
110
(815)
-
(705)
61
Foreign currency exchange gain ................................................................
-
-
61
65,198
Net profit ..............................................................................................
32,533
12,250
109,981
1.90
Earnings per share ...................................................................................
1.10
2.16
1.90
Earnings per share (diluted) .....................................................................
1.10
2.16
9.5.3
Notes to the unaudited Pro Forma Financial Information
9.5.3.1
Note 1 – Receivables
119,698
7
6
(17,674)
12,614
Avance Gas has identified certain accounts receivable in the acquiree, where it is appropriate to reflect the time value
of money in the preliminary purchase price allocation. The fair value of these receivables is based on the discounted
value, where they have been discounted for one year at an estimated industry cost of capital of 10%. The receivables
are being discounted due to the expected time to collect. Based on information available to Avance Gas, no specific
credit risks associated with these receivables have been identified. There is no impact on the combined income
statement as this item is non-recurring in nature.
9.5.3.2
Note 2 – Property, plant and equipment
In preparing the preliminary purchase price allocation, Avance Gas has prepared an estimate of the fair value of the
acquiree‟s property plant and equipment. Avance Gas has identified that it is necessary to adjust the value of
acquiree‟s vessel. The estimated fair value and book value of Aurora LPG‟s vessels is USD 241 million and USD 227.9
million, respectively, giving an adjustment of USD 13.1 million. The estimated fair value is based on Avance Gas‟
estimates derived from market values obtained from independent ship brokers for comparable, charter free, vessels in
the Avance Gas fleet. Vessel values are highly volatile, these estimates may not be indicative of the current or future
basic market value of the vessel or prices that could be achieved if the vessels were sold. There is no impact on the
combined income statement as this item is non-recurring in nature.
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Avance Gas Holding Ltd – Offer Document
9.5.3.3
Note 3 – Newbuilding deposit
Aurora LPG has agreed to purchase six VLGC newbuildings to be built at Hyundai Heavy Industries in Korea. The
expected delivery is Q1 – Q3 2016. The agreed purchase price is USD 77.2 million per ship, a total of USD 463.2
million. The estimated fair value is based on the management of Avance Gas‟ estimates of future cash flow from
expected delivery in 2016 for the useful economic life of the vessels. The cash flow is discounted at an estimated
WACC for the industry of 10%. There is no impact on the combined income statement as this item is non-recurring in
nature.
9.5.3.4
Note 4 – Intangible assets and goodwill
In preparing the preliminary purchase price allocation, the acquiree‟s historical goodwill of USD 164 thousand has not
been allocated any fair value, in accordance with IFRS. In the pro forma balance sheet this historical goodwill is
therefore shown with the value as nil. There is no impact on the combined income statement as this item is nonrecurring in nature.
9.5.3.5
Note 5 – Unfavourable time charter contract
In preparing the preliminary purchase price allocation, Avance Gas has identified a time charter contract which Avance
Gas believes is at an unfavourable rate in relation to estimated current market rate for such a vessel. Avance Gas has
therefore included an adjustment relating to this one time charter contract. The adjustment relates to the difference
between the estimated current market rate for a similar contact and the rate specified in the contract, after giving
effect to timing of the relevant cashflows using a discount rate of 10%. The adjustment will be amortised over a period
of two years from 1 July 2015, which is the remaining contractual period.
9.5.3.6
Note 6 – Equity
Avance Gas Holding Ltd is identified as the legal and accounting acquirer. The purchase of Aurora LPG Holding ASA is
assumed to be an all share offer on a fixed exchange ratio and will increase the number of shares in Avance Gas by
16,547,490. This will increase share capital by USD 16,547,490 and, based on the one month volume weighted
average share price for the period ending on 13 November 2015, paid in capital will increase with USD 203.4 million.
Changes in both the share price and foreign exchange rate between USD and NOK may impact the actual amounts
ultimately included in the final acquisition balance sheet and may differ significantly from the pro forma adjustment. If
the share price of Avance Gas increases by NOK 1, consideration will increase by approximately USD 1.9 million. The
actual consideration will be measured at the date of change of control, being the date all conditions for completion of
the Offer are met. Further, the historical equity balances of the acquiree are eliminated upon acquisition in accordance
with IFRS. There is no impact on the combined income statement as this item is non-recurring in nature.
9.5.3.7
Note 7 – Depreciation
The preliminary purchase price allocation identified an increase of NOK 13.1 million in the carrying value of certain
vessels, included within property plant and equipment. In accordance with IFRS, this increase in carrying amount is
required to the depreciated over the remaining estimated useful life of the asset. This gives rise to an increase in
depreciation for owned vessels for the six month period ended 30 June 2015 of USD 0.4 million, based on an
assumption that the remaining estimated useful lives are 18 years. The depreciation will have a recurring effect over
the remaining estimated useful life.
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Avance Gas Holding Ltd – Offer Document
10
TAXATION
Set out below is a summary of certain Bermuda and Norwegian tax matters related to the Offer and an investment in
Avance Gas. The summary regarding Bermuda and Norwegian taxation are based on the laws in force in Bermuda and
Norway as at the date of this Offer Document, which may be subject to any changes in law occurring after such date.
Such changes could possibly be made on a retrospective basis. Please note that the Norwegian Ministry of Finance has
recently proposed certain amendments to Norwegian tax legislation. The proposed amendments which may be
relevant with respect to accepting the Offer or investing in Avance Gas include inter alia (i) a reduction of the tax rate
on ordinary income from 27% to 25% and (ii) an increase in the effective tax rate on dividends and capital gains
received by individuals resident in Norway for tax purposes from 27% to 28.75%. If the proposals are adopted by the
Norwegian Parliament, the amendments will be effective as of 1 January 2016.
The following summary does not purport to be a comprehensive description of all the tax considerations that may be
relevant to a decision to accept the Offer, acquire, own or dispose of the shares in Avance Gas. Shareholders who wish
to clarify their own tax situation should consult with and rely upon their own tax advisors. Shareholders resident in
jurisdictions other than Norway and shareholders who cease to be resident in Norway for tax purposes (due to
domestic tax law or tax treaty) should specifically consult with and rely upon their own tax advisors with respect to the
tax position in their country of residence and the tax consequences related to ceasing to be resident in Norway for tax
purposes.
Please note that for the purpose of the summary below, a reference to a Norwegian or non-Norwegian shareholder
refers to the tax residency rather than the nationality of the shareholder.
10.1
Bermuda taxation
At the present time, there is no Bermuda income or profits tax, withholding tax, capital gains tax, capital transfer tax,
estate duty or inheritance tax payable by Avance Gas or by its shareholders in respect of the Shares. Avance Gas has
obtained an assurance from the Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act
1966 that, in the event that any legislation is enacted in Bermuda imposing any tax computed on profits or income, or
computed on any capital asset, gain or appreciation or any tax in the nature of estate duty or inheritance tax, such tax
shall not, until 31 March 2035, be applicable to Avance Gas or to any of Avance Gas‟ operations or to its shares,
debentures or other obligations except insofar as such tax applies to persons ordinarily resident in Bermuda or is
payable by Avance Gas in respect of real property owned or leased by Avance Gas in Bermuda.
10.2
Norwegian taxation
10.2.1
Taxation of the Offer
The exchange of shares in Aurora LPG for shares in Avance Gas under the Offer, will be considered a realisation of the
shares in Aurora LPG for Norwegian tax purposes.
Norwegian Personal Shareholders
A capital gain or loss generated by shareholders who are individuals resident in Norway for tax purposes (“Norwegian
Personal Shareholders”) through a disposal of shares is taxable or tax deductible in Norway. Such capital gain or
loss is included in or deducted from the Norwegian Personal Shareholder‟s ordinary income in the year of disposal.
Ordinary income is currently taxable at a rate of 27%.
The gain is subject to tax and the loss is tax deductible irrespective of the duration of the ownership and the number
of shares disposed of.
The taxable gain/deductible loss is calculated per share as the difference between the consideration for the share (i.e.
the listed value of the shares in Avance Gas received under the Offer) and the Norwegian Personal Shareholder‟s cost
price of the share, including costs incurred in relation to the acquisition or realisation of the share. From this capital
gain, Norwegian Personal Shareholders are entitled to deduct a calculated allowance provided that such allowance has
not already been used to reduce taxable dividend income. Please refer to Section 10.2.2 “Taxation of dividends
received from Avance Gas – Norwegian Personal Shareholders” below for a description of the calculation of the
allowance. The allowance may only be deducted in order to reduce a taxable gain, and cannot increase or produce a
deductible loss, i.e. any unused allowance exceeding the capital gain upon the realisation of a share will be annulled.
If the Norwegian Personal Shareholder owns shares acquired at different points in time, the shares that were acquired
first will be regarded as the first to be disposed of, on a first-in first-out basis.
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Avance Gas Holding Ltd – Offer Document
Norwegian Corporate Shareholders
Norwegian shareholders who are limited liability companies (and certain similar entities) resident in Norway for tax
purposes (“Norwegian Corporate Shareholders”) are exempt from tax on capital gains derived from the realisation
of shares qualifying for participation exemption, including shares in Aurora LPG. Losses upon the realisation and costs
incurred in connection with the purchase and realisation of such shares are not deductible for tax purposes.
Non-Norwegian Shareholders
Capital gains generated by Non-Norwegian tax resident shareholders (“Non-Norwegian Shareholders”) are not
taxable in Norway unless the Non-Norwegian Shareholder holds the shares in connection with the conduct of a trade or
business in Norway.
10.2.2
Taxation of dividends received from Avance Gas
Norwegian Personal Shareholders
Dividends received by Norwegian Personal Shareholders are taxable as ordinary income in Norway for such
shareholders currently at a rate of 27% to the extent the dividend exceeds a tax-free allowance. The allowance is
calculated on a share-by-share basis. The allowance for each share is equal to the cost price of the share multiplied by
a risk free interest rate based on the effective rate after tax of interest on treasury bills (Nw.: statskasseveksler) with
three months maturity. The allowance is calculated for each calendar year, and is allocated solely to Norwegian
Personal Shareholders holding shares at the expiration of the relevant calendar year.
Norwegian Personal Shareholders who transfer shares will thus not be entitled to deduct any calculated allowance
related to the year of transfer. Any part of the calculated allowance one year exceeding the dividend distributed on the
share (“excess allowance”) may be carried forward and set off against future dividends received on, or gains upon
realisation, of the same share.
Norwegian Corporate Shareholders
Dividends distributed by companies resident in Bermuda for tax purposes, including dividends from Avance Gas,
received by Norwegian Corporate Shareholders are taxable as ordinary income in Norway for such shareholders
currently at a flat rate of 27%.
Non-Norwegian Shareholders
As a general rule, dividends received by Non-Norwegian Shareholders from shares in Non-Norwegian companies are
not subject to Norwegian taxation unless the Non-Norwegian shareholder holds the shares in connection with the
conduct of a trade or business in Norway.
10.2.3
Taxation of capital gains on realisation of shares in Avance Gas
Norwegian Personal Shareholders
Sale, redemption or other disposal of shares is considered a realisation for Norwegian tax purposes. A capital gain or
loss generated by a Norwegian Personal Shareholder through a disposal of shares is taxable or tax deductible in
Norway. Such capital gain or loss is included in or deducted from the Norwegian Personal Shareholder‟s ordinary
income in the year of disposal. Ordinary income is currently taxable at a rate of 27%.
The gain is subject to tax and the loss is tax deductible irrespective of the duration of the ownership and the number
of shares disposed of.
The taxable gain/deductible loss is calculated per share as the difference between the consideration for the share and
the Norwegian Personal Shareholder‟s cost price of the share, including costs incurred in relation to the acquisition or
realisation of the share. From this capital gain, Norwegian Personal Shareholders are entitled to deduct a calculated
allowance provided that such allowance has not already been used to reduce taxable dividend income. Please refer to
Section 10.2.2 “Taxation of dividends received from Avance Gas – Norwegian Personal Shareholders” above for a
description of the calculation of the allowance. The allowance may only be deducted in order to reduce a taxable gain,
and cannot increase or produce a deductible loss, i.e. any unused allowance exceeding the capital gain upon the
realisation of a share will be annulled.
If the Norwegian Personal Shareholder owns shares acquired at different points in time, the shares that were acquired
first will be regarded as the first to be disposed of, on a first-in first-out basis.
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Avance Gas Holding Ltd – Offer Document
Norwegian Corporate Shareholders
A capital gain or loss derived by a Norwegian Corporate Shareholder from a disposal of shares in Avance Gas is taxable
or tax deductible in Norway. The taxable gain/deductible loss per share is calculated as the difference between the
consideration for the share and the Norwegian Corporate Shareholder‟s cost price of the share, including costs incurred
in relation to the acquisition or disposal of the share. Such capital gain or loss is included in or deducted from the basis
for computation of ordinary income in the year of disposal. Ordinary income is currently taxable at a rate of 27%.
The gain is subject to tax and the loss is tax deductible irrespective of the duration of the ownership and the number
of shares disposed of.
If the Norwegian Corporate Shareholder owns shares acquired at different points in time, the shares that were
acquired first will be regarded as the first to be disposed of, on a first-in first-out basis.
Non-Norwegian Shareholders
As a general rule, capital gains generated by Non-Norwegian Shareholders are not taxable in Norway unless the NonNorwegian Shareholder holds the shares in connection with the conduct of a trade or business in Norway.
10.2.4
Controlled Foreign Corporation (CFC) taxation
Norwegian shareholders in Avance Gas will be subject to Norwegian taxation according to the Norwegian Controlled
Foreign Corporations regulations (Norwegian CFC-regulations) if Norwegian shareholders directly or indirectly own or
control (hereinafter together referred to as “Control”) the shares of Avance Gas.
Norwegian shareholders will be considered to Control Avance Gas if:

Norwegian shareholders Control 50% or more of the shares or capital in Avance Gas at the beginning of and
at the end of a tax year; or

If Norwegian shareholders Controlled Avance Gas the previous tax year, Avance Gas will also be considered
Controlled by Norwegian shareholders in the following tax year unless Norwegian resident shareholders
Control less than 50% of the shares or capital at both the beginning and the end of the following tax year;
or

Norwegian shareholders Control more than 60% of the shares or capital in Avance Gas at the end of a tax
year.
If less than 40% of the shares or capital are Controlled by Norwegian shareholders at the end of a tax year, Avance
Gas will not be considered Controlled by Norwegian shareholders for Norwegian tax purposes.
Under the Norwegian CFC-regulations Norwegian shareholders are subject to Norwegian taxation on their
proportionate part of the taxable net income generated by Avance Gas, calculated according to Norwegian tax
regulations, regardless of whether or not any dividends are distributed from Avance Gas.
10.2.5
Net wealth tax
The value of shares is included in the basis for the computation of net wealth tax imposed on Norwegian Personal
Shareholders. Currently, the marginal net wealth tax rate is 0.85% of the value assessed. The value for assessment
purposes for listed shares is equal to the listed value as at 1 January in the year of assessment.
Norwegian Corporate Shareholders are not subject to net wealth tax.
Non-Norwegian Shareholders are generally not subject to Norwegian net wealth tax. Non-Norwegian personal
shareholders can, however, be taxable if the shareholding is effectively connected to the conduct of trade or business
in Norway.
10.2.6
VAT and transfer taxes
No VAT, stamp or similar duties are currently imposed in Norway on the transfer or issuance of shares.
10.2.7
Inheritance tax
A transfer of shares through inheritance or as a gift does not give rise to inheritance or gift tax in Norway.
82
Avance Gas Holding Ltd – Offer Document
11
RESTRICTIONS
11.1
General
The distribution of this Offer Document, any separate summary documentation regarding the Offer and the making of
the Offer may be restricted by law in certain jurisdictions and neither this Offer Document nor any such summary, nor
the Offer discussed herein or therein, constitutes an offer to sell or the solicitation of an offer to buy securities in any
jurisdiction in which such an offer or solicitation would be unlawful. Any failure to comply with these restrictions may
constitute a violation of the securities laws of such jurisdictions. Avance Gas and the Financial Adviser do not accept or
assume any responsibility or liability for any violation by any person whomsoever of any such restriction.
The Offer Document is not directed to persons whose acceptance of the Offer requires that (i) further documents are
issued in order for the Offer to comply with local law or (ii) registration or other measures are taken pursuant to local
law. No document or material relating to the Offer may be distributed in or into any country where such distribution or
offering requires any of the aforementioned measures to be taken or would be in conflict with any law or regulation of
such country. In the event such distribution or offering nevertheless is made, an acceptance form sent from such a
country may be regarded as non-binding on Avance Gas. The Offer is not being made in or into Australia, Canada or
Japan or, subject to the exceptions discussed below, the United States, and will not be permitted to be accepted in or
from these jurisdictions.
11.2
United States
Shareholders resident in the United States are advised that the shares of Aurora LPG are not listed on any securities
exchange in the United States, and that the Aurora LPG is not subject to the periodic reporting requirements of the
U.S. Exchange Act and is not required to, and does not, file any reports with the SEC thereunder.
The Offer is for the shares of a Norwegian company with consideration in the form of shares in a Bermudian company.
The shares of the companies are listed for trading on the Oslo Stock Exchange and Oslo Axess, respectively, and the
Offer is governed by provisions of Norwegian law. Matters of a legal nature related to the Offer procedure, the content
of this Offer Document and the publication of the Offer are subject to Norwegian law. All matters of a legal nature
related to company law issues as well as certain securities law issues are subject to Norwegian law as Aurora LPG is a
Norwegian company.
The provisions of Bermudian and Norwegian law differ considerably from the corresponding United States legal
provisions. Only a limited set of United States legal provisions apply to the Offer and this Offer Document. To the
extent the Offer is made in the United States, this is done pursuant to Section 14(e) of, and Regulation 14E under, the
U.S. Exchange Act, subject to the exemptions provided by Rule 14d-1(d) under the U.S. Exchange Act, but otherwise
only in accordance with the requirements of Norwegian law and practice, and applicable rules and regulations of the
Oslo Stock Exchange and certain other applicable laws. The Offer is being made on the same terms and conditions as
those made to all other shareholders and any informational documents, including this Offer Document, are being
disseminated to U.S. shareholders on a basis comparable to the method that such documents are provided to
shareholders in Norway. The applicable procedural and disclosure requirements of Norwegian law are different than
those of the U.S. securities laws in certain material respects. The timing of payments, withdrawal rights, settlement
procedures, and other timing and procedural matters of the Offer are consistent with Norwegian practice, which differs
from U.S. domestic tender offer procedures. In accordance with U.S. federal securities laws, the Offer will remain open
for at least 20 U.S. business days.
U.S. shareholders should also be aware that the transaction contemplated in the Offer Document may have tax
consequences in the United States and that such consequences, if any, are not described herein. U.S. shareholders are
urged to consult with legal, tax and financial advisors in connection with making a decision regarding the Offer.
Pursuant to an exemption provided from Rule 14e-5 under the U.S. Exchange Act, Avance Gas may acquire, or make
arrangements to acquire, shares in Aurora LPG, other than pursuant to the Offer, on or off Oslo Axess or otherwise
outside the United States during the period in which the Offer remains open for acceptance, so long as those
acquisitions or arrangements comply with applicable Norwegian law and practice and the provisions of such exemption.
In the United States, the Offer is only being made and the Consideration Shares are only being offered to Aurora LPG
shareholders who are “qualified institutional buyers”, as defined in Rule 144A under the U.S. Securities Act in
transactions not involving any public offering within the meaning of the U.S. Securities Act. Accordingly, the Offer is
only open for acceptance in the United States to Aurora LPG shareholders who Avance Gas reasonably believes are
“qualified institutional buyers” and no offer or solicitation for an offer is made to any other person in the United States.
83
Avance Gas Holding Ltd – Offer Document
Any person (including nominees, trustees and custodians) who would, or otherwise intends to, forward this Offer
Document or any related documents to the United States or to any “U.S. person” as defined in Regulation S may only
do so if such person reasonably believes that the recipient is a “qualified institutional buyer.” U.S. persons accepting
the Offer will in addition to the Acceptance Form be required to execute the U.S. Investor Representation Letter, which
is attached to the Acceptance Form as Exhibit I. See Section 4.9 “Procedures for accepting the Offer.”
Avance Gas may treat as invalid any purported acceptance of the Offer that appears to Avance Gas or any of its
agents to have been executed in or despatched from the United States by a person which has not executed a U.S.
Investor Representation Letter, or which otherwise is considered by Avance Gas or its agents, in their absolute
discretion, to have been made by a person in the United States or by a U.S. person under circumstances where an
exemption from the registration requirements of the U.S. Securities Act is not available.
The Consideration Shares have not been and will not be registered under the U.S. Securities Act or under any of the
relevant securities laws of any state or other jurisdiction of the United States and will be “restricted securities” (as
defined in Rule 144 under the U.S. Securities Act). The Consideration Shares may not be reoffered, resold, pledged or
otherwise transferred, except (i) to a person who the seller reasonably believes is a “qualified institutional buyer”
within the meaning of Rule 144A under the U.S. Securities Act purchasing for its own account or for the account or
benefit of a qualified institutional buyer in a transaction meeting the requirements of Rule 144A (if available), (ii)
outside the United States in compliance with Rule 903 or Rule 904, as applicable, of Regulation S, (iii) pursuant to an
exemption from registration under the U.S. Securities Act provided by Rule 144 thereunder (if available), (iv) pursuant
to any other available exemption from registration under the U.S. Securities Act, or (v) pursuant to an effective
registration statement under the U.S. Securities Act, in each case in accordance with all applicable securities laws of
the states of the United States and any other jurisdiction. The shareholder understands and acknowledges that neither
Avance Gas nor the Receiving Agent makes any representation as to the availability of Rule 144A, Rule 144 or any
other exemption from registration under the U.S. Securities Act.
Avance Gas has agreed that for as long as any of the Consideration Shares being offered and sold pursuant to or in
connection with the Offer remain outstanding and are “restricted securities” within the meaning of Rule 144(a)(3)
under the U.S. Securities Act, if at any time Avance Gas is neither subject to section 13 or section 15(d) under the
U.S. Exchange Act nor exempt from reporting under the U.S. Exchange Act pursuant to Rule 12g3-2(b) thereunder,
Avance Gas will furnish to any holder of the relevant shares or to a prospective purchaser of such shares designated
by any such shareholder the information specified in, and meeting the requirements of, Rule 144A(d)(4) under the
U.S. Securities Act, upon the written request of any such shareholder.
It may be difficult for U.S. shareholders to enforce their rights and any claim they may have arising under the federal
securities laws, since the issuer is located outside the United States, and some or all of its officers may be residents of
a foreign country. U.S. shareholders may not be able to sue Avance Gas or its officers or directors in a foreign court
for violations of the U.S. securities laws. It may be difficult for U.S. shareholders to compel a foreign company and its
affiliates to subject themselves to a U.S. court‟s judgement.
11.3
United Kingdom
The communication of this Offer Document is not being made by, and has not been approved by, an authorised person
for the purposes of section 21 of the Financial Services and Markets Act 2000 (“FSMA”). Accordingly, this Offer
Document is not being distributed to, and must not be passed on to, the general public in the United Kingdom. The
communication of this Offer Document is exempt from the restriction on financial promotions contained in section 21
of FSMA on the basis that it is a communication by or on behalf of a body corporate which relates to a transaction to
acquire shares in a body corporate and the object of the transaction may reasonably be regarded as being the
acquisition of day to day control of the affairs of that body corporate within Article 62 (Sale of body corporate) of the
Financial Services and Markets Act 2000 (Financial Promotion) Order 2005.
11.4
Canada
Neither this Offer Document nor any copy of it may be taken or transmitted into Canada or distributed or redistributed
in Canada or to any individual outside Canada who is a resident of Canada, except in compliance with applicable rules.
11.5
Australia
The Offer is not being made directly or indirectly in or into and may not be accepted in or from Australia. Accordingly,
if any copies of this Offer Document (and any accompanying documents) are mailed or otherwise distributed or sent in
or into Australia, that action does not constitute an offer and any purported acceptance by or on behalf of an
Australian resident will be invalid.
84
Avance Gas Holding Ltd – Offer Document
11.6
Japan
Neither this Offer Document nor any copy of it may be taken or transmitted into Japan or distributed or redistributed
in Japan or to any resident thereof for the purpose of solicitation of subscription or offer for sale of any securities or in
the context where its distribution may be construed as such solicitation or offer.
85
Avance Gas Holding Ltd – Offer Document
12
ADDITIONAL INFORMATION
12.1
Auditor and advisors
Avance Gas‟ independent auditor is PricewaterhouseCoopers AS with registration number 987 009 713, and business
address at Dronning Eufemias gate 8, N-0191 Oslo, Norway. The partners of PricewaterhouseCoopers AS are members
of The Norwegian Institute of Public Accountants (Nw.: Den Norske Revisorforening).
Danske Bank (Bryggetorget 4, P.O. Box 1170 Sentrum, N-0107 Oslo Norway) is acting as financial adviser to Avance
Gas in connection with the Offer.
Advokatfirmaet Thommessen AS (Haakon VIIs gate 10, N-0116 Oslo, Norway) is acting as Norwegian legal counsel to
Avance Gas and MJM Limited (Thistle House, 4 Burnaby Street, Hamilton HM 11, Bermuda) is acting as special
Bermuda legal counsel to Avance Gas.
12.2
Documents on display
Copies of the following documents will be available for inspection at Avance Gas‟ offices at Thistle House, 4 Burnaby
Street, Hamilton HM 11, Bermuda, during normal business hours from Monday to Friday each week (except public
holidays) for a period of twelve months from the date of this Offer Document:

Avance Gas‟ memorandum of association and Bye-laws;

All reports, letters, and other documents, historical financial information, valuations and statements
prepared by any expert at Avance Gas‟ request any part of which is included or referred to in this Offer
Document;

The historical financial information of Avance Gas and its subsidiary undertakings for each of the two
financial years preceding the publication of this Offer Document; and

This Offer Document.
12.3
Incorporation by reference
The information incorporated by reference in this Offer Document shall be read in connection with the cross-reference
list set out in the table below. Except as provided in this Section, no information is incorporated by reference in this
Offer Document.
Avance Gas incorporates by reference the Avance Gas Group‟s unaudited consolidated interim financial statements as
of and for the three and nine month periods ended 30 September 2015, with comparable figures as of and for the
three and nine month periods ended 31 August 2014, the Avance Gas Group‟s unaudited consolidated interim financial
statements as of and for the three and six month periods ended 30 June 2015, with comparable figures as of and for
the three and six month periods ended 31 May 2014, and the Avance Gas Group‟s audited consolidated financial
statements as of and for the thirteen months ended 31 December 2014 and the twelve month periods ended 31
December 2013 and 2012 as well as Aurora LPG‟s interim financial statements as of and for the three and six month
periods ended 30 June 2015, with comparable figures as of and for the three and six month periods ended 30 June
2014:
Section in
Disclosure requirements of
the Offer
the Offer Document
Document
Page (P) in
reference
Reference document and link
Section
Audited historical financial
7.1
information
(Annex I, Section 20.1)
Avance Gas – Financial statements 2014
http://hugin.info/161089/R/1916777/685536.pdf
document
P22-P52
Avance Gas – Financial statements 2013
http://hugin.info/161089/R/1792468/616994.pdf
P1-P26
Avance Gas – Financial statements 2012
http://hugin.info/161089/R/1792499/616998.pdf
Section 7.1
Audit report
Avance Gas – Auditor’s report 2014
(Annex I, Section 20.4.1)
http://hugin.info/161089/R/1916777/685536.pdf
PB29-PB52
P63
Avance Gas – Auditor’s report 2013
http://hugin.info/161089/R/1792468/616994.pdf
86
P27-P28
Avance Gas Holding Ltd – Offer Document
Section in
Disclosure requirements of
the Offer
the Offer Document
Document
Page (P) in
reference
Reference document and link
document
Avance Gas – Auditor’s report 2012
http://hugin.info/161089/R/1792499/616998.pdf
Section 7.1
Accounting policies (Annex I,
Avance Gas – Accounting principles
Section 20.1)
http://hugin.info/161089/R/1916777/685536.pdf
Section 7.1
Interim financial information
Avance Gas – Interim financial statements Q3 2015
and 9
(Annex I, Section 20.6.1)
http://www.newsweb.no/newsweb/search.do?messageId=38863
PB53-PB54
P30-P33
P1–P11
2
Avance Gas – Interim financial statements Q2 2015
http://hugin.info/161089/R/1947759/707305.pdf
Section 8 and
Interim financial information
Aurora LPG – Interim financial statements Q2 2015
9
(Annex II, Section 3)
http://www.auroralpg.com/media/2014/02/Aurora-Q2-2015Interim-Financial-Statement.pdf
87
P1-P13
P1–P12
Avance Gas Holding Ltd – Offer Document
13
DEFINITIONS AND GLOSSARY
In the Offer Document, the following defined terms have the following meanings:
Acceptance Form ................................... The form of acceptance to be distributed and used by the shareholders of Aurora LPG
when accepting the Offer, enclosed as Appendix A to this Offer Document.
Appointed Stock Exchange ...................... An appointed stock exchange in accordance with the provisions of the Bermuda
Companies Act.
Aurora LPG ........................................... Aurora LPG Holding ASA.
Aurora LPG Group .................................. Aurora LPG and its consolidated subsidiaries.
Aurora LPG Interim Financial
Aurora LPG‟s unaudited interim consolidated financial statements as of and for the
Statements ........................................... three and six month periods ended 30 June 2015, with comparable figures as of and
for the three and six month periods ended 30 June 2014.
Aurora Shipping .................................... Aurora Shipping Holding AS.
Avance Gas ........................................... Avance Gas Holding Ltd.
Avance Gas Group ................................. Avance Gas and its consolidated subsidiaries.
Bermuda Companies Act ......................... The Companies Act 1981, as amended of Bermuda.
Board of Directors.................................. The Board of Directors of Avance Gas.
Business Day ........................................ A day other than a Saturday or Sunday on which banks are open for business in
Oslo, Norway.
Bye-laws .............................................. Avance Gas‟ bye-laws.
cbm ..................................................... Cubic meters.
CET ..................................................... Central European Time.
Combination ......................................... The combination of the business of the Avance Gas Group and the Aurora LPG Group
by way of Avance Gas acquiring the shares in Aurora LPG in exchange for newly
issued Shares in combination with cash.
Consideration ........................................ 0.574 new common shares in Avance Gas for each Aurora LPG share (rounded down
to the nearest whole number of shares to each accepting shareholder).
Consideration Shares ............................. The new common shares of Avance Gas to be issued as consideration to the
accepting Aurora LPG shareholders.
Continuing Obligations ........................... The Continuing obligations of stock exchange listed companies issued by the Oslo
Stock Exchange.
Corporate Governance Code ................... The Norwegian Code of Practice for Corporate Governance, dated 30 October 2014.
Drop-dead Date ..................................... 29 February 2016.
EEA ..................................................... The European Economic Area.
EU ....................................................... The European Union.
EUR ..................................................... The lawful common currency of the EU member states who have adopted the Euro as
their sole national currency.
Financial Adviser ................................... Danske Bank.
Financial Information ............................. The Financial Statements, the Interim Q3 Financial Statements and the Interim Q2
Financial Statements.
Financial Statements .............................. The Avance Gas Group‟s audited consolidated annual financial statements as of and
for the thirteen month period ended 31 December 2014 and the audited consolidated
annual financial statements as of and for the twelve month periods ended 30
November 2013 and 2012
Frontline 2012 ....................................... Frontline 2012 Ltd.
HHI...................................................... Hyundai Heavy Industries.
IAS 34 ................................................. International Accounting Standard 34 “Interim Financial Reporting”.
IFRS .................................................... International Financial Reporting Standards as adopted by the EU.
Implied Consideration ............................ NOK 60.0 for each share in Aurora LPG based on the closing share price of Avance
Gas as quoted on the Oslo Stock Exchange on 13 November 2015.
Interim Q2 Financial Statements ............. The Avance Gas Group‟s unaudited interim consolidated financial statements as of
and for the three and six month periods ended 30 June 2015, with comparable
figures as of and for the three and six month periods ended 31 May 2014.
Interim Q3 Financial Statements ............. The Avance Gas Group‟s unaudited interim consolidated financial statements as of
and for the three and nine month periods ended 30 September 2015, with
comparable figures as of and for the three and nine month periods ended 31 August
2014.
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Avance Gas Holding Ltd – Offer Document
IT ........................................................ Information technology.
Jiangnan............................................... Shanghai Jiangnan Changxing Heavy Industry Co., Ltd.
Listing .................................................. The listing of the Consideration Shares on the Oslo Stock Exchange.
LNG ..................................................... Liquefied natural gas.
LPG...................................................... Liquefied petroleum gas.
Management ......................................... The senior management team of the Avance Gas Group.
NOK ..................................................... Norwegian Kroner, the lawful currency of Norway.
Non-Norwegian Shareholders .................. Non-Norwegian tax resident shareholders.
Norwegian Corporate Shareholders .......... Norwegian shareholders who are limited liability companies (and certain similar
entities) resident in Norway for tax purposes.
Norwegian Personal Shareholders ............ Shareholders who are individuals resident in Norway for tax purposes.
Norwegian Securities Trading Act............. The
Norwegian
Securities
Trading
Act
of
28
June
2007
No.
75
(Nw.:
verdipapirhandelloven).
Offer or Contemplated Transaction .......... The voluntary offer made by Avance Gas to acquire all the issued and outstanding
shares in Aurora LPG.
Offer Document ..................................... This offer document and information memorandum containing equivalent information
as a prospectus, dated 16 November 2015.
Offer Period .......................................... The period from and including 17 November 2015 to and including 16 December
2015 at 16:30 hours (CET), and any extension thereof as specified by Avance Gas
pursuant to the terms of the Offer.
Oslo Stock Exchange .............................. Oslo Børs ASA, or, as the context may require, Oslo Børs, a Norwegian regulated
stock exchange operated by Oslo Børs ASA.
Pool ..................................................... The “Atlantic Tankers Pool”, a pool in which Aurora LPG and Aurora LPG AS operates
their vessels.
Pro Forma Financial Information .............. The unaudited condensed pro forma financial information
showing how the
Combination could have affected (i) Avance Gas‟ unaudited consolidated income
statement for the six month period ended 30 June 2015 as if the transaction had
taken place on 1 January 2015 and (ii) Avance Gas‟ unaudited consolidated interim
balance sheet as of 30 June 2015 as if the transaction had taken place on 30 June
2015.
Receiving Agent .................................... Danske Bank.
Registrar Agreement .............................. The registrar agreement entered into between Avance Gas and the VPS Registrar.
Regulation S ......................................... Regulation S under the U.S. Securities Act.
SEC ..................................................... U.S. Securities and Exchange Commission.
Share(s) ............................................... Shares in the share capital of Avance Gas, each with a par value of USD 1.00, or any
one of them.
SPVs .................................................... Single purpose vehicles.
Stolt-Nielsen Gas ................................... Stolt-Nielsen Gas Ltd.
Sungas ................................................. Sungas Holdings Ltd.
Transpetrol ........................................... Transpetrol Shipping Ltd.
UK ....................................................... The United Kingdom.
U.S. or United States ............................. The United States of America.
U.S. Exchange Act ................................. The U.S. Securities Exchange Act of 1934, as amended.
U.S. Securities Act ................................. The U.S. Securities Act of 1933, as amended.
USD ..................................................... United States Dollars, the lawful currency in the United States and Bermuda.
VAT ..................................................... Value added tax.
VLGC ................................................... Very Large Gas Carrier.
VPS ..................................................... The Norwegian Central Securities Depository (Nw.: Verdipapirsentralen).
VPS account .......................................... An account with VPS for the registration of holdings of securities.
VPS Registrar ........................................ DNB Bank ASA, in its capacity as VPS registrar.
89
APPENDIX A:
ACCEPTANCE FORM
ACCEPTANCE FORM
This acceptance form (the “Acceptance Form”) shall be used when accepting the exchange offer (the “Offer”) made by Avance Gas
Holding Ltd (“Avance Gas”) to acquire the issued and outstanding shares in Aurora LPG Holding ASA (“Aurora LPG”), on the terms and
conditions set out herein and in the offer document and information memorandum containing equivalent information as a prospectus
prepared by Avance Gas in connection with the Offer (the “Offer Document”) to which this Acceptance Form is attached. Capitalised terms
used (and not defined) herein shall have the same meaning as in the Offer Document. References in this Acceptance Form to “Consideration
Shares” are to the beneficial interests in the Consideration Shares registered in book-entry form in the VPS.
Shareholder:
Correctly completed and signed Acceptance Forms may be sent by
fax, delivered by hand, e-mail or sent by mail to:
Danske Bank
Bryggetorget 4
P.O. Box 1170 Sentrum
N-0107 Oslo, Norway
Fax: +47 85 40 79 92
Email: [email protected]
ACCEPTANCE:
This Acceptance Form must be received by Danske Bank (the “Receiving Agent”) no later than 16.30 hours (CET) on 16
December 2015 (or such time that the Offer Period may be extended to). Shareholders with Aurora LPG shares registered on
several VPS accounts will receive one Acceptance Form for each VPS account. Accepting shareholders (“Acceptant”) must
return all Acceptance Forms received, properly completed and signed, within the acceptance deadline. Any Acceptance Form
that is not correctly completed or that is received after the expiration of the Offer Period can be rejected without further
notice. Avance Gas reserves the right to approve acceptances that are received after the expiration of the Offer Period or that
are not correctly completed within the limits of the requirements in Section 6-10 (9) of the Securities Trading Act for equal
treatment of shareholders.
To Avance Gas and the Receiving Agent:
1.
I/We confirm that I/we have received and reviewed this Acceptance Form and the Offer Document (the “Offer Materials”) and hereby
accept the Offer for all my/our Aurora LPG shares in accordance with the terms and conditions set forth herein and therein. My/our
acceptance also comprises any Aurora LPG shares which I/we have acquired or will acquire prior to the deadline of the acceptance of
the Offer and which will be registered in my/our VPS account.
2.
I/We accept that I/we may not sell, otherwise dispose of, encumber or transfer to another VPS account, the Aurora LPG shares
tendered hereunder. Furthermore, I/we irrevocably authorise the Receiving Agent to block the Aurora LPG shares on the VPS account
stated below in favour of the Receiving Agent on behalf of Avance Gas.
3.
I/we hereby give the Receiving Agent irrevocable authorisation to debit my/our VPS-account, and to transfer the Aurora LPG shares
tendered hereunder to Avance Gas upon settlement of the Offer.
4.
I/We accept that settlement will be made by way of issuance of new common shares of Avance Gas (the “Consideration Shares”).
5.
I/We accept that DNB Bank ASA, in the capacity as VPS registrar, will be registered as the owner of the Consideration Shares in the
shareholder register of the Company in Bermuda, and that beneficial interests in the Consideration Shares registered in book entry
form with the Norwegian Central Securities Depositary (the “VPS”) and listed on the Oslo Stock Exchange will be transferred to
my/our VPS account.
6.
I/we hereby give the Receiving Agent irrevocable authorisation to subscribe for the Consideration Shares and to debit the beneficial
interests in such Consideration Shares to my/our VPS-account as soon as practically possible after settlement of the Offer, including
the authority to sign on my/our behalf any documents or instruments required in connection with the foregoing, including, without
limitation, any subscription forms and share transfer forms and provide Avance Gas with any information it requires for the sole
purpose registration of the beneficial interests in the Consideration Shares in the VPS.
7.
My/Our Aurora LPG shares are transferred, and, when issued, my/our Consideration Shares will be transferred, free of any
encumbrances and any other third-party right whatsoever and with all shareholder rights attached to them. Any third party with
registered encumbrances or other third-party rights over my/our Aurora LPG shares and/or my/our VPS account(s) must sign the
Acceptance Form and thereby waive their rights therein and approve the transfer of my/our Aurora LPG shares to Avance Gas free and
clear of any encumbrances and any other third-party right whatsoever for the acceptance to be valid.
8.
I/We acknowledge that my/our acceptance is irrevocable, but that I/we shall be released from my/our acceptance if Avance Gas has
not on or before 29 February 2016 announced that the conditions to the Offer set forth in the Offer Document have been satisfied or
waived.
9.
This Acceptance Form, the Offer Document and the Offer are subject to Norwegian law with the Oslo District Court as legal venue.
10. I/We represent that I/we am/are permitted by all applicable law to accept the Offer and have complied with all applicable legal
requirements so that the Offer may be made to, and accepted by, me/us under the laws of all relevant jurisdictions.
11. I/we acknowledge that the Offer will not be available, and is not being made, in the United States or to any “U.S. person” (within the
meaning of Regulation S under the U.S. Securities Act) other than to “qualified institutional buyers” (“QIB”) as such term is defined in
Rule 144A under the U.S. Securities Act, who delivers to the Receiving Agent a duly executed U.S. Investor Representation Letter in
the form attached as Exhibit I to the Offer Document. If I/we have submitted the Acceptance Form without also submitting a U.S.
Investor Representation Letter, I/we will be deemed to have represented and warranted to Avance Gas and the Receiving Agent that
I/we (a) am/are not a U.S. person, or (b) am/are a QIB and (c) am/are not accepting the Offer from within any jurisdiction in which
I/we may not lawfully do so.
12. I/we confirm that I/we as of the date hereof hold the following number of Aurora LPG shares in my/our VPS account set forth below
and that, other than as set forth below, there are no rights holders with respect to my/our Aurora LPG shares.
VPS account:
No. of shares:
Rights holders registered:
Place
Date
Telephone no.
Signature *)
*) If signed pursuant to proxy, a proxy form or company certificate confirming the authorised signature must be enclosed.
Rights holder(s): In the event that there is registered holder(s) of rights on the VPS-account this is marked with a “YES” above in the
right-hand box of this Acceptance Form. As rights holder the undersigned consents that the transaction is undertaken on the above mentioned terms.
Place
Date
Telephone no.
Rights holder’s signature *)
*) If signed pursuant to proxy, a proxy form or company certificate confirming the authorised signature must be enclosed. If more than one charge holder is
registered, each of the charge holders must sign.
Exhibit I
U.S. INVESTOR REPRESENTATION LETTER
Additional Representations and Warranties Required for U.S. Persons and
Acceptants Acquiring Consideration Shares in the United States
We refer to the proposed exchange offer (the "Offer") of all the issued and outstanding shares of Aurora LPG Holding ASA,
details of which are set out in the offer document and information memorandum containing equivalent information as a
prospectus prepared by Avance Gas Holding Ltd (the “Company”) (the “Offer Document”). Capitalised terms used (but not
defined) herein shall have the same meaning as in the Offer Document. References herein to “Consideration Shares” are to the
beneficial interests in the Consideration Shares registered in book-entry form in the VPS.
In connection with the exchange of shares of Aurora LPG Holding ASA for Consideration Shares in the Offer, the undersigned
(the "Acceptant") hereby represents and warrants to the Company and Danske Bank (the "Receiving Agent") that
(i)
the Acceptant is a “qualified institutional buyer” ("QIB"), as defined under Rule 144A ("Rule 144A") promulgated
under the United States Securities Act of 1933, as amended (the "U.S Securities Act");
(ii)
the Acceptant is aware that the Consideration Shares are being offered and sold in reliance on applicable exemptions
from the registration requirements of the U.S. Securities Act for non-public offerings;
(iii)
the Acceptant is acquiring the Consideration Shares for investment purposes for its own account or for the account of
a QIB;
(iv)
the Acceptant understands that the Consideration Shares have not been and will not be registered under the U.S.
Securities Act and will be “restricted securities” (as defined in Rule 144 under the U.S. Securities Act) and that the
Consideration Shares may not be reoffered, resold, pledged or otherwise transferred, except (A)(i) to a person who
the seller reasonably believes is a QIB purchasing for its own account or for the account or benefit of a QIB in a
transaction meeting the requirements of Rule 144A (if available), (ii) outside the United States in compliance with
Rule 903 or Rule 904, as applicable, of Regulation S under the U.S. Securities Act (“Regulation S”), (iii) pursuant to
an exemption from registration under the U.S. Securities Act provided by Rule 144 thereunder (if available), (iv)
pursuant to any other available exemption from registration under the U.S. Securities Act, or (v) pursuant to an
effective registration statement under the U.S. Securities Act and (B) in accordance with all applicable securities laws
of the states of the United States and any other jurisdiction. The Acceptant understands and acknowledges that
neither the Company nor the Receiving Agent makes any representation as to the availability of Rule 144A, Rule 144
or any other exemption from registration under the U.S. Securities Act;
(v)
the Acceptant has conducted its own investigation with respect to the Company and the Consideration Shares and
has had access to and has received such financial and other information regarding the Company and the
Consideration Shares as the Acceptant deems necessary in order to make an informed investment decision to
subscribe for the Consideration Shares. If the Acceptant has had any questions regarding the Company or the
Consideration Shares, the Acceptant has asked these questions and has received satisfactory answers from
representatives of the Company. The Acceptant has not relied on representations, warranties, opinions, projections,
financial or other information or analysis, if any, supplied to it by any person other than the Company or any of its
affiliates;
(vi)
the Acceptant is a sophisticated institutional investor and has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of international investments, including an
investment in the Consideration Shares. In the normal course of its business, the Acceptant invests in or purchases
securities similar to the Consideration Shares. The Acceptant is aware that it may be required to bear the economic
risk of an investment in the Consideration Shares for an indefinite period of time, and it is able to bear such risk for
an indefinite period. The Acceptant is able to bear the economic risks of such an investment, including the loss of its
entire investment. The Acceptant understands that it may not necessarily be able to liquidate its investment in the
Consideration Shares;
(vii)
the Acceptant has relied upon its own tax, legal and financial advisers in connection with its decision to subscribe for
the Consideration Shares and believes that an investment in the Consideration Shares is suitable for the Acceptant
based upon the Acceptant’s investment objectives, financial needs and personal contingencies. The Acceptant has no
need for liquidity of investment with respect to the payment for the Consideration Shares;
(viii)
the Acceptant is not acquiring the Consideration Shares with a view to or for the purposes of resale, distribution or
fractionalization, in whole or in part thereof. The Acceptant has made no agreement with others regarding any of the
Consideration Shares. The Acceptant acknowledges that the Company, the Receiving Agent and their respective
directors, employees, agents, representatives and affiliates will rely on the truth and accuracy of the statements
made herein in making any transfer of the Consideration Shares to the Acceptant, and that such statements will
survive the execution and delivery of this document and the Acceptant’s subscription of the Consideration Shares,
and the Acceptant agrees to notify the Company and the Receiving Agent promptly in writing if any such statements
cease to be accurate and complete;
(ix)
the Acceptant agrees that so long as the Consideration Shares are “restricted securities” as defined in Rule 144
under the U.S. Securities Act, it shall notify each transferee of the Consideration Shares from it that (a) such
Consideration Shares have not been registered under the U.S. Securities Act; (b) such Consideration Shares are
subject to the restrictions on the resale or other transfer thereof described above; (c) such transferee shall be
deemed to have represented that (i) it is a non-U.S. person acquiring the Consideration Shares in an offshore
transaction pursuant to Regulation S, (ii) it is a QIB acquiring the Consideration Shares in a transaction that complies
with the requirements of the exemption from registration provided for in Rule 144A and any applicable laws of the
states of the United States, or (iii) that it an institutional investor acquiring the Consideration Shares in a transaction
exempt from registration under the U.S. Securities Act and that such transferee is not an “underwriter” within the
meaning of Section 2(11) of the U.S. Securities Act; and (d) such transferee shall be deemed to have agreed to
notify its subsequent transferees as to the foregoing;
(x)
the Acceptant understands that the Company will not recognize any offer, sale, pledge or other transfer of the
Consideration Shares made other than in compliance with the above-stated restrictions; and
(xi)
the Acceptant understands and acknowledges that the Company, the Receiving Agent and others will rely upon the
truth and accuracy of the foregoing representations and warranties and that if any of such representations and
warranties made by it are no longer accurate, it shall promptly notify the Company; and if it is acquiring any
Consideration Shares as fiduciary or agent for one or more accounts it represents that it has sole investment
discretion with respect to each such account and that it has full power and authority to make, and does make, the
foregoing representations and warranties on behalf of each such account.
The Company has agreed that for as long as any of the Consideration Shares being offered and sold pursuant to or
in connection with the Offer remain outstanding and are “restricted securities” within the meaning of Rule
144(a)(3) under the U.S. Securities Act, if at any time the Company is neither subject to section 13 or section
15(d) under the U.S. Securities Exchange Act of 1934, as amended (the “U.S. Exchange Act”) nor exempt from
reporting under the U.S. Exchange Act pursuant to Rule 12g3-2(b) thereunder, the Company will furnish to any
holder of the relevant shares or to a prospective purchaser of such shares designated by any such shareholder the
information specified in, and meeting the requirements of, Rule 144A(d)(4) under the U.S. Securities Act, upon
the written request of any such shareholder.
Signature of Acceptant1
Name of undersigned (in block letters):
Date:
1
If signed pursuant to proxy, a proxy form or company certificate confirming the authorised signature must be enclosed.
APPENDIX B:
INDEPENDENT PRACTITIONER’S ASSURANCE REPORT ON THE
COMPILATION OF UNAUDITED PRO FORMA FINANCIAL
INFORMATION
Avance Gas Holding Ltd
Thistle House
4 Burnaby Street
Hamilton HM 11
Bermuda
Financial Adviser and Receiving Agent
Danske Bank
Bryggetorget 4
P.O. Box 1170 Sentrum
N-0107 Oslo
Norway
Legal Advisers to Avance Gas
(as to Norwegian law)
(as to Bermuda law)
Advokatfirmaet Thommessen AS
MJM Limited
Haakon VIIs gate 10
Thistle House
N-0116 Oslo
4 Burnaby Street
Norway
Hamilton HM 11
Bermuda