Cecon entered into a letter of intent (the "LOI") with a reputable Norwegian investor in relation to a potential investment in Cecon of up to NOK 250 million. The potential investment is subject to several conditions including, but not limited to, satisfactory due diligence, removal of parent company guarantee in relation to the US $100 million bond loan (issued by vessel owning subsidiaries) and approval from shareholders and relevant financial creditors. Furthermore, a potential investment in Cecon is assumed to be made on the basis that there is no financial indebtedness at the Cecon level, which is likely to require that the US $10 million bond loan issued by Cecon will have to be converted into equity. Discussions with relevant stakeholders in relation to a potential solution will commence shortly.

The potential investment is based on a pre-money valuation of Cecon of NOK 40 million on a cash and debt free basis (except for trade payables and receivables). However, Cecon and the Investor have agreed that receipt of any of Cecon's outstanding and overdue receivables of approximately US $20 million by the later of 30 November 2010 and closing of the potential investment, shall be to the benefit of current shareholders through a dollar-for-dollar increase of the pre-money valuation.

If a binding agreement is entered into on the terms of the LOI, it is assumed that the investment will be structured as a fully underwritten directed share offering in Cecon with a guaranteed allocation to the Investor sufficient to ensure the Investor an ownership of minimum 51% of all issued shares following the directed share offering. Existing shareholders of Cecon will also be invited to participate in the directed share offering. It is anticipated that completion of the potential investment could occur during fourth quarter of 2010.

Tags: Cecon