Prosafe announces changes to capital return policy

Recent and ongoing developments in the rig market have allowed for substantial value uplift in Prosafe's accommodation rig business. Prosafe is the global market leader, owning 12 such units. An optimal mix between long-term and spot contracts allows Prosafe to benefit from increasing day rates.

 

Further, the FPSO market is witnessing rapid growth with high bidding activity. Prosafe is well positioned as one of the leading suppliers and operators of high quality FPSOs with a strong competitive edge based on in-house technology and project experience. The Company has engineering capacity and access to hulls and shipyards to take on multiple new projects and deliver them on time and within budget. Prosafe is actively pursuing several new FPSO projects with expected awards within three to twelve months.

In line with Prosafe's stated policy to return capital to shareholders without compromising future growth opportunities, the Board has concluded that these developments should be immediately reflected in the capital return policy of Prosafe. The Board has earlier proposed a dividend of NOK 1.25 to be paid in 2007. In addition, the Board has today proposed to distribute a special dividend of NOK 3.75 to be approved by an Extraordinary General Meeting following the Company's relocation to Cyprus where there is no withholding tax on dividend payment. The Board has also proposed to increase the target dividend pay-out ratio from the currently stated policy of 30-50% to approximately 75%. The new pay-out ratio will be effective from fiscal year 2007, however, with a proposed minimum of NOK 5 per share payable in 2008. The proposed total dividend of NOK 5 per share payable in 2007 would imply a dividend yield of 5.4% based on a closing price of NOK 93.10 per share as of March 28th.

The dividend payments will be subject to approval of shareholders of the Company at the respective General Meetings. The new dividend policy will give increased predictability, and will allow Prosafe shareholders to directly benefit from the positive momentum in Prosafe's existing FPSO and accommodation rig operations, while still allowing for strong value creating growth.

Prosafe remains committed to continue its strong FPSO growth. With more than 350 employees in Singapore, mainly within engineering disciplines, and with proprietary mooring and swivel technology, the company is strongly positioned in the upper segment of the FPSO market where barriers of entry remain high. The company will target to increase annual investments into new FPSOs to around USD 800 million. Prosafe will be able to fund such a growth rate, combined with the revised dividend policy, on the back of its current strong balance sheet and high cashflow from existing FPSO contracts and firm and expected cash flow from its existing accommodation units.

Prosafe is the world's leading owner and operator of semi-submersible service rigs and a major owner and operator of floating production and storage vessels outside the North Sea. Operating profit reached USD 150 million in 2006. The company operates globally, employs approx. 1 000 people and is headquartered in Stavanger, Norway. Prosafe is listed on the Oslo Stock Exchange with ticker code PRS. For more information, please refer to www.prosafe.com.

 

Stavanger, 29 March 2007

 

 

For further information please contact:

 

Arne Austreid, President and CEO
Phone no: +47 900 77 334