POLARCUS LIMITED an exempted company incorporated under ...

1

POLARCUS LIMITED (an exempted company incorporated under the laws of the Cayman Islands)

The information contained in this prospectus (the "Prospectus") relates to the contemplated listing on Oslo Børs of (i) 230,769,231 new shares in Polarcus Limited ("Polarcus" or the "Company", and when taken together with its consolidated subsidiaries, the "Group" or the "Polarcus Group"), each with a par value of USD 0.10 (the "Private Placement Shares") and (ii) 98,809,712 new shares in Polarcus, with a par value of USD 0.10 each (the "Bond Conversion Shares" and together with the Private Placement Shares the "New Shares"). The Private Placement Shares were issued on 1 March 2018 to investors that were allocated shares in the private placement that was successfully placed on 26 January 2018 (the "Private Placement"). The Bond Conversion Shares were issued on 13 March 2018 to holders of unsecured bonds who accepted the offer described in the summons published on 26 January 2018 to convert part of their bonds to new shares (the "Bond Conversion Offer"). The contemplated listing of the New Shares on Oslo Børs is expected to take place on or about 22 March 2018.

In addition, the Prospectus relates to the repair offering (the "Repair Offering") by the Company of 30,769,231 new shares with a par value of USD 0.10 each (the "Offer Shares") at a subscription price of NOK 1.30 per Offer Share. In connection with the Repair Offering, non-transferable subscription rights (the "Subscription Rights") will be granted to shareholders of the Company as of 25 January 2018, as registered in the Norwegian Central Securities Depositary (the "VPS") on 29 January 2018 (the "Record Date"), who were not invited to participate in the Private Placement (the "Eligible Shareholders"). Each Eligible Shareholder will be granted 0.303 non-transferable Subscription Rights for each existing share registered as held by such Eligible Shareholder at the Record Date. The number of Subscription Rights granted to each Eligible Shareholder will be rounded down to the nearest whole Subscription Right. Each Subscription Right gives the right to subscribe for, and be allocated, one Offer Share in the Repair Offering. Over-subscription and subscription without Subscription Rights will be permitted; however there can be no assurance that Offer Shares will be allocated for such subscriptions. The subscription period for the Repair Offering will commence at 09.00 (CET) on 22 March 2018 and end at 12.00 (CET) on 5 April 2018 (the "Subscription Period"). Subscription Rights that are not used to subscribe for Offer Shares before the expiry of the Subscription Period will have no value and will lapse without compensation to the holder.

Assuming due payment of the Offer Shares subscribed for and allocated in the Repair Offering, delivery of the Offer Shares in the VPS is expected to take place on or about 11 April 2018.

The Subscription Rights and the Offer Shares have not been and will not be registered under the Securities Act or the securities laws of any state of the United States and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Outside the United States, the Subscription Rights and Offer Shares are being offered to non-US persons in offshore transactions (each as defined in Regulation S) in reliance on Regulation S under the Securities Act. The Offer Shares are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable securities laws and regulations. See Section 17 "Selling and Transfer Restrictions". Investors should be aware that they may be required to bear the financial risks of this investment for an indefinite period of time.

For the definitions of capitalized terms used throughout this Prospectus, see Section 19 “Definitions”. Prospective investors should read this Prospectus in its entirety. Investing in the Shares involves a high degree of risk. See Section 2 "Risk factors".

Managers:

The date of this Prospectus is 21 March 2018

ABG Sundal Collier ASA DNB Markets, a part of DNB Bank ASA

http://www.google.no/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwirr4XckerJAhUDw3IKHTmjBQwQjRwIBw&url=http://www.polarcus.com/news-room/media-gallery/&psig=AFQjCNFvyXIIEzipoA-7f8pP9BnxKF6pww&ust=1450690588610871

2

IMPORTANT INFORMATION

This Prospectus has been prepared solely for use in connection with the listing of the New

Shares and the Repair Offering. Please see Section 19 "Definitions and glossary" for definitions

of terms used in this Prospectus.

The Prospectus has been prepared to comply with the Norwegian Securities Trading Act of 29

June 2007 No. 75 (the "Norwegian Securities Trading Act") and related secondary

legislation, including the Commission Regulation (EC) No. 809/2004 implementing Directive

2003/71/EC of the European Parliament and of the Council of 4 November 2003 regarding

information contained in Prospectuses, as amended, and as implemented in Norway (the

"Prospectus Directive"). This Prospectus has been prepared solely in the English language.

The Financial Supervisory Authority of Norway (the "Norwegian FSA") has reviewed and

approved this Prospectus in accordance with sections 7-7 and 7-8 of the Norwegian Securities

Trading Act on 21 March 2018. The Prospectus is valid for a twelve-month period following its

approval. The Norwegian FSA has not controlled or approved the accuracy or completeness of

the information given in this Prospectus. The approval given by the Norwegian FSA only relates

to the information included in accordance with pre-defined disclosure requirements. The

Norwegian FSA has not made any form of control or approval relating to corporate matters

described or referred to in this Prospectus.

The Company falls under the definition of a small and medium-sized enterprise under the

Prospectus Directive due to its market capitalisation. Thus, the Prospectus has been prepared

in accordance with the proportionate schedules for small and medium-sized enterprises

pursuant to EC Commission Regulation 486/2012 regarding the format and content of the

prospectus, the base prospectus, the summary and the final terms and in regards the disclosure

requirements. Consequently, the Company has applied checklist annex XXV and annex III for

this Prospectus.

Neither the Company nor the Managers, or any of their respective affiliates, representatives,

advisers or selling agents, are making any representation to any subscriber or purchaser of

Offer Shares regarding the legality or suitability of an investment in the Offer Shares. Each

investor should consult with his or her own advisers as to the legal, tax, business, financial and

related aspects of a subscription or purchase of the Offer Shares. No person is authorised to

give information or to make any representation concerning the Group or in connection with the

Private Placement, the Bond Conversion Offer and the Repair Offering other than as contained

in this Prospectus. If any such information is given or made, it must not be relied upon as

having been authorised by the Company or the Managers or by any of their affiliates, advisers

or selling agents.

The distribution of this Prospectus and the sale of the Offer Shares may be restricted by law in

certain jurisdictions. This Prospectus does not constitute an offer to sell, or a solicitation of an

offer to buy, any Offer Shares in any jurisdiction in which such offer or solicitation is not

authorized, or it is unlawful to make such an offer or solicitation. No one has taken any action

that would permit a public offering of the Offer Shares to occur outside of Norway. Accordingly,

neither this Prospectus nor any advertisement or any other offering material may be distributed

or published in any jurisdiction except under circumstances that will result in compliance with

applicable laws and regulations. Persons in possession of this Prospectus are required to inform

themselves about, and to observe, any such restrictions. In addition, the Offer Shares are

subject to restrictions on transferability and resale in certain jurisdictions and may not be

transferred or resold except as permitted under applicable securities laws and regulations. Any

failure to comply with these restrictions may constitute a violation of applicable securities laws.

For further information on the sale and transfer restrictions of the Company's shares (the

"Shares"), see Section 17 "Selling and transfer restrictions".

This Prospectus and the terms and conditions of the Repair Offering as set out herein 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 Private Placement, the Bond Conversion Offer, the Repair Offering or

this Prospectus.

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NOTICE TO NEW HAMPSHIRE RESIDENTS

NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE

HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED STATUTES WITH

THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY

REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A

FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED

UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR

THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A

TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE

MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON,

SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY

PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT

WITH THE PROVISIONS OF THIS PARAGRAPH.

NOTICE TO INVESTORS IN THE UNITED STATES

Because of the following restrictions, prospective investors are advised to consult legal counsel

prior to making any offer, resale, pledge or other transfer of the Shares. The Offer Shares have

not been and will not be registered under the U.S. Securities Act or with any securities

regulatory authority of any state or other jurisdiction in the United States and may not be

offered, sold, pledged or otherwise transferred within the United States except pursuant to an

exemption from, or in a transaction not subject to, the registration requirements of the U.S.

Securities Act and in compliance with any applicable state securities laws. Accordingly, the Offer

Shares will not be offered or sold within the United States, except in reliance on the exemption

from the registration requirements of the U.S. Securities Act under Rule 144A. The Offer Shares

will be offered outside the United States in compliance with Regulation S. Prospective

purchasers are hereby notified that sellers of Offer Shares may be relying on the exemption

from the provisions of Section 5 of the U.S. Securities Act provided by Rule 144A under the

U.S. Securities Act. See Section 17.2.1 "Selling and transfer restrictions—Selling restrictions—

United States".

Any Shares offered or sold in the United States will be subject to certain transfer restrictions

as set forth under Section 17.3.1 "Selling and transfer restrictions—Transfer restrictions—

United States".

The securities offered hereby have not been recommended by any United States federal or

state securities commission or regulatory authority. Further, the foregoing authorities have not

passed upon the merits of the Repair Offering or confirmed the accuracy or determined the

adequacy of this Prospectus. Any representation to the contrary is a criminal offense under the

laws of the United States.

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TABLE OF CONTENTS

1. SUMMARY ........................................................................................................... 7

2. RISK FACTORS .................................................................................................. 19

RISK FACTORS RELATED TO THE INDUSTRY IN WHICH POLARCUS OPERATES ............................. 19 RISK FACTORS RELATED TO THE COMPANY AND THE GROUP ............................................... 20 RISKS FACTORS RELATED TO FINANCE ........................................................................ 24 RISK FACTORS RELATED TO THE SHARES AND THE REPAIR OFFERING .................................... 27

3. RESPONSIBILITY FOR THE PROSPECTUS .......................................................... 30

4. PRESENTATION OF INFORMATION .................................................................... 31

DATE OF INFORMATION ......................................................................................... 31 PRESENTATION OF FINANCIAL INFORMATION ................................................................. 31 ROUNDING ........................................................................................................ 31 INDUSTRY AND MARKET DATA .................................................................................. 31 FORWARD-LOOKING STATEMENTS ............................................................................. 32 MANAGERS ....................................................................................................... 33 NO ADVICE ....................................................................................................... 33 THIRD PARTY INFORMATION .................................................................................... 33 ENFORCEMENT OF CIVIL LIABILITY ............................................................................. 33

5. THE RESTRUCTURING ....................................................................................... 35

FLEET BANK FACILITY ........................................................................................... 35 SWAP TERMINATION ............................................................................................. 35 WORKING CAPITAL FACILITY ................................................................................... 35 SECURED BONDS ................................................................................................ 36 CASH SWEEP ..................................................................................................... 36 UNSECURED BONDS ............................................................................................. 36 SALE AND LEASE TERMINATION ................................................................................ 37

6. LISTING OF THE PRIVATE PLACEMENT SHARES ................................................ 38

BACKGROUND .................................................................................................... 38 USE OF PROCEEDS ............................................................................................... 38 EXPENSES RELATED TO THE LISTING OF THE PRIVATE PLACEMENT SHARES .............................. 38 SHARE CAPITAL FOLLOWING COMPLETION OF THE PRIVATE PLACEMENT .................................. 38 DILUTION ......................................................................................................... 39 SELLING AND TRANSFER RESTRICTIONS ...................................................................... 39 ADVISORS ........................................................................................................ 39 LOCK-UP .......................................................................................................... 39 INTEREST OF NATURAL AND LEGAL PERSONS INVOLVED IN THE PRIVATE PLACEMENT ................... 39 JURISDICTION .................................................................................................... 39

7. LISTING OF THE BOND CONVERSION SHARES .................................................. 40

BACKGROUND .................................................................................................... 40 EXPENSES RELATED TO THE LISTING OF THE BOND CONVERSION SHARES ............................... 40 SHARE CAPITAL FOLLOWING COMPLETION OF THE BOND CONVERSION OFFER .......................... 40 DILUTION ......................................................................................................... 40 SELLING AND TRANSFER RESTRICTIONS ...................................................................... 40 ADVISORS ........................................................................................................ 40 LOCK-UP .......................................................................................................... 40 INTEREST OF NATURAL AND LEGAL PERSONS INVOLVED IN THE BOND CONVERSION OFFER ........... 41 JURISDICTION .................................................................................................... 41

8. THE TERMS OF THE REPAIR OFFERING ............................................................. 42

THE REPAIR OFFERING .......................................................................................... 42

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PARTICIPATION OF MAJOR EXISTING SHAREHOLDERS AND MEMBERS OF THE COMPANY'S MANAGEMENT,

SUPERVISORY OR ADMINISTRATIVE BODIES IN THE REPAIR OFFERING ............................................ 47 DELIVERY AND LISTING OF THE OFFER SHARES ............................................................. 47 MANDATORY ANTI-MONEY LAUNDERING PROCEDURES ...................................................... 47 FINANCIAL INTERMEDIARIES .................................................................................... 48 SELLING RESTRICTIONS AND RESTRICTIONS ON DISTRIBUTION OF SUBSCRIPTION RIGHTS ........... 48 THE OFFER SHARES ............................................................................................. 49 SHARES FOLLOWING THE REPAIR OFFERING ................................................................. 49 DILUTION ......................................................................................................... 49 ADVISORS ........................................................................................................ 49 NET PROCEEDS AND EXPENSES RELATED TO THE REPAIR OFFERING ...................................... 50 INTERESTS OF NATURAL AND LEGAL PERSONS INVOLVED IN THE REPAIR OFFERING .................... 50 PUBLICATION OF INFORMATION RELATING TO THE REPAIR OFFERING..................................... 50 JURISDICTION AND GOVERNING LAW .......................................................................... 50 LOCK-UP .......................................................................................................... 50 SUPPLEMENTARY PROSPECTUS ................................................................................. 50

9. INDUSTRY AND MARKET ................................................................................... 51

MARKET OVERVIEW .............................................................................................. 51 SEISMIC FLEET OVERVIEW ...................................................................................... 52 POSITIONING OF POLARCUS IN THE MARKET ................................................................. 54

10. BUSINESS ...................................................................................................... 59

INCORPORATION, REGISTERED OFFICE AND REGISTRATION NUMBER ...................................... 59 GROUP HISTORY ................................................................................................. 59 OVERVIEW OF BUSINESS ACTIVITIES .......................................................................... 61 DATA ACQUISITION METHODS .................................................................................. 65 VISION AND STRATEGY .......................................................................................... 67 ORGANIZATION AND BUSINESS LINES ......................................................................... 68 THE POLARCUS FLEET ........................................................................................... 71 MATERIAL CONTRACTS .......................................................................................... 75 ORGANIZATIONAL STRUCTURE ................................................................................. 85 LEGAL AND ARBITRATION PROCEEDINGS ................................................................... 86

11. SELECTED FINANCIAL INFORMATION ............................................................ 88

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES .......................................................... 88 CONSOLIDATED HISTORICAL FINANCIAL INFORMATION ..................................................... 88 SUMMARY OF KEY FINANCIALS ................................................................................. 92 SEGMENT INFORMATION ........................................................................................ 93 VESSEL UTILIZATION ............................................................................................ 95 LIQUIDITY AND CAPITAL RESOURCES .......................................................................... 95 WORKING CAPITAL STATEMENT ................................................................................ 97 IMPAIRMENT CHARGES RECOGNIZED IN THE THREE MONTHS ENDING 31 DECEMBER 2017 ........... 97 SIGNIFICANT CHANGES IN FINANCIAL AND TRADING POSITION IN THE GROUP AFTER 31 DECEMBER

2017 98 TREND INFORMATION ......................................................................................... 98 INVESTMENTS ................................................................................................. 98 SUMMARY OF FINANCING ..................................................................................... 99 CAPITALIZATION AND INDEBTEDNESS .................................................................... 108 AUDITORS .................................................................................................... 111

12. BOARD OF DIRECTORS, MANAGEMENT, EMPLOYEES AND CORPORATE

GOVERNANCE ....................................................................................................... 112

INTRODUCTION ................................................................................................. 112 NOMINATION COMMITTEE ..................................................................................... 112 BOARD OF DIRECTORS ........................................................................................ 112 MANAGEMENT .................................................................................................. 117 NUMBER OF EMPLOYEES ....................................................................................... 119

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EMPLOYEE REMUNERATION.................................................................................... 120 EMPLOYEE LONG TERM INCENTIVE SCHEMES ............................................................... 120 EMPLOYEE HEALTH PROTECTION ............................................................................. 121 BENEFITS UPON TERMINATION ............................................................................... 121 PENSION SCHEME ........................................................................................... 121 CORPORATE GOVERNANCE ................................................................................. 122 CONFLICTS OF INTERESTS ................................................................................. 123 CONVICTIONS FOR FRAUDULENT OFFENCES, BANKRUPTCY ETC. ....................................... 123

13. RELATED PARTY TRANSACTIONS ................................................................. 124

RELATED PARTY TRANSACTION FOR THE TWELVE MONTHS ENDED 31 DECEMBER 2017 ............. 124 RELATED PARTY TRANSACTION AFTER 31 DECEMBER 2017 ............................................. 124

14. CORPORATE INFORMATION AND DESCRIPTION OF THE SHARE CAPITAL .... 125

GENERAL CORPORATE INFORMATION ........................................................................ 125 SHARES AND SHARE CAPITAL ................................................................................. 125

15. SECURITIES TRADING IN NORWAY .............................................................. 137

INTRODUCTION ................................................................................................. 137 TRADING AND SETTLEMENT ................................................................................... 137 INFORMATION, CONTROL AND SURVEILLANCE .............................................................. 137 THE VPS AND TRANSFER OF SHARES ........................................................................ 138 SHAREHOLDER REGISTER – NORWEGIAN LAW ............................................................. 138 FOREIGN INVESTMENT IN NORWEGIAN SHARES ............................................................ 138 DISCLOSURE OBLIGATIONS ................................................................................... 138 INSIDER TRADING.............................................................................................. 138 MANDATORY OFFER REQUIREMENTS ......................................................................... 139

16. TAXATION .................................................................................................... 141

INTRODUCTION ................................................................................................. 141 TAXATION ON DIVIDENDS ..................................................................................... 141 NORWEGIAN TAX ON CAPITAL GAINS ON SHARES ........................................................ 142 NORWEGIAN NET WEALTH TAX .............................................................................. 142 NORWEGIAN DUTIES ON TRANSFER OF SHARES ........................................................... 143 NORWEGIAN CFC-LEGISLATION ............................................................................. 143 CAYMAN ISLAND TAXATION .................................................................................. 143

17. SELLING AND TRANSFER RESTRICTIONS ..................................................... 144

GENERAL ........................................................................................................ 144 SELLING RESTRICTIONS ....................................................................................... 144 TRANSFER RESTRICTIONS ..................................................................................... 146

18. ADDITIONAL INFORMATION ........................................................................ 149

DOCUMENTS ON DISPLAY ..................................................................................... 149 INCORPORATION BY REFERENCE ............................................................................. 149

19. DEFINITIONS AND GLOSSARY ...................................................................... 150

7

1. SUMMARY

Summaries are made up of disclosure requirements known as "Elements". These Elements are

numbered in Sections A– E (A.1 – E.7) below. This summary contains all the Elements required

to be included in a summary for this type of securities and the issuer. Because some Elements

are not required to be addressed, there may be gaps in the numbering sequence of the

Elements. Even though an Element may be required to be inserted in the summary because of

the type of securities and issuer, it is possible that no relevant information can be given

regarding the Element. In this case a short description of the Element is included in the

summary with the mention of "not applicable".

Section A – Introduction and Warnings

A.1 Warning This summary should be read as an introduction to the

Prospectus.

Any decision to invest in the Offer Shares should be based

on consideration of the Prospectus as a whole by the

investor.

Where a claim relating to the information contained in the

Prospectus is brought before a court, the plaintiff investor

might, under the national legislation in its Member State,

have to bear the costs of translating the Prospectus before

the legal proceedings are initiated.

Civil liability attaches only to those persons who have

tabled the summary including any translation thereof, but

only if the summary is misleading, inaccurate or

inconsistent when read together with the other parts of the

Prospectus or it does not provide, when read together with

the other parts of the Prospectus, key information in order

to aid investors when considering whether to invest in such

securities.

A.2 Resale or final

placement of

securities by financial

intermediaries

Not applicable. This Prospectus will not be used in

subsequent resales by financial intermediaries.

Section B - Issuer

B.1 Legal and

commercial name

The legal name of the Company is Polarcus Limited and the

Company's commercial name is Polarcus.

B.2 Domicile/Legal

form/Legislation/Co

untry of

incorporation

The Company is an exempted company validly

incorporated with limited liability in the Cayman Islands, is

registered with the Cayman Islands Registrar of Companies

with registration number 201867 and regulated by the

Companies Law.

B.3 Current operations,

principal activities

and markets

Polarcus is one of the five global marine three dimensional

(3D) towed streamer geophysical service providers. The

other providers are WesternGeco (Schlumberger), CGG,

PGS and SGS. The seismic data acquired by the Company's

vessels is used by oil and gas companies to evaluate

hydrocarbon structures and to increase chances of

commercial success ahead of the exponentially more

expensive drilling phase. The data is also used to

8

determine size and structure of known reservoirs in order

to maximize field recovery and ongoing production rates.

Polarcus has two principal business activities: (i) contract

seismic services and (ii) multi-client services. In addition,

the Company charters two seismic vessels under long term

Bareboat agreement to Sovcomflot, and also provides

management services related to the seismic operation of

one vessel for Turkish Petroleum International Company.

B.4a Significant recent

trends affecting the

issuer and the

industry in which it

operates

Not applicable. There are no significant recent trends

affecting the issuer and the industry in which it operates.

B.5 The Group The Company is the parent company of the Group.

B.6 Persons having an

interest in the

issuer's capital or

voting rights

Shareholders owning 5% or more of the Shares have an

interest in the Company's share capital, which is notifiable

pursuant to the Norwegian Securities Trading Act.

The Company is not aware of any persons or entities,

except for those set out below, who, directly or indirectly,

have an interest of 5% or more of the Shares as of the date

of this Prospectus. The following persons or entities have

notified of an interest of 5% or more of the Shares in the

Company:

Carl-Peter Zickerman (through his wholly owned

companies Zickerman Holding Ltd and Zickerman Group

Ltd), has holdings corresponding to a total of 34,925,401

Shares, corresponding to 7.23% of the issued share

capital.

Bybrook Capital LLP who, through Bybrook Capital

Master Fund LP, Bybrook Capital Hazelton Master Fund

LP, Bybrook Capital Badminton Fund LP and Bybrook

Capital Burton Partnership, in aggregate, have holdings

corresponding to a total of 89,331,697 Shares following

the Private Placemenet, corresponding to 23.3% of the

issued share capital prior to the Bond Conversion Offer

and the Repair Offering.

The Company is not aware that the Company is controlled

or owned, directly or indirectly, by any Shareholder or

related Shareholders.

B.7 Selected historical

key financial

information

9

Consolidated statement of income:

(In millions of USD)

Three months ended

31 December

Twelve months

ended

31 December

Year ended

31 December

2017

(Unaudited)

2016

(Unaudited)

2017

(Unaudited)

2016

(Audited)

2015

(Audited)

Revenues

Contract revenue 28.4 36.0 146.9 185.1 270.8

Multi-client revenue 6.0 11.2 27.7 56.6 92.8

Other income 2.8 - 4.4 1.8 13.9

Total Revenues 37.2 47.2 179.0 243.4 377.5

Operating expenses

Cost of sales (33.9) (45.6) (148.8) (176.9) (204.3)

General and administrative costs (3.6) (4.2) (15.9) (19.4) (21.5)

Provision for onerous contracts 27.0 (26.4) 27.0 (46.4) (8.8)

Depreciation and amortization (10.9) (11.3) (45.0) (48.7) (72.4)

Multi-client amortization (10.5) (21.0) (42.1) (56.8) (69.3)

Impairments (89.8) (24.8) (91.2) (26.7) (315.4)

Total Operating expenses (121.7) (133.3) (316.0) (374.7) (691.7)

Operating profit (84.5) (86.0) (137.0) (131.3) (314.3)

Share of profit/(loss) from joint ventures - - - (1.2) (1.0)

Finance costs (12.5) (8.5) (44.4) (37.0) (61.1)

Finance income 1.5 0.1 2.4 2.0 12.4

Changes in fair value of financial

instruments 4.1 (1.6) 6.6 13.3 (9.0)

Gain on acquisition of joint venture - - - 177.8 -

Profit before tax (91.4) (95.3) (172.3) 23.5 (373.0)

Income tax expense (0.3) (1.7) (0.1) (3.2) (1.1)

Net profit and total comprehensive

income (91.7) (97.0) (172.4) 20.3 (374.1)

Earnings per share attributable to the equity holders during the period (In

USD)

- Basic (0.6) (1.8) (1.4) 0.5 (5.6)

- Diluted (0.6) (1.8) (1.4) 0.5 (5.6)

Consolidated balance sheet:

(In millions of USD) As of

31 December

Year ended

31 December

2017

(Unaudited) 2016

(Audited) 2015

(Audited)

Non-current Assets

Property, plant and equipment 324.1 443.4 634.4

Multi-client project library 10.4 45.1 50.8

Investment in joint ventures - - 1.2

Intangible assets - - 0.3

Total Non-current Assets 334.5 488.5 686.7

Current Assets

Receivables from customers 19.8 47.6 58.8

Other current assets 14.9 21.3 34.2

Restricted cash 7.8 0.7 14.5

Cash and bank 25.8 13.7 54.0

Total Current Assets 68.4 83.4 161.4

10

TOTAL ASSETS 402.9 571.9 848.2

EQUITY and LIABILITIES

Equity

Issued share capital 15,3 5.3 13.4

Share premium 614.2 586.4 532.2

Other reserves 24.4 29.9 32.6

Retained earnings/(loss) (609.2) (442.8) (466.3)

Total Equity 44.7 178.8 111.9

Non-current Liabilities

Bond loans - 34.6 -

Other interest bearing debt - 0.9 0.6

Long term provisions - 37.3 -

Other financial liabilities 8.6 10.5 22.3

Total Non-current Liabilities 8.6 83.3 23.0

Current Liabilities

Bond loans 48.6 - 220.6

Finance leases - - 166.0

Other interest bearing debt 245.6 249.6 256.9

Provisions 5.5 6.8 8.8

Accounts payable 13.4 18.9 30.1

Other accruals and payables 36.4 34.4 30.9

Total Current Liabilities 349.5 309.8 713.3

TOTAL EQUITY and LIABILITIES 402.9 571.9 848.2

Consolidated cash flow statement:


Three months ended

31 December

Twelve months

ended

31 December

Year ended

31 December

2017

(Unaudited) 2016

(Unaudited) 2017

(Unaudited) 2016

(Audited) 2015

(Audited)

Profit/(loss) for period (91.7) (97.0) (172.5) 20.3 (374.1)

Adjustment for:

Depreciation and amortization 10.9 11.3 45.0 48.7 72.4

Multi-Client amortization 10.5 21.0 42.1 56.8 69.3

Impairments 89.8 24.8 91.2 26.7 315.4


instruments

(4.1) 1.6 (6.6) (13.3) 9.0

Employee share option expenses 0.1 0.1 0.5 0.6 0.5

Interest expense 10.7 8.8 39.7 32.7 55.1

Interest income (0.1) - (0.2) (0.1) (0.8)

Gain on financial restructuring - - - (177.8) -

Effect of currency (gain)/loss (0.1) (3.1) 1.2 (0.6) (4.8)

Gain on buyback of convertible

bonds

- - - - (1.2)

Net movement in provisions (31.8) 26.4 (35.7) 30.6 8.8

Share of (profit)/loss from joint

ventures

- - - 1.2 1.0

Working capital adjustments:

Decrease/(Increase) in current

assets

16.9 2.2 32.0 19.7 22.3

Increase/(Decrease) in trade

payables and accruals

7.2 1.5 (2.6) 2.7 3.4

Net cash flows from operating activities

18.5 (2.6) 34.1 48.1 167.5

Cash flows from investing

activities

11

Payments for property, plant and equipment

(1.7) (1.0) (7.3) (16.4) (15.1)

Proceeds from the disposal of

multi-client projects

- - - - 25.2

Payments for multi-client project library

(6.9) (12.6) (20.6) (44.6) (96.7)

Payments to acquire intangible

assets

- - - - (12.4)

Net cash flows used in investing activities

(8.7) (13.5) (28.0) (61.0) (99.3)

Cash flows from financing

activities

Net receipt from bank loans - - - 7.9 -

Proceeds from the issue of ordinary

shares

- - 39.0 - -

Repayment of bond loans - - - (0.8)

Repayment of finance lease - - - (7.7)

Repayment of other interest

bearing debt

(2.2) (2.3) (6.9) (14.4) (15.1)

Interest paid (3.9) (4.3) (18.6) (24.4) (41.6)

Financial restructuring fees paid - - - (6.2) -

Other finance costs paid (0.4) (0.4) (0.9) (1.0) (6.4)

Decrease/(Increase) in restricted

cash

(1.1) - (7.1) 13.8 (6.3)

Net cash flow for currency swaps (1.4) (1.6) 1.8 (3.9) (0.5)

Interest received 0.1 - 0.2 0.1 0.8

Net cash flows from financing

activities

(8.9) (8.5) 6.3 (28.2) (77.6)

Effect of foreign currency

revaluation on cash

0.1 1.2 (0.3) 0.9 (2.1)

Net increase in cash and cash equivalents

1.0 (23.5) 12.1 (40.2) (11.5)

Cash and cash equivalents at the

beginning of the period

24.9 37.2 13.7 54.0 65.5

Cash and cash equivalents at

the end of the period

25.8 13.7 25.8 13.7 54.0

Consolidated statement of changes in equity:

For the twelve months ended 31 December 2017

Number of

Shares

Issued Share

capital

Share

Premium

Other

Reserves

Retained Earnings/

(Loss)

Total Equity (In thousands of USD except

for number of shares)

Balance as of 1 January 2017

530,472,947 5,305 586,401 29,865 (442,764) 178,807

Total comprehensive

income/(loss) for the period

- - - (172,453) (172,453)

Employee stock options - - 534 - 534

Other movements (5,988) 5,988 -

Issue of share capital

08 March 2017 at NOK 0.33

per share

1,000,000,000 10,000 28,853 - - 38,853

07 April 2017 at NOK 0.33 per share

3,912,439 39 111 - - 150

Transaction costs on issue of

shares

- (1,173) - - (1,173)

Consolidation of share capital

New share issued 4 - - - - -

10:1 consolidation 16 May

2017

(1,380,946,851) - - - - -

12

For the year ended 31 December 2016 - Audited

Number of

Shares

Issued

Share capital

Share

Premium

Other

Reserves

Retained

Earnings/ (Loss)

Total Equity (In thousands of USD except for

number of shares)

Balance as of 1 January 2016 66,981,368 13,396 532,222 32,556 (466,309) 111,865

Total comprehensive income/(loss) for the period

- - - 20,274 20,274


Other movements - - (3,272) 3,272 -


Class B shares issued to $95m bondholders February 2016 at USD

0.0013 per share 265,384,592 345 26,044 - - 26,389

Class B shares issued to NOK 350m

bondholders February 2016 at USD 0.0013 per share 118,260,837 154 11,606 - - 11,759

Class B shares issued to $125m

bondholders February 2016 at USD

0.0013 per share 79,846,150 104 7,836 - - 7,940

Merger of share classes (on 13

April 2016)

Repurchase of Class B shares at USD

0.0013 per share

(463,491,579) (603) - - - (603)

New ordinary shares issued at USD

0.20 per share

463,491,579 92,698 (92,096) - - 603

Reduction in nominal value

15 August 2016, from USD 0.20 to

USD 0.01 per share

(100.790) 100,790

Balance as at 31 December 2016 530,472,947 5,305 586,401 29,865 (442,764) 178,807


Number of Shares

Issued

Share

capital

Share Premium

Other Reserves

Retained

Earnings/

(Loss)

Total Equity (In thousands of USD except for number of shares)


Total comprehensive income/(loss) for the

period

- - - (374,105) (374,105)

Employee share options - - 505 - 505

Other movements* (1,098) 1,098 -


On 22 November 2015 (at 10:1 from USD

0.02 to USD 0.20 per share)

(602,832,311) - - - - -


B.8 Selected key pro forma

financial information

Not applicable. The Prospectus does not contain

pro forma financial information.

B.9 Profit forecast or estimate Not applicable. The Company has not made any

profit forecasts or estimates.

B.10 Qualifications in the audit In the Annual Report from 2015 and Annual

13

report on the historical

financial information

Report from 2016 there are no qualifications in

the audit report.

B.11 Working capital The Company has sufficient working capital for

its present requirements for the next 12

months.

Section C - Securities

C.1 Type and class of

securities admitted

to trading and

identification number

All the issued shares are in registered form and will, following

the publication of this Prospectus, be registered with the

Norwegian Central Securities Depository ("VPS") register

with ISIN KYG7153K1085. The New Shares are currently

registered with ISIN KYG7153K1739. The Registrar of the

Company is DNB Bank ASA, Verdipapirservice, Dronning

Eufemias gate 30, 0191 Oslo.

C.2 Currency The Offer Shares are issued in USD.

C.3 Number of shares

and par value

The Company's issued share capital is USD 48,301,748.2

divided into 483,017,482 Shares each with a nominal or par

value of USD 0.10, all fully paid and issued in accordance

with Cayman Islands law.

C.4 Rights attached to

the securities

The New Shares and the Offer Shares are shares of the

Company with no special rights attached to them.

C.5 Restrictions on free

transferability

The Offer Shares are freely transferable, subject to any local

regulatory transfer restrictions.

C.6 Admission to trading The Company's shares were admitted to trading on Oslo Børs

on 20 June 2012.

C.7 Dividend policy Polarcus is committed to maximizing the shareholder value,

by inter alia declaring dividends to the Shareholders from its

profit. However, the Company is restricted from declaring

dividends under its loan facility and bonds.

Polarcus has not issued any dividends in the Company's

history.

Section D - Risks

D.1 Key information on

the key risks that are

specific to the issuer

or its industry

Economic development and trends

The demand for the Company's services will depend

substantially on the level of activity and capital spending by

oil and gas companies and specifically in relation to

development and exploration expenditure.

Government regulation and political risk

Changes in the legislative and fiscal framework governing

the activities of oil and gas business could have a material

impact on exploration and development activities or affect

Polarcus' operations or financial results directly or indirectly.

Competition

Polarcus operates in a highly competitive global market.

Fluctuating revenues from period to period

14

The Company's future revenues may fluctuate significantly

from quarter to quarter and from year to year as a result of

various factors driven by both supply and demand influences.

Insurance coverage

Although the Company has taken out insurance coverage

that the Company considers customary in the industry, such

insurance arrangements will not carry full coverage of all its

operating risks.

Contractual and counter-party exposure

The revenues of the Company will be dependent on contract

awards at competitive terms. Furthermore, the revenues of

the Company will depend on the financial position of its

customers and the willingness and ability of these customers

to honour their obligations towards Polarcus in a timely

manner.

Multi-client investments

The Company has made considerable investments in

acquiring and processing seismic data that the Company

owns ("multi-client data"). The multi-client data is being

licensed to third parties for non-exclusive use in oil and gas

exploration, development and production activities.

However, the Company does not know with certainty how

much of the multi-client data it will be able to license or at

what price.

Operating risks

The Company's assets are concentrated in a single industry

and the Group may be more vulnerable to particular

economic, political, regulatory, environmental or other

developments than a company with a more diversified

portfolio of activities.

The seismic data acquisition operations are exposed to

extreme weather and other potentially hazardous conditions.

There is an inherent exposure to technical risks, which may

lead to operational problems, and increased operational

costs and/or loss of earnings, additional investments,

penalty payments, and other such costs which may have a

material effect on the earnings and financial position of the

Company.

Technology may become obsolete

The company monitors technology developments in the

industry and also monitors client sentiment toward

technology. However, the Company's technology could be

rendered obsolete as new and enhanced products and

services are introduced to the seismic market.

Tax

Operating internationally, Polarcus will be subject to taxation

in several jurisdictions around the world. With increasingly

complex and ever-changing tax regulations and their

15

interpretation, the taxation of the Company could increase in

certain jurisdictions. The Company may also in the future be

subject to review of past years tax returns and be subjected

to additional taxes and penalties. These conditions may have

a material effect on the Company's financial results.

If Polarcus is controlled by Norwegian taxpayers, the

Norwegian CFC-regulation ("NOKUS"- rules) may, in certain

conditions, result in the Company being taxed under

Norwegian law as if it had been a Norwegian company.

Pursuant to the Company's Articles of Association, the

Company may refuse to accept shareholder positions leading

to the CFC-regulations becoming applicable. Also, other

amendments to applicable tax provisions may have negative

impact on the return on the investment of Norwegian

taxpayers.

Access to funding

The Company may require additional capital in the future due

to unforeseen liabilities or in order for it to take advantage

of opportunities for acquisitions, joint ventures, capital

expenditure investments or other business opportunities that

may be identified by the Company.

Should the current working capital and cash flow from

operations not be sufficient to meet the Company's financing

needs, the Company may be forced to reduce or delay capital

expenditures or research and development expenditures,

and/or sell assets or businesses at unanticipated times

and/or at unfavourable prices or other terms, and/or to seek

additional equity capital or to restructure or refinance its

debt.

Losses in the past

The Group has experienced substantial losses. If the Group

continues to suffer substantial losses or does not generate

sufficient profit, the Group's cash flow from operations may

not be sufficient to fund ongoing activities and implement the

Group's business plans.

Financial leverage and breach of covenants

The financial leverage of the Company or any breach of

covenants (or other circumstances which entail that loans fall

due prior to the final maturity date) may have several

adverse consequences, including the need to refinance,

restructure or dispose of certain parts of the Company's

businesses in order to fulfil the Company's financial

obligations.

Defaults and insolvency of subsidiaries

In the event of insolvency, liquidation or a similar event

relating to one of the Company's subsidiaries, all creditors of

such subsidiary would be entitled to payment in full out of

the assets of such subsidiary before the Company, as a

shareholder, would be entitled to any distributions. Such an

event would likely cause a cross-default under all the Group's

16

current financing instruments entitling the Group's secured

creditors to enforce their security rights in priority to the

Company, a shareholder.

Exchange rate fluctuations

Currency exchange rate fluctuations and currency

devaluations could have a material impact on the Company's

results from time to time.

High fixed costs

The Group is subject to high fixed costs, which primarily

consist of depreciation, maintenance expenses associated

with the Group’s seismic data acquisition, processing and

interpretation equipment and certain crew costs. Extended

periods of significant unanticipated downtime or low

productivity caused by reduced demand, weather

interruptions, equipment failures, permit delays or other

causes could reduce the Group’s profitability and have a

material adverse effect on the Group’s financial condition and

results of operations because the Group will not be able to

reduce the Group’s fixed costs as fast as revenues decline.

Increased debt service from 1 January 2022

From 1 January 2022, the amortisation payments under the

Fleet Bank Facility and the bonds in CB Tranche A under the

Convertible Bond Loan will increase as the amortisation

profiles prior to the Restructuring will apply. From the same

date, amortisation payments will become payable under the

New Fleet Facility. The ability to make principal and interest

payments when due, and to fund ongoing operations, will

depend on the Group's future performance and ability to

generate cash and profit, which is subject to market

conditions and general economic, financial and competitive

factors beyond the Group's control.

D.3 Key information on

the key risks that are

specific to the

securities

Volatility of share price

There can be no assurance that an active market for the

Company's Shares can be sustained. The Company's share

price may experience substantial volatility. The market

price of the Shares could fluctuate significantly.

Risks related to issuance of Shares or other securities

It is possible that the Company may decide to offer

additional Shares in the future in order to strengthen its

capital base or for other reasons. Any additional offering of

Shares may be made at a significant discount to the

prevailing market price and could have a material adverse

effect on the market price of the outstanding Shares.

Risks associated with dilution

Due to regulatory requirements under foreign securities

laws or other factors, foreign investors may not be able to

participate in a new issuance of Shares or other securities

and may face dilution as a result.

Any investor that is unable or unwilling to participate in the

17

Company's future share issuances will have their

percentage shareholding diluted.

Section E - Offer

E.1 The total net

proceeds and an

estimate of the total

expenses

The gross proceeds to the Company from the Repair

Offering will be approximately NOK 40 million. The

Company's total costs and expenses of, and incidental to,

the Repair Offering are estimated to amount to

approximately NOK 3.6 million. Based on these

assumptions the net proceeds to the Company will be NOK

36.4 million.

E.2a Reasons for the

Offering and use of

proceeds

The reasons for the Repair Offering are to give Eligible

Shareholders the right to subscribe for new Shares at the

same subscription price as shareholders that were invited

to subscribe for Private Placement Shares in the Private

Placement, and to strengthen the Company's equity.

The net proceeds from the Repair Offering will be used to

strengthen the Company's financial position.

E.3 Terms and conditions

of the Offering

There are no conditions for the Repair Offering.

E.4 Material interests in

the Offering

The Managers or their affiliates have provided advisory

investment and commercial banking services to the

Company and its affiliates in the ordinary course of

business, for which they may have received customary

transaction-related fees. The Managers may also have a

non-material investment interest in parties involved in the

Restructuring.

The Underwriter will receive an underwriting commission

for the underwriting in connection with the Repair Offering.

Beyond the above-mentioned, the Company is not aware

of any interest, including conflicting ones, of any natural or

legal persons involved in the Private Placement and the

Repair Offering.

E.5 Selling shareholders

and lock-up

agreements

There are no selling shareholders.

No lock-up agreements were entered into in connection

with the Repair Offering.

E.6 Dilution resulting

from the Offering

Taken together with the dilution resulting from the Private

Placement and the Bond Conversion, the Repair Offering

will result in a dilution of the shareholders of the Company

prior to the Private Placement, to the extent such

shareholders elect not to participate in the Repair Offering,

of approximately 6%. The aggregate dilution for

shareholders not participating in the Private Placement or

the Bond Conversion Issue, but participating in the Repair

Offering to the extent of their Subscription Rights is 68%.

The immediate dilution for shareholders not participating

in the Repair Offering is approximately 70%.

18

E.7 Estimated expenses

charged to investor

No expenses or taxes will be charged by the Company or

the Managers to the applicants in the Repair Offering.

19

2. RISK FACTORS

An investment in the Company and the Offer Shares involves inherent risks. Before making an

investment decision with respect to the Offer Shares, investors should carefully consider the

risk factors set forth below and all information contained in this Prospectus, including the

Financial Statements and related notes. The risks and uncertainties described in this Section 2

are the material known risks and uncertainties faced by the Group as of the date hereof that

the Company believes are relevant to an investment in the Offer Shares.

An investment in the Offer 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 in that risk factor are not a genuine potential threat to an

investment in the Offer Shares. If any of the following risks were to materialise, individually or

together with other circumstances, they could have a material and adverse effect on the Group

and/or its business, financial condition, results of operations, cash flows and/or prospects,

which could cause a decline in the value and trading price of the Offer Shares, resulting in the

loss of all or part of an investment in the Offer Shares.

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 Group’s business, financial condition, results of

operations, cash flows and/or prospects. The risks mentioned herein could materialise

individually or cumulatively. The information in this Section 2 is as of the date of this

Prospectus.

Risk factors related to the industry in which Polarcus operates

2.1.1 Economic development trends

The demand for the Company’s services will depend substantially on the level of activity and

capital spending by oil and gas companies and specifically in relation to development and

exploration expenditure. The activities of the oil and gas companies tend to follow the prices

of oil and gas which have fluctuated over recent years, but have generally been depressed

compared to historical prices. A decrease in oil and gas prices may have a negative impact on

the expenditure on exploration activities which may affect demand for the services of the

Company. Financial projections for and valuation of Polarcus’ assets are largely based on

certain assumptions including those related to future conditions for the markets in which

Polarcus will sell its services. Actual changes in market conditions may affect the accuracy

of the assumptions and future prospects of Polarcus. Historically, the markets for oil and

gas have been volatile.

2.1.2 Multi-jurisdictional operations

Operations in international markets are subject to risks inherent in international business

activities which might significantly affect the Company’s financial performance and

competitiveness, including, but not limited to;

general economic conditions in each relevant country,

changes in taxation and other fiscal regulations,

unexpected changes in regulatory requirements,

environmental protest activity,

compliance with a variety of foreign laws and regulations,

war, terrorist activities, piracy, political, civil or labour disturbances, economic sanctions,

trade policies, embargos, border disputes, military activity,

renegotiation or cancellation of contracts by client

restrictions in currency repatriation,

20

challenges in enforcing contractual rights including the right to payment, and

changes in laws that restrict operations or increase the cost.

2.1.3 Government regulation and political risk

Changes in the legislative and fiscal framework governing the activities of oil and gas business

could have a material impact on exploration and development activities or affect the

Company's operations or financial results directly. Changes in political regimes might

constitute a material risk factor for Polarcus' operations in foreign countries, including

contract and bareboat chartering arrangements for the Polarcus vessels. In a worst case

scenario, political authorities will in certain circumstances be in a position to seize Polarcus'

vessels when these are operating within or flagged under a particular jurisdiction.

In certain countries there is an inherent risk of bribery, corruption and unethical work

practices. The Company has developed clear policies and operating procedures to avoid these

risks, and to the extent reasonably possible, the Company will ensure that all external bodies

that it is required to interact with, operate to the same high standards. Nevertheless, the

Company’s operations could be impacted through the actions of these external bodies. The

Company’s operations are subject to numerous international conventions as well as national,

state and local law, and regulations in force in the jurisdictions in which the Company

conducts, or will conduct, its business. These laws and regulations relate to, inter alia, the

protection of the environment, natural resources, human health and safety, taxes, certification

and visa regulations, licensing and permits for offshore blocks and other requirements. In

particular, compliance with environmental regulations may require significant expenditures

and breaches may result in fines and penalties, which could be material. Whereas the

Company pays and has paid particular attention to safety, conduct and the environment in

its execution of business, stricter regulation or changes in the application of existing

regulations may impose increased costs for operating the business of the Company, or

otherwise impact the Company’s financial condition, operating results or future prospects.

The Company also operates to strict international standards prohibiting unlawful commercial

practices.

The Company cannot predict the extent to which its future cash flow and earnings might be

affected by mandatory compliance with any such new legislation or regulations.

2.1.4 Competition

Polarcus operates in a highly competitive global market. The Company may face competition

from other marine seismic companies as well as other ship owners that introduce capacity

into the market place. This, as well as overcapacity in the seismic market, could adversely

affect the operating results of the Company. Polarcus’ revenue and operating results can vary significantly from quarter-to-quarter and

year-to-year driven by competitor fleet size and global fleet distribution relative to market

demand. Polarcus’ operating income is challenging to forecast due to changes in market

demand driven, in large part, by changes in oil and gas company expenditures.

2.1.5 Commodity prices

Any large fluctuations in oil price could materially impact the demand for seismic services.

Risk factors related to the Company and the Group

2.2.1 Service life and technical performance

The service life of a modern seismic vessel is generally considered to be approximately thirty

years, but could vary depending on its efficiency, periodic vessel maintenance and demand for

such vessels. The service life of streamers and seismic equipment deployed from seismic

vessels is generally considered to be up to ten years subject to similar factors. There can be

21

no guarantee that the vessels or equipment deployed by Polarcus will have a long service life.

The vessels may have particular unforeseen technical problems or deficiencies, new

environmental requirements might be enforced or new technical solutions or vessels might be

introduced to the industry.

The complex operations of the Company may lead to technical and operational difficulties that

result in downtime for the vessel or inability of the vessel to complete a contract. Such risks

may materially affect the operating results and reputation of the Company.

2.2.2 Fluctuating revenues from period to period

The Company’s future revenues may fluctuate significantly from quarter to quarter and

from year to year as a result of various factors including the following:

increases and decreases in industry-wide capacity to acquire seismic data;

fluctuating oil and gas prices, which may impact customer demand for the Company’s

services;

different levels of activity planned by customers;

the timing of offshore lease sales and licensing rounds and the effect of such timing on

the demand for seismic data and geophysical services;

the timing of award and commencement of significant contracts for geophysical data

acquisition services;

weather, marine activity (e.g. barnacle growth reducing vessels’ operational efficiency),

commercial fishing activity restricting access to survey sites and other seasonal factors;

seasonality and other variations in the licensing of geophysical data from the Company’s

multi-client data library; and

reduced vessel utilization due to longer than scheduled yard stays, transits and/or delays

in obtaining necessary permits.

2.2.3 The Group's order book is based on assumptions

The Group’s order book (or backlog) estimates represent those estimated future revenues

relating to projects for which a client has executed a contract and has a scheduled start date

for the project and projects for which the Group has a written letter of intent to award a

contract from the Group’s customers. Order book estimates are based on a number of

assumptions and estimates including operating performance of contracts and assumptions

related to foreign exchange rates.

In accordance with industry practice, contracts for the provision of seismic services typically

can be cancelled at the sole discretion of the client without payment of significant cancellation

costs to the service provider. As a result, even if contracts are included in the order book,

there can be no assurance that such contracts will be wholly executed by the Group, generate

actual revenue or not be renegotiated at a lower price, or even that the total costs already

incurred by the Group in connection with the contract would be covered in full pursuant to

any cancellation clause. Even where a project proceeds as scheduled, it is possible that the

client may default and fail to pay amounts owed to the Group. Material delays, payment

defaults and cancellations could reduce the amount of order book currently reported, and

consequently, could inhibit the conversion of that order book into revenues.

2.2.4 Access to personnel

The Company’s development and business success are significantly dependent upon senior

management and other key personnel. Attracting and retaining qualified field and office based

personnel is of material importance for the operation of the Company’s business. The maritime

and seismic industries are highly competitive for skilled personnel. There is no guarantee that

the Company will be able to attract and retain the personnel required to continue its business

22

and successfully execute the business strategy which might have negative effects on the

Company’s operating results and financial performance.

2.2.5 Insurance coverage

Although the Company has taken out insurance coverage that the Company considers

customary in the industry, such insurance arrangements will not fully cover all its operating

risks. The Company’s insurance policies invariably include deductibles which are discounted

from the amount of any insurance claim. Operation of the vessels represents a potential risk

of loss of or damage to the vessels and equipment. In addition, the Group may not be able to

maintain adequate insurance cover for its vessels and equipment in the future or do so at

premiums that are considered reasonable. An accident involving any of the Group’s assets

could result in loss of earnings, fines or penalties, higher insurance costs and damage to the

reputation of the Company. The Group may not have sufficient insurance cover for the entire

range of risks or there may be a dispute with underwriters on whether a particular risk is

insured or the extent of such insurance, in each case resulting in particular losses not being

covered. Any significant loss or liability not insured could have a material adverse effect on its

business, financial condition and results of operations. In addition, the loss of or continuing

unavailability of one or several of its vessels could have an adverse effect on the Group even

if effective insurance cover should be available.

2.2.6 Contractual and counter-party exposure

The revenues of the Company are dependent on contract awards at competitive terms.

Furthermore, the revenues of the Company will depend on the financial position of customers

and the willingness of these customers to honour their obligations towards Polarcus in a timely

manner. There can be no guarantees that the financial position of counterparties will be

sufficient to adhere to their obligations under the contracts with the Company. The inability of

one or more counterparties to make payment under such contracts might have a significant

adverse effect on the financial position of the Company.

Polarcus is and will in the future be party to various contracts related to its business, most

importantly seismic survey contracts and bareboat chartering arrangements. Consequently,

the Company is and will be exposed to counter party risks. Any potential default by such

counterparties or their inability or lack of willingness to fulfil their commitments may have a

material adverse impact on the Company’s operating results and financial position.

The Company has currently no new building projects or concrete plans for new projects, but

may in the future enter into contracts related to construction of vessels. Any material delays

related to the construction of vessels or other contracts of importance for the construction and

equipment of a vessel may have a material adverse effect on the Company and its financial

position. A potential default or delay by any counterparty, including the shipyard, could have

an adverse effect on the Company and its financial position.

2.2.7 Multi-client investments

The Company has made considerable investments in acquiring and processing seismic data

that the Company owns (“multi-client data”). The multi-client data is licensed to third parties

for non-exclusive use in oil and gas exploration, development and production activities.

However, the Company does not know with certainty how much of the multi-client data it will

be able to licence or at what price. There can be no assurance that the Company will be able

to recover all costs and investments associated with acquiring and processing multi-client

data. If there is a material adverse change in the general prospects for oil and gas exploration,

development and production activities in areas where the Company acquires multi-client data,

the value of such multi-client data could be impaired and the Company could be required to

take a charge against its earnings. The value of multi-client data could also be impaired by

technological or regulatory changes and by other industry or general economic developments.

In general, the Company’s future sales of multi-client data licences are uncertain and depend

on a variety of factors, many of which will be beyond the Company’s control.

23

2.2.8 Operating risks

The Company’s assets are concentrated in a single industry and the Group may be more

vulnerable to particular economic, political, regulatory, environmental or other developments

than a company with a more diversified portfolio of revenue generating activities. It is not

possible to give any guarantees that the vessels will be employed for the duration of their

service life. There is an inherent exposure to technical risks, which may lead to operational

problems, and increased operational costs and/or loss of earnings, additional investments,

penalty payments, and other such costs which may have a material effect on the earnings and

financial position of the Company.

Seismic data acquisition operations are exposed to extreme weather and other hazardous

conditions. In particular, a substantial portion of the Group’s operations are subject to risks

that are customary for marine operations, including capsizing, grounding, collision, interruption

and damage or loss from severe weather or marine conditions, fire, explosions and

environmental contamination from spillage. Any of these risks, whether in the marine or

onshore operations, could result in damage to or destruction of vessels or equipment, injury to

personnel or property damage, and/or suspension of operations or environmental damage. In

addition, the operations involve risks of a technical and operational nature due to the complex

systems that are utilized. If any of these risks materialize, the Group’s business could be

interrupted and the Group could incur significant liabilities. In addition, many similar risks may

result in curtailment or cancellation of, or delays in exploration and production activities of

customers, which could in turn adversely impact the Group’s operations and/or reputation.

2.2.9 Technology may become obsolete

The company monitors technology developments in the industry and also monitors client

sentiment towards technology. However, the Company’s technology could be rendered

obsolete as new and enhanced products and services are introduced to the seismic market.

The Group’ success depends to a significant extent on its ability to source, develop and

produce new and enhanced products and services on a cost-effective and timely basis in

accordance with industry demands.

While the Group commits resources to research and development, it may encounter resource

constraints, financial covenant restrictions or technical or other difficulties that could delay

introduction of new and enhanced products and services in the future. In addition, continuing

development of new products and services inherently carries the risk of obsolescence of older

products and services. New and enhanced products and services, if introduced, may not gain

market acceptance or may be adversely affected by technological changes.

2.2.10 Claims may be asserted against the Group for violation of the intellectual property

rights of third parties, particularly the Group's competitors

The Group may from time to time be accused of patent infringement or violation of other

proprietary rights of third parties, especially if the Group’s competitors view the Group’s

technology to be similar to certain of their products or know-how. The Group’s industry is

heavily reliant on technology and certain of the Group’s intellectual property utilizes similar

principles as those of the Group’s competitors. While the Group has procedures in place to

ensure that the Group does not infringe the rights of third parties, there can be no assurance

that the Group will not be a party to litigation or subject to interim or permanent injunctions

as a result of such claims. Furthermore, the Group may enter into settlement negotiations or

pay damages if the Group were to be found to have infringed a third party's intellectual

property, potentially resulting in considerable cost.

2.2.11 Commodity Prices

Polarcus is exposed to the impact of market fluctuations in the price of certain key commodities

and specifically, oil prices, fuel and transportation costs. Any large fluctuations in these prices

driven by the global economy, exacerbated further by exchange rate fluctuations, could

materially impact future operating results.

24

2.2.12 Tax

Operating internationally, Polarcus will be subject to taxation in several jurisdictions around

the world. With increasingly complex and changing tax regulations and interpretation of these

regulations, the taxation on the Company could increase in certain jurisdictions. The Company

may also in the future be subject to review of past years tax returns and be subjected to

additional taxes and penalties. These conditions may have a material effect on the Company’s

financial results.

If Polarcus is controlled by Norwegian taxpayers, the Norwegian CFC-regulation (“NOKUS”-

rules) may, in certain conditions, result in the Company being taxed under Norwegian law as

if it was a Norwegian company. Pursuant to the Company’s Articles of Association, the

Company may refuse to accept shareholder positions leading to the CFC-regulations becoming

applicable. Also, other amendments to applicable tax provisions may have a negative impact

on the return on the investment of Norwegian taxpayers.

2.2.13 Litigation

Due to the nature of the Group's business, the Group will be involved in litigation matters and

other disputes from time to time. These matters may include, among other things, contract

disputes, personal injury claims, environmental claims or proceedings, tort claims, intellectual

property disputes, securities claims, employment matters and governmental claims for taxes

or duties as well as other litigation that arises in the ordinary course of business. In particular,

the Group cannot predict with certainty the outcome of any claim or litigation matter. The

ultimate outcome of any litigation matter and the potential costs associated with prosecuting

or defending such lawsuits, including the diversion of management's attention to these matters,

could have a material adverse effect on the Group's business, revenue, profit and financial

condition.

Risks factors related to finance

2.3.1 Access to funding

The Company may require additional capital in the future due to unforeseen liabilities or in

order for it to take advantage of opportunities for acquisitions, joint ventures, capital

expenditure investments or other business opportunities that may be identified by the

Company. Any negative development in sales, gross margins or sales processes, may lead to

a strained liquidity position and the potential need for additional funding through equity

financing, debt financing or other means. Any additional equity financing may be dilutive to

existing shareholders. Should the current working capital and cash flow from operations not be sufficient to meet the

Company’s financing needs, the Company may be forced to reduce or delay capital expenditure

or research and development expenditure, or sell assets or businesses at unanticipated times

and/or at unfavourable prices or other unfavourable terms, or to seek additional equity capital

or to restructure or refinance its debt. There can be no assurance that such measures would

be successful or adequate to meet the Company's debt and other obligations as they fall due,

or that such measures would not result in the Company being placed in a less competitive

position.

2.3.2 Financial leverage and breach of covenants

The financial leverage of the Company or any breach of covenant (or other circumstances which

entail that loans fall due prior to the final maturity date) may have several adverse

consequences, including the need to refinance, restructure or dispose of certain parts of the

Company’s business in order to fulfil the Company’s financial obligations. For a summary of

covenants and terms of the Company’s loan arrangements, reference is made to Section 11.12

"Selected financial information —Summary of financing”.

25

2.3.3 Defaults and insolvency of subsidiaries

In the event of insolvency, liquidation or a similar event relating to one of the Company’s

subsidiaries, all creditors of such subsidiary would be entitled to payment in full out of the

assets of such subsidiary before the Company, as a shareholder, would be entitled to any

payments. Defaults by, or the insolvency of, certain subsidiaries of the Company could result

in the obligation of the Company to make payments under parent financial or performance

guarantees in respect of such subsidiaries’ obligations under executed seismic survey contracts,

loans or the occurrence of cross defaults on certain borrowings of the Company or other Group

companies. In a worst case scenario, a creditor may under certain circumstances be in a

position to seize a vessel for a period of time which could have a material adverse effect on the

Group's business, revenue and financial condition. There can be no assurance that the

Company and its assets would be protected from any actions by the creditors of any subsidiary

of the Company, whether under bankruptcy law, by contract or otherwise.

2.3.4 Changes to accounting rules or regulations

The Group’s annual audited consolidated financial information is prepared in accordance with

International Financial Reporting Standards as adopted by the EU (“IFRS”), the Group’s

quarterly unaudited consolidated financial information is prepared in accordance with

International Accounting Standard 34 “Interim Financial Reporting” as issued by the

International Accounting Standards Board (IASB). Changes to existing accounting rules or

regulations may impact the Group’s future profit and loss or cause the perception that the

Group is more highly leveraged. In addition, new accounting rules or regulations and varying

interpretations of existing accounting rules or regulations may be adopted in the future and

could adversely affect the Group’s financial position and results of operations.

2.3.5 High fixed costs

The Group is subject to high fixed costs, which primarily consist of depreciation, maintenance

expenses associated with the Group’s seismic data acquisition, processing and interpretation

equipment and certain crew costs. Extended periods of significant unanticipated downtime or

low productivity caused by reduced demand, weather interruptions, equipment failures, permit

delays or other causes could reduce the Group’s profitability and have a material adverse effect

on the Group’s financial condition and results of operations because the Group will not be able

to reduce the Group’s fixed costs as fast as revenues decline.

The Group makes significant investment in property and equipment. As of 31 December 2017,

the net book value of the Group’s property and equipment was USD 342.1 million. Such

developments as a decline in demand for the Group’s services or changes in competitor capacity

and technology may adversely impact the Group’s ability to recover the value of the assets

invested and result in an impairment of those assets.

2.3.6 Losses in the past

The Group has experienced substantial losses. For the year ended 31 December 2015, it

suffered a net loss of USD 374.1 million, for the year ended 31 December 2016 it managed a

net profit of USD 20.3 million due to a financial restructuring, and for the twelve month period

ended 31 December 2017, the Group's unaudited account show a net loss of USD 172.5 million.

If the Group continues to suffer substantial losses or does not generate sufficient profit, the

Group’s cash flow from operations may not be sufficient to fund ongoing activities and

implement the Group’s business plans.

From time to time the Group may enter into transactions to acquire assets or shares of other

companies or to contract new builds, which may be financed partially or wholly with debt. Such

debt financing may not be available to the Group or, if available, may not be available on

favourable terms. Failure to obtain such financing on a timely basis could cause the Group to

forfeit or forego various opportunities. In addition, failure to obtain such financing on attractive

terms may result in increased financing costs and could adversely affect the Group’s earnings

and financial position.

26

Furthermore, the Group’s business is capital intensive, and the Group makes significant

investments in vessels and in processing, seismic and other equipment. The Group also incurs

relatively high fixed costs in its operations. As a result, if the Group cannot keep its vessels and

other equipment utilized at relatively high levels, due to reduced demand, weather

interruptions, equipment failure, technical difficulties, labour unrest or other causes, the Group

could incur significant operating losses.

2.3.7 Exchange rate fluctuations

Currency exchange rate fluctuations and currency devaluation could have a material impact on

the Company’s results from time to time. Historically, most of the Company’s income and

expenses have been denominated in USD, GBP, NOK, AUD, RUB and EUR. The Company

predominately sells its products and services in USD while a high portion of the operating

expenses are incurred in NOK, GBP and EUR. A depreciation of the USD will have an adverse

effect on the Company’s financial performance as the Company will typically have higher

revenues than expenses denominated in USD. The Company’s debt is predominately

denominated in USD. Currency fluctuations relative to the NOK of an investor’s currency of

reference may adversely affect the value of an investor’s investments.

2.3.8 Increased debt service from 1 January 2022

From 1 January 2022, the amortisation payments under the loan agreement for a bank facility

of USD 410 million with Eksportfinans ASA as lender and with DNB Bank ASA and DVB Bank

SE, Nordic Branch, together with Garanti-instituttet for Eksportkreditt ("GIEK") as guarantors

(the "Fleet Bank Facility"), and the bonds in the tranche under the USD 125,000,000 2.875%

Secured Convertible Bond issue 2011/2016 with ISIN NO 001 0607435 ("CB Tranche A")

under the Convertible Bond Loan (the "Secured Bonds") will increase as the amortisation

profiles prior to the Restructuring will apply. From the same date, amortisation payments will

become payable under a new loan provided by DVB and GIEK (the "New Fleet Facility"). The

ability to make principal and interest payments when due, and to fund ongoing operations, will

depend on the Group's future performance and ability to generate cash and profit, which is

subject to market conditions and general economic, financial and competitive factors beyond

the Group's control.

2.3.9 Cash sweep

In connection with the Restructuring, a cash sweep mechanism (the "Cash Sweep") was

included for Eksportfinans ASA, Eksportkreditt Norge AS and the Norwegian Government

represented by the Norwegian Export Credit Guarantee Agency, DVB and DNB as guarantors

thereof (the "Bank Lenders"), DVB and GIEK (the "New Fleet Facility Lenders") and the

holders of Secured Bonds. The Cash Sweep mechanism provides for 70% of any excess cash

flow (after certain deductions) to be distributed to and between holders of Secured Bonds, the

Bank Lenders and the New Fleet Facility Lenders. The Cash Sweep mechanism limits the cash

available for the Group which may reduce the Group's operational and financial flexibility.

2.3.10 The Fleet Bank Facility and the New Fleet Facility contains, and future credit facilities

may contain, one or more financial covenants which the Group could fail to meet.

The Fleet Bank Facility and the New Fleet Facility requires the Group to satisfy minimum liquidity

and positive working capital covenants. See Section 11.12.2/11.12.6 “Selected financial

information – Summary of financing – USD 410 million Fleet Bank Facility/New Fleet Facility”.

The ability of the Group to comply with these tests in the Fleet Bank Facility and the New Fleet

Facility and future credit facilities may be affected by events beyond their control and it cannot

be assured that the Group will continue to meet these tests. The failure of the Group to comply

with these obligations could lead to a default under these credit facilities unless the Group can

obtain waivers or consents in respect of any breaches of these obligations thereunder. It cannot

be assured that these waivers or consents will be granted. A breach of any of these covenants

or the inability to comply with the required financial ratios could result in a default under these

credit facilities. In the event of any default under these credit facilities, the lenders under these

facilities will not be required to lend any additional amounts to the Group and could elect to

27

declare all outstanding borrowings, together with accrued interest, fees and other amounts due

thereunder, to be immediately due and payable.

2.3.11 Restrictions imposed by the New Fleet Facility and the Fleet Bank Facility and the

Group's other outstanding debt may limit the Group's ability to take certain actions

The New Fleet Facility and the Fleet Bank Facility and certain other agreements governing the

Groups other outstanding debt, currently or in the future, may limit the Group's flexibility in

operating its business. For example, these agreements restrict the ability of the Company and

certain of its subsidiaries to, among other things:

Borrow money;

Pay dividends or make other distributions;

Create certain liens;

Make certain asset dispositions;

Make certain loans or investments;

Issue or sell share capital of the Company's subsidiaries;

Guarantee indebtedness;

Enter into transactions with affiliates; or

Merge, consolidate or sell, lease or transfer all or substantially all of the Group's assets.

It cannot be assured that the operating and financial restrictions and covenants in the New

Fleet Facility and the Fleet Bank Facility and agreements governing the Group’s other

outstanding debt will not adversely affect the Group’s ability to finance its future operations or

capital needs or engage in other business activities that may be in the Group’s interest. The

Group cannot guarantee that operating and financial restrictions and covenants in the New

Fleet Facility and certain of the Group’s other credit facilities will permit the Group to execute

its business strategy as it may intend.

In addition to limiting the Group’s flexibility in operating its business, a breach of the covenants

in the New Fleet Facility could cause a default under the terms of the Group’s other financing

agreements, causing all the debt under those agreements to be accelerated. If this were to

occur, no assurances can be made that the Group would have sufficient assets to repay its

debt.

Risk factors related to the Shares and the Repair Offering

2.4.1 Volatility of share price

There can be no assurance that an active market for the Company's Shares can be sustained.

The Company's share price may experience substantial volatility.

The market price of the Shares could fluctuate significantly. Factors that influence share

prices include, but are not limited to:

general conditions within the oil industry;

actual or anticipated variations in operating results;

changes in financial estimates or recommendations by stock market analysts regarding

the Company or its competitors;

announcements by the Company or its competitors of significant acquisitions, strategic

partnerships, joint ventures or capital commitments;

sales or purchases of substantial blocks of Shares;

additions or departures of key personnel;

28

future equity or debt offerings by the Company and its announcement of these offerings;

general market and economic conditions; and

rumours and speculation in the market.

Moreover, in recent years the stock market in general has experienced large price fluctuations.

These broad market fluctuations may adversely affect the Company's stock price, regardless of

its operating results.

2.4.2 Risks related to the issuance of Shares or other securities

As of the date of this Prospectus, the Company has an authorised share capital of USD

59,108,915.70 divided into 591,089,157 Shares of par value USD 0.10, of which 483,017,482

Shares are issued.

The Company's board of directors (the "Board" or the "Board of Directors") is authorised to

issue the remaining 61,888,137 authorised Shares of par value USD 0.10 (which have not been

reserved for the purpose of the Repair Offering, employee option schemes, the convertible

bonds and the Warrants – see Section 14.2.3 “Board authorisations” below) to strengthen the

Company's equity, to issue new shares in connection with merger and acquisition opportunities

as well as other business reasons namely, to take advantage of viable business opportunities,

including but not limited to efficiency upgrades, multi-client projects and for general working

capital purposes through one or more offerings and upon terms as decided by the Board. The

authorization may also be used in a takeover situation.

If the Company decides to offer additional Shares in the future for other reasons, such offering

may be made at a significant discount to the prevailing market price and could have a material

adverse effect on the market price of the outstanding Shares.

2.4.3 Risks associated with dilution

Subscription Rights that are not exercised by the end of the Subscription Period will have no

value and will automatically lapse without compensation to the holder. To the extent that an

Eligible Shareholder does not exercise its Subscription Rights prior to the expiry of the

Subscription Period, whether by choice or due to a failure to comply with procedures set forth

in Section 8 “Terms of the Repair Offering”, or to the extent that an Eligible Shareholder is not

permitted to subscribe for Offer Shares as further described in Section 17 “Selling and Transfer

Restrictions”, such Eligible Shareholder’s proportionate ownership and voting interests in the

Company after the completion of the Subsequent Offering will be diluted.

Furthermore, due to regulatory requirements under foreign securities laws or other factors,

foreign investors may not be able to participate in any other new issuance of Shares or other

securities and may face dilution as a result. Any investor that is unable or unwilling to

participate in the Company’s future share issuances will have their percentage shareholding

diluted. Further, if foreign holders of the Shares are not able to receive, trade or exercise pre-

emptive rights granted in respect of their Shares in any rights offering by the Company, then

they may not receive the economic benefit of such rights. In addition, their proportional

ownership interests in the Company will be diluted.

2.4.4 Additional risks for holders of Shares that are registered in a nominee account

Beneficial owners of Shares that are registered in a nominee account (e.g., through brokers,

dealers or third parties) may not be able to vote such Shares unless their ownership is re-

registered in their names with the VPS prior to the Company’s General Meetings. The Company

cannot guarantee that beneficial owners of the Shares will receive the notice for a General

Meeting in time to instruct their nominees to either effect a re-registration of their Shares or

otherwise vote their Shares in the manner desired by such beneficial owners. For more

information, see Section 14.2 “Shares and share capital”.

29

2.4.5 Enforceability of civil liabilities in Cayman Islands

The Company is incorporated under the laws of the Cayman Islands. The rights of the

shareholders are governed by Cayman Islands law and by the Company’s Memorandum of

Association and Articles of Association. These rights may differ from the rights of a shareholder

in other jurisdictions. As a result, it may, inter alia, not be possible for non-Cayman Islands

investors to effect service of process on the Company or its directors in the shareholder's own

jurisdiction, or to enforce against the Company judgments obtained in non-Cayman Islands

courts.

2.4.6 Transfer restrictions under the securities laws of United States and other jurisdictions

The Company has not registered its Shares under the U.S. Securities Act or the securities laws

of other jurisdictions except Norway, and the Company does not expect do so in the future.

The Shares may not be offered or sold in the United States or to U.S. persons (as defined in

Regulation S under the U.S. Securities Act), nor may they be offered or sold in any other

jurisdiction in which the registration of the Shares is required but has not taken place, unless

an exemption from the applicable registration requirement is available or the offer or sale of

Shares occurs in connection with a transaction that is not subject to these provisions. In

addition, there can be no assurances that shareholders residing or domiciled in the United

States will be able to participate in future capital increases.

30

3. RESPONSIBILITY FOR THE PROSPECTUS

This Prospectus has been prepared in connection the listing of the New Shares and the Repair

Offering.

The Board of Directors of Polarcus Limited accepts responsibility for the information contained

in this Prospectus. The members of the Board of Directors confirm that, after having taken all

reasonable care to ensure that such is the case, the information contained in this Prospectus

is, to the best of their knowledge, in accordance with the facts and contains no omissions likely

to affect its import.

, _____ 2018

Peter Rigg

Chairman and

Board member

Karen El-Tawil

Board member

Erik M Mathiesen

Board member

Peter Zickerman

Board member

Tom Henning Slethei

Board member

Nicholas Smith

Board member

31

4. PRESENTATION OF INFORMATION

Date of information

The information contained in this Prospectus is current as at the date of the Prospectus and is

subject to change or amendment without notice. In accordance with section 7-15 of the

Norwegian Securities Trading Act, significant new factors, material mistakes or inaccuracies

relating to the information included in this Prospectus, which are capable of affecting the

assessment of the Shares between the time of approval of this Prospectus by the Norwegian

FSA and the listing of the Offer Shares, will be included in a supplement to this Prospectus.

Except as required by applicable law and stock exchange rules, the Company does not

undertake any duty to update the information in this Prospectus. The publication of this

Prospectus shall not under any circumstances create any implication that there has been no

change in the Group's affairs or that the information herein is correct as of any date subsequent

to the date of this Prospectus.

Presentation of financial information

The Company's audited financial statements as of, and for the years ended 31 December 2016,

and 2015 (collectively referred to as the "Annual Financial Statements"), and the Company's

unaudited interim financial statements as of, and for the three-month and twelve month periods

ended 31 December 2017 (the "Interim Financial Statements"), have been prepared in

accordance with International Financial Reporting Standards as issued by the International

Accounting Standards Board (IASB) ("IFRS"). The Financial Statements are included by

reference in section 18.2 "Incorporation by reference". The Annual Financial Statements have

been audited by Ernst & Young AS, as set forth in its report thereon included by reference in

section 18.2 "Incorporation by reference".

Rounding

Percentages and certain amounts included in this Prospectus have been rounded for ease of

presentation. Accordingly, figures shown as totals in certain tables may not be the precise sum

of the figures that precede them.

Industry and market data

This Prospectus contains statistics, data, statements and other information relating to markets,

market sizes, market shares, market positions and other industry data pertaining to the Group's

business and the industries and markets in which it operates. Unless otherwise indicated, such

information reflects the Group's 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 and interim financial statements and

other presentations published by listed companies operating within the same industry as the

Group, as well as the Group's internal data and its own experience, or on a combination of the

foregoing. Unless otherwise indicated in the Prospectus, the basis for any statements regarding

the Group's competitive position is based on the Company's own assessment and knowledge

of the market in which it operates.

The Company confirms that where information has been sourced from a third party, such

information has been accurately reproduced and that as far as the Company 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. The Company does not intend, and does not assume any obligations to, update

industry or market data set forth in this Prospectus.

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. The Company has not independently verified and cannot give

any assurances as to the accuracy of market data contained in this Prospectus that was

extracted from these industry publications or reports and reproduced herein. Market data and

32

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 Prospectus and projections, assumptions and estimates based on such

information may not be reliable indicators of the Company'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 2 "Risk Factors" and elsewhere in this

Prospectus.

Forward-looking statements

This Prospectus contains forward-looking statements. All statements contained in this

Prospectus other than statements of historical fact, including statements regarding the

Company's future results of operations and financial position, its business strategy and plans,

and its objectives for future operations, are forward-looking statements. The words "believe,"

"may," "will," "estimate," "continue," "anticipate," "intend," "expect," and similar expressions

are intended to identify forward-looking statements. The Company has based these forward-

looking statements largely on its current expectations and projections about future events and

trends that it believes may affect its financial condition, results of operations, business strategy,

short-term and long-term business operations and objectives, and financial needs.

Forward-looking statements are subject to a number of risks and uncertainties, and are based

on numerous assumptions regarding the Group's present and future business strategies and

the environment in which the Group operates. The actual results, performance or achievements

of the Group may differ materially from any future results, performance or achievements

expressed or implied by such forward-looking statements. Although the Company believes that

the expectations reflected in the forward-looking statements are reasonable, it cannot

guarantee future results, levels of activity, performance, or achievements. Given these

uncertainties, investors should not rely upon forward-looking statements as predictions of

future events or performance.

Except as required by the applicable law or stock exchange rules, the Company does not intend,

and expressly disclaims any obligation or undertaking, to update any of these forward-looking

statements after the date of this Prospectus or to conform these statements to actual results

or revised expectations.

Forward-looking statements are found in Sections 9 "Industry and market", 10 "Business", 11

"Selected financial information", and 14 "Corporate information and description of the share

capital", and include statements regarding the Company's management's intent, belief or

current expectations with respect to, among other things:

strategies for the Company's services, segments and business, as well as for the Company

as a whole;

global and regional economic conditions;

supply and demand for seismic related services;

sales volumes, price levels, costs and margins;

competition and actions by competitors and others affecting the global or regional market

within the seismic industry, including changes to industry capacity and utilization and

pricing of services;

the Company's planned capacity and utilization rates;

fluctuations in foreign exchange rates; earnings, cash flows, dividends and other expected

33

financial results and conditions;

cash requirements and use of available cash;

financing plans;

anticipated capital spending;

growth opportunities;

development, production, commercialization and acceptance of new services and

technologies; and

environmental and other regulatory matters.

No forward-looking statements contained in this Prospectus should be relied upon as predictions

of future events. No assurance can be given that the expectations expressed in these forward-

looking statements will prove to be correct. Actual results could differ materially from

expectations expressed in the forward-looking statements if one or more of the underlying

assumptions or expectations proves to be inaccurate or is unrealized.

Managers

The Company has engaged ABG Sundal Collier ASA and DNB Markets as joint Managers for the

Private Placement and the Repair Offering. ABG Sundal Collier ASA has been engaged as

Manager for the Bond Conversion Offer. The Managers have been acting for the Company and

no one else in this respect. The Managers will not be responsible to anyone other than the

Company for providing the protections afforded to clients of the Managers or for providing

advice in relation to the listing. In the ordinary course of their businesses, the Managers and

certain of their respective affiliates have engaged, and may continue to engage, in investment

and commercial banking transactions with the Company and its subsidiaries.

No advice

The contents of this Prospectus are not to be construed as legal, business or tax advice. Each

prospective investor should consult his or her own lawyer, financial adviser or tax adviser for

legal, financial or tax advice in relation to any subscription, purchase or proposed subscription

or purchase of any Offer Shares. Each prospective investor should consult with such advisers

as needed to make its investment decision and to determine whether it is legally permitted to

hold Offer Shares under applicable legal investment or similar laws or regulations. Investors

should be aware that they may be required to bear the financial risks of any investment in Offer

Shares for an indefinite period of time.

Third party information

In certain sections of the Prospectus information sourced from third parties has been

reproduced. In such cases, the source of the information is always identified. Such third party

information has been accurately reproduced. As far as the Company is aware, and is able to

ascertain from information published by the relevant third party, no facts have been omitted

which would render the reproduced information inaccurate or misleading.

Enforcement of civil liability

The Company is a public limited liability company incorporated under the laws of Cayman

Islands. As a result, the rights of holders of the Company’s Shares will be governed by the laws

of Cayman Islands and the Company’s articles of association (the "Articles of Association").

The rights of shareholders under the laws of Cayman Islands may differ from the rights of

shareholders of companies incorporated in other jurisdictions. The majority of the members of

the Company's board of directors (the "Board Members" and the "Board of Directors",

respectively) and all of the members of the senior management of the Group (the

"Management") are not residents of the United States, and almost all of the Group's assets

are located outside the United States. As a result, it may be difficult for investors in the United

States to effect service of process on the Company or its Board Members and members of

34

Management in the United States or to enforce in the United States judgments obtained in U.S.

courts against the Company or those persons, including judgments based on the civil liability

provisions of the securities laws of the United States or any State or territory within the United

States. Uncertainty exists as to whether courts in the Cayman Islands will enforce judgments

obtained in other jurisdictions, including the United States, against the Company or its Board

Members or members of Management under the securities laws of those jurisdictions or

entertain actions in the Cayman Islands against the Company or its Board Members or members

of Management 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 the

Cayman Islands. The United States and the Cayman Islands do not currently have a treaty

providing for reciprocal recognition and enforcement of judgements (other than arbitral awards)

in civil and commercial matters.

35

5. THE RESTRUCTURING

Since 2014, the significant oil price decline has caused depressed levels of seismic spending by

oil companies, with a knock-on reduction in demand for the Company’s services and lower day

rates across the industry. In 2017, the market remained challenging and uncertain, with

industry-wide low vessel utilization. The Company’s earnings in 2017 were negatively impacted

by the continued lower demand and excess vessel capacity in the market. To enable the

Company to be in a position to continue to operate in the prevailing challenging market, the

Company refinanced the majority of its debt in January and February 2018 (the

"Restructuring").

The Restructuring consisted of amendments to the Company's financing agreements, including

an extension of the existing amortization freezes and increasing the Company's working capital

facility (as further described in sections 5.1 to 5.5 below) and a significant reduction in the

Company's unsecured bond debt through a bond conversion (as further described in sections

5.6 "The Restructuring – Unsecured Bonds" and 7 "Listing of the Bond Conversion Shares"

below). The Restructuring was conditional upon the Company raising gross proceeds of

approximately NOK 300 million in the Private Placement, which it did on 1 March 2018, and as

further described under section 6 "Listing of the Private Placement Shares".

Through implementation of the Restructuring, the Company's financial situation has been

significantly improved. The Private Placement, the subsequent Repair Offering, the vessel

transaction underpinned by the New Fleet Facility and amended financing terms following the

Restructuring and an increased working capital facility will improve the Company's liquidity by

approximately USD 220 million to 2022.

The Restructuring introduced several changes to the financing agreements of the Company.

The following is a summary of the main terms of the Restructuring:

Fleet Bank Facility

The Company and the Bank Lenders agreed to a general extension of the fixed amortization

freeze until 1 January 2022 (from 1 January 2019 prior to the Restructuring). During this period,

the principal part of one loan within the Fleet Bank Facility will receive fixed amortisation for

the period that the vessel "Ivan Gubkin" is on a long term bareboat charter. The reduction in

fixed instalments between 2019 and 2021 improves the Company's liquidity by approximately

USD 79 million.

The Bank Lenders participate in the Cash Sweep described below. Postponed amortisation

payments will be added to the payment due on the maturity date.

The Bank Lenders have also agreed to reduced interest payable on the Fleet Bank Facility. In

addition, the debt service ratio, minimum equity ratio and minimum market value covenants

have been removed. Other covenants have also been amended to provide the Company with

greater operational flexibility, even in a flat market environment.

Swap Termination

Polarcus has terminated its swap and credit support arrangement including a cross currency

swap provided thereunder. The Company paid a termination fee of USD 7.7 million and this fee

was financed in full by a new facility provided by DNB Bank ASA. The new facility amortizes by

USD 2 million on 30 June 2019, USD 3 million on 30 June 2020 and USD 2.7 million on 30 June

2021. The interest rate on the new facility is USD LIBOR + 4% p.a.

Working Capital Facility

The Company's working capital facility has been increased to USD 40 million (from the USD 25

million prior to the Restructuring). The maturity date was extended from 1 July 2019 to 30

June 2022.

36

Secured Bonds

Amendments to the Secured Bonds included a reduction in fixed amortisation payments to USD

4.6 million per annum for the period that the vessel "Vyacheslav Tikhonov" remains on a long

term bareboat charter. For periods that the vessel is not on a long term bareboat charter,

holders of Secured Bonds will not receive fixed amortisation, but will receive interest at a

reduced rate and participate in the Cash Sweep described below. Postponed amortisation

payments will be added to the payment due on the maturity date. The maturity date was

extended from 30 March 2022 to 1 July 2022.

Cash Sweep

A new Cash Sweep mechanism was introduced in which the Bank Lenders, holders of Secured

Bonds and the New Fleet Facility Lenders participate. The Cash Sweep is only triggered if the

consolidated excess cash flow from the Group is positive for the preceding financial year, in

which case 70% of the excess cash flow will be distributed on an annual basis to the eligible

participants in proportion to the amount of each outstanding loan.

The "excess cash flow" term is defined as the annual net increase in cash and cash equivalents

(as set out in the Company's annual consolidated cash flow statement) adjusted to exclude

any: (a) investments in property, plant and equipment in excess of USD 20 million; and (b)

any cash or cash equivalents received or recovered by the Group from: (i) (a) issue of new

shares, (b) bank loans, (c) the issuance of bonds or other capital markets instruments, (d) sale

of assets (other than late sales of the multi-client library), (e) insurance claim proceeds used

(or intended to be used) to effect repairs or purchase replacement assets within one year of

receipt (other than insurance proceeds relating to total loss or constructive total loss of a vessel

for which there is no time limit for reinvestment), (f) mergers and acquisitions and (g)

movements in escrow and retention accounts. Notwithstanding the above, in case of (i) vessel

sales and (ii) insurance proceeds upon a total loss or constructive total loss of a vessel, the

existing pre-transaction provisions in the MUSD 410 Facility Agreement as described in Section

11.12.2 will prevail (i.e. the cash sweep does not overrule the specific proceeds waterfall

provisions relating to asset sales and insurance proceeds in the existing MUSD 410 Facility

Agreement).

Unsecured Bonds

As set out in the stock exchange notice by the Company dated 25 January 2018, the bonds

with International Securities Identification Number NO 001 0757263 ("CB Tranche B"), with

ISIN NO 001 0757271 ("CB Tranche C", as of 14 March 2018, merged with CB Tranche B),

the NOK unsecured bond loan issued by the Company with ISIN NO 001 0714389 and ISIN NO

001 0757255 (the "NOK Unsecured Bond") and the unsecured USD bond loan issued by the

Company with ISIN NO 001 0680150 and ISIN NO 001 0757248 (the "USD Unsecured Bond")

(taken together, the "Unsecured Bonds") were amended in connection with the Restructuring.

The amendments involved a reduction in principal value of the bonds to the applicable 2018

call price level, amendment of the interest to a rate of 5% payable in kind (bonds received as

payment in kind fall due on the maturity date), maturity extended from 30 December 2022 to

1 January 2025 and removal of certain covenants and restrictions. Through the reduction in

principal value the outstanding amount under the NOK Unsecured Bonds was reduced from

NOK 348,640,000 to NOK 94,960,000; the USD Unsecured Bonds was reduced from USD

94,655,000 to USD 26,263,750; and the CB Tranche B and CB Tranche C were in aggregate

reduced from USD 30,446,200 to 8,597,550 (the "Reduction in Principal Value").

The holders of the Unsecured Bonds were further presented with two alternatives. Alternative

1 involved choosing to hold Unsecured Bonds on the amended terms as described above.

Alternative 2 involved accepting an offer to convert all or part of the Unsecured Bonds into

equity, as further described in section 7 "Listing of the Bond Conversion Shares".

The outstanding amount under the NOK Unsecured Bonds was reduced from NOK 94,960,000

to NOK 53,514,847, the USD Unsecured Bonds was reduced from USD 26,263,750 to USD

13,116,617 and the CB Tranche B and CB Tranche C was in aggregate reduced from USD

37

8,597,550 to USD 3,555,354. The total outstanding under the Unsecured Bonds amounts to

USD 23.5 million (using USD-NOK of 7.81) after the Reduction in Principal Value and the Bond

Conversion.

On 14 March 2018 the two tranches in the NOK Unsecured Bonds were merged into one tranche,

two tranches in the USD Unsecured Bonds were merged into one tranche and CB Tranche B

and CB Tranche C were merged into one tranche.

Sale and lease termination

On 26 February 2018, Polarcus purchased POLARCUS NADIA and POLARCUS NAILA from GSH.

These vessels were previously operated under long-term leases. The remaining financial

commitment prior to the Restructuring was approximately USD 90 million. The purchase was

fully financed by a new loan, maturing in 2024, on terms substantially similar to the Fleet Bank

Facility (the "New Fleet Facility"). The aggregate purchase price for the two vessels was USD

75 million and the long-term leases were terminated simultaneously with the purchase. As part

of the sale and lease termination, GSH received warrants for 2.5% of the Company's

outstanding share capital after the Restructuring with a strike price of NOK 3.90 as further

described in section 14.2.5 "Corporate information and description of the share capital – Shares

and the share capital – Warrants". The warrants are exercisable until 30 November 2022. The

agreement with GSH also contains a profit split mechanism in case an agreement to sell any of

POLARCUS NADIA or POLARCUS NAILA is entered into by Polarcus on or before 31 December

2018.

38

6. LISTING OF THE PRIVATE PLACEMENT SHARES

Background

As a part of the Restructuring, the Company launched the Private Placement on 25 January

2018. The Private Placement was successfully placed on 26 January 2018 through the

conditional allocation of 230,769,231 Private Placement Shares, each with a nominal value of

USD 0.10, at a subscription price of NOK 1.30 per share, raising gross proceeds of NOK 300

million.

Following fulfilment of the conditions for completion of the Private Placement, including the

required resolutions at the Company's extraordinary general meeting on 15 February 2018 (the

"EGM") to increase the Company's authorised share capital and to authorise the issuance of

the Private Placement Shares, the Bond Conversion Shares and the Offer Shares, the Private

Placement was completed on 23 February 2018, and the Private Placement Shares were

delivered to the investors against payment of the subscription price on 1 March 2018. The

Private Placement Shares represent approximately 48% of the issued shares in the Company

as of the date of this Prospectus.

The Private Placement Shares are issued in accordance with Cayman Islands law. The Private

Placement Shares rank pari passu in all respects with the Company's other issued Shares and

carry full shareholder rights in the Company from the time of issuance. The Private Placement

Shares are eligible for any dividends which the Company may declare after such date. For a

description of rights attached to the Private Placement Shares, see Section 14 "Corporate

information and description of the share capital".

The Private Placement Shares are registered in the VPS with ISIN KYG7153K1739 (the

"Temporary ISIN"). The Private Placement Shares will be converted to the ordinary ISIN,

being ISIN number KYG7153K1085 (the "Ordinary ISIN"), following approval of this

Prospectus, and be tradable on Oslo Børs. The Company's register of shareholders with the VPS

is administrated by DNB Bank ASA, Verdipapirservice, Dronning Eufemias gate 30, 0191 Oslo.

It is expected that trading in the Private Placement Shares will commence on Oslo Børs on or

about 22 March 2018.

The subscription price of NOK 1.30 per share was a result of a book-building process.

Following an assessment of the Company's financial condition, the need for new investors and

preferred timing of the equity issue, the Board of Directors decided that it was in the Company's

and shareholders' best interests to carry out the equity raise as a Private Placement.

Use of proceeds

The net proceeds from the Private Placement will be used to strengthen the Company's

financial position.

Expenses related to the listing of the Private Placement Shares

The gross proceeds to the Company from the Private Placement amounted to NOK 300

million. The costs and expenses of, and incidental to, the Private Placement amounted to

approximately USD 1.5 million (approximately NOK 12 million). Based on this, the net

proceeds to the Company amounted to approximately NOK 288 million.

Share capital following completion of the Private Placement

The Company's issued share capital was increased from USD 15,343,853.9 divided into

153,438,539 shares of a par value of USD 0.10 each, to USD 38,420,777 divided into

384,207,770 shares of a par value of USD 0.10 each through the issuance of the Private

Placement Shares.

39

Dilution

Following completion of the Private Placement, the aggregate dilution for the existing

shareholders is approximately 60%.

Selling and transfer restrictions

For a description of selling restrictions applicable to the Private Placement, see Section 17

"Selling and transfer restrictions".

Advisors

ABG Sundal Collier ASA, Munkedamsveien 45E, 0250 Oslo, Norway and DNB Markets, Dronning

Eufemias gate 30, 0191 Oslo are acting as Joint Managers in the Private Placement.

Advokatfirmaet Wiersholm AS, Dokkveien 1, 0250 Oslo, Norway is acting as legal advisor to

the Company in respect to Norwegian Law.

Lock-up

No lock-up agreements were entered into in connection with the Private Placement.

Interest of natural and legal persons involved in the Private Placement

The Managers or their affiliates have provided from time to time and may provide advisory and

commercial banking services to the Company and its affiliates in the ordinary course of

business. The Managers have received commissions of 4% of the gross proceeds to the

Company from the Private Placement. The Managers may also have a non-material investment

interest in parties involved in the Restructuring. Beyond the above-mentioned, the Company is

not aware of any interest, including conflicting ones, of any natural or legal persons involved

in the Private Placement.

Jurisdiction

The Private Placement Shares were issued pursuant to the Companies Law of the Cayman

Islands (as amended) (the "Companies Law").

40

7. LISTING OF THE BOND CONVERSION SHARES

Background

As part of the Restructuring, described in section 5 "The Restructuring", holders of Unsecured

Bonds were offered the opportunity to convert all or part of their Unsecured Bonds (valued at

70% of the par value of the bonds after the Reduction in Principal Value), into equity at a

subscription price of NOK 1.30 per share, limited to 50% of the total outstanding amount under

the Unsecured Bonds (the "Bond Conversion"). On 13 March 2018, the Company announced

that 98,809,712 Bond Conversion Shares, each with a nominal value of USD 0.10 had been

issued and delivered to the unsecured bondholders who elected to receive shares. The Bond

Conversion Shares represent approximately 20% of the issued shares in the Company as of

the date of this Prospectus.

The Bond Conversion Shares are issued in accordance with Cayman Islands law. The Bond

Conversion Shares rank pari passu in all respects with the Company's other issued Shares and

carry full shareholder rights in the Company from the time of issuance. The Bond Conversion

Shares are eligible for any dividends which the Company may declare after such date. For a

description of rights attached to the Bond Conversion Shares, see Section 14 "Corporate

information and description of the share capital".

The Bond Conversion Shares are registered in the VPS on the Temporary ISIN. The Bond

Conversion Shares will be converted to the Ordinary ISIN following approval of this Prospectus,

and be tradable on Oslo Børs. The Company's register of shareholders with the VPS is

administrated by DNB Bank ASA, Verdipapirservice, Dronning Eufemias gate 30, 0191 Oslo. It

is expected that trading in the Bond Conversion Shares will commence on Oslo Børs on or about

22 March 2018.

Expenses related to the listing of the Bond Conversion Shares

The costs and expenses of, and incidental to, the listing of the Bond Conversion Shares

amounted to NOK 2 million (approximately USD 260,000).

Share capital following completion of the Bond Conversion Offer

The Company's issued share capital was increased from USD 38,420,777.00 divided into

384,207,770 shares of a par value of USD 0.10 each, to USD 48,301,748.20 divided into

483,017,482 shares of a par value of USD 0.10 each following the completion of the Bond

Conversion Offer.

Dilution

Following completion of the Bond Conversion Offer, the aggregate dilution for the existing

shareholders is approximately 68%.

Selling and transfer restrictions

For a description of selling restrictions applicable to the Bond Conversion Offer, see Section 17

"Selling and transfer restrictions".

Advisors

ABG Sundal Collier ASA, Munkedamsveien 45E, 0250 Oslo, Norway are acting as Manager for

the Bond Conversion Offer. Advokatfirmaet Wiersholm AS, Dokkveien 1, 0250 Oslo, Norway is

acting as legal advisor to the Company in respect to Norwegian Law.

Lock-up

No lock-up agreements were entered into in connection with the Bond Conversion Offer.

41

Interest of natural and legal persons involved in the Bond Conversion Offer

The Manager or its affiliates have provided from time to time and may provide advisory and

commercial banking services to the Company and its affiliates in the ordinary course of

business. The Manager received transaction-specific fees of 0.6 % of the principal value of the

outstanding amount under the Unsecured Bonds after the Reduction in Principal Value. The

Manager may also have a non-material investment interest in parties involved in the

Restructuring. Beyond the above-mentioned, the Company is not aware of any interest,

including conflicting ones, of any natural or legal persons involved in the Bond Conversion Offer.

Jurisdiction

The Bond Conversion Shares were issued pursuant to the Companies Law.

42

8. THE TERMS OF THE REPAIR OFFERING

This Section sets out the terms and conditions pursuant to which all applications for Offer

Shares in the Repair Offering are made. Investing in the Offer Shares involves inherent risks.

In making an investment decision, each prospective investor must rely on its own examination,

analysis of and enquiry into the Company and the terms of the Repair Offering, including the

merits and risks involved. Neither the Company nor the Managers, or any of their respective

representatives or advisers, are making any representation to any offeree or purchaser of the

Offer Shares regarding the legality of an investment in the Offer Shares by such offeree or

purchaser under the laws applicable to such offeree or purchaser. Each investor should consult

with his or her own advisors as to the legal, tax, business, financial and related aspects of a

purchase of the Offer Shares. Prospective investors should read this Section in conjunction with

the other parts, in particular Section 2 "Risk factors".

The Repair Offering

8.1.1 Overview

As part of the Restructuring, the Company launches the Repair Offering. The Repair Offering

comprises an offering of 30,769,231 Offer Shares each with a nominal value of USD 0.10, at a

Subscription price of NOK 1.30 per Offer Share, corresponding to gross proceeds of NOK 40

million (approximately USD 5.2 million).

The Repair Offering is directed towards shareholders of the Company as of the end of trading

on 25 January 2018 (as registered in VPS as of the end on 29 January 2018), who were not

invited to participate in the Private Placement, and who are not resident in a jurisdiction where

such offering would be unlawful, or would (in jurisdictions other than Norway) require any

prospectus filing, registration or similar action ("Eligible Shareholders").

Eligible Shareholders in the Repair Offering will be granted non-transferable Subscription Rights

that, subject to applicable laws, provide rights to subscribe for and be allocated Offer Shares.

Over-subscription and subscription without Subscription Rights will be permitted; however

there can be no assurance that Offer Shares will be allocated for such subscriptions.

Subscription Rights and Offer Shares will not be granted, issued or offered in certain

jurisdictions or to residents of certain jurisdictions. For further information see Section 17

"Selling and transfer restrictions". The reasons for the Repair Offering are to give Eligible

Shareholders the right to subscribe for new Shares at the same subscription price as

shareholders that were invited to subscribe for Private Placement Shares in the Private

Placement, and to strengthen the Company's equity.

8.1.2 Resolution regarding the Repair Offering

The Company's Board of Directors passed the following resolution to issue of the Offer Shares

on 24 January 2018:

“Upon motion duly made, seconded and carried unanimously, IT WAS RESOLVED that,

subject to Shareholder Approval being obtained:

(a) …

(b) the issue of the Placement Shares to investors and existing shareholders and bondholders,

fully paid, in accordance with the terms of the Private Placement, Repair Issue and Bond

Conversion be and is hereby approved;…”

On 15 February, the EGM passed a resolution to approve the Repair Offering.

8.1.3 Timetable

The timetable below provides certain indicative dates for the Repair Offering, assuming duly

payment of the Offer Shares subscribed for and allocated in the Repair Offering:

43

Last day of trading in the Shares including Subscription Rights: 25 January 2018

Ex. Rights trading in the Shares commenced on Oslo Børs: 26 January 2018

Record Date: 29 January 2018

Subscription Period commences: 22 March 2018 at

09:00 (CET)

Subscription Period ends: 5 April 2018 at 12:00

(CET)

Allocation of the Offer Shares: 5 April 2018

Distribution of the allocation letters: 5 April 2018

Payment Date: 9 April 2018

Delivery Date for the Offer Shares: 11 April 2018

Listing and commencement of trading in the Offer Shares on

Oslo Børs:

11 April 2018

8.1.4 Subscription Rights

Eligible Shareholders of the Company as of the end of 25 January 2018, as registered in the

VPS on the Record Date, who did not participate in the Private Placement, and who are not

resident in a jurisdiction where such offering would be unlawful, or for jurisdictions other than

Norway, would require any filing, registration or similar action, will be granted non-transferable

Subscription Rights giving a right to subscribe for, and be allocated, Offer Shares in the Repair

Offering. Each Eligible Shareholder will, subject to applicable securities laws, be granted 0.303

non-transferable Subscription Rights for each existing Share registered held by such Eligible

Shareholder as of the Record Date. The number of Subscription Rights granted to each Eligible

Shareholder will be rounded down to the nearest whole Subscription Right.

The Subscription Rights will be registered in the VPS on the ISIN number KYG7153K1812, and

will be distributed to each Eligible Shareholder's VPS account on or about 22 March 2018.

Each Subscription Right will, subject to applicable securities laws, give the right to subscribe

for and be allocated one Offer Share in the Repair Offering. Over-subscription (i.e. subscription

for more Offer Shares than the number of Subscription Rights allocated to the subscriber) and

subscription without Subscription Rights will be permitted; however there can be no assurance

that Offer Shares will be allocated for such subscriptions.

The Subscription Rights must be used to subscribe for Offer Shares before the end of the

Subscription Period (i.e. before 5 April 2018 at 12:00 hours (CET)). Subscription Rights that

are not exercised before 5 April 2018 at 12:00 hours (CET) will have no value and will lapse

without compensation to the holder. Holders of Subscription Rights should note that

subscriptions for Offer Shares must be made in accordance with the procedures set out in this

Prospectus and that holding of Subscription Rights in itself does not represent a subscription

for Offer Shares.

Shareholders resident in jurisdictions where the Prospectus may not be distributed and/or with

legislation that, according to the Company's assessment, prohibits or otherwise restricts

subscription for Offer Shares, and shareholders who participated in the Private Placement (the

"Ineligible Shareholders") will not receive Subscription Rights. Eligible Shareholders should

be aware that the exercise of Subscription Rights by holders who are located in countries

outside of Norway may be restricted or prohibited by applicable securities laws. Please refer to

Section 8.6 "Selling Restrictions and restrictions on distribution of Subscription Rights" below

for a further description of such restrictions.

44

8.1.5 Record Date

Eligible Shareholders who receive Subscription Rights are the shareholders registered in VPS

at the end of the Record Date, i.e. on 29 January 2018.

Provided that the delivery of traded Shares was made with ordinary T+2 settlement in the VPS,

Shares that were acquired until and including 25 January 2018 will give the right to receive

Subscription Rights, whereas Shares that were acquired from and including 26 January 2018

will not give the right to receive Subscription Rights.

8.1.6 Subscription Period

The Subscription Period for the Repair Offering will commence at 09:00 hours (CET) on 22

March 2018 and end at 12:00 hours (CET) on 5 April 2018.

The Subscription Period may be shortened or extended.

8.1.7 Subscription Price

The Subscription Price in the Repair Offering is NOK 1.30 per Offer Share.

For an overview of the effective cash cost for members of the Management and the Board of

Directors of acquiring Shares or rights to Shares during the last year, please see Section

14.2.10 "Corporate information and description of the share capital – Shares and share capital

– Primary insider purchases".

8.1.8 Subscription Procedures

Subscriptions for Offer Shares in the Repair Offering must be made by submitting a correctly

completed Subscription Form in the form included in Appendix 1 to the Managers during the

Subscription Period or may, for Norwegian citizens, be made online as further described below.

Subscribers who are Norwegian citizens may also subscribe for Offer Shares in the Repair

Offering through the VPS online subscription system (or by following the link www.abgsc.com

or www.dnb.no/emisjoner which will redirect the subscriber to the VPS online subscription

system). In order to use the online subscription system, the subscriber must have, or obtain,

a VPS account number. All online subscribers must verify that they are Norwegian citizens by

entering their national identity number (Norwegian: "personnummer").

Correctly completed Subscription Forms must be received by the Managers or, in the event of

online subscription in the VPS, correctly completed subscription must be registered, no later

than 12:00 hours (CET) on 5 April 2018. Subscription forms must be received by the Managers

at the following address or e-mail:

ABG Sundal Collier ASA

Munkedamsveien 45D

P.O. Box 1444 Vika

N-0115 Oslo

Norway

Phone: + 47 22 01 61 73

Email:

[email protected]

www.abgsc.com

DNB Markets, Registrars Department

Dronning Eufemias gate 30

P.O. Box 1600 Sentrum

N-0021 Oslo

Norway

Tel: +47 23 26 81 01

E-mail:

[email protected]

www.dnb.no/emisjoner

None of the Company or the Managers may be held responsible for postal delays, internet lines

or servers or other logistical or technical problems that may result in subscriptions not being

received in time or at all by the Managers. Subscription Forms received by the Managers, or

subscriptions registered in the VPS, after the end of the Subscription Period and/or incomplete

or incorrect Subscription Forms and any subscription that may be unlawful may be disregarded

at the sole discretion of the Company and the Managers without notice to the subscriber.

mailto:[email protected]

http://www.abgsc.com/


http://www.dnb.no/emisjoner

45

Subscriptions are binding and irrevocable, and cannot be withdrawn, cancelled or modified by

the subscriber after having been received by the Managers or registered in the VPS. The

subscriber is responsible for the correctness of the information filled into the Subscription Form

or registered when subscribing online in the VPS. By signing and submitting a Subscription

Form or submitting an online subscription in the VPS, each subscriber confirms and warrants

to have read this Prospectus and to be eligible to subscribe for Offer Shares under the terms

set forth herein.

There is no minimum subscription amount for which subscriptions in the Repair Offering must

be made. Oversubscription (i.e. subscription for more Offer Shares than the number of

Subscription Rights held by the subscriber entitles the subscriber to be allocated) will be

permitted; however there can be no assurance that Offer Shares will be allocated for such

subscriptions.

Multiple subscriptions (i.e. subscriptions on more than one Subscription Form) are allowed.

Please note, however, that each separate Subscription Form submitted by the same subscriber

with the same number of Offer Shares subscribed for on both Subscription Forms will only be

counted once, unless otherwise explicitly stated in one of the Subscription Forms. In the case

of multiple subscriptions through the VPS online subscription system or subscriptions made

both on a Subscription Form and through the VPS online subscription system, all subscriptions

will be counted.

8.1.9 Underwriting

The Company and Bybrook Capital LLP, Pollen House, 10-12 Cork Street, London W1S 3NP as

investment manager for Bybrook Capital Master Fund LP, Bybrook Capital Hazelton Master Fund

LP, Bybrook Capital Burton Partnership LP and Bybrook Capital Badminton Fund LP (the

"Underwriter") entered into an underwriting agreement on 25 January 2018. The Repair

Offering is fully underwritten by the Underwriter, holding 23.3% of the shares outstanding prior

to the Bond Conversion Offer and the Repair Offering. The number of Offer Shares that i) are

not validly subscribed for during the subscription period of the Repair Offering, or ii) are validly

subscribed for during the subscription period of the Repair Offering, but for which the relevant

subscriber fails to make due payment for, shall be allocated to the Underwriter.

The Underwriter's obligation to subscribe for the Allocated Shares is conditional on the

Company’s Shares not being delisted, or the Company having received any written notification

from Oslo Børs threatening to delist the Company’s existing shares.

The Underwriter will receive an underwriting fee of 5% of the gross proceeds from the Repair

Issue.

8.1.10 Allocation

Allocation of the Offer Shares is expected to take place on or about 5 April 2018.

The allocation of Offer Shares to subscribers in the Repair Offering shall be made pursuant to

the following criteria:

Allocation will be made to subscribers on the basis of granted Subscription Rights which

have been validly exercised during the Subscription Period.

If not all Subscription Rights are exercised, subscribers having exercised their

Subscription Rights and who have over-subscribed will be allocated additional new Offer

Shares on a pro rata basis based on the number of Subscription Rights exercised by each

such subscriber. To the extent pro rata allocation is not possible, the allocation shall be

determined by drawing of lots.

Any remaining Offer Shares not allocated pursuant to the criterias described above will

be allocated to subscribers not holding subscription rights. Allocation will be sought made

pro rata based on the respective subscription amounts, provided, however, that such

allocations may be rounded down.

46

The Board reserves the right to round off, reject or reduce any subscription for Offer Shares

not covered by Subscription Rights on the on basis of criteria such as (but not limited to) current

ownership in the Company relative to orders size, sector knowledge, perceived investor quality

and investment horizon.

No fractional Offer Shares will be allocated. Allocation of fewer Offer Shares than subscribed

for will not impact the subscribers' obligation to pay for the number of Offer Shares allocated.

Notifications of allocated Offer Shares in the Repair Offering and the corresponding amount to

be paid by each subscriber will be set out in a letter from the Managers, which will be mailed

on or about 5 April 2018. The Company expects to issue a stock exchange notification

announcing the results of the Repair Offering on or about the same date. The results will also

be available in the subscribers' accounts in VPS.

8.1.11 Payment Date for the Offer Shares

The Payment Date for the Offer Shares in the Repair Offering is 9 April 2018.

When subscribing for Offer Shares in the Repair Offering, each subscriber with a Norwegian

bank account must provide a one-time irrevocable authorization to the Managers to debit a

specified bank account with a Norwegian bank for the total subscription amount payable for the

Offer Shares allocated to such subscriber. Accounts will be debited on or about the Payment

Date, and there must be sufficient funds in the stated bank account from and including the date

falling 2 banking days prior to the Payment Date. The Managers reserves the right (but have

no obligation) to make up to three debit attempts within seven working days after the Payment

Date if there are insufficient funds in the account on the first debiting date.

The subscriber furthermore authorizes the Managers to obtain confirmation from the

subscriber's bank that the subscriber has disposal over the indicated account as well as a

confirmation that there are sufficient funds in the account to cover the payment.

Subscribers who do not have a Norwegian bank account must ensure that payment for the

allocated Offer Shares is made on or before the Payment Date.

Details and instructions regarding the settlement of allocated Shares can be obtained by

contacting the Managers on telephone: +47 22 01 61 73 for ABG Sundal Collier ASA, and +47

23 26 81 01 for DNB Markets. For company and market specific questions, or general questions

regarding the background for the Repair Offering, the Company can be contacted on: +971

443 60 800, or [email protected].

If there are insufficient funds in a subscriber's bank account or it is impossible to debit a bank

account for the amount the subscriber is obligated to pay, or payment is not received by the

Managers according to other instructions, the allotted Offer Shares will be withheld. Should any

subscriber have insufficient funds in his or her account, should payment be delayed for any

reason, if it is not possible to debit the account or if payments for any other reasons are not

made when due, overdue interest will accrue and other terms will apply as further set out

below.

Overdue and late payment will be charged with interest at the applicable rate under the

Norwegian Act on Interest on Overdue Payment on 17 December 1976 No. 100, currently

8.50% per annum. If the subscriber fails to comply with the terms of payment, the Offer Shares

will not be delivered to the subscriber.

If a subscriber fails to comply with the terms of payment, the Offer Shares will, at the discretion

of the Underwriters, not be delivered to the subscriber. The Company and the Managers reserve

the right to, at the cost and risk of the subscriber, cancel the allocation and to reallocate, sell,

assume ownership of or otherwise dispose of all or parts of the allocated Offer Shares on such

terms and in such manner as the Managers may decide in accordance with applicable law and

otherwise based on the Board of Directors' discretion, without further notice to the subscriber

in question if payment has not been received within the third day after the Payment Date. The

47

non-paying subscribers will remain fully liable for payment for the Offer Shares together with

any interest, costs, charges and expenses accrued, and if the Offer Shares are sold on behalf

of the subscriber, the subscriber will be liable for any loss, costs, charges and expenses suffered

or incurred by the Company and/or the Managers as a result of or in connection with such sales

(however so that the applicant shall not be entitled to profits from such sale, if any). The

Company and/or the Managers may enforce payment of any amounts outstanding in

accordance with applicable law.

Any excess amount paid by an Eligible Shareholder will be returned as soon as possible

following the Payment Date.

Participation of major existing shareholders and members of the Company's

management, supervisory or administrative bodies in the Repair Offering

Other than the Underwriters, the Company is not aware of any major shareholders of the

Company or members of the Board of Directors or Management who intend to apply for Offer

Shares in the Repair Offering, or who intends to apply for more than 5% of the Offer Shares.

Delivery and listing of the Offer Shares

All subscribers subscribing for Offer Shares in the Repair Offering must have a valid VPS account

to receive Offer Shares.

Delivery of the Offer Shares in the Repair Offering will take place on or about 11 April 2018.

The Offer Shares issued in the Repair Offering will be listed on Oslo Børs as soon as the Offer

Shares issued in the Repair Offering have been registered in the VPS.

The Offer Shares may not be traded on Oslo Børs before they are fully paid, issued and

registered in the VPS.

Mandatory anti-money laundering procedures

The Repair Offering is subject to the Norwegian Act on Money Laundering No. 11 of 6 March

2009 and the Norwegian Money Laundering Regulations No. 302 of 13 March 2009 (collectively

the "AML Legislation").

All subscribers who are not registered as existing customers with the Managers must verify

their identity to the Managers in accordance with requirements of the Anti-Money Laundering

Legislation, unless an exemption is available.

Subscribers that have designated an existing Norwegian bank account and an existing VPS

account on the Subscription Form are exempted, provided the aggregate subscription amount

is less than NOK 100,000, unless verification of identity is requested by the Managers. The

verification of identification must be completed prior to the end of the Subscription Period.

Subscribers who have not completed the required verification of identification will not be

allocated Offer Shares.

Furthermore, participation in the Repair Offering is conditional upon the subscriber holding a

VPS account. The VPS account number must be stated on the Subscription Form. VPS accounts

can be established with authorised VPS registrars which can be Norwegian banks, authorised

securities brokers in Norway and Norwegian branches of credit institutions established within

the EEA. However, non-Norwegian investors may use nominee VPS accounts registered in the

name of a nominee. The nominee must be authorised by the Norwegian Financial Services

Authority.

Establishment of VPS account requires verification of identification to the VPS registrar in

accordance with the AML Legislation.

48

Financial intermediaries

All persons and entities holding Shares or Subscription Rights through financial intermediaries

should read this Section 8.5 "Financial intermediaries". All questions concerning the timeliness,

validity and form of instructions to a financial intermediary in relation to the exercise of

Subscription Rights should be determined by the financial intermediary in accordance with its

usual customer relations procedure; or as it otherwise notifies each shareholder.

Neither the Company nor the Managers is liable for any action or failure to act by a financial

intermediary through whom shareholders of the Company hold their Shares.

8.5.1 Subscription Rights

If an Eligible Shareholder held the Shares through a financial intermediary on the Record Date,

the financial intermediary will customarily give each Eligible Shareholder details of the

aggregate number of Subscription Rights to which each Eligible Shareholder will be entitled.

The relevant financial intermediary will customarily supply each Eligible Shareholder with this

information in accordance with its usual customer relations procedures. Eligible Shareholders

should contact their financial intermediary if they have received no information with respect to

the Repair Offering.

Shareholders who hold their Shares through a financial intermediary and who are Ineligible

Shareholders will not be entitled to exercise their Subscription Rights transferred to the financial

intermediary.

8.5.2 Subscription Period

The time until which notification of exercise instructions may be validly given may be earlier if

Shares are held through a financial intermediary. This depends on the financial intermediary.

8.5.3 Subscription

If Eligible Shareholders hold their Subscription Rights through a financial intermediary and wish

to exercise their Subscription Rights, they should instruct their financial intermediary in

accordance with the instructions received from such financial intermediary. The financial

intermediary will be responsible for collecting exercise instructions from the Eligible

Shareholders and for informing the Managers of their exercise instructions.

8.5.4 Method of Payment

Eligible Shareholders holding their Subscription Rights through a financial intermediary should

pay the Subscription Price for the Offer Shares that they are allocated in accordance with the

instructions received from that financial intermediary. The financial intermediary must pay the

Subscription Price to the Managers, who will in turn pay it to the Company. Payment for the

Offer Shares must be made to the Managers no later than the Payment Date. Accordingly,

financial intermediaries may require payment to be provided to them prior to the Payment

Date.

Selling Restrictions and restrictions on distribution of Subscription Rights

Subscription Rights will not be issued to persons who are residents in the United States,

Australia, New Zealand, Canada, Japan, South Korea or Brazil or in any jurisdiction where such

issuance would be unlawful. The distribution of this Prospectus, the offering of the Offer Shares

and the issue of the Subscription Rights in the Repair Offering may in certain jurisdictions be

restricted by law. Persons in possession of this Prospectus are required to inform themselves

about and to observe any such restrictions. This Prospectus may not be used for, or in

connection with, and does not constitute, any offer to sell, or an invitation to purchase, any of

the Offer Shares offered hereby in any jurisdiction in which such offer or invitation would be

unlawful or restricted. No one has taken any action that would permit a public offering of Offer

Shares to occur outside of Norway. Shareholders who reside in any country outside EU/EAA

may not be permitted to receive Subscription Rights or Offer Shares.

49

The Subscription Rights and the Offer Shares have not been and will not be registered under

the Securities Act or the securities laws of any state of the United States and may not be offered

or sold within the United States except pursuant to an exemption from, or in a transaction not

subject to, the registration requirements of the Securities Act. Outside the United States, the

Subscription Rights and Offer Shares are being offered to non-US persons in offshore

transactions (each as defined in Regulation S) in reliance on Regulation S under the Securities

Act. The Offer Shares are subject to restrictions on transferability and resale and may not be

transferred or resold except as permitted under applicable securities laws and regulations.

Investors should be aware that they may be required to bear the financial risks of this

investment for an indefinite period of time.

See Section 17 "Selling and transfer restrictions" for a description of certain further restrictions

on resale and transfer.

The Offer Shares

The Offer Shares will be Shares in the Company with a nominal value of USD 0.10 each, and

will be issued electronically in the VPS in registered form in accordance with Cayman Islands

law.

The Offer Shares will rank pari passu in all respects with the existing Shares and will carry full

shareholder rights in the Company from the time of issuance, which is expected to occur on or

about 11 April 2018. The Offer Shares will be eligible for any dividends which the Company

may declare after said registration. All Shares, including the Offer Shares, will have voting

rights and other rights and obligations which are standard under the Companies Law, and are

governed by Cayman Islands law. Please refer to Section 14 "Corporate information and

description of the share capital" for a more detailed description of the Shares.

The Offer Shares will, upon delivery, be registered on the Ordinary ISIN, and will be listed on

Oslo Børs under ticker code "PLCS". The Company's registrar is DNB Bank ASA,

Verdipapirservice, Dronning Eufemias gate 30, 0191 Oslo.

Shares following the Repair Offering

Through completion of the Repair Offering, the Company's issued share capital will increase

from USD 48,301,748.20 divided into 483,017,482 shares of a par value of USD 0.10 each, to

USD 51,378,671.3 divided into 513,786,713 shares of a par value of USD 0.10 each.

The Company has only one class of issued shares outstanding and all Shares are freely

transferable.

Dilution

The Private Placement resulted in a dilution of the then existing shareholders of the Company

of approximately 60%. The Bond Conversion resulted in a dilution of the then existing

shareholders of the Company of approximately 20%. Taken together with the dilution resulting

from the Private Placement and the Bond Conversion, the Repair Offering will result in a dilution

of the shareholders of the Company prior to the Private Placement, to the extent such

shareholders elect not to participate in the Repair Offering, of approximately 6%. The aggregate

dilution for shareholders not participating in the Private Placement or the Bond Conversion

Issue, but participating in the Repair Offering to the extent of their Subscription Rights is 68%.

The immediate dilution for the shareholders not participating in the Repair Offering is

approximately 70%.

Advisors

ABG Sundal Collier ASA and DNB Markets act as Joint Managers for the Repair Offering.

Advokatfirmaet Wiersholm AS acts as Norwegian legal counsel to the Company.

50

Net proceeds and expenses related to the Repair Offering

The gross proceeds to the Company from the Repair Offering will be approximately NOK 40

million. The Company's total costs and expenses of, and incidental to, the Repair Offering are

estimated to amount to approximately NOK 3.6 million. Based on these assumptions the net

proceeds to the Company will be NOK 36.4 million.

The net proceeds from the Repair Offering will be used to strengthen the Company's financial

position.

No expenses or taxes will be charged by the Company or the Managers to the applicants in the

Repair Offering.

Interests of natural and legal persons involved in the Repair Offering

The Managers or their affiliates have provided advisory and commercial banking services to the

Company and its affiliates in the ordinary course of business. The Managers will receive a

management fee of 4% of the gross proceeds to the Company from the Repair Offering in

connection with the Repair Offering and, as such, have an interest in the Repair Offering.

The Underwriter will receive an underwriting commission as described in section 8.1.9 "The

terms of the Repair Offering – The Repair Offering – Underwriting" for the underwriting in

connection with the Repair Offering.

Beyond the above-mentioned, the Company is not aware of any interest, including conflicting

ones, of any natural or legal persons involved in the Repair Offering.

Publication of information relating to the Repair Offering

In addition to press releases, which will be posted on the Company's website, the Company will

use Oslo Børs' information system www.newsweb.no) to publish information relating to the

Repair Offering. The results of the Repair Offering are expected to be announced on or about

5 April 2018.

Jurisdiction and governing law

The Offer Shares will be issued pursuant to the Companies Law.

This Prospectus is subject to Norwegian law. Any dispute arising in respect of this Prospectus

is subject to the exclusive jurisdiction of the Norwegian courts with Oslo City Court as legal

venue in the first instance.

Lock-up

No lock-up agreements were entered into in connection with the Repair Offering.

Supplementary Prospectus

In the event a significant new factor, material mistake or inaccuracy relating to the information

included in this Prospectus arises which is capable of affecting the assessment of the Offer

Shares and which arises between the time that the Prospectus is approved and the end of the

Subscription Period or listing of the Offer Shares, the Company shall publish a supplementary

prospectus.

Any supplementary prospectus will be published in the same manner as this Prospectus.

51

9. INDUSTRY AND MARKET

Market overview

Polarcus owns and operates a fleet of high-end 3D seismic acquisition vessels that generate

revenue in the contract and multi-client market segments by acquiring geophysical seismic

surveys. The industry considers "high end" vessels to be those that are capable of towing 10

streamers or more for the purposes of acquiring 3D seismic data and are operated under a

management system recognized, audited and approved by global super-major and major oil

companies. This is an important differentiation as such vessels deliver significant efficiencies

through the size of the in-sea spreads that they are capable of towing.

A detailed explanation of the “contract” and “multi-client” market segments in which Polarcus

operates is provided in section 10.3 "BUSINESS—Overview of business activities". A detailed

explanation of the Polarcus vessels and their capabilities is provided in section 10 "BUSINESS".

9.1.1 Demand drivers

The market for geophysical seismic surveys is largely driven by the oil and gas companies’

incentives to invest in exploration, development and production of hydrocarbon reserves. Their

willingness to invest is a consequence of current revenues, (oil and gas prices) acreage

available for exploration and production combined with the global oil and gas demand/supply

balance. These factors are, in turn, impacted by various political and economic considerations,

such as global production levels, prices of alternative energy sources, government policies, and

the political stability in oil producing regions. In general, the demand for geophysical services

is therefore driven by:

The demand/supply balance for oil and gas

Oil and gas companies‟ exploration and production ("E&P") spend

After a decade of growth in E&P spending from 1999, further growth was capped by the

economic recession that started in 2008. The result was a decrease in year-on-year global

exploration and production spending in 2009. The recession had a significant short-term impact

on the global energy demand, illustrated by the severe drop in oil price. In 2009, the oil price

recovered and trended upwards. In 2011, the spot price of Brent averaged USD 111 per barrel,

marking the first time the global benchmark averaged more than USD 100 per barrel for a year.

In H2 2014, the oil price fell rapidly with Brent falling to USD 62 per barrel in December 2014,

as supply fears waned with OPEC production hitting a two-year high. The oil price continued its

rapid decline throughout 2015 reaching a low of USD 27 a barrel in January 2016, its lowest

level since 2003. The rapid decline in oil prices has been driven by a number of factors: several

years of increasing production of unconventional oil; weakening global demand; a significant

shift in OPEC policy that has maintained production at relatively high levels; unwinding of some

geopolitical risks; and an appreciation of the U.S. dollar. (Source: World Bank Group Policy

Research Note, The Great Plunge in Oil Prices: Causes, Consequences, and Policy Responses,

March 2015). The oil price adjusted to a monthly average of USD 44 per barrel for full year

2016 on account of accelerating reductions in the U.S. rig count and market reactions to news

of a potential OPEC/non-OPEC supply management.

The Brent crude oil price stabilized at around USD 55 per barrel during Q1 2017. However,

speculation during Q2 2017 over increasing unconventional production and increasing global

oil stockpiles saw Brent again fall below USD 50 per barrel. The second half of 2017 has seen

the Brent crude oil price increase and stabilise at around USD 60 per barrel amongst a

backdrop of OPEC/non-OPEC maintaining reduced supply in addition to increased geopolitical

instability in the Middle East. At the beginning of 2018 the Brent oil price averaged ~ USD

70 per barrel to mid-February.

For 2018, the EIA (Short-Term Energy Outlook, 9 January 2018,

https://www.eia.gov/outlooks/steo/) forecast and average Brent crude oil price of USD 60

52

per barrel. The broader industry outlook remains somewhat cautious with a more stable

current and projected oil price providing some certainty, but a number of oil and gas

companies maintaining subdued exploration budgets for 2018.

Figure 1: Historic oil price since 2015 and forward oil price through 2022

(Source: Factset)

Seismic market demand

Seismic acquisition is the primary tool used by the oil companies both to explore for new

reserves and for field appraisal and development programs of already discovered and in some

cases, producing fields. Licence concessions negotiated between E&P companies and host

governments regularly include seismic surveys in their work commitment obligations. The oil

and gas industry uses seismic data, particularly 3D seismic data, to identify and evaluate

prospects within licensed acreage, increase the chance of commercial success of these

prospects for the license holder, and de-risk the drilling phase that ultimately determines the

success or otherwise of the E&P companies investment. Over the past three decades the cost

of such exploration programs has grown substantially which, combined with the historically

delivered success rates of 20% - 25% on an exploration well, has fuelled the demand for more

and higher quality 3D seismic surveys. The search for hydrocarbons has moved beyond the

"easy to find near surface" reserves to more complex geological environments such as those

found in the pre-salt geology present in the Gulf of Mexico, West Africa, offshore Brazil and

more recently to more remote frontier regions such as the Northern European Atlantic Margin,

Myanmar, Suriname and Guyana. The rapid decline in oil price from 2014 has temporarily

slowed investment in some global locations, however it is anticipated that this is a deferral of

investment and that the more challenging frontiers will pay an increasingly important role as

future sources of hydrocarbon reserves.

Seismic fleet overview

During 2015, the majority of seismic companies announced that they would stack and/or

permanently retire a number of vessels and in some instances, postpone new build contracts.

This lead to a significant reduction in the number of active vessels in the global seismic fleet in

the first part of 2016. During 2016, the market saw some reactivations and further stacking.

As of Q4 2017, the number of active 3D seismic vessels capable of towing more than 10

streamers is estimated at around 25. This number has reduced from more than 40 vessels early

0

10

20

30

40

50

60

70

80

Jan-1

5

Apr-

15

Jul-1

5

Oct-

15

Jan-1

6

Apr-

16

Jul-1

6

Oct-

16

Jan-1

7

Apr-

17

Jul-1

7

Oct-

17

Jan-1

8

Apr-

18

Jul-1

8

Oct-

18

Jan-1

9

Apr-

19

Jul-1

9

Oct-

19

Jan-2

0

Apr-

20

Jul-2

0

Oct-

20

Jan-2

1

Apr-

21

Jul-2

1

Oct-

21

Jan-2

2

Apr-

22

Jul-2

2

Oct-

22

Brent Oil, USD per barrel

53

in 2015 and from approximately 60 vessels in 2012. The full effect of global fleet reductions

has not yet been seen in the market. It should be noted that there are currently an estimated

additional 10-12 vessels capable of towing 10 streamers or more that are "stacked" (not

included in the active count above), meaning that they could be reactivated if there was

increasing demand from clients.

The Company maintains a comprehensive database of the global 3D seismic fleet, and

estimates limited, if any, growth in the number of vessels through 2018. This will help ensure

a more balanced supply/demand outlook for seismic in the short to medium term. The Company's vessels are all new–builds (delivered since 2009). They all incorporate many new

and innovative technological features.

During H2-2015 it was announced that Dolphin Geophysical (DOLP) had entered into

liquidation. Subsequently, Shearwater Geophsyical AS (SGS) emerged and entered the marine

seismic market in Q4 2016 with three former DOLP vessels. Additional market participants

include WesternGeco (WG), PGS, CGG and Polarcus (PLCS). All companies operate globally in

both the contract and multi-client market segments. However, in Q1 2018, WesternGeco

announced that it will exit the marine and land seismic market. WesternGeco will honour their

existing contractual contract commitments and we estimate a reduced fleet of two vessels

(instead of four) will be sufficient to complete these contracts.

Some seismic companies are operating fixed but flexible fleet numbers where a smaller portion

of the fleet will be used selectively to address seasonal demand. Polarcus estimates that it

will maintain a market share of approximately 15-20% in 2018. This is estimated by

monitoring the global fleet of active 3D vessels, as displayed in Figure 2.

Figure 2: Estimated High-end 3D vessels in the global market, Source Polarcus.

Q3 '12 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3'17 Q4'17 Q1'18e

WG CGG PGS PLCS DOLP/SGS

4142

40

29

2627

3230 28

58

29 29

2422

54

Positioning of Polarcus in the market

The Company has identified and implemented a number of significant technology

developments in the current market. These developments have led to:

significant differentiation of the Polarcus service offering to clients;

penetration of market segments across marine seismic acquisition and data processing;

and

growth of Polarcus revenue generation in these market segments.

Polarcus has focused its differentiating technologies on the two key value-creating

considerations for clients:

improved efficiency of marine seismic acquisition which is typically measured in an

increased number of 3D marine seismic square kilometres acquired per unit of time;

and

improved quality of data acquired by the Polarcus fleet driven by: increased data

sampling (number of data points per unit of distance in both X and Y directions; similar

to increasing pixel counts in digital cameras and TVs), increased frequency content of

the seismic data recorded, and improved signal-to-noise of the seismic data recorded

9.3.1 XArray™: Efficient and high quality 3D seismic acquisition

In 2014, Polarcus introduced an innovative acquisition technique termed XArray™ designed to

deliver a highly efficient acquisition technique without compromising data quality.

The 'X' in XArray refers to increasing the number of energy sources beyond the traditional dual

(two) energy sources in conventional acquisition.

The increase in sources to three ('Triple Source') or five ('Penta Source') increases the data

quality through an increased number of data points on the seabead which increases the

resolution in the recorded picture.

This allows for an increased streamer separation with a maintained data quality which

significantly increases the efficiency of acquisition; an increased spread width means that more

square kilometres are acquired per vessel pass.

This technique enables tailoring acquisition to provide improved data quality and/or improved

acquisition efficiency depending on the client's specific project objectives.

XArray™ offers a number of consequential benefits for oil and gas companies:

A reduction in survey duration and cost by utilizing wide spreads without compromising data

quality

Decreasing the number of deployed streamers in a wide spread thereby reducing capital

costs for the seismic company, reducing operational risks, and reducing crew EHSQ exposure

on the vessel back deck and in small boat operations for the purposes of in-sea maintenance

requirements.

Polarcus currently offers two basic configurations of XArray™: Triple Source and Penta Source.

55

Triple Source: This configuration will, with a 12 x 150m streamer configuration, achieve the

same data resolution and sail-line efficiency as a conventional dual source configuration utilizing

an 18 x 100m streamer configuration. This reduces the operational exposure for Polarcus' crew

and the environment whilst providing a highly cost effective and high quality data project

solution for the Company's clients.

Penta Source: This offering extends the multi-source acquisition concepts to acquire very dense

data resolution with conventional streamers and using a five-source configuration. Penta Source

enables a significant increase in data density and data quality providing data sampling to

6.25m. This type of acquisition is targeted at specific projects where complex structures in the

near surface need to be resolved to allow accurate imaging of the underlying hydrocarbon

deposits.

Since its introduction by Polarcus in 2014, the Company has successfully bid and utilized the XArray™ offering on third party projects as well as using the concept extensively on the

Company's own multi-client programs.

In 2016, more than 30% of square kilometres acquired by Polarcus was generated using

XArray™ and in 2017 it is estimated that ~70% of square kilometres acquired will be generated

using XArray™. For 2018 XArray™ sales have reached 85% of total sq. km booked as of end

of January 2018.

9.3.2 RightFLOW™: advanced seismic solutions for reducing exploration costs

Polarcus' RightFLOW™ offering is the result of a data processing collaboration between Polarcus

and the Company's data processing partner, DownUnder GeoSolutions Pty Ltd ("DUG").

RightFLOW™ refers to the 'Right' combination of acquisition parameters, survey design and

data processing flows both onboard the vessel and at data processing centres onshore.

Polarcus introduced RightFLOW™ to help oil companies reduce exploration cycle time and costs,

and mitigate drilling risk. The offering employs an approach to seamlessly integrate and

accelerate every step of the seismic data acquisition and processing workflow, from the initial

survey design through to the delivery of final data and interpretation products, tailoring the

workflow for any given geologic and geophysical environment. The result enables oil companies

to make better-informed decisions about potential well commitments earlier in the exploration

cycle.

56

The offering can be structured in different ways to suit individual client requirements. For

example, comprehensive on-board acquisition QC followed by full onshore processing; ultrafast

advanced on-board 3D processing followed by a more complex onshore processing sequence;

or a combined offshore/onshore flow that passes an on-board processed intermediate dataset

to a DUG onshore processing centre for more sophisticated multichannel noise attenuation,

velocity analysis, regularization, and time and/or depth imaging.

Polarcus regularly applies the RightFLOW™ offering to both third party projects and the

Company's own multi-client programs.

A key development during 2016 was to re-brand Polarcus' on-board processing capability as

"Priority Processing". The offering is enabled by DUG hardware and software being operated by

Polarcus personnel delivering high-end interpretable products directly from the vessel. Such

Priority Processing products involve a very advanced processed data volume delivered from the

vessel on every project.

9.3.3 RightBAND™: broadband acquisition solutions to maximise signal-to-noise

RightBAND™ is Polarcus' geophysical proposition for broadband data acquisition and is aimed

at optimizing data quality by maximizing signal-to-noise ratio at target geologic horizons by

tuning the seismic source and receivers to the right frequency band. The result to the client is

an optimized, de-ghosted (broadband) 3D image of the sub-surface.

For each survey design the source and receiver tow depths are chosen in conjunction with the

client to optimize the expected bandwidth at the targets and to maximize signal-to-noise at the

receiver ghost notch frequencies in preparation for pre-stack de-ghosting processing. Through

careful consideration of complex geophysical modelling, data acquisition and data processing

aspects, Polarcus ultimately delivers a service, which includes:

• Ultra-quiet data recording environment with X-BOW vessels and true 2Hz solid streamer

cables (low noise environment with maximized frequency band)

• Extended weather windows and enhanced low frequencies with deep towed streamers

• High signal-to-noise data compatible with various leading broadband processing solutions

on offer in the industry

Polarcus’ RightBAND™ offering is widely recognized across the industry as an effective solution

for broadband data acquisition and is now commonly utilized on third party projects and applied

in all the Company’s multi-client programs.

9.3.4 Remote and challenging operational ability

Based on the Company's own assessment, Polarcus is a leading provider in delivering safe,

operationally efficient and high data quality 3D seismic acquisition in some of the most remote

and challenging locations around the globe. The Company has obtained pre-bid approval from

all major international oil companies, and a high proportion of all other oil companies. The

Company’s Lost Time Injury Frequency rate and the Total Recordable Case Frequency rates,

both industry standard metrics, demonstrate that the Company is outperforming that of the

industry average (Industry statistics provided by the International Association of Geophysical

Contractors). The Company’s use of innovative technology such as X-ArrayTM reduces the

required amount of in-sea equipment, and thereby, obtains more efficient high quality data

acquisition. Remote and challenging locations provide significant operational challenges

including, extreme weather, sea-ice, icebergs, floating debris, piracy, remote logistics and

significant environmental restrictions.

Successful 3D seismic campaigns have been completed in such locations as: Sakhalin-Russia,

Greenland, Barents Sea, Falkland Islands, New Zealand, Australia, Myanmar, Nigeria,

Colombia, Brazil, Uruguay and Suriname. The success of such projects have relied on the

competence of the Company’s crew and suitability of vessels in addition to the sales and

57

operations team working in close alignment with the client in order to ensure robust planning

and risk mitigation.

9.3.5 Arctic and Environmentally Sensitive Sea Areas Offering

The Company believes that in the long term, the Arctic region will generate a vast increase in

seismic activity as the international oil and gas community seeks to explore the hydrocarbon

potential of this largely unexplored frontier region.

Polarcus has witnessed the increasing demand for more green credentials and has taken a

leadership role within the industry with improved environmental performance (new builds,

green passport features, operations management and environmental leadership). As new

environmental legislation takes effect and the industry moves into more environmentally

sensitive sea areas and frontier regions, the Company is very well positioned to deliver industry-

leading Arctic and environmental standards to clients. This position has been achieved by

proactive investment in vessel technology and development of specific Arctic and environmental

operating procedures ahead of regulatory requirements.

Seismic operations in the Arctic are challenging due to the extreme environmental conditions

and short operating season. Of paramount importance for any seismic operation will be safety,

efficiency, data quality, and environmental protection. The Company has made important

investments in the design of its seismic fleet that it believes will meet or exceed industry

requirements in all these areas. All of the Company's vessels carry the CLEANDESIGN class

notation that, coupled with the ULSTEIN X-BOW®, a double hull, the latest bilge water cleaning

technology and an advanced ballast water management system, will offer the industry the

safest and most environmentally responsible seismic acquisition services available today for

the Arctic regions and Environmentally Sensitive Sea Areas.

Polarcus vessel's POLARCUS ASIMA, POLARCUS ALIMA and VYACHESLAV TIKHONOV are

certified with the ICE-1A level and Polarcus is the only seismic Company with vessels with the

ICE-1A* (super) level (POLARCUS AMANI (Now Ivan Gubkin) and POLARCUS ADIRA). The ICE-

1A and ICE-1A* class notations enable Polarcus vessels to enter the seismic survey areas

earlier, and leave the areas later, than competitors' vessels thus extending the operating

season. The new ice class notation, ICE-1A*, verifies that the vessel has sufficient strength,

engine power and equipment to transit through areas with ice floes of 1.0 m level ice thickness,

thereby providing a significant competitive advantage over lesser classed vessels. The high ice

class characteristics of the fleet are of particular interest for clients planning programs in the

Arctic Region. VYACHESLAV TIKHONOV is also capable of significantly higher transit speeds, of

18 knots, than most other seismic vessels, providing the opportunity for faster mobilization to

remote prospects than comparable vessels.

In 2012, Polarcus received the world's first ever DNV Level 1 Triple E™ rating for its entire

operational fleet. Triple E™ is a voluntary environmental rating scheme for ships with categories

from Level 4 to level 1, where 1 is the highest. To achieve Level 1, all levels must be complied

with and there are areas of specific focus across management, operation and vessel/equipment

design. The rating is based on a verification of a ship's actual energy efficiency and

environmental performance, carried out by an independent third party. This gives a transparent

and detailed view of the company and vessel Environmental Energy Efficiency (EEE)

performance and the management system and processes required to deliver such performance.

The Company believes that it can maintain a differentiated offering for the Arctic and the

Environmentally Sensitive Sea Areas for an extended period due to the nature and quality of

investments made in the Polarcus fleet and the requirement for much of this technology to be

adopted in the vessel construction phase (there are significant limitations to what can be retro-

fitted to competitors' vessels post construction).

9.3.6 Exploration 3D offering

Polarcus employs a number of spread enhancement and drag reduction technologies on-board

the Company’s vessels that enable vessels to tow ultra-wide seismic spreads comprising

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streamer separations of up to 200m as compared to the industry standard of 100m. This allows

the Company to offer a highly competitive exploration 3D solution to the industry that has

attracted significant industry interest in frontier markets as diverse as South America,

Greenland, Myanmar, and Australia.

The exploration 3D offering also enables the Company to stay at the forefront of operational

excellence and to lead the industry in various production records, such as an ultra-wide 3D

marine seismic project being acquired in H1 2016 offshore Myanmar. In this project, POLARCUS

AMANI towed an in-sea configuration that measures 1.8km wide across the front ends. With

each of the ten streamers separated by 200m, the total area covered by the spread is 17.6

sq.km and delivers the oil company client a production rate of up to 190 sq.km per day. This

configuration is also the largest in-sea configuration ever towed by a single seismic vessel as

well as the largest man-made moving object on earth.

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10. BUSINESS

Incorporation, registered office and registration number

The Company’s registered name is Polarcus Limited. The Company is a Cayman Island

exempted company with limited liability registered with the Cayman Island Registrar of

Companies with registration number 201867. The Company was incorporated on 17 December

2007. The Polarcus Group was founded by Carl-Gustav Zickerman. The Company conducts its

business according to applicable law and its Memorandum of Association and Articles of

Association. From 30 September 2009, the Company's Shares have been listed on Oslo Axess

and later Oslo Børs with the ticker "PLCS" following an initial public offering in September 2009.

Polarcus' registered office is c/o Walkers Corporate Limited, Cayman Corporate Centre, 27

Hospital Road, George Town, Grand Cayman, Cayman Islands. The administrative headquarter

of Polarcus is located at Almas Tower, Level 32, Jumeirah Lakes Towers, PO Box 283373, Dubai,

U.A.E, telephone number: +971 4 43 60 800. The Company's website is www.polarcus.com.

Group history

The Polarcus Group dates back to the incorporation of Polarcus Limited on 17 December 2007.

The Group consists of 24 entities as per the Group corporate chart in Section 10.9.1 "Business—

Organizational structure—Description of Group that the Company is part of". The entities are

incorporated in various jurisdictions, including but not limited to Norway, Cayman Islands,

United Arab Emirates, England, Brazil, Egypt, Cyprus, Nigeria, France, Singapore and United

States of America.

In the early phase of the Company, eight high-end 3D seismic vessels were constructed

incorporating the X-BOW vessel design from Ulstein Design AS. The vessels were delivered

between 2009 and 2012.

On 30 September 2009, the Company's Shares were listed on Oslo Axess with ticker "PLCS"

following an initial public offering in September 2009.

In August 2011, Polarcus signed a five year Bareboat Charter Party Agreement with a company

within OAO Sovcomflot for the 8-streamer 3D seismic vessel POLARCUS SELMA. The vessel was

renamed VYACHESLAV TIKHONOV by the charterers. The charterers exercised an option to

extend the Bareboat Charter Party Agreement by an additional three years in February 2016.

In February 2013 Polarcus sold the 8-streamer 3D seismic vessel POLARCUS SAMUR to TPAO.

The agreement also included two 3-year services agreements relating to seismic data

acquisition, management and crewing services for the vessel. These agreements were extended

by an additional two years in January 2016. In February 2018, the rights and obligations of

TPAO under the services agreements were novated to Turkish Petroleum International

Corporation and their term extended for an additional one year.

In June 2014 Polarcus entered into an agreement with DUG for the lease of hardware and

software for the on-board seismic data quality control, enabling Polarcus to offer a high-end

fast-track processing solution on-board its vessels. Polarcus hires its own field personnel for

the quality control and fast-track processing services. The partnership with DUG enables a

higher degree of control in timing and quality of on-board fast-track processing solutions with

a more flexible and powerful on-board hardware capability. Polarcus has full ownership of on-

board fast-track revenue streams.

The rapid decline in oil prices and consequent cautious spending by oil companies in recent

years has negatively impacted the Group's earnings since the second half of 2014. During Q4

2014, the Company addressed the increased liquidity risk caused by the weakening market by

raising USD 35 million in new equity and implementing a cost management program, with the

aim of reducing the 2015 cost base by USD 40 million (the "Cost Management Program").

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In February 2015, Rod Starr assumed the role of Chief Executive Officer of Polarcus. He joined

Polarcus from TGS-NOPEC Geophysical Company where he served as Senior Vice President

Western Hemisphere.

Subsequently, in early 2015, the Group adopted a '2015 Agenda' which consisted of plans to

address the three key areas of (i) revenue generation, (ii) cost reduction and (iii) debt

management. In line with the 2015 Agenda, the Group implemented several measures during

2015 and subsequently which have enabled the Group to significantly reduce its cost base, to

gain market share in a difficult market and optimize cash generation from operations.

The Cost Management Program included targeted savings in employment costs, operating

costs, operating efficiency initiatives and supply chain streamlining. During 2015, the Group

recognized savings of USD 39 million as a direct result of the Cost Management Program.

In March 2015 the Company secured amended terms to the USD 410 million Fleet Bank Facility

described in Section 11.12.1 "Selected financial information—Summary of financing—USD 410

million Fleet Bank Facility". Furthermore, the Company received support from the majority of

bondholders to amend certain terms to the Convertible Bond Issue described in Section 11.12.3

"Selected financial information—Summary of financing—Convertible Bond issue".

On 25 March 2015, the Company took the decision to stack one of its vessels, POLARCUS

NADIA, as the Company could not be certain of securing sufficient backlog at acceptable rates

for the whole fleet. Although the reduction in fleet size reduced the Group's revenue generating

capacity, it also reduced its cost base both for operating costs and capital expenditure for the

remaining fleet. As a result of the stacking of POLARCUS NADIA, the Group achieved savings

in operating costs of USD 29 million during 2015 compared to the previous year. In addition,

capital expenditure related savings of USD 10 million were recognized during 2015.

In order to improve the Company's liquidity position, during Q3 2015 the Company sold its

Multi-Client library related to projects acquired in Northwest Europe and West Africa to TGS for

a consideration of USD 26 million with Polarcus retaining future revenue share on late sales of

this data.

The Company continues to focus on building a profitable multi-client library with strict pre-

funding requirements. The book value of the Company's multi-client library as of 31 December

2017 was USD 10.4 million.

Polarcus announced on 7 December 2015 its decision to halt all payments of interest and

amortization to all of its finance providers. Prior to such decision, the Company had initiated

discussions with its finance providers, being the banks, lease providers and certain bond

holders, in order to address the Group's financing structure. Subsequently, on 6 January 2016,

the Company announced a restructuring plan (the "2016 Restructuring"). On 22 January

2016, the Company's bondholders approved and, subsequently, on 27 January 2016, the

Company's shareholders also approved the 2016 Restructuring. The 2016 Restructuring was

completed and implemented during February 2016 by finalizing the documentation with the

relevant financing parties.

The 2016 Restructuring provided the Company with significantly reduced debt service of

approximately USD 140 million over 2016 and 2017 and an improved balance sheet. The 2016

Restructuring resulted in an accounting gain of USD 178 million and an increase in share capital

of USD 46 million in Q1 2016, largely as a result of a reduction in the carrying values of its debt

liabilities, with the total increase to equity being USD 224 million.

During 2016, the Group recognized further cost savings of USD 55 million of gross costs of

sales (excluding operating leases) and USD 2 million of general and administrative cost savings

compared to 2015.

Due to prolonged soft demand for global oil and gas exploration services throughout 2016, the

Company was unable to maintain positive cash flow from operations. In Q4 2016, the Company

commenced discussions with the lenders under the Fleet Bank Facility and on 9 February 2017

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announced the launch of a private placement and subsequent offering raising new equity (the

“2017 Equity Raise”). The cash injection generated from these equity offerings strengthened

the Company's liquidity position in response to the prolonged industry downturn.

The amendments to the Fleet Bank Facility, following the 2016 Restructuring and 2017 Equity

Raise improved the liquidity position of the Company by USD 80 million through to the end of

2018 by a USD 30 million freeze of loan principal repayments, USD 15 million reduction in lease

payments and an approximate USD 40 million equity raise. Additionally, the Working Capital

Facility of USD 25 million was extended by one year to 1 July 2019.

On 17 March 2017, the Company gave notice that Duncan Eley, former Chief Operating Officer

of Polarcus, had been appointed CEO, replacing Rod Starr who had resigned from his position.

In April 2017, one of the Company’s Norwegian subsidiaries signed an agreement with SCF

GEO AS to charter the POLARCUS AMANI on bareboat terms for a fixed period of 5½ years. The

vessel was renamed IVAN GUBKIN by the charterers.

The Company has maintained a disciplined focus on cost management and during 2017, the

Group recognized further savings compared to 2016 of USD 49 million of gross cost of sales

(excluding operating leases) and USD 3 million savings on general and administrative costs.

In October 2017 the Company announced a further organizational restructure that is estimated

to deliver annualized cost savings of USD 8 million which will be fully realized from Q2 2018.

In January 2018, the Company announced the Restructuring, as described in section 5 "The

Restructuring" of this Prospectus. The Restructuring included purchasing "POLARCUS NADIA"

and "POLARCUS NALIA" from GSH, and refinancing the majority of the Company's debt. On 12

February 2018, the Restructuring plan was approved by the Company's bondholders, and on

15 February 2018, the shareholders of the Company approved the equity and warrant issues

under the Restructuring plan as described in section 6 "Listing of the Private Placement Shares",

section 7 "Listing of the Bond Conversion Shares, section 8 "The terms of the Repair Offering,

and section 14.2.5 "Corporate information and description of the share capital - Shares and

share capital – Warrants". Subject to the finalisation, execution and registration of certain

security documentation (which is expected to be completed by 30 March 2018), the

Restructuring was completed and implemented during February and March 2018 by finalizing

the documentation with the relevant financing parties.

Overview of business activities

Polarcus is one of five global marine three dimensional (3D) towed streamer geophysical service

providers. The other global providers are WesternGeco (Schlumberger), CGG, PGS and

Shearwater GeoServices. In January 2018, Schlumberger announced that it would be exiting

the marine seismic acquisition business. The seismic data acquired by the Company's vessels

is used by oil and gas companies to evaluate hydrocarbon structures and to increase chances

of commercial success ahead of the significantly more expensive drilling phase. The data is also

used to determine size and structure of known reservoirs in order to maximize field recovery

and ongoing production rates. Polarcus has two principal business activities: (i) contract seismic

services and (ii) multi-client projects.

In addition, the Company charters two seismic vessels under long term Bareboat agreements

to Sovcomflot as described in Section 10.8.3 "Business—Material contracts—Bareboat charter

of VYACHESLAV TIKHONOV" and in Section 10.8.4 "Business—Material contracts—Bareboat

charter of IVAN GUBKIN". The Company also provides management services related to the

seismic operation of one vessel for Turkish Petroleum International Company as described in

Section 10.8.6 "—Material contracts—Seismic data acquisition agreement, and management

and crewing agreement with Turkish Petroleum ".

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10.3.1 Contract seismic services

The Company's range of contract seismic services includes 3D, high-density 3D, 4D, multi-

azimuth and wide azimuth data acquisition. Typical clients are independent, national and

international oil and gas companies with offshore exposure.

During 2015 and 2016, Polarcus introduced its XArray™ acquisition technique that provided

additional (X) sources to the traditional dual source offering. XArray™ is being marketed as

"Triple Source" or "Penta Source" and provides a highly efficient acquisition methodology that

requires less in-sea equipment and delivers a high-quality data product. During 2016, this

technique gained substantial traction with clients and comprised more than 30% of the square

kilometres acquired by Polarcus during the year. During 2017, use of XArray™ comprised

approximately 60% of square kilometres acquired by Polarcus. As of the end of January 2018,

more than 85% of the Polarcus fleet booked square kilometres in 2018 require the use of

XArray™ as the preferred acquisition methodology.

Contracts for seismic surveys are entered into directly with the client. They are priced and

negotiated on a project by project or spot market basis, according to the prevailing market

conditions and requirements of each individual project. A seismic survey is typically of one to

six months duration, with potential for seasonal and multi-year contract terms in some cases,

especially with national and international oil and gas companies.

An invitation to tender is issued by the relevant oil and gas company directly to the various

service providers, typically two to six months before the expected commencement of a project.

It is at the discretion of the relevant oil and gas company who it invites to tender. Direct award

of contracts is uncommon, but does take place. A project is typically awarded one to four

months prior to its commencement. The Company participates in seismic tenders globally, with

activity hotspots being driven by licence round activity, operational seasons (weather), new

discoveries, and other market conditions supportive of investment by oil and gas companies in

exploration activity. The Company has established three regional offices worldwide to gather

market intelligence, drive marketing campaigns, generate multi-client projects and coordinate

and execute sales activity. The Houston office services the North and South America ("NASA")

region, the London office services the Europe, Africa and Middle East ("EAME") region and the

Singapore office services the Asia Pacific ("APAC") region. All three regions generally have high

levels of activity, making it possible to build backlog and viable campaigns within each region

with the objective of minimizing inter-regional transits.

The Company places a high focus on the Arctic and Environmentally Sensitive Sea Areas

("ESSA") in its marketing strategy in order to generate value from the significant differentiation

of the Polarcus vessels are specifically suited to operations in such areas. This includes the high

ice class notations (ICE-1A and ICE-1A*), double hull construction, specialist de-icing

equipment, ice radars, as well as the ballast water treatment systems, catalytic converters to

reduce emissions to air, and highly efficient marine gas oil engines to minimise fuel

consumption.

The Group's first major Arctic project was offshore western Greenland in 2012 where three

Polarcus vessels operated for two major oil companies over a three-month period. The project

exemplified the value of the investments made by Polarcus into Arctic differentiation and the

comprehensive set of Arctic-specific operational procedures developed to support such

activities. These procedures have been accredited by DNV-GL, one of the world's leading ship

and maritime classification society. Additional value benefits of the high ice class were

demonstrated after successfully transiting the Northern Sea Route between Norway and the

Pacific Ocean during summer 2013, a passage only accessible at that time to vessels with ICE-

1A or higher.

The Group has subsequently undertaken successful Arctic contract and multi-client seismic

operations in the Barents Sea, offshore both northern Norway and Russia. In Q2/Q3, 2015 the

Company acquired a high-profile large and complex multi-vessel operation in the Arctic waters

offshore Sakhalin for a super-major oil company. The project involved coordination of two

Polarcus seismic vessels in a very narrow operational time window that was determined by the

63

prevailing sea-ice conditions. The project was delivered ahead of the client's plan and budget

with outstanding safety, environmental and operational performance.

Polarcus has built up similar extensive operational experience in non-Arctic Environmentally

Sensitive Sea Areas. During 2015 when the Company successfully acquired an extended

campaign of proprietary and multi-client projects in Australia totalling more than 16 vessel

months. This campaign was considered to be an endorsement of Polarcus' environmentally-

focused investments given that the environmental permits for the projects were secured in a

timely manner in what was a highly regulated and restrictive period for exploration activities in

Australia. Due to the environmental technology invested in the vessels and the fact that, across

the fleet, the vessels have uniform characteristics, three different Polarcus vessels were

interchanged to deliver this campaign. Such uniformity and the consequent operational

flexibility give clients comfort on the Company’s ability to perform and provide assurance to

the environmental regulator that delivery of environmentally-compliant operations is deeply

engrained within the Company's philosophy. This operational flexibility also enables the

Company to interchange vessels in order to optimize fleet location, utilization and to be better

positioned to meet client timing requirements.

The Company continues to pursue similar projects to leverage its Arctic and environmental

differentiation. The extensive track record that Polarcus has compiled, positions the Company

well to secure such projects going forward.

In a relatively short period of time the Company has established itself as a global operator of

high-end 3D marine seismic services with an extensive track record of operational excellence

in all four corners of the globe including the following key markets:

North West Europe (UK, Norway, Ireland, Denmark, Russia)

West Africa (Senegal, Guinea Bissau, Ghana, Nigeria, Cameroon, Equatorial Guinea,

Namibia, South Africa, Morocco, Mauritania)

East Africa (Kenya, Mozambique)

Asia Pacific (India, Myanmar, Malaysia, Indonesia, Australia, New Zealand, Japan)

North America (Gulf of Mexico)

South America (Suriname, Guyana, Brazil, Colombia, Uruguay, Falkland Islands)

The Company has implemented an in-house processing capability through its well-established

agreement with DUG under which Polarcus leases hardware and software for the seismic data

quality control on-board its vessels and which also enable Polarcus to offer a high quality fast-

track processing solution on-board all Polarcus vessels. Polarcus has marketed this high-end

offshore processing capability "Priority Processing" in order to reflect the high quality and rapid

turn-around of de-ghosted, pre-stack time migrated data volumes upon which oil companies

can make planning and operational decisions.

DUG furthermore provides onshore advanced seismic data processing services at its data

processing centres as and when such services are part of the scope of surveys awarded to or

required by the Company.

A key element of Polarcus delivering its XArray™ technique is DUG's ability to de-blend data.

DUG is a leading provider of de-blending technology to client's worldwide providing services

principally from its processing centres in London, Singapore and Perth. The combination of

Polarcus and DUG to deliver seismic acquisition, on-board fast track processing and advanced

onshore processing has established a strong reputation across a broad client base. The XArray™

and RightFLOW™ offerings (see Section 9.3 — Industry and market - Positioning of Polarcus in

the market") "rely on the combination of the acquisition and data processing competences of

Polarcus and DUG.

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10.3.2 Multi-client projects

Multi-client projects are surveys undertaken by seismic companies where the deliverables

comprise a suite of fully imaged seismic data that are subsequently licensed to oil and gas

companies on a non-exclusive basis. The seismic company develops the opportunity in much

the same way as an exploration company and then seeks industry underwriting from oil and

gas companies to reduce the upfront project commercial risks. Subsequent multiple sales of

data licences over a period of time, typically 5 to 10 years, are expected to deliver returns in

excess of contract seismic service rates. Such licence sales arise both from first time sales to

new clients and from uplift fees, contractually committed from existing licensees on trigger

events such as: formation of bidding groups for purposes of bidding for acreage, acreage

awards, joint operating agreements, farm-ins, commencement of drilling operations and M&A

activity, where an acquiring entity does not already possess a valid data licence. Ownership of,

or exclusive marketing rights to, the multi-client project deliverables remains with the seismic

company and project risks are offset through meticulous business case planning supported by

pre-funding commitments from participating oil and gas companies in advance of project

execution.

Under this model, oil and gas companies benefit from access to high quality data at less than

the cost of acquiring the same data on contracted seismic service rates, but forfeit their

exclusivity of access to the data. In many cases, such data is acquired over open acreage, or

acreage due for full or partial relinquishment, in anticipation of future licensing by relevant

authorities. The project deliverables are used by oil and gas companies for risk evaluation and

prospect identification prior to making a bid for acreage or prior to making a field development

plan.

The Company applies a professional project management approach to the planning and delivery

of multi-client projects, with each project being supported by a sound business case for success

and with quality control of the deliverables in accordance with industry-accepted practices.

Multi-Client projects can be either identified by a prospective client that brings the project

details to the seismic companies in a similar manner to an invitation to tender for a proprietary

contract, or it may be developed by the Company proposing a business case for approaching

potential clients who may be interested in pre-funding such a project.

As part of the agreement with DUG, entered into in June 2014, DUG has the opportunity to

participate in all Polarcus multi-client projects through providing its data processing services as

a cost contribution to the project. This opportunity secures DUG a revenue contribution from

the project commensurate with its cost contribution. The cost and revenue proportion taken by

DUG on such multi-client projects is typically in the order of 10%.

In October 2016, Polarcus announced a multi-client collaboration with TGS-NOPEC Geophysical

Company ("TGS"). TGS is a global multi-client company and the collaboration leverages the

core strengths and expertise of TGS and the Company. The collaboration agreement enables

Polarcus vessels to be used for the acquisition of 3D marine seismic projects in a structure

where TGS may provide substantial funding of multi-client projects and, depending on the

respective level of funding between the parties, a revenue share mechanism is put in place for

late pre-funding and late sales related to the multi-client projects. The collaboration is intended

to drive utilization of Polarcus vessels as well as to allow Polarcus to expand its multi-client

business with limited capital investment. See section 10.8.8 "Business – Material contract -

Collaboration agreement with TGS" for further detail.

As of 31 December 2017, the Company had a multi-client library with a book value of USD 10.4

million. The Company's data library comprises multi-client surveys offshore Australia, West

Africa, the Middle East and Brazil. The carrying value of the Brazilian multi-client library is nil

as it has been fully amortized.

10.3.3 Vessel backlog

The Company is dependent on obtaining contracts for seismic services and for making licence

sales of its multi-client data to third parties. These risk factors are further described in Section

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2.2.7 "Risk factors—Risk factors related to the Company—Contractual and counterparty

exposure", and Section 2.2.8 "Risk factors—Risk factors related to the Company—Multi-client

investments".

As of 31 December 2017, the Company had an order backlog of USD 155 million. The booked

capacity for its active fleet of four vessels for the coming quarters is given below. POLARCUS

NADIA has been stacked since 01 April 2015 and is therefore excluded from the booked

capacity.

Q1 2018 Q2 2018 Q3 2018 Q4 2018

100% 75% 50% 35%

VYACHESLAV TIKHONOV is presently on a bare boat charter agreement with a subsidiary of

SCF until August 2019, and is included in the above numbers. The fixed 5 1/2 years charter for

POLARCUS AMANI (renamed IVAN GUBKIN) to a subsidiary of SCF is also included in the above

numbers.

Data acquisition methods

Modern marine seismic data is collected by emitting acoustic energy below the water’s surface

from energy sources towed behind a survey vessel (see Figure 3). The energy source is

typically formed by using high pressure air that is emitted through an array of energy source

elements. At rock layer boundaries beneath the seabed some of this acoustic energy is

reflected back up to the seismic streamers, also towed behind the survey vessel. These

streamers can be up to 12,000 metres long and they have hydrophones within them that

detect and convert this reflected energy into digital data, which in turn is recorded on-board

the survey vessel. This data is processed both on-board and onshore and subsequently

interpreted to provide a 3D image of the earth beneath the sea-bottom of the survey area.

Geoscientists then analyse these images to identify potential hydrocarbon reservoirs.

Figure 3: Principle of towed marine seismic acquisition

Several seismic techniques are in use today to provide such information to geoscientists. At

the highest level, these can be categorized into 2-, 3- and 4-dimensional seismic surveys. The

2-dimensional (2D) seismic surveys represent the most basic and least costly method, being

conducted by a survey vessel towing a single streamer and one energy source. Such surveys

will generate data which comprises individual cross-sections of the earth along the lines

tracked by the vessel. These lines may be kilometres apart, and this method is often used for

66

large basin-wide analyses of frontier geologic regions. However, these 2D surveys cannot

accurately define prospective hydrocarbon traps or the structural geometry of prospective

oilfields.

3D seismic is a more sophisticated technique that involves towing multiple streamers behind

the survey vessel to produce, in effect, several parallel 2D cross-sections of data in each single

traverse of the vessel (see Figure 4). When the area is covered with a number of traverses of

this type, the data is processed to produce a 3-dimensional (3D) cube of the subsurface.

Further improvements in data quality can be achieved by reducing the lateral spacing between

the streamers, termed High Density 3D (or “HD3D”); by acquiring the area in different

directions to provide illumination of the target zone from a number of different perspectives,

termed Multi-azimuth (or “MAZ”); or by laterally offsetting the source from the line of traverse

to improve target illumination at depth and beneath sub-surface structures such as salt or

basalt, termed Wide-azimuth (or “WAZ”). These advanced techniques are more complex and

more costly as they require additional streamer capacity and in the case of Wide-azimuth,

additional vessels to tow the energy sources parallel to the primary survey vessel (see Figure

4). Compared to traditional 3D seismic, High Density 3D seismic can quadruple the streamer

requirements, Wide-azimuth surveys are often acquired with two vessels carrying streamers

and sources as well as two additional vessels carrying sources only. In the case of Multi-

azimuth, the same area can be acquired up to six times in different directions. However, the

benefits of improved image quality and therefore better understanding of the reservoir are

increasingly recognized to outweigh the higher costs.

A market has also developed for a cost-effective 3D exploration technique that is proving of

high interest to oil and gas companies seeking to explore large frontier licence blocks, often

in deep water. Such acreage typically requires the licensee to undertake an initial exploration

study prior to a more thorough appraisal or partial relinquishment, or to support an equity

participation plan (farm-in/farm-out agreement). This technique requires expanding the

lateral separation between streamers, commonly known as wide tow 3D acquisition, in order

to provide much greater area coverage without causing a significant loss of resolution in the

imaging. New developments in drag reduction and in-sea equipment technology have allowed

the Company to compete successfully in this growing market segment, with the Company’s

vessels capable of towing ultra-wide spreads of 10 streamers with separations of up to 200m

between parallel streamers.

Figure 4: Plan views of four major types of 3D seismic acquisition that Polarcus is able to employ

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In 4-dimensional (4D) seismic programs, the 4th dimension is elapsed time, meaning that the same 3D survey may be reacquired over periods of typically one to three years. This method

is used to observe the physical changes occurring in a reservoir as a result of hydrocarbon

production, or injection of water or gas into the reservoir, by analysing the differences between

models acquired over a number of years. Time-lapse or 4D seismic compares the results of

3D seismic surveys repeated over significant time intervals (e.g. before a field starts producing

versus various post-production stages) over the same geographic area. The picture below

shows an example of a seismic 3D operation where the total lateral spread exceeds 1,350 metres, and the length of the seismic streamers is typically 8,100 metres - but can be as much

as 12,000 metres.

Figure 5: An aerial view of a 3D operation demonstrating the size of the "spread"

Vision and strategy

10.5.1 Vision

The Company’s vision is “to be a pioneer in an industry where the frontiers of seismic

exploration are responsibly expanded without harm to our world”.

10.5.2 2020 Company Strategy

The Company’s 2020 Strategy is to responsibly provide the RIGHT marine geophysical services

and seismic data from Pole to Pole, through innovation and excellence to succeed in any market

condition, and capture additional value by re-shaping the industry to improve explorational

success.

What we do:

Acquire Marine Seismic Data

Own & Process Seismic Data

Add value with our assets & our capabilities

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10.5.3 Balanced Scorecard and Company Improvement Plan

To deliver the 2020 Company Strategy there are two central management tools used to

measure company performance against the 2020 Company Strategy with reference to the

Company Vision.

A Balanced Scorecard is used to measure performance against a set of defined annual goals.

The Balanced Scorecard includes the following four categories to measure company

performance:

Financial (eg. revenue, profitability, cash generation)

Business processes (eg. asset utilization, fleet backlog secured, effective implementation

of safety and management system)

External environment (eg. client satisfaction, competitor activity)

Innovation and Growth (eg. new revenue streams, new technologies, organizational

development)

The annual Company Initiatives are aligned with the Balanced Scorecard categories and define

a number of company-wide initiatives that underpin the continuous improvement of the

organization.

The following are examples of annual Company Initiatives:

Financial (eg. global tax structures, working capital initiatives)

Business processes (eg. departmental quality optimization)

External environment (eg. optimizing partner and supplier relationships)

Innovation and Growth (eg. capturing innovation, new revenue, intra-organization

communication)

10.5.4 Core Values

At inception and in support of the above vision, the Company identified a set of Core Values

which define the Company’s ethos and the way Polarcus’ management, employees and

contractors are expected to perform within the business.

Responsibility Innovation Excellence

Environmental

Health & Safety

Ethical

Financial

RIGHT Solutions

Marine acquisition

Data processing

Service offering

Human capital

Geoscience

Operational

Commercial

Organization and business lines

10.6.1 Organization

Polarcus is organized in three geographical business units with client-facing regional offices in

the US, UK and Singapore, to cover global markets across North & South America (NASA),

Europe Africa & Middle East (EAME), and Australia & Pacific (APAC) respectively. The Company

has the benefit of experienced sales and marketing teams with extensive networks and in-

depth knowledge of their respective regional market. Each regional office delivers contract-

sales and multi-client revenue streams and houses technical marketing capabilities.

These client-facing regional teams are supported by centralized Business Services and

Operations & Geophysical support organizations located at the Group's headquarters in Dubai,

U.A.E. The Operations and Geophysical support structure consists of supply chain, EHSQ

(Environmental, Health, Safety and Quality), crewing, geophysical, operational and technical

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support to the global fleet of vessels. The Business Support organization comprises centralized

human resources, finance, legal, marketing and IT support functions.

The Group additionally has a network of satellite marketing offices distributed globally. The

Group has also entered into marketing agreements with local representatives in many of the

jurisdictions worldwide where such local representation is required in order to enable the Group

to participate in the tendering process for surveys. Polarcus is pre-qualified to participate in

tenders for the vast majority of oil and gas companies in the offshore exploration and

production environment.

Unlike other seismic companies, Polarcus directly employs maritime crew in addition to the

marine seismic crew and office based personnel. This ensures that all employees operate under

one unified EHSQ (Environment, Health, Safety and Quality) management system. This

continues to be an organizational structure that enables Polarcus to demonstrate leadership in

safe, clean, efficient and high quality 3D marine seismic data acquisition.

The Group, including its seismic vessels, was certified in September 2010 under ISO 9001, ISO

14001 and OHSAS 18001, becoming the first seismic player in the industry to achieve such

company-wide accreditation both onshore and offshore. This certification is maintained by the

Company according to accreditation requirements.

Historically, the staffing of the Group has relied largely on securing expert management and

employees from across the seismic industry. Since 2011, the Company has run a field crew

trainee recruitment, training and development program. By selecting, recruiting and training

junior field crew, the Company is better able to secure its future workforce and reduce the

reliance existing human capital in the industry. In 2017, the Company introduced a flexible

crew model designed to maximise retention of Polarcus field crew employees while retaining

the ability to crew vessels according to demand.

The following organizational charts describe the top level organization and the business unit

structure as they are currently filled within the Company:

Polarcus Executive Management Team

Chief Executive Officer

Duncan Eley

Chief Financial Officer

Hans-Peter Burlid

General Counsel

Caleb Raywood

SVP People & Business Services

Tamzin Steel

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Polarcus Organization Structure

As at 31 December 2017, the Group had 363 employees. The number of employees in office-

based locations around the world was 100. The number of field-based employees was 263.

10.6.2 Business lines – key transfer pricing policies

Polarcus has the following principal service-providing companies within the Polarcus Group;

(i) Polarcus DMCC which is the main administration company and employs most of the

administrative personnel including the senior management, (ii) Polarcus UK Limited, Polarcus

US Inc. and Polarcus Asia Pacific Pte. Ltd. that employ business development and marketing

personnel, and (iii) Polarcus Group Services Limited that employs the maritime and seismic

crew for all vessels within the Group.

For the sales support services that Polarcus UK Limited, Polarcus US Inc. and Polarcus Asia

Pacific Pte. Ltd. render, they receive a commission of 5% based on the total value of each

seismic survey contract that is budgeted to derive an operating profit. In the event that a

seismic survey contract is budgeted to incur an operating loss, no inter-company sales

commission is chargeable. The commission rate is in line with the rates that the Group pays to

its unrelated agents.

Polarcus DMCC provides (i) EHSQ, technical and operational services and (ii) administrative

management services to the various companies within the Polarcus Group.

For the EHSQ, technical and operational services as well as the administrative management

services, the pricing method applied is a fixed service fee. The service fee is calculated by

aggregating the total cost base and adding a mark-up, assessed by reference to

contemporaneous market conditions.

In its capacity as streamer pool operator, Polarcus Shipholding AS leases out streamers and

certain connected in-sea equipment to the various vessel owning entities. The lease fee is

calculated by aggregating the total cost base and adding a mark-up of 3%, depending on

market conditions. The Group companies are invoiced monthly in arrears.

The Company believes that its transfer pricing policies and documentation are in line with

international practice.

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The Polarcus fleet

The Polarcus fleet comprises seven ultra-modern seismic research vessels built to the ULSTEIN

SX124, SX133 and SX134 designs. The vessels are ultra-modern and innovative seismic

research vessels that have been designed for the most challenging offshore projects and

operating conditions and carry class notations from the classification society, Det Norske Veritas

(DNV) of Norway. The vessels combine the latest developments in maritime technology with

highly advanced seismic systems.

The first Polarcus vessels were built in Dubai, UAE, by Drydocks World Dubai LLC ("DWD") and

the last two vessels in Norway by Ulstein Verft AS. All vessels are high-end 3D seismic vessels

where six of the vessels have 12-14 streamer capability and are capable of transits at up to 15

knots, and one vessel has the capability of towing up to 8 streamers in wide-tow configuration

comprising 200 metres lateral separation between streamers. This last-mentioned vessel is also

capable of transit speed of up to 18 knots making her especially suited for fast and safe transits

to/from remote survey areas (such as in the Arctic) thereby maximizing time on a prospect.

Her speed also allows efficient transits in markets such as Asia Pacific where there are typically

long distances between prospects.

The Company originally had a fleet of eight vessels, one of which, POLARCUS SAMUR, was sold

in 2013. Of the seven remaining vessels, one vessel, POLARCUS NADIA has been stacked since

01 April 2015. The Company currently has no immediate plans to increase or decrease its fleet

size, nor change the number of its vessels that are stacked.

10.7.1 Design features

All the vessels feature the latest innovative inverted bow design, the ULSTEIN X-BOW® hull.

This has several benefits over traditional hull designs such as:

Improved transit performance in marginal or bad weather, giving the Company the

option of either higher transit speeds or reduced fuel consumption according to

operational requirements

Lower pitch and heave acceleration

No bow slamming

Reduced noise and vibration levels

Less spray, especially important in Arctic operations

Negligible occurrence of green water on bridge deck

Other important features are increased systems redundancy, crew comfort, environmental

impact mitigation and superior performance. The ULSTEIN SX124 vessels hold a DNV ICE-1C

class notation while the ULSTEIN SX133 and SX134 vessels also hold a DNV ICE-1A class

notation (the two latest vessels an ICE-1A* class notation) that will enable safe access and an

extended operations season in the Arctic Ocean.

The class notation ICE-1C verifies that the vessels have sufficient strength, engine power and

equipment to transit through areas with ice floes of 0.4 m level ice thickness while the class

notation ICE-1A verifies that the vessels are capable of transiting through areas with ice floes

of 0.8 m level ice thickness. The new super-high ice class notation, ICE-1A*, verifies that the

vessels have sufficient strength, engine power and equipment to transit through areas with ice

floes of 1.0 m level ice thickness.

The vessels are amongst the most environmentally sound seismic vessels in the market,

designed with exhaust catalysts for all main engine exhaust lines in order to reduce the

emissions of NOx, HC (hydrocarbons), soot and sound. These designs supersede any

international requirements currently in force and are in accordance with DNV’s latest rules for

CLEAN-DESIGN class. There are for instance no fuel tanks adjacent to the vessels external hull,

72

which mitigates the potential for exposure of fuel to the environment, and the adopted bilge

water cleaning system will reduce contaminants to less than 5 ppm in contrast to typical

maritime shipping levels of 15 ppm or greater.

Polarcus believes that the expansion of the industry into new frontiers and environmentally

sensitive regions of the world will require a much greater level of environmental compliance as

new and projected legislation on emissions to air and water come into effect. Taxes on NOx

emissions for instance have already been introduced in Norway and are expected to be

implemented in other parts of the world in due course. The Company believes and has already

seen that this has become a significant service differentiator for Polarcus. In order to secure

this differentiator, the Company has placed a strong emphasis from its inception on “green”

investments, both for its seismic systems and its maritime technologies. The Company has an

emission accreditation certificate from DNV that verifies that it operates with a dramatically

reduced environmental footprint compared to its peers.

Polarcus Naila Polarcus Asima Polarcus Alima

Type: 3D Vessel Type: 3D vessel Type: 3D vessel

Design: Ulstein SX124 Design: Ulstein SX134 Design: Ulstein SX134

Length: (loa) 90.8m Length: (loa) 92.0m Length: (loa) 92.0m

Beam: 19.0m Beam: 21.0m Beam: 21.0m

Streamer capacity: 14 Streamer capacity: 12 Streamer capacity: 12

Speed 15.0 knots Speed 15.0 knots Speed 15.0 knots

Ice class: ICE-C Ice class: ICE-1A Ice class: ICE-1A

Year delivered: 2010 Year delivered: 2010 Year delivered: 2011

Polarcus Adira Polarcus Nadia Ivan gubkin

Type: 3D Vessel Type: 3D Vessel Type: 3D vessel

Design: Ulstein SX134 Design: Ulstein SX124 Design: Ulstein SX134

Length: (loa) 92.0m Length: (loa) 88.8m Length: (loa) 92.0m

Beam: 21.0m Beam: 19.0m Beam: 21.0m

Streamer capacity: 14 Streamer capacity: 12 Streamer capacity: 14

Speed 15.0 knots Speed 14.0 knots Speed 15.0 knots

Ice class: ICE-1A* Ice class: ICE-C Ice class: ICE-1A*

Year delivered: 2012 Year delivered: 2009 Year delivered: 2012

http://polarcus.com/20.0.0.0/378/a5db2f88bfb4126219635ab22

73

Vyacheslav Tikhonov

Type: 3D Vessel

Design: Ulstein SX133

Length: (loa) 84.2m

Beam: 17.0m

Streamer capacity: 8

Speed 17.0 knots

Ice class: ICE-1A

Year delivered: 2011

10.7.2 Polarcus' seismic streamers

As oil and gas exploration activities are conducted in areas with deeper, more complex geology,

the demand for longer streamers is increasing although exact requirements may vary

significantly from project to project. Streamer sections are owned by the owners of the Group's

vessels and Polarcus Shipholding AS. Streamer sections are fungible and can be leased between

vessel owning companies as current project operations require. At the date of this Prospectus,

all Polarcus operated vessels (excluding POLARCUS NADIA) are equipped with a complete set

of streamers and associated spare levels. In addition, the Group has in excess of one full

streamer set available for use across the fleet following the stacking of POLARCUS NADIA and

delivery of POLARCUS AMANI into the bareboat charter party described in Section 10.8.4

"Business – Material contracts - Bareboat charter of IVAN GUBKIN.

10.7.3 POLARCUS NADIA & POLARCUS NAILA

Delivered in December 2009 and February 2010 respectively, POLARCUS NADIA and POLARCUS

NAILA are 3D seismic vessels built to the ULSTEIN SX124 design.

POLARCUS NADIA is capable of towing up to 12 streamer cables with a lateral separation of up

to 75 metres, or 10 streamer cables with a lateral separation of 100 metres. The vessel was

stacked in April 2015.

Built in 2010, POLARCUS NAILA was converted in 2014 and is capable of towing up to 14

streamer cables with a lateral separation of up to 150 metres, or 10 streamer cables with a

lateral separation of 200 metres.

POLARCUS NADIA and POLARCUS NAILA have an overall length of 88.8 metres and 90.8 metres

respectively, a draft of 6.6 metres and a maximum speed of 15 knots. Both vessels carry the

ICE-C class notation enabling them to operate in light ice conditions. The vessels are amongst

the most environmentally sound seismic vessels in the market with diesel-electric propulsion,

high specification catalytic convertors, a double hull and advanced bilge water cleaning

systems.

POLARCUS NADIA and POLARCUS NAILA have been acquired by Polarcus Nadia AS and Polarcus

Naila AS respectively from GSH Seismic Carrier I AS part of the Restructuring.

10.7.4 POLARCUS ASIMA & POLARCUS ALIMA

Delivered in August 2010 and March 2011 respectively, POLARCUS ASIMA and POLARCUS

ALIMA are both Arctic-ready 3D seismic vessels built to the ULSTEIN SX134 design and capable

of towing up to 12 streamer cables with a lateral separation of 100 metres. POLARCUS ASIMA

POLARCUS NAILA

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and POLARCUS ALIMA have an overall length of 92 metres, a draft of 7.5 metres and a

maximum speed of 15 knots, and carry the high ice class notation, ICE-1A, enabling them to

operate with the utmost safety in the Arctic Ocean. The vessels are also amongst the most

environmentally sound seismic vessels in the market with diesel-electric propulsion, high

specification catalytic convertors, a double hull and advanced ballast water treatment / bilge

water cleaning systems.

POLARCUS ASIMA & POLARCUS ALIMA are owned by Polarcus Asima AS and Polarcus Alima AS

respectively.

10.7.5 POLARCUS SELMA (VYACHESLAV TIKHONOV)

POLARCUS SELMA (named VYACHESLAV TIKHONOV under bareboat charter) was delivered in

August 2011 and was handed over to Sovcomflot in a 5-year bareboat charter agreement. In

February 2016, the charterers exercised an option to extend the charter term by an additional

three years. This charter is described in section 10.8.3. VYACHESLAV TIKHONOV is of the

ULSTEIN SX133 design with the high ice class notation, ICE-1A, enabling her to operate safely

and effectively in the Arctic. The 84 metre long vessel with maximum speed of 17 knots, is

purpose built for the high-end 3D marine seismic market and is capable of towing up to 8

streamers in a conventional spread, or 6 streamers in a First PassTM wide tow configuration

comprising 200 metres between streamers. The vessel is again amongst the most

environmentally sound seismic vessels in the market with diesel-electric propulsion, high

specification catalytic convertors, a double hull and advanced ballast water treatment / bilge

water cleaning systems.

POLARCUS SELMA is owned by Polarcus Selma Ltd.

10.7.6 POLARCUS AMANI & POLARCUS ADIRA

POLARCUS AMANI was delivered in March 2012 and POLARCUS ADIRA in June 2012.

The vessels are of the same proven design as POLARCUS ASIMA and POLARCUS ALIMA, but

incorporate additional advanced capabilities, including the ability to tow up to 14 streamers.

Moreover, the propulsion plant is upgraded with higher capacity. POLARCUS AMANI and

POLARCUS ADIRA have an overall length of 92 metres, a draft of 7.5 metres and a maximum

speed of 15 knots. They carry the super high ice class notation, ICE-1A* enabling them to

operate with the utmost safety in the Arctic Ocean. The vessels are equipped with three

additional lead-in winches that enable the vessels to tow up to 14 streamers and provide more

capacity for spare streamers.

POLARCUS AMANI & POLARCUS ADIRA are owned by Polarcus Amani AS and Polarcus Adira AS

respectively.

POLARCUS AMANI (named IVAN GUBKIN under bareboat charter) was handed over to

Sovcomflot in a 5½ year bareboat charter agreement commencing in April 2017. This charter

is described in section 10.8.3

10.7.7 Encumbrances related to the vessels

The major encumbrances related to the vessels owned by the Polarcus Group are summarised

below.

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Vessel 1st lien

VYACHESLAV TIKHONOV USD 125m Convertible Bond as described in section 11.12.3

The fleet consisting of: POLARCUS ASIMA, POLARCUS ALIMA POLARCUS AMANI (renamed IVAN GUBKIN)

POLARCUS ADIRA

USD 410m Fleet Bank Facility as described in section 11.12.2

Working Capital Facility, Swap Facility and Guarantee Facility as described in section 11.12.7

The fleet consisting of; POLARUCS NADIA POLARCUS NAILA

New Fleet Facility as described in section 11.12.6

Material contracts

This section summarises the contracts which are material to the Company. Breaches or

cancellations related to these contracts will have a material adverse effect on the Company.

However, the Company’s business is not dependent on one single contract.

The Company is dependent on obtaining contracts for seismic services and for the multi-client

data being licensed to third-parties. These risk factors are further described in Section 2.2.5

“Risk factors —Risk factors related to the Company—Contractual and counter-party exposure”,

and Section 2.2.6 “Risk factors —Risk factors related to the Company—Multi-client

investments”.

10.8.1 Seismic acquisition contracts

Most seismic acquisition contracts are awarded through a tendering process. The contract

signed between Polarcus (as contractor) and an oil company (as client) is generally based on

the client's standard terms and conditions with exceptions negotiated by Polarcus to align the

contract terms as much as possible to terms that reflect Polarcus' acceptable allocation of

contractual risk. Contract terms will vary depending on the client's identity, size, nationality,

and on the location of the work. In certain jurisdictions, exceptions to contract terms are not

accepted at all.

The contracts will always contain provisions setting out the commercial and practical aspects

of the work, such as scope of work, rates and prices (rates will either be turn-key or day/km

rate with mobilization fee, demobilization fee, standby rate), insurance requirements, EHSQ

standards, technical specifications, details of contractor's equipment, software and personnel.

Furthermore, the main terms of a legal character found in industry standard seismic acquisition

contracts can be summarized as follows:

Terms of payment: payment of fees is normally on monthly basis, usually within 30 days

of receipt of invoice; sometimes with a provision for interest in the event of late payment.

However, national oil companies sometimes insist on paying only after completion of the

full survey.

Financial guarantees: In certain situations the contracts are subject to the provision of a

bid bond (at the tendering stage), parent company guarantee (at the tendering stage or

after an award) and/or a performance bank guarantee (after an award). The amount of

such guarantees varies from project to project.

Taxes: Tax provisions and liabilities will vary depending on the jurisdiction where the

survey is performed and on the contracting entities used by both parties. However, taxes

are usually for the contractor's account, including customs and excise duties.

Ownership of seismic data: Typically, the data belongs to the client from creation, subject

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to payment by the client of all sums due to the contractor under the contract. The client

will usually also request ownership of inventions/know-how created by the contractor

during the survey (if any).

Warranties and disclaimers: Contractor's warranties in the contract are normally limited

and warranties of merchantability or fitness for a particular purpose with respect to any

work, technical information, data, products or reports are excluded. Clients normally

recognize that the contractor cannot warrant the accuracy or completeness of any

interpretations, recommendations or reservoir descriptions or other models developed

based on the data provided by the contractor, nor for any subsequent operations carried

out by the client reliant on such data.

Liquidated damages: In some instances the client imposes payment of liquidated

damages for delay, either in commencing or completing the work. Polarcus always

requests a waiver of this requirement; however, this requirement is sometimes imposed

on all contractors without scope for negotiation.

Remedy for defective/lost/damaged data: Normally the client will have the right to require

the contractor to either reacquire data which are defective/lost/damaged (at a time to be

decided by the client, or mutually agreed), or to reimburse the client for the amounts

originally charged for the defective/lost/damaged data. Under some contracts, the client

will even require the contractor to pay for all or part of the cost of the client having to

hire another seismic contractor to re-perform the survey (or part thereof). However,

Polarcus will always seek to limit its liability in respect of such third party costs. In most

instances of defective/lost/damaged data, the contractor will be able to fulfil its

rectification obligation by correcting the data tapes through further processing or

reprocessing, or providing identical copies of the tapes.

Liabilities: Most contracts implement the "knock for knock" principle where each party is

responsible for damage and losses to their own property and personnel, regardless of

cause (although sometimes the principle is slightly eroded by the "gross negligence/wilful

misconduct of the other party" exception). With respect to third party liability, each party

is responsible for third party losses to the extent that they have caused them. For certain

third party liabilities, however, the client will be responsible, such as pollution other than

from the contractor's vessel and property, damages inherent to the work suffered by third

parties, such as fishermen and fishing plants. Contractors will often also request (but not

always obtain) the client to be solely responsible for any damage arising from/in

connection with offshore installations/rigs (including pollution) and submerged property.

It is worth noting that an increasing number of companies refuse to accept the "knock for

knock" principle, and tend instead to push more liability onto the contractor. Seismic

contracts normally also include provisions excluding consequential losses. Certain clients

accept a limitation of contractor's liability to 100-150% of the total contract price.

Force majeure: The contractor will be exempted from performing its obligations under the

contract in the event of the occurrence of force majeure; but will be compensated at (or

an agreed percentage of) the standby rate (typically a somewhat reduced production rate

still covering the operational cost of the vessel) during such occurrence. The client (and

sometimes the contractor as well) has the right to terminate the contract if the force

majeure lasts for more than a certain number of days. The client may also allow the

contractor to demobilize and carry on with other work, and later return to the area to

finalize the survey.

Termination: The client can terminate the contract for breach of the contractor's

obligations under the contract (such as failure to start the seismic survey on time; breach

of main contractual obligations; insolvency; breach of business ethics provisions; breach

of confidentiality obligations). In most contracts the client also has the right to terminate

the contract for convenience (without cause), subject to payment of a reasonable

termination fee designed to cover the contractor's cost or losses. In some contracts, the

contractor is also granted a right to terminate in the event of the client company's default

(such as delayed payments of amounts due or insolvency).

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Governing law and dispute resolution: The governing law of the contract will depend

principally on the client's identity and on the location of the survey. English, Norwegian,

Dutch and French law are frequently used; but in certain jurisdictions (e.g. in Asia, Africa

and South America), the contract may be governed by local law with little possibility for

negotiation. Disputes are either referred to international arbitration or to competent local

courts.

Business ethics: The contractor is invariably obliged to comply with anti-corruption

legislation, including the US Foreign Corrupt Practices Act and the UK Bribery Act 2010.

10.8.2 Multi-Client licences

Multi-client licences cover surveys undertaken by seismic companies where the project

deliverables, comprising a suite of fully imaged seismic data, are subsequently licensed to oil

and gas companies on a non-exclusive basis. Ownership of or exclusive marketing rights to the

project deliverables remains with the seismic company and project risks are offset through

meticulous business case planning supported by written pre-funding commitments from

participating oil and gas companies in advance of vessel mobilization.

Most multi-client projects originate from opportunities identified by Polarcus and/or its various

partners. However, such projects can also originate from tenders, either through conversion of

projects tendered on a proprietary basis or, in jurisdictions where multi-client surveys are the

only available option for the conduct of seismic surveys, through tenders by oil companies for

the acquisition of the data on a multi-client basis.

Multi-client contracts comprise a Master Licence Agreement (“MLA”) and project-specific

supplements. Client licences are usually based on Polarcus’ standard MLA and related standard

supplement. On occasion the client will provide its own MLA. Most MLAs in the industry are

based on the standard developed by the International Association of Geophysical Contractors,

so all are relatively similar. For this reason, negotiations of MLAs can be relatively fast.

The main terms of a standard MLA (and related supplements) are as follows:

Scope: The MLA is a general document which sets out the general terms and conditions

of a non-exclusive licence granted by the seismic company (or licensor) to the client (or

licensee) to use certain seismic data obtained by and belonging to the licensor and their

related derivatives (being any product derived, generated, or created from the data).

Upon each occasion where the licensor licences specific multi-client data to the licensee

(in the context of a seismic survey in a defined location), the parties will execute a

supplement to the MLA. The supplement will identify the specific data licensed, the licence

fee, payment terms, and other matters concerning the licence transaction to which the

parties mutually agree.

Duration: MLAs and supplements are long term contracts (25 years from their respective

effective date is a standard). The MLA will however remain effective during the term of

any active supplement.

Taxes: Tax provisions and liabilities will vary depending on the jurisdiction of the

individual project and on the contracting entities used by each party; but usually any

taxes levied or assessed against the licensor as a consequence of the licensing of the data

are for the licensee's account.

Ownership of seismic data: The licensor owns, or has exclusive rights to market, the data

and derivatives. The licensor has the right at any time to licence any part of the data and

derivatives to third parties at such prices and on such terms as are determined by the

licensor. However, the data, and potentially the derivatives will eventually become part

of the public domain (within a time period ranging from 10 to 15 years, depending on the

jurisdiction; 10 years being most common). The licensee only has the non-exclusive right

to utilize such data subject to the restrictions set out in the MLA. However, the licensee

retains ownership of the licensee's interpretation(s) (being interpretations created by the

licensee or its consultants that are based upon space and time location of the data and/or

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derivatives but do not directly incorporate actual data or derivative values or

magnitudes).

Confidentiality: The confidentiality provisions of the MLA are the core provision of the

document. The data and derivatives constitute valuable and highly confidential intellectual

property and trade secrets. Except as expressly permitted by the MLA, the licensee and

its employees, officers and third party service providers must keep the data and

derivatives strictly confidential, and are not allowed to show or transfer such data. The

MLA regulates very strictly the exceptions to this principle. The licensee may make copies,

or show the data to its affiliates (“related entities” – the definition of which can be more

or less wide) or to certain services providers (subject to confidentiality obligations no less

onerous than those set out in the MLA); communicate the data or preferably portions

thereof to government agencies if required by law or regulations; and transfer the data

to its partners (subject to confidentiality obligations no less onerous than those set out in

the MLA, and payment of the applicable licence fee). If the licensee is acquired by a third

party entity, the MLA automatically terminates unless the licence fee, or an agreed portion

thereof, is promptly paid to the licensor by the acquirer and the acquirer agrees to be

bound by the terms and conditions of the relevant MLA and supplement.

Audit: The licensor generally has the right to audit the licensee’s (and its related entities')

premises, systems and storage sites to verify that all data and derivatives have been

returned or destroyed upon termination for a period of twelve (12) months from the

termination of the MLA or any supplements.

Warranties and disclaimers: Most MLAs will include wording to the effect that the licensor’s

warranties are limited and that the licensor makes no representation or warranty, express

or implied, in respect to the quality, accuracy, condition, durability, latent defects,

absence of patent, trademark or copyright infringement, or the usefulness of the data

and derivatives or otherwise. The evaluation, interpretation or use of the data and/or any

derivatives is at the licensee’s own risk and responsibility.

Liabilities: Due to the necessity to protect the commercial value of the data, the licensee

is fully responsible for all damages, costs or other loss suffered or incurred by the licensor

as a direct or indirect result of any misuse or inappropriate disclosure of any portion of

the data and/or derivatives and/or licensee derivatives, or other breach of the MLA and

the applicable supplement by any of the parties to whom the licensee has disclosed the

data and/or derivatives and/or licensee derivatives. The licensor will in turn assume all

liabilities relating to the acquiring and processing the data, and will indemnify the licensee

any claims arising out of such activities.

Termination: In most cases the licensor can terminate the MLA or any supplement for

breach of the licensee’s obligations thereunder (for example: breach of main contractual

obligations including failure to pay licence fees; insolvency; breach of confidentiality

obligations/ wrongful disclosure of the seismic data to unauthorized third parties). Usually

the MLA grants the licensee a certain period of time to rectify the breach before

termination becomes effective. In some MLAs, the licensee may also have negotiated the

right to terminate in the event of the licensor’s breach of the MLA/ supplement and failure

to so remedy. Supplements may also include separate termination provisions. Upon

termination of an MLA or any supplement, the licensee must promptly return and/or

destroy all relevant data and derivatives and provide written certification that all copies

of such documents have been returned to the licensor or destroyed.

Governing law and dispute resolution: these provisions will depend on the identity and

nationality of the licensor and the location of the particular project area. English law and

the jurisdictions of English courts are frequent standards.

10.8.3 Bareboat charter of VYACHESLAV TIKHONOV

On 10 August 2011, Polarcus signed a five-year Bareboat Charter Party Agreement (the

“BBCP”) with SCF Sakhalin Supply Limited, a subsidiary of OAO Sovcomflot ("SCF"). The vessel

was delivered to the charterers on 18 August 2011 and, on 16 September 2011, was renamed

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VYACHESLAV TIKHONOV. In February 2016, the charterers exercised an option to extend the

term of the original agreement by three years until August 2019.

The BBCP is based on the Baltic and International Maritime Council ("BIMCO") 2001 standard

bareboat charter agreement. Under the BBCP, the charter period can be extended by successive

periods of, first, 12 months and three periods of 24 months beyond the current fixed period.

From the third anniversary of the delivery date of the vessel under the BBCP and each year

onwards, the charterers had the option to purchase the vessel for a price of USD 115,100,000

reducing to a minimum of USD 59,000,000 from the eight anniversary onwards. The purchase

option can also be exercised in a situation where the owner is in default on the BBCP.

The construction and completion of the vessel and acquisition of equipment was financed by

the USD 125,000,000 convertible bond issue described in Section 11.8.3 "Selected financial

information —Summary of financing—Convertible Bond issue". Nordic Trustee AS has, on behalf

of the bondholders, issued a letter assuring the charterers’ quiet enjoyment of the vessel in the

charter period.

In compliance with the agreement, the vessel has been bareboat registered in Russia and is

sailing under Russian flag. In connection with the bareboat registration, both Polarcus and the

bondholders were granted a power of attorney to deregister the vessel from the Russian flag

in a situation where the charterers default on their obligations under the BBCP and a termination

event occurs or if the charterers fail to deregister the vessel at the end of the charter period.

The agreement contains detailed provisions on responsibility for insurance, maintenance and

operation of the vessel and her equipment, the charterers' responsibility for taxes and fees in

the jurisdictions where the vessel operates and the duty to indemnify the owner against any

loss, damage or expense incurred by the owners as a consequence of the operation of the

vessel. The BBCP furthermore contains standard default and termination clauses.

The charter hire under the BBCP was originally secured by an escrow account with a deposit

equal to four months charter hire and assignment of insurances. The escrow account was

replaced by a parent company guarantee from the parent company of the charterers in 2013.

The agreement is governed by English law with arbitration in accordance with London Maritime

Arbitrators Association ("LMAA") as dispute venue.

10.8.4 Bareboat Charter of IVAN GUBKIN

On 13 April 2017, a Norwegian subsidiary in the Group signed a 5½ year bareboat charter party

Agreement with SCF GEO AS, a subsidiary of SCF for the hire of “POLARCUS AMANI”,

subsequently renamed “IVAN GUBKIN” (the “Gubkin Charter”). The Gubkin Charter is based

on the BIMCO 2001 standard bareboat charter agreement. The vessel was delivered to the

charterers on 21 April 2017. The charterers have options to extend the hire period by up to two

months. The vessel was delivered without streamers and the streamer package previously on

board the vessel is available for use across the Polarcus fleet. The Gubkin Charter will generate

minimum hire of USD 70 million over the fixed charter period with the possibility of increased

charter hire fees based on Sovcomflot benefitting from certain market improvements.

Sovcomflot has the right to purchase the vessel at any time during the charter at pre-agreed

prices.

The terms of the Gubkin Charter relating to flagging, insurance, maintenance, operation and

taxes are substantially similar to those agreed for the for VYACHESLAV TIKHONOV charter

described in Section 10.8.3 "Business - Material contracts – Bareboat charter of VIYACHESLAV

TIKHONOV".

The agreement is governed by Norwegian law with any disputes to be referred to arbitration in

Oslo.

80

10.8.5 Seismic data acquisition agreement, and management and crewing agreement with

Turkish Petroleum International Company

On 11 February 2013 the subsidiary Polarcus Samur AS completed the sale of the POLARCUS

SAMUR, an eight-streamer Ulstein SX 133 X-Bow vessel with seismic equipment to Turkish

Petroleum Corporation (“TPAO”), further to a memorandum of agreement dated 31 December

2012 (“MOA”). The MOA was based on the Norwegian Shipbroker’s Association’s standard

Saleform 2012, as adopted by BIMCO. POLARCUS SAMUR was thereafter renamed “Barbaros

Hayreddin Paşa” and is sailing under the Turkish International flag.

Simultaneously with the delivery of POLARCUS SAMUR to TPAO, Polarcus commenced a three

year collaboration with TPAO covering seismic data acquisition, fast-track data processing,

management and crewing for the vessel.

The Polarcus-TPAO collaboration agreements were renewed on 11 February 2016 for two years.

The agreements include seismic data acquisition, on-board quality control and management

and crewing for the vessel, Barbaros Hayreddin Paşa. In February 2018, the rights and

obligations of TPAO under the agreements were novated to Turkish Petroleum International

Company (“TPIC”) and the term of the agreements was extended by one year. The agreements

contain standard warranties, indemnities, insurance, termination and confidentiality provisions

as are usual for this type of agreement. Furthermore liability for consequential losses is

excluded, and the Contractor’s liability for default and delay under the agreement is limited.

The agreement is governed by Turkish law with arbitration in Istanbul in accordance with the

arbitration rules of the international chamber of commerce (ICC).

The total value of the agreements with TPIC is approximately USD 14 million for the extended

period of one year commencing in February 2018.

10.8.6 Agreement for data processing

On 30 June 2014, Polarcus DMCC entered into a 42 month agreement for the provision of

onboard data processing systems and associated training and support services with DUG. In

December 2017 the parties extended the Agreement until 31 December 2018.

Under the agreement DUG shall:

lease, install and maintain, on an exclusive basis, data processing hardware and software

(“Systems”) on board all Polarcus vessels (other than VYACHESLAV TIKHONOV and

Barbaros Hayreddin Paşa) and at Polarcus’ Dubai office;

provide support and training services to Polarcus processing personnel, allowing them to

properly use the Systems for real time seismic data quality control and fast track

processing;

provide Polarcus with the right to associate itself with the DUG’s broadband technology

“DUG Broad” for marketing purposes; and

at Polarcus’ option: provide Polarcus with access to DUG’s research and development

capabilities (including the development of any new software module and the definition,

development and testing phases of the “Real-Time and Offline Acquisition QC Software”)

and also allocate one or more DUG experienced employees (a senior seismic processing

geophysicist and/ or a seismic processing geophysicist) at Polarcus’ Dubai offices whose

role shall be to facilitate the due performance of DUG’s obligations under the agreement.

All Systems are installed on-board the Polarcus vessels and operational. Training and support

as well as DUG Broad, DUG employee secondment and R&D access (where the latter are

required) shall be provided throughout the term of the agreement.

The agreement includes indemnity, liability (including liability for default and delay), insurance,

termination, confidentiality, EHSQ and business ethics provisions normal for such agreements

as well as provisions concerning intellectual property rights.

81

The agreement is governed by English law with arbitration in London in accordance with the

International Arbitration Rules of the London Court of International Arbitration (LCIA).

10.8.7 Contract for strategic consultancy services

In January 2016, Carl-Peter Zickerman, formerly employed by the Company as Executive Vice

President Strategic Investments and Company founder, moved from being an employee to a

consultant with Zickerman Group DMCC. Zickerman Group DMCC has been engaged by Polarcus

to provide business and advisory consultancy services, in particular in relation to corporate,

financial, business development and related strategic matters. These services commenced on

1 February 2016.

10.8.8 Collaboration Agreement with TGS

On 17 November 2016, Polarcus announced the execution of a collaboration agreement with

TGS-NOPEC Geophysical Company ASA ("TGS"). Under the agreement, the parties agreed

rates at which the Group would provide seismic acquisition services to TGS for certain multi-

client projects and the terms on which the parties agreed to collaborate on these multi-client

opportunities. The collaboration agreement was extended for a further 12 months in January

2018. The term of the agreement expires on 31 December 2018 and may be extended for a

further term of 1 year. The agreement also provides Polarcus with a right of first refusal to

provide TGS with services to acquire 3D seismic data over an area of up to 10,000 km2 during

2018 subject to certain conditions.

10.8.9 Contracts with local consultants

Polarcus Group companies have entered into agreements with local consultants in jurisdictions

worldwide, including: Brazil, Egypt, Ghana, India, Indonesia, Malaysia, Mexico, Nigeria and

Turkey. Such agreements are required either by local regulation or practice in order for a foreign

contractor to be eligible to tender for a seismic survey contract or are executed for business

development purposes to demonstrate that the Polarcus entity has a more significant degree

of engagement in that territory. Each consultant acts as such on a market exclusive basis for

the relevant Polarcus Group company. The relationships with local consultants are normally

entered into pursuant to a standard form of agreement developed by Polarcus. The

agreements: (i) define the territory of each consultancy agreement, (ii) list the different

obligations of the consultants, such as the marketing obligation, the duty to inform Polarcus of

upcoming projects, the duty to assist the Polarcus Group in preparing and submitting tenders,

the duty to give appropriate assistance in connection with a survey and the duty to liaise with

local authorities, (iii) emphasize the consultant’s obligation to comply with applicable laws and

regulations, including anti-corruption and bribery laws, regulation and principles, and (iv)

stipulate the commission of the consultant, normally between 2% and 5% of the revenue paid

to Polarcus less certain other fees and expenses. The agreements normally do not include a

retainer fee to the consultants. The agreements otherwise include indemnity, liability,

termination and confidentiality provisions normal for such agreements as well as provisions

concerning intellectual property rights. The duration of the agreements varies from 12 months

to 3 years. The agreements are governed by English law or local law if mandatory under such

local law or as otherwise negotiated with the consultant.

10.8.10 Agreements with multi-client consultants

Polarcus has through its various subsidiaries entered into agreements with certain specialist

consultants for the provision of expert local assistance in the development, planning, and

marketing of 3D multi-client projects.

The relationships with such consultants are normally entered into pursuant to a standard form

of agreement developed by Polarcus. The agreements: (i) define the territory of each

agreement, (ii) list the different obligations of the consultants, such as the duty to identify,

develop and market potential and actual projects, the duty to assist Polarcus in planning and

designing optimal surveys, the duty to give appropriate assistance in connection with a survey

and the duty to liaise with local authorities, the duty to negotiate relevant documentation with

82

clients, (iii) emphasize the consultant's obligation to comply with applicable laws and

regulations, including anti-corruption and bribery laws, regulation and principles, and (iv)

stipulate the retainer fee and/or the commission of the consultant. The agreements otherwise

include indemnity, liability, termination and confidentiality provisions normal for such

agreements as well as provisions concerning intellectual property rights. The duration of the

agreements varies from 12 months to 3 years. The agreements are governed by English law or

local law if mandatory under such local law or as otherwise negotiated with the consultant.

The Company’s subsidiary Polarcus Serviços Geofísicos Do Brasil Ltda ("Polarcus Do Brasil

Ltda"), on 26 August 2014, entered into a non-exclusive agreement with Brazilian company

Sinergeo Consultoria e Representaçoes Ltda (“Sinergeo”) for the exclusive provision by

Sinergeo of assistance in the development, marketing, and execution of 3D proprietary as well

as multi-client projects in Brazil. Under the terms of this agreement, Polarcus pays Sinergeo a

fixed sales commission on any net project revenues plus a monthly retainer fee which is fully

deductible from future commission payments. The agreement is valid for an initial period of

three years from its effective date (being 1st September 2014) and is thereafter renewable in

annual periods unless terminated by either party by giving 60 days' notice prior to the

expiration of the initial term or any renewed terms. The agreement is governed by English law

with arbitration in London in accordance with the rules of the London Maritime Arbitrators

Association (LMAA).

As part of the agreement with DUG entered into in June 2014, DUG has the right but not the

obligation to participate in all Polarcus multi-client projects through providing its data

processing services as a cost-contribution to the project which secures DUG a corresponding

revenue contribution from the project.

See also, Section 10.3.2 "Business – Material contracts – Multi-client projects" for detail of the

multi-client collaboration with TGS-NOPEC Geophysical Company ("TGS").

10.8.11 Other contracts related to the operation of the vessels

Polarcus has entered into time charters for the chartering of support vessels related to the

various surveys the Group's seismic vessels are involved in. Certain of the charters have a

duration of more than one year, while most charters are for shorter periods and are connected

to one particular survey. The charters are all based on amended BIMCO provisions negotiated

between the parties for the specific services provided.

The Group has furthermore entered into agreements for medical and logistical support and with

certain agency companies for certain on-board services.

The vessel-owning entities regularly use the services of local ship agents and helicopter service

providers in its operations.

10.8.12 Research and development (R&D) policies

The Company does not plan any major R&D projects, but keeps under constant review the

design and construction of its new build fleet as well as the nature of its geophysical offerings.

Significant attention has been paid to the handling system and the back deck operations area

with the aim of making source array and streamer deployment and retrieval as efficient as

possible and to obtain optimal drag reduction.

Polarcus has developed a seismic source array with an improved frequency response that,

combined with the selected solid streamer and recording system, displays an improved signal

quality. In addition, the source is more efficient than competitive sources as less air volume is

required for the same energy output. Polarcus has further developed an alternative source

array with less energy output with the intention to offer this source as an environmental

alternative to the larger source by doing a test line and analysing the result prior to commencing

the survey. This can be obtained without losing any significant time, and can give the client an

option for choosing a source with lower acoustic energy. This can be of significant economic

and environmental importance, e.g. in mitigating interference with marine mammals.

83

The Company is, together with a Norwegian company, developing a system for steering the

seismic source in the lateral plane. This has an advantage for controlling the position of the

source and can improve positioning during 4D surveys where repetition of last survey source

position is important. It is further envisaged that there will in the future be a directed R&D

effort into improving the operational efficiency and environmental credentials of the vessels.

Other key innovations that the Company has developed are the XArray™ and RightFLOW™

products and services which are outlined in Section 9.3.1 "Industry and market – Positioning

of Polarcus in the market - XArray™: Efficient and high quality 3D seismic acquisition" and

Section 9.3.2 "Industry and market – Positioning of Polarcus in the market - RightFLOW™:

advanced seismic solutions for reducing exploration costs" respectively.

The Company has not spent material amounts on R&D projects during the period covered by

historical financials.

10.8.13 Leased offices

The Company has leased offices in Dubai of 14,000 sq.ft. at an annual rent of approximately

USD 700,000, in Houston of 2,600 sq.ft. at an annual rent of approximately USD 100,000, in

Singapore at an annual rent of approximately USD 130,000 and in Gatwick, London at an annual

rent of approximately USD 100,000.

10.8.14 Environmental focus

Polarcus has focused on a series of environmental initiatives across all business lines and at all

levels of operations and is committed to minimize the environmental footprint of the Company’s

activities. This commitment is embedded in the Company’s core values of Responsibility,

Innovation and Excellence and part of in the Company’s Vision is to operate an environmentally

responsible company that we envision as being an inspiration and model for others in our

industry and beyond. The commitment to minimizing the Company’s environmental footprint

has been a key factor in the successful recruitment of many employees of all experience levels

into the Company.

The Company in July 2008 became a core member of the International Association of

Geophysical Contractors (“IAGC”) and the Polarcus Chief Executive Officer ("CEO") was elected

to the IAGC Board of Directors in September 2008. The IAGC maintains several programs and

initiatives relating to environmental matters and the Company is an active participant in the

various committees and sub-committees for such work.

There are several environmental issues that may arise in the operation of the vessels. The

Company has implemented a number of mitigations for those relating to emissions.

The Company recognizes four emission types; solid, fluid, gaseous, and acoustic, and two

physical sources of these emissions; the seismic survey vessel itself, and the in-sea seismic

acquisition equipment.

In order to measure the effectiveness of emissions mitigation, Polarcus measures emissions of

polluting gases such as NOx, SOx, and COx from the Company’s vessels on a 'per vessel, per

month' basis. In so doing, Polarcus is the first and only seismic company in the industry to have

received the Det Norske Veritas “Vessel Emissions Qualification Statement”, awarded to the

Company in Q2 2010.

Through this measurement process, Polarcus is able to determine the success of its emissions

reduction systems and to set goals for continuous improvement. To reduce the emissions of

major polluting gases, the Company has incorporated high specification catalytic converters

across the seismic fleet to reduce emissions of harmful NOx gasses. NO2 is a major greenhouse

gas and air pollutant, with approximately 250 times more impact per unit weight than CO2.

The selective catalytic reduction process on the exhausts uses urea to effectively reduce NO2

to simple nitrogen gas and water. The catalytic convertors also have positive effects on residual

hydrocarbons, soot, and even sound, with the ability to substantially reduce emissions as

follows:

84

NOx Reduction: 90 - 98%

HC Reduction: 80 - 90%

HC Soot Reduction: 20 - 30%

Sound Attenuation: 20 - 35dB(A)

To mitigate SOx emissions, Polarcus has chosen to use the cleaner bunker fuel, marine gas oil

(“MGO”) and does not use heavy fuel oil (“HFO”). Under the Dangerous Substances Directive

as set out by UN, all HFOs on the market today are classified as carcinogenic (cat. 2), harmful

and dangerous for life and the environment. MGO, by contrast, is a distillate from the refinery

process with much lower viscosity, lower sulphur content (typically < 0.2% Sulphur) and lower

PCA (polycyclic aromatics) than HFO. Polarcus uses low-sulphur MGO across its seismic fleet.

Mitigating emissions of non-gaseous pollutants from seismic vessels

Polarcus has incorporated design features such as the DP2 dynamic positioning system, a

double hull, and advanced ballast and bilge water treatment systems to reduce or eliminate the

emissions of non-gaseous pollutants from seismic vessels into the sea. The incorporated

measures have enabled the Company to achieve the DNV CLEAN-DESIGN class notation across

the Company’s seismic fleet.

Polarcus’ seismic source array is well balanced and requires less air volume than other seismic

sources for the same energy output and thus reduces the energy consumption from the seismic

compressors. The Company further offers an alternative seismic source with lower energy

output as an option.

Seismic impact on marine mammals has significant focus across the industry, and Polarcus has

proactively installed passive acoustic monitoring (“PAM”) systems on all vessels that, when

operated can help detect the presence of cetaceans in the vicinity of the seismic vessel when

visibility is poor or at night.

In addition Polarcus is supporting an industry initiative for the development of a “low impact

seismic source” (LISS) which is in development phase by a technical organization based in the

USA.

Other factors that might impact the operation and utilization of the seismic vessels are:

Illegal interference from environmental activists opposed to the industry

This has from time to time in the industry been encountered in certain areas. Polarcus has not

been exposed to any encounters of material significance. The Company remains vigilant to

monitor such interference and the Company’s policy regarding this matter is to adopt a non-

confrontational approach at all times.

Legislative bans on doing surveys in certain areas

This may be a seasonal issue or in some areas also a permanent issue that can be

accommodated with proper planning and implementation. The vessels, due to the CLEANCLASS

notation and BWM-T notations, may be able to enter areas that other seismic vessels are not

able to enter.

Reduction in production due to restriction related to mammals and other sea

creatures

Restrictions on conducting seismic (the activation of the high pressure air energy source) in

close proximity to mammals is becoming an increasingly important issue for the industry. This

is regulated by legislation in many countries and can be accommodated with proper planning.

Polarcus has installed specialist PAM systems on-board its vessels that can, when used by the

client, reduce the uncertainty regarding the presence of cetaceans near the vessel.

Restrictions in certain areas due to seasonal fish migration or mating

85

Restrictions due to seasonal fish migration or mating is legislated in certain areas and can be

accommodated with proper planning.

With the DP2 system, double hull and cleaning of emissions, both to air and water, Polarcus

vessels enjoy a competitive advantage over other seismic vessels. Polarcus may be able to

enter some environmentally sensitive areas where some or all of the advance design features

could be a requirement for entry and prevent other vessels from entering the area. The double

hull provides additional security in the event of a collision or grounding and reduces the risk of

pollution.

Organizational structure

10.9.1 Description of Group that the Company is part of

Polarcus Limited is the holding company of the Group.

The legal structure of the Polarcus Group as the date of this Prospectus is depicted below.

86

Polarcus 1 Ltd. has been a dormant company for a significant period and Management resolved to dissolve the company voluntarily. On 5 February 2018, a Certificate of Dissolution was issued by the Cayman Islands Registrar of Companies confirming that Polarcus 1 Ltd. will be dissolved with effect from 23 April 2018 and thereupon removed from the Companies Register.

All subsidiaries, except Polarcus Nigeria Limited and Polarcus Ghana Limited, are 100% directly

or indirectly owned by Polarcus Limited. Polarcus Nigeria Limited is owned 49/51 with Ashbert

Limited. Polarcus Ghana Limited is owned 90/10 with Lysam Limited.

Legal and arbitration proceedings

Other than the proceedings listed below, the Company is not aware of any governmental, legal

or arbitration proceedings (including any such proceedings which are pending or threatened of

which the Company is aware), during a period covering at least the previous 12 months which

may have, or have had in the recent past significant effects on the Company and/or the Group's

financial position or profitability.

10.10.1 Dispute with Schottel

Schottel GmbH ("Schottel") developed and supplied four different thrusters to two Polarcus

vessels, the MV "Polarcus Naila" and MV "Polarcus Nadia" (the "Vessels"), both Vessels being

chartered by Polarcus companies under bareboat charter. All four thrusters installed on the

Vessels repeatedly failed causing severe operational downtime, giving rise to four different

claims brought by the charterers, Polarcus Naila AS and Polarcus Nadia AS, against Schottel in

the Koblenz courts, Germany (where Schottel is domiciled). The total value of the claims is

approximately USD 66.2 million. The proceedings are currently pending before the German

court.

10.10.2 Dispute with East Guardian

On 16 February 2016, the Company received a letter informing that the Company would be

served with a notice of conciliation proceedings by East Guardian Asset Management AG ("East

Guardian"), a holder of bonds in the bond issue with ISIN NO 001 0680150 where the 2016

Restructuring plan was approved with 90.46% of the votes in the bondholders' meeting held

87

on 22 January 2016. East Guardian has claimed that this approval is invalid as the amendments

allegedly required unanimity amongst bondholders and provide unequal treatment among the

creditors. In February 2018 the Company was served with such notice. In the Company's view,

the claim is without merit.

In April 2016, the Company received a notice of East Guardian's intention to litigate against

the board members claiming damages for economic loss caused by board members having

"negligently omitted information from the market and, concerning the present board members,

have carried out an invalid resolution adopted at a bondholder's meeting" (where the latter

presumably refers to the matters mentioned above). As at the date of the Prospectus, there

has been no further development of East Guardian’s purported claim (which the Company

considers to be wholly without merit).

On 18 November, 2016 East Guardian issued a writ against Nordic Trustee AS and the

"community of bondholders" on the same basis. On 21 December 2017 Oslo District Court gave

a decision in favour of Nordic Trustee AS, disproving any claim on the basis of damages. The

decision was appealed by East Guardian on 19 January 2018 to the Borgarting High Court. As

of the date of the Prospectus, Nordic Trustee AS has given notice of defence, and the Borgarting

Court of Appeal has scheduled a hearing to commence on 12 September 2019. In the

Company's view, East Guardian's claims are without merit.

88

11. SELECTED FINANCIAL INFORMATION

The following consolidated financial information has been derived from the Company's

unaudited condensed consolidated interim financial statements as of and for the three and

twelve months ended 31 December, 2017 (the "Interim Financial Statements") and the

Company's audited consolidated financial statements for 2015 and 2016 (the "Annual

Financial Statements"). The selected financial information set forth below should be read in

conjunction with Polarcus' published financial statements, including the notes that form part

of those financial statements. The consolidated financial statements of the Group have been

prepared in accordance with International Financial Reporting Standards ("IFRS") as issued

by the International Accounting Standards Board ("IASB").

The historical financials are incorporated by reference to this Prospectus:

Fourth Quarter Report 2017

http://hugin.info/151377/R/2171765/836931.pdf

Fourth Quarter Report 2016


Annual Report 2016


Annual Report 2015

https://polarcus.com/media/1498/annual-report-2014-final-v2.pdf

The financial statements for 2015 and 2016 were audited by Polarcus’ auditor, Ernst & Young

AS, independent accountants.

Summary of significant accounting policies

The principle accounting policies applied in the preparation of the consolidated financial

statements can be found in note 2 in the Annual Report 2016 incorporated by reference in

Section 18.2 "Incorporation by reference" in this Prospectus.

11.1.1 Multi-Client amortization

Understanding the method of amortization of the Company’s Multi-Client library is important in

understanding the Company’s financial performance and position. Please refer to note 2.8 in

the Annual Report 2016, incorporated by reference in Section 18.2 "Incorporation by reference"

in this Prospectus, for the accounting policy on Multi-Client amortization.

Consolidated historical financial information

11.2.1 Consolidated statement of comprehensive income


Three months ended

31 December

Twelve months

ended

31 December

Year ended

31 December

2017

(Unaudited)

2016

(Unaudited)

2017

(Unaudited)

2016

(Audited)

2015

(Audited)

Revenues

Contract revenue 28.4 36.0 146.9 185.1 270.8

Multi-client revenue 6.0 11.2 27.7 56.6 92.8

Other income 2.8 - 4.4 1.8 13.9

Total Revenues 37.2 47.2 179.0 243.4 377.5




https://polarcus.com/media/1498/annual-report-2014-final-v2.pdf

89

Operating expenses

Cost of sales (33.9) (45.6) (148.8) (176.9) (204.3)

General and administrative costs (3.6) (4.2) (15.9) (19.4) (21.5)

Provision for onerous contracts 27.0 (26.4) 27.0 (46.4) (8.8)

Depreciation and amortization (10.9) (11.3) (45.0) (48.7) (72.4)

Multi-client amortization (10.5) (21.0) (42.1) (56.8) (69.3)

Impairments (89.8) (24.8) (91.2) (26.7) (315.4)

Total Operating expenses (121.7) (133.3) (316.0) (374.7) (691.7)

Operating profit (84.5) (86.0) (137.0) (131.3) (314.3)

Share of profit/(loss) from joint

ventures - - - (1.2) (1.0)

Finance costs (12.5) (8.5) (44.4) (37.0) (61.1)

Finance income 1.5 0.1 2.4 2.0 12.4


instruments 4.1 (1.6) 6.6 13.3 (9.0)

Gain on financial restricturing - - - 177.8 -

Profit before tax (91.4) (95.3) (172.3) 23.5 (373.0)

Income tax expense (0.3) (1.7) (0.1) (3.2) (1.1)

Net profit and total

comprehensive income (91.7) (97.0) (172.4) 20.3 (374.1)

Earnings per share attributable

to the equity holders during the

period (In USD)

- Basic (0.6) (1.8) (1.4) 0.5 (5.6)

- Diluted (0.6) (1.8) (1.4) 0.5 (5.6)

11.2.2 Consolidated balance sheet

(In millions of USD) As of

31 December

Year ended

31 December

2017

(Unaudited)

2016

(Audited)

2015

(Audited)

Non-current Assets

Property, plant and equipment 324.1 443.4 634.2

Multi-client project library 10.4 45.1 50.8

Investment in joint ventures - 1.2

Intangible assets - - 0.3

Total Non-current Assets 334.5 488.5 686.7

Current Assets

Receivables from customers 19.8 47.6 58.8

Other current assets 14.9 21.3 34.2

Restricted cash 7.8 0.7 14.5

Cash and bank 25.8 13.7 54.0

Total Current Assets 68.4 83.4 161.4

TOTAL ASSETS 402.9 571.9 848.2

EQUITY and LIABILITIES

Equity

Issued share capital 15,3 5.3 13.4

Share premium 614.2 586.4 532.2

Other reserves 24.4 29.9 32.6

90

Retained earnings/(loss) (609.2) (442.8) (466.3)

Total Equity 44.7 178.8 111.9

Non-current Liabilities

Bond loans - 34.6 -

Other interest bearing debt - 0.9 0.6

Long-term provisions - 37.3 -

Other financial liabilities 8.6 10.5 22.3

Total Non-current Liabilities 8.6 83.3 23.0

Current Liabilities

Bond loans 48.6 - 220.6

Finance leases - - 166.0

Other interest bearing debt 245.6 249.6 256.9

Provisions 5.5 6.8 8.8

Accounts payable 13.4 18.9 30.1

Other accruals and payables 36.4 34.4 30.9

Total Current Liabilities 349.5 309.8 713.3

TOTAL EQUITY and LIABILITIES 402.9 571.9 848.2

11.2.3 Consolidated cash flow statement


Three months ended

31 December

Twelve

months

ended 31 December

Year ended

31 December

2017

(Unaudi

ted)

2016

(Unaudited)

2017

(Unaudited)

2016

(Audited)

2015

(Audited)

Profit/(loss) for period (91.7) (97.0) (172.5) 20.3 (374.1)

Adjustment for:

Depreciation and amortization 10.9 11.3 45.0 48.7 72.4

Multi-Client amortization 10.5 21.0 42.1 56.8 69.3

Impairments 89.8 24.8 91.2 26.7 315.4

Changes in fair value of financial instruments (4.1) 1.6 (6.6) (13.3) 9.0

Employee share option expenses 0.1 0.1 0.5 0.6 0.5

Interest expense 10.7 8.8 39.7 32.7 55.1

Interest income (0.1) - (0.2) (0.1) (0.8)

Gain on financial restructuring - - - (177.8) -

Effect of currency (gain)/loss (0.1) (3.1) 1.2 (0.6) (4.8)

Gain on buyback of convertible bonds - - - - (1.2)

Net movement in provisions (31.8) 26.4 (35.7) 30.6 8.8

Share of (profit)/loss from joint ventures - - - 1.2 1.0

Working capital adjustments:

Decrease/(Increase) in current assets 16.9 2.2 32.0 19.7 22.3

Increase/(Decrease) in trade payables and

accruals

7.2 1.5 (2.6) 2.7 (5.4)

Net cash flows from operating activities 18.5 (2.6) 34.1 48.1 167.5

Cash flows from investing activities

Payments for property, plant and equipment (1.7) (1.0) (7.3) (16.4) (15.1)

91

Proceeds from the disposal of multi-client projects

- - - - 25.2

Payments for multi-client project library (6.9) (12.6) (20.6) (44.6) (96.7)

Payments to acquire intangible assets - - - - (12.4)

Net cash flows used in investing

activities

(8.7) (13.5) (28.0) (61.0) (99.3)

Cash flows from financing activities

Net receipt from bank loans - - - 7.9 -

Proceeds from the issue of ordinary shares - - 39.0 - -

Repayment of bond loans - - - - (0.8)

Repayment of finance lease - - - - (7.7)

Repayment of other interest bearing debt (2.2) (2.3) (6.9) (14.4) (15.1)

Interest paid (3.9) (4.3) (18.6) (24.4) (41.6)

Financial restructuring fees paid - - - (6.2) -

Other finance costs paid (0.4) (0.4) (0.9) (1.0) (6.4)

Decrease/(Increase) in restricted cash (1.1) - (7.1) 13.8 (6.3)

Net cash flow for currency swaps (1.4) (1.6) 1.8 (3.9) (0.5)

Interest received 0.1 - 0.2 0.1 0.8

Net cash flows from financing activities (8.9) (8.5) 6.3 (28.2) (77.6)

Effect of foreign currency revaluation on cash 0.1 1.2 (0.3) 0.9 (2.1)

Net increase in cash and cash

equivalents

1.0 (23.5) 12.1 (40.2) (11.5)

Cash and cash equivalents at the beginning

of the period

24.9 37.2 13.7 54.0 65.5

Cash and cash equivalents at the end of

the period

25.8 13.7 25.8 13.7 54.0

11.2.4 Consolidated statement of changes in equity

For the twelve months ended 31 December 2017 – Unaudited

Number of

Shares

Issued Share

capital

Share

Premium

Other

Reserves

Retained

Earnings/

(Loss)

Total Equity (In thousands of USD except for number

of shares)


Total comprehensive income/(loss) for the

period

- - - (172,453) (172,453)


Other movements* (5,988 5,988 -


08 March 2017 at NOK 0.33 per share 1,000,000,000 10,000 28,853 - - 38,853

07 April 2017 at NOK 0.33 per share 3,912,439 39 111 - - 150

Transaction costs on issue of shares - (1,173) - - (1,173)


New share issued 4 - - - - -

10:1 consolidation 16 May 2017 (1,380,946,851) - - - - -

Balance as at 31 December 2017 153,438,539 15,344 614,192, 24,411 (609,228) 44,719

* Other movements represent the fair value of employee stock options unexercised and expired during the period.


92

Number of

Shares

Issued

Share capital

Share

Premium

Other

Reserves

Retained

Earnings/ (Loss)

Total Equity

(In thousands of USD except for number of shares)


Total comprehensive income/(loss) for the period - - - 20,274 20,274


Other movements - - (3,272) 3,272 -


Class B shares issued to $95m bondholders

February 2016 at USD 0.0013 per share 265,384,592 345 26,044 - - 26,389

Class B shares issued to NOK 350m bondholders

February 2016 at USD 0.0013 per share 118,260,837 154 11,606 - - 11,759

Class B shares issued to $125m bondholders February 2016 at USD 0.0013 per share 79,846,150 104 7,836 - - 7,940

Merger of share classes (on 13 April 2016)

Repurchase of Class B shares at USD 0.0013 per

share

(463,491,579) (603) - - - (603)

New ordinary shares issued at USD 0.20 per share 463,491,579 92,698 (92,096) - - 603

Reduction in nominal value

15 August 2016, from USD 0.20 to USD 0.01 per

share

(100.790) 100,790



Number of

Shares

Issued

Share

capital

Share

Premium

Other

Reserves

Retained

Earnings/

(Loss)

Total Equity

(In thousands of USD except for number of shares)


Total comprehensive income/(loss) for the period - - - (374,105) (374,105)

Employee share options - - 505 - 505

Other movements* (1,098) 1,098 -


On 22 November 2015 (at 10:1 from USD 0.02 to USD 0.20 per share)

(602,832,311) - - - - -


Summary of key financials

In order to measure the Company's performance on a historic basis, the Management has

primarily made use of the following measures: EBIT, EBITDA, Prefunding Level, Total cash, and

Net interest bearing debt. These are Alternative Performance Measures ("APMs") which are

provided to give a deeper understanding of the Company's financial performance and which are

further defined below.

The non-IFRS financial measures presented herein are not recognised measurements of

financial performance under IFRS, but are used by Management to monitor and analyse the

underlying performance of the Company's business and operations. Investors should not

consider any such measures to be an alternative to profit and loss for the period, operating

profit for the period or any other measures of performance under generally accepted accounting

principles.

93

The Company believes that the non-IFRS measures presented herein are commonly used by

investors in comparing performance between companies. Accordingly, the Company discloses

the non-IFRS financial measures presented herein to permit a more complete and

comprehensive analysis of its operating performance relative to other companies across

periods. Because companies calculate the non-IFRS financial measures presented herein

differently, the non-IFRS financial measures presented herein may not be comparable to

similarly defined terms or measures used by other companies.

EBIT is short for earnings before interest and tax. It is an important measure for Polarcus as it

provides an indication of the profitability of the operating activities. The EBIT margin presented

is defined as EBIT divided by net revenues.

EBITDA is short for earnings before interest, tax, depreciation, amortization and impairments.

The Company uses EBITDA because it is useful when evaluating operating profitability as it

excludes amortization, depreciation and impairments related to investments that occurred in

the past.

The Prefunding Level is calculated by dividing the multi-client prefunding revenues by the cash

investments in the multi-client library. The Prefunding Level is considered as an important

measure as it indicates how the Company’s financial risk is reduced on multi-client investments.

Total cash is defined as the total of restricted and unrestricted cash held by the Company at

the reporting date. The Company uses total cash as it provides an indication of the Company’s

complete cash position.

Net interest bearing debt is defined as the total book value of the Company’s non-current and

current debt, less the balance of cash and cash equivalents, as well as any restricted cash that

is restricted for the purposes of repaying debt. The Company uses net interest bearing debt as

it provides an indication of the Company’s debt position net of available cash.

A summary of the key financials is shown below:

Unaudited Unaudited Unaudited Audited Audited (In millions of USD) Q4 2017 Q4 2016 Year ended

31-Dec-17

Year ended

31-Dec-16

Year ended

31-Dec-15

Revenues 37.2 47.2 179.0 243.4 377.5

EBITDA 26.7 (29.0) 41.3 0.9 142.8

EBIT (84.5) (86.0) (137.0) (131.3) (314.3)

Net profit//(loss) for the period (91.7) (97.0) (172.5) 20.3 (374,1)

Earnings//(loss) per share (USD) (0.60) (1.83) (1.41) 0.46 (5.59)

Net cash flows from operating

activities

18.5 (2.6) 34.1 48.1 167.5

Total assets (period end) 402.9 571.9 402.9 571.9 848.2

Total liabilities (period end) 358.2 393.1 358.2 393.1 736.3

Total Equity (period end) 44.7 178.8 44.7 178.8 111.9

PP&E cash investment 1.7 1.0 7.3 16.4 15.1

Multi-client projects cash investment 6.9 12.6 20.6 44.6 97.0

Total cash (period end) 33.7 14.5 33.7 14.5 68.5

Net interest bearing debt (period

end)

260.7 270.7 260.7 270.7 588.1

Equity Ratio 11% 31% 11% 31% 13%

Segment information

The chief operating decision maker of the Group reviews Proprietary Contracts and Multi-client

as separate operating segments. As these two segments meet the aggregation criteria as

prescribed under IFRS 8 Operating segments, they are combined into one segment called

‘Marine’.

Other business activities of the Group including bareboat charter and management services are

reported under the ‘Other’ operating segment. The Group’s general administration overheads

are also included under ‘Other’.

94

Quarter ended 31 December 2017 Quarter ended 31 December 2016

Unaudited Unaudited

(In millions of USD) Marine Other Total Marine Other Total

Revenues

Proprietary contracts* 17.9 - 17.9 28.6 - 28.6

Multi-client prefunding 3.5 - 3.5 11.0 - 11.0

Multi-client late sales 2.5 - 2.5 0.2 - 0.2

Bare boat charter (Operating leases)*

- 6.8 6.8 - 3.6 3.6

Management fees* - 3.7 3.7 - 3.7 3.7

Other income (Insurance claims) - 2.8 2.8 - - -

Total Revenues 23.9 13.3 37.2 39.9 7.4 47.2

Operating costs (31.1) (6.4) (37.5) (43.5) (6.3) (49.9)

Provision for onerous contracts (26.4) - (26.4)

EBITDA 19.8 7.0 26.7 (30.0) 1.0 (29.0)

Depreciation and amortization (7.5) (3.4) (10.9) (9.3) (2.0) (11.3)

Multi-client amortization (10.5) - (10.5) (21.0) - (21.0)

Impairments (89.3) (0.5) (89.8) (24.8) - (24.8)

Operating profit (EBIT) (87.5) 3.0 (94.5) (85.1) (0.9) (86.0)

Net financial income/(expenses) - (6.9) (6.9) - (9.4) (9.3)

Profit/(loss) before tax (87.5) (3.9) (91.4) (85.1) (10.2) (95.3)

*Disclosed as ‘Contract revenue’ in the consolidated statement of comprehensive income.

Year ended 31-Dec-2017 Year ended 31-Dec-2016 Year ended 31-Dec-2015

Unaudited Audited Audited

(In thousands of USD) Marine Other Total Marine Other Total Marine Other Total

Revenues

Proprietary contracts* 108,506 - 108,506 153,821 - 153,821 215,438 - 215,438

Multi-client prefunding 21,724 - 21,724 55,313 - 55,313 83,554 - 83,554

Multi-client late sales 5,984 - 5,984 1,256 - 1,265 9,265 - 9,265

Bare boat charter

(Operating lease)* - 23,469 23,469 - 14,426 14,426 - 24,008 24,008

Management fees* - 14,950 14,950 - 16,848 16,848 - 31,312 31,312

Other income - 4,351 4,351 - 1,752 1,752 - 13,895 13,895

Total Revenues 136,213 42,770 178,983 210,390 33,026 243,416 308,257 69,214 377,471

Operating costs (138,614) (26,102) (164,716) (166,467) (29,741) (196,209) (189,726) (36,096) (225,822)

Provision for onerous

contracts 27,027 - 27,027 (46,356) - (46,356) (8,803) - (8,803)

EBITDA 24,626 16,667 41,293 (2,433) 3,284 851 109,727 33,118 142,845

Depreciation and

amortization (33,498) (11,520) (45,018) (40,518) (8,154) (48,672) (64,139) (8,275) (72,414)

Multi-client amortization (42,108) - (42,108) (56,807) - (56,807) (69,274) - (69,274)

Impairments (90,658) (520) (91,178) (26,658) - (26,658) (315,430) - (315,430)

Operating profit (EBIT)

(141,638) 4,627 (137,011) (126,416) (4,870) (131,286) (339,116) 24,843 (314,273)

Net financial expense - (35,311) (35,311) - 154,803 154,803 - (58,738) (58,738)

Profit/(loss) before tax

(141,638) (30,684) (172,322) (126,416) 149,933 23,517 (339,116) (33,895) (373,011)

95

Year ended 31-Dec-2017 Year ended 31-Dec-2016 Year ended 31-Dec-2015

Unaudited Audited Audited

(In thousands of USD) Marine Other Total Marine Other Total Marine Other Total

Total assets 241,912 160,976 402,888 492,755 79,123 571,878 746,409 100,527 846,936

Investments in joint

ventures

- - - - - - 1,220 - 1,220

Cash investments in long-

term assets*

27,972 - 27,972 61,042 - 61,042 124,533 - 124,533

* Includes investments in property, plant and equipment, Multi-client library and intangible assets.

Vessel utilization

Q4 2017

Q4 2016

31-Dec-16

31-Dec-15

Utilization 68% 72% 83% 84%

By category:

Exclusive Seismic Contract* 58% 55% 71% 60%

Multi-Client Seismic Contract 10% 17% 12% 24%

Transit 12% 16% 12% 10%

Yard Stay - 3% 2% 1%

Standby 20% 9% 3% 5%

Total 100% 100% 100% 100%

* - Includes the vessel V. Tikhonov which is on Bare Boat charter.

POLARCUS NADIA excluded from vessel utilization subsequent to stacking on 01 April 2015

Liquidity and capital resources

11.6.1 Sources of liquidity

The Company's primary sources of liquidity are revenue from contract seismic services,

bareboat charters and to a lesser extent revenue from the Group's multi-client projects. In

addition, the Company has raised equity.

Based on the Company's current estimates, the cash and capital balances as of 31 December

2017, the Restructuring, and the funds raised through the Private Placement are sufficient both

to meet the Company's working capital and capital expenditure requirements.

The Company's historical sources of liquidity have been revenue from contract seismic services,

bareboat charters and revenue from the Group's multi-client projects. The Company's primary

source of funding in the future is expected to be revenue from contract seismic services and

bareboat charters as well as revenue from the Group's multi-client projects.

11.6.2 Cash flow statement - 2015

Net cash flow from operating activities was USD 167.5 million in 2015 compared to USD 157.8

million in 2014. The main reason for the increase was due to a higher positive change in working

capital balances, which increased by USD 7.9 million to USD 25.7 million in 2015 from USD

17.9 million in 2014.

Net cash flow used in investing activities was USD 99.3 million in 2015 compared to USD 113.3

million in 2014. Payments for property, plant and equipment totalled USD 15.1 million in 2015

compared to USD 52.7 million in 2014. The main reason for the decrease was due to payments

for a conversion of the propulsion system and upgrade of the streamer towing capability of

POLARCUS NAILA in 2014. Payments for investments in the Multi-Client library increased to

USD 97.0 million in 2015 compared to USD 46.9 million in 2014, due to the increased utilization

96

(to 24% from 12%) in Multi-Client projects, driven largely by the Capreolus project, a large

and highly prefunded Multi-Client project offshore Australia. Net cash proceeds of USD 25.2

million were received from TGS in 2015 following the partial divestment of the Company’s Multi-

Client library.

Net cash flow from financing activities was an outflow of USD 77.6 million in 2015 compared to

USD 32.2 million in 2014. The main reason for the increase was that in 2014 there was an

equity issue USD 34.9 million, thus reducing the net outflow from financing activities, and the

change in restricted cash balance was negative in 2015 compared to positive in 2014. Interest

paid was USD 41.6 million in 2015 compared to USD 51.4 million in 2014. Restricted cash

deposits increased by USD 6.3 million to USD 14.5 million in 2015 compared to a decrease of

USD 12.2 million to USD 8.2 million in 2014.

Unrestricted cash held at 31 December 2015 was USD 54.0 million compared to USD 65.5

million at 31 December 2014. Total cash held at 31 December 2015 was USD 68.5 million

compared to USD 73.7 million at 31 December 2014. In addition to the cash balances held, the

Company had an undrawn working capital facility of USD 25 million at 31 December 2015.

11.6.3 Cash flow statement - 2016

Net cash flow from operating activities was USD 48.1 million in 2016 compared to USD 167.5

million in 2015. The decrease is mainly driven by the lower revenue of USD 134.1 million

recorded in 2016 compared to the prior year.

Net cash flow used in investing activities was USD 61.0 million in 2016 compared to USD 99.3

million in 2015. Payments for property, plant and equipment totalled USD 16.4 million in 2016

compared to USD 15.1 million in 2015. Payments for investments in the Multi-Client library

decreased to USD 44.7 million in 2016 compared to USD 97.0 million in 2015, mainly due to a

reduction in the vessel allocation to Multi-Client projects from 24% the prior year to 12% in

2016.

Net cash flow from financing activities was an outflow of USD 28.2 million in 2016 compared to

USD 77.6 million in 2015. Interest paid was USD 24.4 million in 2016 compared to USD 41.6

million in 2015, the reduction due to lower interest bearing debt following the 2016

Restructuring. Net proceeds of USD 7.9 million were received in the year following an USD 8.0

million bank loan to finance purchase of in-sea seismic equipment. Restricted cash deposits

decreased by USD 13.8 million in 2016 to negative USD 6.3 million in 2015.

During the year, the Company extinguished 50% of the Swap at fair value by making a payment

of USD 6.7 million from restricted cash which was deposited as collateral for the Swap and USD

1.6 million from the cash collateral the Company had previously deposited with the issuer of

the Swap. The impact of the buyback on the Company's free cash balance was nil, and the

reduction in the Swap reduces the Company's exposure to financial risk arising from possible

future changes in the market value of the Swap. The Swap was entered into in July 2014 in

relation to the NOK 350 million bond. The reduction aligns the Swap with the underlying liability

after the 2016 Restructuring of the NOK 350 million bond in Q1 2016.

Unrestricted cash held at 31 December 2016 was USD 13.7 million compared to USD 54.0

million at 31 December 2015. In addition to the cash balance held, the Company has an

undrawn working capital facility of USD 25 million at 31 December 2016.

11.6.4 Cash flow from 1 January 2017 to 31 December 2017

Net cash flow from operating activities decreased to USD 34.1 million (compared with 12

months to 31 December 2016 – USD 48.1 million), due to decreased operating profits and

negative working capital movement between periods. The net working capital movement in the

period increased to USD 29.3 million (compared with 12 months to 31 December 2016 – USD

22.5 million).

Net cash flow used in investing activities decreased to USD 28.0 million (compared with 12

months to 31 December 2016 – USD 61.0 million), driven by reduced payments for property,

97

plant and equipment and reduced investment in multi-client as a result of reduced vessel

allocation to multi-client projects.

Net cash flow from financing activities increased by USD 34.5 million to an inflow of USD 6.3

million (compared with 12 months to 31 December 2016 – outflow USD 28.2 million), with the

increase mainly due to net proceeds of USD 37.8 million from the issue of share capital in 2017.

Total cash held at the period end was USD 33.7 million (compared with 31 December 2016 –

USD 14.5 million), including restricted cash of USD 7.8 million (compared with 31 December

2016 – USD 0.7 million). The Company’s working capital facility of USD 25.0 million was

undrawn at the period end.

11.6.5 Cash flow from 1 October 2017 to 31 December 2017

Net cash flow from operating activities increased to USD 18.5 million (Q4 2016 – USD 2.6

million), mainly due to improved working capital movement between quarters. The net working

capital movement in the quarter increased to positive USD 24.1 million (Q4 2016 – positive

USD 3.6 million). The positive working capital movement in the quarter is mainly due to

customer payments received from revenue generated in the preceding quarter.

Net cash flow used in investing activities increased to USD 8.7 million (Q4 2016 – USD 13.5

million), driven by decreased investment in multi-client assets due to less vessel allocation to

multi-client projects in the quarter.

Net cash flow from financing activities was an outflow of USD 8.9 million (Q4 2016 – USD 8.5

million). Net cash movement relating to currency swaps was an outflow of USD 1.4 million (Q4

2016 – outflow USD 1.6 million). A payment was made to restricted cash of USD 1.1 million in

the quarter ahead of an amortization payment on the secured convertible bond falling due in

Q1 2018. Repayment of other interest bearing debt was USD 2.2 million (Q4 2016 – USD 2.3

million) as the Company paid off in full the remaining outstanding amount of a streamer

package loan taken out in 2016.

Total cash held at the quarter end was USD 33.7 million (Q4 2016 – USD 14.5 million), including

restricted cash of USD 7.8 million (Q4 2017 – USD 0.7 million). The Company’s working capital

facility of USD 25.0 million was undrawn at the quarter end.

11.6.6 Capital resources

As stated in Section 2 "Risk Factors", the Group operates in a cyclical business, with revenues

varying in relation to spending on seismic surveys by oil companies. The variations in operating

revenues described in Sections 11.6.2 to 11.6.4 above, are within the normal range of

variations as a result of the cyclical nature of the business.

Working capital statement

At the date of this Prospectus, the Group has sufficient working capital for its present

requirements for the next 12 months.

Impairment charges recognized in the three months ending 31 December

2017

Non-cash impairment charges totalling USD 89.8 million were recognized in the three months

ending 31 December 2017, of which USD 77.0 million was in relation to the Company’s fleet of

vessels operating in the spot market and associated seismic equipment. The impairment of

seismic vessels and equipment is a result of the prolonged weak seismic market that has

resulted in an oversupply of vessels and protracted pressure on day rates. As a result of

uncertainty regarding the timing of future late sales, an impairment charge of USD 12.0 million

was recognized on the Company’s multi-client project library.

98

Significant changes in financial and trading position in the Group after 31

December 2017

Other than the Restructuring, the Private Placement, the Bond Conversion Offer, and the fully

underwritten Repair Offering as described in section 5 "The Restructuring", there has been no

significant changes in financial and trading position after 31 December 2017.

Trend information

There are no recent trends in production, sales and inventory, and costs and selling prices since

31 December 2017 that are reasonably likely to have a material effect on the issuer's prospects

for the current financial year.

Investments

11.11.1 Principal investments up to the date of the Prospectus

Three

months ended Q4

2017

Three

months ended Q4

2016

Twelve

months ended Q4

2017

2016 2015

(In USD thousands) Unaudited Unaudited Unaudited Audited Audited

Payments for property, plant and equipment (1,748) (965) (7,340) (16,387) (15,125)

Payments for multi-client project library (6,928) (12,580) (20,631) (44,649) (96,969)

Payments to acquire intangible assets - - - (7) (12,439)

Total investments (8,676) (13,545) (27,972) (61,042) (124,533)

Proceeds from assets sale - - - - 25,197

Polarcus invested a total of USD 124.5 million in 2015, USD 61.0 million in 2016, and USD 28

million in the 12 months ended 31 December 2017.

The Company does not report investments by geographical area. As further described in Section

10.3 "Business—Overview of business activities", the Company's operations are characterised

by short-term contracts from one to six months, with potential for seasonal and multi-year

contract terms in some cases, and projects are typically awarded one to four months prior to

commencement. Hence, the Company's vessels' geographic position will change relatively

often.

Investments in property, plant and equipment

In 2015, the investments in Property, plant and equipment amounted to USD 15.1 comprising

USD 12.0 million for propulsion conversion and upgrade of streamer towing capability of

POLARCUS NADIA and USD 3.1 million of capital expenditure related to maintenance of seismic

and maritime equipment.

In 2016, the "Payments for property, plant and equipment" totalled USD 16.4 million which

included mainly a full in-sea seismic equipment set, a five year classification survey for

POLARCUS ALIMA and an intermediate classification survey for POLARCUS NAILA.

In the twelve months to 31 December 2017, the "Payments for property, plant and equipment"

totalled USD 7.3 million, of which USD 4.1 million related to 5-year mandatory vessel

classification surveys for two vessels and the remainder related to in-sea equipment.

On 26 February 2018, the Company completed the purchase of POLARCUS NADIA and

POLARCUS NAILA from GSH for an aggregate purchase sum of USD 75 million, as further

described in section 5.7 "The Restructuring – Sale and lease termination".

99

Investments in Multi-Client projects

In 2015, Polarcus invested USD 97 million in Multi-Client projects. Of this investment USD 13

million was invested in five projects which were later in the year divested comprising USD 9

million in two projects offshore West Africa, USD 2 million in two projects offshore Ireland and

USD 2 million in a projects offshore UK. Polarcus also invested USD 77 million in two projects

offshore Western Australia and USD 7 million in one project offshore West Africa which were

not divested.

In 2016, Polarcus invested USD 45 million in multi-client projects comprising USD 29 million in

two projects offshore Brazil, USD 15 million in two projects offshore Australia, and USD 1 million

in a project offshore Gambia.

In the twelve months to 31 December 2017, Polarcus invested USD 20.6 million in multi-client

project.

Investments in intangible assets

Polarcus invested a total of USD 12.4 million in intangible assets in the two-year period from

2015 to 2016, all of which was invested in 2015. No investment in intangible assets was made

in the twelve months to 31 December 2017.

Sale of assets

In 2015, Polarcus divested a portion of its multi-client library by selling its North West Europe

and West Africa multi-client library which generated cash flow of USD 25.2 million.

11.11.2 Investments in progress

There are no material investments in progress as of date of Prospectus.

11.11.3 Future commitments and investments as of the date of this Prospectus

At the date of this Prospectus, the Group has not made any firm commitments for future

investments apart from investment in property, plant and equipment and Multi-client

investments in its ordinary course of business.

The Group expects to make additional investment in property, plant and equipment of

approximately USD 10 million in 2018, mainly related to investments in seismic equipment.

The Group expects to make additional Multi-Client investments of approximately USD 20 million

in 2018 with an aggregated prefunding level of approximately 80%. The investment is expected

to be mainly financed from the Company’s operating cash flows.

Summary of financing

In recent years, the Group has been adversely impacted by the severe industry downturn,

where the significant decline in the price of oil has caused depressed levels of seismic spending

by oil companies, and a knock on reduction in demand for the Group's services and lower vessel

rates. The industry downturn has led to several seismic vessels being stacked, including

Polarcus Nadia. The market conditions continued to be challenging through 2017 and,

consistent with its peers, the Group had considerable levels of debt (both to lease providers,

bank lenders and bondholders). While the cost management program that was implemented in

Q4 2014 had ensured that the operations were cash positive before debt service, the capital

structure of the Group at the end of 2017 was unsustainable. On this background, the Group

carried out the restructuring of its financial debt in Q1 2018 (the "Financial Debt

Restructuring").

As of the date of this Prospectus, the Company has the following debt facilities:

100

Debt Security Original Size Outstanding (principal)

Maturity Interest

NOK Unsecured Bond Issue

NOK Bond Unsecured NOK 350m NOK 54m Jan-25 5.0%¹

USD Unsecured Bond Issue

USD Bond Unsecured USD 95m USD 13m3 Jan-25 5.0%¹

Convertible Bond Issue

Tranche A Vyacheslav Tikhonov

USD 71.330m2 USD 69.6m Jul-22 5.60% or 2.90%

plus 1.125-3.625%

Tranche B Vyacheslav Tikhonov

USD 30.5m2 USD 3.6m Jan-25 5.0%¹

USD 410 million Fleet Bank Facility

Loan 1 Asima USD 80m USD 42.6m Aug-22

Tranche A: 3.93%

Tranche B: USD LIBOR + 1.05% plus margin grid

Loan 2 Alima USD 55m USD 35.8m Mar-23 USD LIBOR +

0.86% + margin grid

Loan 3 tranche a Amani USD 86m USD 62.9m Mar-24 5.60%

Loan 3 tranche b Amani USD 28m USD 21.0m Mar-24 2.85% + margin

grid

Loan 4 Adira USD 114m USD 86.1m Jun-24 2.85% + margin

grid

New Fleet Facility

Loan 1 Nadia USD 29m USD29m Dec-24

Varying for each tranche, see

section 11.12.6 "New Fleet

Facility"

Loan 2 Naila USD 46m USD46m Dec-24

Varying for each tranche, see

section 11.12.6 "New Fleet

Facility"

Other facilities

Swap Facility

See section 11.12.7 “Other Facilities”

USD 7.7m USD 7.7m Jun-21 LIBOR + 4.00



USD 40m USD 0 m Jun-22 LIBOR + 4.00

101

Guarantee Facility


USD 20m (uncommitted)

USD 1.6m

¹ Interest is paid as payment in kind

2 Original size of USD 125m in total for all tranches, reduced after amortizations and buy backs

3 Polarcus holds own bonds with nominal value USD 3.3 million

The Company expects to be able to generate enough cash from its operations to meet its

financial liabilities as they fall due. The Private Placement and the proceeds from the Repair

Offering together with the debt rescheduling and interest relief contained in the Restructuring

are expected to provide the Company with sufficient liquidity to operate in the event that

market pricing and vessel utilisation remain at current levels into 2021, after which time the

Company is reliant on an improvement in market conditions. In the event that pricing falls

further or, utilisation cannot be maintained, the Company may have to secure additional

financing.

11.12.1 Cash Sweep mechanism

An element in the debt service of the Group for the duration between 31 December 2017 and

1 January 2022 (the "Runway Period") is the cash sweep mechanism (the "Cash Sweep").

The participants in the Cash Sweep are the Bank Lenders, the New Fleet Facility Lenders and

the holders of Secured Bonds.

A Secured Loan qualifies for participation in the Cash Sweep based on which vessel it has

financed. The conditions for participation differ between the loans/vessels. Below is a table

showing which Secured Loans will have the opportunity to participate in the Cash Sweep and

on which conditions and to which vessel such loan is connected for the purposes of the Cash

Sweep.

The amount swept (based on the excess cash flow) is calculated on the basis of an audited

financial statements for the Group for each financial year and the excess cash flow corresponds

to the annual net increase in cash and cash equivalents, subject to certain exceptions as set

out in the financing agreements, as further described in section 5.5 "The Restructuring – Cash

Sweep". An amount corresponding to 70% of excess cash flow will be swept and will be

distributed to the relevant lenders in respect of the eligible loans pro rata based on the loan

amounts outstanding on closing of the Restructuring.

Loan Vessel Cash Sweep participation

Fleet Bank Facility Loan 1 Asima Always when not on a third party bare boat charter

Fleet Bank Facility Loan 2 Alima Always when not on a third party bare boat charter

Fleet Bank Facility Loan 3 Tranche A

Amani/Ivan Gubkin Always when not on a third party bare boat charter or being

stacked

Fleet Bank Facility Loan 3 Tranche B

Amani/Ivan Gubkin Always when not on a third party bare boat charter or being

stacked

Fleet Bank Facility Loan 4 Adira Always when not on a third party bare boat charter

Convertible Bond Loan Tranche A Vyacheslav Tikhonov Always when not on a third party bare boat charter or being

stacked

102

New Fleet Facility Loan A Nadia Always when not on a third party bare boat charter or being

stacked

New Fleet Facility Loan B Naila Always when not on a third party bare boat charter

If a loan/vessel only qualifies for participation in the Cash Sweep for parts of the financial year,

its participation in the Cash Sweep for that year will be reduced pro rata for the part of the year

during which the loan/vessel qualified for participation. Amounts paid under the Cash Sweep

will be considered as amortisations under the respective loan. Under the Fleet Bank Facility and

the New Fleet Facility, the payments will reduce the amortisation payment on the final maturity

date of each loan and for tranche a under the convertible bonds, the payments will reduce the

amortisation payment on the maturity date and, if the amount exceeds this payment, reduce

successive preceding instalments.

11.12.2 USD 410 million Fleet Bank Facility

The loan agreement is made with Eksportfinans ASA, Eksportkreditt AS and GIEK as lenders

and originally governed loans 1-4 which was granted to each of Polarcus Asima AS, Polarcus

Alima AS, Polarcus Amani AS and Polarcus Adira AS for financing the acquisition of each of the

vessels Polarcus Asima, Polarcus Alima, Ivan Gubkin (fka. Polarcus Amani) and Polarcus Adira.

The loans were originally guaranteed so that 25% of the exposure was guaranteed by DNB

Bank ASA (12.5%) and DVB Bank SE (12.5%) and the remaining 75% was guaranteed by

GIEK.

The interest rates for the different loans/tranches are summarized below.

Bank debt Interest rate p.a. Guarantee commission

Loan 1 Tranche A 3.93% (fixed) As per margin grid

Loan 1 Tranche B USD LIBOR + 1.05% As per margin grid

Loan 2 USD LIBOR + 0.86% As per margin grid

Loan 3 Tranche A 2.85% (fixed) 2.75% or as per margin grid

Loan 3 Tranche B 2.85% (fixed) As per margin grid

Loan 4 2.85% (fixed) As per margin grid

The guarantee premium to be paid in respect of the third party guarantees referred to above

for each of the loans are based on the consolidated adjusted EBITDA of the Group as set out in

the margin grid below:

Margin Grid

Adjusted EBITDA Cash Payment in kind Total

<35 million 0.75% 0.375% 1.125%

35-50 million 1.00% 0.375% 1.375%

50-75 million 1.75% 0.375% 2.125%

75-90 million 2.75% 0.375% 3.125%

>90 million 3.25% 0.375% 3.625%

103

The Fleet Bank Facility has a maturity profile with final maturity ranging from August 2022 to

June 2024, as shown in the table included in section 11.12 "Selected financial information –

Summary of financing". According to the pre-Financial Debt Restructuring terms, loans 1-4

should start to amortise (by semi-annual instalments) in 2018. For the duration of the Runway

Period, no amortisations will take place, except that the loans will participate in the Cash Sweep

(when eligible) and that 32% of any revenues generated by third party charters for any of the

vessels Polarcus Asima, Polarcus Alima, Ivan Gubkin and Polarcus Adira shall be used for

repaying the loans.

For periods when the vessels are not on a third party charter, but operating in the spot market,

the relevant loan financing the vessel will participate in the Cash Sweep.

After the expiry of the Runway Period, instalments under the Fleet Bank Facility will be paid

semi-annually in accordance with the pre-Financial Debt Restructuring payment schedule,

however so that any postponed amortisations under the loans will be added to the payment on

the final maturity date of that loan.

The Fleet Bank Facility has a security package as follows:

First priority cross-collateralised mortgages over each of the four vessels Polarcus Asima,

Polarcus Alima, Polarcus Amani ("Ivan Gubkin") and Polarcus Adira.

First priority assignment of earnings related to the four vessels on a floating charge basis;

First priority assignment of earnings from Polarcus Shipholding AS on a floating charge

basis;

First priority assignment of all vessel insurances for the four vessels;

First priority pledge of earnings accounts from the four borrowers and Polarcus

Shipholding AS;

First priority pledge over retention accounts of the borrowers and Polarcus Shipholding

AS;

First priority share pledge in the shares of the four vessel owning companies;

First priority share pledge in the shares of Polarcus Shipholding AS;

First priority share pledge in the shares of Polarcus DMCC (the technical manager);

First priority assignment of any charter party/employment contract with duration of more

than 12 months related to each of the four vessels;

First priority assignment of certain intercompany loans;

First priority floating charge over machinery and plant of Polarcus Shipholding AS, the

Norwegian incorporated borrowers and for any borrowers in other jurisdictions where

legally and practically possible;

Second priority floating charge over machinery and plant of Polarcus Naila AS;

Unconditional and irrevocable on-demand guarantee from Polarcus Limited and parents

of the vessel owning companies.

The Fleet Bank Facility includes covenants applicable to Polarcus Limited and its subsidiaries.

Financial covenants include a minimum liquidity reserve of USD 10 million and positive working

capital, as well as a capex covenant. The Capex covenant will only apply during the Runway

Period and will restrict the capex of the Group for property, plant and equipment to USD 80

million, but allowing for further capex including if funded by equity or excess cash flow.

The Fleet Bank Facility otherwise includes covenant and default provisions normal for ship

financing, including vessel insurance and maintenance provisions, distribution restrictions,

restrictions related to asset disposal, restructuring, change of business, negative pledge and

restrictions related to new debt.

104

The lenders have the right to declare the tranches or commitments thereof, including accrued

interest and expenses, to be in default and due for immediate payment, inter alia, in a situation

where (i) any of the vessel owners or any guarantor default on its obligations of the Fleet Bank

Facility, (ii) any other financial obligation or commitment of a vessel owner or a guarantor

exceeding USD 5 million is cancelled, declared due and payable prior to maturity or is not paid

when due as a result of an event of default, (iii) in case of insolvency or other standard event

of default situations as further stipulated in the loan agreement.

The Fleet Bank Facility contains restrictions on distribution of dividends, stating that the

Company shall not distribute any dividends or make any other distributions in whatever form

to its shareholder(s) or any other person(s). The same restrictions apply under the working

capital facility.

The loan agreement is governed by Norwegian law with Oslo District Court as dispute venue.

11.12.3 Convertible Bond Issue

The Company issued convertible bonds in an aggregate amount of USD 125 million in April

2011 to finance the re-acquisition and completion of the vessel Polarcus Selma (later bareboat

chartered under name "Vyacheslav Tikhonov"). Nordic Trustee AS acts as bond trustee for the

bond issue. The convertible bonds are, inter alia, secured by a first priority vessel mortgage

over Vyacheslav Tikhonov, related equipment, certain insurances, inter-company loans, pledge

of shares in the vessel owner and upstream guarantee from the Company. Nordic Trustee AS

acts as bond trustee for the convertible bond issue.

The convertible bonds were split into three tranches; CB Tranche A (defined as the Secured

Bonds), CB Tranche B and CB Tranche C. The holders of bonds under CB Tranche B and/or CB

Tranche C bonds (which were merged into one tranche on 14 March 2018, see below) have

contractually subordinated their claims to those of the holders of bonds under the Secured

Bonds.

The terms for the Secured Bonds and the CB Tranche B and CB Tranche C (such two merged

tranches, the "Subordinated Bonds") bonds are different with respect to interest,

amortisation and maturity. As a part of the Restructuring, the total outstanding amount of the

Subordinated Bonds was reduced and converted into equity as further described in section 5.6

"The Restructuring – The Unsecured Bonds" and section 7 "The listing of the Bond Conversion

Shares" above. On 14 March 2018, the Company merged the Subordinated Bonds such that

holders of CB Tranche C Bonds received one CB Tranche B Bond for each CB Tranche C Bond

they held as at 14 March 2018 and the CB Tranche C was eliminated.

The Secured Bonds have a final maturity date on 1 July 2022. The Secured Bonds receive cash

interest at a fixed rate of 5.6% p.a. for as long as Vyacheslav Tikhonov is on a long term third

party bareboat charter. For any period that Vyacheslav Tikhonov is not on such a third party

charter, the Secured Bonds receive cash interest at a base rate of 2.90% p.a. plus cash and

PIK interest in accordance with the table below (based on the Company's adjusted EBITDA for

each quarter).

Adjusted EBITDA Cash PIK Total

<35 million 0.75% 0.375% 1.125%

35-50 million 1.00% 0.375% 1.375%

50-75 million 1.75% 0.375% 2.125%

75-90 million 2.75% 0.375% 3.125%

>90 million 3.25% 0.375% 3.625%

For the duration of the Runway Period, the Secured Bonds will receive fixed amortisation

payments of USD 4.6 million per annum for the period that the vessel "Vyacheslav Tikhonov"

105

remains on a long term bareboat charter. For periods that the vessel is not on a bareboat

charter, holders of Secured Bonds will not receive fixed amortisation but will participate in the

Cash Sweep described above. Postponed amortisation payments will be added to the payment

due on the maturity date. After the expiry of the Runway Period, the Secured Bonds will be

repaid by quarterly instalments of USD 1.75 million.

The merged Subordinated Bonds mature in full on 1 January 2025. The merged Subordinated

Bonds receive PIK interest at 5% p.a.

The bonds are convertible into Shares of Polarcus, at a conversion price of USD 125.871 per

Share as per the date of this Prospectus (and as adjusted by the bond agreement for the

Secured Bonds). The conversion option may be exercised at any time from the issuance date

up until the earlier of 10 days before the maturity date of the bonds or 10 days before the date

of redemption of the bonds. The conversion price is subject to standard adjustment provisions.

Upon a delisting of Polarcus' Shares or a change of control event in Polarcus, (if one shareholder

or several shareholders acting in concert have the right to cast 50% of the votes at the General

Meeting of Polarcus) each bondholder may require Polarcus to redeem bonds at par plus

accrued interest or convert its bonds at a change of control conversion price calculated in

accordance with a defined formula.

Polarcus may, on or after the date falling approximately three years after the issuance, call the

remaining part of the Secured Bonds at its par value plus accrued interest, provided that the

parity value (the underlying value of the bond) on each of at least twenty dealing days within

a period of thirty consecutive dealing days have exceeded USD 1.3 or provided that 90% or

more of the Secured Bonds issued on the issue date have been redeemed, converted into

Ordinary Shares or purchased and cancelled.

Polarcus may at any time redeem the merged Subordinated Bonds in whole or in part at 100%

of par value plus accrued interest on the redeemed amount, but any partial redemption of

Subordinated Bonds must be carried out pro rata with the B bonds and the NOK Unsecured

Bonds and the USD Unsecured Bonds (in accordance with the procedures of the securties

depository).

If bondholders exercise their conversion right, Polarcus may for each bond that is converted

exercise a cash settlement option to redeem the bond by settling the principal amount of the

bond (USD 1.00) in cash and the remaining value in Shares.

The loan includes normal covenants and default provisions according to market practice.

The loan agreement is governed by Norwegian law with Oslo District Court as the legal venue.

11.12.4 USD Senior Unsecured Bond Issue

On 7 June 2013, the Company issued a USD 95 million unsecured bond. Nordic Trustee AS acts

as bond trustee for the bond issue. As a part of the Restructuring, the total outstanding amount

of bonds was reduced and converted, in part, into equity as further described in section 5.6

"The Restructuring – The Unsecured Bonds" and section 7 "The listing of the Bond Conversion

Shares" above.

On 14 March 2018, the Company merged Tranche A and Tranche B of the Bond Issue such that

holders of Tranche B Bonds received one Tranche A Bond for each Tranche B Bond they held

as at 14 March 2018 and the Tranche B was then eliminated.

The bonds accrue an interest of 5% p.a. which is payable in kind on a semi-annual basis. The

bonds mature in full on 1 January 2025.

The bond agreement includes normal default provisions and light covenants, after a number of

restrictive covenants and other terms (including all financial covenants) were removed in the

Restructuring.

106

Polarcus may at any time redeem the bonds at 100% of par plus accrued interest.


11.12.5 NOK Senior Unsecured Bond Issue

On 8 July 2014, the Company issued senior unsecured bonds totalling NOK 350 million. Nordic

Trustee AS acts as bond trustee for the bond issue. As a part of the Restructuring, the total

outstanding amount of bonds was reduced and converted into equity as further described in

section 5.6 "The Restructuring – The Unsecured Bonds" and section 7 "The listing of the Bond

Conversion Shares" above.

On 14 March 2018, the Company merged Tranche A and Tranche B of the Bond Issue such that

holders of Tranche B Bonds received one Tranche A Bond for each Tranche B Bond they held

as at 14 March 2018 and the Tranche B was then eliminated.

The bonds accrue an interest of 5% p.a. which is payable in kind on a semi-annual basis. The

bonds mature in full on 1 January 2025.

The bond agreement includes normal default provisions and light covenants, after a number of

restrictive covenants and other terms (including all financial covenants) were removed in the

Restructuring.

Polarcus may at any time redeem the bonds at 100% of par plus accrued interest.


11.12.6 New Fleet Facility

As part of the Restructuring, the sale leaseback arrangements for the vessels Polarcus Nadia

and Polarcus Naila were terminated and the vessels were purchased by Polarcus Nadia AS and

Polarcus Naila AS respectively. The acquisition was financed by a new facility to the Group (the

"New Fleet Facility") in the amount of USD 74,944,877, divided into two loans, loan 1 in an

amount of USD 29,144,539 and loan 2 in an amount of USD 45,800,338.

The New Fleet Facility has no fixed amortisations during the Runway Period, unless any of the

vessels are on a long term third party bareboat charter, in which case, the relevant loan shall

amortise by an amount corresponding to 32% of such charter revenue. Whenever a vessel is

not on such a third party charter, the relevant loan will participate in the Cash Sweep, to the

extent eligible (i.e. when operating in the spot market). After the Runway Period, the New Fleet

Facility shall be repaid by amortisations of USD 6,250,000 p.a. with a final maturity date on 31

December 2024.

Loan 1 is divided into four tranches – tranche a, tranche b, tranche c and wrap around tranche

1.

Loan 2 is divided into five tranches – tranche a, tranche b, tranche c, tranche d and wrap

around tranche 2.

Tranche a of each loan will receive a fixed interest rate of 3.93% p.a.

Tranche b of each loan will receive interest of 2% p.a. for 2018, 3% p.a. for 2019 and then

floating interest rate, in each case plus a margin in cash and PIK based on the margin grid,

however so that the loans receive an additional 0.81% p.a. margin from 21 December 2021.

Tranche c of each loan will receive floating interest plus a margin in cash and PIK based on the

margin grid however so that the cash element of the margin is reduced by 0.59 percentage

points for the period from and including 1 March 2018 to and including 31 December 2018.

Tranche d of loan 2 will receive floating interest rate plus a margin of 0.81% p.a.

107

Wrap around tranche 1 will receive an interest rate of 3.93% p.a. plus margin in cash and PIK

as per the margin table for the period up until and including 20 December 2021 and from 21

December 2021, floating interest rate plus margin in cash and PIK as per the margin table plus

0.81% p.a.

Wrap around tranche 2 will receive an interest rate of 3.93% p.a. plus margin in cash and PIK

as per the margin table for the period up until and including 24 February 2022 and from 25

February 2022, floating interest rate plus margin in cash and PIK as per the margin table plus

0.81% p.a.

The margin grid for the New Fleet Facility is the same as for the Fleet Bank Facility set out

above. Guarantee premium for the third party guarantees for the New Fleet Facility will also be

calculated according to the margin table.

The terms of the New Fleet Facility mirror those of the Fleet Bank Facility in most respects.

The New Fleet Facility is secured by:

Guarantee from Polarcus;

Mortgages over each of the vessels Polarcus Nadia and Polarcus Naila;

Assignment of charter earnings;

Assignment of insurances for the vessels;

Assignment over any intra-group loans granted by any of Polarcus Nadia AS and Polarcus

Naila AS;

Assignment over certain intra-group loans to any of Polarcus Nadia AS and Polarcus Naila

AS;

Floating charges over receivables (factoring) from Polarcus Naila and Polarcus Nadia AS;

Pledges over the earnings accounts and retention accounts;

Share pledge over each of Polarcus Nadia AS and Polarcus Naila AS;

Floating charges over and machinery and plant from Polarcus Naila and Polarcus Nadia

AS;

11.12.7 Other facilities

Swap Facility

As part of the Restructuring, the Company's cross currency swap was terminated and unwound.

The termination costs amounted to USD 7.7 million and was financed in full by a new facility

from DNB Bank ASA (the "Swap Facility"). The Swap Facility receives interest at USD LIBOR

+ 4% p.a.. The new facility amortizes by USD 2 million on 30 June 2019, USD 3 million on 30

June 2020 and USD 2.7 million on 30 June 2021.

The Swap Facility, subject to certain intercreditor arrangements, shares in the security for the

Fleet Bank Facility and the securities listed below under “Working Capital Facility”.


The commitment under the Group's Working Capital Facility is USD 40 million which is made

available on the basis of the amount of receivables from customers in the Company's

consolidated accounting management reports.

The interest on drawn amounts under the facility is equal to USD LIBOR + 4.00% p.a. and

undrawn amounts of commitment receive 1.60% p.a.

The terms of the Working Capital Facility include an obligation to perform a clean down at least

every 9 months based on the principles set out in the Working Capital Facility.

108

The working capital facility share in the security for the Fleet Bank Facility, subject to certain

intercreditor arrangements, and is secured by the following securities which also secure

obligations under the Swap Facility), and obligations in respect of guarantees issued under the

Guarantee Facility described below;

second priority mortgages over the vessels Polarcus Asima, Polarcus Alima, Polarcus

Amani (Ivan Gubkin) and Polarcus Adira;

assignment of earnings and insurances in respect of such vessels;

pledge over machinery and plant by each of Polarcus Asima AS, Polarcus Alima AS,

Polarcus Amani AS and Polarcus Adira AS;

factoring pledges by each of Polarcus Asima AS, Polarcus Alima AS, Polarcus Amani AS

and Polarcus Adira AS;

share pledges over the shares in Polarcus MC Ltd, Polarcus Seismic Ltd, Polarcus Norway

AS and Polarcus Asia Pacific Ltd;

pledge by Polarcus Asia Pacific Ltd over its multi-client library;

Pledge from Polarcus over a USD bank account as security for obligations under the

working capital facility, the Swap Facility and for guarantees issued under the Guarantee

Facility;

In connection with the amendments in 2017, additional security was agreed to be

established in the form of (i) a first priority pledge over retention accounts in the amount

of USD 6 million, (ii) a first priority pledge over the shares in Polarcus DMCC and (iii)

second priority pledge over the streamers purchased from the bankruptcy estate of

Dolphin Geophysical AS.

Guarantee Facility

On 15 December 2014, the Company entered into a common terms agreement with DNB Bank

ASA in respect of a USD 20 million uncommitted guarantee facility (the "Guarantee Facility"),

which underwent technical amendments in connection with the 2016 restructuring.

Reference is made to the description of the working capital facility in respect of the security

provided for the obligations in respect of guarantees issued under the Guarantee Facility.

As of the date of the Prospectus, guarantees totalling USD 1.6 million have been issued by DNB

Bank ASA under the common terms agreement and remain outstanding.

Capitalization and indebtedness

Financial risk management

For a description of the Company’s financial risk management, including funding and treasury

policies please see note 3 of the 2016 Annual Report incorporated by reference to this

Prospectus.

Reclassification of Fleet Bank Facility loan

At 31 December 2017, as a result of the USD 90 impairment charges described in section 11.8

"Selected financial information – Impairment charges recognised in the three months ended 31

December 2018", the Company’s book equity was lower than the minimum required by

financing covenants and the Company was in breach of its equity ratio covenant at the year

end. The covenant breach was remedied in Q1 2018 as part of the Company’s Financial Debt

Restructuring. However, as the remedy occurred after the year end, the Company’s long-term

debt is temporarily reclassified as current at 31 December 2017. The debt is expected to be

reclassified as a non-current liability in Q1 2018.

Capitalisation and indebtedness

109

The information presented below should be read in conjunction with the other parts of this

Prospectus, in particular Section 11 "Selected Financial Information", the Audited Annual

Financial Statements for 2015 and 2016 of the Company (See Section 19.2 "Incorporation by

reference"), and the Interim Financial Statements of the Company (see Section 19.2

"Incorporation by reference").

This Section provides information about the Company's unaudited capitalisation and unaudited

net financial indebtedness on an actual basis as at 31 December 2017 and, in the "As adjusted"

columns, the Company's unaudited capitalisation and net financial indebtedness as at the date

of the Prospectus, on an adjusted basis, to give effect to the Private Placement, the Reduction

in Principal Value and the Bond Conversion Offer as if these events had happened on 31

December 2017.

Other than as set forth as above, there has been no material change to the Company's

unaudited capitalisation and unaudited net financial indebtedness since 31 December 2017.

The figures in the below two tables are based on the carrying values in the Company’s balance

sheet as per 31 December 2017. The changes since 31 December 2017 are estimates of the

(unaudited) accounting impacts of the most significant impacts of the financial restructuring

completed in 2018

Capitalisation

(In '000s of USD) As of 31 December

2017

Changes since 31

December 2017

As adjusted

Total current debt:

Guaranteed - - -

Secured 1 268,547 1 (268,547) -

Unguaranteed/Unsecured 80,998 2 (25,746) 55,252

Total current debt 349,545 (294,293) 55,252

Total non-current debt (excluding current portion of long-term debt):

Guaranteed -

Secured 3 - 343,547 343,547

Unguaranteed and unsecured4, 7

8,624 20,167 28,791

Total non-current debt 8,624 363,714 372,338

Total indebtedness 358,169 69,421 427,590

Shareholders' equity

Share capital 5 629,536 52,832 682,368

Legal Reserve - - -

Other Reserves 6 (584,817) - (584,817)

Total shareholders' equity

44,719 52,832 97,551

Total capitalisation 402,888 122,253 516,517

1 Consists of Fleet Bank loan with book value 245,646 + secured CB part with book value 22,901

2 Consists of all unsecured bond tranches, total book value 25,746 + provisions 5,489 + accounts payable 13,351 + accruals 36,412

3 The CB Tranche A with carrying value USD 22.9 million at end Q4 2017 has security in the vessel VYACHESLAV TIKHONOV. The Fleet Bank loan facility, carrying value USD 245.6 million, has security in the vessels POLARCUS

110

ASIMA, POLARCUS ALIMA, POLARCUS ADIRA, and IVAN GUBKIN (FKA. POLARCUS AMANI). The Fleet Bank facility is a loan agreement for a bank facility, with Eksportfinans ASA, Eksportkreditt AS and GIEK as lenders and with DNB Bank ASA and DVB Bank SE, Nordic Branch, together with GIEK as guarantors. See Section 11.12.2 for more information regarding The Fleet Bank facility. At 31 December 2017 the secured debt was classified as current as the Company was in breach of covenants and, hence, did not have an unrestricted right to defer repayment for at least 12 months. Following the completion of the Restructuring in Q1 2018, the secured debt was reclassified as non-current. After 31 December 2017, the Company acquired the vessels POLARCUS NADIA and POLARCUS NAILA. As described in Section 5.7, that acquisition was financed by the USD 75 million New Fleet Facility (see Section 11.12.6).

4 At 31 December 2017 the Unsecured Bonds were classified as current as the Company was in breach of covenants and, hence, did not have an unrestricted right to defer repayment for at least 12 months. Following the completion of the Restructuring in Q1 2018, the Unsecured Bonds were reclassified as non-current. After 31 December 2017, carrying value of the Unsecured Bonds has been reduced by approximately USD 13.3 million as an effect of a principal reduction to the previous 2018 call prices and a voluntary conversion to equity of some of the Unsecured Bonds.

5 Issued share capital and share premium from the Company's consolidated balance sheet as per Q4 2017. After 31 December 2017 the issued share capital and share premium has increased as a consequence of the Private Placement of USD 36 million (net of issue cost) and the conversion of unsecured debt resulting in a USD 16 million equity increase.

6 Other reserves and retained earnings/(loss) from the Company's consolidated balance sheet as per Q4 2017.

7 After 31 December 2017, bank debt was increased by USD 7.7 million following draw down of the Swap Facility

from DNB Bank ASA in relation to funding of a termination of a cross currency swap financial instrument that had a carrying value of USD 8.6 million at 31 December 2017.

Indebtedness

(In '000s of UDS) As of 31 December 2017

(unaudited)

Changes since 31 December 2017¹

As adjusted

A. Cash1 25,846 36,375 62,221 B. Cash equivalents 7,818 - 7,818 C. Trading securities - - - D. Liquidity (A)+(B)+(C) 33,664 36,375 70,039 E. Current financial receivables 19,766 - 19,766 F. Current bank debt 245,646 (245,646) - G. Current portion of non-current debt 48,647 (48,647) -

H. Other current financial debt - - - I. Current financial debt (F)+(G)+(H)

294,293 (294,293) -

J. Net current financial indebtedness (I)-(E)-(D)

240,863 (330,668) (89,805)

K. Non-current bank loans 2,4 - 328,346 328,318 L. Bonds issued 3 - 35,396 35,396 M. Other non-current loans4 - - - N. Non-current financial indebtedness (K)+(L)+(M)

- 363,742 363,742

O. Net financial indebtedness (J)+(N)

240,863 33,074 273,937

¹ Cash includes USD 7.8 million restricted cash. After 31 December 2017, the Private Placement in February 2018 equated to USD 36.4 million after deduction of direct costs and before potential subsequent repair offering. 2 After 31 December 2017 the Company acquired the vessels Polarcus Nadia and Polarcus Naila. As described in Section 5.7, that acquisition was financed by the USD 75 million New Fleet facility (see section 11.12.6).

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3 After 31 December 2017, the carrying value of the Unsecured Bonds has been reduced by USD 13.3 million as an effect of a principal reduction in the value of Unsecured Bonds in line with the previous 2018 call prices and a voluntary conversion to equity of the Unsecured Bonds.

⁴ After 31 December 2017, bank debt was increased by USD 7.7 million following draw down of a new loan facility

from DNB Bank ASA in relation to funding of a termination of a cross currency swap financial instrument that had a carrying value of USD 8.6 million at 31 December 2017

The capitalisation table above includes both interest-bearing and non-interest-bearing assets

and liabilities. The indebtedness table above includes only interest-bearing assets and interest-

bearing liabilities.

Subsequent to 31 December 2017, the Company has received gross proceeds from the Private

Placement amounting to NOK 300 million. The Company has acquired the vessels POLARCUS

NADIA and POLARCUS NAILA financed by the New Fleet Facility for USD 75 million. Due to the

Bond Conversion and the reduction of the principal amount of the Unsecured Bonds, the

carrying value of indebtedness has been reduced by approximately USD 13.3 million. Apart

from these elements, there have been no material changes in capital resources and

indebtedness subsequent to 31 December 2017.

Auditors

The Company’s auditor since its incorporation has been Ernst & Young AS. The address of the

auditor is Dronning Eufemias gate 6, NO-0191 Oslo, Norway.

The financial statements for 2015 and 2016 were audited by Ernst & Young AS, and their audit

opinions were issued without qualifications.

• The 2015 audit report can be found in the 2015 Annual Report

http://hugin.info/151377/R/2003456/739508.pdf, page 100.

• The 2016 audit report can be found in the 2016 Annual Report

http://hugin.info/151377/R/2095143/792350.pdf, page 93.

Ernst & Young AS has not audited, reviewed or produced any report on any other information

provided in this Prospectus. Ernst & Young AS is a state authorized public accounting firm

(Norway) and member of Den Norske Revisorforening (The Norwegian Institute of Public

Accountants).



112

12. BOARD OF DIRECTORS, MANAGEMENT, EMPLOYEES AND CORPORATE

GOVERNANCE

Introduction

The general meeting (the "General Meeting") is the highest authority of the Company. All

shareholders in the Company are entitled to attend and vote at General Meetings of the

Company and to table draft resolutions for items to be included on the agenda for subsequent

General Meetings.

The overall management of the Company is vested in the Board of Directors and the

Management. Consistent with Cayman Islands law, the Board of Directors is responsible for,

among other things, supervising the general and day-to-day management of the Company's

business ensuring proper organisation, preparing plans and budgets for its activities, ensuring

that the Company's activities, accounts and management of its assets are subject to adequate

controls and undertaking investigations necessary to perform its duties.

The Management, whose duties are delegated by the Board, is responsible for the day-to-day

management of the Company's operations consistent with Cayman Islands law. Among other

responsibilities, the Company's CEO is responsible for keeping the Company's accounts in

accordance with applicable law and for managing the Company's assets in a responsible

manner.

Nomination committee

The annual general meeting on 3 May 2017 (the "2017 AGM") approved the appointment of

the members of the nomination committee for a one year period. The committee is mandated

to evaluate and submit a recommendation to the annual general meetings on nominees for

election as members and possibly deputy members of the Board and the chairman of the Board,

nominees for election as members of the nomination committee, remuneration of Board

members and member of the nomination committee and recommendation on amendments to

the committee's terms of reference.

The terms of reference under which the nomination committee operates can be found at the

following web-page: http://www.polarcus.com.

The current members of the nomination committee are Mrs. Katherine Hall (Chair), Mrs. Karen

El-Tawil and Mr. Kristian Falnes. The members of the nomination committee are elected for a

period of one year. Mrs. Katherine Hall and Mr. Kristian Falnes are independent representatives

from the Board of Directors and the Management. None of the members hold any employment

position within the Polarcus Group.

The 2017 AGM approved fees for the nomination committee for 2017 of USD 6,000 for the

committee chair and USD 3,000 for each other member in addition to USD 1,500 per member

per committee meeting, the fees being payable annually in arrears following the next AGM of

the Company.

Board of directors

The Board of Directors (the “Board”) of Polarcus is responsible for administering the Company’s

affairs and for ensuring that the Company’s operations are organized in a satisfactory manner.

The directors are elected for service periods of up to two years. Directors may be re-elected

and there is no limit on the number of terms that any one director may serve.

12.3.1 Board members

The 2017 AGM approved the following directors’ fees for 2017; USD 120,000 for the Chairman,

USD 90,000 for the Deputy Chairman (the Deputy Chairman has since resigned) and USD

55,000 for each of the other directors, as well as USD 1,500 per director per committee

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meeting. The directors’ fees are paid quarterly in arrears on each of 30 June, 30 September,

31 December and 31 March.

In October 2014 the Board of Directors agreed to take a 10% voluntary reduction in their fees,

on a temporary basis, commensurate with a similar reduction applied to the salary of the

Company's Management and this reduction remains in place today.

There are no service contracts between members of the Board of Directors and the Company

or any of its subsidiaries providing for benefits upon termination of assignment.

The names of the Board members, director's shareholdings as of the date of this Prospectus

and their remuneration in 2017 is provided in the table below:

Name of director Director since Current term

expires AGM

Shares

owned

Options

owned

Remuneration

paid (in USDk)

2017

Peter M. Rigg, Chairman 20-Jun-08 2018 228,846 0 119

Karen El-Tawil 13-Feb-14 2018 4,250 0 59

Carl Peter Zickerman 12-May-16 2018 34,925,401 0 50

Tom Henning Slethei 12-May-16 2018 14,350,571 0 56

Erik M Mathiesen 12-May-16 2018 267,308 0 50

Nicholas Smith 6-March-17 2019 0 0 45

The business address of all directors is: c/o Company Secretary, Polarcus DMCC, Almas Tower,

Level 32, Jumeirah Lakes Towers, PO Box 283373, Dubai, UAE.

The following provides a profile of the members of the Board as of the date of this Prospectus:

Peter Rigg, Chairman (born 1948)

Peter Rigg has an extensive background in investment banking with over 25 years' experience

working in Asia and Europe, principally for Credit Suisse First Boston where he was a worldwide

Managing Director responsible for Asian Equity Capital Markets. He is currently non-executive

Chairman of MXC Capital plc, an AIM listed technology investment company, and is an

independent non-executive Director of Schroder Oriental Income Fund Limited and of the

Kaiyuan and Excel entities listed below which relate to a Limited Partnership making

investments in education in China. Mr. Rigg is also an investment committee member of the

China Car Parking Investment Fund and a member of the Advisory Board of South West Energy,

a privately owned Company with oil interests in Ethiopia. Mr. Rigg is a qualified UK solicitor and

Chairman of the Board of Polarcus Limited. Mr. Rigg currently holds the following directorships,

supervisory or leading management positions (other than positions in the Company and/or its

subsidiaries):

MXC Capital Plc, Chairman

Schroder Oriental Income Fund Limited, Independent non-executive Director and

Chairman of the Audit and Management Engagement Committees

Kaiyuan Education Fund GP Holdings Limited, Independent non-executive Director

Kaiyuan Education Fund GP Limited, Independent non-executive Director

Kaiyuan Management Limited, Independent non-executive Director

Excel Access International Limited, Independent non-executive Director; and

South West Energy, Advisory Board member.

Furthermore, Mr. Rigg has previously held the following directorships, supervisory or leading

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management positions during the last five years (other than positions in the Company and/or

its subsidiaries):

GEMS Oriental and General Fund II, Independent non-executive Director; and

GEMS Fund III, Independent non-executive Director.

Cartesius Advisory Network, non-executive Director.

Carl Peter Zickerman (born 1972)

Peter Zickerman has two decades of experience in the seismic industry. He was the Founder of

Eastern Echo Ltd where he held the position of Executive Vice President & Business

Development and was a member of the board. In 2008 he founded Polarcus where he held the

position as Executive Vice President & Head of Strategic Investments until February 2016, and

was also a member of the board between 2008 and 2012. His experience covers both maritime

and seismic operations, strategy and commerce. Mr. Zickerman holds a B.Sc. in Marine

Engineering from Kalmar Maritime Academy, Linnaeus University, Sweden.

Mr. Zickerman currently holds the following directorships, supervisory or leading management

positions (other than positions in the Company and/or its subsidiaries):

Zickerman Group Limited, director

Zickerman Holding Limited

Zickerman Group DMCC; and

DNV GL Middle East National Committee, member

Mr. Zickerman has previously held no directorships, supervisory or leading management

positions during the last five years (other than positions in the Company and/or its

subsidiaries).

Karen El-Tawil (born 1961)

Karen El-Tawil has over 30 years of experience in the geophysical services industry, with 15

years at the executive level. Mrs. El-Tawil retired from TGS-NOPEC Geophysical Company in

2012 as Vice President Business Development and her management experience includes:

Quality Control, Project Development, Customer Service, Marketing, Sales, Information

Technology, Investor Relations and Mergers and Acquisitions. Mrs. El-Tawil was with Western

Geophysical from 1984 through 1987, Schlumberger Geco-Prakla from 1987 through 1997, and

TGS-NOPEC from 1997 through 2012. Mrs. El-Tawil has degrees in earth science and

mathematics from Adrian College, Michigan. Mrs. El-Tawil is a director of Pulse Seismic Inc, an

onshore multi-client company traded on the Toronto exchange.

Mrs. El-Tawil currently holds the following directorships, supervisory or leading management


Pulse Seismic Inc, Board Member, Independent non-executive Director, Chair of the

Compensation Committee and member of the Environmental Health and Safety

Committee. Previous member of Audit and Risk Committee and Corporate Governance

Committee

Prison Entrepreneurship Program, Advisory Board Member

Mrs. El-Tawil has previously held no other directorships, supervisory or leading management


subsidiaries):

Tom Henning Slethei (born 1974)

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Tom Henning Slethei has been an investor in the stock and bond market for over two decades.

He is Chairman and owner of various companies within the real estate and finance sectors. He

has extensive Board experience including as Chair of the nomination and compensation

committees, Noreco ASA, as Chairman of the Board, Jåsund Utviklingsselskap AS and Sola

Bredband AS, and as a Director at Forus Naeringspark.

Mr. Slethei currently holds the following directorships, supervisory or leading management


Alto Holding AS, chairman

Alto Invest AS, chairman

Hestholmen AS, chairman

Jåsund Utviklingsselskap AS, chairman

Sameiet Krossenbygget Sola, chairman

Skiftesvik AS, chairman

Sola Bredbånd AS, chairman

Solakrossen 13 AS, chairman

Stokkavik AS, chairman

Vestø AS, chairman

Ivar Iks, director

Ivar Næring AS, director

Kvithei Utbyggingsselskap Sola Kf, director

Nord Jæren Bompengeselskap AS, director

Sola Tomteselskap Kf, director

Hinna Park Jernbanebyggene AS, Director

HP Stadionblokk B AS, Director

HPS Næring AS, Director

Hummeren Eiendom Tananger AS, Chairman

Hummeren Holding AS, Chairman

Hummeren Hotell AS, Chairman

Mr. Slethei has previously held no other directorships, supervisory or leading management


subsidiaries).

Erik Mathiesen (born 1970)

Erik Mathiesen is an independent advisor. He was until January 2017 a Founding partner of

Storm Capital Management, London, an asset management firm focusing on energy,

transportation and real estate in the Nordics. He was also CEO of Storm Real Estate ASA. He

has worked in corporate finance advisory in shipping and oil services as a partner for EC Hambro

Rabben, London and in corporate banking at Hambros Bank, London.

Mr. Mathiesen currently holds the following directorships, supervisory or leading management


Sisu Holding, chairman

Segulah GP board, boardmember

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7Yield, boardmember

Bember, boardmember

Furthermore, Mr. Mathiesen has previously held the following directorships, supervisory or

leading management positions during the last five years (other than positions in the Company

and/or its subsidiaries):

Storm Capital Management, partner

Storm Real Estate ASA, CEO

Siem Industries/Subsea7, SVP

Nicholas Smith (born 1951)

Nicholas Smith is a Chartered Accountant with a long-term career in investment banking and

as CFO of Asian investment bank Jardine Fleming Group. He has had a successful non-executive

track record in the public E&P sector and investment trusts, including seven years as Chairman

of Ophir Energy plc, and as board member for several other AIM listed companies.

Mr. Smith is ACA 1975, FCA 1980, BA (Open) 2008. He is a British citizen.

Mr. Smith currently holds the following directorships, supervisory or leading management


Chairman of Aberdeen New Thai Investment Trust;

Chairman of Schroder Asia Pacific Investment Fund, where he was previously Chair of

Audit and Senior Independent Director; and

a board member for JPMorgan European Small Companies Investment Trust PLC where

he is also Chair of Audit.

Furthermore, Mr. Smith has held the following other directorships, supervisory or leading

management positions during the last five years (other than positions in the Company and/or

its subsidiaries):

Ophir Energy PLC, Chairman from September 2009 until retirement in April 2016. Ophir

is a FTSE exploration company that listed in July 2011;

Asian Citrus Holdings Ltd, appointed director at the AIM flotation in 2005. Chairman of

Remuneration Committee and member of Audit Committee. Left the Board in March 2013.

12.3.2 Board committees

The Board of Directors has established two board committees: (i) the corporate governance

and remuneration committee and (ii) the audit and risk committee. The 2017 AGM resolved to

remunerate participation in the corporate governance and remuneration committee and the

audit and risk committee with USD 1,500 per meeting per committee member.

Corporate governance and remuneration committee

The current members of the corporate governance and remuneration committee are Mrs. Karen

El-Tawil (Chair), Mr. Peter Rigg and Mr. Tom Henning Slethei. Each member of the corporate

governance and remuneration committee holds such position until he/she resigns, is removed

by resolution of the Board or otherwise ceases to be a director.

The committee is mandated to regularly review and update the Company's governance

commitments and structure, and to review proposals from Management on bonus and option

schemes and other benefits as well as general principles for the Group's salary and allowance

program.

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The terms of reference under which the corporate governance and remuneration committee

operates can be found at the following web-page: www.polarcus.com.

Audit and risk committee

Until 29 January, 2017, the members of the audit committee were Mr. Arnstein Wigestrand

(Chair), Mr. Peter Rigg and Mr. Chris Kelsall. On 29 January 2017, Mr Kelsall resigned as a

director. Given the complexity and scale of financial and accounting issues which the Company

was addressing at that time, the Board determined that the function of the audit committee

temporarily be assumed by the full Board. On 27 April 2017, the audit committee was

reactivated with Mr. Peter Rigg (Chair) and Mr. Nicholas Smith as members. On 3 May 2017,

following the 2017 AGM, the Board appointed Mr. Nicholas Smith (Chair), Mr. Peter Rigg and

Dr. Henrik Madsen as committee members. On 23 October 2017, the committee was

renamed: ‘the audit and risk committee’. On 29 November 2017, the Board appointed Mr. Erik

Mathiesen to the committee to replace Dr. Madsen who had recently resigned from the Board

The committee is mandated to regularly review the Company's proposals for quarterly accounts

and various issues related to the account, introduction of new and changes to existing

accounting principles, high level supervision of the budget process, to review and evaluate the

Company's internal financial control and on behalf of the Board to liaise the Company's auditor

and monitor the auditor's independence. The committee is also mandated to review regularly

Management’s processes to mitigate key corporate risks that have been identified.

The terms of reference under which the audit committee operates can be found at the following

web-page: http://www.polarcus.com.

12.3.3 Loans and guarantees

The Company has no outstanding loans or guarantees to any member of the Board.

Management

The Management of Polarcus currently comprises four executives with extensive domain

knowledge within their job function and with senior management experience from across the

energy, shipping and oilfield services industries.

The Management of Polarcus currently includes the following:

Name

Position

Duncan Eley

Chief Executive Officer

Hans-Peter Burlid

Chief Financial Officer

Caleb Raywood

General Counsel & Company Secretary

Tamzin Steel SVP People & Business Services

The Management all have business addresses at Polarcus DMCC, Almas Tower, Level 32,

Jumeriah Lakes Towers, PO Box 283373, Dubai, U.A.E.

The following provides a profile of the members of the Management of Polarcus as of the date

of this Prospectus.

Duncan Eley (born 1972), Chief Executive Officer

Duncan Eley has over 18 years of experience in the seismic industry in various senior

management roles across operations, technology manufacture & development and sales &

marketing. He worked with Schlumberger for 10 years supporting marine seismic operations in

Europe, West Africa and North America. Mr. Eley has a Bachelor of Science and Bachelor of

Engineering (with Honours) from Monash University in Australia. In 2006 he completed his MBA

at Erasmus University in Holland. Prior to joining Polarcus in 2009, Mr. Eley worked for several

118

years with strategy consultancy firm, L.E.K. Consulting, across the energy, transport and

natural resources sectors.

Mr. Eley was appointed COO of the Company in May 2013, and was appointed CEO in March

2017.

Mr. Eley currently holds no directorships, supervisory or leading management positions (other

than positions in the Company and/or its subsidiaries), and has held no such position for the

last five years.

Hans-Peter Burlid (born 1980), Chief Financial Officer

Hans-Peter Burlid has over 14 years of experience in the seismic industry with key roles in

finance, accounting and business development. He was formerly Senior Manager, Business

Development and co-founder of Eastern Echo Ltd and was instrumental in the start-up of

Polarcus. Mr. Burlid holds a B.Sc. in Economics and Business Administration from Blekinge

Institute of Technology, Sweden.

Mr. Burlid was appointed as CFO of the Company in March 2016.

Mr. Burlid currently holds no directorships, supervisory or leading management positions (other

than positions in the Company and/or its subsidiaries), and has held no such position for the

last five years.

Caleb Raywood (born 1970), General Counsel & Company Secretary

With 20 years of commercial experience, Mr. Raywood most recently acted as General Counsel

and sat on the Board of Directors for Sea Trucks Group. Prior to this, Mr. Raywood worked for

six years with MasterCard International Inc. as Region Counsel (South Asia, Middle East &

Africa) and prior to that assignment, worked for six years at Clyde & Co, an international law

firm in London and Dubai specialising in shipping and maritime issues. Holding a Bachelor's

Degree in English and European Law from the University of Essex (UK) and a Master's Degree

in European Business Law from the University of Nijmegen, The Netherlands, he leads Polarcus'

team of lawyers as a qualified Barrister and Solicitor Advocate.

Mr. Raywood joined the Group in June 2016.

Mr. Raywood currently holds no directorships, supervisory or leading management positions

(other than positions in the Company and/or its subsidiaries)

Furthermore, Mr. Raywood has previously held the following directorships, supervisory or

leading management positions during the last five years (other than positions in the Company

and/or its subsidiaries):

Director, Sea Trucks Group Limited (2015-2016)

General Counsel and Company Secretary, Sea Trucks Group Limited (2010-2016)

Tamzin Steel (born 1977), SVP People & Business Services

Tamzin Steel has over 15 years' experience working in global multinational companies in the

oil & gas industry. Prior to joining the Polarcus team, Ms. Steel held senior leadership positions,

with a focus on Human Resources and organisational change, most recently working for Abu

Dhabi National Energy Company (TAQA). Tamzin holds a Bachelor's Degree (with Honors) in

Business Studies from Robert Gordon University, Aberdeen.

Ms. Steel joined the Group in June 2016 and had previously advised the Group as a consultant

since February 2016.

Ms. Steel currently holds no directorships, supervisory or leading management positions (other

than positions in the Company and/or its subsidiaries).

Ms. Steel has previously held the following directorships, supervisory or leading management


subsidiaries):

119

Abu Dhabi National Energy Company (TAQA), UAE, Group Vice President Human

Resources; and

KCA DEUTAG Drilling Group, UK, Senior Vice President Human Resources.

The members of the Management are employed by Polarcus DMCC, a wholly owned subsidiary

of Polarcus, which functions as the main administration and support company of the Group.

12.4.1 Management shareholdings and options

As per the date of this Prospectus, the members of the Management of Polarcus hold/control

the following Shares and share options in Polarcus:

Manager Position Shares Total number of

options

Duncan Eley Chief Executive Officer 489,616 261,400

Hans-Peter Burlid Chief Financial Officer 157,596 114,900

Caleb Raywood General Counsel & Company Secretary 134,615 50,000

Tamzin Steel SVP People & Business Services 134,615 50,000

12.4.2 Remuneration and benefits

The salaries and other benefits paid to members of the Management for the financial year

ended 31 December 2017 are shown in the table below.

(in thousands of USD)

Paid in year 2017

Amounts in thousands

of USD

Salaries Bonus Other

benefits

Total paid

salary and

benefits

Benefits paid

to pension

plan

Share

option

expenses

Roderick Albert Starr1 188 - 108 295 - 24

Duncan Eley

481 126 158 765 48 35

Hans-Peter Burlid 370 125 150 645 37 33

Caleb Raywood 265 - 155 420 21 4

Tamzin Steel 265 - 173 438 26 4

Total 1,569 251 744 2,563 133 100

1 The table shows the remunerations and benefits received by Roderick Albert Starr (ex-CEO)

until his last day of employment (9 June 2017).

12.4.3 Loans and guarantees

As of the date of this Prospectus, the Company has no outstanding loans or guarantees to any

member of the Management.

Number of employees

As at 31 December 2017, the Company had 363 employees of over 46 different nationalities,

of which 263 work in the field as seismic and maritime crew on board the vessels. The

Company's strategy is to employ its own crew to serve on-board the vessels. Contractors are

used for the more junior maritime support roles.

As of 31 December 2015, the Company had 475 employees and as of 31 December 2016, the

Company had 435 employees.

The reduction in number of employees was driven by the decision in Q1 2015 to stack one of

the Company’s vessels, POLARCUS NADIA, as well as the cost saving plan implemented around

120

the same time. The saving initiatives lead to a reduction in staff across the organisation and

included both vessel crew and office based employees.

The further reduction in 2016 resulted largely from the reorganization announced on 1 February

2016 and subsequent ongoing efforts to manage costs and streamline the organization.

Additional reductions to the workforce during 2017 were driven by Polarcus Amani going on to

long term bareboat charter to Sovcomflot in Q2 2017, and the prolonged market downturn and

reduced industry activity persisting into Q4 2017 which prompted an organization re-shape

with the support organization reduced accordingly.

Employee remuneration

The Company has developed and implemented a comprehensive remuneration program

designed to attract, motivate and retain the best talent from the global workforce.

The Company’s strategy is to provide all employees with a fixed (non-variable) salary.

Employees then have the possibility of increasing their compensation through participation in

a performance-related bonus scheme. Based on the overall performance of the Company

against certain pre-defined metrics, together with performance against individual and team-

specific goals, the employee can benefit from a variable compensation in the range of 8% to

60% of base salary annually where the maximum bonus level depends on the employee’s

position in the Company. Field crew assigned as trainees are not eligible to participate in this

bonus scheme. The structure of the performance-related bonus scheme will vary from year to

year in line with company goals. A summary of the bonus payments made in 2015, 2016 and

2017 is reproduced in the following table:

Summary of Performance-related bonus payments

* Bonuses are typically paid in the year after the performance they relate to. There are various eligibility criteria including performance, employment start date, period of continuous service.

** The bonus in 2016 was a one-off plan introduced to align employee incentive with the necessary focus on generating free cash. The mechanism provided for partial payment on a quarterly basis when the performance criteria were met. 50% of any earned bonus was paid in the month following the relevant quarter results, with the remaining 50% retained in a pool for potential payment at year-end. The free cash performance targets were achieved in Q1 and Q3 and 50% of bonuses were paid for these quarters only (approximately 2.75% of annual base salary for each quarter). The Q2, Q4 and year-end targets were not achieved.

*** In lieu of a short-term incentive plan in 2017, a one-off targeted plan was implemented to align key employees with near-term priorities in which up to USD 2 million was available for distribution. Payments under this plan are typically in two tranches with 50% paid in January 2018 and the remaining 50% due to be paid in July 2018. Payments totalling USD 832,500 were made after 31 December 2017 and before the date of this Prospectus.

Employee long term incentive schemes

Since 2008, the Company has operated a number of long term incentive plans which have been

implemented to support the Company's recruitment, retention and recognition requirements

accordingly, and are designed to align employee performance with the longer-term objectives

of the Company. Participation in the plan has varied from plan to plan, and included

management and broader employee groups (both office-based and field-based) depending on

the objectives of the Company at the time of each plan's inception. The long term incentive

plans are all share option plans with durations which range from five to seven years. The plans

provide employees with a grant of options which, subject to defined criteria and vesting periods,

enable employees to exercise the options after two, three or four years from the date of grant.

There are three plans which remain current and are described in detail in Section 14.2.6

Summary of Performance-related bonus payments*

2015 No payment to any employee

2016 Retention bonus paid to selected key employees. 5% of base salary paid to all eligible employees**

2017 No payment to any employee***

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"Corporate information and description of the share capital – Shares and share capital – Share

options".

Employee health protection

The Group has implemented comprehensive employee health protection plans comprising a

health care scheme providing inpatient and outpatient support, a short-term disability scheme

protecting the employee against loss of base salary together with a long-term disability scheme

to assist employees suffering illness or accidents that prevent the employee from working. In

addition, the Group has implemented a life assurance scheme designed to provide a lump sum

compensation in the event of employee death. All of these schemes are fully paid for by the

Group.

Benefits upon termination

All employees have a contractual notice period related to the termination of their employment

(apart from cases of employment termination for cause or during probationary periods of

employment) during which they continue to receive their remuneration. In the event of a forced

termination (involuntary termination apart from those for cause), the employee will receive a

form of severance payment as defined by statute or their contact of employment.

Upon termination by the Company of the employment of any member of the Management

(other than for cases of gross misconduct), the member is entitled to a severance payment

equal to 12 months base salary plus expected benefits (i.e. cash remuneration including any

anticipated bonuses, all allowances, and all other benefits currently provided to the employee).

Most other employees of the Group are entitled to a severance payment equal to between one

and three months of base salary.

The Management are entitled to retain their long term incentive awards in the event of their

employment being terminated by the Company provided that they have at least five years of

seniority in the Company.

In the event of a merger or a change of control in Polarcus, the Management are entitled within

a reasonable period of time thereafter to terminate their employment and receive certain

benefits (ranging from 6 to 12 months of base salary and expected benefits) under certain

conditions. This entitlement recognises that the executive is unlikely to remain in the same

position, or in employment at all, after the changes.

Certain other employees of the Company are in the event of a merger or a change of control

in Polarcus entitled within a reasonable period of time thereafter to terminate their employment

and receive certain benefits (ranging from 6 to 12 months of base salary and expected benefits)

under certain conditions.

Pension Scheme

In November 2010, the Group introduced a retirement savings (‘pension’) plan designed for

many of its field-based and office-based employees. This defined contribution scheme is based

on the employer company contributing a minimum of between 4% and 8% of employee base

salary to the plan and there is no requirement for the employee to make a contribution.

Enrolment is automatic following completion of an employee’s employment probationary period

and for employees that are making voluntary contributions through payroll, the employer

company will make a further contribution of up to 2% of the employee’s base salary where the

amount depends upon the level of employee contribution. There is a vesting period of five years

and the scheme is set up with the funds under trust for the protection of the plan members

(the employees).

The scheme has developed considerably subsequent to its inception providing employees with

increased investment choices and a sub-plan to cater for specific employee groups. Since the

scheme is a defined contribution savings scheme, the Group has no liability with regards the

funds invested. The total funds under management related to Company investments is USD

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20.65 million as at 31 December 2017, of which USD 0.66 million is for members of the

Management.

In December 2014, the Group introduced a retirement savings plan for its office-based

employees in Norway. This defined contribution scheme requires the employer company to

contribute 5% of employee admissible compensation. There is no vesting period and the

scheme is set up with the funds under trust for the protection of the plan members (the

employees). Since the scheme is a defined contribution savings scheme, the Group has no

liability with regards the funds invested.

In November 2015, the Group introduced a retirement savings plan for its office-based

employees in the United Kingdom, UK. This pension scheme meets the legislation defined by

The Pensions Regulator in the UK and specifically the Company’s auto enrolment obligations.

This defined contribution scheme requires employees to contribute a minimum of 6% of their

base salary, though as per legislation, employees have the option to opt out of the scheme

altogether. For employees that are making contributions through payroll, the employer

company will contribute between 6% and 8% of employee base salary to this scheme where

the amount depends upon the level of employee contribution. There is no vesting period and

the scheme is set up with the funds under trust for the protection of the plan members (the

employees). Since the scheme is a defined contribution savings scheme, the Group has no

liability with regards the funds invested.

In January 2016, the Group introduced a retirement savings plan for its office-based employees

in the United States of America. This voluntarily established private sector plans meets the

requirements stipulated in the US’s Employee Retirement Income Security Act (ERISA) and is

by definition a qualified 401(k) retirement savings scheme. This scheme provides 100%

employer matching contributions for employee contributions of between 3% and 6% of base

salary, though as per legislation, employees have the option to opt out of the scheme

altogether. There is a phased vesting scheme whereby after two years of employment seniority,

the employee commences vesting in the employer contributions until after four years of

seniority, the employee becomes 100% vested in the employer contributions, and the scheme

is set up with the funds under trust for the protection of the plan members (the employees).

The total funds under management represent the current value of the accumulated amount the

Company has paid in to the various pension funds for qualifying employees. The amounts

previously paid in by the Company have been expensed in the income statement in the period

in which the employees earned the pension contribution. The pension funds are not recognized

in the Company's balance sheet as they are not funds owned by the Company.

Corporate governance

There exists no corporate governance code that in particular applies to companies incorporated

under Cayman Islands law, outside of that provided for as a matter of Cayman Islands law and

pursuant to the Memorandum of Association and Articles of Association. The Companies Law,

the Memorandum of Association and the Articles of Association provide for general and specific

requirements of the Company as regards corporate governance, including (without limitation)

regulations concerning distribution of capital, and the protection of creditors and shareholders.

The Company is in compliance with these provisions through its Memorandum of Association

and Articles of Association, as incorporated by reference in Section 18.2 "Additional

information—Incorporation by reference" of this Prospectus.

The Board of Directors of the Company has resolved to adapt to and comply with the Norwegian

Corporate Governance Code to the extent reasonable for a company of its size and complexity

and has prepared a report summarizing how the code has been implemented by the Company.

The latest version of this document, Corporate Governance Report for the year 2016, was

adopted by the Board of Directors on 6 April 2017.

The Corporate Governance Report for the year 2016 includes a description of any deviations of

the Company from the recommendations of the Norwegian Corporate Governance Code

("NUES") and is incorporated to this Prospectus by reference and can be found at the following

123

web-page: https://polarcus.com/media/2121/polarcus-cgr-2016_final.pdf. The Company

complies with most of the recommendations in NUES. Deviations are described in sections 5.6.3

of the Corporate Governance Report for the year 2016. The Board of Directors will continuously

develop and monitor its corporate governance commitments based on professional advice,

experience, input from shareholders and the market in general.

Conflicts of interests

Carl-Peter Zickerman is a Board Member and provides consultancy services to the Company

through his consultancy, Zickerman Group DMCC. Mr. Zickerman was employed by Polarcus

prior to 1 February 2016 as Executive VP and Head of Strategic Investments). The Company

does not consider Mr. Zickerman’s previous employment or current consultancy to the Company

create a conflict of interest with his position as a director.

Other than the above, there are no potential conflicts of interest between any duties to the

Company of the members of the Board or the Company’s Management, and their private

interests or other duties.

Convictions for fraudulent offences, bankruptcy etc.

None of the members of the Board of Directors or the Management have during the last five

years preceding the date of this Prospectus:

any convictions in relation to indictable offences or convictions in relation to fraudulent

offences;

received any official public incrimination and/or sanctions by any statutory or regulatory

authorities (including designated professional bodies) or been disqualified by a court from

acting as a member of the administrative, management or supervisory bodies of a

company or from acting in the management or conduct of the affairs of any company; or

been declared bankrupt or been associated with any bankruptcy, receivership or

liquidation in his/her capacity as a founder, director or senior manager of a company or

partner of a limited partnership.

124

13. RELATED PARTY TRANSACTIONS

Related party transaction for the twelve months ended 31 December 2017

Zickerman Group DMCC, a company wholly owned by a board member Mr. Peter Zickerman,

has been engaged by the Company to perform strategic consultancy services. During the

quarter ended 31 December 2017, the Company paid USD 0.12 million to Zickerman Group

DMCC for consultancy services and the total amount paid during the twelve months ended on

the same date is USD 0.54 million.

Related party transaction after 31 December 2017

For the period after 31 December and to the date of the Prospectus, the Company has paid a

total of USD 0.1 million to Zickerman Group DMCC for consultancy services.

125

14. CORPORATE INFORMATION AND DESCRIPTION OF THE SHARE CAPITAL

General corporate information

The Company’s registered name is Polarcus Limited. The Company is a Cayman Island

exempted company with limited liability registered with the Cayman Island Registrar of

Companies with registration number 201867. The commercial name of the Company is

Polarcus. The Company was incorporated on 17 December 2007. Polarcus Limited's registered

office is c/o Walkers Corporate Limited, Cayman Corporate Center, 27 Hospital Road, George

Town, Grand Cayman KYI-9008, Cayman Island. Polarcus Limited is the holding company of

the Polarcus Group.

The business headquarter of the Company is in Dubai, UAE. The Company's registered office is

located at Almas Tower, Level 32, Jumeirah, Lakes Towers, PO Box 283373, Dubai and the

Company's telephone number at that address is +97144360800. The Company's website can

be found at www.polarcus.com. The content of www.polarcus.com is not incorporated by

reference into or otherwise forms part of this Prospectus.

The majority of the offshore crew of the Polarcus Group vessels are employed by Polarcus

Limited. As of 31 December 2017 the Company had 363 employees. Polarcus Limited's Shares

are registered on the Oslo Stock Exchange with ticker symbol "PLCS".

Shares and share capital

The following description includes certain information concerning the Company's share capital,

a brief description of certain provisions contained in the Company's Memorandum of Association

and Articles of Association as they are in effect as of the date of this Prospectus and a brief

description of certain applicable Cayman Islands law and certain provisions under the

Norwegian Securities Trading Act. The summary does not purport to be complete and is

qualified in its entirety by the Company's Memorandum of Association and Articles of

Association, Cayman Islands law and Norwegian law. Any change in the Memorandum of

Association and Articles of Association is subject to approval by a Special Resolution of the

Company's Shareholders.

14.2.1 General

The Company's authorised share capital is USD 59,108,915.70 divided into 591,089,157 shares

each with a nominal or par value of USD 0.10. The issued share capital is USD 48,301,748.20

divided into 483,017,482 Shares each with a nominal or par value of USD 0.10, all fully paid

and issued in accordance with Cayman Islands law. All the issued Shares are in registered form

and are registered with the Norwegian Central Securities Depository ("VPS"). The Private

Placement Shares and the Bond Conversion Share are registered in the VPS with the Temporary

ISIN, and the other Shares are registered in the Ordinary ISIN. The New Shares will be

converted to the Ordinary ISIN following approval of this Prospectus. The Registrar of the

Company is DNB Bank ASA, Verdipapirservice, Dronning Eufemias gate 30, 0191 Oslo.

The Company has one class of shares in issue. All Shares carries equal rights in all respects

and all issued Shares have a par value of USD 0.10 each. One Share entitles the holder to one

vote at the annual and extraordinary shareholder meetings of the Company.

14.2.2 Share capital development

A summary of the issued share capital development for the period from 1 January 2015 to the

date of this Prospectus is presented in the table below.

126

Date Type of change in

capital

Change in

issued share capital (USD)

Changes in

number of shares

No of shares

following change

Subscripti

on price per share

Par value

(USD/ share)

Issued Share

Capital

following increase

(USD)

23-Nov-15 Reverse split 0

Reduced by

602,832,311

shares

66,981,368 - 0.2 13,396,273.6

09-Mar-16 Issuance of Class B

shares 602,539.05 463,491,579 530,472,947

USD

0.0013

0.0013 for

Class B

Shares

13,998,812.65

13-Apr-16 Repurchase of Class B Shares

Reduced by 602,539.05

Reduced by

463,491,579

shares

66,981,368 -

0.0013 for

Class B

Shares

13,396,273.6

13-Apr-16

Issuance of ordinary

Shares as

consideration in the

repurchase of Class B

Shares

92,698,315.80 463,491,579 530,472,947 - 0.2 106,094,589.4

22-May-16 Reduction in par value Reduced by 100,789,859.9

3

0 530,472,947 - 0.01 5,304,729.47

08-Mar-17 Issuance of new

shares 10,000,000 1,000,000,000 1,530,472,947 NOK 0.33 0.01 15,304,729.47

03-May-17

Consolidation of the

authorized and issued

share capital

0 Reduced by

1,380,946,851 153,438,539 - 0.10 15,343,854

1-Mar-18 Private Placement 23,076,923.1 230,769,231 384,207,770 NOK 1.30 0.10 38,420,777.0

13-Mar-18 Bond Conversion 9,809,871,2 98,809,712 483,017,482 NOK 1.30 0.10 48,301,748.2

14.2.3 Board authorizations

As of the date of this Prospectus, the Company has an authorized share capital of USD

59,108,915.70 divided into 591,089,157 Shares of par value USD 0.10. As of the date of this

Prospectus, USD 48,301,748.20 of the authorized share capital has been issued, representing

483,017,482 Shares of par value USD 0.10 each. Another 30,769,231 Shares, representing a

share capital of USD 3,076,923.1, will be issued in relation to the Repair Offering. The Board

of Directors of the Company is authorized to distribute the remaining authorized share capital

of USD 7,730,244.4 representing 77,302,444 Shares of par value USD 0.10 each. Of the

77,302,444 authorised, unissued Shares, 1,834,200 Shares have been reserved for the

Polarcus Group's employee option schemes, up to 733,963 Shares for issue in relation to the

Company's convertible bonds and 12,846,144 Shares for issue in relation to the Company’s

Warrants. The number of Shares reserved for the convertible bonds is based on the current

status and are subject to standard adjustment mechanisms following rights issues, dividends,

reset mechanism and other adjustments.

The remaining 61,887,281 authorized and unissued Shares may be issued by the Board of

Directors to strengthen the Company's equity, to issue new shares in connection with merger

and acquisition opportunities as well as other business reasons namely, to take advantage of

viable business opportunities, including but not limited to efficiency upgrades, multi-client

projects and for general working capital purposes through one or more offerings and upon

terms as decided by the Board. The authorization may also be used in a takeover situation.

14.2.4 Convertible bond loans

The Company's outstanding convertible loan is described in Section 11.12.3 "Selected financial

information—Summary of financing—Convertible Bond Issue" above.

127

14.2.5 Warrants

In connection with the Restructuring and the purchase of POLARCUS NADIA and POLARCUS

NAILA, GSH was awarded 12,846,144 transferable warrants with a strike price of NOK 3.90.

The warrants are exercisable until 30 November 2022. The warrants were issued to GSH upon

completion of the sale and lease termination as described in section 5.7 "The Restructuring –

Sale and lease termination" of this Prospectus. The number of Warrants and the strike price

are subject to standard adjustment mechanisms following consolidation or subdivision of the

Shares.

14.2.6 Share options

The Company currently operates three employee share option plans. The data in this subsection

is adjusted to reflect the consolidation of the Company's Shares that took place on 3 May 2017.

2012 Employee Share Option Scheme

In 2012, following AGM approval, the Company implemented a share option plan ("2012 Plan")

under which a maximum of 140,000 options could be granted to employees of the companies

within the Polarcus Group.

The exercise price for each option is based on the weighted average price for which the shares

have been traded at Oslo Stock Exchange in the period of 30 trading days immediately prior to

the date the options were granted.

The 2012 Plan has a five-year duration from the grant date. The options vest three years after

the grant date and can be exercised up to five years after the grant date.

The exercise of the options is conditional upon the market price of the shares (defined as the

weighted average price for which the shares have been traded at Oslo Stock Exchange in the

previous period of 30 trading days) exceeding the exercise price by at least 30% at one time

during the exercise period. In addition, the exercise of the options is conditional upon the

employee completing three years of service (the vesting period), and being an employee of the

Group at the exercise date.

The options are exercisable upon a change of control event (above 50%).

As of 31 December, 2017, 39,700 options were outstanding under this plan of which 2,800

options had been granted to members of the management during the relevant period. The

weighted average exercise price is NOK 396.06 per option. No members of the management

have exercised any options granted under this plan.


In 2014, following AGM approval, the Company implemented a share option plan ("2014 Plan')

under which a maximum of 150,000 options could be granted to employees of companies within

the Polarcus Group.




The 2014 Plan has a seven-year duration from the grant of the options, with 1/3-part being

available for exercise after the second, third and fourth anniversary after the grant of the

options.




during the option period.


128

As of 31 December 2017, 107,000 options were outstanding under this plan of which 18,500

options had been granted to members of the management during the relevant period. The

weighted average exercise price is NOK 280.60 per option. No members of the management

have exercised any options granted under this plan.


In 2016, following AGM approval, the Company implemented a share option plan ("2016 Plan")

under which a maximum of 1,600,000 options could be granted to employees of companies

within the Polarcus Group.




The 2016 Plan has a seven-year duration from the grant of the options, with 1/3-part being

available for exercise after the second, third and fourth anniversary after the grant of the

options.




during the exercise period.


Mr. Eley, CEO of the Company, received 130,000 options on 12 May 2017 under the 2016

Employee Share Option Scheme. The awarded share options had an exercise price of NOK 2.40

and an exercise period from 12 May 2019 to 11 May 2024.

As of 31 December 2017, 1,317,500 options were outstanding under this plan of which 455,000

options have been granted to members of Management. The weighted average exercise price

is NOK 7.39 per option. No members of Management have exercised any options granted under

this plan. No further options will be issued under this plan.

14.2.7 Dilutive effect of convertibles, warrants and options

Assuming full conversion of convertible debt, warrants and share options, the total number of

Shares issued would increase by 14,891,378 Shares.

Dilutive instrument Number of equivalent Shares Shares associated with convertible debt: 581,034 Shares associated with outstanding stock options as of 31 December 2017: 1,464,200 Warrants: 12,846,144 Total: 14,891,378

The number of Shares reserved for the convertible debt is based on the current status and are

subject to standard adjustment mechanisms to the conversion price following rights issues,

dividends, the reset mechanism and other adjustments. The number of Warrants are subject

to standard adjustment mechanisms to the strike price following consolidation or subdivision.

The 1,464,200 outstanding options in the three different share option plans as of 31 December

2017 have an average exercise price of approximately NOK 33.86 per option as described in

Section 14.2.6 "Corporate information and description of the share capital - Shares and share

capital - Share options".

14.2.8 Own Shares

As of the date of this Prospectus, Polarcus holds a total of 5 own Shares.

129

Pursuant to the Articles of Association, the Company may acquire, for valuable consideration

(determined by the Board of Directors), Shares in its own share capital if and in so far as

approved by ordinary resolution by the General Meeting, including acquisitions as a defence

mechanism in a potential buy-out situation or a change of control situation in the Company.

The authorization shall be given for a specific number of Shares and for a specific period of

time. Furthermore, the Company may, without being authorized thereto by the General

Meeting, acquire Shares in its own share capital (at prevailing market value and on such other

terms as the directors shall determine) in order to transfer those Shares to the employees of

the Company or a Polarcus Group company under a scheme applicable to such employees.

14.2.9 Share price development

The Shares have been publicly traded on Oslo Axess and thereafter Oslo Børs under the trading

symbol "PLCS" since the IPO on 30 September 2009.

The Share price performance, since 1 January 2017 for the shares listed on Oslo Børs and since

2 March 2018 for the shares listed on Merkur Market, is shown in the graph below:

14.2.10 Primary insider purchases

On 19 May 2017, CEO Duncan Eley acquired 100,000 shares at an average price of NOK 2.77

per share. Following the acquisition he owned 105,000 shares in the Company.

On the same date, Tom Henning Slethei, Director of the Company, through his wholly owned

company Alto Holding AS, acquired 256,989 shares at an average price of NOK 2.77 per share.

Following the transaction, he owned 5,000,000 shares in the Company.

The following primary insiders participated in the Private Placement:

Chairman of the board Peter Rigg, was allocated 153,846 shares in the Private Placement,

currently holding a total of 228,846 Shares, corresponding to 0.05% of the issued share

capital.

Board member Carl-Peter Zickerman (through his wholly owned companies

Zickerman Group Ltd), was allocated 15,385,000 shares in the Private Placement.

Board member Tom Henning Slethei (through his wholly owned company Alto

Holding AS), was allocated 5,945,000 shares in the Private Placement.

Board member Erik Mathiesen (through his wholly owned company SISU Holding AS), was

allocated 192,308 shares in the Private Placement currently holding a total of 267,308

Shares, corresponding to 0.06% of the issued share capital.

Duncan Eley, CEO of Polarcus, was allocated 384,616 shares in the Private Placement,

0

1

2

3

4

5

6

Jan 17 Apr 17 Jul 17 Oct 17 Jan 18

PLCS at Oslo Børs PLCS-ME at Merkur Market

NOK

130

currently holding a total of 489,616 Shares, corresponding to 0.1% of the issued share

capital.

Hans-Peter Burlid, CFO of Polarcus, was allocated 153,846 shares in the Private

Placement, currently holding a total of 157,596 Shares, corresponding to 0.03% of the

issued share capital.

Caleb Raywood, General Counsel of Polarcus, was allocated 134,615 shares in the Private

Placement, currently holding a total of 134,615 Shares, corresponding to 0.03% of the

issued share capital.

Tamzin Steel, SVP People & Business Services of Polarcus, was allocated 134,615 shares

in the Private Placement, currently holding a total of 134,615 Shares, corresponding to

0.03% of the issued share capital.

The following primary insiders participated in the Bond Conversion Offer:

Tom Henning Slethei, through his wholly owned company Alto Holding AS, was awarded

3,405,570 Bond Conversion Shares at a conversion price of NOK 1.30 per share. Following

the Bond Conversion, Slethei holds a total of 14,350,571 shares in the Company,

corresponding to 2.97% of the total outstanding shares of the Company prior to the Repair

Offering.

Carl-Peter Zickerman, through his wholly owned companies Zickerman Group Limited and

Zickerman Holding Limited, was awarded an aggregate of 1,700,041 Bond Conversion

Shares at a conversion price of NOK 1.30 per share. Following the Bond Conversion,

Zickerman holds a total of 34,925,401 shares in the Company, corresponding to 7.23%

of the total outstanding shares of the Company prior to the Repair Offering.

On 13 March 2018, Board member Tom Henning Slethei (through his wholly owned company

Alto Holding AS) acquired 900,000 ordinary shares in Polarcus listed on Merkur Market at an

average price of NOK 1.50 per share. Also on 13 March 2018, Mr. Slethei (through his wholly

owned company Alto Holding AS) sold 900,000 ordinary shares in Polarcus listed on Oslo Børs

at an average price of NOK 1.59 per share. Following these transactions, Mr. Slethei owns

14,350,571 shares in Polarcus.

14.2.11 Shareholder structure

As of 16 March 2018, the Company had approximately 3,700 holders of its Shares registered

in the VPS. The following table provides an overview of the 20 largest shareholders:

Shareholder Account type Shares Ownership

1 J.P. Morgan Securiti Nominee 89,000,340 18.4%

2 Euroclear Bank S.A./ Nominee 48,409,257 10.0%

3 Clearstream Banking Nominee 19,879,027 4.1%

4 ABG Sundal Collier A Nominee 15,385,000 3.2%

5 MP Pensjon Pk Ordinary 15,356,777 3.2%

6 Global Skipsholding Ordinary 14,865,380 3.1%

7 Inak 3 As Ordinary 14,500,000 3.0%

8 Alto Holding As Ordinary 14,350,571 3.0%

9 Morgan Stanley & Co. Nominee 13,972,350 2.9%

10 Nordnet Livsforsikri Ordinary 13,769,040 2.9%

11 The Bank Of New York Nominee 11,538,461 2.4%

12 Skandinaviska Enskil Nominee 11,080,280 2.3%

131

13 Kristian Falnes As Ordinary 10,506,521 2.2%

14 North Energy Capital Ordinary 10,000,000 2.1%

15 Norda Asa Ordinary 9,888,960 2.0%

16 MSIP Equity Ordinary 5,000,000 1.0%

17 Nordnet Bank Ab Nominee 4,436,662 0.9%

18 Toluma Norden As Ordinary 4,250,000 0.9%

19 Credit Suisse Ag Nominee 4,000,000 0.8%

20 TTC Invest As Ordinary 4,000,000 0.8%

The major shareholders of the Company are defined as shareholders holding more than 5% of

the Company's share capital. In accordance with the disclosure requirements under the

Norwegian Securities Trading Act, shareholders acquiring ownership to or control more than

certain levels of the share capital, including 5%, of a company listed on Oslo Børs must notify

the stock exchange immediately.

The Company is not aware of any persons or entities, except for those set out below, who,

directly or indirectly, have an interest of 5% or more of the Shares as of the date of this

Prospectus. The following persons or entities have notified of an interest of 5% or more of the

Shares in the Company:

Carl-Peter Zickerman, who gave notice on 1 March 2018 (through his wholly owned

companies Zickerman Holding Ltd and Zickerman Group Ltd), has holdings corresponding to a

total of 34,925,401 Shares, corresponding to 7.23% of the issued share capital.

Bybrook Capital LLP, who gave notice on 1 March 2018 that they, through Bybrook Capital

Master Fund LP, Bybrook Capital Hazelton Master Fund LP, Bybrook Capital Badminton Fund

LP and Bybrook Capital Burton Partnership LP in aggregate held holdings corresponding to a

total of 89,331,697 Shares, corresponding to 23.3% of the issued share capital prior to the

Bond Conversion Offer and the Repair Offering.

All the Shares have equal voting rights. Thus, all major Shareholders have the same voting

rights relative to the number of Shares held; each Share carries one vote.

The Company is not aware that the Company is controlled or owned, directly or indirectly, by

any Shareholder or related Shareholders.

14.2.12 Dividend policy

Polarcus is committed to maximizing shareholder value, by inter alia declaring dividends to the

Shareholders from its profit. However, the Company is restricted from declaring dividends

under its loan facility and bonds as further described in more detail in Section 11.12.2 "Selected

financial information – Summary of financing – USD 410 million Fleet Bank Facility".

Polarcus has not issued any dividends in the Company's history.

14.2.13 Memorandum and Articles of Association

The Memorandum of Association as amended on 15 February 2018 and Articles of Association

as adopted by a resolution passed by a three-quarter majority of the shareholders being entitled

to vote at the General Meeting ("Special Resolution") dated 3 May 2017 are incorporated by

reference to this Prospectus, http://www.polarcus.com/en-us/articles-of-association/articles-

of-association.php, see Section 18.2 "Additional information—Incorporation by reference". The

summary of the Articles set out below is given for general background information purposes

only, and should not be construed as legal advice. Each Shareholder is responsible for seeking

separate legal advice to the extent necessary.

132

14.2.14 Objects and purposes

In accordance with paragraph 3 of the Memorandum of Association, the objects for which the

Company is established are to carry on, undertake, engage or invest, directly or indirectly, by

itself or through subsidiaries or part-owned companies, partnerships or other forms of entities,

on a worldwide basis, in any commercial activity within the international oil and oil services

business, including oil and gas exploration, production and participation, seismic data services

and general offshore energy related business, and whatever else may be considered incidental

or conductive thereto, including without limitation the acquisition, construction, equipment,

leasing, chartering, operation, agency and manning of any kind of vessels and everything

incidental thereto, and the Company shall have full power and authority to carry out any other

project not prohibited by the Companies Law.

14.2.15 Provisions with respect to members of administrative, management and supervisory

bodies

The Articles of Association contains provisions relating to the appointment of directors in articles

104-107, and proceedings of directors in articles 109-116. Furthermore, the Articles of

Association contain provisions regarding the appointment of committees of the Board in article

129. Articles 133-138 include provisions concerning alternate directors and the right for a

Director to appoint an alternate director.

In general, the Board of Directors may exercise all such powers of the Company that are not,

by the Companies Law or the Articles of Association, required to be exercised by the General

Meeting of Shareholders.

14.2.16 Description of Shares

The Company has one class of issued shares. The Shares have a par value of USD 0.10 each

and are equal in all respect. One Share entitles the holder to one vote at the annual and

extraordinary shareholder meetings of the Company.

14.2.17 Actions required to change rights of holders of Shares

The rights attached to any Share (unless otherwise provided by the terms of issue of the

Shares) may, whether or not the Company is being wound up, be varied with the consent in

writing of the holders of three-quarters of the issued Shares, or with the sanction of a Special

Resolution.

14.2.18 General Meeting

Through their ability to vote in the Shares at the General Meeting or otherwise, the

Shareholders of the Company are, collectively, able to exercise authority over Polarcus, subject

to the provisions of the Articles of Association and of the Companies Law.

All Shareholders are entitled to attend and vote at general meetings of the Company, either in

person, by proxy or by duly authorized representative.

General Meetings are convened by the Board of Directors. General Meetings shall furthermore

be convened by the Board at the request of any director, the auditor or a Shareholder or

Shareholders holding at the date of such request not less than 5 % of the issued and paid-up

share capital. A notice of an annual General Meeting shall be given at least 14 clear days before

the date of the meeting and a notice for any other General Meetings shall be given at least 7

clear days before the date of the meeting. The notice of the General Meeting shall include an

agenda for the meeting. The annual General Meeting shall be held within 6 months from the

end of each financial year. The annual General Meeting shall deal with and decide on the

adoption of the annual financial statement and annual report, the question of declaring

dividend, election of directors to the Board of Directors and their remuneration, appointment

of an auditor and its remuneration and such other matters as may be set out in the notice for

the meeting.

133

As Polarcus is listed on Oslo Børs and complies with the Norwegian Corporate Governance Code,

Polarcus intends, where practically possible (i.e. unless there are exceptional circumstances),

to call all General Meetings with 21 days advance notice.

14.2.19 Voting rights

On a show of hands every Shareholder who (being an individual) is present in person or by

proxy or, if a corporation or other non-natural person is present by its duly authorized

representative or proxy, shall have one vote and on a poll every Shareholder shall have one

vote for every Share of which in he is the holder.

Decisions of the General Meeting require a simple majority of the votes unless otherwise laid

down in the Articles of Association or the Companies Law. In the case of election of directors

to the Board of Directors, the Shareholders may by simple majority of the votes appoint any

person to be a director, however, where a director is sought to be appointed outside the General

Meeting normally appointing directors, such decision requires a Special Resolution. An increase

of the authorized share capital requires simple majority.

Certain decisions, including resolutions to consolidate and divide the share capital, to subdivide

the authorised share capital into Shares of higher or lower par value, to amend the Articles of

Association, or to reduce the share capital must receive the approval of Special Resolution.

On a poll or on a show of hands votes may be cast either personally or by proxy. A Shareholder

may appoint up to two proxies or the same proxy under one or more instruments to attend and

vote at a meeting. Where a Shareholder appoints more than one proxy the instrument of proxy

shall state which proxy is entitled to vote on a show of hands.

A Shareholder holding more than one Share need not cast the votes in respect of his Shares in

the same way on any resolution and therefore may vote a Share or some or all such Shares

either for or against a resolution and/or abstain from voting a Share or some or all of the Shares

and, subject to the terms of the instrument appointing him, a proxy appointed under one or

more instruments may vote a Share or some or all of the Shares in respect of which he is

appointed either for or against a resolution and/or abstain from voting.

In order to be entitled to vote, a Shareholder must be registered as the legal owner of the

Shares in the register of shareholders of the Company. The directors may fix in advance or

arrears a date as the record date for the determination of Shareholders entitled to vote at any

General Meeting. Pursuant to the Articles of Association, if no record date is fixed for the

determination of Shareholders entitled to vote at a General Meeting, the date on which the

notice of the meeting is sent shall be the record date for such determination of Shareholders.

The directors of Polarcus will ensure that a record date is fixed in accordance with any applicable

rules and regulations.

14.2.20 Restriction on ownership and transfer of Shares

The Shares are freely transferable.

However, in order to protect Norwegian Shareholders from taxation based on the Norwegian

N–KUS -regulations, the Articles of Association allows the Board to decline to register the

transfer of a Share where such transfer would, in the opinion of the Board, be likely to result

in 50% % or more of the aggregate issued share capital of the Company, or Shares of the

Company to which are attached 50% % or more of the votes attached to all issued Shares of

the Company, being held or owned directly or indirectly by individuals or legal persons resident

for tax purposes in Norway or, alternatively, such Shares being effectively connected to a

Norwegian business activity, or the Company otherwise being deemed a "controlled foreign

company" as such term is defined pursuant to Norwegian tax legislation.

There are no limitations under the Companies Law on the rights of non-residents or foreign

owners to hold or vote Polarcus Shares.

There are no pre-emption rights on the issue or transfer of Shares.

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14.2.21 Additional issuances

All Shares for the time being unissued shall be under the control of the Board of Directors who

may:

issue, allot and dispose of Shares to such persons, in such manner, on such terms and

having such rights and being subject to such restrictions as they may from time to time

determine, including the issue, allotment and disposal of the same (at a market value

determined by the directors in their discretion) as a defence mechanism in connection with a

potential buy-out situation or a change of control situation in relation to the Company; and

grant options with respect to such Shares and issue warrants or similar instruments with

respect thereto, and for such purposes, the Board of Directors may reserve an appropriate

number of Shares for the time being unissued.

There are no pre-emption rights on the issue of Shares in favour of existing Shareholders.

However, the Board of Directors is pursuant to the Company's corporate governance

commitments committed to limiting the level of dilution of existing Shareholders. The

commitments provide that the Company, in the event of a share offering, will carefully consider

the purpose and need for new equity, the urgency of such equity, the strategic positioning

between the Company and the new shareholders towards which the offering is directed, the

offer price, the financial market conditions and the need for compensating existing

Shareholders.

14.2.22 Dividends

Under the Companies Law, the Company may only make distributions by way of dividend out

of profits or, provided that immediately following the date that the dividend is proposed to be

paid the Company is able to pay its debts as they fall due in the ordinary course of business,

out of its share premium account.

Any proposal to pay a dividend, and the amount of the dividend, must be recommended by the

Board and approved by the Shareholders by simple majority vote in a General Meeting. The

Shareholders may vote to reduce (but not to increase) the dividends proposed by the Board.

The Board may, if approved by the Shareholders by simple majority vote in a General Meeting,

distribute Shares, credited as fully paid, instead of cash in respect of the whole (or some part,

to be determined by the directors) of any of the dividends.

The Shareholders do not have an absolute entitlement to an annual share in the Company's

profits (form of "obligatory" dividends).

The Board may fix in advance or arrears a date as the record date for the determination of

Shareholders entitled to receive payment of any dividend. If no record date is fixed for the

determination of Shareholders entitled to receive payment of a dividend, the date on which the

resolution of the directors declaring such dividend is adopted shall be the record date for such

determination of Shareholders. There is no fixed date or time limit on which entitlement to

dividends (if any) arises.

The directors may deduct from any dividend or distribution payable to any Shareholder all sums

of money (if any) then payable by such Shareholder to the Company on account of calls or

otherwise. Any dividend which cannot be paid to a Shareholders and/or which remains

unclaimed after six months from the date of declaration of such dividend may, in the discretion

of the directors, be paid into a separate account in the Company's name, provided that the

Company shall not be constituted as a trustee in respect of that account and the dividend shall

remain as a debt due to the Shareholder. Any dividend which remains unclaimed after a period

of six years from the date of declaration of such dividend shall be forfeited and shall revert to

the Company. There are no procedures for payment of dividends to non-resident Shareholders.

Any furture payments of dividends on the Shares to non-resident Shareholders will be

denominated in NOK, and will be paid to the Shareholders through the VPS.

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The Company is subject to dividend restrictions under its applicable financing arrangements as

further described in Sections 11.12.2 "Selected financial information – Summary of financing –

USD 410 million Fleet Bank Facility".

14.2.23 Provisions preventing change of control

The Articles of Association provide the Board of Directors with the power to issue Shares (at a

market value determined by the directors in their discretion) as a defense mechanism in

connection with a potential buy-out situation or a change of control situation in relation to the

Company. Furthermore, the Articles of Association also empower the Company, subject to the

provisions of the Companies Law and any applicable listing rules, to acquire, for valuable

consideration (determined by the directors), Shares in its own share capital and in so far as

approved by Shareholders, including acquisitions as a defence mechanism in a potential buy-

out situation or a change of control situation in the Company.

Please also see Section 14.2.20 "Corporate information and description of the share capital –

Shares and share capital —Restriction on ownership and transfer of Shares".

Other than as set out above, there are no other provisions in the Articles of Association that

serve as a mechanism to delay, defer or prevent a change of control of the Company.

14.2.24 Mandatory takeover, squeeze-out and sell-out provisions applicable for the Shares

The Companies Law currently contains two methods by which a third party might effect the

acquisition of the shares of a Cayman Islands company. The Companies Law contains squeeze-

out provisions that enable an offeror to acquire 100% of the shares in a Cayman Islands

company in specific circumstances where a takeover offer made by the offeror is approved by

holders of not less than 90% in value of the shares affected. Any takeover offer applicable to

the Company will be subject to the tender offer rules of Oslo Børs, as further described in

section 15.9 "Securities trading in Norway – Mandatory offer requirements".

The Companies Law also provides for a court-supervised scheme of arrangement which will

result in the acquisition of either all or none of the shares of the Cayman Islands company. A

scheme of arrangement would require the approval of a majority in number representing 75%

in value of the shareholders who attend and vote in person or by proxy at a court directed

meeting of the company, and the sanction of the Grand Court of the Cayman Islands.

Other than as set out above, the Companies Law does not contain any mandatory takeover,

squeeze-out and sell-out provisions applicable to the Shares.

As the Shares of the Company are listed on Oslo Børs the Shares will be subject to the

mandatory take-over provisions set out in the Norwegian Securities Trading Act chapter 6 as

further described in section 15.9 "Securities trading in Norway – Mandatory offer

requirements".

14.2.25 Redemption or conversion rights

Shareholders do not have any redemption rights or conversion rights with respect to their

Shares.

14.2.26 Rights of liquidation

Pursuant to the Companies Law, the Company may be voluntarily wound up by a special

resolution, or by simple majority vote where the Company is unable to pay its debts as they

fall due.

The Shares rank pari passu in the event of a return of capital by the Company upon a liquidation

or otherwise.

If the Company shall be wound up, and the assets available for distribution amongst the

Shareholders shall be insufficient to repay the whole of the share capital, such assets shall be

distributed so that, as nearly as may be, the losses shall be borne by the Shareholders in

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proportion to the net asset value per Share held by such Shareholders. If in a winding up the

assets available for distribution amongst the Shareholders shall be more than sufficient to repay

the whole of the share capital at the commencement of the winding up, the surplus shall be

distributed amongst the Shareholders in proportion to the par value per Share held by such

Shareholders at the commencement of the winding up.

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15. SECURITIES TRADING IN NORWAY

Introduction

Oslo Børs was established in 1819 and is the principal market in which shares, bonds and other

financial instruments are traded in Norway. Oslo Børs is operated by Oslo Børs ASA, which also

operates the regulated marketplace Oslo Axess.

Oslo Børs has entered into a strategic cooperation with the London Stock Exchange group with

regards to, inter alia, trading systems for equities, fixed income and derivatives.

Trading and settlement

Trading of equities on Oslo Børs is carried out in the electronic trading system Millenium

Exchange. This trading system was developed by the London Stock Exchange and is in use by

all markets operated by the London Stock Exchange as well as by the Borsa Italiana and the

Johannesburg Stock Exchange.

Official trading on Oslo Børs takes place between 09:00 hours (CET) and 16:20 hours (CET)

each trading day, with pre-trade period between 08:15 hours (CET) and 09:00 hours (CET),

closing auction from 16:20 hours (CET) to 16:25 hours (CET) and a post-trade period from

16:25 hours (CET) to 17:30 hours (CET). Reporting of after exchange trades can be done until

17:30 hours (CET).

The settlement period for trading on Oslo Børs is two trading days (T+2). This means that

securities will be settled on the investor’s account in the VPS two days after the transaction,

and that the seller will receive payment after two days.

Oslo Clearing ASA, a wholly-owned subsidiary SIX x-clear Ltd, a company in the Six Group, has

a license from the Norwegian FSA to act as a central clearing service, and has from 18 June

2010 offered clearing and counterparty services for equity trading on Oslo Børs.

Investment services in Norway may only be provided by Norwegian investment firms holding a

license under the Norwegian Securities Trading Act, branches of investment firms from an EEA

member state or investment firms from outside the EEA that have been licensed to operate in

Norway. Investment firms in an EEA member state may also provide cross-border investment

services into Norway.

It is possible for investment firms to undertake market-making activities in shares listed in

Norway if they have a license to this effect under the Norwegian Securities Trading Act, or in

the case of investment firms in an EEA member state, a license to carry out market-making

activities in their home jurisdiction. Such market-making activities will be governed by the

regulations of the Norwegian Securities Trading Act relating to brokers' trading for their own

account. However, market-making activities do not as such require notification to the

Norwegian FSA or Oslo Børs except for the general obligation of investment firms being

members of Oslo Børs to report all trades in stock exchange listed securities.

Information, control and surveillance

Under Norwegian law, Oslo Børs is required to perform a number of surveillance and control

functions. The Surveillance and Corporate Control unit of Oslo Børs monitors market activity

on a continuous basis. Market surveillance systems are largely automated, promptly warning

department personnel of abnormal market developments.

The Norwegian FSA controls the issuance of securities in both the equity and bond markets in

Norway and evaluates whether the issuance documentation contains the required information

and whether it would otherwise be unlawful to carry out the issuance. Under Norwegian law, a

company that is listed on a Norwegian regulated market, or has applied for listing on such

market, must promptly release any inside information directly concerning the company (i.e.

precise information about financial instruments, the issuer thereof or other matters which are

likely to have a significant effect on the price of the relevant financial instruments or related

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financial instruments, and which are not publicly available or commonly known in the market).

A company may, however, delay the release of such information in order not to prejudice its

legitimate interests, provided that it is able to ensure the confidentiality of the information and

that the delayed release would not be likely to mislead the public. Oslo Børs may levy fines on

companies violating these requirements.

The VPS and transfer of shares

The Company's shareholder register is operated through the VPS. The VPS is the Norwegian

paperless centralised securities register. It is a computerised bookkeeping system in which the

ownership of, and all transactions relating to, Norwegian listed shares must be recorded. All

transactions relating to securities registered with the VPS are made through computerised book

entries. No physical share certificates are, or may be, issued. The VPS confirms each entry by

sending a transcript to the registered shareholder irrespective of any beneficial ownership. To

give effect to such entries, the individual shareholder must establish a share account with a

Norwegian account agent. Norwegian banks, authorised securities brokers in Norway and

Norwegian branches of credit institutions established within the EEA are allowed to act as

account agents.

The entry of a transaction in the VPS is generally prima facie evidence in determining the legal

rights of parties as against the issuing company or any third party claiming an interest in the

given security.

The VPS is liable for any loss suffered as a result of faulty registration or an amendment to, or

deletion of, rights in respect of registered securities unless the error is caused by matters

outside the VPS’ control which the VPS could not reasonably be expected to avoid or overcome

the consequences of. Damages payable by the VPS may, however, be reduced in the event of

contributory negligence by the aggrieved party. VPS's liability is capped at NOK 500 million.

The VPS must provide information to the Norwegian FSA on an on-going basis, as well as any

information that the Norwegian FSA requests. Further, Norwegian tax authorities may require

certain information from the VPS regarding any individual’s holdings of securities, including

information about dividends and interest payments.

Shareholder register – Norwegian law

An approved and registered nominee has a duty to provide information on demand about

beneficial shareholders to the issuer and to the Norwegian authorities. In case of registration

by nominees, the registration in the VPS must show that the registered owner is a nominee. A

registered nominee has the right to receive dividends and other distributions but cannot vote

on shares at general meetings on behalf of the beneficial owners.

Foreign investment in Norwegian shares

Foreign investors may trade shares listed on Oslo Børs through any broker that is a member of

Oslo Børs, whether Norwegian or foreign.

Disclosure obligations

If a person's, entity's or consolidated group's proportion of the total issued shares and/or rights

to shares in an issuer with its shares listed on a regulated market in Norway (with Norway as

its home state, which will be the case for the Company) reaches, exceeds or falls below the

respective thresholds of 5%, 10%, 15%, 20%, 25%, 1/3, 50%, 2/3 or 90% of the share capital

or the voting rights of that issuer, the person, entity or group in question has an obligation

under the Norwegian Securities Trading Act to notify Oslo Børs and the issuer immediately. The

same applies if the disclosure thresholds are passed due to other circumstances, such as a

change in the Company's share capital.

Insider trading

According to Norwegian law, subscription for, purchase, sale or exchange of financial

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instruments that are listed, or subject to the application for listing, on a Norwegian regulated

market, or incitement to such dispositions, must not be undertaken by anyone who has inside

information, as defined in section 3-2 of the Norwegian Securities Trading Act. The same applies

to the entry into, purchase, sale or exchange of options or futures/forward contracts or

equivalent rights whose value is connected to such financial instruments or incitement to such

dispositions.

Mandatory offer requirements

The Norwegian Securities Trading Act requires any person, entity or consolidated group that

becomes the owner of shares representing more than one-third of the voting rights of

Norwegian companies and certain other foreign issuers, including the Company, to, within four

weeks, make an unconditional general offer for the purchase of the remaining shares in that

issuer. A mandatory offer obligation may also be triggered where a party acquires the right to

become the owner of shares that, together with the party's own shareholding, represent more

than one-third of the voting rights in the issuer and Oslo Børs decides that this is regarded as

an effective acquisition of the shares in question.

The mandatory offer obligation ceases to apply if the person, entity or consolidated group sells

the portion of the shares that exceeds the relevant threshold within four weeks of the date on

which the mandatory offer obligation was triggered.

When a mandatory offer obligation is triggered, the person subject to the obligation is required

to immediately notify Oslo Børs and the issuer in question accordingly. The notification is

required to state whether an offer will be made to acquire the remaining shares in the issuer

or whether a sale will take place. As a rule, a notification to the effect that an offer will be made

cannot be retracted. The offer and the offer document required are subject to approval by Oslo

Børs before the offer is submitted to the shareholders or made public.

The offer price per share must be at least as high as the highest price paid or agreed to be paid

by the offeror for the shares in the six-month period prior to the date the threshold was

exceeded. If the acquirer acquires or agrees to acquire additional shares at a higher price prior

to the expiration of the mandatory offer period, the acquirer is required to restate its offer at

such higher price. A mandatory offer must be in cash or contain a cash alternative at least

equivalent to any other consideration offered.

In case of failure to make a mandatory offer or to sell the portion of the shares that exceeds

the relevant mandatory offer threshold within four weeks, Oslo Børs may force the acquirer to

sell the shares exceeding the threshold by public auction. Moreover, a shareholder who fails to

make an offer may not, as long as the mandatory offer obligation remains in unfulfilled, exercise

rights in the issuer, such as voting on shares at general meetings of the issuer's shareholders,

without the consent of a majority of the remaining shareholders. The shareholder may,

however, exercise its rights to dividends and pre-emption rights in the event of a share capital

increase. If the shareholder neglects his duty to make a mandatory offer, Oslo Børs may impose

a cumulative daily fine that accrues until the circumstance has been rectified.

Any person, entity or consolidated group that owns shares representing more than one-third

of the votes in a Norwegian issuer with its shares listed on a Norwegian regulated market is

required to make an offer to purchase the remaining shares of the issuer (repeated offer

obligation) if the person, entity or consolidated group through acquisition becomes the owner

of shares representing 40% or more of the votes in the issuer. The same applies

correspondingly if the person, entity or consolidated group through acquisition becomes the

owner of shares representing 50% or more of the votes in the issuer. The mandatory offer

obligation ceases to apply if the person, entity or consolidated group sells the portion of the

shares which exceeds the relevant threshold within four weeks of the date on which the

mandatory offer obligation was triggered.

Any person, entity or consolidated group that has passed any of the above mentioned

thresholds in such a way as not to trigger the mandatory bid obligation, and has therefore not

previously made an offer for the remaining shares in the company in accordance with the

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mandatory offer rules is, as a main rule, required to make a mandatory offer in the event of a

subsequent acquisition of shares in the company.

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16. TAXATION

Introduction

This subsection presents a brief outline of certain tax aspects related to purchase, holding and

disposal of shares in the Company. The presentation is based on Norwegian tax laws and

regulations in force as of the date of this Prospectus and describes the tax situation for

Norwegian shareholders (shareholders with Norwegian tax domicile).

The presentation does not include any information with respect to taxation in any other

jurisdiction than Norway, and the presentation only focuses on the shareholder categories

explicitly mentioned below. Hence the presentation does i.a. not exhaustively cover the tax

situation for non-Norwegian shareholders holding shares in the Company through a Norwegian

permanent establishment. Further, special rules (exit taxation), which are not mentioned

below, may apply to shareholders that have moved or will move out of Norway.

The presentation is of a general nature and is not intended to be an exhaustive analysis of all

possible tax aspects relating to the shares in the Company or dividends paid from the Company.

Accordingly, prospective holders of shares in the Company should consult their own tax advisors

as to the consequences under the tax regulations of Norway and elsewhere.

The presentation is subject to any amendments to tax laws and regulations that may occur

after the date of this Prospectus, including any retroactive enforcement.

The considerations made in this subsection is based upon the Company being, for Norwegian

tax purposes, deemed tax domiciled in a low-tax jurisdiction, as the Cayman Islands is currently

on the “black list” of low-tax jurisdictions issued by the Norwegian Tax Directorate.

Taxation on dividends

16.2.1 Norwegian personal shareholders

Dividends distributed from the Company to shareholders being natural persons tax resident in

Norwegian are taxable as ordinary income at a rate of 23 %, but the tax base is adjusted

upwards by a factor of 1.33, thus implying an effective tax rate of 30.59% (2018).

However, this will only apply to the extent the dividends exceed a calculated risk-free return

on the investment (tax-free return), which thus is tax exempt.

The tax-free return is calculated annually on a share-by-share basis and pertains to the owner

of the share at the end of the year. The tax-free return is calculated on the basis of the

shareholder's cost price of the share multiplied by a statutory risk-free interest. The risk-free

interest is determined on the basis of interest on 3-months treasury bills, as published by

Norges Bank (Central Bank of Norway), after tax with the addition of 0.5 percentage points.

The risk free-interest rate for 2017, was 0.4 %. The risk free interest rate for 2018 will be

published mid January 2019.

If the actual distributed dividends for one year are less than the calculated tax-free return

(calculated for each share), the surplus tax-free return can be carried forward to be offset

against dividends or capital gains on the same share for subsequent years. Any such surplus

tax-free return will be added to the basis for calculating the annually tax-free return for

subsequent years.

16.2.2 Norwegian corporate shareholders

Norwegian shareholders who are corporations (i.e. limited liability companies, mutual

funds, savings banks, mutual insurance companies or similar entities resident in Norway

for tax purposes) are to a large extent exempt from tax on dividends received on shares in

Norwegian limited liability companies, pursuant to the Norwegian exemption method

(Norwegian: Fritaksmetoden). However, as the Company is deemed resident of a low-tax

jurisdiction, the exemption method will not apply and dividend income is fully taxable at a rate

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of 23 %.

The repayment of paid-up share capital and paid-up share premium of each share is not

regarded as dividends for tax purposes and thus not subject to tax.

Norwegian Tax on Capital Gains on Shares

16.3.1 Personal Shareholders

Sale, redemption, or other disposal of shares is considered a realization for Norwegian tax

purposes.

A capital gain or loss generated by a Norwegian personal shareholder through a realization of

shares in the Company is taxable or tax deductible in Norway. Such capital gain or loss is

included in or deducted from the basis for computation of ordinary income in the year of

disposal at a rate of 23 %, then calculated with a factor of 1.33, resulting in an effective tax

rate of 30.59 % (2018). Gain is subject to tax and loss is deductible for tax purposes

irrespective of the duration of the ownership and the number of shares owned and/or disposed

of.

The capital gain or loss is calculated based on the consideration received for the share less the

cost price of the share, transaction expenses and any surplus tax-free return on the share at

the time of disposal (as a result of the non-utilization of the calculated annual tax-free returns).

However, any surplus tax-free return may only be deducted in order to reduce a capital gain,

and not to produce or increase a loss. Further, any surplus tax-free return on one share cannot

be set-off against gains on another share. Expenses and broker's commission incurred both at

the time of purchase and the time of sale are deductible when calculating the capital gain or

loss. A FIFO (First In First Out) principle applies if shares are not acquired at the same time.

Please note that special rules may apply for shareholders that have emigrated or will emigrate.

16.3.2 Corporate Shareholders

Provided that the Company, according to Norwegian Tax Law, is deemed tax domiciled in a low

tax jurisdiction, the Norwegian exemption method will not apply. This entails that a capital gain

or loss generated by a Norwegian corporate shareholder through a realization of shares in the

Company is taxable or tax deductible in Norway at a rate of 23 %. Gain is subject to tax and

loss is deductible for tax purposes irrespective of the duration of the ownership and the number

of shares owned and/or disposed of.

The capital gain or loss is calculated based on the consideration received for the share less the

cost price of the share and transaction expenses. Expenses and broker’s commission at both

the purchase and the sale are deductible when calculating the capital gain or loss. A FIFO (First

In First Out) principle applies if shares are not acquired simultaneously.

16.3.3 Foreign Shareholders

As a general rule, capital gains generated by a foreign shareholder from shares in companies

tax domiciled outside of Norway are not subject to Norwegian taxation unless (i) the shares are

effectively connected to a business subject to taxation in Norway, or (ii) the foreign shareholder

is an individual who has been tax domiciled in Norway at any time during the five calendar

years preceding the year of dividend distribution or realization.

Norwegian Net Wealth Tax

Norwegian corporations are exempt from net wealth taxation.

Norwegian personal shareholders are subject to net wealth tax. The marginal net wealth tax

rate is currently 0.85 percent. When calculating the net wealth tax base, shares in listed

companies (including on Oslo Stock Exchange) are valued at 80% of the shares’ quoted value

as on January 1 in the assessment year.

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Norwegian Duties on Transfer of Shares

No stamp duty or similar duties are currently imposed in Norway on the transfer of shares,

neither on acquisition nor disposal.

Norwegian CFC-legislation

Provided that the Company, according to Norwegian Tax Law, is tax domiciled in a low tax

jurisdiction, and the shares directly or indirectly are deemed to be owned or controlled with 50

% or more by Norwegian shareholders, Norwegian CFC-legislation (“NOKUS”) will apply. If

NOKUS taxation applies, Norwegian shareholders are subject to annual taxation in Norway for

their proportionate part of the taxable net income of the Company, regardless of whether

dividends are distributed, and calculated in accordance with Norwegian tax law.

Pursuant to the Company’s Articles of Association, the Company may refuse to accept

shareholder positions leading to the CFC-regulations becoming applicable. Also, other

amendments to applicable tax provisions may have a negative impact on the return on the

investment of Norwegian taxpayers.

Cayman Island Taxation

There is, at present, no direct taxation or withholding in the Cayman Islands and interest,

dividends and gains payable by the Company will be received free of all Cayman Islands taxes.

The Company is registered as an "exempted company" pursuant to the Companies Law. The

Company has received an undertaking from the Governor in Cabinet of the Cayman Islands to

the effect that, for a period of twenty years from such date, no law that thereafter is enacted

in the Cayman Islands imposing any tax or duty to be levied on profits, income or on gains or

appreciation, or any tax in the nature of estate duty or inheritance tax, will apply to any

property comprised in or any income arising from the Company, or to the Shareholders thereof,

in respect of any such property or income.

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17. SELLING AND TRANSFER RESTRICTIONS

General

As a consequence of the following restrictions, prospective investors are advised to consult

legal counsel prior to making any offer, resale, pledge or other transfer of the Shares offered

hereby.

Other than in Norway, the Company is not taking any action to permit a public offering of the

Shares in any jurisdiction. Receipt of this Prospectus will not constitute an offer in those

jurisdictions in which it would be illegal to make an offer and, in those circumstances, this

Prospectus is for information only and should not be copied or redistributed. Except as

otherwise disclosed in this Prospectus, if an investor receives a copy of this Prospectus in any

jurisdiction other than Norway, the investor may not treat this Prospectus as constituting an

invitation or offer to it, nor should the investor in any event deal in the Shares, unless, in the

relevant jurisdiction, such an invitation or offer could lawfully be made to that investor, or the

Shares could lawfully be dealt in without contravention of any unfulfilled registration or other

legal requirements. Accordingly, if an investor receives a copy of this Prospectus, the investor

should not distribute or send the same, or transfer Shares, to any person or in or into any

jurisdiction where to do so would or might contravene local securities laws or regulations.

Selling restrictions

17.2.1 United States

The Offer Shares have not been and will not be registered under the U.S. Securities Act, and

may not be offered or sold except: (i) within the United States to QIBs in reliance on Rule 144A;

or (ii) to certain persons in offshore transactions in compliance with Regulation S under the

U.S. Securities Act, and in accordance with any applicable securities laws of any state or

territory of the United States or any other jurisdiction. Accordingly, the Managers has

represented and agreed that it has not offered or sold, and will not offer or sell, any of the Offer

Shares as part of its allocation at any time other than to QIBs in the United States in accordance

with Rule 144A or outside of the United States in compliance with Rule 903 of Regulation S.

Transfer of the Offer Shares will be restricted and each purchaser of the Offer Shares in the

United States will be required to make certain acknowledgements, representations and

agreements, as described under Section 17.3.1 "—Transfer restrictions—United States".

Any offer or sale in the United States will be made by affiliates of the Managers who are broker-

dealers registered under the U.S. Exchange Act. In addition, until 40 days after the

commencement of the Repair Offering, an offer or sale of Offer Shares within the United States

by a dealer, whether or not participating in the Repair Offering, may violate the registration

requirements of the U.S. Securities Act if such offer or sale is made otherwise than in

accordance with Rule 144A of the U.S. Securities Act and in connection with any applicable

state securities laws.

17.2.2 United Kingdom

This Prospectus and any other material in relation to the Repair Offering described herein is

only being distributed to, and is only directed at persons in the United Kingdom who are

qualified investors within the meaning of Article 2(1)I of the Prospectus Directive ("qualified

investors") that are also (i) investment professionals falling within Article 19(5) of the Financial

Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); (ii) high net

worth entities or other persons falling within Article 49(2)(a) to (d) of the Order; or (iii) persons

to whom distributions may otherwise lawfully be made (all such persons together being referred

to as "Relevant Persons"). The Offer Shares are only available to, and any investment or

investment activity to which this Prospectus relates is available only to, and will be engaged in

only with, Relevant Persons). This Prospectus and its contents are confidential and should not

be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any

145

other person in the United Kingdom. Persons who are not Relevant Persons should not take

any action on the basis of this Prospectus and should not rely on it.

17.2.3 European Economic Area

In relation to each Relevant Member State, an offer to the public of any Offer Shares which are

the subject of the Repair Offering contemplated by this Prospectus may not be made in that

Relevant Member State, other than the Repair Offering in Norway as described in this

Prospectus, once the Prospectus has been approved by the competent authority in Norway and

published in accordance with the Prospectus Directive (as implemented in Norway), except that

an offer to the public in that Relevant Member State of any Offer Shares may be made at any

time under the following exemptions under the Prospectus Directive, if they have been

implemented in that Relevant Member State:

a) to legal entities which are qualified investors as defined in the Prospectus Directive;

b) to fewer than 150 natural or legal persons (other than qualified investors as defined in

the Prospectus Directive), as permitted under the Prospectus Directive, subject to

obtaining the prior consent of the Managers for any such offer, or in any other

circumstances falling within Article 3(2) of the Prospectus Directive; provided that no such

offer of Offer Shares shall require the Company or the Managers to publish a prospectus

pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to

Article 16 of the Prospectus Directive.

For the purposes of this provision, the expression an "offer to the public" in relation to any

Offer Shares in any Relevant Member State means the communication in any form and by any

means of sufficient information on the terms of the offer and any Securities to be offered so as

to enable an investor to decide to purchase any Offer Shares, as the same may be varied in

that Member State by any measure implementing the Prospectus Directive in that Member

State the expression "Prospectus Directive" means Directive 2003/71/EC (and amendments

thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant

Member State), and includes any relevant implementing measure in each Relevant Member

State.

This EEA selling restriction is in addition to any other selling restrictions set out in this

Prospectus.

17.2.4 Additional jurisdictions

17.2.4.1 Canada

This Prospectus is not, and under no circumstance is to be construed as, a prospectus, an

advertisement or a public offering of the Offer Shares in Canada or any province or territory

thereof. Any offer or sale of the Offer Shares in Canada will be made only pursuant to an

exemption from the requirements to file a prospectus with the relevant Canadian securities

regulators and only by a dealer properly registered under applicable provincial securities laws

or, alternatively, pursuant to an exemption from the dealer registration requirement in the

relevant province or territory of Canada in which such offer or sale is made.

17.2.4.2 Hong Kong

The Offer Shares may not be offered or sold in Hong Kong by means of any document other

than (i) in circumstances which do not constitute an offer to the public within the meaning of

the Companies Ordinance (Cap. 32) of Hong Kong, or (ii) to "professional investors" within the

meaning of the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made

thereunder, or (iii) in other circumstances which do not result in the document being a

"prospectus" within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong, and no

advertisement, invitation or document relating to the Offer Shares may be issued or may be in

the possession of any person for the purposes of issue (in each case whether in Hong Kong or

elsewhere), which is directed at, or the contents of which are likely to be accessed or read by,

the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong)

146

other than with respect to Offer Shares which are or are intended to be disposed of only to

persons outside Hong Kong or only to "professional investors" within the meaning of the

Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made thereunder.

17.2.4.3 Singapore

This Prospectus has not been registered as a prospectus with the Monetary Authority of

Singapore. Accordingly, this Prospectus and any other document or material in connection with

the offer or sale, or invitation for subscription or purchase, of the Offer Shares may not be

circulated or distributed, nor may they be offered or sold, or be made the subject of an invitation

for subscription or purchase, whether directly or indirectly, to persons in Singapore other than

(i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289

of Singapore (the "SFA"), (ii) to a relevant person, or any person pursuant to Section 275(1A),

and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise

pursuant to, and in accordance with the conditions of, any other applicable provision of the

SFA.

17.2.5 Other jurisdictions

The Offer Shares may not be offered, sold, resold, transferred or delivered, directly or indirectly,

in or into, Japan, Australia or any other jurisdiction in which it would not be permissible to offer

the Offer Shares.

In jurisdictions outside the United States and the EEA where the Repair Offering would be

permissible, the Offer Shares will only be offered pursuant to applicable exceptions from

prospectus requirements in such jurisdictions.

Transfer restrictions

17.3.1 United States

The Offer Shares have not been and will not be registered under the U.S. Securities Act and

may not be offered or sold within the United States except pursuant to an exemption from, or

in a transaction not subject to, the registration requirements of the U.S. Securities Act and

applicable state securities laws. Terms defined in Rule 144A or Regulation S shall have the

same meaning when used in this Section.

Each purchaser of the Offer Shares outside the United States pursuant to Regulation S will be

deemed to have acknowledged, represented and agreed that it has received a copy of this

Prospectus and such other information as it deems necessary to make an informed decision

and that:

• The purchaser is authorised to consummate the purchase of the Offer Shares in

compliance with all applicable laws and regulations.

• The purchaser acknowledges that the Offer Shares have not been and will not be

registered under the U.S. Securities Act, or with any securities regulatory authority or

any state of the United States, and are subject to significant restrictions on transfer.

• The purchaser is, and the person, if any, for whose account or benefit the purchaser is

acquiring the Offer Shares was located outside the United States at the time the buy order

for the Offer Shares was originated and continues to be located outside the United States

and has not purchased the Offer Shares for the benefit of any person in the United States

or entered into any arrangement for the transfer of the Offer Shares to any person in the

United States.

• The purchaser is not an affiliate of the Company or a person acting on behalf of such

affiliate, and is not in the business of buying and selling securities or, if it is in such

business, it did not acquire the Offer Shares from the Company or an affiliate thereof in

the initial distribution of such Shares.

• The purchaser is aware of the restrictions on the offer and sale of the Offer Shares

pursuant to Regulation S described in this Prospectus.

147

• The Offer Shares have not been offered to it by means of any "directed selling efforts" as

defined in Regulation S.

• The Company shall not recognise any offer, sale, pledge or other transfer of the Offer

Shares made other than in compliance with the above restrictions.

• The purchaser acknowledges that the Company, the Managers and their respective

advisers will rely upon the truth and accuracy of the foregoing acknowledgements,

representations and agreements.

Each purchaser of the Offer Shares within the United States pursuant to Rule 144A will be

deemed to have acknowledged, represented and agreed that it has received a copy of this

Prospectus and such other information as it deems necessary to make an informed investment

decision and that:

• The purchaser is authorised to consummate the purchase of the Offer Shares in

compliance with all applicable laws and regulations.

• The purchaser acknowledges that the Offer Shares have not been and will not be

registered under the U.S. Securities Act or with any securities regulatory authority of any

state of the United States and are subject to significant restrictions to transfer.

• The purchaser (i) is a QIB (as defined in Rule 144A), (ii) is aware that the sale to it is

being made in reliance on Rule 144A and (iii) is acquiring such Offer Shares for its own

account or for the account of a QIB, in each case for investment and not with a view to

any resale or distribution to the Offer Shares.

• The purchaser is aware that the Offer Shares are being offered in the United States in a

transaction not involving any public offering in the United States within the meaning of

the U.S. Securities Act.

• If, in the future, the purchaser decides to offer, resell, pledge or otherwise transfer such

Offer Shares, as the case may be, such Shares may be offered, sold, pledged or otherwise

transferred only (i) to a person whom the beneficial owner and/or any person acting on

its behalf reasonably believes is a QIB in a transaction meeting the requirements of Rule

144A, (ii) in accordance with Regulation S, (iii) in accordance with Rule 144 (if available),

(iv) pursuant to any other exemption from the registration requirements of the U.S.

Securities Act, subject to the receipt by the Company of an opinion of counsel or such

other evidence that the Company may reasonably require that such sale or transfer is in

compliance with 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 any applicable

securities laws of any state or territory of the United States or any other jurisdiction.

• The purchaser is not an affiliate of the Company or a person acting on behalf of such

affiliate, and is not in the business of buying and selling securities or, if it is in such

business, it did not acquire the Offer Shares from the Company or an affiliate thereof in

the initial distribution of such Shares.

• The Offer Shares are "restricted securities" within the meaning of Rule 144(a) (3) and no

representation is made as to the availability of the exemption provided by Rule 144 for

resales of any Offer Shares, as the case may be.

• The Company shall not recognise any offer, sale pledge or other transfer of the Offer

Shares made other than in compliance with the above-stated restrictions.

• The purchaser acknowledges that the Company, the Managers and their respective

advisers will rely upon the truth and accuracy of the foregoing acknowledgements,

representations and agreements.

17.3.2 European Economic Area

• Each person in a Relevant Member State (other than, in the case of paragraph (a),

persons receiving offers contemplated in this Prospectus in Norway) who receives any

communication in respect of, or who acquires any Offer Shares under, the offers

148

contemplated in this Prospectus will be deemed to have represented, warranted and

agreed to and with the Managers and the Company that:

• it is a qualified investor as defined in the Prospectus Directive; and

• in the case of any Offer Shares acquired by it as a financial intermediary, as that term is

used in Article 3(2) of the Prospectus Directive, (i) the Offer Shares acquired by it in the

offer have not been acquired on behalf of, nor have they been acquired with a view to

their offer or resale to, persons in any Relevant Member State other than qualified

investors, as that term is defined in the Prospectus Directive, or in circumstances in which

the prior consent of the Managers has been given to the offer or resale; or (ii) where Offer

Shares have been acquired by it on behalf of persons in any Relevant Member State other

than qualified investors, the offer of those Shares to it is not treated under the Prospectus

Directive as having been made to such persons.

• For the purposes of this representation, the expression an "offer" in relation to any Offer

Shares in any Relevant Member State means the communication in any form and by any

means of sufficient information on the terms of the offer and any Offer Shares to be

offered so as to enable an investor to decide to purchase or subscribe for the Offer Shares,

as the same may be varied in that Relevant Member State by any measure implementing

the Prospectus Directive in that Relevant Member State and the expression "Prospectus

Directive" means Directive 2003/71/EC (and amendments thereto, including the 2010

PD Amending Directive, to the extent implemented in the Relevant Member State), and

includes any relevant implementing measure in each Relevant Member State and the

expression "2010 PD Amending Directive" means Directive 2010/73/EU.

149

18. ADDITIONAL INFORMATION

Documents on display

For the life of this Prospectus, the following documents (or copies thereof) are referred to and

available for inspection at Polarcus’ homepage www.polarcus.com and the Company’s present

management location during normal business hours at Almas Tower, Level 32, Jumeirah Lakes

Towers, PO Box 283373, Dubai, U.A.E, telephone number: +971 4 43 60 800:

the Memorandum of Association and the Articles of Association of the Company

all reports, letters, historical financial information and other documents which is included

or referred to in this Prospectus; and

the historical financial information of the Company and its subsidiary undertakings for

each of the two financial years preceding the publication of this Prospectus.

Incorporation by reference

The information incorporated by reference in this Prospectus should be read in connection with

the cross reference list as set out in the table below. Except as provided in this section, no

other information is incorporated by reference into this Prospectus.

The Company incorporates its unaudited interim financial report for the fourth quarter 2017

and the audited consolidated annual reports for the financial years ended 31 December 2016

and 2015.

Section in the

Prospectus

Disclosure requirements

of the Prospectus

Reference document and link

Section 11.1 Accounting policies Annual Report 2016:


Section 11.2 Historical financial

information

Fourth quarter 2017:


Annual Report 2016: http://hugin.info/151377/R/2095143/792350.pdf

Annual Report 2015:


Section 11.6 Information concerning the

Company's capital

resources, Financial Risk

Management

Annual Report 2016:


Section 14.2.14 Memorandum and Articles of

Association

https://polarcus.com/media/2165/amended-memorandom-and-

articles-of-association-polarcus-limited-3-may-2017.pdf


https://polarcus.com/media/2165/amended-memorandom-and-articles-of-association-polarcus-limited-3-may-2017.pdf

https://polarcus.com/media/2165/amended-memorandom-and-articles-of-association-polarcus-limited-3-may-2017.pdf

150

19. DEFINITIONS AND GLOSSARY

The following definitions and glossary apply in this Prospectus unless otherwise dictated by the

context, including the foregoing pages of this Prospectus.

2010 PD Amending Directive Directive 2010/73/EU amending the Prospectus Directive.

2012 Plan

The Company's employee share option plan as approved by the

AGM in 2012, under which a maximum of 140,000 Shares could be granted

2014 Plan The Company's employee share option plan as approved by the AGM in 2014, under which a maximum of 1,500,000 Shares could be granted

2016 Plan The Company's employee share option plan as approved by the AGM in 2016, under which a maximum of 16,000,000 Shares could be granted

2016 Restructuring The Company's refinancing of the majority of its debt in Q1 2016

2017 AGM The annual general meeting of the Company held on 3 May 2017

2017 Equity Raise The equity raised by the Company pursuant to the launch of a private placement and subsequent offering announced on 9 February 2017

A Bonds See definition of "CB Tranche A" below

Articles of Association The articles of association of the Company.

AML Legislation The Norwegian Act on Money Laundering No. 11 of 6 March 2009 and the Norwegian Money Laundering Regulations No. 302 of 13

March 2009

Annual Financial Statements The Company's audited consolidated financial statements for

2015 and 2016.

APAC The Asia Pacific Region

APM Alternative performance measures; non-IFRS financial

measures

Bank Lenders

Eksportfinans ASA, Eksportkreditt Norge AS and the Norwegian

Government represented by the Norwegian Export Credit Guarantee Agency, DVB and DNB as guarantors thereof.

BBCP Bareboat Charter Party agreement with SCF Sakhalin Supply

Limited regarding the vessel VYACHESLAV TIKHONOV

BIMCO

The Baltic and International Maritime Council – shipping

association representing ship-owners controlling around 65% of the world's tonnage

Board Members The members of the Board of Directors.

Board or Board of Directors The board of directors of the Company.

Bond Conversion Offer

An offer to the holders of Unsecured Bonds to convert all or part of their Unsecured Bonds (valued at 70% of the par value of the bonds after the Reduction in Principal Value), into equity at a subscription price of NOK 1.30 per share, limited to 50% of the total outstanding amount under the Unsecured Bonds.

Bond Conversion Shares The shares issued in the Bond Conversion Offer

151

Cash Sweep

The cash sweep mechanism providing for 70% of any excess

cash flow (after certain deductions) to be distributed to and between the Bank Lenders, the New Fleet Facility Lenders and the holders of the Secured Bonds

CB Tranche A A tranche under the USD 125,000,000 2.875% Secured Convertible Bond issue 2011/2016 with ISIN NO 001 0607435.

CB Tranche B A tranche under the USD 125,000,000 2.875% Secured Convertible Bond issue 2011/2016 with ISIN NO 001 0757263

CB Tranche C A previous tranche under the USD 125,000,000 2.875% Secured Convertible Bond issue 2011/2016 with ISIN NO 011 0757271.

CEO The Company's chief executive officer.

CET Central European time.

CFC-legislation Controlled foreign corporation legislation

Class B Shares The Company's previous 463,491,579 authorised unissued Class B shares

Companies Law The Companies Law of the Cayman Islands (as amended)

Company Polarcus Limited.

Convertible Bond Loan The convertible bond loan issued by the Company originally comprising CB Tranche A, CB Tranche B and CB Tranche C.

Corporate Governance Code The Norwegian Code of Practice for Corporate Governance dated 30 October 2014.

Cost Management Program A cost management program with the aim of reducing the 2015 cost base by USD 40 million

DNV Det Norske Veritas – a classification society

DOLP Dolphin Geophysical

DSR Debt Service Ratio

DUG DownUnder GeoSolutions Pty Ltd

DUG Broad DUG's broadband technology

DWD or Drydocks Dubai Drydocks World Dubai LLC, UEA, an entity of the Government of

Dubai established in 1983

E&P Exploration and production (of oil and gas)

EAME Europe, Africa and Middle East

EBIT Earnings before interest and tax

EBITDA Earnings before interest, tax, depreciation, amortization and impairments

East Guardian East Guardian Asset Management AG

EEA The European Economic Area.

152

EGM The extraordinary general meeting of the Company held on 15

February 2018

EHSQ Environment, Health, Safety, Quality

Eligible Shareholders Shareholders in the Company as of 25 January 2018, as registered in VPS on the Record Date

ESSA Environmentally Sensitive Sea Areas

EU The European Union.

EUR

EURO, the currency introduced at the start of the third stage of the Economic and Monetary Union to the Treaty establishing the European Economic Community, as amended by the Treaty on the European Union

Financial Debt Restructuring The restructuring of the financial debt of the Company under the

Restructuring

Fleet Bank Facility

The term loan facility of USD 410 million entered into with, among others, Eksportfinans ASA and Eksportkreditt Norge AS as lenders and DNB Bank ASA, DVB Bank SE, Nordic Branch and GIEK as guarantors

Forward-looking statements

All statements other than statements as to historic facts or present facts and circumstances, typically indicated by words such as "believe," "may," "will," "estimate," "continue,"

"anticipate," "intend," "expect," and similar expressions.

GBP The currency of the United Kingdom (British Pound)

General Meeting The Company’s general meeting of shareholders.

GIEK

Garanti-instituttet for Eksportkreditt – guarantor for Norwegian

companies' export credits on behalf of the Norwegian Government

Group The Company and its subsidiaries.

Guarantee Facility

A common terms agreement with DNB Bank ASA in respect of a USD 20 million uncommitted guarantee facility, which underwent technical amendments in connection with the 2016 Restructuring

Gubkin Charter The 5½ year bareboat charter party Agreement with SCF GEO AS, a subsidiary of SCF, for the hire of “POLARCUS AMANI”, subsequently renamed “IVAN GUBKIN”

HC Hydrocarbons

HD3D High Density 3-Dimensional

HFO Heavy Fuel Oil

IAGC International Association of Geophysical Contractors

IASB Internation Accounting Standards Board

IAS 34 International Accounting Standard 34 "Interim Financial Reporting."

IFRS International Financial Reporting Standards as adopted by the EU.

153

Ineligible Shareholder

Eligible Shareholders resident in jurisdiction where the

Prospectus may not be distributed and/or with legislation that, according to the Company's assessment, prohibits or otherwise restricts subscription of Offer Shares.

Inline Fold The number of independent reflection points that occur at the same subsurface coordinates

Interim Financial Statements The Company's unaudited condensed consolidated interim financial statements as of and for the three and twelve months ended December 31 2017

ISIN Securities number in the Norwegian Central Securities

Depository (VPS).

LIBOR London Interbank Offered Rate

LISS Low impact seismic source

LMAA London Maritime Arbitrators Association

Management The Group’s senior management team.

Managers ABG Sundal Collier ASA and DNB Markets.

Memorandum of Association The memorandum of association of the Company

MGO Marine gas oil

MLA Master License Agreement

MOA A memorandum of agreement dated 11 February 2013 between Polarcus Samur AS and TPAO

Multi-azimuth or MAZ

Method of improving seismic data acquisition data quality by acquiring the area in different directions to provide illumination of the target zone from a number of different perspectives

NASA North and South America region

New Fleet Facility A new loan, maturing in 2024, on terms substantially similar to

the Fleet Bank Facility

New Fleet Facility Lenders DVB and GIEK

NIBOR Norwegian Interbank Offered Rate

NOK Norwegian Kroner, the lawful currency of Norway.

NOKUS Norwegian CFC-legislation

NOK Unsecured bond issue The Company's bonds issued under ISIN NO 001 0714389 and NO 001 0757255

Non-Norwegian shareholders Shareholders who are not resident in Norway for tax purposes.

154

Norwegian FSA The Financial Supervisory Authority of Norway (Norwegian:

"Finanstilsynet").

Norwegian corporate

shareholders

Shareholders who are limited liability companies and certain

similar corporate entities resident in Norway for tax purposes.

Norwegian personal

shareholders Personal shareholders resident in Norway for tax purposes.

Norwegian Securities Trading

Act

The Norwegian Securities Trading Act of 29 June 2007 no. 75

(Norwegian: "Verdipapirhandelloven").

Offer Shares The shares offered in the Repair Offering

Ordinary ISIN The ISIN with no KYG7153K1085 where the Shares of the

Company listed on Oslo Børs is registered in the VPS.

Repair Offering The offering of 30,769,231 shares in the Company to existing

shareholders, each share at a subscription price of NOK 1.30.

OPEC Organisation for Petroleum Exporting Countries

Order The Financial Services and Markets Act 2000 (Financial

Promotion) Order 2005 as amended.

Oslo Axess A Norwegian regulated market, owned and operated by Oslo

Børs ASA

Oslo Børs

Oslo Børs ASA or, as the context may require, Oslo Børs, a

Norwegian regulated stock exchange operated by Oslo Børs ASA.

PAM Passive Acoustic Monitoring

PCA Polycyclig Aromatics

Polarcus Do Brasil Ltda Polarcus Serviços Geofísicos Do Brasil Ltda

Ppm Parts per million

Prefunding Level

The prefunding level is calculated by dividing the multi-client prefunding revenues by the cash investments in the multiclient library.

Private Placement The issuance of 230,769,231 new shares in the Company, each with a par value of USD 0.10

Private Placement Shares The shares issued in relation to the Private Placement

Prospectus This prospectus, dated 21 March 2018.

Prospectus Directive

Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State) and includes any relevant implementing measure in each Relevant Member State.

QC Quality Control

QIBs Qualified institutional buyers, as defined in Rule 144A.

Qualified Investors

Qualified investors within the meaning of Article 2(1)I of the

Prospectus Directive

155

Record Date 29 January 2018

Reduction in Principal Value

The reduction in principal value of the outstanding amount under the NOK Unsecured Bonds from NOK 348,640,000 to NOK 94,960,000; the USD Unsecured Bonds from USD 94,655,000 to USD 26,263,750; and the CB Tranche B and CB Tranche C in aggregate from USD 30,446,200 to 8,597,550.

Registrar / VPS Registrar DNB Bank ASA, Verdipapirservice, Dronning Eufemias gate 30, 0191 Oslo

Relevant Member State Each Member State of the EEA which has implemented the Prospectus Directive

Relevant Persons

Persons in the UK that are (i) investment professionals falling within Article 19(5) of the Order or (ii) high net worth entities, and other persons to whom the Prospectus may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order.

Reset Event When 50% of the bonds are called/repaid across all unsecured tranches (CB Tranche B1, CB Tranche B2, the A Bonds and the

B Bonds)

Restructuring The Company's refinancing of the majority of its debt in Q1 2018

Rule 144A Rule 144A under the U.S. Securities Act

Runway Period The period between 31 December 2017 and 1 January 2022

Sovcomflot SCF Geo AS

SCF SCF Sakhalin Supply Limited, a subsidiary of OAO Sovcomflot

Schottel Schottel GmbH

Secured Bonds The bonds in CB Tranche A under the Convertible Bond Loan.

Secured Loans Means the loans under the Fleet Bank Facility, the Secured Bonds and the loans under the New Fleet Facility.

SFA The Securities and Futures Act of Singapore

SGS Shearwater Geophysical AS

Share(s) The shares in the capital of the Company

Shareholder(s) Person or legal entity registered in the VPS Register as holder of a Share

Sinergeo The Brazilian company Sinergeo Consultoria e Representaçoes

Ltda

Special Resolution A resolution passed by a three-quarter majority of the Members as, being entitled to do so, vote in person or, where proxies are allowed, by proxy at a General Meeting

Subscription Period 22 March 2018 to 5 April 2018

Subscription Rights A number of rights given to Eligible Shareholders to subscribe for Offer Shares.

Systems Data processing hardware and software on board all Polarcus operated vessels

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Swap Facility A new cross currency swap provided by DNB Bank ASA

Temporary ISIN The temporary ISIN, no ISIN KYG7153K1739, where the Private Placement Shares and the Bond Conversion Shares are listed prior to approval of the Prospectus

TGS TGS-NOPEC Geophysical Company

TPAO Turkish Petroleum Corporation

TPIC Turkish Petroleum International Company

UK United Kingdom

Underwriter

Bybrook Capital LLP, Pollen House, 10-12 Cork Street, London W1S 3NP as investment manager for Bybrook Capital Master

Fund LP, Bybrook Capital Hazelton Master Fund LP, Bybrook Capital Burton Partnership LP and Bybrook Capital Badminton

Fund LP.

Unsecured Bondholders The holders (at any time) of bonds issued under the Unsecured

Bond Loans

Unsecured Bonds The bonds issued under the Unsecured Bond Loans

Unsecured Bond Loans CB Tranche B, CB Tranche C, the NOK Unsecured Bond and the USD Unsecured Bond.

USD United States Dollar, the lawful currency of the United States of

America

USD Unsecured bond issue The unsecured USD bond loan issued by the Company with ISIN

NO 001 0680150 and ISIN NO 001 0757248.

U.S. Exchange Act The United States Securities Exchange Act of 1934, as amended

USGS United States Geological Survey – a scientific agency of the United States government

U.S. Securities Act The United States Securities Act of 1933, as amended

VPS/VPS Register VPS Holding ASA, the Norwegian Central Securities Depository

VPS account An account held with the VPS Register to register ownership of securities

WG WesternGeco

Wide-azimuth or WAZ

Method of improving seismic data acquisition data quality by laterally offsetting the source from the line of traverse to improve target illumination at depth and beneath sub-surface

structures.

Appendix 1

157

SUBCRIPTION FORM POLARCUS LIMITED REPAIR

OFFERING

For information regarding the underwritten repair offering (the "Repair Offering") with subscription rights ("Subscription Rights") for

all shareholders of Polarcus Ltd. (the "Company") in VPS as of 25 January 2018 who were not invited to participate in the Private Placement (the "Eligible Shareholders"), please see the prospectus dated 21 March 2018 (the "Prospectus"). Terms defined in the

Prospectus shall have the same meaning when used herein. Subscription Forms may be mailed, e-mailed or delivered in the period from

22 March 2018 at 09:00, CET to 5 April 2018 at 12:00, CET, to one of the following addresses: ABG Sundal Collier ASA, PO Box 1444

Vika, N-0115 Oslo, e-mail [email protected] or DNB Markets, Registrars Department, Dronning Eufemias gate 30, P.O. Box 1600 Sentrum, N-0021 Oslo, e-mail [email protected]. Accurately completed Subscription Forms must be received by the Managers by 12:00, CET,

on 5 April 2018. It is not sufficient for the Subscription Form to be postmarked within the Subscription Period. Norwegian subscribers may

also subscribe for Offer Shares on the following Internet pages: www.abgsc.com or www.dnb.no/emisjoner within the Subscription Period.

Neither the Company nor the Managers may be held responsible for delays in the mail system or for non-receipt of Subscription Forms

forwarded by facsimile to the Managers. The Company and the Managers reserve the right to disregard improperly completed, delivered or executed Subscription Forms, or any subscription which may be unlawful. A subscription is irrevocable and may not be withdrawn,

cancelled or modified once it has been received by one of the Managers. The minutes from the extraordinary general meeting of the

Company held on 15 February 2018, the Company's articles of association and its annual reports for the last two years are available at

the Company's web page www.polarcus.com. The resolution to increase the share capital by the Board of Directors is included in the Prospectus.

Eligible Shareholders will receive 0.303 Subscription Rights for each existing Shares registered as held by such Eligible Shareholder as of

the Record Date. The Subscription Rights will be registered on each Eligible Shareholder's VPS account. Each Subscription Right carries the right to subscribe for one (1) Offer Share. The number of Subscription Rights granted to each Eligible Shareholder will be rounded

down to the nearest whole Subscription Right. The Subscription Price is NOK 1.30 per Offer Share. The Subscription Rights are non-

transferable. The Subscription Rights are registered with the VPS under the International Securities Identification Number (ISIN)

KYG7153K1812. Over-subscription and subscription without Subscription Rights is permitted; however there can be no assurance that Offer Shares will be allocated for such subscriptions. Subscription Rights not used to subscribe for Offer Shares before the end of

the Subscription Period will have no value and will lapse without compensation to the holder. The principles of allocation of

Offer Shares are described in the Prospectus. Notifications of allotments are expected to be mailed on or about 6 April 2018.

By signing the Subscription Form, the subscriber grants the Managers an irrevocable one-time authorisation to debit the allotted subscription amount in NOK from the bank account designated by the subscriber. The amount will be debited on or about 9 April 2018,

and there must be sufficient funds in the stated bank account from and including two banking days prior to the Payment Date. If there

are insufficient funds in a subscriber's bank account or it is impossible to debit a bank account for the amount the subscriber is obligated

to pay, or payment is not received by the Managers according to other instructions, the allotted Offer Shares will be withheld. Interest will, in such event, accrue at the applicable rate according to the Norwegian Act on Interest on Overdue Payments 1976, currently 8.50

percent per annum. The Managers reserves the right (but is under no obligation) to make up to three debits in the period up to seven

days after the Payment Date, if there are insufficient funds on the account on the Payment Date. If payment is not made within the due

date, the Managers reserve the right without further notice to take over the allocated Offer Shares and/or let the Underwriter acquire them. The original applicant remains liable for payment of the Subscription Price multiplied by the allocated Offer Shares, together with

any interest, costs, charges and expenses accrued, and payment may be enforced for any such amount outstanding. Subscribers who do

not have a Norwegian bank account must ensure that payment for the allocated Offer Shares is made on or before the Payment Date.

Assuming that payment from all subscribers are made when due, delivery of the Offer Shares is expected to take place on or about 11 April 2018. A subscriber will not under any circumstances be entitled to sell or transfer its Offer Shares until these shares have been paid

in full by such subscriber and registered on the subscribers' VPS accounts. Assuming timely payment by all subscribers, the Company

expects that the Offer Shares will be listed on Oslo Børs on or about 11 April 2018.

SPECIFICATION

OF THE SUBSCRIPTION

The Offering may, in certain jurisdictions, be restricted by law. For more information on applicable selling and transfer restrictions in

respect of the Rights and the Offer Shares, see the Prospectus under the heading "Selling and Transfer Restrictions."

Note: Subscribers may subscribe for more (or less) than the number of Subscription Rights.

Subscriber's VPS-account no.

No. of Subscription Rights Subscribes for (number of shares)

(For official use: Serial no.)

Subscription price per share NOK 1.30

Total amount to be paid NOK

One-time authorisation for debiting account (must be filled in):

The undersigned hereby grants an irrevocable authorisation to the Managers to debit the Norwegian bank account set out herein for the allotted amount (the value in NOK of: number of allotted shares * NOK 1.30)

_____________________________

Bank account (11 digits)

__________________________________________________________________________________________________________________________________________

Place and date of subscription. (Must be dated within the Subscription Period.)

Binding signature. The subscriber must be of age. When signed on behalf of another person, evidence of authority must be provided.

DETAILS RE SUBSCRIBER (REQUIRED INFORMATION)

Subscriber's VPS account no.

PLEASE NOTIFY THE REGISTRAR OF ANY CHANGES

Subscriber's first name

Subscriber's surname/firm etc.

Street address etc. (private subscribers; home address)

Postal code and area

Date of birth and national ID number

Dividends to be credited to bank account (11 digits)

Nationality

Telephone (at day time)/Telefax/e-mail


http://www.abgsc.com/

http://www.dnb.no/emisjoner

http://www.polarcus.com/

Appendix 1

158

ADDITIONAL GUIDELINES FOR SUBSCRIBERS

Regulatory issues: In accordance with the Norwegian MiFID II Regulation of 4 December 2017 no. 1913 and the Norwegian Regulation on supplementary rules to the Norwegian MiFID II and MiFIR Regulations of 20 December 2017 no. 2300 corresponding to Directive 2014/65/EU (the Markets in Financial

Instruments Directive) (together referred to as the "MiFID II Regulations"), the Managers must categorize all new customers in one of three customer

categories; Eligible counterparties, Professional and Non-professional clients. All investors that are applying/subscribing for Offer Shares in relation to the

Repair Offering, and which are not existing clients of the Managers, must complete the Manager’s Customer Registration Forms and fulfil the relevant provisions of the Norwegian MiFID II Regulations to be categorized as a Professional client. For further information about the categorization, the applicant may contact

ABG Sundal Collier, PO Box 1444 Vika, N-0115 Oslo, Norway, phone +47 22 01 61 73 or DNB Markets, Registrars Department, Dronning Eufemias gate 30,

P.O. Box 1600 Sentrum, N-0021 Oslo, Norway, phone +47 23 26 81 01.

The Managers will receive a consideration from the Company and will in conducting its work have to take into consideration the requirements of the Issuer

and the interests of the investors subscribing under the Repair Offering and the rules regarding inducements pursuant to the requirements of the Norwegian

MiFID II Regulations (implementing the European Directive for Markets in Financial Instruments (MiFID II).

Selling Restrictions: The attention of persons who wish to subscribe for Offer Shares is drawn to Section 17 "Selling and Transfer Restrictions" of the

Prospectus. The Company is not taking any action to permit a public offering of the Subscription Rights or the Offer Shares (pursuant to the exercise of the

Subscription Rights or otherwise) in any jurisdiction other than Norway. Receipt of the Prospectus will not constitute an offer in those jurisdictions in which it

would be illegal to make an offer and, in those circumstances, the Prospectus is for information only and should not be copied or redistributed. Persons outside Norway should consult their professional advisors as to whether they require any governmental or other consent or need to observe any other formalities to

enable them to subscribe for Offer Shares. It is the responsibility of any person wishing to subscribe for Offer Shares under the Offering to satisfy himself as

to the full observance of the laws of any relevant jurisdiction in connection therewith, including obtaining any governmental or other consent which may be

required, the compliance with other necessary formalities and the payment of any issue, transfer or other taxes due in such territories. The Subscription Rights

and Offer Shares have not been registered, and will not be registered, under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or with any securities regulatory authority of any state or other jurisdiction of the United States, and may not be offered, sold, exercised, pledged, resold,

granted, delivered, allocated, taken up, transferred or delivered, directly or indirectly, within the United States, except pursuant to an exemption from, or in

a transaction not subject to, the registration requirements of the U.S. Securities Act and in compliance with any applicable securities laws of any state or other

jurisdiction of the United States. The Subscription Rights and Offer Shares have not been and will not be registered under the applicable securities laws of Australia, Canada, Japan, Hong Kong, Singapore or the United Kingdom and may not be offered, sold, exercised, pledged, resold, granted, allocated, taken

up, transferred or delivered, directly or indirectly, in or into Australia, Canada, Japan, Hong Kong, Singapore or the United Kingdom or in any other jurisdiction

in which it would not be permissible to offer the Subscription Rights or the Offer Shares unless otherwise described in Section 17 of the Prospectus. A

notification of exercise of Subscription Rights and subscription of Offer Shares in contravention of the above restrictions may be deemed to be invalid. By subscribing for the Offer Shares, persons effecting subscriptions will be deemed to have represented to the Company that they, and the persons on whose

behalf they are subscribing for the Offer Shares, have complied with the above selling restrictions. Persons effecting subscriptions on behalf of any person

located in the United States will be responsible for confirming that such person, or anyone acting on its behalf, has executed the investor letter in the form to

be provided by the Managers upon request.

Execution Only: The Managers will treat the application as an execution-only instruction from the applicant to apply for Offer Shares, since the Managers is

not in the position to determine whether the application for Offer Shares is suitable or not for the applicant. Hence, the applicant will not benefit from the

corresponding protection of the relevant conduct of business rules in accordance with the Norwegian MiFID II Regulation (implementing the European Directive for Markets in Financial Instruments (MiFID II).

Information exchange: The subscriber acknowledges that, under the Norwegian Securities Trading Act and the Norwegian Commercial Banks Act and foreign

legislation applicable to the Managers there is a duty of secrecy between the different units of each of the Managers. This may entail that other employees of the Managers may have information that may be relevant to the subscriber and to the assessment of the Offer Shares, but which the Managers will not have

access to in their capacity as Managers for the Repair Offering.

Information barriers: The Managers are securities firm that offers a broad range of investment services. In order to ensure that assignments undertaken in the Managers' corporate finance departments are kept confidential, the Managers' other activities, including analysis and stock broking, are separated from

the Managers' corporate finance departments by information walls. Consequently the subscriber acknowledges that the Managers' analysis and stock broking

activity may conflict with the subscriber's interests with regard to transactions in the Shares, including the Offer Shares.

The subscriber acknowledges that, under the Norwegian Securities Trading Act and the Norwegian Commercial Banks Act and foreign legislation applicable to

the Managers there is a duty of secrecy between the different units of each of the Managers. This may entail that other employees of the Managers may have

information that may be relevant to the subscriber and to the assessment of the Offer Shares, but which the Managers will not have access to in their capacity

as Managers for the Repair Offering.

VPS account and mandatory anti-money laundering procedures: The Repair Offering is subject to the Norwegian Money Laundering Act of 6 March

2009 No. 11 and the Norwegian Money Laundering Regulations of 13 March 2009 No. 302 (collectively, the "Anti-Money Laundering Legislation"). Subscribers

who are not registered as existing customers of one of the Managers must verify their identity to the Manager in accordance with requirements of the Anti-Money Laundering legislation, unless an exemption is available. Subscribers who have designated an existing Norwegian bank account and an existing VPS

account on the Subscription Form are exempted, unless verification of identity is requested by the Managers. Subscribers who have not completed the required

verification of identity prior to the expiry of the Subscription Period will not be allocated Offer Shares. Participation in the Repair Offering is conditional upon

the subscriber holding a VPS account. The VPS account number must be stated in the subscription form. VPS accounts can be established with authorised VPS registrars, who can be Norwegian banks, authorised securities brokers in Norway and Norwegian branches of credit institutions established within the EEA.

Establishment of a VPS account requires verification of identity to the VPS registrar in accordance with the Anti Money Laundering Legislation. However, non-

Norwegian investors may use nominee VPS accounts registered in the name of a nominee. The nominee must be authorised by the Financial Supervisory

Authority of Norway.

Terms and conditions for payment by direct debiting - securities trading: Payment by direct debiting is a service the banks in Norway provide in

cooperation. In the relationship between the payer and the payer's bank the following standard terms and conditions apply:

a) The service "Payment by direct debiting – securities trading" is supplemented by the account agreement between the payer and the payer's bank, in

particular Section C of the account agreement, General terms and conditions for deposit and payment instructions.

b) Costs related to the use of "Payment by direct debiting – securities trading" appear from the bank's prevailing price list, account information and/or information given in another appropriate manner. The bank will charge the indicated account for costs incurred.

c) The authorisation for direct debiting is signed by the payer and delivered to the beneficiary. The beneficiary will deliver the instructions to its bank that

in turn will charge the payer's bank account.

d) In case of withdrawal of the authorisation for direct debiting the payer shall address this issue with the beneficiary. Pursuant to the Norwegian Financial

Contracts Act the payer's bank shall assist if the payer withdraws a payment instruction that has not been completed. Such withdrawal may be regarded

as a breach of the agreement between the payer and the beneficiary.

e) The payer cannot authorise payment of a higher amount than the funds available on the payer's account at the time of payment. The payer's bank will

normally perform a verification of available funds prior to the account being charged. If the account has been charged with an amount higher than the

funds available, the difference shall immediately be covered by the payer.

f) The payer's account will be charged on the indicated date of payment. If the date of payment has not been indicated in the authorisation for direct

debiting, the account will be charged as soon as possible after the beneficiary has delivered the instructions to its bank. The charge will not, however, take place after the authorisation has expired as indicated above. Payment will normally be credited the beneficiary's account between one and three

working days after the indicated date of payment/delivery.

g) If the payer's account is wrongfully charged after direct debiting, the payer's right to repayment of the charged amount will be governed by the account agreement and the Norwegian Financial Contracts Act.

Overdue and missing payments: Overdue payments will be charged with interest at the applicable rate under the Norwegian Act on Interest on Overdue

Payment of 17 December 1976 No. 100; 8.5% per annum as of the date of the Prospectus. If a subscriber fails to comply with the terms of payment, the Offer Shares will, at the discretion of the Underwriters, not be delivered to the subscriber. The Managers reserve the right to, at any time and at the risk and

Appendix 1

159

cost of the subscriber, re-allot, cancel or reduce the subscription and the allocation of the allocated Offer Shares, or, if payment has not been received by the Payment Date, without further notice sell, assume ownership to or otherwise dispose of the allocated Offer Shares in accordance with applicable law. If Offer

Shares are sold on behalf of the subscriber, such sale will be for the subscriber's account and risk and the subscriber will be liable for any loss, costs, charges

and expenses suffered or incurred by the Company and/or the Manager as a result of, or in connection with, such sales. The Company and/or the Managers

may enforce payment for any amounts outstanding in accordance with applicable l

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