French Republic Becomes Strategic Owners in STX Europe’s French Yards

STX Europe and the French Republic have agreed that the French state becomes a 33.34 percent shareholder in STX France and its shipyards in Saint-Nazaire and Lorient. The combined ownership of STX and the French Republic will expand the strategic opportunities for one of the few sophisticated large capacity shipyards in Europe.

STX Europe is today one of the world’s leading builders of cruise ships and ferries, with a market share of 35 – 40 percent. The company builds all of the world’s largest and most advanced cruise ships at its yards in France and Finland. The French yards have also experience with navy vessels. Other shipyards in STX Europe are market leaders for specialised offshore vessels.

The new agreement between STX Europe and the French Republic is a realization of the memorandum of understanding announced by the two parties at 12 June this year. The French Republic will acquire the 33.34 percent interest in STX France via an equity investment of in total EUR 110 million which is expected to be made on 7 November 2008.

The French state’s initial payment will be supplemented, based on STX France’s performance over the period 2009-2011, by an earn out mechanism whereby the French state will make a direct payment of up to 83,3 million to STX Europe. If the parties decide to increase the capitalization of STX France, this amount can be reinvested in STX France and supplemented by the French state, so that STX France will receive a total amount of up to Euros 125 million. The total equity injection would then be EUR 235 million, with an implied value of STX France of EUR 470 million.

“STX France is one of very few shipbuilders with experience, technology and competence to deliver large and advanced ships, tailor made for specific purposes. Through the new agreement, this foundation is further strengthened by combining STX and the French state as solid owners with an industrial perspective”, says Torstein Dale Sjøtveit, president and CEO of STX Europe.

Based on the new ownership model, STX France aims to expand the business within today’s primary market for both cruise ships and ferries. The yards will also explore opportunities in other segments where STX Europe already has solid experience and skills, for example for ships to the navy or for very large and advanced offshore vessels.

Facts regarding the transaction:

Today, STX Europe ASA (“STX Europe”) controls 75 of the shares in the two French yards through STX France Cruise SA (“STX France”). In the transaction, STX Europe and the French Republic have agreed that the French Republic becomes a shareholder in STX France Cruise SA (“STX France”).

STX Europe will continue to be the controlling shareholder of STX France with just above 50 percent, while the French Republic will own approximately 33.34 percent. Alstom Holdings SA (“Alstom”), today a 25 percent shareholder of STX France, will own the remaining shares, approximately 16 percent.

According to the agreement, the French Republic shall be represented to the Board of Directors of STX France by at least two members. STX and the French Republic have furthermore agreed a Shareholders Agreement for STX France which gives the French Republic significant minority protection, as well providing procedures and restrictions on the sale by a party of its shares in STX France.

STX’ business within the building of cruise ships and ferries is primarily based on the shipyards in France and Finland. This strategy will continue with the new agreement.

The agreement is depending on approval of STX Europe’s Board of Directors, final approval by the French government, and approval by certain business partners of STX France.

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