PGS ASA: Binding Agreements with Majority of Lenders

October 21, 2020: Oslo, Norway, PGS ASA (the "Company" or "PGS") has, further to its announcement on September 25, 2020, regarding its agreement in principle on main terms with its lenders, now entered into a lock-up agreement (the "Lock-Up Agreement") with lenders representing, in aggregate, 79.6% of its ~$350 million revolving credit facility ("RCF") and ~$522 million term loan B facility ("TLB"). PGS has also entered into a consent and amendment agreement (the "Consent and Amendment Agreement") with the representative of 100% of the finance parties under its ~$300 million export credit facilities ("ECF"). Overview of the Transactions As previously announced, the agreed terms of these transactions (the "Transactions") will, once consummated, enable PGS to extend its current near- term maturity and amortization profile under its RCF/TLB and ECF facilities by approximately two years. Together with the cost saving initiatives previously announced, the Transactions will strengthen PGS's liquidity profile in the currently challenging operating environment. The main terms agreed pursuant to the Lock-Up Agreement and the Consent and Amendment Agreement are as follows: * The $135 million RCF due 2020, the $215 million RCF due 2023 and the ~$2 million TLB due 2021 will each be converted into a new TLB on the same terms as the ~$520 million 2024 TLB * Quarterly amortization payments of up to 5% per annum of the original principal amount of the ~$520 million 2024 TLB will be replaced by the new amortization payments described below * The post transaction total debt under these credit facilities of ~$872 million (subject to any increases in principal due to payment-in-kind fees and any reduction in principal due to lenders electing to exchange part of their existing debt into new convertible bonds; see further below) maturing in March 2024 will have following amortization profile (payable pro-rata to all TLB lenders): * ~$135 million amortization payment due in September 2022 * $200 million amortization payment due in September 2023 * ~$9 million quarterly amortization starting March 2023 * Quarterly amortization payments totalling ~$106 million due over the next two years under the ECF will be deferred and repaid over four quarters starting December 2022 * The current excess cash flow sweep for the RCF/TLB facilities will be replaced by an excess liquidity sweep for any liquidity reserve in excess of $200 million at each quarter end, with such amounts to be applied against (i) the deferred amortization amounts under the ECF and (ii) the ~$135 million TLB amortization, until they have both been paid in full; thereafter, any liquidity reserve in excess of $175 million at each quarter end will be applied against the remaining TLB amortizations * The financial maintenance covenants will be amended, with the net leverage ratio to be 4.5x through June 30, 2021, 4.25x through December 31, 2021, 3.25x through December 31, 2022 and 2.75x thereafter * The lenders' security package will be strengthened * Total fees across the lender groups of up to ~$7.6 million will be payable in cash and up to ~$9.9 million will be payable in kind * An up to ~NOK 116.2 million 3-year 5% unsecured convertible bond (the "CB") which can be converted into new PGS shares at NOK 3 per share (up to a maximum of 38,720,699 shares, equalling 10% of the currently outstanding PGS shares) will be issued by PGS. Lenders under the RCF and TLB facilities will have a pro rata preferential right to subscribe for the CB against conversion of a corresponding amount of their existing secured loans. To the extent the CB is not fully subscribed, certain lenders under the TLB will (i) subscribe for 80% of the unallocated amount for cash and (ii) have the right to subscribe for the remaining 20% of the unallocated amount for cash. PGS will be able to require that bondholders convert the CB into shares if the PGS share price exceeds NOK 6 for 30 consecutive trading days Support for the Transactions/Implementation The representative of all of the ECF financing parties has entered into the Consent and Amendment Agreement which (i) provides for the proposed amendments to the ECF and (ii) maintains the forbearance arrangements (including restrictions on acceleration and enforcement action) (the "Forbearance") as put in place with the ECF following the previous market announcement on September 25, 2020. The non-amendment terms of the Consent and Amendment Agreement are effective immediately and are subject to customary termination events.  The amendment terms will become effective upon the consummation of the Transactions. The Lock-Up Agreement has been entered into by RCF and TLB lenders representing in aggregate 79.6% by amount and 65.3% by number, including: * An informal Ad-Hoc Committee of TLB lenders and certain other TLB lenders representing 78.9% of the ~$522 million TLB facilities * 100% of the $215 million 2023 RCF * 50.4% of the $135 million 2020 RCF The Lock-Up Agreement outlines the terms of the proposed amendments to the RCF/TLB Credit Agreement. Under the terms of the Lock-Up Agreement, the lenders have agreed, among other things, to take such steps as are required to support the implementation and the consummation of the Transactions. The Lock-Up Agreement also maintains the terms of the Forbearance arrangement as put in place with the majority of the RCF and TLB lenders prior to the previous market announcement on September 25, 2020. The terms of the Lock-Up Agreement are effective immediately and subject to customary undertakings and termination events. Following this announcement, the Company will launch a request for support from TLB lenders who have not yet seen the details of the Transactions and from RCF lenders who have not yet signed the Lock-Up Agreement. Unless 100% of the RCF and TLB lenders consent to the Transactions, the amendments to the RCF and TLB will be implemented pursuant to an English law scheme of arrangement upon approval of the English Court, after obtaining the necessary majority creditor consent (being 75% by value and a majority in number of the total RCF and TLB voting in the Scheme) (the "Scheme"). The Scheme will enable the Transaction in respect of the RCF and TLB to be implemented and bind all RCF and TLB lenders (including those who vote against or do not vote). To date, lenders holding a sufficient amount of RCF and TLB debt to meet the relevant Scheme approval levels have already signed the Lock-up Agreement. The governing law of the RCF and TLB has been changed to English law in furtherance of the Scheme. The agreed amendments to the RCF, TLB and ECF facilities are inter-conditional and subject to customary conditions precedent and subsequent. They remain subject to the implementation processes described above. If implemented consensually (assuming 100% consent from the RCF and TLB lenders), the Transactions are expected to close during Q4 2020. If implemented through the Scheme, it is anticipated that the Transactions will close during the course of Q1 2021. Further details on implementation will be announced in due course. Further information on the Transactions, as well as the summary financial information shared with Ad-Hoc Committee of TLB lenders and certain other TLB lenders, can be found in the presentation titled Cleansing Presentation on the Company's website www.pgs.com (http://www.pgs.com) - Investors - Presentations. The Company will continue to operate its business as usual by performing other obligations, including making payments of interest, as they fall due.