ZITON A/S - LONG-TERM TIME CHARTER AGREEMENTS WITH SIEMENS GAMESA

28 Apr 2023 23:55 CEST

Siemens Gamesa Renewable Energy A/S (“Siemens Gamesa”) and ZITON A/S today
announced a strategic agreement whereby the current time charter agreement for
WIND ENTERPRISE will be extended by four and a half years and the parties will
enter into a new six-years’ time charter agreement for a new vessel to be
purchased.

Extension of existing time charter
The current time charter agreement for WIND ENTERPRISE expires on 31 October
2024 with Siemens Gamesa having various extension options to extend the current
agreement until 20 June 2025. Siemens Gamesa will make use of all options to
extend the agreement on terms similar to the current agreement. In addition, the
parties have reached an agreement for extension of the time charter from 21 June
2025 to 31 December 2029 at terms reflecting the changes in the market
environment since the original time charter was entered into in December 2020,
including a higher day-rate. As variable opex is generally paid by Siemens
Gamesa, profitability on WIND ENTERPRISE is expected to increase materially.
After 1 January 2027, Siemens Gamesa will retain an option for early termination
of the contract against payment of a one-off compensation. The outlook for
offshore wind continues to be robust driven by transition towards zero-emissions
and European energy independence. This has spurred demand for jack-up vessels
within transport & installation and has reduced the supply of jack-up vessels
within O&M. The consequence is that demand-supply within O&M is getting
increasingly tight resulting in a considerable increase in day rate contracted
for the extension of the time charter.

New time charter for new vessel
Siemens Gamesa and ZITON have entered into an agreement of time charter of a new
vessel on terms similar to the extension agreement for WIND ENTERPRISE. The time
charter is expected to be initiated when the vessel is operational which is
expected in the beginning of 2024. The time charter will end on 31 December
2029. For this time charter contract, Siemens Gamesa does not hold any options
for early termination.

ZITON has signed an agreement to purchase the sister vessel to WIND ENTERPRISE,
subject to securing financing. The vessel has the same specifications as WIND
ENTERPRISE and was built a few months later than WIND ENTERPRISE in 2011 at the
same yard. ZITON has been operating WIND ENTERPRISE since May 2019 and has,
amongst others, completed 10-years classing of WIND ENTERPRISE during January
and February 2021 prior to the vessel entering into the current time charter
agreement with Siemens Gamesa. The vessel has operated very efficiently on the
time charter with Siemens Gamesa since 1 March 2021 with less than five days of
off-hire in the period. ZITON has therefore gained significant experience in
efficient operations and maintenance of the vessel. The acquisition of WIND
ENTERPRISE was partially financed with a senior secured bond issue. Operations
have been successful, and the issuing entity has brought down net leverage from
3.7x at bond issuance to 2.5x at the end of 2022.


This experience can effectively be applied to the sister vessel. The vessel is
currently operating in China with installation of offshore wind turbines.
Earlier in the year, ZITON performed inspection of the vessel crane, jacking
system, engines etc. and the vessel was found to be in sound condition. The
vessel will shortly depart for a dry dock in China to have final inspection of
legs and spudcans. Upon satisfactory inspection, the living area will be
prepared in China for complete upgrade at yard stay in Europe. Thereafter, the
vessel will be transported back to Europe a journey of approx. 2½ months. Once
in Europe, the vessel will complete a yard stay to be upgraded according to dock
specifications prepared from the findings in our inspection reports. The sister
vessel will be upgraded to the current high standards of WIND ENTERPRISE for
essential functions such as vessel crane, jacking system and engines. In
addition, accommodation, laundry facilities, galley and messroom areas and
gymnasium will be upgraded to high-level European standards. Currently, the
vessel has 78m legs that is planned to be extended for the vessel to operate at
some of the deepest locations of current and future offshore wind farm turbines
installed by Siemens Gamesa.

As customary for time charter contracts, Siemens Gamesa will pay a fixed time
charter rate and pay for variable OPEX-related costs during the tenor of time
charter. The total value of the remaining part of the WIND ENTERPRISE time
charter and the six-years’ time charter agreement for the sister vessel can
amount up to approx. EUR 373 million in the duration of the agreements.

Fixed income meetings with investors
To support in financing the purchase of the sister vessel, ZITON has mandated
Pareto Securities AB to conduct a series of fixed income meetings and, subject
to market conditions, a bond issue in an amount of approx. EUR 275 million may
follow (“New Bonds”). The net proceeds from the New Bonds are intended to be
used to repay ZITON’s and subsidiary Wind Enterprise P/S outstanding bonds
(ISINs: NO0010832488, NO0010832512, and NO0010911126) of an aggregate amount of
approximately EUR 173 million (excl. accrued interest and call premia), to
finance the purchase of the sister vessel and related capital expenditure in an
aggregate amount of EUR 93 million, to repay drawn amounts under the RCF, and to
finance transaction costs and general corporate purposes.

Current trading update and outlook
ZITON also publishes certain current trading updates as per March 2023. For the
last twelve months, ending March 2023, ZITON’s unaudited revenue and EBITDA
amounted to EUR 61.9 million and EUR 29.5 million, respectively. Net
interest-bearing debt (adjusted for capitalized financing costs and IFRS 16
leases) amounted to EUR 171.8 million, including cash on balance sheet of EUR
5.7 million.

Based on the first three months’ strong performance and a healthy outlook, ZITON
increases its guidance for 2023 EBITDA to EUR 30–34 million from EUR 28-32
million. Cash flow from operations is also expected to come in above the
previous guidance, and ZITON updates its guidance to EUR 27–31 million from EUR
27-29 million.

As stated, the new vessel will complete an upgrade at yard stay in Europe. The
expected capex related to this is EUR 13.5 million, while the total capex for
transportation to Europe and yard stay in China amount to approximately EUR 10
million. During 2024, ZITON expects to complete further upgrades to the new
vessel amounting to approximately EUR 15 million.

The new contracts with Siemens Gamesa are expected to improve the financial
performance of ZITON significantly once both vessels are in operation. Following
the day rate increase in mid-2025, ZITON is expected to generate an annualized
run-rate EBITDA of approx. EUR 75 million. The two vessels contracted with
Siemens Gamesa are expected to generate approx. 55% of ZITON’s run rate revenue
from mid-2025.



For further information, please contact
Thorsten Jalk, CEO ZITON A/S Jens Michael Haurum, CFO ZITON A/S
email: thj@ziton.eu email: jmh@ziton.eu
direct: +45 8744 4410 direct: +45 8744 4430

For information about the bond financing, please contact
Markus Wirenhammar, Head of Investment Banking, Pareto Securities AB
email: ziton@paretosec.com
direct: +46 70 872 51 86

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589140_1 - Siemens Gamesa time charter new and extension.pdf