Prospectus of 1 June 2012
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Hurtigruten ASA, prospectus of 1 June 2012 Registration Document Prospectus Hurtigruten ASA Registration Document Narvik/Oslo, 1 June 2012 Joint Lead Managers: Danske Markets, DNB Markets, DVB Bank SE / Fearnley Fonds ASA, Nordea Markets, Sparebank 1 Markets & Swedbank First Securities 1 of 33 Hurtigruten ASA, prospectus of 1 June 2012 Registration Document Important information The Registration Document is based on sources such as annual reports and publicly available information and forward looking information based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for the Company's (including subsidiaries and affiliates) lines of business. This Registration Document is subject to the general business terms of the Joint Lead Managers, available at their websites. Confidentiality rules and internal rules restricting the exchange of information between different parts of the Joint Lead Managers may prevent employees of the Joint Lead Managers who are preparing this presentation from utilizing or being aware of information available to Joint Lead Managers and/or affiliated companies and which may be relevant to the recipient's decisions. The Joint Lead Managers and/or affiliated companies and/or officers, directors and employees may be a market maker or hold a position in any instrument or related instrument discussed in this Registration Document, and may perform or seek to perform financial advisory or banking services related to such instruments. The Joint Lead Managers' corporate finance department may act as managers or co-managers for this Company in private and/or public placement and/or resale not publicly available or commonly known. Copies of this presentation are not being mailed or otherwise distributed or sent in or into or made available in the United States. Persons receiving this document (including custodians, nominees and trustees) must not distribute or send such documents or any related documents in or into the United States. Other than in compliance with applicable United States securities laws, no solicitations are being made or will be made, directly or indirectly, in the United States. Securities will not be registered under the United States Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The distribution of the Registration Document may be limited by law also in other jurisdictions, for example in Canada, Japan and in the United Kingdom. Verification and approval of the Registration Document by Finanstilsynet (the Norwegian FSA) implies that the Registration Document may be used in any EEA country. No other measures have been taken to obtain authorisation to distribute the Registration Document in any jurisdiction where such action is required. 2 of 33 Hurtigruten ASA, prospectus of 1 June 2012 Registration Document TABLE OF CONTENTS: 1 Risk factors .................................................................................................................... 4 2 Definitions ...................................................................................................................... 7 3 Persons responsible ......................................................................................................... 8 4 Statutory Auditors ........................................................................................................... 9 5 Information about the issuer ........................................................................................... 10 6 Business overview ......................................................................................................... 11 7 Organizational structure ................................................................................................. 19 8 Trend information .......................................................................................................... 21 9 Administrative, management and supervisory bodies .......................................................... 22 10 Major shareholders ...................................................................................................... 25 11 Financial information concerning the issuer's assets and liabilities, financial position and profits and losses ....................................................................................................................... 27 12 Documents on display .................................................................................................. 29 Joint Lead Manager’s disclaimer ......................................................................................... 31 Articles of Association Hurtigruten ASA ................................................................................ 32 3 of 33 Hurtigruten ASA, prospectus of 1 June 2012 Registration Document 1 Risk factors The company uses financial instruments such as bank loans, bond loans and convertible bond loans. The purpose of these financial instruments is to raise capital for investments that are necessary for the company’s activities. In addition, the company has financial instruments such as trade receivables, trade payables, etc., which are directly linked to the day-to-day operations. For hedging purposes the company makes use of certain financial derivatives. The company uses financial derivatives for trading purposes to a limited extent. As a result of its regular operations, the company is exposed to risks related, for example, to fluctuations in exchange and interest rates and bunker costs. The company’s overall hedging strategy is to create predictability for the company’s operations and reduce the impact volatility in macro-economic conditions might have on the company’s financial performance and standing. The primary management parameter is the expected net cash flow. Extensive use is made of simple, transparent and liquid hedging instruments, mainly forward contracts, combined possibly with options and corridors. Currency risk The company operates internationally and is exposed to currency risk in multiple foreign currencies. This risk is especially relevant in relation to the euro (EUR), US dollar (USD), pound sterling (GBP) and Australian dollar (AUD). The currency risk arises from future ticket sales and assets and liabilities recognized on the balance sheet. In addition, the bunker cost is quoted in USD. A currency risk arises when future commercial transactions or recognized assets or liabilities are denominated in a currency other than the entity’s functional currency. The company’s strategy is to hedge 60–80 per cent of the net expected cash flow in euro one to two years into the future through the use of transparent and liquid instruments, usually forward contracts combined with foreign currency loans. For 2012, 60 per cent of the net expected cash flow in EUR has been hedged. The company completed the refinancing of its debt in March 2012. Portions of the loan can be converted from NOK to EUR in order to achieve “natural hedging”. No decision has been made on the timing of the conversion. In connection with chartering out the MS Finnmarken as a hotel ship to Boskalis Australia Pty Limited for 18 months, starting in April 2010, the company has had currency hedges for AUD corresponding to approximately 60 per cent of the expected cash flow throughout the term of the charter. The currency hedges expired at the same time as the expiration of the charter on 30 October 2011. Forward foreign currency contracts The nominal amount of outstanding forward foreign exchange contracts at 31 December 2011 was NOK 465 million (2010: NOK 1 264 million). The hedged, highly probable transactions denominated in a foreign currency are expected to occur at various dates over the next 12 months. The forward foreign exchange contracts mature during the period from July to September, when most of the hedged cash flow is expected to occur. The forward foreign exchange contracts satisfy the requirements for hedge accounting under IFRS and changes in the fair value are recognized directly in the hedging reserve in equity. Gains and losses on forward foreign exchange contracts that are recognized in equity at 31 December 2011, will be recognized in the income statement in the same accounting periods that the hedged transactions affect the profit or loss. The gains or losses realised are allocated to passenger revenues. Interest rate risk The company’s interest rate risk is associated with current and non-current borrowings. Borrowings at variable interest rates entail an interest rate risk for the company’s cash flow. Fixed interest rate loans expose the company to a fair value interest rate risk. In 2010 and 2011 the group’s loans with variable interest rates have been in NOK. The company manages the variable interest rate risk by means of variable to fixed interest rate swap contracts. Interest rate swap contracts entail a conversion of variable interest rate borrowings to fixed interest rate borrowings. The group enters into a contract with other parties to exchange the difference between the contract’s fixed interest rate and variable interest rate calculated based on the agreed principal through the interest rate swaps. At 31 December 2011 a minor portion (around 10 per cent) of the company’s debt has been hedged. In connection with Hurtigruten’s refinancing of its debt in March 2012, interest rate hedges will be established