OSX Brasil Reveals New Business Plan

OSX Brasil S/A, a Brazilian publicly held corporation with activities in the sector of supplying equipment and services to the offshore oil and natural gas industry, with integrated operations in shipbuilding, chartering of exploration and production units (E&P) and operation and maintenance services (O&M), hereby informs to its shareholders and the market that:

The Board of Directors of OSX Brasil S/A has taken the following actions regarding the Company´s business, as detailed below:

1. Approval of the Company´s new Business Plan, prioritizing cash generating projects of its Leasing unit and phasing the construction works for implementing its shipyard;
2. With the vote of the Company’s Independent Directors, approval of the partial exercise of the Put Option, in the amount of US$ 120 million, with a remaining balance of US$ 380 million that may be exercised until March 2014; and
3. Election of the Executive Board of the Company for the new term.

The new business plan of the Company takes into consideration the current market conditions for the three business units of the Company, the short and medium term potential demands from its client OGX, and an update of the economic and financial parameters of the original business model of the Company.

As already anticipated by the Company, the new Business Plan provides for the prioritization of cash generating projects of its Leasing unit and the phasing the construction works for implementing its shipyard, with the goal of completing the construction works of the initial phase of the shipyard, in order to meet the current orderbook from its customers. The resumption of future phases of construction of the shipyard shall be compatible with the confirmation of new perspectives on customer demand and corresponding economic and financial equation.

PHASING OF THE CONSTRUCTION WORKS OF UCN Acu

As a result of the slowdown of the construction works of UCN Acu, various dialogues and initiatives have been initiated by the subsidiary OSX Construção Naval S/A and will continue ongoing with its clients, lenders, employees, suppliers and other stakeholders, in view of the need to readjust the original planning for the new phasing.

The current confirmed orderbook of the shipyard consists of building one PLSV for client Sapura and integrating two FPSOs for Petrobras (through a joint venture in which OSX holds 49%), in face of: (a) the termination of 11 MRs’ construction contracts with Kingfish, formalized today by OSX, and (b) the pending confirmation of technical specifications by client OGX regarding orders placed for construction in the Açu shipyard.

The Company reaffirms its perception of the strategic value of a shipyard with the magnitude and quality as originally conceived, which is an essential infrastructure to meet the vast demand for local content existing in the country, including as a result of the pre-salt discoveries. Accordingly, the company reaffirms its expectation that the immediate steps now being taken preserve the goal of completing the construction of the shipyard in the long run, by means of new demands from customers and related capital investments.

“Together with our team of employees in Açu, we have built these important steps of phase 1 of our shipbuilding unit, which shall already be able to serve as a major offshore yard in Brazil. We regret that the existing situation requires, at this moment, changing personal and business projects, which have our appreciation and respect. Given the strategic importance of such an infrastructure asset of this quality for our country, we have every reason to believe in the future resumption of the construction of the next phases of our shipyard. We greatly appreciate everyone who helped us in achieving this first step“, said Danilo Baptista, OSX’ Shipbuilding Officer.

ADVANCES AND PROSPECTS OF THE LEASING / SERVICES UNITS

In addition to the FPSO OSX-1 that is already in the operational phase, the construction of the major equipment of OSX´s oil production fleet is in advanced stage at respected local and international shipyards, in line with the informed construction schedules. The Company has been dedicated to ensuring that such construction activities and related operational activities continue its regular course. In this respect, OSX highlights the current final phase of construction (commissioning) of FPSO OSX-2 (with 92.31% of physical implementation) and OSX-3 (with 91.71% of physical implementation).

At the end of this year of 2013, OSX’s fleet of oil production platforms shall comprise three FPSOs, thus constituting one of the largest fleets for oil production in Brazil.

As for future business opportunities in this segment, the results of the 11th Bid Round conducted by the National Oil Agency (ANP) indicates potential growth for the Company in the long term.

Additionally the Company has been studying different scenarios for the optimization of its current services and leasing portfolio.

NEW CAPITALIZATION OF $ 120 MILLION, WITH PARTIAL EXERCISE OF THE PUT OPTION

In line with the new Business Plan of the Company, the independent members of the Board of Directors of the Company, Messrs. Luiz do Amaral de França Pereira Neto, Rodolpho Tourinho and Samir Zraick have unanimously and without exception approved the exercise of the put option (Put), in an amount in Reais equivalent to U.S. $ 120 million, granted to the Company by its controlling shareholders, pursuant to the respective agreement dated March 16, 2010 as amended on October 17, 2012, aiming to provide the Company with additional equity for the execution and implementation of its business plan.

As a result of this exercise, a capital increase will be implemented by OSX totaling $ 120 million in May 2013, with the issuance of new common shares of OSX, at the issuance price set in the Put Option Agreement, corresponding to the price per share offered in the Initial Public Offering of the Company adjusted for inflation (IGP-M/FGV).

NEW EXECUTIVE BOARD

The Board of Directors elected the following new Executive Board of OSX Brasil S/A:

• Carlos Eduardo Bellot Sardenberg as CEO, COO and Engineering, Leasing and Development Director;
• Danilo Souza Baptista as COO in charge of Naval Construction business, and
• Luiz Guilherme Marques Esteves, CFO and Investor Relations.

NEW BUSINESS PERSPECTIVE

“The new Business Plan of OSX initiates a new period for the Company business, adapted to new conditions being verified, with firm capital discipline required to achieve our long-term goals,” said Carlos Bellot, CEO of OSX .

OSX has been studying, among other initiatives, potential business combinations for both the shipyard, and for the leasing / services units, in the interest of the Company and with a view to generate greater value for its shareholders. In this regard, the Company will keep the market promptly informed in accordance with applicable regulations.

The Company´s management believes that the set of initiatives now announced is the most suitable for the current circumstances and reiterates its commitment to conducting the business of OSX, requesting and thanking the support of its employees, partners and other stakeholders in this new period.

[mappress]

Press Release, May 19, 2013