CONDITIONAL BUY-BACK OFFER OF DNO03 AND DNO04 BONDS

DNO ASA offers the bondholders a conditional buy-back of the following bonds:
 
DNO 03 / ISIN: NO 0010226574 / 3m Nibor + 3.50% / 02.06.2009
DNO 04 / ISIN: NO 0010226582 / 7.915% annual / 02.06.2009
 
The buy-back offer is subject to acceptance of amendment of paragraph 8.2 - governing equity ratio coverage and the deletion of paragraph 8.3 which restricts additional funding though secured loans - in the DNO 03 and DNO 04 loan agreements.
 
Regarding the amendment of paragraph 8.2, DNO ASA offers the bondholders net interest bearing debt to book equity coverage at less than three times (please refer to www.newsweb.no for further documentation). Should DNO ASA receive the required majority vote to amend the covenants in the loan agreement, then the company will offer to buy back all or parts (subject to bond holder interest) of the DNO 03 and DNO 04 bonds under the following terms:
 
1.      DNO 03 (FRN) will be repurchased at a price equalling a yield of 3 month Nibor +1.50% until maturity.
2.      DNO 04 (fixed rate) will be repurchased at a price equalling a yield spread over the Norwegian swap rate of +1.50% until maturity.
3.     Settlement date for both bonds will be 2nd March 2006.
 
The repurchase price will be set using the 3 month Nibor resp. Norwegian swap rate at the close of business on the same day as the bond holder meeting takes place. As an example, the repurchase price of DNO 03 based on the 3 month Nibor level at the close of 27th January with settlement on the 2nd March would be 106.15, while the corresponding price for DNO 04 using the same dates and using the Norwegian swap curve would be 108.56.
 
Subject to a positive outcome of the above proposals, the existing bondholders are also invited to subscribe to the three following bond loans:
 
  •          A new five-year floating rate bond at a price resulting in a yield of 3 month Nibor +2.5% to maturity
  •          The existing DNO 06 (ISIN: NO 0010283724) floating rate callable bond which matures in 2012 at a price resulting in a yield of 3 month Nibor +3.35% to maturity
  •          The existing DNO 07 (ISIN: NO 0010283732) fixed rate callable bond which matures in 2012 at a price resulting in a yield spread of 3.35% over the Norwegian swap
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    Further details are available on www.newsweb.no.
     
    DNO ASA has appointed Fearnley Fonds ASA to manage the buy-back of the existing bonds (DNO 03 and DNO 04) as well as issue the new 5-year floating rate bond, and to tap the existing DNO 06 and DNO 07 bonds. For questions and subscriptions please contact Eivind Hadler-Olsen (email: e.hadler-olsen@fearnleys.no, tel: +47 22 93 63 83) or Arnt Ove Takvam (email: a.takvam@fearnleys.no, tel: +47 22 93 63 62).