Receipt of letter from GMS’ lending banks

Gulf Marine Services PLC

('GMS' or the 'Company')

Receipt of letter from GMS' lending banks

GMS announces that it has received a letter (the "Bank Letter"), a copy of which is attached hereto, from the agent on behalf of all six of its lenders (the "Banks") in relation, inter alia, to the votes of Seafox International Limited ("Seafox"), Mazrui Investments LLC ("Mazrui") and Horizon Energy LLC ("Horizon") at the Company's general meeting of shareholders held on 27 October 2020 against, and therefore defeating, the resolutions in respect of the Company's proposed issuance of warrants to the Banks by the end of 2020 pursuant to the terms of its financing documents (the "Finance Documents").

In particular, the agent on behalf of the Banks has reiterated that the Banks "… are not willing to renegotiate any of the terms of the Finance Documents and expect the Company and the Parent [the Obligors] to perform all of their respective obligations under the [Finance Documents]. This position continues to hold regardless of the composition of the Company's Board or the appointment of new directors. The Banks' primary concern remains the financial health of the Obligors and their ability to continue their business operations effectively and at the same time fulfil their contractual obligations to the Banks…."

In addition, the Company received a separate letter from ADCB, the second largest lender in the bank syndicate, relating to the same matter, in which it noted, "… with significant concern, that the recent vote by the Activist Shareholders [Seafox, Mazrui and Horizon] against the issuance of the Warrants represents a repudiation of the [Finance Documents]. The actions by the Activist Shareholders will, if not properly challenged, cause [GMS] to breach [its] obligations under the [Finance Documents]….If this does occur and the Event of Default is not cured, ADCB has no option but to seek to enforce its rights under [the Finance Documents]. In all likelihood, this will force GMS to enter into administration, which will not serve the interests of any stakeholder." ADCB further noted that it "reserves its rights at law in respect of the actions and conduct of the Activist Shareholders…."

Letter from Agent on behalf of GMS' lending banks

9 November 2020

Dear Sirs

General meeting of the shareholders of Gulf Marine Services plc

We refer to (i) the Parent's announcement (the GM Announcement) of the results of its general meeting (the General Meeting) held on 27 October 2020 announcing, among other things, a majority of shareholders voted against the allotment of securities and the resolution in respect of allotment of securities therefore failed to pass; and (ii) the Common Terms Agreement originally dated 29 November 2015 (as lastly amended and restated on 16 June 2020, the Common Terms Agreement).

Terms defined in the Common Terms Agreement shall have the same meaning when used in this letter.

We are writing to you in our capacity as Intercreditor Agent under the Common Terms Agreement, on behalf of all the Banks.

As you have described in the GM Announcement, pursuant to the Common Terms Agreement the Parent is required either to:

1.   raise at least USD75,000,000 in net proceeds from the issuance of new equity and use the proceeds to prepay the Term Facilities by no later than 31 December 2020 (the Equity Prepayment); or

2.   issue warrants to the Banks (the Warrants) in accordance with clause 20.27 (Warrants) of the Common Terms Agreement.

We understand that the Parent has suspended efforts to achieve the equity raise needed to make the Equity Prepayment. We further understand that the issuance of the Warrants required the resolutions tabled at the General Meeting to be passed and that therefore, as matters currently stand, the Parent will be unable either to achieve the Equity Prepayment or to issue the Warrants by 31 December 2020. The Banks are extremely concerned about these developments.

The Banks wish to remind the Company:

1.   of its and the Parent's continuing obligation pursuant to clause 20.27(f) (Warrants) of the Common Terms Agreement to use all reasonable endeavours to achieve the passing of the Parent Resolutions; and

2.   that an Event of Default (the Anticipated Event of Default) will occur under clause 23.16 (Warrants) of the Common Terms Agreement if neither the Equity Raise nor the issuance of Warrants have occurred by 31 December 2020, giving the Banks a right to accelerate the Facilities and enforce any of their rights under the Common Terms Agreement, including enforcement of asset security.

Pursuant to clause 34.6 (Waivers and remedies cumulative) of the Common Terms Agreement, no failure to exercise, nor any delay in exercising, on the part of any Finance Party, any right or remedy under a Finance Document shall operate as a waiver of any such right or remedy or constitute an election to affirm any Finance Document. No election to affirm any Finance Document on the part of any Finance Party shall be effective unless it is in writing. No single or partial exercise of any right or remedy shall prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in each Finance Document are cumulative and not exclusive of any rights or remedies provided by law.

Accordingly, each Finance Party reserves any right or remedy it may have now or subsequently in connection with or arising from the Anticipated Event of Default.

The Banks reiterate that they are not willing to renegotiate any of the terms of the Finance Documents and expect the Company and the Parent to perform all of their respective obligations under the Common Terms Agreement. This position continues to hold regardless of the composition of the Company's Board or the appointment of new directors. The Banks' primary concern remains the financial health of the Obligors and their ability to continue their business operations effectively and at the same time fulfil their contractual obligations to the Banks, including pursuant to clause 20.27 (Warrants) of the Common Terms Agreement.

This letter may be communicated by the Company to all shareholders.

Ends

Enquiries:

MAR

The information contained within this announcement is considered by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement via a Regulatory Information Service, this inside information will be considered to be in the public domain.

The person responsible for arranging for the release of this announcement on behalf of GMS is Tony Hunter, Company Secretary.

ABOUT GMS

GMS, a company listed on the London Stock Exchange, was founded in Abu Dhabi in 1977 and has become a world-leading provider of advanced self-propelled self-elevating support vessels (SESVs).  The fleet serves the oil, gas and renewable energy industries from its offices in the United Arab Emirates and Saudi Arabia.  The Group's assets are capable of serving clients' requirements across the globe, including those in the Middle East, South East Asia, West Africa, North America, the Gulf of Mexico and Europe.

The GMS fleet of 13 SESVs is amongst the youngest in the industry, with an average age of eight years. The vessels support GMS's clients in a broad range of offshore oil and gas platform refurbishment and maintenance activities, well intervention work and offshore wind turbine maintenance work (which are opex-led activities), as well as offshore oil and gas platform installation and decommissioning and offshore wind turbine installation (which are capex-led activities).

The SESVs are categorised by size - K-Class (Small), S-Class (Mid) and E-Class (Large) - with these capable of operating in water depths of 45m to 80m depending on leg length.  The vessels are four-legged and are self-propelled, which means they do not require tugs or similar support vessels for moves between locations in the field; this makes them significantly more cost-effective and time-efficient than conventional offshore support vessels without self-propulsion. They have a large deck space, crane capacity and accommodation facilities (for up to 300 people) that can be adapted to the requirements of the Group's clients.

The Company's Legal Entity Identifier is 213800IGS2QE89SAJF77.