PROSPECTUS. CURATO HOLDING AS (A private limited liability company organized under the laws of Norway)

Transkript

1 PROSPECTUS CURATO HOLDING AS (A private limited liability company organized under the laws of Norway) Listing of Bonds issued by Curato Holding AS in a NOK 500 million senior secured callable bond issue with maturity in 2018 ISIN: NO This prospectus (the Prospectus ) relates to, and has been prepared in connection with the listing (the Listing ) on Oslo Børs, a stock exchange operated by Oslo Børs ASA ( Oslo Børs ), of bonds (the Bonds ) which were issued by Curato Holding AS ("the "Company" or the "Issuer") on 22 November 2013 in a NOK 500 million senior secured bond issue with maturity in November 2018 (the Bond Issue ). The Bonds have a floating interest rate of 3 month NIBOR %. The Bonds are expected to be listed and tradable on Oslo Børs on or about 14 May The distribution of this Prospectus may in certain jurisdictions be restricted by law. Accordingly, this Prospectus may not be distributed or published in any jurisdiction except under circumstances that will result in compliance with any applicable laws and regulations. The Company and the Manager (as defined below) requires persons in possession of this Prospectus to inform themselves about, and to observe, any such restrictions. This Prospectus and the Bonds shall be governed by and construed in accordance with Norwegian law. The courts of Norway, with Oslo City Court as legal venue, shall have exclusive jurisdiction to settle any dispute which may arise out of, or in connection with the Bonds or this Prospectus. THIS PROSPECTUS IS A LISTING PROSPECTUS FOR BONDS ALREADY ISSUED BY CURATO HOLDING AS. NO SECURITIES ARE BEING OFFERED TO ANY PERSON IN ANY JURISDICTION ON THE BASIS OF THIS PROSPECTUS. Investing in the Company and the Bonds (including but not limited to the Bonds) involves material risks and uncertainties. See section 2 Risk Factors and section 4 Cautionary Note Regarding Forward-Looking Statements. *** Manager Nordea Markets 12 May 2014

2 IMPORTANT INFORMATION Please refer to section 11 Definitions and Glossary of Terms for definitions of terms used throughout this Prospectus, which also apply to the preceding pages. This Prospectus has been prepared in order to provide information about the Group and its business in relation to the Listing of the Bonds, and to comply with the Norwegian Securities Trading Act of June 29, 2007 no. 75 (the Norwegian Securities Trading Act ) and related secondary legislation, including EC Commission Regulation (EC) no. 809/2004 implementing Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive) regarding information contained in prospectuses (the Prospectus Directive ). This Prospectus has been prepared solely in the English language. The Company has furnished the information in this Prospectus. The Company has engaged Nordea Markets, part of Nordea Bank Norge ASA (the Manager ) as Manager for the Listing. Unless otherwise indicated, the information contained herein is current as of the date hereof and the information is subject to change, completion and amendment without notice. In accordance with Section 7-15 of the Norwegian Securities Trading Act, every significant new factor, material mistake or inaccuracy that is capable of affecting the assessment of the Bonds arising after the time of approval of this Prospectus and before the date of listing of the Bonds on Oslo Børs will be published and announced promptly as a supplement to this Prospectus. Neither the publication nor distribution of this Prospectus shall under any circumstances create any implication that there has been no change in the Group s affairs since the date hereof or that the information herein is correct as of any time since its date. The distribution of this Prospectus may in certain jurisdictions be restricted by law. Accordingly, this Prospectus may not be distributed or published in any jurisdiction except under circumstances that will result in compliance with any applicable laws and regulations. The Company and the Manager require persons in possession of this Prospectus to inform themselves about, and to observe, any such restrictions. An investment in the Bonds involves inherent risks. Potential investors should carefully consider the risk factors set out in section 2 Risk Factors in addition to the other information contained herein before making an investment decision. An investment in the Company or its securities is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of their entire investment. The contents of this Prospectus are not to be construed as legal, business or tax advice. Each prospective investor should consult with its own legal adviser, business adviser and tax adviser as to legal, business and tax advice. In the ordinary course of their respective businesses, the Manager and certain of their respective affiliates have engaged, and will continue to engage, in investment and commercial banking transactions with the Group. The Bonds are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted under applicable securities laws and regulations. Investors should be aware that they may be required to bear the financial risks of an investment in the Bonds for an indefinite period of time. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. Without limiting the manner in which the Company may choose to make any public announcements, and subject to the Company s obligations under applicable law, announcements relating to the matters described in this Prospectus will be considered to have been made once they have been received by Oslo Børs and distributed through its information system. The distribution of this Prospectus and the offer and sale of the Bonds in certain jurisdictions may be restricted by law. The Company and the Manager require persons in possession of this Prospectus to inform themselves about, and to observe, any such restrictions. This Prospectus does not constitute an offer of, or an invitation to subscribe or purchase any securities in any jurisdiction. Furthermore, the restrictions and limitations listed and described herein are not exhaustive, and other restrictions and limitations in relation to the Prospectus that are not known or identified by the Company and the Manager at the date of this Prospectus may apply in various jurisdictions as they relate to the Prospectus. The Company has not registered the Bonds under the U.S. Securities Act or the securities laws of other jurisdictions other than the Kingdom of Norway and the company does not expect to do so in the future. The Bonds may not be offered or sold in the United States or to U.S. persons (as defined in Regulation S under the Securities Act), except for pursuant to an exemption from the registration requirements of the U.S. Securities Act and applicable state securities law, or pursuant to an effective registration statement.

3 TABLE OF CONTENTS 1. SUMMARY RISK FACTORS RESPONSIBILITY STATEMENT CAUTIONARY NOTE TO INVESTORS THE BONDS INFORMATION ABOUT THE COMPANY FINANCIAL INFORMATION THE COMPANY S BOARD AND MANAGEMENT SHARE CAPITAL AND MAJOR SHAREHOLDERS DOCUMENTS ON DISPLAY AND INCORPORATION BY REFERENCE DEFINITIONS AND GLOSSARY OF TERMS APPENDICES Appendix 1 Bond Agreement Appendix 2 Curato Group consolidated financial statements 2012 Appendix 3 Curato Group consolidated financial statements 2013 Appendix 4 Curato AS financial statements 2012 Appendix 5 Curato AS financial statements 2013 Appendix 6 Curato Røntgen AS financial statements 2012 Appendix 7 Curato Røntgen AS financial statements

4 1. SUMMARY Summaries are made up of disclosure requirements known as Elements. These elements are numbered in Sections A E (A.1 E.7). This summary contains all the Elements required to be included in a summary for this type of securities and Issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be inserted in the summary because of the type of securities and Issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of not applicable. Section A Introductions and warnings A.1 Introduction and warning This summary should be read as introduction to the prospectus. Any decision to invest in the securities should be based on consideration of the prospectus as a whole by the investor. Where a claim relating to the information contained in the prospectus is brought before a court, the plaintiff investor might, under the national legislation of the Member States, have to bear the costs of translating the prospectus before the legal proceedings are initiated. Civil liability attaches only to those persons who have tabled the summary including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the prospectus or it does not provide, when read together with the other parts of the prospectus, key information in order to aid investors when considering whether to invest in such securities. A.2. Use of the prospectus in resales by financial intermediaries Not applicable. The Prospectus will not be used in subsequent resales by financial intermediaries Section B Issuer and guarantors B.1 Legal and commercial name B.2 Domicile, legal form, legislation and country of incorporation The legal and commercial name of the Company is Curato Holding AS. The legal and commercial names of the Guarantors are Curato AS and Curato Røntgen AS The Company is incorporated in Norway with registration number and organised as a private limited liability company in accordance with the Norwegian Private Limited Companies Act. Curato AS is incorporated in Norway with registration number and organised as a private limited liability company in accordance with the Norwegian Private Limited Companies Act. Curato Røntgen AS is incorporated in Norway with registration number and organised as a private limited liability company in accordance with the Norwegian Private Limited Companies Act. B.4b Known trends Due to lower birth rate, the Norwegian population is growing older which increases the demand for Curato's services as elderly are more exposed to serious deceases. Furthermore there is increasing political interest in using private providers of radiology services in order to reduce the public hospital's waiting periods. 4

5 B.5 Group The Company and the Guarantors constitute the Group. The Company is the parent company of Group and directly and indirectly controls the Guarantors. B.9 Profit forecast or estimate B.10 Qualifications in the audit report B.12 Selected historical key financial information, material adverse changes in prospects and significant changes in the financial or trading position. Not applicable. The Company and the Guarantors have not made any profit forecasts or estimates. Not applicable. There are no qualifications in the audit reports. The Group's statement of income: Figures in NOK thousand OPERATING INCOME Group Sales revenue 68, ,915 Other operating income 943 3,739 Net operating income 69, ,655 OPERATING EXPENSE Cost of goods sold -1,931-9,200 Salaries -35, ,089 Depreciation and amortization -17,397-55,246 Writedowns ,615 Other operating expenses -20, ,842 Total operating expenses -76, ,992 Operating result -7,231 40,663 5

6 FINANCIAL INCOME AND FINANCIAL EXPENSES Financial income 12,363 7,974 Financial expenses -23,237-36,043 Net financial items -10,874-28,069 Pre-tax result -18,105 12,594 Tax expense 5,365-3,366 Net result -12,740 9,228 Comprehensive income Items that will not be reclassified -971 Other income and expenses Currency translation adjustment -170 Year comprehensive income -971 Total comprehensive income -13,711 9,058 6

7 The Group's statement of financial position: Group Figures in NOK thousand Assets FIXED ASSETS Intangible assets Goodwill 440, ,637 Intangible asset 1,295 1,706 Deferred tax assets Total intangible assets 441, ,596 Fixed assets Real property 550 3,380 Movables, inventory, equipment 304, ,436 Total fixed assets 304, ,816 Financial fixed assets Investment in shares and units 200 Pension 355 6,049 Other receivables - 20 Total financial fixed assets 355 6,269 Total fixed assets 746, ,681 7

8 CURRENT ASSETS Inventory - Receivables Accounts receivables 31,515 23,523 Other receivables 25,153 3,355 Total receivables 56,667 26,878 Cash and cash equivalents 550,246 45,246 Total current assets 606,914 72,161 Total assets 1,353, ,842 Equity and liabilities EQUITY Paid in capital Share capital 1,800 9,335 Share premium fund 178,200 27,579 Total paid in capital 180,000 36,914 Other equity -13,711 24,703 LIABILITIES Provisions Pension liabilities 3,763 4,046 Deferred tax 45,584 6,801 Total provisions 49,347 10,847 Other long term debt Debt to credit institutions 27, ,547 Shareholder loan - 168,680 8

9 Total equity 166,289 61,617 Other long term debt 465,500 72,850 Total other long term debt 493, ,077 Current liabilities Accounts payable 14,626 22,464 Debt credit institutions 11,724 59,859 Tax payable 2,972 5,771 Public duties payable 12,919 11,795 Short term debt to shareholders 559,261 Other current liabilities 42,705 30,412 Total current liabilities 644, ,301 Total liabilities 1,187, ,225 TOTAL EQUITY AND LIABILITIES 1,353, ,842 9

10 The Guarantors' statement of income: Curato AS Curato Røntgen AS Figures in NOK OPERATING INCOME AND OPERATING EXPENSES Sales revenue 405,481, ,440,184 Other operating income 6,115,445 4,179,546 Total operating income 411,597, ,619,730 OPERATING EXPENSES Use of equipment 9,963,998 9,200,285 Salary expenses 2,636,975 2,719, ,298, ,028,896 Depreciations and amortizations on fixed assets and intangible assets Write-downs on fixed assets and intangible assets 183, ,384 41,285,386 67,466, ,288 8,615,139 Other operating expenses 629, , ,276, ,817,578 Total operating expenses 3,450,444 3,634, ,604, ,127,957 Operating result -3,450,444-3,634,772 60,992,203 25,491,773 10

11 FINANCIAL INCOME AND FINANCIAL EXPENSES Income on investment in subsidiary Interest income from other group companies 164,615,389 40,428,586 1,028, ,785,741 5,882,895 Other interest income 2,463,554 2,153, ,558 51,452 Other financial income 99,417 4,253,169 29,771,835 2,609,820 Total financial income 168,206,900 46,835,647 Interest expenses to other group companies 7,717,245 5,645,335-1,028,540 0 Other interest expenses 24,833,980 30,090,045-2,874,822-4,253,336 Other financial expenses 9,278,790 1,087, , ,305 Total financial expenses 41,830,015 36,823,076 Net financial profit 126,376,885 10,012,571 30,878,994 3,564,525 Profit before tax 122,926,441 6,377,799 91,871,196 29,056,298 Tax expenses ,426 2,012,868 17,360,406 13,687,016 NET PROFIT 134,440,867 4,364,931 74,510,790 15,369,282 11

12 The Guarantor's statement of financial position: Curato AS Curato Røntgen AS Figures in NOK Assets FIXED ASSETS Intangible assets Licenses, patents, brands and similar 1,294,952 1,701,281 Deferred tax assets 36,200 0 Total intangible assets 36, ,294,952 1,701,281 Fixed assets Real property 550, ,000 Machinery and plant 113,551, ,168,921 Movables, inventory, equipment and similar 0 183,652 47,945,115 42,513,107 Total fixed assets 0 183, ,046, ,232,029 Financial fixed assets Investment in subsidiary 422,068, ,479, ,945,600 Loan to other group company Investment in shares and units 0 170,433, ,114 Pension funds 355,361 6,048,885 Other receivables 0 20,00 Total financial fixed assets 422,068, ,479, , ,647,728 Total fixed assets 422,104, ,662, ,696, ,581,038 12

13 CURRENT ASSETS Inventory Receivables Accounts receivables 31,514,580 22,360,845 Other receivables 0 1,146,353 1,535,100 1,882,933 Receivables from group companies 159,581,300 40,428,586 81,096,400 95,547,129 Total receivables 159,581,300 41,574, ,146, ,790,907 Cash and cash equivalents 3,717,073 33,039,205 45,218,290 8,840,988 Total current assets 163,298,373 74,614, ,364, ,631,895 TOTAL ASSETS 585,402, ,277, ,061, ,212,933 Equity and liabilities EQUITY Paid in capital Share capital 9,335,000 9,335,000 1,351,000 1,351,000 Share premium 27,578,528 27,578,528 39,140,682 39,140,682 Other paid in capital 2,633,533 2,633,533 Total paid in capital 36,913,528 36,913,528 43,125,215 43,125,215 Retained earnings Other equity 127,499,024 8,768,557-6,924, ,561,804 Total retained earnings 127,499,024 8,768,557-6,924, ,561,804 Total equity 164,412,552 45,682,085 36,200, ,687,019 LIABILITIES 13

14 Provisions Pensions 3,762,884 2,557,682 Deferred tax 0 2,021,916 3,200,195 4,755,429 Total provisions 0 2,021,916 6,963,039 7,313,111 Other long term debt Debt to credit institutions 0 162,100,243 39,696,594 84,994,778 Long term debt to group companies 0 163,725,348 Debt to shareholders 0 168,679,826 Other long term debt Total other long term debt 0 494,505,416 39,696,594 84,994,778 Current liabilities Accounts payable 5,251 3,476,340 14,620,991 18,090,242 Tax payable 2,972,157 5,771,287 Public duties payable ,369 12,917,884 11,577,327 Short term debt to group companies 420,983,808 95,547, ,194,011 40,428,586 Other current liabilities 0 830,815 50,496,420 29,350,583 Total current liabilities 420,990, ,067, ,201, ,218,024 Total liabilities 420,990, ,594, ,860, ,597,534 TOTAL EQUITY AND LIABILITES 585,402, ,277, ,061, ,212,933 There have been no material adverse changes in the Group's financial or trading position since the date of the last published audited financial statements, being 31 December There have been no material adverse changes in the prospects of the Company or Guarantors since the date of their last published audited financial statements, being 31 December

15 B.13 Recent events Not applicable. There have not been any recent events particular to the Group which are to a material extent relevant to the evaluation of the Group's solvency. B.14 Group and dependence on other entities B.15 Principal activities B.16 Ownership and control For information on the Group, please refer to Element B.5. The Group is inter-related with regard to both financial and operational matters and the Group companies are as such dependent on each other. As all operations are carried out in, and all fixed assets and employees are held by, the Company's subsidiaries, the Company is dependent on other entities in the Group. Curato is Norway s leading and only nationwide private medical imaging diagnostic chain generating imaging to diagnose diseases within the human body. Curato has a market share of over 50% among the private providers, which is reflected in the number of awarded contracts from the regional health authorities (12 of 22 possible). Curato is offering the full array of modalities including MRI, CT, X-Ray, Ultrasound, Mammography and Bone Mineral Density. In total more than half a million examinations are conducted on an annual basis, providing related revenues in excess of NOK 400 million. The Company is indirectly controlled by Altor Fund III GP Limited ("Altor"), in its capacity as general partner of Altor Fund III (no.1) L.P and Altor Fund III (No. 2) L.P and as investment manager for Altor Fund III (no.3) Limited who controls CD Holding I AS which in turn controls the sole shareholder of the Company, CD Holding II AS. B.17 Credit ratings Not applicable. Neither the Company nor the Guarantors have ordered any credit ratings. B.18 The nature and scope of the guarantee The guarantees are unconditional and irrevocable on-demand guarantees from the Guarantors. Section C - Securities C.1 Type and class of security C.2 Currency of the securities issue C.5 Restrictions on the free transferability of the securities C.8 Rights attached to the Bonds Senior secured callable Bonds with ISIN NO NOK Not applicable. There are no restrictions on the free transferability of the Bonds. The Bonds constitute senior debt of the Company, secured on a first priority basis over certain of the assets of the Company and the Guarantors, and otherwise rank at least pari passu with the claims of its other creditors, except for obligations which are mandatorily preferred by law. 15

16 C.9 Terms of the Bonds Please see Element C.8 for rights attached to the Bonds Coupon rate: 3 month NIBOR % per annum. First Interest Payment Date: 22 February 2014 (3 months after the Settlement Date). Final Maturity Date: 22 November 2018 (5 years after the Settlement Date). The Bonds shall be repaid as follows: (i) (ii) (iii) (iv) (v) on the Interest Payment Date 12 months after the Settlement Date, by NOK 20,000,000; on the Interest Payment Date 24 months after the Settlement Date, by NOK 20,000,000; on the Interest Payment Date 36 months after the Settlement Date, by NOK 20,000,000; on the Interest Payment Date 48 months after the Settlement Date, by NOK 20,000,000; and on the Final Maturity Date, by the remaining amount. The instalments shall be repaid at 100% of par value (plus accrued but unpaid interest on the Bonds being redeemed). All instalments and any other partial repayments shall first be deemed applied in respect of the part of the Loan Amount which pursuant to the Purpose of the Bond Issue is used toward financing part of the purchase price in the Transaction (or any refinancing thereof). Partial repayments shall be carried out pro rata in accordance with the procedures of the Securities Depository. Yield: Investors wishing to invest in the Bonds after the issue date must pay the market price for the Bonds in the secondary market at the time of purchase. Depending on the development in the bond market in general and the development of Curato, the price of the Bonds may have increased (above par) or decreased (below par). As the Bonds have a floating reference rate, it is the market's expecations of risk premium, i.e. margin that affects the price. If the price has increased, the yield for the purchaser in the secondary market, given that the reference rate does not change, will be lower than the interest rate of the Bonds and vice cersa. At par and an assumption that the reference rate is 1.80% from the issue date to maturity date, the yield will be 7.05%. C.10 Derivative component C.11 Admission to trading Please see Element C.9 for the terms of the Bonds. The Bonds have a derivative component in the interest payment linked to the Norwegian Interbank Offered Rate (NIBOR). The Company has applied for listing of Bonds on Oslo Børs, and admission to trading is expected to be on or about 14 May 2014 with ISIN NO

17 Section D Risks D.2 Key information on the key risks that are specific to the issuer. D.3 Key information on the key risks that are specific to the securities Section E Offer Market risk Customer risk IPR risk Financial risks Political risks Lack of operating and financial history Insurance risk Equipment risk Taxation risks Growth risk Risks relating to limited ownership period General risk regarding interest bearing securities Price volatility of publicly traded securities Meeting of the bondholders, modification and waivers Risks related to the market Enforceability of civil liabilities Enforcement of security E.2b Reasons for the offer and use of proceeds Not applicable. The Prospectus relates to the listing of already issued Bonds. E.3 Terms and conditions of the offer Not applicable. The Prospectus relates to the listing of already issued Bonds. 17

18 E.4 Material interests E.7 Estimated expenses charged to the investor by the issuer or the offeror The Manager or their affiliates have provided from time to time, and will provide in the future, investment and commercial banking services to the Company and its affiliates in the ordinary course of business, for which they may have received and may continue to receive customary fees and commissions. The Manager, their employees and any affiliate may currently own existing Shares and/or bonds in the Company. The Manager does not intend to disclose the extent of any such investments or transactions otherwise than in accordance with any legal or regulatory obligation to do so. The Manager received a commission in connection with the issue of the Bonds. Not applicable. The Company will not charge any expenses to the investors. 2. RISK FACTORS Prior to any decision to invest in the Company s securities, potential investors should carefully read and assess the following specific risks and the other information contained in this Prospectus. If these risks materialize, individually or together with other circumstances, they may substantially impair the business of the Group and have material adverse effects on the Group s business prospects, financial condition or results of operations and the price of the Company s securities may decline, causing investors to lose all or part of their invested capital. As the assets of the Company are held by various subsidiaries, the risks associated with the Group will also be relevant for the Company. The order in which the individual risks are presented below is not intended to provide an indication of the likelihood of their occurrence nor of the severity or significance of individual risks. An investment in the Company is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all or part of their investment. 2.1 Risks relating to the Group and the industry in which it operates Market Risks The Group s business is exposed to economic cycles. Changes in economic conditions in the markets in which the Group operates can affect the demand for its products and services and there can be no guarantee that sufficient demand for the Group's products and services can be created or maintained Customer Risk The Group is generally depending on single orders under frame agreements with key customers for the sale of its products and services. This creates an uncertainty with respect to future revenue. As majority of the Group's revenue derives from contracts which are subject to public tenders, future revenues of the Group is to a high degree dependent upon the Group's future ability to successfully tender contracts with key customers IPR Risk The Group relies upon intellectual property and trade secret laws and contractual restrictions to protect important proprietary rights, and, if these rights are not sufficiently protected, this may negatively affect the Group s ability to compete and generate revenue. There is also a risk of IPR infringement claims from third parties, potentially hindering the Group s operations or leading to losses for the Company Financial Risks The Company may need additional funding in the future to finance its operations and future growth. Inability to satisfy future liquidity requirements to finance future operations will affect the Company s growth strategy, and there can be no guarantee that future financing will be available on commercially acceptable terms. 18

19 2.1.5 Political Risks The Group operates within a highly regulated area of law, and its ability to generate revenues is to a high degree dependent on services provided to the Norwegian regional health authorities. Political shifts and opinion may affect the regulation of the business area in which the Group operates and the extent to which the regional health authorities is willing to procure services from private health care providers and the terms for such procurement, including but not limited to price Lack of Operating and Financial History The Company is a recently formed entity and has limited operating history or financial history upon which prospective investors can evaluate its likely performance, increasing the uncertainty of an investment in the Company Insurance Risk The Group's insurance may not necessarily cover all potential liabilities of the Group, and there is a risk that the Group will suffer substantial losses which will not be covered by any insurance policy, for example if the Group were to be liable for wrongful treatment/diagnosis or other lawsuits Equipment Risk The Group s equipment may be damaged or in need for replacement, which could be costly and affect the Company's profitability, and which will not necessarily be covered by insurance Taxation Risks The Group is exposed to risk regarding the correct application of tax regulations as well as possible future changes in the tax legislation of, including potential different application of the tax rules by the authority compared to what the Company considers to be correct Growth Risk The Group may be required to make substantial capital expenditure for expansion of its operations in the future. Such capital expenditures could be covered by revenues, new equity or by obtaining new debt. If the Group s revenues are not sufficient to cover capital expenditures for future expansion plans, if the Company is unable to attract investors to increase the Group s equity, or if new debt arrangements are not accessible, or only on unattractive commercial terms, the Group will experience a limited ability to expand its business Limited ownership period The Company has only owned its business for a very limited period of time, and consequently does not have the same level of knowledge about its business and the risks related thereto as would an owner who had held the business for a longer period of time. 2.2 Risk factors relating to the Bonds General risk regarding interest bearing securities All investments in interest bearing securities, such as the Bonds has risks associated with it, such as risks related to the general volatility in the market for such securities, varying liquidity in a single bond issue as well as company specific risk factors Price volatility of publicly traded securities The price of a single bond will fluctuate in accordance with the interest rate and credit markets in general, the market view of the credit risk of that particular bond issue, and the liquidity of these bonds in the market. The interest rates can, and will, experience substantial fluctuations caused by a number of factors based on the development in the international economy, and are dependent on Curato's operations. 19

20 2.2.3 Meeting of the bondholders, modification and waivers The conditions of the Bonds contain provisions for calling meetings of bondholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all bondholders including bondholders who did not attend and vote at the relevant meeting and bondholders who voted in a manner contrary to the majority. The Bond Agreement provides that the Trustee (defined below) may make certain modifications to the conditions of Bond Agreement without the prior consent or sanction of such bondholders, as further detailed in the conditions for the Bond Agreement Risks related to the market There can be no assurance that there will be a liquid market for the Bonds. Therefore, investors may not be able to sell their bonds easily or at prices that will provide them with a yield comparable to similar investments that have a developed secondary market. Illiquidity may have severely adverse effect on the market value of the Bonds. Enforceability of Civil Liabilities The Company is a limited liability company organized under the laws of Norway and the directors and executives of the Company reside in Norway. As a result, it may not be possible for investors in other jurisdictions to effect service of process in other jurisdictions upon such persons or the Company or to enforce judgments on such persons or the Company in other jurisdictions Enforcement of security Although the Bonds are secured, there can be no assurance that the security will be sufficient to cover the Company's payment obligations under the Bonds in case of a default. Furthermore, the Bond Agreement allows the Company to, on certain terms, raise additional debt financing that will be secured by the existing security (without any obligation to create additional guarantees or security), i.e. the Company may accrue more debt under the same security as for the Bonds. Hence the debt/secured assets ratio may increase significantly and the security may not be sufficient to cover the Company's payment obligations under the Bonds in case of a default. 20