Announcement of fully underwritten rights issue

And proposal to transfer equity certificate capital to the premium reserve. The Board of Directors of Sparebanken Sør (SOR) ("Sparebanken Sør" or the “Bank”) announces that it has resolved to propose to conduct a rights issue with gross proceeds of approximately NOK 600 million (the “Rights Issue”) which, on certain terms, is guaranteed fully subscribed through a combination of an underwriting agreement and pre-subscriptions from certain larger existing holders of the equity certificates in the Bank. Furthermore, the Bank's board of directors has resolved to propose a transfer of equity certificate capital stipulated in the Articles of Association to the premium reserve by a change in the par value of the equity certificates.

The notice for the Bank's annual supervisory board meeting ("ASBM") containing inter alia the proposals for resolutions to the ASBM pertaining to the Rights Issue and the transfer of equity certificate capital to the premium reserve is expected to be distributed on or about 9 March 2016.

The equity issue will increase the Bank's Core Equity Tier 1 ("CET-1") capital ratio by approximately 1 percentage points, based on the Bank's RWA as of 31 December 2015, and will enable the Bank to meet expected government requirements and at the same time enable the bank to grow and develop further.

Details of the Rights Issue

The main terms of the Rights Issue, including the subscription price and the number of new equity certificates to be issued, is expected to be set shortly before the ASBM. Existing equity certificate holders in Sparebanken Sør as per the end of 30 March 2016, as registered in the Bank's register of equity certificate holders in VPS as at the end of 1 April 2016, will be granted tradable and listed subscription rights, and the equity certificates are expected to be traded ex subscription rights as from 31 March 2016. According to the preliminary timeline, the subscription period will commence on or about 5 April 2016 and end on or about 19 April 2016 at 16.30 (CET). Oversubscription and subscription without subscription rights is proposed allowed.

The subscription price will be set on market terms. The subscription price, the number of equity certificates to be offered and the share capital increase pertaining to the Rights Issue will be proposed by the Bank's board of directors shortly before the ASBM and finally resolved by the ASBM.

Sparebankstiftelsen Sparebanken Sør (the "Foundation") has pre-subscribed a total amount of NOK 244 million, and will through the Rights Issue ensure the maintenance of its 51% ownership share, conditional on the approval by the Extraordinary General Meeting in the Foundation of an increase in debt. Together with other major equity certificates holders the Rights Issue has been presubscribed by  a total of  51,47 %..The pre-subscribing equity certificate holders will be guaranteed allocation for new equity certificates based on exercised subscription rights only, according to customary allocation principles. A list of the pre-subscribing equity certificate holders will be presented in the prospectus. The remaining share of the Rights Issue is underwritten by DNB Markets, a part of DNB Bank ASA (“DNB Markets”), Pareto Securities AS (“Pareto Securities”), subject to customary terms and conditions.

Preliminary timetable for the Rights Issue

Annual Supervisory board meeting:  30 March 2016
Record date:  1 April 2016
Publication of prospectus: 5 April 2016
Subscription rights allocated to equity certificate holders:  5 April 2016
Subscription period:  5 April 2016 – 19 April 2016 at 16:30 CET
Trading in subscription rights:  5 April 2016 – 19 April 2016 at 16:30 CET
Allocation of new equity certificates and distribution of allocation letters:  On or about 22 April 2016
Payment for new equity certificates:  27 April 2016
Capital increase registered and listing of new equity certificates:  On or about 29 April 2016

The Rights Issue is inter alia subject to (i) approval the annual supervisory board meeting (“ASBM”) scheduled to be held on or about 30 March 2016; and (ii) required approvals from the Financial Supervisory Authority of Norway.

In connection with the Rights Issue, DNB Markets and Pareto Securities will act as Joint Global Coordinators and Joint Bookrunners to Sparebanken Sør. Advokatfirmaet Selmer DA is engaged as the Bank's legal advisor for the Rights Issue.

Further details of the terms of the rights issue will be included in the prospectus for the Rights Offering which is subject to approval from the Financial Supervisory Authority of Norway. It is expected that such prospectus will be distributed on or about 5 April 2016.

Transfer of equity certificate capital stipulated in the Articles of Association to the premium reserve by a reduction in the par value of the equity certificates

The board of directors in the Bank furthermore resolved to propose that the ASBM resolves a transfer of equity certificate capital stipulated in the Articles of Association to the premium reserve by a reduction in the par value of the equity certificates (the "Transfer"). The Transfer will be carried out simultaneously with the Rights Issue and will therefore be carried without a creditors' notice period.

The final proposal from the board of directors pertaining to what the new par value for the Bank's equity certificates shall be after completion of the Transfer will be resolved and announced simultaneously with fixing the subscription price etc. in the Rights Issue, expected to be resolved shortly before the ASBM.

The purpose of the Transfer is to facilitate the completion of the proposed Rights Issue and to achieve a more appropriate level for par value for the Bank's equity certificates going forward. It should be emphasised that the size of the bank's equity certificate capital as such does not change.  

The Transfer is inter alia subject to (i) approval by the annual supervisory board meeting (“ASBM”) scheduled to be held on or about 30 March 2016; and (ii) required approvals from the Financial Supervisory Authority of Norway.

For further information, contact

Geir Bergskaug, CEO, Sparebanken Sør, Tel: +47 901 27 206 Marianne Lofthus, CFO, Sparebanken Sør, Tel: +47 38 17 35 38

About Sparebanken Sør

Sparebanken Sør and Sparebanken Pluss were merged on 1 January 2014. The name of the merged bank is Sparebanken Sør. Sparebanken Sør is now the fifth largest Norwegian-owned bank, with bank total assets of around NOK 100 billion. The merged bank has a total of 40 branch offices in Agder and Telemark. The bank's head office is in Kristiansand. Staff functions are divided between Arendal and Kristiansand. Sparebanken Sør has approximately 450 employees.