Sale of VLCCs and summons to Extraordinary General Meeting

Oslo, 19 October 2011

As disclosed through several stock exchange announcements, Saga Tankers ASA (the "Company") has experienced a substantial decline in the values of its vessels as well as prolonged weak freight markets. This has further resulted in the Company having discussions with its bank syndicate regarding certain of the covenants contained in its loan agreement, especially the so-called "Minimum Value Clause". In order to maintain the loan facility, the bank syndicate has specifically required that the Company conducted a share capital increase to raise new equity.

In today's market, the Board of Directors is of the opinion that a share capital increase could not be concluded at anything else than terms deemed being unattractive for shareholders. The Board of Directors has also considered it such that the financial structure would not have been sufficiently robust even after a capital increase given the market outlook and the revised terms offered by the Company's bank syndicate. The alternative has been to dispose the Company's vessels and thus secure the remaining shareholder's value.

As a consequence, the Company has now entered into outright agreements for the sale of the remaining vessels owned by the Group except for the vessel "Saga Agnes" which has been sold subject to the approval of the general meeting.

The Company's wholly-owned subsidiary Saga Julie AS has entered into an agreement for the sale of its 2000-built VLCC, "Saga Julie", to a first class Greek shipowner. The sale is outright and free from any subjects. The full sales proceeds, USD 30.5 million net plus the value of bunkers and lubes, will be used to deleverage the Company. The vessel will be delivered to the buyer during November 2011.

In addition, the Company's wholly-owned subsidiary Saga Agnes AS has entered into an agreement for the sale of its 2000-built VLCC "Saga Agnes", to the same buyer as for the vessel "Saga Julie". The sale of "Saga Agnes" is subject to approval from the Company's general meeting. The sales price is USD 30.5 million net plus the value of bunkers and lubes. The vessel will be delivered to the buyer upon expiry of its existing timecharter contract in July/August 2012. The buyer will lodge a deposit of 15% of the sales price on a joint account until the vessel is delivered.

The Company will make an extraordinary repayment under its loan facility of USD 13 million. Following the sale of the vessels and repayments of loan, total outstanding loan under the Company's loan facility will be USD 21 million attributable to the Company's remaining VLCC, "Saga Agnes". The loan will amortize by USD 1.2 million per quarter until delivery in July/August 2012.

In the third quarter 2011 periodic financial report, the Company will make a write down on the book value of "Saga Julie" of USD 27.5 million following the sale, and a write down of USD 27.5 million following the forward sale of "Saga Agnes". The sale of "Saga Unity" will result in a write down of USD 28.6 million.

The Company announces today that the steps taken following the decline in ship values have saved the Company from breaching financial covenants under its loan agreement. As a result, the Company is no longer in discussions with its lenders concerning its indebtedness.

The Board of Directors unanimously recommend the General Meeting to approve the sale of "Saga Agnes". Such a sale will result in the Company no longer being involved in the business set out in the Articles of Association, i.e. shipping. It is therefore necessary to submit the proposed sale to the General Meeting. The sale will only be completed if 2/3 of the votes cast are in favour of the proposal.

Following the completion of a potential sale of the vessel "Saga Agnes", the Board of Directors will revert with proposals regarding the Company's future business and operations. This may relate to the development of a new strategy for the Company, a change of the description of the business in the Articles of Association since the Company no longer will engage in the shipping business or possibly to propose that the Company shall be dissolved and consequently pay out shareholder values as a dividend.

Please see the attached summons to the Extraordinary General Meeting to be held on 10 November 2011 in the Company's offices.

Saga Tankers ASA, press release