Norwegian mega-merger sees Farstad and Deep Sea Supply subsumed into Solstad entity

A new mega-OSV company is to be created in Norway from Solstad, which recently absorbed Rem Offshore, plus Farstad, and Deep Sea Supply.

Farstad Shipping, Aker Capital AS, Hemen Holding Limited and Farstad Shipping’s senior lenders, some but not all bondholders, and F-Shiplease AS (a subsidiary of Ocean Yield ASA), have entered into an agreement for a fully-funded financial restructuring of Farstad Shipping. The parties to the agreement, together with Soff Invest AS and Ivan II AS and Tyrholm & Farstad AS have agreed to work for a combination of Solstad Offshore, Farstad Shipping and Deep Sea Supply Plc following completion of the Farstad restructuring.

The companies said: “As repeatedly expressed by a range of industry experts, the fragmented Norwegian OSV industry requires consolidation. By agreeing to complete the Farstad restructuring and to work for the proposed combination, senior lenders, bondholders and long-standing family owners supported by industrial investors are making a collective effort to secure a successful refinancing of Farstad Shipping, and to create a new and robust OSV company operating out of Norway in the high-end segments of the global OSV industry."

"With this solution, we provide Farstad, Solstad and Deep Sea Supply with an industrial platform to sustain the current downturn in the OSV market and be well positioned to exploit a market recovery. We are pleased to have reached an agreement with our banks, bondholders and other stakeholders," said Farstad chief executive officer Karl Johan Bakken.

"For more than a year we have advocated strongly for consolidation in the OSV industry. One step was taken through the merger of REM Offshore into Solstad Offshore in 2016. With a successful completion of the combination we are taking further steps to build the world's leading OSV company", Lars Peder Solstad, chief executive of Solstad Offshore said.

It is proposed that Solstad Offshore will be the parent company in the consolidated group, and will have support of two of the strongest participants in the shipping and offshore sector through Hemen and Aker.

Last month Farstad Shipping said it had been unable to conclude an agreement with Siem Oil Service Invest, part of industrialist Kristian Siem’s offshore empire, that was acceptable to all of its creditors and has been forced to begin looking at other options. This was because key creditors rejected the deal.