A Norwegian offshore support vessel owner has completed its financial restructuring, while another has bought itself more time for negotiations with lenders
Siem Offshore has reached an agreement with European and Brazilian banks and bondholders to implement its financial restructuring plans, with a four-year plan converting debt to equity implemented on 26 May 2021. Included in the plan is reducing future scheduled interest and amortisation payments and extending secured debt with maturity before 1 January 2025.
Siem said this plan “will significantly strengthen the company’s balance sheet and create a stronger financial platform to continue to support its clients, preserve backlog and to meet the challenges in an extended downturn in the offshore supply market”.
This plan turns US$269M of debt into equity and payment of US$4M to bondholders, while the balance will be converted into equity. Secured debt, excluding debt related to support vessels Siem Garnet and Siem Opal, will continue to be guaranteed by the company and be serviced in full, or in part.
“No debt amount will be in excess of current market values of the secured assets,” said Siem Offshore.
Converting debt to equity will significantly reduce the percentage of the company existing shareholders will own and will bring control of the company into the hands of the lenders.
“Based on figures as of year-end 2020, the existing shares are expected to represent approximately 4% and the converted debt (including that of the bondholders) is expected to represent around 96% of the company’s shares after restructuring,” said Siem Offshore.
This restructuring was due to growing debt the company was unable to service in a tough offshore services market, exacerbated by the global Covid pandemic and vessel oversupply.
Siem Offshore has seven vessels in layup out of a fleet of 30 ships, but a backlog of contracts valued at US$440M as of 31 March 2021.
During the past two months, Siem Offshore secured a 110-day firm contract with options for Siem Spearfish to operate in west Africa and a 40-day firm contract for Siem Dorado.
Another Oslo-listed vessel owner, DOF, is also facing tough market conditions and rising debt.
At the end of May, DOF and its subsidiary DOF Subsea gained breathing space to negotiate with lenders and bondholders, signing extensions to standstill arrangement with secured lenders to 30 June 2021, deferring debt repayments for another month. It had already gained similar arrangements with lenders in January, March and April this year. Existing arrangements exclude lenders to DOF Subsea Brasil Servicos and Norskan Offshore, which have agreed to an extension to 10 June 2021.
Another Norwegian vessel owner has continued to offload its elderly assets to improve its financial position. Solstad Offshore said its subsidiary Farstad Construction sold platform supply vessel Far Scotia, with delivery to the new owner on 28 May. “The sale of the vessel will result in an immaterial accounting effect for Q2 2021,” said Solstad.
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