Reach Subsea has agreed on a comprehensive restructuring of its charter agreements. This will enable Reach to move forward with market based charter- in rates. Solstad Offshore and Østensjø Rederi will as part of the restructuring become new shareholders of Reach Subsea.
Although the details of the agreement are confidential between the parties, we can convey that Reach Subsea will be well equipped to handle a prolonged period of weak market conditions. A significant reduction in charter commitments will provide Reach with a competitive and flexible total cost base. Reach Subsea is now positioned to exploit opportunities in the market, and create shareholder value.
The immediate financial implications for Reach Subsea are:
- Reach’s total off-balance sheet bank guarantees of NOK 87m will be cancelled.
- Leasing debt will be reduced by NOK 26m, while bank debt will increase by NOK 20m.
- As compensation, the total restricted cash deposits of NOK 53m will be released and paid out.
- Reach will issue 15m shares, subscribed at NOK 2 per share, to major shareholders, board members, key employees and the ship owners.
- As a result total debt, including bank guarantees, and adjusted for restricted cash deposits, will be reduced to approximately NOK 95 million.
- The Board will summon the AGM and will as part of this propose the issuance of 15m shares, all of which have been subscribed for at NOK 2/share.
Jostein Alendal, CEO of Reach Subsea, commented: “We are pleased to have achieved a mutually acceptable solution that is adapted to the current market climate. This will enable Reach to continue working with ship owners known for quality and reliability – a necessity in our line of business. We are now equipped to face a prolonged period of poor markets, and will continue to deliver services of the highest quality.”
Edited from press release by Angharad Lock
Read the article online at: https://www.oilfieldtechnology.com/offshore-and-subsea/26042016/reach-subsea-agrees-to-restructure-3128/