Kristian Siem’s huge oil and gas contracting company Subsea 7 is taking its shipping spin-off Seaway 7 private in a $114m deal.
The offshore wind and heavylift company was formed in 2021 out of the combination of the renewables division of Subsea 7 with Arne Blystad’s heavylift shipowner OHT.
But Seaway 7 has been hit by delays to one of its new wind turbine installation vessels (WTIVs) and had to be recapitalised last year.
Subsea 7 has agreed to buy 187.9m shares in Seaway 7, or a stake of 21.52%, from shipowner Blystad’s Songa Capital, which has 14%, and two companies linked to Spar Shipping, West Coast Invest and Lotus Marine, which both hold around 3.6%.
The sellers will be paid with Subsea 7 stock, receiving one new share for every 22 shares they have in Seaway 7.
Subsea 7 will own 93.94% of its spin-off as a result.
A voluntary offer will be made for the rest of the shares, before the company contemplates a compulsory buy-out.
Seaway 7 will then be delisted in Oslo.
The deal values the Seaway 7 share at NOK 6.15 ($0.59), based on Subsea 7’s closing price of NOK 135.30 on 1 March.
Seaway 7 was trading down a fraction at NOK 7.22 early on Thursday.
Liquidity benefit
The 8.54m new shares awarded to the sellers are equal to 2.9% of Subsea 7 and are worth $114m.
Seaway 7 said the offer values the company at NOK 5.37bn.
Shareholders who accept the offer will have the benefit of the liquidity of the Subsea 7 shares while retaining a stake in the expected benefits of the combined group, the shipowner added.
Seaway 7 announced a $5m net loss for the fourth quarter on Thursday, down from a profit of $7m a year ago.
The contract backlog stands at $844m.
Problems encountered
The owner said: “Seaway 7 did not perform as expected during 2022. The problems encountered originated from the combination with OHT … linked primarily from issues with the construction of Seaway Alfa Lift.”
The design and fabrication of the mission equipment led to an overrun on the vessel construction schedule and budget, with a knock-on impact on work at the Dogger Bank wind farm off north-east England, for which a provision was taken in 2022.
“This development contributed, among other factors, to the group being unable to realise its initial objective to increase the free float of Seaway 7, and necessitated recapitalising Seaway 7 through a combination of debt and equity rights issue,” the company said.
But it remains confident of a favourable long-term market outlook.
In February, Seaway 7 struck a “milestone” deal with Italian energy company Saipem to target offshore wind contracts.
The Oslo-listed shipowner said the “commercial collaboration agreement” will allow both sides to identify, bid for and execute projects with their combined fleets, saving costs and improving margins.
Financing completed
Last September, Seaway 7 revealed details of a $650m fundraising drive to pay for its two WTIVs on order in China.
It said the financing would give it the $550m needed for the pair, as well as money for future capital needs.
The 142-loa Seaway Ventus and 50,300-dwt semi-submersible Seaway Alfa Lift are due to be delivered from China Merchants Industry Holdings this year.
The Seaway Alfa Lift’s handover was also delayed from last year after a crane accident in October 2021.
Seaway 7’s fleet includes heavylift ships, cable-layers and an accommodation vessel.
