Restructuring Norwegian OSV giant Solstad Offshore has reduced its debt in a deal with John Fredriksen.
The world's biggest owner of high-end offshore vessels said it had agreed to sell its remaining 20% holding in well boat joint venture DESS Aquaculture Shipping (DESS Aqua) to a company affiliated to its partner Fredriksen's privately held Hemen Holding.
Fredriksen's Deep Sea Supply, together with Farstad Shipping, was merged into Solstad in 2017.
The new deal will see Solstad book a gain of NOK 50m ($5.44m) in the fourth quarter.
The sale will have limited cash effect and reduce the company’s debt by NOK 280m, Solstad said.
Solstad will continue to operate the vessels in the DESS Aqua fleet. The company is listed with one operational vessel and two newbuildings.
Talks continuing
Meanwhile, vital talks with lenders and creditors continue in a bid to boost Solstad's liquidity and give it a viable long-term financial platform.
And the company warned of the effects of a deal on shareholders.
"If a long-term solution could be reached, this is expected to involve a comprehensive restructuring of the company, including a potential significant dilution of the shareholders," it said.
The board’s view is that the company’s efforts "have a possibility of success."
During the third quarter, the overall cash position increased from NOK 802m to NOK 1bn.
"The company is in a challenging financial position and has implemented measures to preserve liquidity," it said.
It has an agreement in place with the majority of financial creditors to suspend and defer payments of principal and interest extended until March 31, 2020.
Loss cut in the third quarter
In the three months to 30 September, the net loss was reduced to NOK 1bn, from NOK 1.3bn in the same quarter of 2018.
The 136 ships brought in revenue of NOK 1.48bn, up from NOK 1.4bn a year ago, mainly due to higher activity in the North Sea.
It took a NOK 250m impairment hit on nine vessels, but this is lower than the NOK 850m booked last year.
But it was also hampered by higher unrealised currency losses.
Adjusted EBITDA for the third quarter was NOK 504m versus NOK 431m in 2018.
"The company experiences a positive effect from having a large and versatile fleet of vessels, leading to numerous contract awards worldwide," it said.
The activity level in the market shows some signs of improvement, but a challenging winter season is expected in the North Sea, it added.
"The large number of vessels that are in lay-up, globally, might continue to put pressure on achievable rate-levels," it said.
"But the combination of specification, age, condition and activation cost will probably make a substantial part of this fleet irrelevant for future contracts within offshore."
Solstad's contract backlog is NOK 6.5bn.
