Norway’s DOF Group says it will not be saved by better offshore vessel markets as it tries to reduce its $2bn debt mountain.
The Oslo-listed shipowner is trying to secure a debt-for-equity swap to secure its long-term future.
DOF said in its first-quarter results: “Even though the markets have improved, the group is not in a position to pay its debts without a significant conversion of debt into equity and thereby continue as a going concern.
“The group’s financial position is not sustainable, and the equity is lost.”
The current restructuring proposal on offer to banks and bondholders involves a “significant” conversion of debt into shares and “soft terms” for existing loans, DOF said.
“The dialogue with the lenders is constructive, but a refinancing solution is not yet in place,” it added, and there is no guarantee a deal would be agreed.
DOF logged a net profit of NOK 824m ($85m) in the three months to 31 March, up from a loss of NOK 801m in the same period a year ago.
Revenue climbed to NOK 2.174bn from NOK 1.51bn.
Financial costs were cut to NOK 630m from NOK 720m, including an unrealised currency gain of NOK 1bn, because of a gain on long-term debt due to a significant strengthening of the Brazilian currency against the US dollar.
Average fleet utilisation was 82%, up from 67% a year ago, with high tender activity in all ship segments.
The company operates 55 ships. Only one owned vessel is now in lay-up.
Four units have been sold this year.
DOF added NOK 1.3bn in new contracts in the first quarter, bringing its backlog to NOK 14.6bn.
Looking ahead, it said oil and gas markets have improved, with increased activity in several regions.
“The current situation in Eastern Europe has, however, continued to create instability in the world economy.”