Eyebrows have been raised at the emergence of a new platform supply vessel company that is co-owned by one of Norway’s best-known offshore shipbrokers.
The new outlfit, Cold Water Shipping, is owned equally by Westshore Shipbrokers, Cyprus-based Vivamare Shipping and Tord Ytterdahl, Viking Supply Ships’ former chief commercial officer and deputy chief executive.
Cold Water is in the pre-sound phase of fundraising with potential investors, in which it hopes to secure NOK 675m ($77.2m) before moving towards a public listing in Oslo.
Meanwhile, its fleet is taking shape. Last month, Cold Water signed a speculative newbuilding contract at Keppel Nantong Shipyard in China for an icebreaking PSV at an undisclosed price.
The company has agreed to main terms on shipbuilding contracts for two “advanced” PSVs that are under construction at Remontowa in Poland, which were originally ordered by Siem Offshore in 2013 but later cancelled.
However, the news of Cold Water’s big splash has not been welcomed by all.
TradeWinds has heard that major offshore shipowners are giving Cold Water the cold shoulder over what they perceive to be a conflict of interest by Westshore.
Strategy
Cold Water is the brainchild of Ytterdahl, who saw a commercial opportunity for a company focused on icebreaking PSVs after having worked at Viking Supply.
Ytterdahl took his idea to Solve Hoyrem, managing director of Westshore, who had experience of the Arctic market.
“The idea behind Cold Water I really liked. I said ‘I’ve been very involved in the Arctic’ and I saw the same thing as Tord — there is a demand for such vessels,” Hoyrem told TradeWinds last Friday.
“I immediately said, 'yes, this is something we want to do and be a part of'.”
However, acquisition of the two ex-Siem PSVs was more ad hoc.
I think it’s safe to say that the future for the PSVs, especially in Norway, looks very promising
Solve Hoyrem
“We saw the market was turning and we were maybe just a little bit quicker than the rest,” Hoyrem said.
Now is a good time to be buying PSVs for the Norwegian market, in Hoyrem’s view, as demand for the vessels is projected to grow over the next year or so.
There are 22 rigs drilling on the Norwegian continental shelf and there are no PSVs available, according to Westshore’s research.
“Twelve months from now, the number of drilling rigs is expected to be 31,” Hoyrem said.
“I think it’s safe to say that the future for the PSVs, especially in Norway, looks very promising.”
Feathers ruffled
But it is the issue of Westshore’s part-ownership of Cold Water that has ruffled feathers among offshore support vessel owners.
“Cold Water? Pour some cold water on it!” the head of one OSV owner said when contacted by TradeWinds, speaking on condition of anonymity.
“We have to be careful that we don’t put the wrong image out about this industry. You can’t have an owner and a broker doing the same thing. It’s a conflict of interest.”
TradeWinds has learned that other OSV owners are avoiding dealing with Westshore for the time being.
The market’s grievance seems to be that Westshore will be acting as both an owner and a broker at the same time — but Hoyrem insists this will not be the case.
“As a shipbroker, you cannot have two hats on at the same time,” he said.
“When we entered Cold Water Shipping and said yes to help out facilitating this project, we obviously had made a plan not to come into this situation where we have two hats on. There will not be a conflict of interest for Westshore in this project.”
He explained that the company’s three-way ownership structure is really only temporary because the company has not yet been capitalised fully.
The two PSVs being built at Remontowa will be delivered in the second and fourth quarters of 2020 respectively, while the icebreaking vessel will not hit the water until late 2021.
By this time, Westshore will have diluted its ownership stake in Cold Water, which by then will be listed publicly, Hoyrem said.
Cold Water hopes to list its securities as soon as possible on the Oslo Stock Exchange’s over-the-counter market or the Merkur Market, which will ultimately dilute Westshore’s stake to an estimated 0.04%, according to Hoyrem.
He explained that Westshore’s shares in Cold Water were received in lieu of cash for the broker’s work in helping to establish the new outfit over the past year.
Thumbs up
The feedback Westshore has received from the market has been more positive than negative since Cold Water’s launch, Hoyrem told TradeWinds.
“They’re saying it’s good to see that something is finally happening," he said. "There have been no new projects for years and someone is finally taking the initiative.”
Cold Water has also received a vote of confidence from fellow shipowner Remoy Management, which has agreed to manage Cold Water’s two PSVs when they are delivered in 2020.
Vivamare, one of Cold Water’s three owners, is backed by Russia’s Marine Arctic Geological Expedition, which has agreed to manage the icebreaking vessel if it is fixed for operation in the Russian Arctic.
If not, Hoyrem said the ship could be employed in Alaska or the Canadian Arctic.
Nothing new
In any case, what Westshore is doing is not new to the market — it is just new to Westshore, said Hoyrem, who has spent 17 years in the business.
“There are so many ships now sailing in the Norwegian and the offshore market worldwide that have been facilitated by broking houses,” Hoyrem said.
“Our [shipbroking] competitors — mainly Oslo-based competitors — have done what we are now doing multiple times.
“Multiple times they have been facilitating, they have been capitalising [companies], they have been chartering out ships and taking the initiative and being part of the start-up.”
Hoyrem is anxious to point out that what Westshore is doing in backing Cold Water is not something new.
“What is new is that it has not been happening for a while and that’s why it’s creating some kind of buzz in the market and attention,” he said.
