Norway's Siem Offshore has sealed a new financing deal with its banks and bondholders to avoid liquidity problems during the enduring offshore support vessel downturn.
The shipowner has won two more years to pay back its $1bn of borrowings and secured a waiver of financial covenants until 15 May.
The deferral and suspension of principal and interest was agreed less than two weeks after Siem Offshore had warned that "the extreme fluctuations in the financial markets over the past weeks" had resulted in a further deterioration of its liquidity situation.
The company had said in its fourth-quarter results in February that the OSV market is now in its fifth year of depressed conditions and has taken longer to recover than expected.
"It is highly uncertain as to when charter rates will offer sufficient earnings for full debt servicing," it warned at the time.
Debt reduced by $600m
Siem Offshore has been able to cut its debt from $1.6bn to $1bn over the past five years.
"This significant debt reduction has been possible due to good cooperation with lenders, significant shareholder support, disposal of older and non-strategic assets and good vessel operations," it said.
The company viewed the existing agreement with banks to service 70% of the original repayment schedule from 1 April as unsustainable in current market conditions and with the expected level of earnings in the future.
Siem Offshore had approached its lenders to change the schedule and ease certain financial bank covenants.
"The majority of the financing banks have responded positively that they will be constructive and assist the company by providing the necessary relief on the debt service for the next two years," it added.
It had warned that without help, it would risk breaching cash covenants by the end of March, and suffer liquidity problems.
Bondholders had to approve an extension to maturity as part of the deal, which they did on Tuesday.
Siem Offshore posted a fourth-quarter loss of NOK 67.1m ($6.45m), against NOK 60.5m in 2018.
