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Offshore Support Journal

Cash-strapped Asian owners look to refinance and find new markets

Fri 09 Feb 2018

Cash-strapped Asian owners look to refinance and find new markets
Pacific Radiance believes that the market is picking up and that demand for its vessels will grow

Pacific Radiance is pressing ahead with restructuring and planning a foray into offshore wind as work continues to find a solution to Emas Offshore’s problems

 

Singapore-based offshore vessel owner Pacific Radiance held another informal meeting with noteholders in January and says it plans to diversify into new markets, including offshore wind energy.

The company is seeking a ‘consensual restructuring’ of its borrowings and held an initial informal meeting with the holders of its notes late last year. On 10 January 2018, it convened a second informal meeting with noteholders.

At the second meeting, it proposed to noteholders a plan that would see full conversion of S$100M (US$76M) of notes to equity, a total of 300,000,000 new shares to be issued with no lock-up period, the value of the shares at S$36M based on S$0.119 per share and S$4.3M to be released from an escrow account. Noteholders would have an option to liquidate shares or hold. The plan would see them receive around 40 cents for every Singapore dollar they had invested in the company. If they accept the plan at an upcoming EGM, they would then receive three shares in the restructured company for every dollar, and Pacific Radiance would make coupon payments to the tune of S$4.3M in the escrow account.

The company emphasised that it has spent much of the last couple of years right-sizing its fleet and said it has 36 vessels in layup to reduce maintenance costs. It has also reduced headcount by 35% and enforced a substantial wage reduction for senior management and suspended bonus payouts. The headcount has also been reduced at corporate/management level.

Pacific Radiance said its major lenders are supportive, but terms are still being negotiated. It has received strong interest from potential investors.

The company’s management believes the market is at its inflection point and the business is viable in the long run. “Company-wide, employees are now doing more work with less resources and are exploring every avenue to cut cost without losing quality,” said Pacific Radiance in a presentation.

Post-restructuring, management envisages the company to emerge as an even stronger entity well poised to ride on the upcoming market recovery. It has close working relations with high-quality partners in Malaysia, Indonesia, the Middle East and Mexico, and through its partners, it enjoys access to cabotage restrictions, allowing the company to operate at a full commercial coverage of the market.

The presentation said the company is aiming to diversify beyond oil price-related services and sectors such as offshore wind and liquefied natural gas. It hopes to expand its customer base to include wind turbine manufacturers as well as offshore windfarm developers.

DBS and UOB have rejected a restructuring plan put forward by another well-known owner in the region, Emas Offshore, but dialogue continues as a solution is sought to the troubled firm’s financial situation.

In an update about the company’s proposed restructuring effort, Emas Offshore said that, on 11 January 2018, DBS Bank Ltd and United Overseas Bank Ltd filed joint affidavits in response to scheme applications filed by the offshore vessel company and its wholly owned subsidiary, Emas Offshore Pte Ltd.

DBS Bank and UOB expressed the view that they were not prepared to agree to the terms of the restructuring proposals as they currently stand. However, DBS Bank and UOB are, at this stage, prepared to continue discussions with the companies on a revised proposal or any other proposal from investors.

The hearing date for the scheme applications is 19 March 2018. In the meantime, the company is engaged in discussions with DBS Bank and UOB and with investors to come to a consensus on a revised proposal.

The board of directors of Emas Offshore also recently confirmed that Captain Adarash Kumar has tendered his resignation as an executive director and chief executive officer, and his last day of service will be on 6 April 2018.

In September 2017, Emas Offshore signed term sheets with ‘white knights’ who said they would make a cash investment in the company. Emas Offshore said the companies involved are BT Investment Pte Ltd (BTI), a wholly owned subsidiary of Baker Technology Ltd, and Point Hope Pte Ltd, but noted that it still needed to undertake a restructuring of its secured and unsecured liabilities.

Gulf Navigation to acquire Atlantic Navigation Holdings

Gulf Navigation Holding PJSC is planning to acquire a majority stake in Atlantic Navigation Holdings (Singapore) Ltd.

Atlantic is an integrated offshore supply operation engaged in marine logistic services, shiprepair, fabrication and other marine services. It serves customers in the Middle East and India. It is listed on the Singapore Stock Exchange with total assets of US$177M.

Gulf Navigation said it is in discussions with oil companies in the Gulf region to provide project solutions and offshore services. The potential acquisition will propel the business forward and create added opportunities that both companies can deliver.

Atlantic currently operates a fleet of 25 vessels and has seven newbuild offshore support vessels on order, which are being built to fulfil contracts awarded by a Middle Eastern national oil company (NOC). The duration of the charter is five years plus two years of options. It has a potential value of US$236M.

Atlantic also owns a 50% share in a consortium due to undertake a US$45M decommissioning project with a Middle Eastern NOC. The project is the first of its kind and entails demolition and removal of offshore and onshore structures in an abandoned oil field in Abu Dhabi. Under the terms of the agreement for the project, Atlantic has the first right of refusal in providing the entire marine spread required for the project.

Sapura Energy secures several contracts

Subsidiaries of Sapura Energy Berhad (formerly known as SapuraKencana Petroleum Berhad) have been awarded contracts with a combined value of approximately RM905M (US$231.5M).

Sapura Fabrication Sdn Bhd has been awarded a contract to undertake engineering, procurement, construction and commissioning for the Kinarut ERB west compressor upgrade project on behalf of Petronas. It has also been awarded a contract to undertake the work on the Bokor Betty brownfield and rejuvenation project for the same client.

The company has also secured a contract for provision of engineering, procurement, construction, commissioning and installation of the Phase 2 facilities for the North Malay Basin project for Hess Exploration and Production Malaysia BV.

 

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