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Contract delays cause covenant rejig at GMS

Thu 03 Aug 2017 by David Foxwell

Contract delays cause covenant rejig at GMS
GMS provides self-elevating vessels for the offshore oil and gas and offshore renewables markets

Gulf Marine Services Plc, which provides self-propelled self-elevating support vessels to the offshore oil, gas and renewable energy sectors, says it is seeking to amend the terms of its covenants.

The company said it is in “constructive dialogue” with its banking syndicate on appropriate covenant amendments following the deferment of potential contract awards. The company said its board remains confident of the banks’ continued support.

An earlier operational update on 16 May 2017 noted that the timing of contract awards is dependent on its clients' operational requirements. “As certain potential contract awards and commencement dates have been delayed, the group is now expecting 2017 EBITDA to be US$58-68M (equivalent to an EBITDA margin above 50%), with this guidance subject to the precise timing of contract awards,” GMS said. “The group continues to generate positive operating cash flow, with net debt anticipated to be US$360-370.0M at the end of 2017. Net income in 2017 is expected to be US$1.0-10M.”

Overall the group is continuing to see good levels of tender activity and is progressing a number of opportunities, but is encountering some delays in contract awards and commencement dates.

Duncan Anderson, chief executive officer of GMS, said: “Demand for our large-class and mid-size-class vessels is good, with the strategic reshaping of our fleet through our newbuild programme investment in these larger vessels proving prescient.

“While we are seeing good levels of tender activity in Europe and parts of the Middle East, these are taking longer to convert into contracts than has been the norm. The precise timing of contract awards is inevitably subject to our clients’ operational requirements, and in the current environment can be delayed as a consequence of a protracted tender evaluation and award process.

“We are confident we have the right business model and strategy in place to ensure we are in the best possible position to secure new contracts as the market environment improves.”

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