Shipping company Solstad Offshore has entered into an agreement to sell its entire PSV fleet, which consists of 37 supply vessels, for $577 million, the company said in a stock exchange announcement Tuesday morning. This corresponds to approximately NOK six billion.
The buyer is American Tidewater, one of the largest shipping companies in the world.
In the report, Solstad describes the sale as a “strategic move” that would result in a debt reduction of about NOK six billion for the company. This, in turn, will significantly boost the balance sheet and strengthen the company’s ability to service debt.
The sale of Supply Vessels represents a shift in our strategy in a changing market. Supply vessels mainly supply the oil and gas industry, while anchor handling vessels and construction support vessels can reach all offshore energy sectors, including oil and gas. This step is therefore in line with our strategy of being a major contributor to the green transition, Solstad CEO Lars Peder Solstad says in the stock exchange announcement.
Solstad Offshore’s stake fell more than ten percent on the Oslo Stock Exchange on Tuesday morning. At an exchange rate of NOK 45.5, the company is valued at NOK 3.5 billion.
Lars Peder Solstad. (Photo: Javad Parsa)
Less than half of the turnover
After the sale is completed, Solstad will let go of 41 vessels. Six of these are not in operation, and the company is considering putting them up for sale. He also stated that two more vessels had been sold at the end of the quarter.
This means that the total number of ships on Solstad Offshore will be reduced from 86 to 41. In the letter, Solstad wrote that in the future more ships will be focused on construction tasks and anchor handling vessels.
Supply vessels accounted for just under 20 percent of the turnover in 2022 but at the same time just over 30 percent of the order reserve, a table with the preliminary numbers included in the report to Solstad shows.
The percentage of sales that will come from the renewable energy sector will increase from 17 to 23 percent. Solstad also expects a positive margin impact. Excluding the PSV fleet, turnover in 2022 was NOK 4.7 billion, including NOK 6.5 billion.
It also appears from the preliminary table that the company’s cash balance remained unchanged as a result of the sale at NOK 2.17 billion. However, the debt decreased from NOK 21.1 billion to NOK 15.4 billion.
– The deal gives Solstad greater financial headroom and a significant improvement in debt and cash position going forward, says CEO Solstad.
Overseas staff associated with the PSV fleet will be offered a job by Tidewater, while selected local staff will also be offered a job.
Debt is still significant
Despite the fact that Solstad relatively early after the collapse of oil prices in 2014-2015 both restructured debt and was responsible for most of the small mergers in the industry that followed the ensuing market downturn, the company still has more than NOK 21 billion dollars net of interest bearing debt.
The vast majority of debt is due in the first quarter of 2024.
When Solstad provided its fourth-quarter numbers, the company indicated that talks with creditors about a new solution were underway.
The transaction is subject, among other things, to the approval of the competition authorities and the fulfillment of other conditions. It is reported that the parties have the opportunity to cancel the deal if it is not completed by June 30 of this year.
Aker Capital of Kjell Inge Røkke is the largest owner in Solstad Offshore, with 24.8 percent of the shares. The second largest shareholder is John Fredriksen through SFL Corporation, with just over six percent of the shares.
Solstad’s boss is investor Harald Espedal. He also owns 0.85 percent of the shares in the company, making him the eighth largest owner.
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