Stolt Offshore amends guidance for 2003News // September 29, 2003
Previously, Stolt Offshore forecast a loss for the fiscal year ending November 30, 2003, in the range of $100 million to $125 million, subject to further review at the time of completion of the Blueprint.
Stolt Offshore now expects to report substantially higher losses for the year. Some of the additional losses are attributable to earnings deterioration on the Burullus, Bonga and OGGS projects, but the most significant portion of the expected additionallosses are attributable to actions to be taken to implement the Blueprint and will involve substantial non-cash charges. Stolt-Nielsen S.A., as the majority shareholder, has reviewed the Blueprint and endorses its strategy and implementation.
Stolt Offshore will further analyse the impact of the Blueprint on earnings over the coming weeks, and in order to provide for verification of this information, the Company is announcing delay in the issuance of quarter three earnings until October 15, 2003 and quarter four earnings until 18 February 2004.
Following presentation of the Blueprint for financial recovery to its Lenders, Stolt Offshore has engaged in negotiations to restructure its primary credit facilities. Stolt Offshore has retained Miller Buckfire Lewis Ying & Co., LLC as financial advisor to assist in its negotiations. Whilst the process of restructuring provides a period of uncertainty, the Company believes it has cash and liquid resources sufficient to fund ongoing operations through the anticipated completion of the bank negotiations.
Stolt Offshore has obtained waivers, through October 15, 2003, on its primary credit facilities. The waivers provide time for Stolt Offshore to engage in further discussions with its lending syndicate and for the lenders thereunder to review Stolt Offshore's Blueprint. Consistent with earlier announcements, Stolt Offshore also expects that it will not be in compliance with financial covenants under its primary credit facilities on November 30, 2003, unless negotiations with the lenders result in restructured credit facilities or further waivers are granted prior to such date.
Stolt Offshore's largest shareholder, Stolt-Nielsen S.A., has indicated to Stolt Offshore and its lenders that, because of its own financial situation and the conflicting interest of the lenders to SNSA and the lenders to Stolt Offshore, it can no longerbe relied upon to extend additional support similar to what Stolt-Nielsen S.A. has provided in the past.
Tom Ehret, Chief Executive of Stolt Offshore said: "We have completed the first two stages of the Blueprint plan for financial recovery, namely the strategic and organisational changes. We are pursuing sales of non-strategic assets and we are now working with our lenders to modify our credit agreements to suit the business going forward. Whilst further deterioration in performance in the closing stages of some key projects is disappointing, we have made considerable progress and believe that the adverse consequences of our major problem contracts are behind us."