Hornbeck sells three vessels to US Navy - fourth vessel to followVessel & ROV News // March 3, 2015
Hornbeck Offshore Services has closed a previously announced sale of three 250EDF class OSVs, HOS Arrowhead, HOS Eagleview and HOS Westwind, that were previously chartered to the US Navy.
Since their construction in 2008 and 2009, the vessels have supported the US Navy's submarine fleet on the east and west coast of the US.
In order for the US Navy to continue receiving the unique capabilities of these vessels, Congress has required their purchase from the company.
The three vessels were sold for cash consideration of US$114 million, which is expected to result in a gain on sale of assets of approximately US$33.0 million (US$20.8 million after-tax or US$0.57 per diluted share). The proceeds from the transaction will be used for general corporate purposes that may include retirement of debt, funding for the acquisition, construction or retrofit of vessels or discretionary share repurchases.
The vessel purchase agreement includes an option for the acquisition of a fourth vessel currently under charter to the US Navy, HOS Black Powder, that, if exercised as anticipated, would bring the aggregate sale amount to US$152 million, which is expected to result in an aggregate gain on sale of assets for the four vessels of approximately US$44.0 million (US$27.7 million after-tax or US$0.77 per diluted share).
In addition to these vessel sales, the company separately entered into an operations and maintenance (O&M) contract for the three vessels, which contains an initial term and annual renewal options spanning a 10-year operating period including annual dayrate escalations.
Associated with the O&M contract, the company was also awarded a time charter for HOS Black Powder that will remain in effect until the closing of the anticipated sale of the vessel pursuant to the US Navy purchase option is completed. At such time, HOS Black Powder will operate under the same terms and conditions of the current O&M contract for the other three vessels.
The company expects to complete the sale of HOS Black Powder by the end of the third quarter of 2015, subject to government funding, and all guidance estimates included below reflect an assumed sale date of September 30, 2015.