Siem Offshore unable to meet debt repayments without capital injectionCompany News // June 11, 2015
The Board of Directors of Siem Offshore has resolved to propose to an extraordinary general meeting to discusss a rights issue, with a share capital increase providing gross proceeds of the NKr equivalent of approximately US$100,000,000.
In a statement, the company said: "Due to the significant changes in the oil service industry as a result of the fall in the oil price and the increased supply of offshore support vessels, the rates obtainable for offshore support vessels have fallen significantly over the last few months.
"The Board of the company is of the view that the depressed situation is likely to continue for some years. With the current charter-rates and level of vessel utilization the company will not generate sufficient cash from operations to pay all scheduled capital instalments on the company’s debt without further capital injection.
"The Board of Directors is of the view that the company’s debt leverage is too high in the current environment and has therefore resolved to propose a rights issue of US$100,000,000 to an extraordinary general meeting of the company’s shareholders.
"The finance plan also includes an extension of the company’s NKr 2.5 billion credit facility for six anchor handling tug supply vessels, which was due to expire in November this year, as well as an easing of certain covenant requirements to the company’s banks for the next years."
Siem Offshore said the finance plan will allow the company to serve interest and instalments on its debt in accordance with the original repayment schedules and thereby continue to reduce its debt leverage.
The new shares will be offered with preferential rights to existing shareholders at a subscription price of NOK 1.80 per share. The preferential rights will be tradable.
The largest shareholder of the Company, Siem Europe Sarl., has indicated willingness to fully underwrite the share issue at a guarantee commission of 1%. The underwriting is subject to the approval of the Board of Directors of Siem Industries Inc., which is the parent company of Siem Europe Sarl.