Boa Offshore to restructureCompany News // November 30, 2016
Boa Offshore says the financial situation of the company and its subsidiaries has become “significantly worse than anticipated only a few months ago,” forcing it to embark on a financial restructuring. The company said the decline in its fortunes was mainly attributable to the offshore construction vessel segment having weakened much more than anticipated, difficulties encountered with the sale of the company two anchor handling tug supply vessels, and weaker performance by the company’s tug fleet. The company said its liquidity position is now “severe” and certain liquidity covenants will probably be breached by the end of the fourth quarter of first quarter of 2017.
Although a net refund of NKr 445 million related to the cancellation of multipurpose platform supply vessels ordered at Nantong Mingde Heavy Industry was received during the first quarter of 2016, the main portion of this cash has been spent on servicing the group’s debt obligations and running the business. Boa Group has been working on a proposal for a restructuring of the group’s business and balance sheet, which will be presented to and discussed with its creditors, being banks and bondholders.
“While such discussions will be ongoing with the creditors, the group will continue to operate normally in all material respects,” said the company. “However, during the restructuring process no interest and amortization will be paid to bondholders and intercompany creditors.” The company said service of financial debt in other group companies will depend on the financial position of the relevant company.
“Boa Offshore is now deeply affected by the market situation. The outlook continued to weaken throughout this fall, and our financial situation is such that we have to go to our financial creditors. We will strive to carry out such discussions in an open and constructive way,” said Helge Kvalvik, CEO of Boa Offshore.
Boa Offshore is owned by Taubatkompaniet AS, which is controlled by Ole Bjornevik and his family. Mr Bjornevik said: “The offshore market is weaker than expected. As a consequence, the group has to make major changes and adapt to the demanding market conditions, and this unfortunately also means that we now need to hold discussions with our financial creditors.” The company has retained Pareto Securities and SpareBank 1 Markets as financial advisors and Ro Sommernes as legal advisor.