Siem Offshore seeking bondholder supportCompany News // February 23, 2017
Having received the support of its lenders for its finance plan, Siem Offshore in Norway says its future as a going concern still requires agreement from bondholders.
In a statement about its fourth quarter 2016 and full year 2016, the company said the OSV market continued to be depressed during the fourth quarter with an increase in the number of vessels in lay-up. "Low activity within the oil service industry has led to reductions in chartering rates and increased idle periods. Going forward, we believe that the excess vessel capacity will last for several years and continue to make the market difficult and might force owners to put more vessels into lay-up. The charter rates and margins are below what is sustainable for the industry in the long-run," the company said.
Turning to its finance plan, Siem Offshore noted that, last summer, it announced that it had received approval from all of its bank lenders for its finance plan, however the approval of the plan remains subject to the company reaching agreement with the holders of its two public bonds to extend the maturity dates of the bonds on terms that are acceptable to the banks.
"The finance plan gives support to the company’s contention that it is a viable, going concern and provides a solid financial platform to meet the challenges presented by the oil and gas services market during the next several years," said Siem offshore.
"The approvals included a three-year extension of the final bullet payments of all mortgage debt due before 31 December 2019, deferral of instalments for the fleet of AHTS vessels for 2.5 years with a cash sweep mechanism, and the easing of certain debt covenant requirements from the company’s banks for the next three years."
A formal discussion with the bond holders will commence, however, if the company is unable to reach an agreement with its bondholders, then the agreements for financial relief and relaxation of debt covenants that were made available under the finance plan will terminate and the company as a going concern will become less certain.