Subsea 7 acquires EMAS Chiyoda Subsea assets from bankruptcy courtNews // June 30, 2017
Subsea 7 has confirmed the acquisition of certain businesses of EMAS Chiyoda Subsea (ECS).
The acquisition, under a US bankruptcy code Chapter 11 Plan of Reorganisation, was confirmed by the US Bankruptcy Court for the Southern District of Texas and became effective on 29 June 2017.
Jean Cahuzac, CEO of Subsea, said: "In a challenging business environment our differentiated offering and strong capital discipline has enabled us to pursue this opportunity. This targeted investment enables Subsea 7 to accelerate its strategy to provide a market leading service in the Middle East.
"The addition of people, local presence and client relationships of ECS to our market leading SURF and Conventional capability expands our global presence. As a result of this transaction we have significantly increased our presence in the Middle East, assuming a long-term agreement and three projects in Saudi Arabia, in consortium with L&T Hydrocarbon Engineering (L&T).
"Subsea 7 and Chiyoda Corporation, one of the Plan of Reorganisation sponsors and a previous shareholder of ECS, have started discussions regarding possible collaboration in engineering and technology initiatives to provide solutions to our clients."
Subsea 7 said it will pay less than US$100 million in aggregate, including Subsea 7's contribution to the debtor in possession credit facility, to acquire certain ECS businesses, the Ingleside spoolbase and sundry other assets. The acquired business includes approximately 850 people based in Houston, Singapore and Saudi Arabia.
Subsea 7 has secured a multi-year bareboat charter for the pipelay vessel Lewek Champion for activities in the Middle East, and a short-term charter for the pipelay vessel Lewek Constellation to complete work in hand in other geographies.
As a result of the transaction, Subsea 7 has acquired approximately US$850 million of order backlog, including five projects, each with backlog exceeding US$50 million: Hasbah, in consortium with L&T, offshore Saudi Arabia; Four Decks, in consortium with L&T, offshore Saudi Arabia; 17 Cranes, in consortium with L&T, offshore Saudi Arabia; OCTP, offshore Ghana; and TVEX, US Gulf of Mexico.
Order backlog comprises approximately US$300 million due for execution in 2017, US$450 million in 2018 and US$100 million in 2019 and beyond.
The long-term agreement enables the consortium with L&T to be invited to tender for future projects in Saudi Arabia.
As a result of this transaction, revised financial guidance for 2017, including this transaction, will be provided with Subsea 7's second Quarter results on 26 July 2017.