SeaMetric provides update on status of construction projectNews // September 21, 2009
SeaMetric International AS in Norway says it "continues its efforts to evaluate strategic options regarding the construction of two heavy transport vessels at the CPLEC shipyard in China."
As part of these evaluations, SeaMetric has requested its bondholders to waive certain rights in the loan agreement for the companyís US$60 million bond issue. Such waivers would increase SeaMetricís near term strategic flexibility. The waiver request has already been approved by bondholders representing more than 2/3 of the outstanding loan.
SeaMetric has developed the Twin Marine Lifter (TML) System for installation and removal of very heavy objects in the offshore oil and gas industry such as platform topsides and jackets with weights of 20,000 tonnes and above. SeaMetricís long term goal is to own and operate TML systems in different locations worldwide.
SeaMetric is currently constructing two vessels for the first TML at China Petroleum Liaohe Equipment Company (CPLEC) shipyard in Panjin, China. The shipyardís ultimate owner is the state owned China National Petroleum Corporation (CNPC). The shipyard itself has also under construction. The construction schedule for the vessels has been hit by significant delays. The delivery dates for the vessels are still uncertain, even if the hulls now are 70 per cent complete.
SeaMetricís budgeted total capital expenditure for the construction of the two vessels is US$175 million. The project has so far been financed by equity and a bond issue of US$60 million. The total remaining financing requirement for the two vessels is approximately US$85 million.
As communicated in SeaMetricís second quarter 2009 report, the company is currently evaluating options regarding the continuation of the construction project. The delays negatively affect both SeaMetricís business development efforts and the possibility of attracting further financing for the project.
In order to bring the TML System construction project back on track and secure a credible delivery date, SeaMetric has tried to reach an agreement with the main contractor and the yard, so far without success. SeaMetric is currently investigating whether to enforce any of its other options. The waiver request to Norsk Tillitsmann, the trustee for SeaMetricís bond issue, is necessary to increase SeaMetricís flexibility related to the ongoing process, which might result in changes being made to the construction contract.
"In parallel with the efforts described above, SeaMetric still aims to secure financing for the construction of an entire TML system, consisting of TML vessels and 4-8 TML lifting arms. A major Chinese bank has recently expressed willingness to assist SeaMetric in solving its financing requirements for such construction programme. However, the establishment of a satisfactory financing solution is dependent on first reaching an agreement with CPLEC shipyard. At present this is SeaMetricís main priority," said the company.