Norwegian offshore services provider Boa Offshore has initiated a financial restructuring process due to difficult financial situation and severe liquidity position.
In an Oslo Stock Exchange filing on Tuesday, Boa Offshore informed that the financial situation of Boa Offshore and its subsidiaries has become significantly worse than anticipated only a few months ago.
This is mainly attributable to the offshore construction vessel (OCV) market having weakened much more than anticipated, the sales process of the company’s two AHTSs not progressing as planned, and weaker performance of the company’s tug fleet.
Consequently, the company added, the group’s liquidity position is now severe and certain liquidity covenants are expected to be breached by the end of 4Q 2016 or during 1Q 2017.
Although a net refund related to the cancellation of two MPSVs ordered at Nantong Mingde Heavy Industry of NOK 445 million was received during 1Q 2016, the main portion of this cash has been spent on servicing the group’s debt obligations and running the group’s business.
During last weeks, the company has been working on the restructuring proposal which will be presented to and discussed with the group’s largest financial creditors. During those discussions, Boa will continue to operate normally in all material aspects, however, no interest and amortization will be paid to bondholders and inter-company creditors during the restructuring process.
Helge Kvalvik, CEO of Boa Offshore, commented: “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.”
Boa Offshore is owned by Taubatkompaniet, which is controlled by Ole T. Bjornevik and his family. Bjornevik comments on the financial restructuring: “The offshore market has developed weaker than expected and we need to prepare for the time it will take before it improves. 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 discuss with our financial creditors.”
The company has retained Pareto Securities and SpareBank 1 Markets as financial advisors and Ro Sommernes as legal advisor to assist in this process.
Also on Tuesday, the group, comprised of ship owning companies within the tugboats, barges, and offshore vessels segments, posted its consolidated financial results for the third quarter of 2016.
The company’s operating income during the third quarter dropped to NOK 168.9 million, compared to NOK 534.2 million in the same period 2015, while the company’s loss for the quarter widened totaling NOK 86.3 million, compared to a loss of NOK 17.78 million in the prior year quarter.