French geophysical company CGG has agreed in principle with its longstanding partner Eidesvik, a Norwegian shipping company, and its Nordic lenders to establish a new ownership set-up for its operated fleet.
CGG said on Friday this agreement is reflecting its focus on competitiveness and strict operational and financial costs management.
According to the agreement, CGG and Eidesvik will form a jointly owned holding company which will, in turn, own two shipping companies.
One of the shipping companies will possess the five vessels currently owned by CGG and cold-stacked – Geo Coral, Geo Caribbean, Geo Celtic, CGG Alize and Oceanic Challenger. The other shipping company will own two vessels co-owned by CGG and Eidesvik – Oceanic Vega and Oceanic Sirius.
Eidesvik said that the two shipping companies will have separate financing and no guarantees will be established between these two companies or from the owners.
This new holding company will also hold all the outstanding debt related to those vessels and should be operational at the beginning of the second quarter of 2017, CGG said.
CGG will continue to charter the Oceanic Vega and Oceanic Sirius from the new company and will charter the Geo Coral (from the second quarter 2017 onwards), Geo Caribbean and Geo Celtic vessels, as the charters of other vessels it currently operates expire. CGG will thus continue operating a five 3D vessel fleet with the same maritime and seismic operational management.
The charter rates, that have been agreed as part of this set up, combined with the recently revised charter rate of the Oceanic Champion, as announced on March 14, will enable CGG to substantially reduce charter costs. The new contractual terms have been mainly obtained through the re-profiling of the reimbursement schedule of the debt related to the vessels coupled with an extension of the vessels employment commitments.
The implementation of this new maritime set-up will also result in a reduction of CGG gross debt amount by $182.5 million corresponding to the principal amount of the Nordic loan at April 1, 2017.
Jean-Georges Malcor, CGG CEO, said: “After the implementation of our marine Transformation Plan, launched at the end of 2013, which led to a sharp decrease of our internal cost base, our objective was to further improve our competitiveness by renegotiating the charter costs for our operated fleet.
“Today’s agreement in principle with our Nordic lenders, combined with the strengthening and extension of our partnership with Eidesvik, will allow us to reach this goal by leading to a further reduction of our marine operational cost and will also allow us to reduce substantially our financial costs via the externalization of the existing Nordic loan.”