Offshore oilfield contractor Gulf Marine Services’ (GMS) chief executive officer Duncan Anderson has resigned as the company now expects lower 2019 earnings compared to 2018.
In an update this week, GMS said that since the announcement of its 2018 results earlier this year, the company has been in the process of “a fundamental governance and management overhaul,” replacing the Chairman, the CFO and all but the most recently appointed non-executive Directors.
The board of GMS this week said Duncan Anderson had resigned from the role of CEO and as a Board Director “with immediate effect,” but would remain available to assist an orderly handover of his duties and responsibilities.
Tim Summers, formerly non-Executive Chairman, is taking over the interim role of Executive Chairman while GMS finds “the best-placed candidate to take the business into a new chapter.”
The company, providing offshore service rigs to the offshore energy industry, has previously said that the overall 2019 trading would be at similar levels to 2018, however, a detailed recent review has found that the situation might not be as previously expected.
Lower than expected EBITDA
GMS said: “Over recent weeks, the Board and the Company’s new CFO have conducted a detailed review of the Company’s year-to-date financial performance and forecast activity levels for the fleet, particularly in relation to the Company’s large E-class vessels. The review has established that 2019 EBITDA will be lower than in 2018, in an expected range of $45-$48m.”
“The revised EBITDA forecast has been compiled following a vessel-by-vessel analysis and having made a prudent, revised assessment of the existing contractual and new business prospects. This is how the Company will be assessing its business going forward,” GMS said.
Looking ahead to 2020, GMS says the order book shows improvement, with almost half of the Company’s fleet already secured on firm contracts for the year, which is a stronger position than at the same point 12 months ago.
“Nevertheless, market conditions remain challenging, although there are a number of material new tender opportunities which GMS is pursuing in the near term,” GMS said.
GMS said it has been in negotiation with the Group’s banks on resetting its capital structure “and progress has been made.”
However, GMS confirmed that at the upcoming testing date, it will not meet the covenant to be tested with reference to the Company’s 30 June 2019 half-year financial results.
“The company and its financial advisors continue to be in active and constructive discussions with its banking syndicate and individual lenders with a view to receiving a waiver or agreeing an amendment to the relevant covenants and to establish an appropriate long-term sustainable capital structure,” GMS said.
Tim Summers, Executive Chairman, commented: “On behalf of the Board, I would like to thank Duncan for his years of service to the Group and we wish him well for the future.”
“Whilst we are disappointed to reset guidance for 2019, GMS’s underlying business remains sound and the new Board recognizes the importance of building a track record of delivery for our shareholders.”
“GMS has progressed significantly towards our objectives of governance, management, and cost improvements, and we continue to be in constructive negotiations with our banks on a new capital structure for the Company.”
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