Harkand Group, a provider of subsea capabilities and services to the energy industry, has entered into administration following losses as a result of a prolonged low oil price environment.
Following several reports that Harkand Group was in administration, Offshore Energy Today has learned through the company’s answer machine message from the Aberdeen office that the following subsidiary companies are in administration: Harkand Global Holdings ltd; Harkand Gulf Ltd; Harkand Gulf Contracting Ltd; Harkand AME Ltd; ISS Group Holdigns 1 Ltd; ISS Acquisitions Ltd; ISS Holding Ltd; Integrated Subsea Ltd; ISS HR Services Ltd.
According to the message, several individuals from Deloitte were appointed as the administrators.
Harkand’s website is offline since yesterday and there is no official statement from the company.
To remind, Nordic Trustee, acting as a bond trustee for a bond issued by Harkand Finance, recently exercised its right to terminate charters for two Harkand’s vessels, Harkand Da Vinci and Harkand Atlantis.
Harkand Finance is part of the Harkand Group, which owns and charters vessels in support of offshore oil and gas operations.
The company issued the Bonds to the Bondholders on March 28, 2014 and used the proceeds of the Bonds ($230 million) to finance (in part) the purchase price of the two diving support vessels.
However, citing challenging market environment, Harkand on March 21 sad that the interest payment to bondholders, due 28 March 2016, would not be paid due to insufficient liquidity.
Earlier in March, Nordic Trustee declared the bonds to be in default and replaced the board of directors of the company its two subsidiaries Harkand Atlantis Inc. and Harkand Da Vinci Inc.
Offshore Energy Today has reached out to Deloitte seeking confirmation and further details on the process.
In an e-mail sent to Offshore Energy Today, Deloitte spokesperson said that Ian Wormleighton, Philip Bowers and Michael Magnay of Deloitte were appointed on 4 May 2016 as Joint Administrators of Harkand Group Holdings Ltd and a number of its subsidiaries.
According to Deloitte, operating from a head office in Hammersmith, with offices in Aberdeen and Houston, Texas, Harkand employs approximately 400 staff with an estimated group turnover of £357m. The appointment relates to ten companies within the group.
“Unfortunately the Group’s European business (based in Hammersmith and Aberdeen) could not be saved, having ceased to trade prior to entering administration due to financial pressures. It will now be wound down by the Joint Administrators with the loss of 171 jobs. 39 staff will be retained for a short period to assist with the wind-down of the European business,” Deloitte said in a statement.
It is still hoped a sale can be concluded for the Group’s US (Houston based) and Africa business, thereby protecting a long-term valuable contract and preserving approximately 140 jobs, Deloitte added.
Deloitte also said that a number of other entities within the Group, including Aberdeen-based Andrews Survey, which employees 46 staff, were not subject to insolvency proceedings, and continue to trade. Negotiations are ongoing with a number of parties to secure a sale of the Andrews Survey business.
Ian Wormleighton, Joint Administrator and financial advisory partner at Deloitte, said: “The business has faced losses as a result of the prolonged depression in global oil prices. Despite the Group’s directors seeking to find a solution with its financial stakeholders, a restructuring could not be achieved.
“The directors’ decision to appoint Administrators came after they could not facilitate a sale of the business in its current state or obtain additional capital to continue to trade. Whilst it is disappointing that the majority of the European business is to be wound down, we are still hopeful to be able to save a significant number of jobs in the Group’s US and Africa business, and we’re confident of securing a buyer for the Aberdeen-based Andrews Survey business.”
The article has been updated with a statement from Deloitte.
Offshore Energy Today Staff