Prosafe mulls delivery solution for Safe Eurus flotel

Prosafe, an owner and operator of semi-submersible accommodation vessels also known as flotels, is working on a solution regarding the delivery of its newbuild flotel Safe Eurus to better fit its contractual obligations. 

Prosafe’s capital commitments for the year relate to yard installments, which mainly comprise the final installment on Safe Eurus.

Given recent shifts in the contract portfolio Prosafe said on Wednesday it is ‘looking to find an amicable solution’ regarding the delivery of the accommodation vessel and thereby reduce actual 2016 capital expenditure to the $700 million guiding.

The semi-submersible accommodation vessel Safe Eurus is being built by China’s COSCO (Qidong) Shipyard and is scheduled for delivery in 2016. The vessel has a three-year contract with Petrobras in Brazil, set to start in the first quarter of 2017.

As the vessel would be unemployed for a period of time between its delivery and the first contract with Petrobras, Offshore Energy Today reached out to Prosafe inquiring if the company is considering the delivery delay as a possible solution which could also mean the postponement of the final installment to the shipyard. In an e-mail to Offshore Energy Today, Prosafe’s spokesperson said it can’t be more specific regarding the solution.

However, presenting the company’s 1Q 2016 financial results, Prosafe CEO Stig Christiansen recently said that if the Safe Eurus was deferred the capex would, per definition, be impacted so the company was looking for exactly that type of solutions so that it could defer delivery of that particular vessel.

The Safe Eurus is a Dynamically Positioned (DP3), harsh environment semi-submersible safety and maintenance support vessel that can accommodate up to 500 persons with extensive recreation facilities. Prosafe claims that the Safe Eurus will provide Petrobras with 300 tonne lift capability.

The company also said on Wednesday it remains in constructive dialogue with its key stakeholders for the purpose of improving the company’s financial situation.

The company is evaluating, together with its advisors, different options that will secure sufficient runway for the company throughout 2020, which may include a deleveraging of the balance sheet. The current discussions are based on a balanced solution involving new capital, amortization relief and covenant ease from the senior lenders and conversion (equitization) of all or parts of the outstanding unsecured bond debt.

In parallel, the company continues the work to optimize its operating model, fleet composition and fleet utilization, as well as cost and spend levels. The board currently anticipates that a solution is within reach during the summer, the company stated.

The board further anticipates that the company will deliver an EBITDA in 2016 of between $170 mill and $220 mill and an EBITDA in 2017 of between $110 and $140 mill depending on the outcome of certain contractual discussions with counterparties.

Offshore Energy Today Staff

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