The owner of a cylindrical shaped floating platform design, Sevan Marine, is considering taking legal action against Teekay and its subsidiary Logitel Offshore.
The board of Sevan Marine initiated in January 2016 a review of the circumstances surrounding and the legality of the Logitel Offshore agreements, including the $60 million bond loan granted by Sevan Holding V AS to Logitel Offshore in 2013 and the Fourpartite Agreement entered into in 2014 between Sevan Marine, CeFront, Logitel and Teekay.
Logitel Offshore was established in 2013 by Sevan Marine and CeFront Technology and acquired by Teekay Offshore in 2014.
According to Sevan Marine, the outcome of this review has exposed potential breaches of Norwegian corporate law in relation to these agreements. This could result in the agreements being void or voidable, the company stated. Sevan Marine initiated, through a special Board committee led by the chairperson, a dialogue with Logitel and Teekay in February 2016 in an attempt to resolve the issues raised in an amicable manner and within the framework of applicable law, the company explained.
Until lately, Sevan Marine said, the special Board committee was very optimistic that a settlement would be reached in time to present the main elements of such at the Annual General Meeting to be held on Wednesday, May 25, 2016.
However, the company noted, the dialogue has recently been paused by Logitel/Teekay. Logitel/Teekay have stated that the rationale for this relates to the gangway incident which occurred on the flotel Arendal Spirit.
Namely, on April 21, 2016, during the process of lifting the gangway connecting the Arendal Spirit to an FPSO unit in a period of heavy waves, the gangway of the Arendal Spirit suffered extensive damage, resulting in the vessel being declared off-hire by its charterer, Petrobras.
Sevan Marine has also noted that it appears that Teekay has not allocated any funds in their proposed restructuring plan to accommodate any claims or payments to Sevan Marine in relation to the Logitel Agreements.
Sevan Marine notes that this appears to have been done despite the amount and nature of the claims. “Sevan Marine believes that claims in excess of, and potentially significantly higher than, $50 million may be made against Logitel and/or Teekay irrespective of the validity of the above mentioned agreements. Sevan Marine regrets the situation and is dedicated to seeking the best outcome for all its shareholders,” the company stated on Monday.
In addition, Sevan Marine said it was currently considering its alternatives, including potentially initiating litigation against Logitel, Teekay and other involved parties.
Sevan approached by shareholders
Sevan Marine has also been approached by a group of minority shareholders claiming to control Sevan Marine shares in excess of the 10 percent threshold required in the Joint Stock Public Companies Act for demanding an external investigation into certain matters of relevance to the company.
Sevan Marine said that these shareholders have stated that they would consider calling an external investigation into this matter should an amicable solution not be reached. The outcome of this situation and any potential recovery of value is now considered uncertain, said the company. As such, Sevan said, there remains material uncertainty regarding both the amount and timing of any payments in relation to both the Logitel loan and variable payments due from Logitel.
Sevan Marine said it now has the understanding that given the situation Logitel/Teekay intends to withhold the variable payment due to Sevan Marine regarding Arendal Spirit in June 2016.
Combined with the further decision announced by Logitel/Teekay in their 1Q earnings release of May 19, 2016 to defer the delivery of units 2 and 3 to beyond 2019 non-cash, accounting impairments and provisions of $8 million in relation to the convertible loan and expected variable fee amounts will be recorded as per March 31, 2016.