Siem’s attempt to rescue Farstad goes down the drain

Norwegian offshore vessel owner Farstad Shipping will have to look elsewhere to find a solution for its debt problems after its rescue deal with Siem came to naught. 

Farstad Shipping has for a period of time negotiated with its key creditors to obtain a financial restructuring of the Farstad Shipping group supported by Siem Oil Service Invest, Limited (SOSI).

To remind, in early November 2016, Farstad entered into a non-binding letter of intent with Siem Industries for the financial restructuring, with Siem or a fund managed by Siem as a key equity investor. By the end of the month, Farstad and Siem signed a binding term sheet for the restructuring of Farstad.

The term sheet formally lapsed on December 20, 2016, but the companies continued their joint efforts to obtain a solid financial platform for the operations of Farstad. At that point, Farstad stopped service of interest and amortizations to its financial creditors in order to preserve the liquidity.

However, Farstad informed on Thursday that the company and Siem did have not succeed in finding a solution for the restructuring which would be acceptable to all affected creditors.

Therefore, Farstad said, the term sheet between Farstad and Siem has terminated, and Farstad will pursue other alternatives for its financial restructuring in continued cooperation with its key financial creditors.

With a view to preserving liquidity, Farstad and a majority of its subsidiaries will uphold their current suspension of service of financial debt. The companies’ stand-still agreement with their secured lenders agreed in December and ending on January 31, 2017, will also remain in force, Farstad added.

The Farstad Shipping group will otherwise maintain operations as a going concern. All suppliers and trade creditors will be paid in their ordinary course.

Offshore Energy Today Staff

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