UK engineering, construction and services company Subsea 7 has signed an agreement to acquire Siem Offshore Contractors and two vessels, subject to competition clearance in Germany.
The acquisition will include the entire issued share capital of Siem Offshore Contractors, the inter-array cable lay vessel Siem Aimery and the support vessel Siem Moxie. The acquisition will further expand Subsea 7’s presence in the renewables segment.
This is not the first time for Subsea 7 to try and buy Siem Offshore Contractors. However, those talks were terminated in November last year.
Siem Offshore Contractors is an installer of subsea inter-array cables and provides repair and maintenance services to the global offshore renewable energy market. It employs approximately 100 people. The vessels, Siem Aimery and Siem Moxie, are owned by Siem Offshore Rederi AS. Siem Offshore Contractors GmbH and Siem Offshore Rederi AS are wholly owned subsidiaries of Siem Offshore Inc., which is a related party to Subsea 7.
Siem Moxie is an installation support vessel specially designed and equipped to allow “walk to work” access to offshore installed assets. Siem Aimery is a cable installation, repair and maintenance vessel designed to satisfy cable lay demands of the offshore wind and offshore oil and gas industries.
Subsea 7 said on Thursday that the initial consideration is EUR 140 million subject to adjustments for working capital and net cash in Siem Offshore Contractors and a deferred contingent consideration, based on the contracted volume of work achieved in each year up to 2024, which is not expected to exceed EUR 40 million over the period.
Siem Offshore said that the initial proceeds from the sale will be used to pay down the bank loan on Siem Aimery and Siem Moxie which amounts to around Euro 60 million. The excess cash generated by the transaction will be applied to increase amortization and pre-pay debt.
The considerations are supported by an independent third party valuation and will be funded from Subsea 7’s cash resources. The transaction is expected to be completed in the first half of 2018 and the financial results of Siem Offshore Contractors will be consolidated within Subsea 7’s Renewables and Heavy Lifting Business Unit.
Siem Offshore Contractors’ unaudited pro-forma 2017 financial results included revenue of EUR 97 million and EBITDA of EUR 25 million after an adjustment to exclude chartering costs of the two vessels being acquired. Siem Offshore Contractors’ backlog at December 31, 2017 was approximately EUR 120 million, including EUR 40 million related to the Beatrice wind farm project, which was also included in Subsea 7’s backlog.
Jean Cahuzac, CEO, said: “Siem Offshore Contractors is an experienced provider of services to the offshore renewable energy, oil and gas, and utilities markets with capability that will complement Subsea 7’s existing offering. We believe that this acquisition opportunity will enhance the offshore renewables service we offer as a full lifecycle partner to our clients for their offshore energy developments.”
Siem Offshore Inc’s Chief Executive Officer Bernt Omdal comments: “With this transaction the cable lay activities of SOC is combined with the renewables business of Subsea 7 where it strategically belongs and where it is likely to prosper and grow. The transaction will further strengthen the balance sheet of Siem Offshore and the company will maintain a financial position stronger than most of its competitors. The company will now focus fully on its vessel business.”
Offshore Energy Today Staff