Vard Holdings has agreed to terminate a shipbuilding contract with Norway’s Rem Offshore (REM) in return for a compensation.
The contract with REM for one offshore construction and anchor handling vessel was entered into in June 2014. Delivery of the vessel was originally scheduled for 1Q 2016, but delivery had previously been postponed until 1Q 2018.
The vessel was supposed to be of the Vard 2 06 design with overall length of 100 meters and a beam of 25 meters. It was supposed to be equipped with a 150 ton offshore crane, ROV hangar, prepared for A-frame and accommodation for 90 people.
Vard said on Wednesday that the vessel is in an early stage of construction. The agreement to terminate the shipbuilding contract is part of a restructuring plan agreed in principle between REM and its bank lenders, major bondholders, and main stakeholders. Namely, Rem Offshore is working on an overall restructuring plan to strengthen the company’s balance sheet and liquidity position going forward.
As part of the compensation for the termination, Vard will receive shares equal to approximately 4% of the total issued shares in REM post the restructuring.
Rem Offshore has over the past months been in dialogue with its bank lenders, larger bondholders, and main stakeholders and the company has agreed in-principle on the main terms for a restructuring with those stakeholders. REM said that the restructuring will create a financial runway for the company through 2019, even in a low case scenario with limited or no utilization for the vessels without long-term contract.
REM recently said that the combined effect of the restructuring is expected to improve the company’s liquidity by around NOK 3.6 billion over a 3.5 year period, and reduce the net interest bearing debt by approximately NOK 900m.
Offshore Energy Today Staff