Siem Offshore Looks for New Debt Plan

Norway’s Siem Offshore (SIOFF) intends to carry out a rights issue, with a share capital increase providing gross proceeds of the NOK equivalent of approximately USD 100 million.

SIOFF’s board of directors is of the view that the company’s debt leverage is too high in the current environment and has therefore resolved to propose a rights issue of USD 100 million to an extraordinary general meeting of the company’s shareholders.

“Due to the significant changes in the oil service industry as a result of the fall in oil price and the increased supply of offshore support vessels, the rates obtainable for offshore support vessels have fallen significantly over the last few months. The Board of the Company is of the view that the depressed situation is likely to continue for some years. With the current charter-rates and level of vessel utilization the company will not generate sufficient cash from operations to pay all scheduled capital instalments on the company’s debt without further capital injection,” said the company in a statement.

The finance plan also includes an extension of the SIOFF’s NOK 2.5 billion credit facility for six anchor handling tug supply vessels, which was due to expire in November this year, as well as an easing of certain covenant requirements to the company’s banks for the next years. The finance plan will allow the company to serve interest and instalments on its debt in accordance with the original repayment schedules and thereby continue to reduce the Company’s debt leverage.

The new shares will be offered with preferential rights to existing shareholders at a subscription price of NOK 1.80 per share. The preferential rights will be tradable.

The largest shareholder of the company, Siem Europe Sarl., has indicated willingness to fully underwrite the share issue at a guarantee commission of 1%. The underwriting is subject to the approval of the board of directors of Siem Industries Inc., which is the parent company of Siem Europe Sarl.

Siem Offshore said that the proposed rights issue is subject to shareholder approval at an extraordinary general meeting of the company, notice of which is expected to be sent out shortly. Existing shareholders will be allotted tradable and preferential subscription rights in proportion to their shareholding in the company. Oversubscription will be permitted. The subscription period is expected to start mid-August.

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