Norwegian contractor Reach Subsea said it has agreed on restructuring of its charter agreements with Solstad Offshore and Østensjø Rederi, which should enable the company to move forward with market based chartering rates.
As part of the restructuring Solstad Offshore and Østensjø Rederi will become new shareholders of Reach Subsea.
The details of the agreement have remained confidential between the parties.
The immediate financial implications for Reach Subsea
– Reach’s total off-balance sheet bank guarantees of NOK 87m will be cancelled
– Leasing debt will be reduced by NOK 26m, while bank debt will increase by NOK 20m
– As compensation, the total restricted cash deposits of NOK 53m will be released and paid out
– Reach will issue 15m shares, subscribed at NOK 2 per share, to major shareholders, board members, key employees and the ship owners
As a result total debt, including bank guarantees, and adjusted for restricted cash deposits, will be reduced from approximately NOK 140m to approximately NOK 95m.
Reach said its board will shortly summon the AGM and will as part of this propose the issuance of 15m shares, all of which have been subscribed for at NOK 2 per share. 5m shares will be issued to each of Solstad and Østensjø, while 5m shares will be issued to major shareholders, board members and key employees. In addition, the board will propose that 4m options with strike price NOK 3 per share are issued to Solstad Offshore.
Jostein Alendal, CEO of Reach Subsea, said: “We are pleased to have achieved a mutually acceptable solution that is adapted to the current market climate. This will enable Reach to continue working with ship owners known for quality and reliability – a necessity in our line of business. We are now equipped to face a prolonged period of poor markets, and will continue to deliver services of the highest quality.”