TAKING ACTIONS TO REMAIN COMPETITIVE

Published: April 26, 2016

Reach Subsea has agreed on a comprehensive restructuring of its charter agreements, which will enable Reach to move forward with market based charter- in rates. Solstad Offshore and Østensjø Rederi will as part of the restructuring become new shareholders of Reach Subsea.

Although the details of the agreement are confidential between the parties, we can convey that Reach Subsea will be well equipped to handle a prolonged period of weak market conditions. A significant reduction in charter commitments will provide Reach with a competitive and flexible total cost base. Reach Subsea is now positioned to exploit opportunities in the market, and create shareholder value.

The immediate financial implications for Reach Subsea are:

  • 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. The company’s working capital and cash position is unaffected by the restructuring, and remains robust. In particular in light of the reduced and flexible cost base going forward.

The 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, says: “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.”

 

Featured photo: Jan Ingvar Vårvik, Thorbjørn Sævig & Morten Alvsvåg onboard Viking Neptun