Cash-strapped offshore construction company Lamprell said Tuesday it had received a combined non-binding indicative all cash offer from Blofeld and Al Gihaz for the acquisition of all remaining Lamprell shares. The Blofeld and Al Gihaz have a combined shareholding of 44.24 percent in Lamprell.
“The Joint Bidders are working as fast as possible to put forward the Possible Offer for the entire issued and to-be-issued share capital of Lamprell at a price of 9 pence per ordinary share which also includes a proposed secured bridging loan with a peak aggregate amount of USD 145 million,” Lamprell said.
“The Board of Lamprell has carefully evaluated the Possible Offer together with its financial adviser, Investec Bank plc, with regard to the Company's current liquidity needs as set out in the Company's announcement on 24 June,” Lamprell said.
“The Board has concluded that should a firm offer be made on the same financial terms as the Possible Offer it would be minded to recommend it to Lamprell shareholders, subject to the agreement of other customary terms and conditions and subject to agreement of the proposed bridging loan,” Lamprell said Tuesday.
Lamprell, which builds offshore facilities for the international offshore oil and gas and offshore wind industries, last month said that, operationally, the business continued to deliver for clients and had an active pipeline of new business opportunities.
However, it added that board was urgently pursuing the options available to deliver a funding solution that will resolve the group’s immediate and severe liquidity concerns, with options including asset monetization, project-specific financing, hybrid facilities and/or additional equity, with a view to finalizing these options in Q2 2022, in line with the company’s working capital requirements.
The company, which had $58,4 million in cash (gross) on June 23, is currently building two jack-up rigs for its client the IMI JV, and is investing in a yard upgrade program in Dubai to boost its renewables capacity offering.
Delivery of Rig 1 is expected by the end of 2022 with the delivery of the second rig (“Rig 2”) scheduled to be in Q1 2023.
In its update last month, Lamprell said: “At the point of delivery of Rig 1, the company expects to receive its final milestone payment under the respective contract. However, the company has significant working capital requirements to enable it to complete Rig 1.
“There is a similar working capital profile in respect of the completion and delivery of Rig 2. The current milestone payments expected to be received by the group include $26.4 million in October 2022, $44 million in December 2022, and $44 million in March 2023. One of the significant working capital requirements relates to the payment for equipment provided by a Tier 1 services company for use on Rig 1 and Rig 2. The aggregate quantum of this payment is $59 million, $51 million of which is due to such key supplier in July 2022 with the balance payable in December 2022 (capable of being deferred in consideration of an additional fee).
As for its Hamriyah yard expansion, Lamprell said last month that the investment included the construction of a state-of-the-art renewables serial production line, through which we will be able to construct jacket components, transition pieces and monopiles
“The company believes that this major capital expenditure project amounting to approximately $55 million of capex over the next 9 months is critical to delivering the Group’s growth strategy in renewables. The project has the potential to double Lamprell's annual renewables revenue capacity from c.$400 - $600 million to c.$800 - $1,200 million while lowering unit production costs and materially improving gross margin contribution by over 2.5x on offshore wind foundations projects,” Lamprell said at the time.
“The group now faces urgent and severe liquidity constraints, and requires an immediate funding solution or bridge financing to a funding solution in order to meet immediate funding obligations of $75million in June / July 2022[…],” Lamprell said on June 24. Apart from the immediate working capital requirements, the $75 million would cover the debt facility repayment of $26,4 million.
The company also said the it had medium term capital requirements (until December 31, 2023) of $164 million, of which $55 million of IMI JV contributions, $55 million for renewable production line capex, $38 million for end of service gratuities (equivalent to pension entitlements in the U.A.E.), and $16 million for maintenance capex.