Norwegian offshore support vessel owner Solstad Offshore has agreed to sell 37 platform supply vessels to the U.S. firm Tidewater for $577 million.
The sale will mark Solstad Offshore's exit from the platform supply vessel sector.
Ongoing PSV charter parties will be transferred to Tidewater. Solstad will offer management services to Tidewater in a transition period to facilitate a smooth transfer for the parties and the customers.
The offshore employees associated with the PSV Fleet will be offered employment with Tidewater. Tidewater will also offer employment to certain of the onshore employees.
Solstad said the sale would reduce its debt and strengthen its balance sheet and liquidity position.
Lars Peder Solstad, CEO of Solstad Offshore said, "The sale of the PSVs represents a shift in our strategy in a changing market. The PSVs mainly support the oil and gas industry, while the AHTSs and CSVs can service all offshore energy sectors, including oil and gas and renewables. This move is therefore in line with our strategy of being a key enabler in the energy transition. Further, the transaction will give Solstad greater financial leeway and a significantly improved debt and cash position going forward."
“Following the transaction, the core competence of future Solstad will be even better applied to further developing the CSV and AHTS segments, including building up our service division and capitalizing on a stronger position in the renewable energy market. The generally higher margins for AHTS and CSVs will allow us to improve our financials, strengthen our renewable energy presence, and put us in a position to, over time, renew our fleet,” Lars Peder Solstad said.
Solstad said that the transaction will considerably strengthen Solstad’s balance sheet by facilitating a repayment of approximately NOK 6 billion of the group’s total outstanding debt.
Solstad said its focus going forward would be on high-end construction support vessel and AHTS vessel and project related work, which increasingly generate its EBITDA from the renewable energy market.
Largest owner of high-spec PSVs
In a separate statement, Tidewater said the move solidified its position as "the leading high-specification PSV operator."
"The addition of 37 PSVs makes Tidewater the largest owner and operator of high-specification PSVs, which is the OSV vessel class that has demonstrated the highest utilization through all market cycles," the company said.
"Tidewater’s total fleet of 228 vessels is among the youngest in the world, and features a modern fleet of 199 PSVs and AHTS with an average age of 11.3 years, 65% of which are high-specification vessels," the company said.
Furthermore, Tidewater said that the Solstad PSV acquisition would create the world’s largest hybrid fleet. The combined fleet will include 14 battery hybrid and 2 LNG power capable vessels, the company said.
According to Tidewater, the acquired vessels have total backlog of approximately $620 million (including contract option periods) and "significant potential cash flow generation upside as maturing contracts roll onto higher market day rates."
Quintin Kneen, Tidewater’s President and Chief Executive Officer, said, “This agreement to acquire 37 PSVs from Solstad Offshore marks yet another important milestone in the strengthening of Tidewater’s leadership position as we continue to capitalize on the rapidly improving OSV market. This acquisition further solidifies Tidewater as the leader in large, high-specification PSVs and as the new global leader in hybrid PSVs.
“These vessels make up the highest specification PSV fleet of its size anywhere in the world. All 37 vessels are currently active and are working throughout the world, principally in the North Sea, but also in Brazil, Australia and West Africa.
“Assuming the transaction closes at the end of the second quarter, we are updating our revenue guidance for 2023 to approximately $1.03 billion and our vessel operating margin guidance for 2023 remains the same at approximately 50.0%.
“This transaction is just the latest in a series of transformative steps Tidewater has taken to drive long-term earnings and cash flow generation. We are focused on bringing together the world’s best OSV fleets to create the safest, most sustainable, most reliable, most profitable high-specification OSV fleet in the world.”