Norway-based accommodation vessel provider Prosafe is to scrap three of its oldest vessels and start cold stacking others, the firm said this morning, citing a continued deterioration in the offshore oil services market following the oil price decline.
The firm has also engaged legal and financial advisors to review its strategic options and funding, as it is concerned about meeting covenant obligations.
Prosafe’s problems have been compounded by a further delay in the start-up of its newbuild tender support vessel, Safe Scandinavia, which is now working for Statoil on the Oseberg East field, and the suspension of further contracts it had offshore Mexico, resulting in a reduced backlog, as well as reduced access to refinancing on the bond market.
Prosafe is not alone. Firms with assets especially have been under strain, particularly in the subsea construction market, which has been oversupplied and in many cases heavily indebted. Yesterday, Harkand, a subsea inspection, repair and maintenance firm, saw its creditors terminate two of its dive support vessel charters, Harkand da Vinci and Harkand Atlantis, after the firm missed interest payments. Late last year, another relatively new subsea construction firm, Ceona, went into administration.
Prosafe, however, is in a less crowded market, says it is in constructive dialogue over its position and intends to communicate an updated financial plan during Q2 2016.
The company says it has been working to optimize the fleet deployment and utilization “in a situation where the fleet renewal strategy is being completed while the market is historically soft and contracts are being suspended.”
The firm is in negotiations to delay delivery of the third of its latest thee newbuilds, the Safe Eurus. The other two, Safe Notos and Safe Zephyrus, were delivered early 2016.
The three units to be scrapped are the Jasminia, Hibernia and Safe Britannia. Others will be cold stacked, starting with the Safe Astoria.
Prosafe said it is also likely to contest parts of the additional costs incurred on the tender support vessel conversion project.
Meanwhile, the board of Prosafe has resolved to appoint Stig H. Christiansen as the new interim CEO for Prosafe Management. He will replace Karl Ronny Klungtvedt, who has agreed to step down. Christiansen will take up the position immediately and will continue to serve as the CFO of Prosafe in addition to his position as acting CEO.
Image: The Safe Zephyrus
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