As part of a major restructuring to ensure its long-term survival, Reach Subsea has restructured its charter agreements with Solstad Offshore and Østensjø Rederi which will see the two vessel owners lower their charter rates and become new shareholders of the company.
The company said in an announcement that the move will result in a significant reduction in its charter commitments, and see it well equipped to handle a prolonged period of weak market conditions.
As part of the arrangement, Reach’s total off-balance sheet bank guarantees of NOK 87m will be cancelled, its leasing debt will be reduced by NOK 26m, while bank debt will increase by NOK 20m. The company’s total restricted cash deposits of NOK 53m will be released and paid out to Solstad and Østensjø, who will also be issued with 5m shares each. Another 5m shares will be issued to major shareholders, board members and key employees.
Jostein Alendal, CEO of Reach Subsea, commented: “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.”
As a result of the restructuring Reach’s total debt, including bank guarantees, and adjusted for restricted cash deposits, will be reduced from around NOK 140m to somewhere in the region of NOK 95m.
