The consolidation seen across the Norwegian OSV scene reached its apogee today with the nation’s biggest maritime magnates forging a dramatic merger that will see Farstad Shipping, Solstad Offshore and Deep Sea Supply join forces.
Aker tycoon Kjell Inge Røkke and John Fredriksen have agreed a restructuring plan of beleaguered Farstad Shipping as well as inking plans to merge their own OSV entities with Farstad to create one of the biggest fleets in the sector with Røkke’s Solstad as the lead stakeholder.
“As repeatedly expressed by a range of industry experts, the fragmented Norwegian OSV industry requires consolidation. By agreeing to complete the Farstad Restructuring and to work for the proposed Combination, senior lenders, bondholders and long-standing family owners supported by industrial investors are making a collective effort to secure a successful refinancing of Farstad Shipping and to create a new and robust OSV company operating out of Norway in the high-end segments of the global OSV industry,” the three parties said in a release today.
“With this solution, we provide Farstad, Solstad and Deep Sea Supply with an industrial platform to sustain the current downturn in the OSV market and be well positioned to exploit a market recovery,” said CEO Karl Johan Bakken of Farstad Shipping.
A successful completion of the combination would create the largest company in the high-end global OSV industry with a fleet of 154 vessels. When including all vessel classes and lower spec vessels, the company ranks fourth globally. The company will operate a fleet of 33 CSVs, 66 PSVs and 55 AHTSs vessels deployed globally in all deep water hubs.
“For over a year we have advocated strongly for consolidation in the OSV industry. One step was taken through the merger of REM Offshore ASA into Solstad Offshore in 2016. With a successful completion of the combination we would take further steps to build the world’s leading OSV company”, Lars Peder Solstad, CEO of Solstad Offshore, commented today.
Solstad Offshore will be the parent company in the consolidated group which will be called Solstad Farstad.
“The proposed combination is a necessary structural measure in today’s OSV market, which will enable the combined company to achieve significant synergies through more efficient operations and a lower cost base,” said Jon Are Gummedal, CEO of Deep Sea Supply.
“We are excited by this opportunity to work closely with the Fredriksen group and other stakeholders to realize our ambition to establish an efficient global leader in the OSV segment. The proposed combination of Solstad’s, Farstad’s and Deep Sea Supply’s operational experience, high quality fleet and global network together with the Fredriksen group’s and Aker’s industrial expertise, M&A capabilities and financial strength will provide a powerful platform through Solstad Offshore,” maintained Øyvind Eriksen, president and CEO of Aker.
The new consolidated group, Solstad Farstad, be able to shave costs by somewhere between NOK400m to NOK650m a year, the three parties stated in the release.
Lars Peder Solstad will be proposed as the CEO of the combined company, which will be headquartered out of Skudeneshavn, Norway.
Commenting on today’s news, Mike Meade, CEO of Singapore’s M3 Marine and a Splash contributor, said the merger was one of many surprises the hard pressed offshore sector can expect throughout the year.