Kjell Inge Røkke has won his latest battle to steer further consolidation in Norway’s OSV scene.
The Aker boss took on a major shareholding in Solstad Offshore last month, and has since forced REM Offshore to merge with Solstad to create a 62-strong fleet. Aker, as a major bondholder, had blocked REM’s restructuring plans earlier thus paving the way for today’s merger announcement whereby REM will be subsumed into Solstad.
Røkke had been at loggerheads with another Norwegian tycoon, Åge Remøy, the lead shareholder in REM. As part of the merger Remøy will have a “significant voting interest” in Solstad after the merger.
“The offshore service vessel industry is undergoing a period of great uncertainty,” said Lars Peder Solstad, CEO of Solstad. “Reduced spending across the upstream value chain has contributed to the current overcapacity, adversely impacting dayrates and utilisation. The OSV industry’s fragmented structure is further compounding these negative effects. Solstad and REM both see the need to create larger entities with financial and operational strength to weather the downturn. The combination of Solstad and REM is one step in the right direction, but there remains a strong rationale for further consolidation.”
After the merger, Solstad will retain its Skudeneshavn head office, from which the combined fleet of CSV vessels will be operated. The combined fleet of PSV vessels will be operated from the current REM head office in Fosnavåg.
“Solstad and Aker have put forth an industrial solution for the restructuring of REM Offshore. The merger is a necessary structural measure in today’s offshore service vessel market, which will enable the combined company to achieve significant synergies through more efficient operations and a lower cost base. The combination of Solstad’s, REM’s and Aker’s industrial expertise, M&A capabilities and financial strength will provide a strong platform through Solstad for further development of the OSV industry,” said Øyvind Eriksen, president and CEO of Aker.
The merger is expected to be completed by the start of December this year and is premised upon the completion of REM’s restructuring. Solstad is also going through an extensive restructuring.