REM Offshore has posted NOK 929m ($113m) in write-downs of the value of its vessels and other assets during the year to date, of which NOK 899m ($109.5m) was realised in the second quarter.
“Combined with the newbuild cancellation costs, this means that the company is in breach of covenants relating to equity and the value of the fleet. The company has been granted a temporary waiver of these covenants through a standstill agreement with the banks, and has asked bondholders to approve a temporary waiver,” REM said in its financial report for the second quarter 2016. The latter waiver will be discussed at a bondholder meeting on September 6.
REM said it had 18 vessels in its fleet as of June 30, comprising six construction subsea vessels (CSVs), 11 platform support vessels (PSVs) and one offshore construction vessel (OCV).
Four vessels have been laid up and REM said it is possible more lay-ups could follow due to the “challenging” upcoming winter period.
The cancellation of a vessel being built at the Vard shipyard incurred costs of NOK 191.7m ($23.3m) for the Oslo-listed offshore support vessel owner. The cancellation will have no cash effect, however, as Vard is to be compensated with REM shares.
Otherwise, REM called its current cash position “satisfactory”, which is some good news ahead of its upcoming merger with Solstad Offshore, which will create a 62-vessel fleet.
“The board expects the market for the company’s vessels to remain challenging for some time. There will be a continued focus on steps to reduce costs, enhance liquidity and improve cash flow,” REM commented in its Q2 report.