Norway’s Sevan Marine says “potential breaches of Norwegian corporate law” have been highlighted during a review of agreements and a convertible loan with Logitel Offshore, a subsidiary of Teekay Offshore Partners, which owns and operates accommodation units based on Sevan’s cylindrical design. Litigation could follow, the company said.
The agreements in question are the $60m bond loan granted by Sevan Holding V to Logitel in 2013, and the fourpartite agreement between Sevan Marine, CeFront, Logitel and Teekay signed in 2014.
Delays in the construction of two accommodation vessels during 2015 have incurred “substantial” non-cash impairments, which have caused the carrying value of the loan to Logitel to be reassessed, Sevan said.
The value of the convertible loan to Logitel was $16m including accrued interest as of December 31, 2015, but the total outstanding loan obligation remains $50m, Sevan said in its Q4 2015 results. The value reflects the discounted value of the two remaining $10m fixed payments expected for the two delayed units.
In August 2015, Teekay Offshore confirmed it had delayed delivery of the two offshore accommodation vessels it has under construction at China’s Cosco shipyard by up to 12 months. The first Sevan-designed accommodation unit in the series, Arendal Spirit, was delivered from the yard in February 2015 and commenced a three-year fixed-rate timecharter to Petrobras in Brazil on June 7 last year.
Sevan and its counterparties Logitel and Teekay have been discussing the convertible loan and its impairments since February to resolve the legal issues amicably, but Sevan said today that the dialogue has been “paused”.
“Logitel/Teekay have stated that the rationale for this relates to the gangway incident, which occurred on Arendal Spirit as disclosed by Teekay in their Q1 earnings release,” the Oslo-listed company said in a filing today. The gangway was extensively damanged on April 21 while being lifted during a period of heavy waves, which resulted in the Arendal Spirit accommodation vessel being declared off-hire by its charterer, Petrobras.
“Sevan Marine has also noted that it appears that Teekay has not allocated any funds in their proposed restructuring plan to accommodate any claims or payments to Sevan Marine in relation to the Logitel Agreements. Sevan Marine notes that this appears to have been done despite the amount and nature of the claims,” Sevan continued.
“Sevan Marine now has the understanding that given the situation Logitel/Teekay intends to withhold the variable payment due to Sevan Marine regarding Arendal Spirit in June 2016.”
Litigation could be brought against Logitel and/or Teekay and related parties by Sevan, which believes that claims in excess of and “potentially significantly higher” than $50m brought against them, whether the agreements between the companies are determined to be valid or not.
Sevan Marine said it has also been approached by a group of minority shareholders claiming to control over 10% of its shares, who it says will consider calling an external investigation into the matter, should an “amicable” solution not be reached.
In other news, Siri Hatlen, chair of Sevan’s board since its restructuring in 2011, has decided to step down from the board at the company’s annual general meeting May 25.
