Oslo: With the oil price dive plunging Siem Offshore into financial trouble the company is convening an extraordinary general meeting of shareholders to push through a much needed $100m rights issue.
“Due to the significant changes in the oil service industry as a result of the fall in oil price and the increased supply of offshore support vessels, the rates obtainable for offshore support vessels have fallen significantly over the last few months,” the company said in a release to the Oslo Bors. The company said the depressed situation is likely to continue for some years.
With the current charter rates and level of vessel utilisation Siem Offshore said it will not generate sufficient cash from operations to pay all scheduled capital instalments on the company’s debt without further capital injection.
The board admits the firm’s debt leverage is too high in the current environment.
The proposed new finance plan also includes an extension of the company’s NOK2.5bn credit facility for six anchor handling tug supply vessels, which was due to expire in November this year, as well as an easing of certain covenant requirements to the company’s banks for the next years. The finance plan will allow the Company to serve interest and instalments on its debt in accordance with the original repayment schedules and thereby continue to reduce the Company’s debt leverage.
The largest shareholder of the company, Siem Europe, has indicated its willingness to fully underwrite the share issue at a guarantee commission of 1%.
The subscription period is expected to start mid-August with DnB and Swedbank as managers.