Prosafe SE: Second quarter and first half report 2016
(Thomson Reuters ONE) -
(Figures in brackets refer to the corresponding period of 2015)
Operations
The fleet utilisation rate in the second quarter of 2016 was 41 per cent (58 per
cent).
Safe Boreas commenced the contract with Talisman Sinopec in the UK mid-March and
was fully contracted throughout the quarter.
Safe Zephyrus was delivered from the yard in the first quarter of 2016 and
received acknowledgement of compliance from the Petroleum Safety Authority
Norway, in July. The vessel commenced a contract with Det norske in Norway in
late July.
Safe Scandinavia commenced the TSV contract with Statoil in Norway mid-March.
Drilling support operations successfully commenced at the beginning of April
with a firm contract period until July 2018.
Regalia commenced a contract with Shell in the UK in late May.
Safe Concordia and Safe Caledonia were fully contracted in the quarter.
Safe Bristolia commenced a contract with BG Group in mid-May in the UK for a
two-month firm period. This contract has been completed and the vessel is now
laid up in Norway.
Safe Notos was delivered from the yard in the first quarter of 2016 and is in
transit to Brazil to perform the contract with Petrobras. The vessel is expected
to arrive in Brazil early in the fourth quarter of 2016. The Safe Notos
contract, as extended, is now for three years plus 222 days and the total
contract value is USD 189 million.
Safe Astoria was idle in the quarter and is cold-stacked in Batam, Indonesia.
Safe Lancia is cold stacked in Port Isabel, Texas, USA. The company incurred
off-hire and demobilisation costs as well as costs related to the removal of
thrusters on the vessel in the second quarter.
Safe Regency has transited from Aruba and is now preparing for lay-up in
Curaçao. The company incurred off-hire costs for the vessel in the second
quarter.
In June 2016, Safe Britannia was sold for scrap/recycling in the US. The company
incurred off-hire and demobilisation costs in the quarter until the vessel was
sold.
In August 2016, Jasminia and Safe Hibernia were sold for scrap/recycling in the
US. The company incurred lay-up and demobilisation costs in the quarter.
Financials
Revenues for the second quarter of 2016 were USD 115.4 million (USD 92.5
million). This increase reflects that high day rate units have been on contract
during the second quarter this year as opposed to last year. This has been
partly offset by the closure of the Gulf of Mexico contracts which generated
relatively low day rates.
Operating expenses increased slightly to USD 53.8 million (USD 51 million). Cost
saving initiatives implemented in 2015/2016 have reduced operating expenses in
the second quarter. These savings were offset to a large degree by non-recurring
costs relating to the vessels which previously operated in the Gulf of Mexico.
EBITDA increased to USD 61.6 million (USD 41.5 million). This improvement is
mainly due to higher average day rates, as described above.
Depreciation increased to USD 29.1 million (USD 18.7 million) mainly due to the
new build Safe Boreas and the Safe Scandinavia TSV project. Operating profit was
USD 32.5 million (USD 22.8 million).
Net financial expenses for the second quarter were USD 26.4 million (USD 7.0
million) mainly due to currency effects and higher interest costs.
Net profit amounted to USD 5.2 million (USD 12.2 million).
Total assets at 30 June amounted to USD 2,599.7 million (USD 2,241.7 million),
while the book equity ratio declined to 26.1 per cent (33.9 per cent). Net
interest-bearing debt stood at USD 1,648.5 million (USD 1,123.7 million).
Financial restructuring
On 7 July 2016, the Company announced a proposed comprehensive refinancing. The
refinancing included a proposed private placement of minimum USD 130 million and
maximum USD 150 million at an issue price of NOK 0.25 per share, and a
subsequent equity offering of up to USD 15 million. It was furthermore proposed
that NOK 2.4 billion (approx. USD 290 million) in aggregate face value of the
Company's outstanding senior unsecured bonds be converted into new shares at
30% of the face value and/or cash at the option of each bondholder.
The combined effect of the reduction in bank debt amortisation from Q1 2017
until and including Q4 2020, and the interest rate swap restructuring is
expected to provide a total positive liquidity impact of approximately USD 493
million. There is also a significant financial covenant relief on all facilities
to provide the Company with sufficient headroom to operate.
As part of and subject to the refinancing being completed, the Company has
agreed with Cosco a deferred delivery of Safe Eurus to Q4 2019 (or such earlier
time required by the Company) and a limitation on any further liability in the
event Prosafe does not take delivery of the vessel, giving the Company increased
flexibility and reduced financing risk. In addition, Prosafe and Cosco have also
agreed a deferral of the repayment of the USD 29 million seller's credit to Q4
2019.
On 13 July 2016, the Company announced that it had completed the private
placement of new shares. The private placement of minimum USD 130 million and
maximum USD 150 million, conducted as an accelerated book-building with
preferred allocation for shareholders and bondholders, was fully subscribed. The
final amount of new shares to be issued would be determined on the basis of the
amount required for the cash-out of bonds under the refinancing.
On 11 August 2016, the Company announced that the bondholders had exercised the
cash-out option for NOK 242 million. As per the terms of the proposed
refinancing, the clearing price was therefore set to 35% of current face value
of the bonds. The difference between NOK 84.7 million (35% of NOK 242 million)
and the minimum cash-out amount (NOK 336 million) will be applied for a pro-rata
redemption across remaining bonds as part of the refinancing.
Further, based upon received requests from bondholders, the Company will, as
part of the refinancing, issue a convertible bond of NOK 82.79 million
convertible into 331,163,764 new shares. Adjusted for the cash-out amount and
the convertible bond, the remaining bonds will be converted to 1,396,836,250 new
shares in Prosafe through a debt to equity conversion. As a result of the
minimum cash-out amount being exercised, the Company will issue 4,368,000,000
new shares in the private placement.
The refinancing was approved by the requisite majorities in the Company's bond
loans on 12 August 2016. On 23 August 2016 the Extraordinary General Meeting of
Prosafe resolved to authorise the issuance of the shares and convertible bonds
as described above.
Currently, bank lenders representing 89% (in aggregate) of Prosafe's USD 1,300
million and USD 288 million bank facilities have confirmed credit approval or
agreement-in-principle in favour of the refinancing. The Company is working
constructively with the bank syndicate to obtain the remaining credit approvals
and secure the required all lender support. The refinancing is expected to be
completed by end August / beginning of September 2016.
Reorganisation and rationalisation
As announced on 26 July 2016, as a part of its cost efficiency measures reported
in connection with the company's Q1 2016 report, Prosafe is implementing a
reorganisation of the group's shore-based business resulting in a leaner
organisation around a smaller and partly changed group management team.
The new organisational model of the group is based on the principle of a lean
line organisation focusing on the core business of safe and efficient management
of the fleet.
The rationalisation is necessary to ensure that the Prosafe group remains
competitive in the current difficult market conditions and in a solid position
for future growth when the industry starts to recover. The proposed workforce
reduction is ongoing throughout the remainder of 2016 eventually achieving a
substantial headcount reduction across the group.
The Group's target remains to reduce annual costs by at least USD 30 to 40
million. This should show increasing effect throughout the second half of 2016
as the rationalisation program takes effect and capacity is adjusted to a
falling activity level. In addition, the target includes a reduced capex spend
noticeably in the near and medium term to protect the financial position.
Outlook
Market outlook remains uncertain in the near term, and although there are a
number of prospects, 2017 is expected to be the low point in activity level. In
general, the company sees the demand returning more to the traditional demand
related to maintenance and modification projects with shorter lead times
compared to hook-up projects. Cost reductions in the E&P sector are expected to
contribute to more projects becoming economically viable. Combined with
continued focus on asset integrity and maintenance on offshore installations,
the company expects a gradual market recovery from 2018 onwards.
Prosafe has moved quickly to scrap three vessels and it anticipates that other
suppliers' vessels will be scrapped and/or exit the high-end market of the North
Sea. As a consequence of this, the supply-demand environment is expected to
become more balanced by 2020. The aforementioned plus the substantial debt
reduction, the significantly improved cash flow from the refinancing and
combined with Prosafe's high quality and versatile fleet places the company in a
strong position when the market recovers.
Risk
Prosafe's key risks are described in detail in the Directors' Report as set out
in the Annual Report 2015 and include Prosafe's main operational risks e.g. day
rate level and utilisation rate of the accommodation vessels. The company's
results also depend (inter alia) on operating costs, interest expenses and
exchange rates.
Statement from the Board, the Acting CEO and the Acting CFO
We confirm that, to the best of our knowledge, the financial statements for the
first half year of 2016, which have been prepared in accordance with IAS 34
Interim Financial Statements as adopted by the European Union and the
requirements of the Cyprus Companies Law, give a true and fair view of the
company's assets, liabilities, financial position and profit or loss of the
company, and that the interim management report includes a fair review of the
information required under the Norwegian Securities Trading Act section 5-6
fourth paragraph and the Cyprus Companies Law and Cyprus Transparency
Requirements Law No:190(1) 2007 section 10.
Prosafe is the world's leading owner and operator of semi-submersible
accommodation vessels. The company is headquartered in Larnaca, Cyprus and
listed on the Oslo Stock Exchange with ticker code PRS. For more information,
please refer to www.prosafe.com
Attachment: Q2 2016 report
Larnaca, 24 August 2016
The Board of Directors of Prosafe SE
For further information, please contact:
Stig Harry Christiansen, Acting CEO
Prosafe Management AS
Phone: +47 478 07 813
Robin Laird, Acting CFO
Prosafe Offshore Services Pte Limited
Phone: +65 81 27 21 01
Cecilie Helland Ouff, Senior Manager Finance and Investor Relations
Prosafe AS
Phone: +47 991 09 467
This information is subject to the disclosure requirements pursuant to section
5-12 of the Norwegian Securities Trading Act.
Prosafe Q2 2016 report:
http://hugin.info/64729/R/2036892/758865.pdf
This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Prosafe SE via GlobeNewswire
Unternehmensinformation / Kurzprofil:
Datum: 24.08.2016 - 08:01 Uhr
Sprache: Deutsch
News-ID 490820
Anzahl Zeichen: 12854
contact information:
Town:
Larnaca
Kategorie:
Business News
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