OSV firm Farstad Continues Restructuring Talks

Posted by Joseph Keefe August 30, 2016

Supply firm Farstad Shipping's CEO Karl Johan Bakken repeats is in stand-still agreement with lenders until Oct. 1

Notable disclosures:

* CEO says is talking to both industrial and financial investors on how to refinance 11.6 billion Norwegian crowns in net interest bearing debt ($1.4 bln)

* CEO says 7-8 significant banks involved, and that Nordic banks DNB, Nordea and Danske Bank are central

* CEO says there are also two bond loans and one leasing deal tied up to two vessels

* CEO says can't give more details about discussions, will give information when something is on the table

* CEO says Oct. 1 deadline was not taken out of thin air

* CEO says we are working as fast as we can, but important to find a good deal

* Farstad says at present there are no visible signs of improvement in the market balance for offshore service vessels, and is uncertain how long it will take before the market recovers

* CEO says market need consolidation to be sustainable in the future

* Earlier Kjell Inge Roekke's Aker injected cash into competing service vessel firm Solstad Offshore, which later merged with Rem Offshore

* Other offshore service vessel firms have either undergone, or are undergoing, various restructurings, including Deep Sea Supply, controlled by John Fredriksen, DOF, controlled by the Moegster family, Havila, controlled by the Saevik family, and Siem Offshore, controlled by Kristian Siem

* A key executive at top Norwegian bank DNB on Tuesday told Reuters that he sees year of restructuring in the oil service industry

* Farstad's operating profit before depreciation, amortizations and impairments fell to 735 million crowns in Q2 from 1.04 billion in same period in 2015, and far below what it needs to be able to service its debt

* Farstad booked 862.5 million crowns in impairments in Q2

* CEO says there has been a lag (in vessel impairments)

* CEO says vessels values important in negotiations with lenders

* Vessel values fell 11.8 pct in first half to 14.9 bln at end of June

* Farstad has 57 vessels in operation, whereof 29 AHTS (anchor handling tug vessels), 22 PSV (platform supply vessels) and 6 subsea vessels

* Farstad shares down 4.7 pct to 8.9 crowns at 1004 GMT compared to a rise of 0.5 pct in Oslo's benchmark share index.