Solstad Offshore (SOFF) and REM Offshore, agreed Wednesday, July 27 to merge and ride out the industry’s slump together. The two Norwegian offshore service vessel companies will operate a total of 62 vessels once combined. The principal shareholders of both companies have laid out terms for the merger.
A press release stated the merge will be a statutory triangular merger pursuant to and in accordance with Norwegian law. Afterward, Solstad will retain its Skudeneshavn head office, the headquarters for combined CSV fleet operations, while current REM head office in Fosnavåg will operate combined PSV vessels.
Solstad generated new class B shares, having equal rights to the original shares, now known as class A shares, but with 1/10th vote. The goal is for these new shares to be instrumental for additional consolidation. REMs shareholders will receive the new shares.
Support for the merge comes from Åge Remøy, the largest shareholder in REM and SOFF, and other companies he controls. Conditionally, he wants continued control carried over into a significant voting interest in Solstad. This will be effected by his entitlement to 6,000,000 class A shares, half of the consideration shares attributable to the directed share issue in REM.
Principal shareholders of Solstad have agreed to Åge Remøy as a significant shareholder. Once combined, his principal holding company will nominate a member to the board of directors of Solstad.
Lars Peder Solstad, CEO of Solstad says, “The offshore service vessel (OSV) industry is undergoing a period of great uncertainty. Reduced spending across the upstream value chain has contributed to the current overcapacity, adversely impacting dayrates and utilization. The OSV industry’s fragmented structure is further compounding these negative effects. Solstad and REM both see the need to create larger entities with financial and operational strength to weather the downturn. The combination of Solstad and REM is one step in the right direction, but there remains a strong rationale for further consolidation.”
REM CEO, Arild Myrvoll said, “On a standalone basis, both REM and Solstad have strong operational capabilities, high-in-demand specialist expertise, and an employee and management base that cultivates innovative business developments. From a commercial perspective, the Merger will further strengthen these pillars of productivity and profitability, while at the same time improving margins and reducing downtime through inherent cost and operational synergies.”
Åge Remøy says, “I am satisfied that the merged company will allocate substantial activities to Fosnavåg, with potential for substantial increase, which will contribute to securing development possibilities for the region and stable employment opportunities for our nearly 500 highly qualified employees.”
President and CEO of Aker, Øyvind Eriksen, says, “Solstad and Aker have put forth an industrial solution for the restructuring of Rem Offshore. The merger is a necessary structural measure in today’s offshore service vessel (OSV) market, which will enable the combined company to achieve significant synergies through more efficient operations and a lower cost base. The combination of Solstad’s, REM’s and Aker’s industrial expertise, M&A capabilities and financial strength will provide a strong platform through Solstad for further development of the OSV industry.”
Expected shareholders meetings will be on or around October 1, with an effective merger date on or around December 1, 2016. REM is undergoing restructuring to strengthen its position. The merger is premised upon completion of that restructuring beforehand and requisite approvals from creditors, or absence of intervention by competent regulatory authorities. SOFF foresees consolidation within the industry and is re-evaluating a comprehensive refinancing plan.
Article written by HEI contributor Marcela Arbaca.