Norwegian offshore vessel owner Island Offshore has decided to stop amortization payments, citing tough market conditions.
The company has said the move is a part of the company’s strategy to address its long-term financing structure with the aim of restructuring its balance sheet.
“The Group has, as many others within our industry, during the last two years suffered from the general deterioration in the offshore service market. The Group has taken a number of measures to improve its financial situation but the continued deterioration/lack of improvement to the general market conditions necessitates a more structured approach to the Group’s financial and operational situation,” Island Offshore said.
Island Offshore had 28 vessels at the end of the second quarter 2016. At the time, the company had five platform supply vessels in lay-up, with more expected to be stacked through winter months and upon expiry of existing contracts. According to reports, there are some 500 offshore vessels laid up, of which around a hundred in the North Sea alone.
Presenting its plan to tackle its financing woes on Tuesday, Island Offshore said that it began discussions with its creditors.
“While these discussions are ongoing, the Group has decided with effect from 14 November 2016 to temporarily halt all payments of amortization to its secured finance providers. The Group will, however, continue paying interest on the debt to the finance providers as it falls due. The secured finance providers have been informed of such payment halt,” the company said.
It added: “In anticipation of the successful outcome of the discussions with our long-term finance providers, the Group will continue to operate normally in all other respects and on the basis that all trade creditors will continue to be paid in full, and that the negotiations and deferral of amortization described above will not have negative impact on any of the trade or non-finance creditors of the Group.”
Offshore Energy Today Staff