DOF Subsea finds itself in challenging position

Norwegian subsea service business DOF Subsea has found itself in a challenging financial position as a result of the continued challenging market situation with low vessel utilization and depressed dayrates.

In its financial report for the second quarter 2019 published in late August, DOF Subsea said that its current earnings were not sufficient to support the current amortization plan and that there were imbalances in earnings and liquidity between entities within the group.

In addition, the market for financing and refinancing has become significantly more challenging triggered by a negative change in sentiment and the group has experienced that regular rollover of existing loan facilities is challenging.

DOF and its 65% subsidiary DOF Subsea are on this basis in the process of finding a long-term refinancing solution, with a structure that is aligned with the current market environment.

According to its update on Tuesday, October 8, the company has experienced that regular refinancing has been challenging.

DOF Subsea is in process of negotiating a long-term financing solution, with a structure that is aligned with the current market environment, the company said. A long-term solution will involve all stakeholders, including owners, banks and bondholders.

At the end of June 2019, the company had an order backlog of NOK 13.8 billion ($1.5 billion). The DOF Group has an order backlog of NOK 20 billion ($2.2 billion).

The company said it was making progress with its stakeholders, including a constructive dialogue with key banks to adapt bank facilities to the current market environment. DOF Subsea on Tuesday summoned a bondholder meeting in order to postpone an instalment in DOFSUB07 due on October 22.

Based on the current dialogue with all stakeholders, the best estimate for reaching an agreement on the long-term solutions is during the fourth quarter 2019, however no assurance can be given at this stage, DOF Subsea stated.

DOF Group said that it is likely that a long-term solution will require an equity injection in DOF and that a substantial portion of the new equity will be used to support the refinancing of DOF Subsea. Laco AS, indirectly the largest shareholder in DOF, is in this respect committed to support the group with NOK 200 million in new equity, conditional upon a satisfactory refinancing solution for the Group, including a maturity profile providing satisfactory runway until the expected timing of the market recovery.

DOF said: “The Board of Directors of DOF will work towards a solution for the equity injection, which takes the interests of all shareholders into account and which to the extent permitted within applicable statutory limitations treat all shareholders equally.”

Spotted a typo? Have something more to add to the story? Maybe a nice photo? Contact our editorial team via email.

Also, if you’re interested in showcasing your company, product or technology on Offshore Energy Today, please contact us via our advertising form where you can also see our media kit.