Prosafe misses final payment to Cosco amid talks with lenders

Offshore accommodation specialist Prosafe has missed its final payment to China’s Cosco shipyard for the Safe Notos flotel amid talks with lenders meant to secure financial flexibility for the longer term.

Safe Notos flotel; Source: Prosafe

Prosafe informed last November that it had re-evaluated its outlook and revised its forecasts resulting in a $341 million write down of assets and consequently a marginalized book equity amid a prolonged downturn and weaker outlook in the North Sea.

Prosafe further informed that although the company had sufficient liquidity until early 2021, it would in light of the market outlook start discussions with its lenders with a view to ensure sufficient financial flexibility for the longer term.

In an update on Tuesday, Prosafe said that the discussions with its lenders were ongoing and constructive. Pending conclusions, Prosafe has received consent to defer payments under the $288 million facility from January 15 until February 13, 2020.

Other identified defaults in the period have also been temporarily waived under both the $1,300 million and $288 million facilities. Both measures have been agreed in order to temporarily align the timing of scheduled payments under both facilities and to create stability while a long-term solution and runway is being sought, Prosafe explained.

As part of this, the company’s final payment of approx. $18.5 million owed and due under the sellers credit to Cosco for the Safe Notos flotel has not been made. This payment is subject to certain contractual subordination and coordination arrangements with the financial lenders, and discussions with Cosco on this payment is ongoing.

The Safe Notos has been operating on a three-year and 222-day contract for Petrobras in Brazil since December 7, 2016.

As at the current time, the process with the creditors remains constructive and, although there can be no assurances with respect to the outcome of the ongoing discussions, Prosafe remains hopeful that it will be able to agree a long-term solution in the near term, the company concluded.

Prosafe is in the process of merging with its peer Floatel International, but the plan has come across several regulatory hurdles. The latest update when it comes to the merger of the two accommodation services giants was issued in early January when the two companies agreed an extension of a share purchase agreement related to the proposed merger amid concerns raised by competition authorities in the UK and Norway.

Offshore Energy Today Staff

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