Sevan Marine takes Logitel and Teekay to court
Sevan Marine, a cylindrical platform design provider, has decided to take legal action against Teekay Offshore Partners and subsidiary Logitel Offshore.
According to a statement made by Sevan in its first quarter financial report on Tuesday, the company opted to act on circumstances surrounding the legality and potential claims about agreements with Logitel Offshore.
The board of Sevan Marine began a review of the legality of Logitel agreements in January 2016, including the $60 million bond loan granted by Sevan Holding V AS to Logitel Offshore in 2013 and the fourpartite agreement entered into in 2014 between Sevan Marine, CeFront, Logitel, and Teekay.
To remind, Logitel Offshore was established in 2013 by Sevan Marine and CeFront Technology and acquired by Teekay Offshore in 2014.
$60 million loan
In May 2013, Sevan entered into an agreement to sell the semi-completed Sevan hulls number 4 and 5 on an “as-is, where-is” basis to Logitel Offshore.
The total purchase price for the hulls was $41 million, which was rendered as a seller’s credit. Sevan additionally granted a loan of $10 million which was applied by Logitel towards completing the accommodation units for the hulls. The total $51 million credit was structured as a bullet loan, repayable within 24 – 36 months.
Later that year, Sevan Marine loaned another $9 million convertible loan to Logitel Offshore. The terms and conditions were the same as under the existing agreement which was amended and increased to $60 million to include the latest loan.
Sevan and Logitel entered into a letter of intent with Teekay as the buyer and CeFront as the seller of all shares in Logitel Offshore Holdings AS, which, at the time, owned two hulls that were being converted into floating accommodation units at the COSCO Nantong Shipyard.
Under the terms of the LOI, the lender for the deal, in this case Sevan, was supposed to be repaid in six installments of $10 million, payable not later than six months after delivery of the two units from the COSCO yard. The LOI became effective and formal a couple of months after it was initially signed in May 2014.
Of those six installments, equaling to $60 million, Sevan is claiming that an amount of approximately $10 million is yet to be repaid.
Going to court
In statements during 2016, Sevan said that the review of both deals shown potential breaches of Norwegian corporate law and that it could result in the agreements being void or voidable.
On Tuesday, May 23 Sevan said it took legal action against Logitel claiming payment of the convertible loan, and in parallel began arbitration against both Logitel and Teekay Offshore Partners claiming payment approximate to the amount of one installment of the fourpartite agreement.
According to the company, initial court and arbitration hearings related to these matters have been scheduled for the autumn of 2017.
“The outcome of the Logitel situation, any potential recovery of value and the timing of such recovery remains uncertain. As such, there remains material uncertainty regarding both the amount and timing of any payments in relation to the Logitel agreements,” said Sevan.
Also in the financial report, Sevan posted a net loss of NOK 14.4 million for the first quarter 2017 compared to NOK 96.6 million in the prior-year quarter.
Offshore Energy Today Staff