Subsea 7 snaps up businesses from bankrupt EMAS Chiyoda Subsea
- Business & Finance
Norwegian subsea services player Subsea 7 has announced the acquisition of certain businesses of a bankrupt EMAS Chiyoda Subsea (ECS).
Subsea 7 informed on Thursday that the acquisition, under a US bankruptcy code Chapter 11 Plan of Reorganization, was confirmed by the U.S. Bankruptcy Court for the Southern District of Texas and became effective on June 29, 2017.
Jean Cahuzac, Subsea 7 CEO, said: “In a challenging business environment our differentiated offering and strong capital discipline has enabled us to pursue this opportunity. This targeted investment enables Subsea 7 to accelerate its strategy to provide a market leading service in the Middle East.
“The addition of people, local presence and client relationships of ECS to our market leading SURF and Conventional capability expands our global presence. As a result of this transaction we have significantly increased our presence in the Middle East, assuming a long-term agreement (LTA) and three current projects in Saudi Arabia, in consortium with L&T Hydrocarbon Engineering (L&T).
“Subsea 7 and Chiyoda Corporation, one of the Plan of Reorganisation sponsors and a previous shareholder of ECS, have started discussions regarding possible collaboration in engineering and technology initiatives to provide solutions to our clients.”
Subsea 7 said it will pay less than $100 million in aggregate, including its contribution to the debtor in possession credit facility, to acquire certain ECS businesses, the Ingleside spoolbase and sundry other assets.
The acquired business of ECS includes approximately 850 people based in Houston, Singapore and Saudi Arabia.
Subsea 7 has secured a multi-year bareboat charter for the pipelay vessel Lewek Champion for activities in the Middle East, and a short term charter for the pipelay vessel Lewek Constellation to complete work in hand in other geographies.
As a result of the transaction, Subsea 7 has acquired approximately $850 million of order backlog, including five projects, each with backlog exceeding $50 million: Hasbah, in consortium with L&T, offshore Saudi Arabia; Four Decks, in consortium with L&T, offshore Saudi Arabia; 17 Cranes, in consortium with L&T, offshore Saudi Arabia; OCTP, offshore Ghana; TVEX, US Gulf of Mexico; Order backlog comprised approximately $300 million due for execution in 2017, $450 million in 2018 and $100 million in 2019 and beyond.