Three major offshore companies made major announcements on December 23, right up against the Christmas holiday deadline.
In Marseille, everything ran like clockwork. There were no procedural delays. There was no adjournment. The judge didn't mysteriously fall ill and die on the morning he was due to appear in court.
There was no last-minute White Knight arriving on horseback and bursting into the courtroom to turn the process on its head. The trains in France were still shut down by strikes, and the railway workers were clashing with riot police, but for Bourbon's banks, everything turned out, as they hoped (see here). They got the lot.
As the company's own press release put it:
"By a judgment dated December 23, 2019, the Marseilles Commercial Court decided of the disposal of the assets of Bourbon Corporation to Société Phocéenne de Participations, a company owned by the following banking institutions : BNP Paribas, Caisse Régionale de Crédit Agricole Mutuel Alpes Provence, Caisse Régionale de Crédit Agricole Mutuel de Paris et d'Ile de France, CM-CIC Investissement SCR, Crédit Lyonnais, Natixis and Société Générale.
Transfer of ownership of the Bourbon Corporation assets will take place as of January 2, 2020."
So, the existing shareholders are wiped out. Their equity, in a company with a market capitalisation which once exceeded a billion euros, is now worthless. Founder, Chairman and CEO Jacques de Chateauvieux is gone from the board, his family losing its stake to the banks, which funded the company's expansion from a small fleet of crew boats in West Africa in 2000 to the world's largest offshore fleet with over five hundred vessels at its peak.
Bourbon can now start afresh with new shareholders, a clean balance sheet and an infusion of working capital. How SPP will resolve the tussle with the Chinese finance houses who claim they are owed $800 million in bareboat charter revenue by Bourbon is not clear. And, with a corruption trial scheduled for the senior management and the company in Marseille in February, there are still many unanswered questions for Bourbon and its disgraced leadership.
However, I imagine the staff and customers of Solstad Offshore and DOF in Norway can only look at the swift resolution of Bourbon's debt problems with envy. Their companies remain mired in piecemeal asset sales, endless talks with their banks and bondholders, and desperate attempts to raise extra capital to fund their operations. The vultures have been circling at the year end.
On December 18, Solstad announced that 89 per cent of bondholders in their 2014 unsecured senior bonds has agreed to suspend payments until March 31, 2020. Then, on December 23, the same day that the whole of Bourbon was sold to its creditors, Solstad disclosed a bareboat contract with Saipem for the derrick lay barge Norce Endeavour.
The bareboat contract will commence on the January 2, 2020 for seventeen months, to May 31, 2021 with an optional extension period of a further five months, the company said. Then came the kicker, "as part of the bareboat contract Saipem has the option, at its discretion and subject to, among others, Saipem's internal approvals, to purchase the DLB Norce Endeavour."
But no value was given by Solstad for the price Saipem would pay for the 2010-built pipelayers with its 1,100-tonne lift capacity, if the Italian company did decide to buy it. Saipem has form in snatching quality assets from failing competitors, as when it bought the ultra-deepwater, heavy-lift and construction vessel Lewek Constellation from the ruins of the bankrupt Emas Chiyoda Subsea for US$275 million in March 2018.
DOF, meanwhile, faced further skirmishes in its battle to stay afloat as other Norwegians sensibly retreated to their snowbound mountain chalets. Like Solstad, DOF is torn between a dominant shareholder (Helge Møgster) who doesn't have deep enough pockets to refinance the company properly, and banks and bondholders, who don't want the chaos of a disorderly collapse.
DOF proposed on December 5 that it would raise new equity in January 2020 with expected gross proceeds of between NOK200 million and NOK500 million (US$22 million to US$55 million). You don't need a PhD in advanced finance to wonder whether such a small equity raising is sufficient for a company with debts which ran to over NOK24 billion (US$2.7 billion dollars) according to the third quarter report (here).
The new refinancing proposal is centred on the time-honoured Norwegian refinancing traditions of deny, delay and defer, more Scandinavian than a Christmas tree, with all DOF bank facilities to be merged into one new US$680 million facility with maturity in December 2023, and the company's bonds extended to the end of 2023 and 2024.
Unfortunately, not everyone agrees with the proposal. The bondholders' have to approve it at a meeting to be held in the middle of January 2020, and some banks are proving recalcitrant. The company reported on December 23 that, "the negotiations are still ongoing and a few of the banks, representing less than 10 per cent of the outstanding loan balances, show reluctance, but will hopefully agree to a continued beneficial participation…. The board of directors and the management believe that a solution is obtainable early in the first quarter…." Well, they would say that, wouldn't they?
So, enjoy your holiday eggnog, your mince pies and Christmas pudding. Quite a few turkeys were stuffed in 2019, and don't worry, we'll see what becomes of them in the New Year. Cheers!