Polarcus Ceases Operations as Lenders Prepare to Sell Fleet
Polarcus, a provider of seismic services in the offshore sector, is the latest company to succumb to the prolonged downturn in the sector and the pressures from the COVID-19 pandemic. The company’s lenders instructed Polarcus to bring operations to an end and sail six of the company’s vessel to a safe port to prepare for a sale. The company also said that it would be terminating all of its employees.
Polarcus, which had a fleet of seven vessels, held out the possibility that one ship, the Vyacheslav Tikhonov, might remain in operation. The lenders, who have no security associated with that ship, indicated that they remain open to discuss a standstill period in relation to their remaining claims and collateral with the view of finding a solution that would allow the Vyacheslav Tikhonov, which is under a long-term charter to Sovcomflot, to continue to operate. Polarcus said it will continue to pursue such a standstill agreement to bring stability to the remainder of its business.
The company, which is headquartered in Dubai, had been seeking a broader standstill agreement with the lenders. On January 25, Polarcus reported that it had defaulted on a payment under its Working Capital Facility Agreement, which triggered a cross-default of the group’s other bank facilities and convertible bond loan. The company said it was seeking a solution, but would halt all payments of interest and amortization to finance providers. The default saw the lenders take control of the company’s operating subsidiaries, which in turn owned the vessels.
During its last financial announcement at the end of October 2020, Polarcus cited challenging market conditions, which had led to a more uncertain outlook with subdued demand for seismic services, lower day-rates, and extended payment terms. While they said there had been some recovery in the tender activity for its service, the company said it would depend on the sentiment related to oil price and COVID-19 restrictions.
Polarcus reported that in 2020 its vessels had been on standby for as much as 30 percent of their time. This compared with less than five percent standby in 2019. Utilization fell to 61 percent versus 79 percent in 2019.