Solstad Offshore Completes Restructuring as Sector Struggles

Hard hit by an extended downturn in the offshore oil service sector, many of the leading companies have been forced into restructuring as they sought to address the changes that appear to be permanent in the business. In the latest move, the shareholders, banks, and creditors of Norway’s Solstad Offshore approved a complex financial restructuring.

Solstad’s success at completing its restructuring comes as others in the sector continue to struggle. Last week, Siem Offshore put new proposals to its bondholders as it seeks to complete a refinancing valued at more than $1 billion, while Hermitage Offshore Services, Scorpio Group’s financially troubled offshore operation, announced the sale of its fleet as part of the ongoing bankruptcy proceedings.

The challenges for the oil service industry and Solstad trace back to 2015 and the beginning of the collapse in oil prices.  While the price of oil stabilized, the lack of a recovery lead to a decline of activity in the sector which soon found itself with too much capacity. 

Solstad emerged as Norway’s largest offshore company after a 2017 merger with Farstad Shipping and Deep Sea Supply. At the time they said the merger would create the largest company in the high-end PSVs over 3,200 dwt market, the AHTS with more than 15,000 bhp market, and result in a fleet of over 150 vessels. Even with its size, the company struggled, forcing Solstad to begin a prolonged series of negotiations with creditors, the banks, and bondholders towards a recapitalization. The onset of the pandemic further complicated the process.

“The resolutions from today’s General Meeting mark a new beginning for Solstad Offshore,” said CEO Lars Peder Solstad. “I am very grateful to everyone who has contributed in this process, including creditors, shareholders, advisers, and not at least the dedicated team of internal resources from Solstad Offshore. It has been a long process, but we are pleased with the result. Solstad Offshore is now significantly stronger and may continue to be a reliable partner for our clients, suppliers, and employees.”

The extraordinary general meeting held on October 20, approved all of the proposals for the fully financed restructuring of the group’s debt and equity. It consisted a complicated series of transactions, including decreasing and increasing the shares, a reverse split for the shares, issuance of new shares to certain secured lenders, bondholders, and other stakeholders with payable claims against the group, a private placement of shares, warrants and a convertible loan.

At the completion of the transactions, Aker Capital AS, SFL Corporation, Fausken Invest, a company controlled by board member Frank Ove Reite, Hemen Holding Limited controlled by trusts established by John Fredriksen, CEO Lars Peder Solstad and board chairman Harald Espedal, emerged as the major shareholders along with the banks and former bondholders. A new board of directors was also elected, including Espedal, Reite, and others. 

Solstad emerges with a fleet of about 100 vessels involved in the oil and gas sector as well as offshore wind activities world-wide.  According to CEO Solstad, the company remains one of the main players in the offshore vessel industry going forward with 3,500 employees and they plan to grow their business in the offshore wind sector.