Seacor is Reviewing Alternatives After Shareholders Called for Sale
Weeks after two of the company’s largest shareholders called for the immediate sale to maximize value, Seacor Marine confirmed it has retained advisers and launched a “strategic alternatives review.” The news that the company is looking at options, including a sale of its fleet, assets, merger, or sale of the company, came after it reported improved utilization and day rates, but a decrease in revenues and direct vessel profit during the most recent quarter.
Seacor, which provides services to the offshore sector, including oil, gas, and wind farms, highlighted that its utilization improved following the repositioning of vessels. It also emphasized that it “remains constructive of opportunities across several of our international markets.”
The Middle East conflict, however, is impacting the company as it reports increased labor and insurance costs and a general softening in offshore activity, while it has six vessels active in the region, and two in maintenance. It said it continues to work for customers in Saudi Arabia and Qatar, but also said its two premium liftboats in the region are not expected to operate in the coming quarter.
Seacor reported progress off its lows in the first quarter, but still had a 10 percent decline in year-over-year revenues and a four basis point decline in vessel profit year-over-year. This quarter’s results also included the completion of the sale of five vessels and other equipment. It provided a recognized gain of $31.3 million.
“Over the past several years, the Company has worked diligently to optimize its fleet, strengthen its balance sheet, and position Seacor Marine to benefit from improving offshore market fundamentals,” said Andrew R. Morse, Non-Executive Chairman of the Board. However, the company also confirmed that it has launched a review process aimed at determining the best course to maximize value for shareholders.
This came after activist shareholder Pointillist Family Office, which owns more than seven percent of the stock and is the largest holder, demanded in June that the board begin a strategic review to sell the company or the fleet. Bloomberg reported that Jorey Chernett, CEO of the investment fund, said the company’s fleet was worth more than $1 billion and advocated for accelerating sales or selling the company.
Days later, Yoav Saffar, founder of Smarlenses Capital, which holds 3.5 percent of the stock, released a letter his group had sent to Seacor entitled “The Time has Come.” In it, he argues that competitors used the market downturn to restructure and emerged deleveraged, while Seacor maintained its fleet and continued to carry a substantially heavier debt burden.
Noting the strong market rebound, Saffar called Seacor’s current share price “woefully below the intrinsic value of its fleet and other assets.” He said the valuation gap has remained as the market recovered and management urged patience. He concluded Seacor “never had the scale required” for its strategy to succeed.
Furthermore, he concluded after analyzing the value of the assets that the board needed to initiate a process to realize the embedded value. He said the shareholders “have been waiting long enough, and the time has come.”
that matters most
Get the latest maritime news delivered to your inbox daily.
The share price jumped more than 23 percent on Thursday, July 30, after the board confirmed it had launched the process. It said there are no assurances, saying it could range from the outright sale of the company to assets, a merger, a business combination, or other transactions. The stock is now at $9.54, while Saffar noted that Clarkson had set a $22 figure in June for the intrinsic value.
The door has been opened for further consolidation in an industry that has seen a host of mergers and major transactions in the past few years.
