Swiber to sell vessel to Mermaid Maritime for US$7M, well below book value

Swiber Holdings has entered a letter of intent to sell a vessel, the Resilient, to a Mermaid Maritime subsidiary, Mermaid Subsea Services (Thailand) for US$7 million in cash, well below the US$53.7 million book value as of end-March 2016, the company said in a filing to SGX.

The proposed disposal is expected to result in an estimated loss of around US$46.7 million, based on the book value, the filing said.

The financial statements for January-to-March 2016 are the latest announced consolidated accounts of the group, the filing said.

The vessel, previously known as Swiber Conquest and registered under a Panama flag, is a pipe lay and accommodation work barge built in 2005, and is currently chartered to Swiber Offshore Construction, a subsidiary of Swiber, and sub-chartered to a third party involved in an offshore construction project, the filing said.

Swiber said the pricing of the deal took into account the vessel’s age and existing condition, the current market conditions and outlook for the oil and gas sector, and that the company is under judicial management. The orderly liquidation value of the vessel was also considered, Swiber said.

Independent valuer Maersk Broker Advisory Services A/S put the open market value of the vessel at US$15 million to US$17 million, while the orderly liquidation value of the vessel — an estimation of the proceeds where the seller is under pressure to sell but has a reasonable period of time to market the vessel — is around US$5 million to US$8 million, the filing said.

“As the vessel has been mortgaged in favour of a financial institution under the loan facilities as security for the company’s obligations thereunder, the proposed disposal will enable the group to realise the value of the vessel and use the net proceeds from the proposed disposal towards partial repayment of the amounts owing to the financial institution under the loan facilities, thereby reducing the liabilities of the Group as part of the group’s ongoing restructuring efforts,” Swiber said.

The purchaser, Mermaid Subsea Services (Thailand), also called MSST, provides subsea engineering services in Southeast Asia.

In a separate filing to SGX, Mermaid Maritime said the vessel is a suitable vessel for completing decommissioning work scopes.

“Mermaid considers that purchasing an asset such as the vessel will enable MSST to further pursue opportunities related to decommissioning works in Thailand and the surrounding region,” Mermaid Maritime said.