Siem Offshore agrees to sell Siem Offshore Contractors GMBH and Two Vessels to Subsea 7 S.A. - extended information

Siem Offshore Inc. (the “Company”) has entered into an agreement with a subsidiary of Subsea 7 S.A to sell all its shares in Siem Offshore Contractors GmbH (“SOC”) subject to German competition clearance.

Simultaneously, the Company has agreed to sell the cable lay vessel Siem Aimery and the walk to work vessel Siem Moxie to a company in the Subsea 7 Group. The Company and Subsea 7 are related parties.
The initial consideration is agreed to be Euro 140 million, split between Euro 90 million for the vessels and Euro 50 million for the shares of SOC subject to usual adjustments for net cash and working capital.
In addition, the Company is entitled to contingent consideration based on the volume of work for SOC from the year 2019 to the end of 2024 which is more closely described in the note below. The Company estimates the contingent consideration to amount to between Euro 25-40 million over the period.
The transaction is expected to be concluded in the first half 2018.
The initial proceeds from the sale will be used to pay down the bank loan on Siem Aimery and Siem Moxie which amounts to around Euro 60 million. The excess cash generated by the transaction will be applied to increase amortization and pre-pay debt.
Siem Offshore Inc’s Chief Executive Officer Bernt Omdal comments:
"With this transaction the cable lay activities of SOC is combined with the renewables business of Subsea 7 where it strategically belongs and where it is likely to prosper and grow.  The transaction will further strengthen the balance sheet of Siem Offshore and the Company will maintain a financial position stronger than most of its competitors. The Company will now focus fully on its vessel business.”
About SOC
SOC is a leader in the submarine cable installation, repair and maintenance business, serving the global offshore renewable energy and the oil and gas sectors as well as the utility markets since 2003. The company combines two decades of in-house cable installation experience with best practice and latest vessel technology to operate in harsh environments, and at the same time minimizing weather delays. The innovative Siem Duo: the Cable Lay Vessel “Siem Aimery” and the Installation Support Vessel “Siem Moxie” have already set new standards in offshore wind submarine cable installation.
SOC is servicing the needs of offshore wind, offshore oil and gas as well as energy transmission projects. In addition, the company provides stand-alone accommodation and personnel transfer vessels. The company is active in the following markets: offshore wind, floating offshore wind, marine energy and the oil and gas sector.
As of 31 December 2017, Siem Offshore Contractors had 100 employees with 92 employees located at the headquarters in Leer (Germany) and at the operational base in Eemshaven (Netherlands), as well as eight employees in Aberdeen (UK). The Board of Directors of SOC currently consists of Lars Muck and Renier van den Bichelaer who has recently joined. The management team of SOC consists of Renier van den Bichelaer (CEO), Patrick Wohlgemuth (CFO), Lars Muck (Business Area Manager), Günter Bakker (Operations Director), Jack Bierling (Technical Director) and Franz Nieper (Legal Counsel).
For the year ended 31 December 2017, SOC had total revenue of 108,398 kUSD with an operating margin of 19,961 kUSD, before administration expenses, corresponding to an operating margin of 18%. Net loss for 2017 was 114 kUSD. The net loss included an impairment charge of 6,083 kUSD related to a vessel that was previously owned by SOC and sold during the year and tax expenses for corporate and trade tax of 7,418 kUSD which mainly relates to tax on previously completed projects. Total assets amounts to 110,782 kUSD. Further financial figures are included in the attachment to this announcement.
The amounts stated above include bareboat expenses and income related to lease in and out of the vessels Aimery and Moxie but do not include revenues and expenses related for the vessel owning entities which are not part of SOC. The vessel owning entities and SOC are related parties.
Contact: Dagfinn Lie (Telephone + 4790199051).
Note regarding the Contingent Consideration:
For 2019 the Company will receive a fixed consideration per cable laid by SOC in excess of 50 cables in that year. From 2020 to and including the year 2024 the company will receive additional payment when the amount of cables laid exceeds 80 cables per year.
The amount payable up to 100 cables is Euro 50,000 per cable. Between 100 and 120 cables the amount payable is Euro 100,000. Over 120 cables the amount payable is Euro 200,000 per cable. The higher amounts are only payable for those cables that exceed the threshold.
For non-cable related revenue generated by SOC in the same period, the Company is entitled to additional consideration equal to 8% of non-cable related revenue capped at Euro 30 million. The cable related additional consideration is uncapped. 

Published 06-03-2018 in the Investor category