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Viking Supply Ships AB Interim report Q3 2016 and update on financial restructuring of VSS A/S

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Press release

THIRD QUARTER              

  • Total revenue from continuing operations was MSEK 235 (232)
  • EBITDA from continuing operations was MSEK 85 (48)
  • Result after tax including discontinued operations was MSEK -93 (-282)
  • Result after tax per share including discontinued operations was SEK -0.5 (-1.6)

YEAR TO DATE

  • Total revenue from continuing operations was MSEK 685 (836)
  • EBITDA from continuing operations was MSEK 212 (225)
  • Result after tax including discontinued operations was MSEK -261 (-317)
  • Result after tax per share was SEK -1.5 (-1.8)

SUMMARY OF EVENTS IN Q3

  • EBITDA for Q3 from continuing operations was MSEK 85 (48).
  • The average fixture rate in Q3 was USD 53,300 (49,300) for the AHTS fleet and USD 0 (5,700) for the PSV fleet. The average utilization in Q3 was 65% (63) for the AHTS fleet and 0% (39) for the PSV fleet.
  • In July 2016, the term sheet which had been agreed with the banks was signed. This marked a significant step towards the completion of a financial restructuring of VSS A/S (see note 1, Liquidity and going concern).
  • On 15 September 2016 a bondholders meeting was held. The proposed resolution obtained 98.26% of the votes, and the proposal was adopted according to the voting requirements of the Bond Agreement. According to the proposal, 50% of the outstanding par value of bonds will be converted to quoted class B shares in Viking Supply Ships A/S’ parent company, Viking Supply Ships AB, at SEK 1.5 per share, the bonds being valued at 55% of par. The remaining 50% of the outstanding bonds will be redeemed in cash at a price corresponding to 35% of par.
  • On 9 November 2016, Odin Viking SPV AS and VSS A/S concluded on an agreement to amend the terms in the bareboat charter party. This finalizes the financial restructuring of VSS A/S, subject to an equity issue at an agreed level in Viking Supply Ships AB and a subsequent equity injection by the parent company into VSS A/S. The restructuring will provide VSS AB with a stable financial platform until 2020, subject certain vessel income levels.
  • In July 2016, VSS A/S received an early termination notice of the contract for the Ice-class 1A AHTS vessel Njord Viking. The vessel has been working for Eni Norge in the Barents Sea and has also been part of the extended towing-preparedness in the area on behalf of the Norwegian Coastal Administration. The vessel was according to the contract with Eni Norge firm until the end of 2016, with optional periods of 2 x 6 months thereafter. According to the contract VSS A/S will be entitled to a termination fee of approximately USD 13.300/day for the remainder of the firm period. The termination represents a loss of income during the remaining firm period of the contract of MUSD 3.3 in 2016. VSS A/S will off-set this loss by marketing the vessel in the North Sea spot market, while also searching for alternative contracts for the vessel.
  • During Q3 2016, Vidar Viking and Brage Viking completed their term contracts and returned to the spot market in the North Sea. There is positive indications that the activity level within VSS A/S’ important core areas such as the Barents Sea and Canada will increase in the future and VSS A/S sees concrete contract opportunities within these harsh environment areas and will focus on increasing the contract coverage going forward.
  • Due to the challenging market conditions, VSS A/S has recognized an impairment loss during Q3 2016 of MSEK 55 related to the PSV fleet.
  • In September 2016, Christian W. Berg stepped down as CEO of VSS AB. He will however take on various projects within VSS AB and act as an advisor to the Board of Directors. At the same time, Chairman of the Board Bengt A. Rem, was appointed as interim CEO of VSS AB. Further, Folke Patriksson was appointed Chairman of the Board for as long as Bengt A. Rem is interim CEO. Bengt A. Rem will continue on the Board as a board member.
  • During 2016 it was decided to discontinue the remaining operations in the subsidiary TransAtlantic AB in order to meet financing commitments related to these operations. The decision has led to the initiations of discussions and negotiations with employees, partners and other stakeholders. At the end of Q3 2016 the Group assess’ that discontinuation is likely to be completed within the next 12 months, subject the outcome of the ongoing discussions and negotiations. Due to this, the Group will in its financial reports as from Q3 2016 recognize TA AB as discontinued operations and assets held for sale, according to IFRS 5 Assets Held for Sale and Discontinued Operations. The discontinuing of the operations in TA AB will enable the Group to fully focus on its offshore operations.
  • During Q3 2016 an agreement was entered into for the sale of the RoRo-vessel TransReel, which was delivered to its new owners in October 2016. The sale is expected to give a positive result of MSEK 11 in Q4, but as the funds will be used to cover amortizations of vessel loans it will not have any liquidity effect.

SUBSEQUENT EVENTS   

  • On 18 October 2016, a bankruptcy petition was approved towards the owner of Odin Viking, Norseman Offshore AS. On 9 November, Odin Viking SPV AS, a company owned by Kistefos AS, concluded on an agreement with the bankruptcy trustee, where after Odin Viking SPV AS purchased Odin Viking and acquired the bareboat charter party. On 9 November 2016, Odin Viking SPV AS and VSS A/S concluded on an agreement to amend the terms in the bareboat charter party, including a significant reduction in bareboat rate.

In conjunction with the publication of this interim report, an earnings call will take place on Thursday 10 November, 2016 at 10.00 am. 

  • Phone: +46 (0) 8 50520424
  • Password: Viking Supply Ships Q3 2016 

Please dial in 5-10 minutes before the call starts.

For further information please contact:  

Ulrik Hegelund, CFO, ph. +45 41 77 83 97, e-mail ulrik.hegelund@vikingsupply.com 

Morten G. Aggvin, IR & Treasury Director, ph. +47 41 04 71 25, e-mail ir@vikingsupply.com 

This information is information that Viking Supply Ships AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 08:30 CET on 10 November 2016.

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