September 25, 2009
Trico Marine suspends four Tebma newbuilds
Trico Marine Services, Inc. (Nasdaq:TRMA) has suspended delivery of the last four in a series of eight subsea services vessels from India's Tebma Shipyards.
Suspension of the newbuild contracts was one of a series of moves announced yesterday by Trico, which has previously disclosed its intent to concentrate on improving its balance sheet, reducing outstanding debt and strengthening near term liquidity.
In addition to renegotiating its contract with Tebma, Trico has inked agreements for the sale of two North Sea class vessels for an aggregate sales price of approximately $40 million. The first sale is currently scheduled to close in early October. The second sale is set to close in late October, subject to delivery and inspection in Hong Kong. Trico will utilize the proceeds to repay European bank debt outstanding. Both vessels will be sold to buyers in Asia.
The company also announced that it had reached an agreement regarding the delivery of seven remaining subsea services vessels from what it identifies only as "the shipyard in India."
The ships in question are a series of eight VS470 MPSV's on order at Tebma Shipyards, the first of which, Trico Sabre, was delivered from Tebma's Malpe shipyard on May 20.
Trico Marine say the first three of the remaining vessels will be delivered as currently scheduled between December 2009 and July 2010. The construction contracts for these three vessels have been amended to reduce the purchase price. Approximately $40 million of additional capital expenditures will be incurred between October 2009 and July 2010 to complete these three vessels.
Delivery of the last four subsea service vessels has been suspended and Trico Marine says it "preserves the right to cancel its obligation to take delivery of such vessels" and that "preserving the option to construct the remaining four vessels allows the company flexibility in developing its strategic growth plans for subsea services to adjust for market conditions and liquidity needs at a future date. The effect of the indefinite suspension of delivery is to reduce previous committed capital expenditures for 2010 and 2011 by approximately $80 million."
Trico says the vessel sales, which are in the North Sea spot vessel market, reduce debt, improve liquidity and are consistent with its strategy to reduce both its spot OSV exposure and its dependence on the supply vessel market. The amendments to the subsea service newbuild contracts ensure capacity for subsea services growth with the delivery of three subsea services vessels and also reduce 2010 and 2011 committed capital expenditures.
The company -- which earlier this year was embroiled in a bitter proxy battle with major shareholder Kistefos -- also announced what it called "steps its Board of Directors has taken in its continuing effort to have the Company's governance provisions reflect best practices, including some revisions to governance provisions dating back to 2005. The Board will seek stockholder approval to declassify the Board, with stockholders voting on declassification at the 2010 annual meeting."
Trico also announced a number of changes to its bylaws and corporate governance guidelines.