JULY 28, 2016 — As tough times in the offshore services sector continue, Norway's Solstad Offshore ASA and REM Offshore ASA have agreed to merge.
a "triangular merger" under Norwegian law, REM will be merged into a wholly-owned subsidiary of Solstad that will be the surviving company.REM chairman and controlling shareholder Åge Remøy will become a key shareholder in Solstad.
"The offshore service vessel (OSV) industry is undergoing a period of great uncertainty," said Solstad CEO Lars Peder Solstad. "Reduced spending across the upstream value chain has contributed to the current overcapacity, adversely impacting dayrates and utilization. The OSV industry's fragmented structure is further compounding these negative effects. Solstad and REM both see the need to create larger entities with financial and operational strength to weather the downturn. The combination of Solstad and REM is one step in the right direction, but there remains a strong rationale for further consolidation."
The merged companies will operate a total of 62 vessels. Solstad will retain its Skudeneshavn head office, from which the combined fleet of CSV vessels will be operated. The combined fleet of PSV vessels will be operated from the current REM head office in Fosnavåg.
"On a standalone basis, both REM and Solstad have strong operational capabilities, high-in-demand specialist expertise, and an employee and management base that cultivates innovative business developments," said REM CEO Arild Myrvoll. "From a commercial perspective, the merger will further strengthen these pillars of productivity and profitability, while at the same time improving margins and reducing downtime through inherent cost and operational synergies."
"I am satisfied that the merged company will allocate substantial activities to Fosnavåg, with potential for substantial increase, which will contribute to securing development possibilities for the region and stable employment opportunities for our nearly 500 highly qualified employees," says Åge Remøy.
The planned merger comes after REM bondolders on July 21 rejected a refinancing plan that was not supported by major bondholder Aker Capital.
Today, Øyvind Eriksen, President and CEO of Aker, said, "Solstad and Aker have put forth an industrial solution for the restructuring of Rem Offshore. The merger is a necessary structural measure in today's offshore service vessel (OSV) market, which will enable the combined company to achieve significant synergies through more efficient operations and a lower cost base. The combination of Solstad's, REM's and Aker's industrial expertise, M&A capabilities and financial strength will provide a strong platform through Solstad for further development of the OSV industry."