NAO to raise $122 million, inks LOI with Vard

JUNE 2, 2014 — Nordic American Offshore (NAO) has signed a letter of intent with Vard Holdings Limited for the design and construction of two platform supply vessels with an option for a third.

NAO, an Oslo OTC listed spin-off of Nordic American Tankers (NAT), also announced commencement of its NYSE initial public offering of 5,882,352 common shares at an offering price expected to be between $16.00 and $18.00 per share, bringing in up to around $122 million.

The LOI with Vard marks a bit of fleet diversification for NAO, which got started by buying the six Blue Ship PX121 platform supply vessels that the Ulstein Group built for itself at its Ulstein Verft shipyard and has since taken an option with Ulstein for three more.

The 81 m x 18 m Vard vessels are of VARD 1 08 design, developed by Vard Design in Ålesund, Norway. The hulls of the 4,000 dwt vessels will be built at Vard's Braila shipyard Romania. Delivery is scheduled from Vard Aukra in Norway in the second and third quarters of 2015.

NAO, which is 26% owned by NAT, says it intends to use approximately $81 million of the net proceeds of the offering towards the purchase of the two newbuilding platform supply vessels ("PSVs").

NAO says it "may use the balance of the net proceeds for the construction, in a Norwegian yard [presumably it's talking about Ulstein], of up to three optional PSVs that are similar to the company's PSVs, under a letter of intent into which the company has entered, and for other acquisitions and general corporate purposes including working capital. If the options are exercised, the company will have a fleet of 11 vessels."