Gulf Island resolves MPSV dispute with Hornbeck
Written by Nick Blenkey
Gulf Island Fabrication Inc. (NASDAQ: GIFI) said today that its subsidiary Gulf Island Shipyards LLC (GIS) has resolved its lawsuit with Hornbeck Offshore Services LLC relating to the construction of two multi-purpose supply vessels (MPSVs).
The long-running case dates back to 2018 (see earlier story).
In connection with the resolution, the court dismissed the lawsuit at the request of the parties to the litigation. Further, Gulf Island Fabrication, GIS, Fidelity & Deposit Company of Maryland (FDC) and Zurich American Insurance Company (together with FDC, “Zurich”), the issuer of the performance bonds for the MPSV contracts, entered into a binding term sheet relating to the settlement of Gulf Island and GIS’s obligations under the performance bonds and any indemnity agreements relating to such bonds. In exchange, Gulf Island and Zurich will enter into a note agreement pursuant to which Gulf Island will pay Zurich $20.0 million, plus interest at a rate of 3.0% per annum, payable in fifteen equal annual installments commencing on December 31, 2024. Gulf Island and GIS also agreed to release possession of the MPSVs to Zurich.
“We are pleased to be putting this matter behind us and believe this resolution is in the best interest of all of our stakeholders,” said Gulf Island Fabrication president and CEO Richard Heo. “The resolution will eliminate ongoing legal and vessel holding costs and removes the uncertainty and risk of a potential adverse outcome inherent in any jury trial. The agreement with Zurich for payments over fifteen years will position us to remain in a strong financial position with sufficient liquidity to continue to pursue our strategic objectives. Importantly, the resolution removes a significant distraction, which combined with the completion of the wind-down of our shipyard operations, will enable us to focus our efforts on profitably growing the business.”
Gulf Island Fabrication announced the sale of its shipyard assets and certain long-term vessel construction contracts of its shipyard division to Bollinger Shipyards for approximately $28.6 million back in April 2021.
