Tidewater to buy Solstad’s 37 PSVs for $577 million

Tidewater president and CEO Quintin Kneen says trends point to “as compelling of a long-term market backdrop for our business as we have ever seen.

In a move that will cement its position as the world’s largest operator of offshore service vessels, Houston-headquartered Tidewater Inc. (NYSE: TDW) will pay $577 million to purchase Oslo-listed Solstad Offshore ASA’s fleet of 37 platform supply vessels.

“This agreement to acquire 37 PSVs from Solstad Offshore marks yet another important milestone in the strengthening of Tidewater’s leadership position as we continue to capitalize on the rapidly improving OSV market,” said Tidewater president and CEO Quintin Kneen. “This acquisition further solidifies Tidewater as the leader in large, high-specification PSVs and as the new global leader in hybrid PSVs.

“These vessels make up the highest specification PSV fleet of its size anywhere in the world. All 37 vessels are currently active and are working throughout the world, principally in the North Sea, but also in Brazil, Australia and West Africa.

“Assuming the transaction closes at the end of the second quarter, we are updating our revenue guidance for 2023 to approximately $1.03 billion and our vessel operating margin guidance for 2023 remains the same at approximately 50.0%.”

Shift of strategy for Solstad

Solstad Offshore ASA says the deal with Tidewater Inc. positions it as one of the main global owners and operators of the high-end AHTS and subsea vessels that are essential to realization of the the energy transition.

“The sale of the PSVs represents a shift in our strategy in a changing market. The PSVs mainly support the oil and gas industry, while the AHTSs and CSVs can service all offshore energy sectors, including oil and gas and renewables,” said CEO Lars Peder Solstad. “This move is therefore in line with our strategy of being a key enabler in the energy transition. Further, the transaction will give Solstad greater financial leeway and a significantly improved debt and cash position going forward.”

Solstad says that ongoing charter parties will, subject to the necessary consents from the charterer, be transferred/novated to Tidewater. Absent such consents in time for completion of the transaction, the economic interest in the charter party will be transferred to Tidewater and, until the necessary consents are given or the charter party expires, Solstad will offer management services to Tidewater in a transition period to facilitate a smooth transfer for the parties and the customers.

It adds that the offshore employees associated with the PSV fleet will be offered employment with Tidewater. Tidewater will also offer employment to certain of the onshore employees.

After the transaction has been completed, Solstad’s fleet in operation will consist of 41 high-end offshore vessels. In addition, six vessels are non-operational and considered for sale.

Tidewater’s acquisition thinking

The 37 vessel deal with Solstad comes less than a year after completion of Tidewater’s $190 million acquisition of Swire Pacific Offshore that added 50 vessels (29 AHTS vessels and 21 PSVs) to its fleet

Transaction terms

Tidewater says it intends to fund the transaction through a combination of new debt and cash on hand. The company has received commitments from a group of financial institutions, led by its existing lender DNB Bank ASA, for a three-year senior secured credit facility of up to $325 million, and expects to raise new debt prior to closing of the transaction. Closing of the Transaction is subject to customary regulatory approvals and includes a financing contingency.

Clarksons Securities AS and Evercore are serving as financial advisors to Tidewater. DNB Markets is serving as debt advisor to Tidewater. Vinson & Elkins L.L.P., Advokatfirmaet Wiersholm AS and Clyde & Co are serving as legal counsel to Tidewater.