Keppel Corp's associate company, Floatel International, is merging with Oslo-listed Prosafe to create the world's largest offshore accommodation provider, according to exchange filings yesterday.
Fels Offshore, a wholly owned subsidiary of Keppel's Offshore & Marine unit, currently owns a 49.92 per cent stake in Floatel. After completion of the deal, it will be the merged entity's largest shareholders with a 22 per cent stake.
Funds managed by Oaktree Capital Management will hold 19 per cent of the shares, with HitecVision holding 16 per cent.
Prosafe owns and operates nine vessels, each with a capacity of 300 to 500 beds, and has options for the delivery of two newbuilds over the next five years. Floatel's fleet includes five units, each with capacity for 440 to 550 beds.
"The combined company will be positioned to take advantage of further operational efficiencies as well as enhanced global reach from an enlarged fleet," Prosafe said.
"The combined entity will be better positioned to sustain a prolonged cyclical downturn, with challenging market outlook, falling utilisation and reduced hook-up and commissioning work."
Under the proposed deal, Prosafe will acquire all of Floatel's outstanding shares and warrants, in exchange for new Prosafe shares that will give Floatel's shareholders a 45 per cent stake in the merged entity.
If all conditions are met, the deal is expected to conclude by the third quarter of this year, subject to a long-stop date of Dec 31. Conditions include clearances from the competition authorities in Norway and Britain, as well as creditor and shareholder approvals. It is also conditional on Prosafe's continued listing on the Oslo Stock Exchange.
The new entity had a combined contract backlog of around US$225 million (S$308 million) as of March 31. A further US$102 million in contracts has been secured since the end of March. They include Prosafe snagging a three-year US$80 million contract with Petrobras for Safe Eurus in Brazil, and Floatel's contract extension for its Floatel Superior charter at Equinor's Martin Linge project, worth US$22 million.
Prosafe said the merged entity's revenue exceeds US$600 million for the financial year ended Dec 31, 2018, with Ebitda - earnings before interest, tax, depreciation and amortisation - of more than US$300 million.
In fiscal 2018, Prosafe had revenue of US$331 million, up 17 per cent from US$283 million a year ago. Floatel's revenue was US$303 million, down 3 per cent from US$311 million a year ago.
Dr Glen Ole Rodland, chairman of Prosafe, will become chairman of the combined company. Fels Offshore and Oaktree will nominate one board member each.
Both companies' current financing structures will also be kept intact and separate, with creditor process carried out based on the principle of equal treatment between creditors of Prosafe and Floatel.