Registration Document

Transcription

Golden Energy Offshore Services AS
Registration Document
28 November 2014
Manager
Golden Energy Offshore Services AS – Registration Document
Important information
This Registration Document has been prepared solely in connection with the application for the listing
of Bonds issued by Golden Energy Offshore Services AS (the “Company”) on the Oslo Stock
Exchange. This registration document (the “Registration Document”) together with the Securities Note
constitutes the Prospectus.
The Financial Supervisory Authority of Norway (Nw.: Finanstilsynet) (the “Norwegian FSA”) has
reviewed and approved this Registration Document in accordance with Sections 7-7 and 7-8 of the
Norwegian Securities Trading Act. The Norwegian FSA has not reviewed and approved the accuracy
and completeness of the information contained in the Registration Document. The review and
approval by the Norwegian FSA is strictly limited to whether or not the Company has included
information in accordance with a specified list of content requirements. The Norwegian FSA has not
conducted any review or approval of any corporate issues described or otherwise referred to in the
Registration Document.
New circumstances, material errors or inaccuracies which may have significance for the assessment of
the Bond Issue described herein may be known after the date of the Registration Document, but before
the listing of Bonds. Such information will be published as a supplement to the Registration Document
in accordance with the Norwegian Securities Trading Act Section 7-15. Neither the publication nor
delivery of the Registration Document shall, under any circumstances, create the impression that the
information contained herein is complete or accurate at a time after the date of the Registration
Document or that the Company or its affiliates’ business may not have been changed.
Only the Company and the Manager are entitled to provide information about conditions described in
the Registration Document. Information provided by any other person does not have relevance to the
Registration Document and should therefore not be trusted.
The Registration Document is subject to Norwegian law, unless otherwise expressly stated. Any
dispute regarding the Registration Document shall be resolved by Norwegian law, first instance being
Oslo District Court (Nw. Oslo tingrett).
Distribution of the Registration Document may be restricted by law in certain jurisdictions; including,
but not limited to, the United States, Canada, Australia, Japan and South Africa and the United
Kingdom. Any person who receives the Registration Document is required by the Company and
Manager to independently familiarize themselves with and observe such restrictions. The Norwegian
FSA’s control and approval of the Registration Document implies that the Registration Document can
be used in any other EEA state. Beyond this, no action has been made to obtain permission to
distribute the Registration Document in any jurisdiction where such act is required.
No securities will be registered under the United States Securities Act of 1933 and may not be offered
or sold in the United States without registration or under an applicable exemption from registration
requirements.
This Registration Document does not constitute an offer to subscribe or purchase any bonds or other
securities.
The content of the Registration Document is not any form of legal, financial or tax advice. Any
Bondholder should consult with their own legal and/or financial advisor and/or tax adviser.
Copies of the Registration Document can be obtained by contacting the Company or Lead Manager.
An investment in the Bonds involves inherent risks. Prospective investors in the Bonds should
carefully consider the risks associated with the investment when reading the information
contained in this Registration Document. See Section 1 “Risk Factors” of this Registration
Document and these should be carefully considered.
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INNHOLDSFORTEGNELSE
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2
RISK FACTORS ............................................................................................................. 4
1.1
Risks Related to the Company’s Business and Operations ......................................... 4
1.2
Risks Related to the Company’s Financial Position and Liquidity ................................. 9
1.3
Risks Related to Angola ....................................................................................... 10
PERSONS RESPONSIBLE ............................................................................................ 12
2.1
Persons responsible for the information ................................................................. 12
2.2
Declaration by persons responsible ....................................................................... 12
3
INDEPENDENT AUDITORS .......................................................................................... 13
4
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS ......................... 14
5
INFORMATION ABOUT THE COMPANY........................................................................ 15
6
7
8
9
5.1
Name, incorporation, registration number, domicile and legal form ........................... 15
5.2
Memorandum and Articles of Association ............................................................... 15
5.3
History and development of the Company .............................................................. 15
5.4
Selected financial information ............................................................................... 15
5.5
Recent events relevant to the evaluation of the Company’s solvency ......................... 15
5.6
Investments ....................................................................................................... 15
5.7
Material contracts ............................................................................................... 16
BUSINESS OVERVIEW ................................................................................................ 17
6.1
Principal activities ............................................................................................... 17
6.2
Vision and strategy ............................................................................................. 17
6.3
Energy Swan ...................................................................................................... 17
6.4
Energy Scout ...................................................................................................... 20
6.5
Insurances ......................................................................................................... 24
INDUSTRY OVERVIEW ............................................................................................... 25
7.1
Introduction ....................................................................................................... 25
7.2
General Energy Market Overview - Demand ........................................................... 25
7.3
The Offshore Vessel Market .................................................................................. 26
ORGANISATIONAL STRUCTURE.................................................................................. 29
8.1
Description of the Group that the Company is part of .............................................. 29
8.2
Subsidiaries ....................................................................................................... 29
8.3
The Company’s dependence upon other entities in the Group ................................... 30
8.4
The management agreement ................................................................................ 30
8.5
Related Party Agreements of the Company ............................................................ 31
8.6
The Group – Golden Energy Offshore..................................................................... 31
8.7
Disputes related to other Restis Companies outside the Group .................................. 33
ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY BODIES ................................. 34
9.1
Names and addresses of key persons of the Company ............................................. 34
9.2
Board practices................................................................................................... 35
10 SHARE CAPITAL AND MAJOR SHAREHOLDERS ........................................................... 36
10.1
Share Capital ..................................................................................................... 36
10.2
Major shareholders ............................................................................................. 36
11 FINANCIAL INFORMATION ........................................................................................ 37
2
11.1
Historical financial information .............................................................................. 37
11.2
Legal and arbitration proceedings ......................................................................... 38
11.3
Significant change in the Company’s financial or trading position .............................. 38
12 TREND INFORMATION ............................................................................................... 39
12.1
Statement of no material adverse change .............................................................. 39
12.2
Outlook ............................................................................................................. 39
13 ADDITIONAL INFORMATION ...................................................................................... 40
13.1
Third party information ........................................................................................ 40
13.2
Documents on display ......................................................................................... 40
14 DEFINITIONS............................................................................................................. 41
APPENDIX 1: ARTICLES OF ASSOCIATION ....................................................................... 43
APPENDIX 2: FINANCIAL REPORT FOR THE PERIOD ENDED 30 JUNE 2014
INCLUDING AUDITOR STATEMENT ............................................................................. 44
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1
RISK FACTORS
An investment in the Bonds issued by the Company involves inherent risks. Prospective investors
should carefully consider, among other things, the risk factors set out in the Prospectus, including
those set out in the Securities Note, before making an investment decision. The risks and uncertainties
described in the Prospectus are risks of which the Company is aware and that the Company considers
to be material to its business. This section is not intended to be exhaustive – additional risks and
uncertainties not presently known to the Company, or that it currently deems immaterial, may also
impair the Company’s business operations or the value of the Bonds. The Company cannot assure
investors that any of the events discussed in the risk factors below will not occur. If they do, the
Company’s business, financial condition, results of operations and cash flows could be materially
adversely affected. In such case, the trading price of the Bonds could decline, and an investor may
lose all or part of its investment.
An investment in the Bonds is suitable only for investors who understand the risk factors associated
with this type of investment and who can afford a loss of all or part of the investment.
1.1
1.1.1
Risks Related to the Company’s Business and Operations
Risks related to the employment of the Company’s Vessels
All or a considerable portion of the Company’s income will be dependent on charters and other
employment of the Vessels. The Vessels are currently chartered until 2015 and 2017 respectively.
However, no assurance can be given that the charters will not be terminated before their intended
expiration dates.
Upon expiry or termination of the current charters, there can be no assurance that the Company will be
able to obtain satisfactory employment for the Vessels in the future. In particular, many of the
Company’s clients include oil and oil service companies which impose particularly high standards of
HSE protection. If the Company is unable to comply with a client’s own standards or regulations, this
may adversely affect the Company’s ability to be awarded contracts. Moreover, charter rates and/or
project values are based on several factors that are unpredictable and beyond the Company’s control.
Accordingly, even if the Company is able to renew its charters or other contracts when they lapse, it
may not be able to generate earnings comparable to those received under the expired or terminated
contracts. This may have a material adverse impact on the financial condition of the Company and
thereby also the Company’s ability to service its debts when due.
1.1.2
Risk related to the non-payment by the Company’s key customers
The Company is dependent on a limited number of key customers. The ability of the Company’s
customers to meet their obligations is affected by the customer’s financial and liquidity position.
Although the Company generally require parent company guarantees from its customers, the Company
may, if a key customer or its parent company declares bankruptcy, insolvency or files for a similar
protection under the customer’s jurisdiction, not be able to enforce payment of the customer's
obligations and incur loss on such claims. As the Company is highly dependent on cash flow from its
operations in order to be able to meet its debt obligations as and when they fall due, the bankruptcy,
insolvency or similar protection of a customer may lead to the loss of expected turnover for the
Company from the customer, which may again have a material adverse effect on revenues,
profitability, cash flows and the financial condition of the Company, and thereby also the Company’s
ability to service its debts when due.
1.1.3
Termination of the Charter contracts, suspension of operations or reduced hire
The Company’s Charter contracts provide for wide termination rights for the existing customers which
represent a risk in the Company’s ability to repay the Bonds. The charterer of Energy Swan may,
inter alia, terminate the relevant charter contract at its own convenience by providing payment of an
early termination fee which make between 50 – 70% of the remaining hire. Such payment may not
fully compensate the Company for the loss of the contract. Furthermore, under the Energy Swan
Charter, the Company is not entitled to payment of Charter hire if the vessel is prevented from
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working as a result of circumstances for which the Company is responsible for. Neither is the
Company entitled to payment for Charter hire during dry-docking, except during maintenance and
repairs for periods up to 12 hours per month (may be accumulated up to maximum 4 days) in which
the Company is entitled to payment of Charter hire. The charterer of Energy Scout may not terminate
the contract by convenience, but such Charter still provides for extensive termination rights whereas
the Company is not entitled to a termination fee or any other compensation. Upon the occurrence of a
force majeure event, the charterer may under certain conditions terminate the contract without having
to pay any indemnity or any other compensation. Furthermore, the charterers of the vessels may be
entitled to suspension of hire or hire at reduced rate, under certain circumstances and conditions.
The Company’s future charterers may also be permitted to terminate their Charter in a similar manner
or to suspend the Charter hire and/or suspend the operations in certain events paying only reduced
Charter rate. Many of these events are beyond the Company’s control. Upon the termination/expiry of
the Charter contracts currently in place, no guarantee can be given that the Company will be able to
obtain charter contracts at equivalent or higher rates and/or conditions, or even at all.
If the aforesaid risks materialise, it could have a material adverse effect on the Company’s business,
liquidity, results and financial situation.
1.1.4
The Company’s business is dependent on the price of oil and gas, which for various
reasons is likely to vary over time
As a substantial portion of the Company’s revenue is derived from companies operating in the oil and
gas industry, the Company’s operations, profitability and cash flow are dependent on the level of oil
and gas capital spending by the oil companies which, in turn, is dependent upon the fluctuating market
price of oil and gas.
Demand for the Company’s services in the offshore oil and gas sector is particularly sensitive to price
falls, reductions in production levels and disappointing exploration results. Historically, demand for
offshore exploration, development and production has been volatile and closely linked to the price of
oil and gas. Low oil prices typically lead to a reduction in exploration drilling and hence offshore
support work as oil companies scale down their investment budgets.
Should the prices of oil and gas products drop significantly, or should oil and gas exploration or
development activity otherwise be reduced, the Company may be adversely affected and thereby the
Company’s ability to service the Bonds.
1.1.5
The Company operates in a highly competitive and cyclical market subject to intense
price competition and volatility
There is intense competition in the markets in which the Company operates. International oil and gas
contractors offer comparable services in the offshore deepwater and shallow water marine services
markets.
The offshore service industry is highly cyclical and an over-supply of Vessels may lead to a reduction
in day rates. This may affect the Company’s capacity to secure new contracts and negatively impact
the Company's revenues, profitability and cash flows.
As competitors and others use or develop new technologies or better adapt to market trends, the
Company may be placed at a competitive disadvantage. Further, it may face competitive pressure to
implement or acquire certain new technologies at a substantial cost. The Company cannot be certain
that it will be able to implement and use new technology or products on a timely basis or at an
acceptable cost. Thus, the Company’s inability to implement and use new and emerging technology in
an effective and efficient manner may have a material and adverse effect on the Company’s business,
financial condition, results of operations and cash flows and thereby the Company’s ability to service
the Bonds.
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1.1.6
Risks related to operational and maintenance costs for the Vessels
The Vessels may need to be upgraded, refurbished and repaired due to technological development,
changes in market practice, new requirements from relevant authorities and/or ordinary wear and tear.
There may be no warranties in place to cover the costs of such repairs. The Vessels are also required to
be dry-docked at regular intervals, and might also require dry-docking if damaged. The costs of drydock repairs are unpredictable and can be substantial, and may be higher than expected as a result of
circumstances beyond the Company’s control. The loss of revenues while the Vessels are being
repaired or maintained and repairs for normal wear and tear are typically not covered by any of the
Company’s insurance policies and may adversely affect the Company’s financial position. If any
Vessel does not maintain its class and/or fails any annual survey or dry-docking survey, the Vessel
may be unemployable and uninsurable.
1.1.7
The Company’s operations are subject to environmental liability and other
significant responsibilities
Contracts of the nature the Company may enter into in the offshore sector require high standards of
safety and are associated with considerable risks and responsibilities. These include technical,
operational, commercial and political risks.
All of the Company’s operations are or will be subject to environmental laws and regulations. Current
regulations are constantly reviewed by various environmental authorities at the same time that new
regulations are being studied and implemented. Moreover, the non-compliance with such laws and
regulations may subject the violator to administrative and criminal sanctions, in addition to the
obligation to repair or to indemnify damages caused to the environment and affected third parties.
Pursuant to the standard Time Charter normally applied by the Company, the vessel owner is generally
only liable for pollution damage emanating from the vessel itself. However, no guarantee can be given
that the Company may not be forced to enter into contract with more onerous pollution liability which
may not be fully covered by the Company’s insurances. To the extent that the Company is subject to
environmental liabilities, the payment of such liabilities or the costs that the Company may incur to
remedy environmental damages would reduce funds otherwise available to it and could have a
material adverse effect on the Company’s business.
If the Company is unable to fully avoid or remedy environmental damages or to obtain or renew any
environmental licenses and permits required for its current or future operations, it might be obligated
to suspend activities or enter into interim compliance measures pending completion of the required
remedy. The potential exposure may be significant and could have a material adverse effect on the
Company’s business and financial position. Any pollution liability incurred by the Company may have
an adverse effect on the result of its operation and financial position.
1.1.8
The Company operates in areas where there is a risk of war, armed conflicts, piracy
or terrorist attacks
War, conflicts, military tension and terrorist attacks may cause instability in the areas the Company is
operating, or may cause instability in the world’s financial and commercial markets. Political and
economic instability may occur in some of the geographic areas in which the Company operates (or
may operate in the future) and may contribute to disruptions of operations, loss or seizure of the
Vessels, kidnapping of marine crew or onshore employees, piracy and other adverse effects including
increased operating costs.
In addition, acts of terrorism and threats of armed conflicts in or around various areas in which the
Company operates (or may operate in the future) could limit or disrupt the Company’s operations,
including disruptions from evacuation of personnel, cancellation of contracts or the loss or injury of
personnel or loss or damage to its assets. Armed conflicts, terrorism and their effects on the Company
or its markets may have a significant adverse effect on the Company’s business and results of
operations in the future.
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1.1.9
Political and regulatory risks
The Company is subject to national and international laws and regulations governing the oil and gas
industry and offshore services industry. The Company is required to comply with various regulations
introduced by the authorities where the operations take place, various flag states and the guidelines
introduced by the International Maritime Organization (“IMO”) where applicable. Any change in or
introduction of new regulations, may increase the costs of operations, which could have an adverse
effect on the Company’s profitability.
Changes in the legislative and fiscal framework governing the activities of the oil and gas companies
could have a material impact on exploration and development activity or affect the Company’s
operations directly. In the event that the Company is unable at any time to comply with the existing
regulations or any changes in such regulations, or any new regulations introduced by local or
international bodies, its operations may be adversely affected. If the Company’s Vessels or operations
in general do not comply with the extensive regulations applicable from time to time, the demand for
the Company’s services may be negatively impacted either by affecting exploration, production and
development activity or by affecting the Company’s operations directly. Also, the Company’s
operations may be discontinued or suffer from other sanctions imposed by the relevant authorities.
Furthermore, changes in political regimes could constitute a material risk factor for the Company’s
operations in foreign countries. The Company’s operations partly take place in regions that may be
politically volatile. Changes in the legislative, political, regulatory and economic framework in any
region could adversely affect the Company’s operations directly or indirectly.
1.1.10
Risks associated with disputes
The Company and the Group may be subject to disputes with its customers, suppliers, contractors,
governmental authorities and other third parties. Such disputes could result in a loss of revenues and/or
claims from such third parties which may be uninsured and have a material adverse effect on the
Company and the Group, which again may materially and adversely affect the Company’s ability to
service the Bonds. Investors should be aware that it has been alleged in the press that some of the
Restis Companies outside the Group have illegally accepted Iranian money and shipped Iranian oil in
violation of the international sanctions.
1.1.11
Requisition or arrest of assets
The Vessels or other assets of the Company could be requisitioned by a government in the case of war
or other emergencies or become subject to arrest or piracy. This could significantly and adversely
affect the earnings of the Company as well as the Company’s liquidity and ability to service the
Bonds.
1.1.12
Risks related to intellectual property rights
The Company must observe third parties’ patent rights and intellectual rights. There is always an
inherent risk of third parties claiming that the technology being utilized on its vessels or in connection
with operations of its vessels, infringes upon third parties’ patents or intellectual property rights, and
any such claim, if successful, could have a material adverse effect on the Company’s results of
operation, including the Company’s ability to service the Bonds.
1.1.13
The Company is dependent on a sufficient number of skilled workers
The Company’s performance and success are dependent, in part, on the efforts and abilities of the key
senior management of Golden Energy Offshore Management AS. The loss of any executive officers,
other key employees or controlling shareholder in the said entity could have a material adverse effect
on the results of Company’s business and financial position.
The Company’s ability to remain profitable will depend substantially on Golden Energy Offshore
Management AS’ (through an agreement with Golden Energy Offshore Crewing AS, see section 8.3
and 8.6.3) ability to attract, train and retain skilled vessel crew, project managers, and executive
managers to its operations. The demand for skilled workers is high and the supply is limited,
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particularly during periods of high activity in the oil and natural gas industry. An increase in wages
paid by the Company’s competitors could result in the reduction of the Group’s skilled labour force,
increases in the wage rates it must pay, or both, which may in turn have an impact on the supply of
skilled workers to the Company. Golden Energy Offshore Management AS’ inability to attract, train
and retain a sufficient number of skilled workers to work for the Company could cause a material
adverse impact on the Company’s business.
1.1.14
The Company is controlled by a major shareholder
The Company is, through the Group, controlled by a major shareholder who controls 100% of the
outstanding shares (please see section 10.2 for more details). Decisions relating to the Company’s
business could be made which may negatively impact creditors. In particular, other Group companies
are currently involved in operations in the same market with similar vessels as the Company. Hence,
the interests of the Company’s sole ultimate owner may conflict with the interest of the Bondholders.
If the Company’s ultimate owner decides to direct future contracts to other Group companies than the
Company, this may have a materially adverse effect on the Company’s ability to service the Bonds.
1.1.15
Work stoppages or other labour disputes
The workforce of the Company are employed through other Group companies. The Group employs
members of various unions and has entered into collective bargaining agreements. The employment of
a unionised work force limits flexibility in dealing with employees and may lead to increased
operating costs. In addition, if there is a material disagreement between the Group and any of these
unions, the Group’s and the Company’s business could be affected by the increased costs or reduced
operations associated with industrial disputes. Any prolonged work stoppage or strike onboard any of
the Vessels operated by the Company could result in a material adverse effect on the Company’s
financial condition, results of operations and prospects.
1.1.16
Risks related to the fair market value appraisals and limiting conditions
The fair market value appraisals of the Vessels were provided to the Company by two independent and
recognized offshore shipbrokers, in good faith to the best of their knowledge and are solely a
statement of their opinion as to the fair and reasonable market value of the Vessels at the date given.
No assurance can be given that the estimate can be sustained or are realizable in an actual transaction.
Assuming reasonably unchanged market conditions, any transaction may require a certain period of
time in order to obtain the fair market value estimates on a cash basis.
1.1.17
Certain information in this Registration Document is derived from independent
consultant reports based on projections of future performance
Certain information set forth in this Registration Document is derived from independent consultant
reports and information provided by third parties that include projections that are based on
assumptions and current expectations about future events and financial trends. There can be no
assurance that these projections will prove to be accurate. The information provided by any such third
parties and the conclusions contained in these independent consultant reports are also, in certain cases,
based on information derived from third parties’ internal general data bases, which may not have been
subject to independent verification.
Because of the subjective judgments and inherent uncertainties of projections and because the
projections are based on a number of assumptions that are subject to significant uncertainties and
contingencies beyond the Company’s control, there can be no assurance that the projections or
conclusions derived therefrom will be realized. The actual cost, technical feasibility, commercial
feasibility, cash flow, profit margin and risk exposure of the Company or its business may be
significantly less favourable than those suggested by or projected in the independent consultant
reports.
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1.1.18
The Company’s insurance may be insufficient to cover losses that may occur to the
Vessels or result from their operations.
The Company’s operations are subject to risks inherent in the shipping and marine industry. The
Company’s policy is to maintain insurances in accordance with industry standards which it considers
appropriate for its business including hull and machinery and protection and indemnity insurance. The
Company’s insurance is intended to cover risks associated with the conduct of its business, as well as
environmental damage and pollution coverage. However, insurance against all applicable risks and
liabilities may not be available and, where insurance is procured, the amount recoverable may not be
sufficient to compensate the Company for the relevant loss. The Company cannot assure that it has
adequately insured against all risks, that any future claims will be paid, or that it will be able to
procure adequate insurance coverage at commercially reasonable rates in the future.
The Company may elect not to carry insurance in respect of some risks, for example, business
interruption. Consequently, the Company could be exposed to substantial liabilities or loss. Under
certain contracts or legal regimes, the Company may potentially be exposed to unlimited liability for
losses caused by its negligence or the negligence of its subcontractors and such liability may not be
adequately covered by the Company’s insurance policies.
1.1.19
Substantial time may lapse before payment is made under the relevant Vessel’s
insurances in the event of intervention by a foreign state power or piracy.
If the Company is deprived of a Vessel by intervention by a foreign state power or a Vessel has been
captured by pirates or taken away from the Company by similar unlawful interventions, the insurances
taken out by the Company will entitle the Company to payment under the insurances. However,
substantial time may lapse before the Company is entitled to claim for a total loss under the insurances
of the Vessels in such circumstances.
1.2
1.2.1
Risks Related to the Company’s Financial Position and Liquidity
The Company is exposed to currency exchange risk
The Company’s functional and reporting currency is NOK. However, the Company receives
significant revenue in other currencies, particularly in USD, and incurs significant costs in USD and
NOK. Given the difference between the currency of revenues and costs, the Company may not be able
to match revenues with costs denominated in the same currency. Certain countries, in which the
Vessels may operate, particularly in West Africa where Energy Scout currently operates, may enact or
apply rules requiring the Company to invoice a significant percentage of its services for Vessels
operating in such countries in the local currency. In addition, the Company does not have any hedging
arrangements in place to minimise the effects of such foreign exchange movements. Any adverse
movements in these currencies or changes in local laws requiring the Company to invoice in local
currencies or increase the percentage of revenue the Company is required to invoice in local currency
may materially adversely affect the Company’s business, financial condition, results of operations and
prospects.
1.2.2
Tax risk
The Company’s operations and personnel are located or incorporated in various jurisdictions and are
subject to a number of tax regimes. The final determination of the Company’s tax liabilities involves
the interpretation of local tax laws, tax treaties and the determination of tax authorities in each
jurisdiction. Changes in the operating environment, location of assets and personnel, changes in tax
laws or practices and currency/repatriation controls could adversely impact the Company’s financial
performance.
1.2.3
The value of the Vessels and other assets of the Company may vary over time
Due to changes in the demand for the Company’s Vessels, availability of other Vessels in the market
or changes to the level of E&P activity of the Company’s existing and future customers, the value of
the Vessels and other assets of the Company may be reduced.
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There can be no assurance that the value of the Vessels and/or the other secured assets will be
sufficient to cover all the outstanding Bonds together with accrued interest and expenses in case of a
default and/or if the Company is insolvent, wound up or goes into liquidation. The value of the
Vessels and other secured assets may fluctuate with market conditions. Any downturn in the market
could have a material adverse effect on the fair market value of the collateral security. A sale of any of
the Vessels and/or other assets could be forced at prices significantly below fair market value and
could result in recoveries being insufficient to cover the Company’s obligations and result in a loss for
holders of the Bonds.
1.2.4
Additional capital requirements
The Company may require additional capital in the future due to unforeseen liabilities or in order for it
to take advantage of opportunities for acquisitions, joint ventures or other business opportunities that
may be presented to it. There can be no assurance that the Company will be able to obtain necessary
financing in a timely manner on acceptable terms.
1.2.5
The Company may be unable to redeem the Bonds on the Final Maturity Date
The Company's ability to service its indebtedness depends on many factors beyond its control, and no
assurance can be given that the Company will be able to make scheduled payments under the Bond.
Pursuant to the Bond Agreement, the Bonds shall be payable in full on the Final Maturity Date. In the
event that the Company is unable to meet its ongoing debt obligations or has insufficient cash to
redeem the Bonds in full on the Final Maturity Date, no assurance can be given that it will be able to
obtain the necessary debt or equity refinancing, or that such refinancing will be on terms acceptable to
the Company. A failure to obtain required refinancing would have a material adverse effect on the
Company's business, operations and financial condition and the ability to repay the Bonds on the Final
Maturity Date.
1.3
1.3.1
Risks Related to Angola
The Angolan economy is largely dependent on its oil production and global prices of
oil
According to the CIA World Factbook’s latest available information (updated on 11 April 2014), oil
production and its supporting activities contribute 85% of Angola’s GDP. The historically high oil
prices over the past several years has contributed to an increase in Angola’s macroeconomic stability.
However, if oil prices or Angolan production levels decline, there may be an adverse impact on the
revenue earned in Angola. A decline in oil prices or a reduction in Angola’s oil production could have
a material adverse effect on the Angolan economy and, in turn, on the Company.
1.3.2
Risks related to corrupt practices
The Group and thereby the Company has put in place internal regulations to remain compliant with all
applicable corruption compliance regulations and maintains a zero tolerance policy towards bribery by
any of its employees and agents. Both the Group and the Company are also subject to external audits
and controls carried out by representatives of its contracting parties. However, although the Group and
the Company believe all their agency agreements are entered into on market terms, there can be no
assurance that any of the agents acting on behalf of the Group or the Company will not engage in
corrupt activities without the knowledge of the Group or the Company. It is emphasised that Angola is
ranked in 153th position out of 177 countries in the Transparency International Corruptions
Perceptions Index 2013. Corrupt practices of third parties or anyone working for the Group or the
Company, or allegations of such practices, may have an adverse impact on the reputation, performance
and financial condition of the Company.
1.3.3
Risks related to emerging markets
Investments in emerging markets are generally only suitable for sophisticated investors who fully
appreciate the significance of the risks involved in, and are familiar with, investing in emerging
markets. Investors should also note that emerging markets are subject to rapid change and that the
information set forth in this Registration Document may become outdated relatively quickly.
10
Moreover, financial turmoil in any emerging market country may tend to adversely affect prices in
equity markets of other emerging market countries as investors move their money to more stable,
developed markets. Financial problems or an increase in the perceived risks associated with investing
in emerging economies could dampen foreign investment in West Africa. In addition, during such
times, companies that operate in emerging markets can face severe liquidity constraints as foreign
funding sources are withdrawn. Thus, financial turmoil in any emerging market country in which the
Company operates could adversely affect the Company’s business, financial condition, results of
operations and prospects as well as result in a decrease in the price of the Bonds.
Companies operating in emerging markets such as the Company may be particularly susceptible to
disruptions in the capital markets and the reduced availability of credit or the increased cost of debt,
which could result in experiencing financial difficulty. In addition, the availability of credit to entities
operating within emerging markets is significantly influenced by levels of investor confidence in such
markets as a whole. As a result factors that impact market confidence (for example, a decrease in
credit ratings or state or central bank intervention) could affect the price or availability of funding for
entities within any of these markets.
In addition to the above mentioned risks, operations in emerging market countries may be affected by:
-
political and economic instability;
civil strife, acts of war, guerrilla activities and insurrection;
competition from existing market participants that may have a longer operating history in or
greater familiarity with the foreign markets it enters;
government interventions and protectionism;
potential adverse changes in laws and regulatory practices, including import and export
license requirements, tariffs, legal structures and tax laws;
cancellation of contractual rights;
trade barriers;
difficulties in staffing and managing operations;
import and export restrictions;
adverse tax consequences;
lack of well-developed legal systems that could make it difficult for the Company to enforce
its contractual rights;
security and safety of employees;
restrictions on the right to convert or repatriate currency or export assets;
greater risk of uncollectible accounts and longer collection cycles;
currency fluctuations;
indigenisation and empowerment programmes;
logistical and communications challenges; and
changes in labour conditions.
Many of these countries and regions are in various stages of developing institutions and legal and
regulatory systems that are characteristic of democracies. However, institutions in these countries and
regions may not be as firmly established as they are in countries in the developed world. Some
countries and regions are also in the process of transitioning to a market economy and, as a result, are
experiencing changes in their economies and their government policies that can affect any of the
Company’s operations or investments in these countries and regions. Moreover, the procedural
safeguards of the new legal and regulatory regimes in these countries and regions are still being
developed and, therefore, existing laws and regulations may be applied inconsistently. In some
circumstances, it may not be possible to obtain the legal remedies provided under those laws and
regulations in a timely manner. As the political, economic and legal environments remain subject to
continuous development, investors in these countries and regions face uncertainty as to the security of
their investments. Any unexpected changes in the political or economic conditions in these or
neighbouring countries may have a material adverse effect on the Company’s business, financial
condition, results of operations and prospects.
11
2
PERSONS RESPONSIBLE
2.1
Persons responsible for the information
Persons responsible for the information given in the Registration Document are as follows:
Golden Energy Offshore Services AS, St Olavs plass 1, 6002 Aalesund, Norway.
2.2
Declaration by persons responsible
Golden Energy Offshore Services AS confirms that, having taken all reasonable care to ensure that
such is the case, the information contained in the Registration Document is, to the best of its
knowledge, in accordance with the facts and contains no omission likely to affect its import.
Aalesund, 28 November 2014
Per Ivar Fagervoll
Chief Executive Officer
Golden Energy Offshore Services AS
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3
INDEPENDENT AUDITORS
The Company’s auditor is Ernst & Young AS, Dronning Eufemias gate 6, 0191 Oslo, Norway. State
authorised public accountant Amund Frøysa has been responsible for the auditor’s report for the
financial period ended 30 June 2014.
Ernst & Young AS is a member of the Norwegian Institute of Public Accountants.
Ernst & Young AS was elected new auditor of the Company in a board meeting 8 May 2014 in
connection with Golden Energy Offshore AS’ acquisition of the Company.
From the date of the Company’s incorporation till 8 May 2014 the Company’s auditor was RSM
Hasner Kjestrup & Wiggen AS, Filipstad Brygge 1, 0252 Oslo. RSM Hasner Kjestrup & Wiggen AS
is a member of the Norwegian Institute of Public Accountants.
13
4
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS
This Registration Document includes forward-looking statements (“Forward-looking Statements”)
that reflect the Company’s current views with respect to future events and financial and operational
performance; including but not limited to, statements relating to the risks specific to the Group’s
business, future earnings from charter contracts, the ability to distribute dividends, the ability to
refinance existing indebtedness, solution to contractual disagreements with counterparties, the
implementation of stratetic initiatives as well as other statements relating to the Company’s future
business development and economic performance. These Forward-looking Statements can be
indentified by the use of forward-looking terminology; including the terms “assumes”, “projects”,
“forecasts”, “estimates”, “expects”, “anticipates”, “believes”, “plans”, “intends”, “may”, “might”,
“will”, “would”, “can”, “could”, “should” or, in each case, their negative or other variations or
comparable terminology. These Forward-looking Statements are not historical facts. They appear in a
number of places throughout this Registration Document, including inter alia; section 6 “Business
Overview”, Section 7 “Industry Overview” and Section 11 “Financial Information” and include
statements regarding the Company’s intentions, beliefs or current expectations concerning, among
other things, goals, objectives, financial condition and result of operations, liquidity, outlook and
prospects, growth, strategies, impact of regulatory initiatives, capital resources and capital expenditure
and dividend targets, and the industry trends and developments in the markets in which the Company
operates.
Prospective investors in the Bonds are cautioned that Forward-looking Statements are not guarantees
of future performance and that the Company’s actual financial position, operationg results and
liquidity, and the development of the industry in which the Company operates may differ materially
from those contained in or suggested by the Forward-looking Statements contained in this Registration
Document. The Company cannot guarantee that the intentions, beliefs or current expectations that
these Forward-looking Statements are based on will occur.
By their nature, Forward-looking Statements involve and are subject to known and unknown risks,
uncertainties and assumptions as they relate to events and depend on circumstances that may or may
not occur in the future. Because of these known and unknown risks, uncertainties and assumptions, the
outcome may differ materially from those set out in the Forward-looking Statements. Should one or
more of these risks and uncertainties materialize, or should any underlying assumption prove to be
incorrect, the Company’s business, actual financial condition, cash flows or results of operations could
differ materially from that described herein as anticipated, believed, estimated or expected.
The information contained in this Registration Document, including the information set out under
Section 1 “Risk Factors”, identitifies additional factors that could affect the Company’s financial
position, operationg results, liquidity and performance. Prospective investors in the Bonds are urged
to read all sections of this Registration Document and, in particular Section 1 “Risk Factors” for a
more complete discussion of the factors that could affect the Company’s future performance and the
industry in which the Company operates when considering an investment in the Bonds.
Except as required according to Section 7-15 of the Norwegian Securities Trading Act, the Company
undertakes no obligation to publicly update or publicly revise any Forward-looking Statement,
whether as a result of new information, future events or otherwise. All subsequent written or oral
Forward-looking Statements attributable to the Company or the persons acting on behalf of the
Company are expressly qualified in their entirety by the cautionary statements referred to above and
contained elsewhere in this Registration Document.
14
5
INFORMATION ABOUT THE COMPANY
5.1
Name, incorporation, registration number, domicile and legal form
The legal and commercial name of the Company is Golden Energy Offshore Services AS. The
Company was incorporated 16 December 2013 in Oslo, Norway under the name Startfase 647 AS.
The Company was acquired by Golden Energy Offshore AS and changed its name to Golden Energy
Offshore Services AS 8 May 2014.
The Company is organised as a private limited company and is incorporated under the laws of Norway
and registered in the Norwegian Register of Business Enterprises under the registration number 913
011 384. The Company’s registered office is at St Olavs plass 1, 6002 Aalesund, Norway. The
Company’s web address is: www.geoff.no and the Company’s telephone number is +47 70 10 26 60.
5.2
Memorandum and Articles of Association
In accordance with § 3 of the Company’s Articles of Association, the Company’s objective is to
operate as a shipping company with connected operation.
A copy of the Company’s Memorandum can be obtained by contacting the Company. The Company’s
Articles of Association are enclosed as Appendix 1 to this Registration Document.
5.3
History and development of the Company
The Company was incorporated in December 2013, and there was no activity in the Company till it
was acquired by the Group 8 May 2014.
On 28 May 2014 the Company completed a Bond issue of NOK 370,000,000, and on 30 May 2014 the
Company acquired the Vessels M/V Energy Swan and M/V Energy Scout as described in section 5.6
below.
5.4
Selected financial information
Below is a summary of the Company’s balance sheet per 30 June 2014.
Total fixed assets
Total current assets
Total assets
NOK
500 081 721
32 408 830
532 490 552
Total long-term debt
Total current liabilities
Total liabilities
Total equity and liabilities
354 407 049
25 178 268
379 585 317
532 490 552
Please see further details about the Company’s financial situation in Chapter 11, “Financial
Information”.
5.5
Recent events relevant to the evaluation of the Company’s solvency
There has been no recent events particular to the Company which are to a material extent relevant to
the evaluation of the Company’s solvency.
5.6
Investments
Upon the closing of the Bond Issue, the Company became the sole beneficial owner of the Vessels
M/V Energy Swan and M/V Energy Scout 30 May 2014.
Prior to the issuance of the Bonds, the Vessels were owned 100% by GEOS, a company in the Golden
Energy Offshore Group. The only material assets of this company were the Vessels, and GEOS was
liquidated after the completion of the sale of the Vessels to the Company.
15
Simultaneously with disbursement of the proceeds from the Bond Issue, the Vessels were purchased
by the Company from GEOS at broker values, being NOK 315 million for Energy Swan and
NOK 172.5 million for Energy Scout. See also information in section 6.3.1 and 6.4.1. The purchase of
the Vessels were initially fully financed by the net proceeds from the Bond Issue and the balance was
financed with Seller’s Credit. The Seller’s Credit was converted into Company equity immediately
after closing of the acquisition of the Vessels. The remaining NOK 360 million needed to fund the
acquisition of the Vessels was funded by the net proceeds from the Bond Issue.
5.7
Material contracts
Except for agreements entered into as part of the Company’s ordinary course of business, the
Company has not entered into any material contracts, which could result in any Group member being
under an obligation or entitlement that is material to the Company’s ability to meet its obligation to
security holders in respect of the securities being issued.
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6
BUSINESS OVERVIEW
6.1
Principal activities
The Company is an offshore service company, providing platform supply vessels to major oil
companies, and its principal activity is to own, charter out and operate vessels, with connected
operations. The Company is the sole beneficial owner of the Vessels M/V Energy Swan and M/V
Energy Scout. The Company’s income derives from the charter of these two Vessels. Further
information about each of the Vessels is included in section 6.3 and 6.4 below.
6.2
Vision and strategy
The Company is a start-up company established in relation to the Bond Issue. The Golden Energy
Offshore Group in which the Company is part of, is however a well-established fully integrated ship
owning company, operating modern and high spec offshore vessels for the global and gas service
industry with a history dating back in excess of 85 years. See section 8.1 and 8.6 for more information
of the Group.
The strategy of the Company is;
-
To be customer focused:
by delivering high and predictable quality services in accordance with customer demands
by actively developing its services in co-operation with each customer;
-
To be highly commited to safe operations:
to continue the Vessels’ superior QHSE track record with only one minor Lost Time
Injury (LTI) and no Medical Treatment Incident (MTI) for the past three years;
to complete the on-going seamless certification process for ISO 9001, ISO 14001,
OHSAS 18001 and ISO 50001;
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To create an optimal return for its investors by continuiosly striving to make the Company’s
operations as cost effective as possible:
by having a dedicated focus on medium to large PSVs;
by allocating the Company’s management services to the Group’s management company.
Both of the Company’s Vessels are chartered on a long-term basis to oil majors, thus the Company’s
main aim going forward is to continue to deliver quality services to these customers.
The existing contracts may be subject to early termination as further described in section 6.3.2 and
6.4.3 below. Also, the charter for the vessel Energy Scout expires in June 2015 if not extended. The
Company aims to keep the Vessels chartered at all times, however, in addition to the Company’s own
performance, its ability to enter into a new charter on favourable terms and conditions depends on the
worldwide market’s demand for offshore vessels in general.
6.3
6.3.1
Energy Swan
About Energy Swan
Energy Swan was built in 2005 at the shipyard Brattvaag Skipsverft AS. The vessel is of ST 216
design and is a large PSV/pipe carrier vessel with shafts directly coupled to two efficient Azipull main
thrusters astern, and 3 electrical CCP tunnel thrusters in the bow. The vessel is designed to meet the
general market, in addition to be suitable for field support and ROV duties. The vessel is equipped
with DP2 class dynamic positioning system (Nautronix NMS6000). The hull is designed for low fuel
consumption and excellent sea-keeping in addition to low noise and vibration in hull and
superstructure to ensure high comfort. The vessel is designed to meet the class notification “Clean”
and high focus has been given to reduce fuel consumption. Please see key specifications of the vessel
below:
17
Type: Multipurpose field / PSV
Built: 2005
Shipyard: Brattvaag Skipsverft AS
IMO no.: 9319985
Call sign: LFUR
Flag: Norway
Class: NV, 1A1, SF, E0, DYNPOS
AUTR, LFL, OIL-REC, NOFO,
CLEAN, ICE C, COMFPRT-V, DK(+)
and HL (2.8)
CLASS ID: DNV 25667
LOA: 93.40m
Breadth mld.: 19.20m
Engine power: 2 x Caterpillar
type 3612, 3800kW each
Cargo deck area: 1041m2
Gross tonnage: 4180T
Economy speed: 12KNTS@ 12
MT
Full speed: 18,5KNTS@ 32,5 MT
Since its delivery, the vessel has been chartered to several different oil and offshore companies such as
ConocoPhillips, Statoil (former StatoilHydro), Marathon Norway, BP Norge, DONG and Allseas. For
the past 5 years, the vessel has generated in excess of NOK 145 million. Currently, the Vessel is
chartered to ConocoPhillips but expected to replace its frontrunner Energy Insula on the Time Charter
with Wintershall Norge AS in the beginning of June 2014, please refer to section 6.3.2 below for more
details.
The charter free value of the vessel is NOK 315 million, based on information of the vessel stipulated
in standard reference books by two independent and recognised offshore shipbrokers as of 31
December 2013. The validity of employment contracts or the standing of the Charters has not been
assessed in connection with the valuation.
6.3.2
Energy Swan Time Charter
The Charter for Energy Swan was entered into on 6 September 2013 (“Swan Charter”) by and between
GEOS and Wintershall Norge AS (“Wintershall”), a wholly owned subsidiary of the German oil major
Wintershall, and was transferred from GEOS to the Company by novation in connection with the
Company’s acquisition of the Vessels. The vessel’s area of operation is the Norwegian continental
shelf, mainly the North Sea. The Charter is based on an amended form of SUPPLYTIME 2005 and
includes the following terms;
Hire and Payments
The period of hire is four (4) years counting from 30 September 2013 with an option to extend the
Swan Charter for a period of 1 year x 4 by giving Company a 30 days’ notice.
The hire is NOK 153,000 per day which consist of OPEX (11.1%), crew cost (36.4%) and financing
cost (52.5%). A 2 x 1.25% commission fee is deducted from the hire.
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The Swan Charter hire will be firm for a period of 12 months. In the following period, crew costs and
operating costs will be adjusted on a yearly basis. The crew cost element shall be adjusted in
accordance with the last officially negotiated and published Seafarers “tariff for
offshoreservicefartøyer” issued by the Norwegian Shipowners’ Association (Nw. Norges
Rederiforbund). The operating cost element shall be escalated in accordance with the change in the
consumer price index (KPI) SSB-table 03013 for the period in question. Hire payable by Wintershall
in any declared option period shall be the same as in the original hire period, including relevant
adjustments. First escalation review was 1 October 2014.
Hire is payable monthly in arrears to the Company. If there is failure to pay hire by the due date, the
Company shall notify Wintershall in writing of such failure. If after 30 days of such notice the hire
remains unpaid, the Company may suspend the performance of any or all of its obligations under the
Charter. Non-payment of hire following 30 days upon receipt of such notice will also entitle the
Company to withdraw its vessel from the Swan Charter.
The Company shall provide and pay for all lubricants, equipment for normal sea fastening, provisions,
wages and all other expenses of the master, officer and crew; all maintenance and repair of the vessel’s
hull, machinery and equipment. Wintershall shall cover the cost for compulsory pilotage, subject to
the Company having a system in place to ensure that relevant officers obtain PEC as soon as possible.
The vessel shall be redelivered to at the port of Mongstad on the expiration day or on the date of early
termination of the Charter.
Suspension of hire
If as a result of any deficiency of crew, or of the Company’s stores, strike of master, officers and crew,
breakdown of machinery, damage to hull or other accidents to the vessel, or as a result of other
circumstances for which the Company is responsible, the vessel is prevented from operating, no hire
shall be payable by Wintershall in respect of any time lost provided that Wintershall is informed about
all breakdowns or accident situations. Any hire paid in advance shall be adjusted accordingly.
The Company’s liability for any loss, damage or delay sustained by Wintershall as a result of the
vessel being prevented from working by any cause whatsoever shall be limited to suspension of hire.
Early Termination
Wintershall may terminate the Swan Charter at any time by giving written notice to the Company.
Upon such early termination, the Company will be entitled to the following percentage of the
remaining Swan Charter hire for any remaining firm and/or declared optional Swan Charter period; If
90 days’ notice or more, 50%. If 60 days or more, 60%. If 30 days or more, 70%.
If a breakdown of the Company’s equipment or the vessel occurs at any time during the term of the
Swan Charter resulting in the Company being unable to perform their obligations under the Charter for
a period of more than 10 consecutive days, Wintershall and/or the Company may terminate the Swan
Charter unless the Company has initiated reasonable steps within 48 hours to remedy the nonperformance or provided the charterers with a substitute vessel. Termination as a result of breakdown
shall not relieve the charterers of any obligation for hire and any other payments.
Wintershall is also entitled to terminate the Swan Charter if the vessel is off-hire for an aggregate
period of 30 days during a 12 month period.
Insurances
The Company shall procure and maintain in effect for the duration of the Swan Charter; (i) Marine
hull insurance, (ii) Protection and indemnity (Limit of cover no less than USD 50,000,000, (iii)
Comprehensive general insurance (Bodily Injury USD 25,000,000 per person, property damage USD
50,000,000 per occurrence), (iv) Workmen’s compensation and employer’s liability insurance for
employees, (v) Comprehensive general automobile liability insurance; and (vi) Any other insurance
19
that Company acting as diligent, prudent and competent considers appropriate in terms of type,
coverage and limit, taking into account the nature, extent, scope and location of the services.
Subcontracting and assignment of the Swan Charter
Wintershall may sublease the vessel but shall always remain responsible to the the for the fulfilment of
its obligations under the Swan Charter.
The Company may not assign or transfer any part of the Swan Charter without the written approval of
Wintershall, which approval shall not be unreasonably withheld. Approval by Wintershall of such
sublease or assignment shall not relieve the Company of their responsibility for due performance of
the part of the services which is sublet or assigned.
Governing law and jurisdiction
The Swan Charter is governed by Norwegian law with disputes to be resolved by arbitration in
accordance with the Norwegian arbitration Act in Stavanger.
6.4
6.4.1
Energy Scout
About Energy Scout
Energy Scout was built in 2005 at the shipyard Brevik Construction AS. The vessel is of well-known
UT 755-L design and is a mechanically driven supply ship / pipe carrier, which is designed to meet the
general market. The vessel is designed for field supply and ROV duties, equipped with 4 thrusters and
DP 2 class dynamic positioning system and is ideal for all kind of offshore services worldwide. Please
see key specifications of the vessel below:
Type: Multipurpose Field Supply /
PSV
Built: 2005
Shipyard: Brevik Construction AS
IMO no.: 9322188
Call sign: LMWM3
Flag: Norway
Class: 1A1, ICE-C Fire Fighter I
OILREC SF, LFL, E0, DYNPOSAUTR CLEAN DK(+) HL (2.5)
TMON
CLASS ID: DNV 25595
LOA: 71,90m
Breadth mld.: 16,5
Engine power: 2 x RR Marine
Type KRMB-9, 2005kW each
Cargo deck area: 681m2
Gross tonnage: 2152T
Economy speed: 12KNTS@
10MT
Full speed: 14KNTS@ 18 MT
Since its delivery, the vessel has been chartered to inter alia the oil major Statoil (former
StatoilHydro) and Total E&P Congo. For the past 5 years, the vessel has generated in excess of
20
NOK 190 million. Currently, the Vessel is chartered to Interoil Angola Limitada, please see section
6.4.2 below for more details.
The charter free value of the vessel is NOK 172.5 million, based on information of the vessel
stipulated in standard reference books by two independent and recognised offshore shipbrokers as of
31 December 2013. The validity of employment contracts or the standing of the charters has not been
assessed in connection with the valuation.
6.4.2
The Energy Scout Time Charter
On 25 June 2012, GEOS signed a Time Charter for Energy Scout (“Interoil Charter”) with Interoil
Angola Limitada (“Interoil”) on a back-to-back basis (i.e. reflecting the terms and conditions) of a
charter party agreement (“Total Service Agreement”), entered into by and between Interoil and Total
E&P Angola Lda (“Total”), a wholly owned subsidiary of the French oil major Total. Pursuant to the
Total Service Agreement, Interoil shall provide Total services in support of Total’s petroleum
activities, mainly offshore Angola and Energy Scout maintains general supply duties for Total with
base port Luanda, Angola. The Interoil Charter was transferred from GEOS to the Company by
novation in connection with the Company’s acquisition of the Vessels.
The terms of the Interoil Charter are substantially on “back-to-back” terms with the Total Service
Agreement, for the exception of certain provisions relating to e.g. hire and payments. Please refer to
Section 6.4.4 below for an overview of the terms of the Interoil Charter which differ from the terms of
the Total Service Agreement.
6.4.3
Terms of the Total Service Agreement
Hire and payments
The period of hire is three (3) years. The commencement date was 1 July 2012 and redelivery date is
1 July 2015 or on the completion date or date of early termination. Total have the right to extend
subject to a written notice to Interoil not less than thirty (30) days before completion day.
Total shall pay all non-disputed invoices within thirty (30) days as from the end of the month of their
issuance. Interoil is not entitled to payment of any hire rate during breakdown or Total loss of the
vessel.
In default of payment by Total, Interoil is entitled to withdraw the vessel and suspend the performance
of any and all of their obligations under the Total Service Agreement. Interoil shall have no
responsibility whatsoever for any consequences thereof, and hire shall continue to accrue.
Suspension of hire
Should Interoil during the course of the Total Service Agreement fail to (i) supply sufficient
equipment, (ii) provide sufficient number of properly skilled personnel, (iii) satisfy the safety
requirements of the Total Service Agreement, which would hinder in any way the performance of the
services, Total shall notify Interoil of such deficiency and shall be entitled at its own discretion (a) to
continue the services subject to paying at reduced rate, and/or (b) to suspend the performance of
Interoil's services and suspend payment of hire.
Interoil shall bear all costs and expenses, associated with correcting the above mentioned deficiencies
including any extra costs and expenses for transportation.
Total shall, at its sole discretion, at any time, have the right to suspend the services of Interoil, subject
to 15 days prior notice, for operational reasons without fault of Interoil, for a minimum period of 21
consecutive days. In the event of such suspension by Total, Interoil shall be remunerated at stand-by
rate.
Interoil is entitled to terminate the Total Service Agreement by written notice if the duration of the
suspension as mentioned above exceeds ninety (90) consecutive days or if the cumulative duration
21
over one (1) year for a number of different suspensions exceeds ninety (90) days. In the event of such
termination, Interoil shall be remunerated by Total at hire rate until the delivery date of the vessel and
demobilisation fee shall be paid.
Early Termination
Total may terminate the Total Service Agreement subject to prior written notice (i) if Interoil fails to
mobilise by notified delivery date, (ii) if Interoil is in material breach of any of its obligations under
the Total Service Agreement requirements and/or has not remedied such breach or has not resumed
satisfactorily the performance of the services within seven (7) days, (iii) if the vessel’s unavailability
lasts for more than 14 days, and/or (iv) in case of bankruptcy, liquidation or take-over of Interoil or (v)
in case of change of flag or contractorship without Total’s prior written approval. No mobilisation fee
or any other compensation shall be paid and Interoil shall remain responsible to demobilise at his own
cost the vessel from the worksite upon receipt of the notice of termination by Total.
In the event of force majeure preventing operations beyond thirty (30) days, or if in Total’s reasonable
opinion the force majeure conditions are expected to last longer than thirty (30) days, either party shall
be entitled to terminate the Total Service Agreement by notice to the other party, without having to
pay any indemnity. For the period Interoil is prevented to perform the services for reason of force
majeure, no rate or other compensation whatsoever shall be paid by Total to Interoil.
Subcontracting and assignment
Subject to prior written notice given to Interoil, Total may sublet the vessel, without prejudice to the
respective rights and obligations of either party under this contract, to any third party providing such
party is not a competitor of Interoil.
Total may assign all or part of their rights and obligations defined in the Total Service Agreement
provided previous notice to Interoil and that Total shall remain responsible to Interoil for due
performance of the Total Service Agreement.
Insurances
Interoil shall at his own cost and expense obtain from insurers acceptable to Total the following
insurances:
a) Workmen’s compensation insurance.
b) Employer’s liability Insurance with a minimum limit of USD 5,000,000 per occurrence or the
limit required by applicable law, whichever is highest.
c) Protection and indemnity insurance for no less than the value of the vessel or the full amount
stated by applicable laws limiting Interoil's liability or USD 5,000,000 whichever is the
highest.
d) Hull and machinery and possible increased value insurance covering the full value of the
vessel, her equipment and appurtenances. This insurance may be subject to a deductible for
Interoil of no more than USD 100,000 or otherwise as agreed in writing by Total.
e) Full towage liability insurance.
6.4.4
Terms of the Interoil Charter which differ from the Total Service Agreement
The terms of the Interoil Charter are “back-to-back” with the terms of the Total Service Agreement
with the exception of inter alia the following provisions:
-
22
The day rate payable by Interoil to the Company is USD 25,950.- per day pro rata including
5.25% WHT, lubes and DGPS signal costs, victualing costs for vessel’s crew, excluding
fuel/water. Payment of invoices shall be made directly to the Company thirty days after the
end of the calendar month of non-disputed invoices. The rates and fees under the Interoil
Charter shall remain fixed and firm and are not subject to revision.
-
The Company shall be responsible for the operation and technical services to be provided in
connection with the Total Service Agreement which includes making the vessel available to
Interoil for all purposes of the Total Service Agreement and for its duration.
-
The hire is a firm period of three (3) years, from the date of commencement of the contract
between Interoil and Total and is co-terminus with this Total Service Agreement.
-
Interoil is responsible for payment of any local taxes (Excluded the WHT tax included on all
invoices from the Company), duties, levies and any liability towards government, or quasigovernmental authorities, concerning this revenue generated by this agreement.
-
If, after 30 days following the 30 days end of invoicing month, payment is not received by the
Company, the Company may require Interoil to make payment of the amount due within 15
banking days of receipt of notification from the Company; failing which the Company shall
have the right to withdraw the vessel without prejudice of any claim the Company may have
against Interoil under the Interoil Charter. While payment remains due, the Company shall be
entitled to suspend the performance of any of their obligations hereunder. They shall not have
any responsibility whatsoever for any consequences thereof and hire shall continue to accrue
and any extra expenses resulting from such suspension shall be for Interoil account.
-
The parties are in agreement to endeavour to resolve any disputes, controversy or claim
arising out of or in relation to or in connection with the Interoil Charter, first through
negotiation. In any event of dispute, either party may refer the dispute to arbitration in
accordance with the arbitration laws of England. The arbitration shall be held in London and
heard by three arbitrators. Notwithstanding, either party may approach a court of competent
jurisdiction for an interdict or similar urgent relief.
-
Interoil indemnifies the Company against any losses and damages that it may suffer for nonperformance by Interoil, of any of the provisions of the Total Service Agreement, as
established in a court of law or arbitration, and also any lien and third party rights exercised
against the Company and the vessel, and in that connection Interoil shall advance funds,
provide security and generally defend any claims that may be made against the vessel.
-
Interoil shall not engage in any contractual negotiations and shall not discuss any
amendments, changes or whatever to the contract with Total, without the written approval of
the Company.
In addition, Interoil shall provide the Company certain services during this Interoil Charter without
any additional cost to the Company whatsoever, e.g. regular liaison and co-ordination with Total, taxes
administration and invoice and payment control.
Interoil Charter guarantee
AOS Cyprus Holding (“AOS”) with a 99% ownership of Interoil, guarantees unconditionally and
irrevocably as primary obligor an unlimited liability on behalf of Interoil, as security for the payment
by Interoil of sums due under this charter party. AOS guarantees to pay any sum or sums due from
Interoil to the Company under or in connection with the Interoil Charter, including any recoverable
costs and expenses that may be incurred by the Company in enforcing any of their rights under or in
connection with the charter party, whether in legal proceedings or otherwise; and any liability on the
part of the Company to pay the cost of bunkers, port charges, stevedoring costs or any other costs
arising during the course of the charter party which is the responsibility of Interoil.
If within ten banking days after receipt of a demand AOS receives (i) a written notice from Interoil
stating that they dispute the Company’s claim for the above mentioned guaranteed amount and (ii)
evidence that the matter has been referred to court or arbitration under the Interoil Charter, then AOS
shall not be obliged to make any payment under this guarantee until latest thirty days after the dispute
has been finally settled, in each case following the exhaustion of any appeal process therefrom. AOS
23
shall immediately provide the Company with a copy of the written notice and the evidence of referral
of the matter to court or arbitration.
All sums payable by AOS shall be paid free and clear of set-off or counterclaim or any other deduction
or withholding whatsoever.
Before exercising any of the rights, powers or remedies conferred upon them under the guarantee or
law to make any demand of Interoil, the Company may not take any action or obtain judgement in any
court against Interoil, make or file any claim or proof in a winding-up, liquidation, entering into
administration or dissolution of Interoil; or enforce or seek to enforce any other security taken in
respect of the Interoil Charter.
The Company is entitled to transfer any party by way of assignment all their rights under the guarantee
extended to any assignee or subsequent assignee. AOS may not assign charge or transfer any of its
rights or obligations under the guarantee without the prior written consent of the Company.
The guarantee is governed by English law and the jurisdiction of the English Courts shall apply.
6.5
Insurances
The Company has the following insurances policies:
-
-
Safety and Security Insurance (Nw. Trygghetsforsikring), which includes:
Workers Compensation Insurance, limited up to 40G (G being the Norwegian
National Insurance Scheme, equal to NOK 85,245 per February 2014);
Loss of Licence; and
Accident Insurance.
Group Life Insurance, limited up to 10G
Pension Insurance (defined as benefit pension from 60-67 years), disability pension of 66%
The various insurance policies are in accordance with the best practice of prudent owners of Vessels of
a similar type to the Vessels, with sound and reputable insurance companies, underwriters or
associations.
The Company is a member of the marine insurer Gard P&I, member club of the International Group of
P&I Clubs.
Please see section 8.4.2 for insurances related to the management agreement and section 6.3.2 and
6.4.3 above for insurances related to the Vessels’ Time Charters.
The Company is in compliance with all its current Time Charters in terms of the required insurance
cover.
24
7
INDUSTRY OVERVIEW
This discusses the industry in which the Company operates, which is the offshore supply vessel
industry. Certain of the information in this section relating to market environment, market
developments, growth rates, market trends, industry trends, competition and similar information are
estimates based on data compiled by professional organizations, consultants and analysts; in addition
to market data from other external and publicly available sources, and the Company’s knowledge of
the markets. The following discussion contains Forward-looking Statements, see section 4,
“Cautionary Note Regarding Forward-Looking Statements”. Any forecast information and other
Forward-looking Statements in this Section are not guarantees of future outcomes and these future
outcomes could differ materially from current expectations. Numerous factors could cause or
contribute to such differences, see section 1, "Risk Factors", for further details.
7.1
Introduction
Offshore vessels perform a wide range of services related to construction and decommissioning work,
pipe laying, support of drilling rigs and floating and fixed installations. Offshore service vessels can be
divided into three main groups; Anchor Handling Tug and Supply vessels (“AHTS”), Platform Supply
Vessels (“PSV”), subsea vessels and seismic vessels.
The Company focuses on PSVs and does not own any AHTS, subsea or seismic vessels. The
Company’s vessels are on term contracts, for the majority of the duration of the Bond. PSV vessels are
further described in section 7.3, “The Offshore Vessel Market”.
Demand for PSVs are mainly related to support of offshore platforms, rigs and floating production
units, with respect to transport cargo between such installations/units and supply bases onshore. PSVs
have liquid tanks, dry bulk tanks and deck area for transportation of various cargoes such as mud,
brine, cement, water, oil, food supplies, and other supplies including oil, lubes and similar related to
production/operation of the offshore rigs/platforms.
7.2
General Energy Market Overview - Demand
The Company operates in the offshore supply vessel industry, which is affected by the global
exploration and production (“E&P”) spending. Over the past couple of years there have been large
upheavals in the world energy markets. While the global financial crisis had a dramatic impact on the
outlook for energy markets, the year 2013 is estimated to have seen 14% growth in global offshore
E&P spending, compared to 2011 and 2012 with 10% and 20% respectively. According to Rystad
Energy, a consultancy, the expectation until 2018 is a compound annual growth rate of 4%, mainly
driven by spending in deepwater (more than 1,500 meters) areas.
25
Figure 1: Offshore E&P spending
450
400
350
12%
2%
3%
4%
USD billion
300
CAGR 2014-2018E
Deepwater
Midwater
Shelf
Total
250
200
150
100
50
2001 2003 2005 2007 2009 2011 2013 2015E 2017E
Shelf (to 125 meter)
Midwater (125-1500 meter)
Deepwater (1500+ meter)
_____
Source: Rystad Energy per 29 August 20141
7.3
The Offshore Vessel Market
The offshore service vessel market can be divided into several categories and segments. The main
categories are Platform Supply Vessels, Anchor Handling Tug and Supply vessels, subsea vessels and
seismic vessels. The Company owns only PSVs.
7.3.1
Platform Supply Vessels
PSVs are specially designed for transport of supplies to and from offshore installations. On deck the
vessels carry containers, equipment and pipes (the latter applies mostly for larger PSVs). Under deck
the vessels transport a variety of different fluids in separate tanks, like mud & brine, cements or other
dry bulk, water, fuel and drill-cut. Furthermore, some vessels have tanks for special fluids like
methanol as well.
PSVs are classified according to their carrying capacities:
-
Size of free deck space
Total carrying capacity in dwt (“dead weight tons”)
Type and capacity of special tanks carrying mud & brine, fuel, dry bulk, methanol, etc.
Historically, PSVs with more than 2,000 dwt were considered large, but as the trend continues towards
larger and larger vessels, PSVs with dwt between 3,000 and 4,000 are now considered medium-sized,
1
Source publicly available, but requires license agreement
26
and vessels with a carrying capacity above 4,000 dwt are considered large vessels. Classified by deck
area this corresponds to approximately 600-800 m2 for medium-sized vessels, and above 800 m2 for
large vessels.
The figure below shows the development of the active PSV fleet.
Figure 2: PSV fleet development
250
PSV < 3 000 dwt
PSV 3-4 000 dwt
PSV > 4 000 dwt
Total in service
2,000
1,800
200
1,600
150
1,200
1,000
100
Total fleet
Vessels delivered
1,400
800
600
50
400
200
-
72
75
78
81
84
87
90
93
96
99
02
05
08
11 14E 17E
_____
Source: SpareBank 1 Markets’ research based on IHS-Petrodata as per 29 August 20142
There are currently 301 PSVs under construction, equivalent of 21% of the entire PSV fleet. 137
vessels are larger than 4,000 dwt, and 123 are between 3,000 dwt and 4,000 dwt. 127 are scheduled for
delivery in 2014, but historically slippage has been high so it is expected that significant volumes will
be shifted into 2015 and 2016.
7.3.2
Platform Supply Vessel earnings
PSVs are normally chartered by end users such as oil majors (e.g. BP, Statoil, Total) on a term
contract for a set duration, possibly with options to extend the charter period. The charterer then
normally pays a day rate for the use of the vessel, equipment and crew.
As, evidenced above, the PSV supply has increased significantly, over the last decade. However,
increasing demand for these vessels has outpaced supply growth and term rates have increased
steadily. Global average day rate for a vessel between 3,000 dwt and 4,000 dwt is now about USD
27,600.
2
SpareBank 1 Markets’ research is not publicly available. IHS-Petrodata publicly available, but requires license agreement.
27
Figure 3: Global PSV term day rates (3,000-4,000 dwt)
30,000
25,000
USD/day
20,000
15,000
10,000
5,000
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
_____
Source: SpareBank 1 Markets’ research based on IHS-Petrodata as per 29 August 2014
7.3.3
Competitive landscape
The supply market for PSVs is highly fragmented. A representative list of the major tonnage owners is
shown below. Out of estimated 1,440 PSVs globally, the largest fleet owners are Edison Chouest,
Tidewater and Bourbon each with 6-9% of the global fleet. The PSV market is characterized by low
barriers to entry, which has led to a large number of owners with small fleets of 10 vessels or less.
Below is a graphic showing examples of large suppliers of offshore vessels (not exhaustive).
Figure 4: Top global PSV tonnage owners
160
140
120
PSVs
100
80
60
40
20
Edison Tidewater Bourbon Hornbeck Harvey
Chouest
Gulf
Gulfmark
Seacor
Vroon
Swire
Deep Sea
_____
Source: SpareBank 1 Markets’ research based on IHS-Petrodata per 29 August 2014
7.3.4
The Company’s Competition
The Company operates in a market with intense competition. International oil and gas contractors such
as inter alia Havila Shipping, Bourbon Offshore, Farstad Shipping, Solstad Offshore, Vestland
Offshore, Eidesvik, Island Offshore and Olympic Offshore offer comparable services in the offshore
marine industry.
28
8
ORGANISATIONAL STRUCTURE
8.1
Description of the Group that the Company is part of
The Company is fully owned by Golden Energy Offshore AS. Below is an illustration of the legal
structure of the Golden Energy Offshore AS’ Group. The Group was reorganised after the issuance of
the Bonds.
The chart below illustrates the legal structure of the Group.
Golden Energy Offshore AS
Norway
100%
100%
Golden Energy
Offshore Services AS
Norway
Golden Energy Offshore
Holdings (Norway) AS
Norway
100%
100%
Energy Swan
Group Services AS
Norway
Energy Scout
Group Chartering AS
Norway
3%
100%
Golden
Energy
PSV Invest
I Norway
100%
Golden
Energy
PSV Invest
II Norway
100%
Golden
Energy
PSV Invest
III Norway
100%
Golden
Energy
PSV Invest
IV Norway
Ocean Ness DIS
Norway
Energy Insula
PX121
TBN 1
PX121
TBN 2
PX121
Option 1
PX121
Option 2
The sole and ultimate owner of the Group is Mr. Victor Restis, a leading Greek shipping entrepreneur
operating in several countries, please refer to section 8.6.5 and 10.2 below. Mr. Victor Restis is the
sole ultimate owner of the Group by virtue of being the ultimate beneficiary to the bearer shares, i.e.
the physical stock certificate, of Charlotte Trading Ltd.
The Group companies are incorporated under the laws of Norway and Cyprus respectively.
The combined Group (as defined for purposes of this Offering Memorandum) consists of the
Company, Golden Energy Offshore AS, Golden Energy Offshore Group Holdings (Norway) AS,
Golden Energy Offshore Group Services AS, Golden Energy Offshore Group Chartering AS,
Golden Energy PSV Invest I, Golden Energy PSV Invest II, Golden Energy PSV Invest III, Golden
Energy PSV Invest IV, Sakashita Co Ltd, Famar Shipping AS, Golden Energy Offshore Management
Holding AS, Golden Energy Offshore Management AS and Golden Energy Offshore Crewing AS.
See more information about the Group in section 8.6 below.
8.2
Subsidiaries
The Company has no subsidiaries.
29
8.3
The Company’s dependence upon other entities in the Group
There are no employees in the Company. The administration, management and accounting services of
the Company are provided by the human resources employed by other entities within the Group:
Golden Energy Offshore Management AS and Golden Energy Offshore Crewing AS. As such, the
Company is dependant upon the provision of management and crewing services by these Group
entities. In theory, management and crewing services can be obtained from third parties. It should be
noted, however, that the high qualifications and skills of the current human resources in the two Group
entities providing such services are considered as one of the Company’s competitive strengths. See
section 8.4 below for more information about the management agreement between the Company and
Golden Energy Offshore Management AS and section 8.6.3 for more information about Golden
Energy Offshore Crewing AS.
8.4
8.4.1
The management agreement
The management agreement
The Company has entered into a management agreement with Golden Energy Offshore Management
AS for the management of the Vessels. As manager, Golden Energy Offshore Management AS carries
out management services in respect of the Vessels as agent for and on behalf of the Company.
The ship management agreement for the Vessels is based on BIMCO’s widely used SHIPMAN 2009
standard ship management agreement, without material deviations. The agreement is made on
commercial arm’s length terms.
The total annual management fee being paid by the Company under the management agreement is
NOK 2.4 million for each of the Vessels. Pursuant to the management agreement, the vessel manager
is obliged to provide the Company with inter alia commercial management, technical management
and crew management. This includes among other things, seeking and negotiating employment for the
vessel, providing suitably qualified crew and ensuring that the vessel complies with the requirements
of the law of the flag state and providing competent personnel to supervise the maintenance and
general efficiency of the vessel. The crew is provided to the vessel manager by Golden Energy
Offshore Crewing AS, cf. section 8.6.3.
In the performance of the vessel manager’s responsibilities under the management agreement, the
vessel manager is entitled to have regard to his overall responsibility in relation to all Vessels as may
be entrusted to his management from time to time.
All monies collected by the vessel manager under the management agreement on behalf of the
Company and any interest thereon shall be held to the credit of the Company in a separate bank
account, except for money relating to the commercial management of the Vessel’s which shall be paid
into a bank account in the name of the Company.
8.4.2
Insurances under the management agreement
The Company maintains insurances consistent with industry practice to protect against losses due to
sudden and accidental destruction of Vessels, environmental contamination and other operating
accidents or disruptions and liability to third parties. Insurances related to the management of the
Vessels will be provided by the management company Golden Energy Offshore Management AS.
Pursuant to the management agreement, throughout the period of the agreement, the vessel manager
shall arrange the following insurances at the Company’s expense:
-
Hull and machinery marine insurance (including but not limited to crew negligence)
Protection and indemnity insurance (including but not limited to pollution risk and diversion
expenses)
War risk insurance
Loss of hire insurance
In addition, the vessel manager is obliged to provide crew insurance.
30
Table of insurances cover on the Vessels:
Hull and machinery
Protection and indemnity
War risk
Loss of hire
Crew Insurances (to be provided by
the vessel manager)
Energy Swan
IMO no. 9319985
NOK 320 000 000
USD Unlimited*
NOK 480 000 000
NOK 21 000 000
Energy Scout
IMO no. 9322188
NOK 200 000 000
USD Unlimited*
NOK 300 000 000
NOK 1 620 000
USD 3 000 000 000**
USD 3 000 000 000**
* The cover afforded for oil pollution is limited to USD 1 000 000 000 each incident or occurrence each owner’s entry.
** The cover afforded for passengers and seamen/crew risks combined is limited to USD 3 000 000 000 each vessel each
accident. The cover afforded for passenger risks is limited to USD 2 000 000 000 each vessel each accident.
For insurances related to the Vessels’ Time Charters, please refer to section 6.3.2 and 6.4.3.
8.5
Related Party Agreements of the Company
Except for the purchase agreement relating to the acquisition of the Vessels as set out above in section
5.6, the management agreement with Golden Energy Offshore Management AS described in section
8.4 above and Golden Energy Offshore Management AS performing certain accounting and
administration services to the Company, the Company has not entered into any agreements with other
Group companies or other related parties.
8.6
8.6.1
The Group – Golden Energy Offshore
Introduction
Golden Energy Offshore, with a history dating back in excess of 85 years, is a well-established fully
integrated ship owning, shipping and offshore service company. The Group traces its roots back to
1929, and have since the foundation evolved into a fully integrated ship owner company which
operates modern and high spec offshore service vessels for the global oil and gas service industry.
The main office of the Group’s Norwegian companies is located in Aalesund on the west coast of
Norway. The region holds one of the strongest and most important offshore and maritime clusters in
Norway, also deemed to be leading in an international and global context.
8.6.2
The Group’s History and Development
Golden Energy Offshore, formerly called S. Ugelstad Rederi AS (Eng. S. Ugelstad shipping
company), was established in 1929 with a fleet of general cargo Vessels and tankers.
In 1974, S. Ugelstad Rederi AS entered into the offshore supply market and took delivery of the first
AHTS and PSV.
In 2007, the Ugelstad shipping group was sold and the name of the group was changed to
Aries Offshore, in 2010, however, Aries Offshore was sold and the group changed its name to today’s
Golden Energy Offshore.
In 2013, Golden Energy Offshore Management AS was awarded a long term prestigious 5-year (with
2 x 5 year option) management contract with BP Norge and was also awarded management contracts
for two additional PSV newbuilds.
Golden Energy Offshore’s activity has grown significantly over the last years and from operating two
Vessels in 2007, Golden Energy Offshore now owns and operates 7 vessels.
8.6.3
The Business of the Group
Golden Energy Offshore is active in different shipping sectors, but the main part of the business
relates to the offshore supply sector.
31
The management company, Golden Energy Offshore Management AS, conducts the maritime and
technical management on behalf of the other Group companies, including administration and
management of the vessels described in section 8.6.4 below. Hence, the Group companies owning or
leasing vessels, as the case may be, have entered into management agreements with Golden Energy
Offshore Management AS.
The crew for the Group’s vessels are provided by Golden Energy Offshore Management AS under
each respective management agreement, such personnel being provided to the management company
from Golden Energy Offshore Crewing AS where the Group’s personnel is placed. The personnel are
provided to the management company under an intercompany personnel service agreement which
establishes a mutual secondment of personnel between the two companies.
8.6.4
Fleet of the Group
The Group owns and operates the following 7 Vessels through Group companies;
-
Energy Swan (built in 2005) – PSV/ROV support
Energy Scout (built in 2005) – PSV/ROV support/DSV
Energy Insula (built in 2013) – PSV
NS ORLA (built in 2014) – Multifunctional supply and service vessel
NS Frayja (built in 2014) - Multifunctional supply and service vessel
Energy Lindesnes (built in 2015) – Multipurpose field vessel, platform supply vessel
Energy Dutchess – under construction
Energy Empress – under construction
Of the existing operating fleet, Energy Swan and Energy Scout are owned by the Company, while
Energy Insula is on an operational lease. The remaining vessels are under the Group’s management.
Energy Insula, NS Orla and NS Frayja are all under employment under prestigious management
agreements with oil majors; Energy Insula is employed on the spot market, currently to the Norwegian
branch of the German oil major Wintershall, as frontrunner for Energy Swan under the Swan Charter,
while NS Orla and NS Frayja is employed on long term contracts to the Norwegian branch of BP until
May 2029.
Energy Lista and Energy Lindesnes are newbuilds managed by Golden Energy Offshore Management
AS, which were available for employment from June 2014 and September 2014 respectively.
All of the Group’s vessels are fully certified according to national and international rules. Energy
Swan, Energy Insula, NS Orla and NS Frayja are registered in the Norwegian Ship Register (NOR),
while Energy Scout, Energy Lista and Energy Lindesnes are register in the Norwegian International
Ship Register (NIS). All of the vessels have Document of Compliance for Norway through DNV.
8.6.5
Ownership of the Group
The ultimate owner of the Group is Mr. Victor Restis, a leading Greek shipping entrepreneur, who
through Enterprises Shipping and Trading SA, founded in 1973, currently manages about 78 vessels of
about 7.4m dwt comprising of 52 bulkers, 25 tankers, and a cruise vessel for world-wide
transportation, serving international trade in a big range of perishable products, general cargo and ore
products. Through affiliates and strategic partnerships the company has presence in Athens (Greece),
Singapore, Ålesund (Norway), Cape Town, Manila, St. Petersburg, Novorossiysk, Odessa, Geneva
and Dubai. Non shipping activities include investments in financial services, tourism/resorts,
renewable energy, media/publication companies, real estate, logistics, consumables and others.
32
8.7
8.7.1
Disputes related to other Restis Companies outside the Group
Mr. Restis and some Restis Companies outside the Group are being accused of
violating international sanctions against Iran
In May 2013, Defendants American Coalition Against Nuclear Iran aka United Against a Nuclear Iran
(“UANI”), Mark D. Wallace, David Ibsen and Nathan Carleton launched a global media campaign
accusing Mr. Restis and some Restis Companies of being “front-men” for the Iranian regime by
illegally accepting Iranian money and shipping Iranian oil in violation of the international sanctions.
The accusations relates to vessels owned by another Restis Company and does not relate to any of the
Group’s vessels.
Mr. Restis holds that the relevant vessels have visited Iran openly under authorization by the various
international sanctions regimes, largely on behalf of American-based charterers to provide
humanitarian food aid to the Iranian people. Alleging that the allegations are categorically false, Mr.
Restis and the Restis Companies have filed a lawsuit for defamation and other torts in the state of New
York, U.S. The case is currently in the discovery period in which the plaintiffs and the defendants
provide information relating to the claim.
8.7.2
Mr. Victor Restis is being charged of embezzlement and money laundering
Mr. Victor Restis is being charged of embezzlement in the degree of felony and money laundering in a
criminal prosecution currently pending before the Greek Criminal Courts. The charges, in essence,
concerns two loans granted by the First Business Bank. During the material period of time, Mr. Restis
was a shareholder without having actual or decisive responsibilities in the administration or in the
bodies and services of the Bank. Notwithstanding his denial and rejection of the accusations,
Mr. Restis has arranged for the settlement of the two loans for reasons of ethical principle. Due to the
pending charges, some personal items of Mr. Restis have been confiscated by virtue of the respective
legal provisions and will remain so until a final judgment of the court or other intermediate court
order. Mr. Restis is continuing his business activities as normal. The case remains pending before the
Ordinary Investigator.
33
9
ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY
BODIES
9.1
Names and addresses of key persons of the Company
Below is an overview of the Board of Directors of the Company.
NAMES, FUNCTIONS AND BUSINESS ADDRESSES
Name:
Per Ivar Fagervoll
Polymnia (Paula)
Lazopoulou
Kyriacos Zarvanos
Function in Company:
Chairman of the Board
& Chief Executive
Officer
Director
Director
Position and business address:
Chairman of the Board and Chief Executive Officer in the
Norwegian Group companies. Business address: St Olavs plass
1, 6002 Aalesund, Norway
Chief Financial Officer in Enterprises Shipping and Trading
S.A. Business address: 11. Poseidonos – Athens, Greece
Chief Executive Officer in Golden Energy Management S.A.
Business address: 11. Poseidonos – Athens, Greece
Below is further information about the background of the Board of Directors of the Company.
9.1.1
The Board of Directors of the Company
The Company has a Board of Directors consisting of Ms. Lazopoulou and Mr. Zarvanos, and a chief
executive officer, Per Ivar Fagervoll. The members of the Board of Directors receive an annual
director fee in which is agreed upon in the annual general meeting. In addition, the Chief Executive
Officer is also granted a performance bonus. The Directors in the Board of Directors in the Company
are also directors in the Board of Directors in the management company Golden Energy Offshore
Management AS.
Please see further information about the background of the members of the Company’s Board of
Directors below.
Per Ivar Fagervoll, Chairman of the Board
Mr. Fagervoll joined the Group in January 2008 and served as Director of Chartering and Business
Development. In June 2008, he became Chief Executive Officer and Director of the Board of
Directors in the Norwegian Group companies. In January 2014, Mr. Fagervoll’s position as a Director
of the Board of Directors was replaced with a position as Chairman of the Board. Mr. Fagervoll has
more than 30 years’ experience in the international shipping and offshore industry both offshore and
onshore and has previously served as Deputy CEO, Chartering Manager/Director, Operation Manager,
QHSE Manager, Port Captain, Terminal Manager, Logistic Manager and Master Mariner, and has also
served in other managerial positions in the maritime sector internationally including as Captain on
offshore vessels. Mr. Fagervoll is educated as Class 1 Master Mariner and also hold Class 1 certificate.
Polymnia (Paula) Lazopoulou, Director
Ms. Lazopoulou joined the Group in 2011 as financial advisor. She has been Director of the Board of
Directors of the Company since the Company was acquired. Ms. Lazopoulou also serves as Director
of Golden Energy Offshore Management AS (i.e. the management company) and several other Group
companies. Since 2011, she has served as Chief Financial Officer in Enterprises Shipping and Trading
S.A, a Restis Company managing around 80 vessels. She has previously held senior management
positions in the shipping finance departments of several major European banks and has more than 12
years of experience in the field. Ms. Lazopoulou holds both a Master of Science in International
Accountancy and Consultancy and a Bachelor of Education in International Business and Economics.
Kyriacos Zarvanos, Director
Mr. Zarvanos has been Director of the Board of Directors of the Company since the Company was
acquired. Mr. Zarvanos serves as Director of Golden Energy Marine Corp. and Paramount Tankers
Inc, Golden Energy Offshore Management AS (i.e. the management company) and several other
Group companies. Furthermore, he serves as Chief Executive Officer of the company Golden Energy
Management S.A., a company formed in 2002 to develop and run the tanker activities of the Restis
34
Companies, taking delivery and handling of over 20 tankers. Prior to this, he held the senior
commercial management position in a Greek shipping group for a total of 11 years, working from the
group’s Monte Carlo, Piraeus and London offices. Mr. Zarvanos holds a Master of Science from
Imperial College in London and a Bachelor of Education in Mechanical Engineering from King’s
College in London.
9.1.2
Key personnel undertaking management roles in the managing company Golden
Energy Offshore Management AS
There are no employees in the Company. Most of the administration, management and accounting
services of the Company are provided by the human resources employed by Golden Energy Offshore
Management AS.
9.1.3
The Group’s Health, Safety and Environment
Quality, Health, Safety and Environmental management (“QHSE”) is a core value of the business of
the Company. As the managing company, Golden Energy Offshore Management AS has its own
QHSE manager and QHSE is given first priority in all daily operations. The policies of the Group
comply with national and international regulations, as well as relevant industry standards, guidelines
and best practice recommendations.
The Group has implemented the International Safety Management code (ISM), the International Ship
and Port Facility Security Code (ISPS) and the International Standard ISO 9001and ISO 14001. The
management company Golden Energy Offshore Management AS is currently undergoing a so-called
seamless certification process and is expected to be provided certification by DNV for ISO
14001/9001/50001/OHAS 18001 during fall 2014. In addition, the management company are currently
in a process of being certified for MLC 2006, GOMO, Achilles, FPAL, NWEA, UKOOA and IMCA.
The Group’s management systems are approved according to requirements made by the International
Maritime Organization (IMO) and QHSE procedures complies with all Norwegian requirements to inhouse QHSE management.
9.1.4
The Company’s Labour Relations
As stated in section 8.4 and 8.6.3, the personnel undertaking key management roles and the rest of the
employees are contracted by Golden Energy Offshore Management AS and Golden Energy Offshore
Crewing AS respectively. The Group has not experienced any material work stoppages or labour
problems.
9.1.5
Conflicts of interest
At the present, there are no potential conflicts of interests between any duties to the Issuer and the
members of the administrative, management or supervisory bodies and their private interests and/or
other duties.
9.2
9.2.1
Board practices
Board committes
At present the Company has no board committees
9.2.2
Corporate governance
As the Company is newly established it has not yet fully established routines for compliance with the
Norwegian Code of Practice (the “Code”) regarding Corporate Govenance. The Company wishes to
act in accordance with the Code and is currently preparing for such compliance. However, the CEO
will remain a member of the Company board, which is not in compliance with the Code.
35
10
SHARE CAPITAL AND MAJOR SHAREHOLDERS
10.1
Share Capital
The Company has an issued share capital of NOK 30,000 comprising of 30 shares, each with a par
value of NOK 1,000. There is only one class of shares, and all outstanding shares have been fully paid.
10.2
Major shareholders
The Company is a wholly owned subsidiary of Golden Energy Offshore AS.
The Group is controlled by a major shareholder who controls 100% of the outstanding shares.
Decisions relating to the Group’s business could be made which may negatively impact creditors. In
particular, other Group companies are currently involved in operations in the same market with similar
vessels as the Company. Hence, the interests of the Company’s sole ultimate owner may conflict with
the interest of the Bondholders. If the Company’s ultimate owner decides to direct future contracts to
other group companies than the Company, this may have a materially adverse effect on the Company’s
ability to service the Bonds.
See more information about the Group’s shareholder in section 8.6.5.
10.2.1
Change of control
As of the date of the Registration Document there are no arrangements known to the Company, which
may at a subsequent date result in a change of control of the Company.
36
11
FINANCIAL INFORMATION
11.1
Historical financial information
Golden Energy Offshore Services AS was incorporated 16 December 2013. The initial purpose of the
Company was to own its share capital of NOK 30,000 and to be sold off at a later date. The
Company’s memorandum and Articles of Association, as resolved at the time of its incorporation,
stipulated that there should be no activity in the Company until such sale had taken place. As a result
the Company prepared no annual report for 2013.
The Company has prepared an interim report for the period since the Company was aqcuired by the
Group and till 30 June 2014. The historical financial information have been prepared in accordance
with IFRS and have been fully audited. The complete interim report, including the auditor’s statement,
has been enclosed as Appendix 2 to this Registration Document.
Below is the audited profit and loss account for the Company for the period 8 May 2014 till 30 June
2014.
Profit and loss account per 30 June 2014
Freight income
Total Income
Operating expenses vessels
Other operating expenses
Operating result before depreciations
Ordinary depreciation
Operating result
Other Interest charges
Other financial charges
Net financing
Ordinary result before taxes
Tax ordinary result
Result
Other comprehensive income
Total comprehensive income
NOK
5 817 031
5 817 031
1 124 171
443 195
4 249 665
2 386 119
1 863 547
-3 432 063
-56 249
-3 488 312
-1 624 765
0
-1 624 765
0
-1 624 765
37
Below is the Company’s audited balance sheet per 30 June 2014.
Balance sheet per 30 June 2014
NOK
Assets
Fixed assets
Tangible fixed assets
Total fixed assets
500 081 721
500 081 721
Current assets
Stocks
Account receivables
Receivables
Deposits, cash, etc.
Total current assets
Total assets
710 953
6 843 628
3 082 370
21 771 879
32 408 830
532 490 552
Equity and liabilities
Equity
Share capital
Other equity
Total equity
154 530 000
-1 624 765
152 905 235
Liabilities
Bonds
Total long-term debt
354 407 049
354 407 049
Current liabilities
Current portioan of long-term debt
Trade debt
Other current liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
4 625 000
5 921 182
14 632 086
25 178 268
379 585 317
532 490 552
11.2
Legal and arbitration proceedings
The Company has not been involved in any governmental, legal or arbitration proceedings (including
any such proceeding which are pending or threatened of which the Company is aware), since the date
of its incorporation and to the date of this Registration Document, which may have, or have had in the
recent past, significant effects on the Company and/or the Company’s financial position or
profitability.
The Company is not involved in any lawsuits, arbitrations or disputes as of the date of the Registration
Document.
11.3
Significant change in the Company’s financial or trading position
There has been no significant change in the financial or trading position of the Company since the end
of the last financial period for which a financial statement has been published.
38
12
TREND INFORMATION
12.1
Statement of no material adverse change
There has been no material adverse change in the prospects of the Company since the date of its last
published audited financial statements.
12.2
Outlook
There are no known trends, uncertainties, demands, commitments or events that are reasonably likely
to have a material effect on the Company’s prospects for the current financial year.
There has recently been a drop in the market price for oil and gas. However, such fluctuations have not
been of an extent that has affected the business prospects of the Company significantly.
Below is a brief overview of the outlook for the Company. See also section 7, “Industry Overview” for
a description of the market in which the Company operates.
12.2.1
Vessels
The Company owns 2 platform supply vessels (PSVs) (the “Vessels”) which are operated and
managed by Golden Energy Offshore Management AS in Ålesund, Norway.
Energy Swan currently operates in the North Sea, having its base on Mongstad outside of Bergen. The
vessel works on a long-term contract, chartered by Wintershall Norge AS.
Energy Scout currently operates outside of Angola in Africa, having its base in Luanda. The vessel
works on a long-term contract with Total Angola, chartered by Wintershall Norge.
12.2.2
Market
The Company currently has no vessels in the spot market. Contract coverage for the Vessels for the
remaining of 2014 is 100 %. The market is influenced by the amount invested globally on search and
production activities for energy production. According to Rystad Energy (independent consultancy),
expected yearly growth rate up until 2018 is 4%. This is very low compared to previous years’
expectations.
It has been a significant increase on the supply side of PSVs the last decade, but the demand has more
than compensated for the supply of vessels. This can be shown by looking on the increased term rates.
The Company operates in a market with heavy competition. There are several Norwegian companies
delivering comparable services such as well as international companies.
39
13
ADDITIONAL INFORMATION
13.1
Third party information
Part of the information in this Registration Document has been sourced from a third party. The
Company hereby confirms that this information has been accurately reproduced and that as far as the
Company is aware and is able to ascertain from information published by that third party, no facts
have been omitted which would render the reproduced information inaccurate or misleading.
13.2
Documents on display
The following documents (or copies thereof) may for the life of the Registration Document be
inspected at the Company’s registered office in St Olavs plass 1, 6002 Aalesund, Norway:
(a)
(b)
(c)
40
The Memorandum and Articles of Association of the Company
All reports, letters and other documents, historical financial information, valuations and
statements prepared by any expert at the Company’s request any part of which is
included or referred to in the Registration Document.
The historical financial information of the Company from the date of the incorporation of
the Company and till the date of this Registration Document.
14
DEFINITIONS
AHTS
AS
Bond Agreement
Bond Issue
Bond or Bonds
Bondholders
Charter or Time Charter
Change of Control Event
CLEAN
CPP tunnel thrusters
COMFPRT-V
DK(+)
DNV
DNV 1A1
DP2 Class
DYNPOS AUTR
E0
E&P
Energy Scout
Energy Swan
Fire Fighter I
GEOS
Group or Golden Energy Offshore
HL (2.5)
ICE-C
IFRS
Immediate Family
Anchor Handling Tug and Supply vessel
The Norwegian for private limited companies (similar to
"Ltd") (Nw. aksjeselskap)
The bond agreement related to the Bond Issue
The NOK 370 million senior secured bond issuance by the
Company referred to in this Registration Document
The bonds issued under the Bond Issue
The investors who hold Bonds in the Company
one or all of the time charters, as the case may be, relating to
the Vessels
Any person and/or person affiliated with (Norw.:
nærstående) such person (as defined in Section 2-5 of the
Norwegian Securities Trading Act), save for Mr. Victor
Restis and members of his Immediate Family, becomes the
owner, directly or indirectly, of more than 50.0% of the
outstanding shares of the Parent Company
Clean class on vessel as per DNV rules
Controllable pitch propeller. Tunnel thruster is designed for
giving max side force to the ship in maneuvering condition
Comfort class covering requirements for noise and
Vibration.
Deck strengthening for heavy cargo
The classification society named DNV GL AS
Vessel designed in compliance with DNV rules for
shipbuilding regards to hull, machinery, systems and
equipment.
IMO class for redundancy in propulsion and electrical
layout
Dynamic positioning system with redundancy in technical
design and with an independent joystick system back-up.
Instrumentation and automation installed to allow for
unattended machinery space
Exploration and production
M/V Energy Scout, registered under Norwegian flag with
IMO number 9322188 and calling signal LMWM3
M/V Energy Swan, registered under Norwegian flag with
IMO number 9319985 and calling signal LFUR
Active protection, giving it the capability to withstand
higher heat radiation loads from external fires.
The former Golden Energy Offshore Services AS a
Norwegian private limited company with organization no.
979 664 443, which was liquidated upon the issuance of the
Bonds
The Parent Company and its subsidiaries as illustrated in
section 6.1
Tanks strengthen for heavy liquid with maximum density
of 2.5 t/m3
Ship with basic ice strengthening
International Financial Reporting Standards
In relation to Mr. Victor Restis, his spouse, parents,
children, grandchildren, brothers and sisters, including
adopted, half and step members
41
IMO
ISIN
ISO 9001
ISO 14001
ISO 50001
Issuer or Company
LFL
Manager
NOFO
NOK
Parent Company
PEC
OHSAS 18001
OIL-REC
OPEX
PSV
Restis Company or Restis
Companies
ROV
Seller’s Credit
SF
TMON
Trustee
Vessels
42
International Maritime Organization
International Securities Identification Number
International standard organization on Quality Management
System
International Standard organization on Environmental
Management systems
International standard organization for Energy Management
systems
Golden Energy Offshore Services AS, a Norwegian private
limited company with organization no. 913 011 384
Low Flashpoint Liquid. Designed for carriage of liquid with
flashpoint lower than 60°C
SpareBank 1 Markets, Olav Vs gate 5, 0161 Oslo, Norway
Norwegian Clean Seas Association for Operating
Companies
Norwegian kroner, the currency of Norway
Golden Energy Offshore AS, a Norwegian private limited
company with organization no. 913 011 325
Protection and Environmental committee on-board
Occupational Health and Safety Management System
Oil Recovery. Recovered oil reception and transportation
after a spill of oil in emergency situations.
Operating expense
Platform Supply Vessel
Any company in which Mr. Victor Restis has an ownership
interest
Remotely Operated underwater Vehicle
The seller’s credits issued to partially fund the acquisition of
the Vessels as per closing of the relevant acquisition
Designed to DNV Damage stability requirements to
Offshore Service vessels
Tail Shaft Monitoring
Nordic Trustee ASA (changed its name from Norsk
Tillitsmann ASA 7 May 2014)
Energy Swan and Energy Scout
APPENDIX 1: ARTICLES OF ASSOCIATION
43
APPENDIX 2: FINANCIAL REPORT FOR THE PERIOD ENDED 30
JUNE 2014 INCLUDING AUDITOR STATEMENT
44
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46
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48
49
50
51
52
53
54
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Registration Document

Transcription

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