The world's largest and strongest offshore engineering vessel owner is born! Tidewater acquires Norwegian PSV fleet

To better focus on the renewable energy market, Norwegian offshore vessel owner Solstad Offshore is officially exiting the platform supply vessel (PSV) sector, selling its entire PSV fleet to the American company Tidewater. This transaction will make Tidewater the largest owner of high-specification PSVs. Five years after completing bankruptcy restructuring, this former "old friend" of a Chinese shipyard has become the world's largest and strongest offshore support vessel (OSV) owner.

On March 7, Solstad Offshore announced an agreement with Tidewater to sell its fleet of 37 PSVs for a total cash consideration of $577 million (approximately RMB 4.00 billion). These PSVs currently operate globally, including the North Sea, Brazil, Australia, and West Africa, with approximately $620 million in backlog contracts, including options.

This strategic move will reduce Solstad's debt by approximately NOK 6 billion (approximately RMB 3.973 billion) and significantly strengthen its balance sheet, debt-paying ability, and liquidity. Furthermore, exiting the PSV sector is expected to significantly reduce Solstad's capital expenditure plans for 2023 and 2024. The transaction is expected to be completed in the second quarter of 2023.

According to VesselsValue's estimates, the total value of Solstad's PSV fleet is approximately $617 million. Most of the PSVs were built between 2012 and 2014, except for one built in 2003.

After the transaction, Solstad's fleet will consist of 41 high-end offshore vessels, including anchor handling tug supply vessels (AHTS) and construction support vessels (CSV), plus 6 non-operating vessels for sale. Solstad stated that its vessels will continue to support customers in the offshore energy sector. Anticipating significant investment in offshore renewable energy and oil and gas markets in the coming years, the company will maintain its global footprint in all key offshore regions.

Solstad CEO Lars Peder Solstad explained: "The sale of the PSV fleet represents a strategic shift in a changing market. PSVs primarily serve the oil and gas industry, while AHTS and CSVs can serve all sectors of the offshore energy industry, including oil and gas and renewable energy. Therefore, this move aligns with our strategy to be a key driver of energy transition. Furthermore, this transaction will provide Solstad with greater financial flexibility and significantly improve our future debt and cash position."

"Following the transaction, Solstad's core competencies will be better applied to further develop CSV and AHTS operations, including building our service department and leveraging a stronger position in the renewable energy market. AHTS and CSVs generally have higher profit margins, which will allow us to improve our financial position, strengthen our renewable energy business, and enable us to gradually update our fleet over time."

On March 7, Tidewater also issued a related announcement, stating that this acquisition will make it the largest owner and operator of high-specification PSVs, which are the highest-utilized type of offshore support vessel (OSV) across all market cycles.

Tidewater stated that it plans to fund the acquisition through a combination of new debt and existing cash. Tidewater's fleet comprises 228 vessels, including 199 PSVs and AHTS, with an average age of 11.3 years, of which 65% are high-specification vessels. The combined fleet will have 14 battery hybrid vessels and 2 LNG-powered vessels, representing the world's largest hybrid OSV fleet.

Tidewater President and CEO Quintin Kneen said: "The acquisition agreement is another significant milestone for the company, strengthening our market leadership as we continue to capitalize on the rapidly improving OSV market. This acquisition further solidifies Tidewater's global leadership position in the large, high-specification PSV segment and in the hybrid PSV segment."

"This transaction is the latest in a series of transformative actions Tidewater has taken to drive long-term earnings and cash flow generation. We are focused on assembling the world's best OSV fleet to create the world's safest, most sustainable, reliable, and profitable high-specification OSV fleet."

If the transaction is completed as scheduled in the second quarter of this year, Tidewater will update its 2023 revenue forecast to approximately $1.03 billion, while the vessel operating margin forecast will remain unchanged at approximately 50.0%.

According to International Ship Network, as the world's largest offshore vessel owner, Tidewater once owned more than 350 offshore vessels, nearly 100 of which were built by Chinese shipyards, making it a major customer for Chinese shipyards. However, due to the long-term downturn in the offshore market, the company filed for bankruptcy protection and restructuring in May 2017. In 2018, after completing its restructuring, Tidewater merged with another American offshore vessel owner, GulfMark, creating the world's largest OSV fleet at the time with 274 OSVs.

Last April, Tidewater further acquired Swire Pacific Offshore, further solidifying its position as the world's largest OSV owner. All 50 OSVs in Swire Pacific Offshore's fleet joined Tidewater's fleet, including 29 AHTS and 21 PSVs, among which were 10 large AHTS and 18 large PSVs.