Deep Sea Supply Plc. has entered into an agreement to acquire 10 PSVs. The total price paid for the 10 vessels including remaining CAPEX is $366 million, and the total broker value for the vessels is $ 419 million.
Deep Sea Supply will raise approximately $200 million through a Private Placement to partly finance the acquisition of the vessels. The Private Placement is fully underwritten by the company’s largest shareholder, Hemen Holding Ltd.
The transaction will increase the current fleet of the company from 30 to 40 vessels, and the company’s market capitalization from approximately $200 million to $400 million.
The 10 PSVs are acquired through the acquisition of 100% of the shares in PSV Holding Inc. PSV Holding is owned by Greenwich Holdings Ltd, an affiliated company of Hemen Holding.
Through the acquisition of PSV Holding, The company will assume ownership of five PSVs; “Sea Tantalus”, “Sea Titus”, “Sea Tortuga”, “Sea Falcon” and “Sea Flyer”, all of which were delivered from Cochin shipyard in India and Sinopacific shipyard in China during 2013 and 1Q 2014.
Furthermore, PSV Holding has five vessels under construction, one 4,100 dwt PSV of STX 05-L CD design at Cochin Shipyard Limited in India, and four 4,600 dwt PSV of Ulstein PX 105 design at Sinopacific in China. These newbuilds are expected to be delivered during 3Q and 4Q 2014.
The vessels are state of the art PSVs of Norwegian design with good cargo capacities, low fuel consumption, clean design and well equipped.
The total consideration to be paid by the company for all the shares in PSV Holding is based on an Enterprise Value (equity plus net debt and remaining capital expenditure) of $366 million, including capital expenditure commitments of $136 million.
Fair market value of the vessels and newbuilding contracts is $419 million based on the average of broker values from two recognized ship brokers per March 31,2014 (on an Enterprise Value basis).
Deep Sea Supply hence acquires the vessels at approximately 13% discount to market values.
The company intends to secure bank financing in the amount of approximately $200 million towards the 10 vessels and newbuilding contracts, which combined with the proceeds from the announced private placement of new shares in the company will fully fund the transaction. The transaction is expected to close during June 2014.
June 2, 2014