New Deal Sees Subsea Ship Secure Extension but Reduced Rate
Wednesday 28 September 2016
The latest addition to Volstad Maritime’s fleet of vessels was ordered when conditions in the offshore vessel market were very different from those that prevail now – the ship’s time charter has been significantly amended as a result
Early May 2016 saw the subsea construction vessel Grand Canyon III delivered to Volstad Maritime by Kleven shipyard in Norway. The vessel, a ST-259 CD design from Skipsteknisk in Norway, is a close sister to Grand Canyon I and Grand Canyon II, which are also owned by Volstad Maritime, and was designed to undertake a range of subsea operations, having DP3 class dynamic positioning enabling the ship to continue to work in severe weather conditions.
Like the earlier vessels of the same type, Grand Canyon III has a 250-tonne heave compensated crane (with 3,000m of wire), facilities to launch up to five remotely operated vehicles (ROVs) simultaneously and a below-deck carousel lay system for installation of power cables, umbilicals or tubular products.
Volstad Maritime now has three vessels contracted to Canyon Offshore Ltd, a subsidiary of Helix Energy Solutions Group in the US, the agreements for which were recently revised in light of the significant downturn in the market since the sharp fall in the oil price that began in mid-2014. This fall in the oil price led to charter rates for most vessel types – including subsea vessels – being renegotiated. Volstad Maritime’s contracts with Helix were no exception.
Under the terms of the deal thrashed out between Helix and Volstad Maritime, the charter rates for all three vessels have been reduced in return for extensions of the term of the charters. Volstad Maritime was originally granted a five-year time charter contract for Grand Canyon I, which has been extended by two years, and Volstad Maritime was originally granted a five-year time charter contract for Grand Canyon II, which has been extended by one year.
The contract between Helix and Volstad Maritime for Grand Canyon III was originally to be for five years. This deal has been extensively revised, with the ship initially entering what the owner described in a recent presentation as a “semi-cold stack optional period” for 12 months in return for a two-year firm charter party extension. The agreement states that, whilst the new unit is stacked, it can be activated at any time during the cold stack period and, if activated within the first 365 days of the deal, a charter rate discount similar to that agreed for Grand Canyon I and Grand Canyon II applies.
In a presentation issued earlier this year by Volstad Maritime, the company said that it and Canyon Offshore believed the agreements were “positive steps” in the current market, providing near-term cost savings for the client, a vessel supply reduction, efficiencies and potential future benefits as and when the market recovers and demand picks up again. Volstad Maritime noted at the time that it was engaged in constructive discussions to “adapt to the current offshore service market” and said it remained well positioned for stronger markets.
In May 2016, it said it had recently conducted a roadshow to holders of bonds issued by its subsidiary Volstad Subsea. Following the roadshow, the company says it has been and is in constructive dialogue with certain of Volstad Subsea’s largest bondholders. It noted that, on 1 May 2016, Volstad Maritime had taken delivery of Grand Canyon III and confirmed the vessel had entered into a seven-year charter with Canyon Offshore Ltd commencing with a one-year cold stack period subject to activation notice provisions.
Volstad Subsea’s NKr600 million (US$72.8 million) bonds were due to mature on 5 July 2016. Assisted by its advisors ABG Sundal Collier, SpareBank 1 Markets and Wikborg, Rein & Co, the company was in discussions with all relevant stakeholders to find a solution on the upcoming maturity.