A reverse asset acquisition in
Results for the three months ended
For the three months ended
For the three months ended
Results for the year ended
For the year ended
For the year ended
Share and per share results included herein have been retroactively adjusted to reflect the one-for-ten reverse stock split of the Company's common shares, which took effect on
Summary of fourth quarter of 2019 and other recent events | ||||
• | The Company entered into term charter contracts for two of the Company's platform supply vessels, or PSVs, (Hermit Galaxy and Hermit Horizon) which are expected to run consecutively for a period of ten months commencing in late March or early | |||
• | In | |||
• | During the fourth quarter of 2019, the Company’s average daily rates and utilization were as follows: | |||
• | The Company’s PSVs (operating in the | |||
• | The Company’s AHTS vessels (operating in | |||
• | The Company’s crew boats ("Crew Boats", operating in | |||
• | Below is a summary of the average effective dayrates and duration of charters for the Company’s vessels that have been fixed thus far in the first quarter of 2020 as of the date hereof: | |||
• | The Company’s PSVs (operating in the | |||
• | The Company’s AHTS vessels (operating in | |||
• | The Company’s Crew Boats (operating in | |||
• | In |
Fleet list and employment update
Set forth below is the Company's fleet list along with an update on the long-term employment of each vessel as of the date of this press release. For purposes of the below table, only contracts with periods of three months or greater have been presented.
Vessel Type | Built | Employment | Term contract rate per day(USD) (1) | Contract begin date | Contract end date | Underlying contract denomination | ||
PSV | ||||||||
1 | Hermit Fighter | PSV | 2012 | Term Contract | GBP | |||
2 | Hermit Prosper | PSV | 2012 | Spot | ||||
3 | PSV | 2013 | Term Contract | GBP | ||||
4 | Hermit Thunder | PSV | 2013 | Term Contract | GBP | |||
5 | NAO Guardian | PSV | 2013 | Term Contract | GBP | |||
6 | Hermit Protector | PSV | 2013 | Spot | ||||
7 | Hermit Viking | PSV | 2015 | Term Contract | GBP | |||
8 | Hermit Storm | PSV | 2015 | Term Contract | NOK | |||
9 | Hermit Galaxy | PSV | 2016 | Spot / Term Contract | NOK | |||
10 | Hermit Horizon | PSV | 2016 | Spot / Term Contract | NOK | |||
AHTS | ||||||||
11 | Hermit Brilliance | AHTS | 2009 | Term Contract (4) | USD | |||
12 | Hermit Baron | AHTS | 2009 | Term Contract (4) | USD | |||
Crew Boats | ||||||||
13 | Petrocraft 1605-1 | 2012 | Term Contract (5) | USD | ||||
14 | Petrocraft 1605-2 | 2012 | Spot | |||||
15 | Petrocraft 1605-3 | 2012 | Spot | |||||
16 | Petrocraft 1605-5 | 2013 | Spot | |||||
17 | Petrocraft 1605-6 | 2013 | Spot | |||||
18 | Petrocraft 2005-1 | 2015 | Spot | |||||
19 | Petrocraft 2005-2 | 2015 | Spot | |||||
20 | Petrocraft 1905-1 | 2019 | Term Contract | USD | ||||
21 | Petrocraft 1905-2 | 2019 | Term Contract | USD | ||||
22 | Petrocraft 1905-3 | 2019 | Term Contract | USD | ||||
23 | Petrocraft 1905-4 | 2019 | Term Contract | USD |
(1) Contracts denominated in GBP and NOK have been converted using spot rates in effect as of
Liquidity
As of
Drydock and capital expenditure update
The Company made approximately
One of the Company's PSVs underwent an engine overhaul during the first quarter of 2020 for aggregate costs of approximately
Additionally, the Company reflagged three of its PSVs, two of which were reflagged from the
No other special surveys and/or engine overhauls are scheduled for the first or second quarter of 2020.
Debt
The following table sets forth the principal balance of the Company’s debt outstanding:
As of | ||||||||
In thousands of | ||||||||
Initial Credit Facility with DNB and SEB | $ | 132,905 | $ | — | ||||
New Term Loan Facility with DNB and SEB | - | 132,905 | ||||||
DVB Credit Facility | 9,000 | 9,000 | ||||||
$ | 141,905 | $ | 141,905 |
New Equity Line of Credit
In
New
In
The terms and conditions of the New Term Loan Facility are similar to the previously announced commitment for this credit facility, with the exception of modifications to certain financial covenants and other key terms. These new financial covenants and terms are summarized as follows:
• | Cash and cash equivalents shall at all times be equal to or greater than | |
• | The ratio of net debt (defined as total debt less cash) to total capitalization (defined below) shall be no greater than 0.70 to 1.00 from the date that the New Term Loan Facility is executed through | |
• | The aggregate fair market value of the vessels collateralized under the New Term Loan Facility shall at all times be at least 115% of the aggregate outstanding principal amount until | |
• | The Company is restricted from paying dividends for 24 months following the date of the execution of the New Term Loan Facility. |
DVB Supplemental Agreement
As part the Company’s purchase of its two AHTS vessels in
At inception, the provision to unwind the sales of the two AHTS vessels was accounted for as a freestanding financial instrument. As of
Reverse acquisition accounting treatment arising from the acquisition of assets from SOHI
In
As a result of the Transaction, SOHI and its affiliated entities (collectively referred to as "Scorpio"), which are part of the Scorpio group of companies, obtained a controlling voting interest in the Company. Accordingly, under the relevant accounting guidance, Scorpio was identified as the accounting acquirer of the Company, and the Transaction is considered to be a reverse acquisition. Moreover, the Company determined that the Transaction constitutes a reverse acquisition of assets rather than a reverse business combination. The implications of this determination can be summarized as follows:
• | The SOHI Assets of Scorpio, as the accounting acquirer, were recorded at their historical carrying values. | |
• | The theoretical cost of the reverse acquisition was determined based on the price of the Company’s common shares on the date of the Transaction and was allocated to the Company's pre-Transaction assets and liabilities on a relative fair value basis. | |
• | Given the difference between the fair value and the carrying value of the Company’s shareholders' equity on the date of the Transaction, the application of purchase accounting resulted in a reduction in the carrying value of Vessels (on the consolidated balance sheet) of | |
• | Under the applicable accounting guidance, a reverse asset acquisition results in a change in the basis of accounting on the Transaction date. As a result, the financial information presented herein for the three months and year ended |
Since it has been determined that the Transaction constitutes an acquisition of assets, the historical financial information prior to the date of the Transaction presented herein (and in future reports and filings) will continue to reflect that of the Company prior to the Transaction rather than that of the SOHI Assets as would be required in a business combination. Management believes that the historical financial information of the Company prior to the Transaction is more relevant to investors than the historical financial information of the SOHI Assets due to the relative size of the Company's 10 PSVs compared to the SOHI Assets and that the value and operating results of the PSVs are expected to be the ultimate driver of the Company's business in future periods. The results from the operations and cash flows of the SOHI Assets are included only in the Company's financial information from the Transaction date.
Accordingly, the Company's pre-Transaction financial information is presented for periods as of and for the three months and year ended
Condensed Consolidated Statements of Income or Loss | |||||||||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||||||||
Three months ended | Year ended | ||||||||||||||||||||||||||||||
Amounts in thousands of USD | |||||||||||||||||||||||||||||||
Charter revenue - PSVs | $ | 10,009 | $ | 6,169 | $ | 35,169 | $ | 20,654 | |||||||||||||||||||||||
Charter revenue - AHTS vessels | 1,709 | — | 3,729 | — | |||||||||||||||||||||||||||
Charter revenue - Crew Boats | 1,072 | — | 2,915 | — | |||||||||||||||||||||||||||
Total charter revenue | 12,790 | 6,169 | 41,813 | 20,654 | |||||||||||||||||||||||||||
Vessel operating expenses | (9,394 | ) | (6,001 | ) | (33,842 | ) | (25,173 | ) | |||||||||||||||||||||||
Voyage expenses | (132 | ) | (587 | ) | (1,519 | ) | (2,215 | ) | |||||||||||||||||||||||
General and administrative expenses | (2,142 | ) | (1,729 | ) | (5,741 | ) | (4,757 | ) | |||||||||||||||||||||||
Depreciation | (2,905 | ) | (4,432 | ) | (10,657 | ) | (17,298 | ) | |||||||||||||||||||||||
Impairment loss on vessels | — | (160,080 | ) | — | (160,080 | ) | |||||||||||||||||||||||||
Total operating expenses | (14,573 | ) | (172,829 | ) | (51,759 | ) | (209,523 | ) | |||||||||||||||||||||||
Operating loss | (1,783 | ) | (166,660 | ) | (9,946 | ) | (188,869 | ) | |||||||||||||||||||||||
Interest income | 13 | 22 | 60 | 207 | |||||||||||||||||||||||||||
Interest expense | (2,174 | ) | (2,323 | ) | (9,126 | ) | (8,031 | ) | |||||||||||||||||||||||
Other financial expense / (income), net | 1,663 | (346 | ) | (104 | ) | (601 | ) | ||||||||||||||||||||||||
Total other costs | (498 | ) | (2,647 | ) | (9,170 | ) | (8,425 | ) | |||||||||||||||||||||||
Income taxes | — | — | — | — | |||||||||||||||||||||||||||
Net loss | $ | (2,281 | ) | $ | (169,307 | ) | $ | (19,116 | ) | $ | (197,294 | ) | |||||||||||||||||||
Basic and diluted loss per share | (0.10 | ) | (26.23 | ) | (1.13 | ) | (31.50 | ) | |||||||||||||||||||||||
Basic and diluted weighted average number of common shares outstanding | 22,279,447 | 6,454,222 | 16,962,006 | 6,263,094 |
* Reflects the financial results of the Company including the periods both prior to (relating to a fleet of 10 PSVs) and subsequent to the Transaction date of
** Reflects the financial results of the Company (relating to a fleet of 10 PSVs) for the historical periods prior to the Transaction.
Condensed Consolidated Balance Sheets | |||||||||||||||
(unaudited) | |||||||||||||||
As of: | |||||||||||||||
Amounts in thousands of USD | |||||||||||||||
Cash and cash equivalents | $ | 12,681 | $ | 8,446 | |||||||||||
Accounts receivable, net | 8,381 | 2,602 | |||||||||||||
Prepaid expenses | 427 | 755 | |||||||||||||
Inventory | 1,808 | 1,181 | |||||||||||||
Other current assets | 406 | 1,176 | |||||||||||||
Total current assets | 23,703 | 14,160 | |||||||||||||
Vessels, net | 178,206 | 176,914 | |||||||||||||
Total non-current assets | 178,206 | 176,914 | |||||||||||||
Total assets | $ | 201,909 | $ | 191,074 | |||||||||||
Accounts payable | $ | 4,342 | $ | 843 | |||||||||||
Accounts payable, related party | 588 | 492 | |||||||||||||
Other current liabilities | 2,946 | 3,147 | |||||||||||||
Current debt | 207 | — | |||||||||||||
Total current liabilities | 8,083 | 4,482 | |||||||||||||
Non-current debt | 141,698 | 132,457 | |||||||||||||
Other long-term liabilities | — | 71 | |||||||||||||
Total non-current liabilities | 141,698 | 132,528 | |||||||||||||
Shareholders' equity | 52,128 | 54,064 | |||||||||||||
Total liabilities and shareholders' equity | $ | 201,909 | $ | 191,074 | |||||||||||
Other operating data for the three months and year ended | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
For the three months ended | For the year ended | |||||||||||||||||||
2019 (Successor) | 2018 (Predecessor) | 2019 (Predecessor and Successor) | 2018 (Predecessor) | |||||||||||||||||
Adjusted EBITDA (1) | $ | 723 | $ | (2,148 | ) | $ | (515 | ) | $ | (11,491 | ) | |||||||||
PSVs | ||||||||||||||||||||
Average dayrates per on-hire day (2) | $ | 11,524 | $ | 9,958 | $ | 11,260 | $ | 10,239 | ||||||||||||
Utilization rate % (3) | 89.8 | % | 70.5 | % | 87.0 | % | 58.6 | % | ||||||||||||
Effective dayrates (4) | 10,350 | 7,017 | 9,792 | 6,001 | ||||||||||||||||
Vessel operating expenses per day (5) | 7,498 | 6,523 | 7,320 | 6,897 | ||||||||||||||||
Average number of active vessels | 10.0 | 8.6 | 9.2 | 8.4 | ||||||||||||||||
Average number of vessels in layup | — | 1.4 | 0.8 | 1.6 | ||||||||||||||||
Average number of vessels | 10.0 | 10.0 | 10.0 | 10.0 | ||||||||||||||||
AHTS vessels | ||||||||||||||||||||
Average dayrates per on-hire day (2) | 9,055 | N/A* | 8,647 | N/A* | ||||||||||||||||
Utilization rate % (3) | 100.0 | % | N/A* | 73.7 | % | N/A* | ||||||||||||||
Effective dayrates (4) | 9,055 | N/A* | 6,371 | N/A* | ||||||||||||||||
Vessel operating expenses per day (5) | 5,181 | N/A* | 6,032 | N/A* | ||||||||||||||||
Average number of active vessels | 2.0 | N/A* | 2.0 | N/A* | ||||||||||||||||
Average number of vessels in layup | — | N/A* | — | N/A* | ||||||||||||||||
Average number of vessels | 2.0 | N/A* | 2.0 | N/A* | ||||||||||||||||
Crew Boats | ||||||||||||||||||||
Average dayrates per on-hire day (2) | 2,412 | N/A* | 2,492 | N/A* | ||||||||||||||||
Utilization rate % (3) | 42.4 | % | N/A* | 39.2 | % | N/A* | ||||||||||||||
Effective dayrates (4) | 1,023 | N/A* | 977 | N/A* | ||||||||||||||||
Vessel operating expenses per day (5) | 1,480 | N/A* | 1,316 | N/A* | ||||||||||||||||
Average number of vessels | 11.0 | N/A* | 11.0 | N/A* | ||||||||||||||||
* The other operating data for these vessels is presented from the Transaction date. Therefore, operating results for these vessels is not presented for the three months and year ended
(1) | See Non-GAAP Measures section below. |
(2) | Average dayrates are calculated by subtracting voyage expenses, including bunkers and port charges, from charter revenue and dividing the net amount by the number of on-hire days in the period. On-hire days are the number of available days less the number of days the vessel is offhire. Available days are the number of calendar days in a period less the number of days the vessel is laid-up. |
(3) | Utilization rates are determined by the dividing the number of on-hire days by the total number of available days (including offhire days and unutilized days) in the period. |
(4) | Effective dayrates represent the average day rate multiplied by the utilization rate for the respective period. |
(5) | Vessel operating costs per day represent vessel operating costs divided by the number of operating days during the period. Operating days are the total number of days (including offhire days and days in layup) in a period. Vessel operating expenses are lower while a vessel is in lay-up. There were no vessels in lay-up during the three months ended |
About the Company
Non-GAAP Measures
This press release presents the Company's results of operations on a combined basis for the periods prior to and subsequent to the reverse acquisition involving the AHTS vessels and Crew Boats acquired from SOHI. This press release also describes adjusted net loss, and adjusted EBITDA. The presentation of results of operations on a combined basis for the periods prior to and subsequent to the reverse acquisition, adjusted net loss, and adjusted EBITDA are not measures prepared in accordance with
The Company believes that the presentation of adjusted net loss, and adjusted EBITDA are useful to investors or other users of its financial statements, such as its lenders, because they facilitate the comparability and the evaluation of companies in the Company’s industry. In addition, the Company believes that adjusted net loss, and adjusted EBITDA are useful in evaluating its operating performance compared to that of other companies in the Company’s industry. The Company’s definitions of adjusted net loss, and adjusted EBITDA may not be the same as reported by other companies in the offshore support vessel industry or other industries.
Statement of income or loss prior to and subsequent to the Transaction
Predecessor | Successor | Predecessor and Successor | |||||||||
Amounts in thousands of USD | Year ended | ||||||||||
Charter revenue - PSVs | 5,258 | 29,911 | 35,169 | ||||||||
Charter revenue - AHTS vessels | — | 3,729 | 3,729 | ||||||||
Charter revenue - Crew Boats | — | 2,915 | 2,915 | ||||||||
Total charter revenue | 5,258 | 36,555 | 41,813 | ||||||||
Vessel operating expenses | (6,612 | ) | (27,230 | ) | (33,842 | ) | |||||
Voyage expenses | (395 | ) | (1,124 | ) | (1,519 | ) | |||||
General and administrative expenses | (1,207 | ) | (4,534 | ) | (5,741 | ) | |||||
Depreciation | (2,205 | ) | (8,452 | ) | (10,657 | ) | |||||
Total operating expenses | (10,419 | ) | (41,340 | ) | (51,759 | ) | |||||
Operating loss | (5,161 | ) | (4,785 | ) | (9,946 | ) | |||||
Interest income | 21 | 39 | 60 | ||||||||
Interest expense | (2,555 | ) | (6,571 | ) | (9,126 | ) | |||||
Other financial expense, net | 32 | (136 | ) | (104 | ) | ||||||
Total other costs | (2,502 | ) | (6,668 | ) | (9,170 | ) | |||||
Income taxes | — | — | — | ||||||||
Net loss | (7,663 | ) | (11,453 | ) | (19,116 | ) |
In Q4 2019, the allocation between the Predecessor and Successor activity was adjusted primarily to align the Predecessor activity to the period prior to the Transaction date. There was no impact to the year-to-date net income as a result of these adjustments.
The above table reflects the financial results of the Company both prior to (relating to a fleet of 10 PSVs) and subsequent to the Transaction date of
Reconciliation of Net Loss to Adjusted Net Loss
Successor | |||||||||||
For the three months ended | |||||||||||
Per share | |||||||||||
In thousands of | Amount | basic and diluted | |||||||||
Net loss | (2,281 | ) | (0.10 | ) | |||||||
Adjustment: | |||||||||||
(Gain) / loss on financial instruments | (1,453 | ) | (0.07 | ) | |||||||
Adjusted net loss | (3,734 | ) | (0.17 | ) |
Predecessor | |||||||||||
For the three months ended | |||||||||||
Per share | |||||||||||
In thousands of | Amount | basic and diluted | |||||||||
Net loss | (169,307 | ) | (26.23 | ) | |||||||
Adjustment: | |||||||||||
Impairment loss on vessels | 160,080 | 24.80 | |||||||||
Adjusted net loss | (9,227 | ) | (1.43 | ) |
Predecessor | |||||||||||
For the year ended | |||||||||||
Per share | |||||||||||
In thousands of | Amount | basic and diluted | |||||||||
Net loss | (197,294 | ) | (31.50 | ) | |||||||
Adjustment: | |||||||||||
Impairment loss on vessels | 160,080 | 25.56 | |||||||||
Adjusted net loss | (37,214 | ) | (5.94 | ) | |||||||
Reconciliation of Net Loss to Adjusted EBITDA
For the three months ended | For the year ended | ||||||||||||||||||||
2019 (Successor) | 2018 (Predecessor) | 2019 (Predecessor and Successor) | 2018 (Predecessor) | ||||||||||||||||||
Amounts in thousands of USD | |||||||||||||||||||||
Net loss | (2,281 | ) | (169,307 | ) | (19,116 | ) | (197,294 | ) | |||||||||||||
Interest income | (13 | ) | (22 | ) | (60 | ) | (207 | ) | |||||||||||||
Interest expense | 2,174 | 2,323 | 9,126 | 8,031 | |||||||||||||||||
Other financial (income) expense | (1,663 | ) | 346 | 104 | 601 | ||||||||||||||||
Amortization of acquired time charters | (399 | ) | — | (1,226 | ) | — | |||||||||||||||
Depreciation | 2,905 | 4,432 | 10,657 | 17,298 | |||||||||||||||||
Impairment loss on vessels | — | 160,080 | — | 160,080 | |||||||||||||||||
Adjusted EBITDA | 723 | (2,148 | ) | (515 | ) | (11,491 | ) | ||||||||||||||
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Matters discussed in this press release may constitute forward‐looking statements. The Private Securities Litigation Reform Act of 1995 provides safe harbor protections for forward‐looking statements in order to encourage companies to provide prospective information about their business. Forward‐looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The Company desires to take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and is including this cautionary statement in connection with this safe harbor legislation. The words "believe," "expect," "anticipate," "estimate," "intend," "plan," "target," "project," "likely," "may," "will," "would," "could" and similar expressions identify forward‐looking statements.
The forward‐looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in the Company’s records and other data available from third parties. Although management believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond the Company’s control, there can be no assurance that the Company will achieve or accomplish these expectations, beliefs or projections. The Company undertakes no obligation, and specifically declines any obligation, except as required by law, to publicly update or revise any forward‐looking statements, whether as a result of new information, future events or otherwise.
Important factors that, in the Company’s view, could cause actual results to differ materially from those discussed in the forward-looking statements include the strength of world economies and currencies, general market conditions, including fluctuations in charter rates and vessel values, changes in demand in the offshore support vessel ("OSV") market, changes in charter hire rates and vessel values, demand in OSVs, the Company’s operating expenses, including bunker prices, dry docking and insurance costs, governmental rules and regulations or actions taken by regulatory authorities as well as potential liability from pending or future litigation, general domestic and international political conditions, potential disruption of shipping routes due to accidents or political events, the availability of financing and refinancing, vessel breakdowns and instances of off-hire and other important factors described from time to time in the reports filed by the Company with the
Contacts:
+ 377 9798 5717 (
+ 1 646 432 3315 (
Web-site: www.hermitage-offshore.com
Source:
2020 GlobeNewswire, Inc., source