Sevan Marine reported the results for the first quarter of 2011.
The Company's working capital is insufficient to support its present requirements and there is an immediate need to solve the Company's financial situation. The Company, together with its advisors, is in the process of seeking a debt restructuring, potentially in combination with a share issue as well as a reduction of overhead cost to secure the Company's financial position. A robust financial structure coupled with the Company's FPSO assets and technology should form the basis for creating shareholder value and securing stakeholders going forward. However, the Company is dependent on a successful restructuring in order to meet its commitments. The Company is in constructive dialogue with its stakeholders, but at the date of this report, no firm resolution has been reached.
The Board confirms that the 1Q 2011 financial statements have been prepared based on a going concern assumption. The basis for this assumption is the Company's strategic plan and a successful outcome of the restructuring plans described above. The outcome of the restructuring is however, at the date of this report, still uncertain and may impact the assumptions applied in the preparation of the 1Q 2011 financial statements. In addition to the going concern assumption, this particularly relates to "Sevan Capital Assets" and "Deferred Tax Assets" as further described in the attached report. Sevan Marine has engaged ABG Sundal Collier, DnB NOR Markets, Pareto Securities and SEB Enskilda to address a financial and strategic restructuring of Sevan Marine.
The loss from continued business carry only rounding differences compared to the preliminary figures presented in the announcement on May 20, 2011. However, a temporary breach of an equity covenant as further described in note 9 in the attached report, requires that amounts which formally could be held to be mandatory repayable at balance sheet date to be classified as current. All interest-bearing debt was therefore classified as current as per March 31, 2011.
Operating revenue for the quarter amounted to USD 51.1 million (USD 53.5 million). EBITDAFX was USD 20.4 million (USD 27.6 million). Operating profit was USD 3.8 million (USD 13.0 million), and net loss was USD 53.3 million (net loss of USD 63.3 million).
Operating revenue was USD 2.4 million lower than the previous quarter mainly as a result of a non-recurring compensation received from the Oilexco administration in previous quarter. This effect was partly offset by higher revenue from rebillable expenses from FPSO Sevan Voyageur and FPSO Sevan Hummingbird and higher revenue from the Topside and Process Technology segment.
Operating expense was USD 4.7 million higher than the previous quarter mainly due to higher rebillable operating expense on FPSO Sevan Voyageur and FPSO Sevan Hummingbird as well as higher operating expense in the Topside and Process Technology segment, all of which are also reflected in the revenues above.
A net foreign exchange loss relating to financing of USD 21.4 million (gain of USD 0.7 million) was mainly a result of unrealized disagio on NOK-nominated bonds following a strengthening in NOK compared to USD of 5.8% during the quarter.
Financial expense through profit and loss decreased by USD 25.4 million to USD 22.0 million (USD 47.4 million) mainly due to non-recurring expenses relating to refinancing activities in previous quarter.
Net loss on continued business was USD 39.7 million (loss of USD 45.4 million) for the quarter. Net pro forma loss reflects the net loss as if the drilling segment was a third party to the Sevan Marine Group and amounted to USD 33.6 million for the quarter.
Net loss on discontinued business, which reflects the net loss from the drilling segment to be de-consolidated following the initial public offering executed on May 3, 2011, amounted to USD 13.6 million (USD 17.9 million) for the quarter.
As of March 31, 2011, total assets amounted to USD 2.723 billion (USD 2.587 billion), of which USD 1,169.7 million (USD 2,145 billion) was capitalized as 'Sevan Capital Assets'. Assets of disposal group, which reflect the total assets in the drilling segment, amounted to USD 1.298 billion. Cash and cash equivalents amounted to USD 29.2 million (USD 116.1 million).
As of March 31, 2011, Sevan Marine has undrawn USD 52.1 million on a bank facility to part finance the upgrade of FPSO Sevan Voyageur which is not reflected on the balance sheet as per March 31, 2011. As at the date of this report, USD 10.0 million remains undrawn under the financing facility. In addition, the discontinued operation has undrawn USD 342.9 million on a bank facility to fund the construction of Sevan Brasil which is not reflected on the balance sheet as per March 31, 2011.
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