Solstad Offshore ASA (SOFF) has an ownership of 30.23% of the company MPU Offshore Lift ASA (MPU). MPU has a large vessel under construction at Keppel Verolme in Rotterdam, which is designed for, among other abilities, the decommissioning of offshore installations.
The construction of the vessel is highly complex and has resulted in significant cost overruns compared to the original budget.
In connection with MPU's impending bank financing which the company, under certain conditions, has been granted, the administration of MPU has made a revised cost estimate for the project. The Board of MPU, where SOFF is represented, has been presented a cost increase to finalize the project of approximately EUR 100 million, equivalent to approximately 25% compared to previous estimates presented to both the Board and the market in general. This increase of the construction cost needs to be covered by new equity.
The Board of SOFF is very disappointed by the unforeseen cost increase, and has decided not to participate in the coming equity issue in MPU.
SOFF expects to book a significant loss related to the investment of MPU. The exact amount is depending on the result of the ongoing financing process of MPU. SOFF's total investment in MPU consist of NOK 209 mill in shares and USD 31,7 in a convertible bond.
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