Dockwise has announced five near term contracts awarded to its subsidiaries, Dockwise Shipping and Offshore Kinematics Inc (OKI), for the transportation of drilling rigs and dredging equipment, and the supply of float-over hardware. Total revenues for the contracts are US $40 million.
In the light of current financial market conditions, Dockwise reiterates the security of its debt structure and the strength of its cash flow position. Current trading continues consistently in-line with guidance provided at interim results announcement.
2008 & 2009 Contract Awards
Dockwise Shipping is to transport the drilling rig, Noble Hans Deul, from its new- build yard in China to its first assignment in the North Sea. Jackup rig Noble Carl Norberg will be moved from West Africa to a new assignment in Mexico. On behalf of CCCC from China Dockwise Shipping will also transport three loads of dredging equipment to Nigeria and Sri Lanka. All projects are for execution in the final quarter of 2008, with total revenues of more than US $27 million.
OKI has been contracted by the EOS / Woodside joint venture to provide float-over hardware on the North Rankin B project. For this contract, OKI is to invest US $4 million in the world's largest test press (12,000 MT with 2 m stroke), an investment enabling OKI to secure a range of similar offshore marine projects. It will also provide for OKI to expand into several services increasingly sought by clients: rubber molding, fabrication and machining. The contract, largely for execution in 2009, has a value of almost US $13 million.
Financial Update Dockwise's debt structure, covenants and repayment terms are unchanged and its debt facility is unaffected by the recent crisis in the banking industry. Debt has peaked at US $1,040 million, with 75% of interest fixed at 5.05%. Cash conversion from EBITDA remains stable and consistent with previous quarters. The stated 2008 EBITDA guidance of $225m, provides for comfortable headroom for both principal covenants, leverage (Net Debt / EBITDA) and interest cover for the remainder of the financial year.
Looking ahead to 2009, the completion of our fleet expansion and refurbishment program will ensure substantially lower capex; some $50 million compared to approximately $240 million in 2008. This will allow the Board, as previously stated, to plan for a marked drop in financial gearing and to utilize free cash flow to deleverage the balance sheet. While the Board anticipates achieving a gearing ratio (net debt/EBITDA) of below 3x at end 2009, our covenants permit 3.85x and 3.4x for 2009 and 2010, respectively. Scheduled repayments of debt commence in 2009 ($ 10million) and continue 2010 ($ 10million) and 2011 ($12.5 million).
Andre Goedee, Chief Executive, Dockwise Ltd, said, "Progress in 2008 continues according to plan and we see encouraging signs in our markets as we look ahead into 2009. Our investment in fleet refurbishment and expansion during 2008 has equipped Dockwise well to capture growth opportunities in both traditional and new markets.
The current capex programme is nearing completion and following the final installments this winter, Dockwise will become free cashflow positive during the first quarter of 2009. We will then progressively deleverage our business and review options to develop value and reward shareholders."
Dockwise will present Q3 results on November 17, 2008.
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