Equinox Offshore Accommodation Limited (EOAL) has not met the amended milestone delivery dates agreed with the initial charterer of the vessel as was announced on November 28, 2008. As a result, that charter has been terminated in accordance with its terms.
Despite the termination, EOAL will continue to provide updated schedule information to the charterer in an effort to meet that company’s demand for a DPII vessel should its project schedule be delayed.
The delays to the delivery schedule of ARV1 have been caused by the application of the complex regulatory regime applying to the unique accommodation and repair vessel concept. The special rules applying have created significant extra engineering work and have delayed class approval of the vessel.
Mechanical completion of the vessel is now expected to occur by 31 January 2009, with commissioning expected to take between a further three and eight weeks.
On completion, the vessel will be classed as an ARV vessel with full capacity to operate as both an accommodation and repair vessel.
The vessel is still expected to be completed below budget.
Market and Contracts
The accommodation market remains very strong due to high demand and an increasingly limited supply of accommodation vessels.
The Company is now engaged in discussions with a number of companies who require vessels in the first quarter of 2009. Of the projects being bid for, all are of a longer duration than the original charter contract.
The Company is now working to secure a contract upon completion of the vessel.
As previously announced, ARV2 is currently located at Sembawang Shipyard, with conversion ready to commence upon the departure of ARV1 from the yard.
All major long lead items for the vessel have been purchased, with many of them already delivered to the yard. In addition, a substantial amount of engineering has been completed since the purchase of the vessel in February 2008.
Assuming full debt funding is secured and commencement of conversion occurs no later than the beginning of March 2009, the vessel is estimated to be completed within seven months of commencement.
A longer period of conversion will be necessary if the conversion is to be funded from cashflow from the operation of ARV1 alone.
Budget and Funding to Completion
The company will seek to fund remaining capital expenditures on ARV1 and committed investments on ARV2 through a bridge financing facility.
The funding requirement will be from the end of February 2009.
The company is in positive dialog with potential lenders now and is working to secure bridge funding until a new contract is secured and bank financing is in place.
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