Nimrod Sea Asst Share Discussion Threads

[rambutan2] 09/5/2015 16:46

Fairly predictable...

Shareholder Update

8 May 2015

Following the dividend announcement and update released on 16 April 2015 which stated that the Company Nimrod Sea Assets Limited (NSA) would provide an update regarding the second Fletcher vessel (Aberdeen DIS) the Company can confirm that Fletcher Shipping has notified Aberdeen Offshore (which is the General Partner of the entity in which NSA has a 75% equity interest) that it will not be taking delivery of the second vessel (known as FS Scorpius) from the shipbuilder. As a result, the bareboat charter between Aberdeen Offshore and Fletcher Shipping for the second vessel has been cancelled by Fletcher Shipping and NSA's investment in the second vessel will not be proceeding. Funds allocated for that investment are available for investment in other projects. The wider implications of the cancellation of the bareboat charter for the second vessel are under review by Aberdeen Offshore.

Furthermore in two of NSA's investments the company has been informed that dividends are being held within the vessel owning companies waiting to be distributed:

Bukit Timah: the charterer continues to perform all its obligations and requirements, including prompt payment of the bareboat charter hire and being in compliance with the relevant covenants. Despite this one member of the senior debt banking syndicate is currently withholding permission to allow us to distribute the agreed dividend from the entity to NSA. It is expected that following discussions these accrued dividend payments will be paid given the strong rebound in the oil price and strength of the order book of our counter-party.

Norseman: This investment is in a high end Northern Europe focused asset where vessel values have been disproportionately affected by economic sanctions against Russia given it is used to support production in these regions. The charterer continues to fulfil all its obligations including prompt and timely payment of the charter income. A valuation of the vessel was undertaken, as required by the senior loan agreement, leading to a technical breach of the loan-to-value covenant; the bank has agreed a temporary waiver of this provided dividends are retained in the company awaiting a revaluation. NSA is therefore not expecting the June distribution and a reduced dividend is forecast to resume in December with this resuming to expected levels in June 2016.

The Company will provide updates on the above mentioned investments when there is further information.

The Executive Directors reiterate that while they are extremely confident of the long-term market potential deals are also taking longer to close as the Company and senior debt providers have become more cautious about counterparty risk in the changed environment. The Executive Directors have also noticed a decline in the number of prospective quality projects that meet the IRR and residual value projections of the Company, that satisfy all investment criteria, that carry a sensible risk weighting in the current market, and that will deliver a well-balanced portfolio. However they remain confident in the income potential and residual value characteristics of the vessels throughout the market cycle although there is some short-term uncertainty regarding asset values that is making closing transactions on acceptable terms to the Company somewhat slower than anticipated.

The WTI oil price has risen from a low of USD44.08ppb on January 28 2015 to USD 59.19ppb on May 8 2015 (a rise of 34%) and in the view of the Executive Directors this is signalling a return to confidence in the offshore oil and gas industry and they therefore remain confident in the long-term maintenance and marine asset market but will not enter into transactions through this period unless they are likely to add significant value for the shareholders.

Following the announcement on 30 April 2015 about its latest transaction the Company has now completed seven investments to date in the following Marine Asset Companies: Bukit Timah Offshore DIS, Norseman Offshore IS, DSV Alliance DIS, Volstad Maritime II DIS, Altus Subsea IS, Aberdeen DIS and Jane Offshore Ltd representing 54% of the Company's capital.