Aker Solutions has agreed to transfer ownership in its subsidiary Aker Marine Contractors (AMC) to Singapore listed company Ezra Holdings Ltd (Ezra) in exchange for equity instruments in Ezra and cash. In addition, 50% of Aker Solutions' ownership in the Aker Connector installation vessel will be transferred to Ezra.
With AMC's experienced personnel, assets and project execution capabilities on board, the new partnership is a significant step towards realising the ambition of developing a world class SURF (subsea umbilicals risers and flowlines) and floater installation company with differentiated assets covering all water depths and regions of the world. In addition, Ezra will access Aker Solutions' wide range of subsea and other products to create a leading combined EPCI capability.
Under the agreement, Aker Solutions will sell 100 percent of the shares in its wholly-owned subsidiary AMC to Singapore-based Ezra, in which Aker Solutions becomes a substantial shareholder. Aker Solutions and Ezra also enter a 50/50 joint venture for ownership and chartering of the new-build Aker Connector (to be renamed AMC Connector), which will be completed in early 2012.
In the transaction, AMC is valued at USD 250 million. Ezra will settle the transaction by paying Aker Solutions USD 50 million in cash, USD 100 million in shares in Ezra Holdings Ltd, and USD 50 million in a convertible bond with maturity after 36 months. The final USD 50 million plus interest will be settled in cash on and subsequent to delivery of Aker Connector. The USD 100 million payment in shares will give Aker Solutions a substantial shareholding in Ezra. Aker Solutions will be represented with one director on the board of Ezra.
Upon delivery of the Aker Connector vessel, Ezra will take 50 percent ownership in the vessel owning company including assumption of 50 percent of Aker Connector's capital expenditure commitments.
"AMC is a strong engineering and project execution organisation. By becoming part of Ezra, AMC will have access to a larger and rapidly growing fleet of installation vessels covering all IMR and SURF installation segments - including flexible and rigid pipelay with capacity up to 3,500 metres water depth - which will enable Ezra/AMC to compete with the world's leading SURF contractors," says Øyvind Eriksen, executive chairman, Aker Solutions. Currently AMC operates two vessels, the Boa Deep C and Boa Sub C.
Ezra operates in the offshore market under the EMAS brand name. EMAS is an integrated offshore support solutions provider for the oil and gas industry. The business was founded in 1992 and is headquartered in Singapore.
"This will be a transformational move that will propel Ezra and AMC to jointly become one of the world's top-five SURF contractors," says Eriksen.
While AMC's foothold is primarily in Gulf of Mexico and Europe, Ezra has a strong position in Asia Pacific including Australia, as well as West Africa. When teaming up for product deliveries combined with installation and subsea construction services, the partnership will also benefit from Aker Solutions' strong positions in Brazil and arctic regions.
"We already operate a large fleet of offshore support vessels and are engaged in engineering, fabrication and offshore construction. This partnership will be the foundation for creating a world class deepwater SURF and floater installation player, and forms a key part of our next lap growth strategy. We see great potential in partnering with Aker Solutions to offer true EPCI capabilities combining products and installation services. We welcome Aker Solutions as a valued partner in the company," says Lionel Lee, managing director of Ezra.
Ezra and AMC will initially operate a fleet of five construction and SURF installation vessels, growing rapidly to ten differentiated vessels from 2013. Ezra also operates approximately 30 anchor handling tugs (AHT), anchor handling tug supply (AHTS) and diving support vessels (DSV), and two accommodation barges through its offshore support division.
Aker Marine Contractors has a proud and unique heritage, having successfully executed the most complex projects around the world over the last 35 years. Aker Marine Contractors handled the largest structure ever moved on the surface of the earth, undertook the longest tow of a fixed platform, pioneered offshore float-over of large topsides and installed subsea equipment at the world's northernmost field.
Specialising in offshore support, installation and marine services, EMAS offers integrated solutions across a wide spectrum of the support supply chain, over the entire life cycle of an oilfield. With operations across the globe, the group currently has offices in the UK, the US, Norway, India, Thailand, Malaysia, Vietnam, Australia and Brunei.
The transaction is expected to be completed during Q1 2011.
Aker Solutions ASA's advisors for this transaction have been Arctic Securities (financial) and BA-HR (legal).