Prosafe Se · OSL:PRS
Prosafe — Investor Presentation (August 2016)
38 slides from Prosafe's investor presentation, August 2016
Slide 1: Company presentation
August 2016 Company presentation
Slide 2: Disclaimer
Disclaimer All statements in this presentation other than statements of historical fact are forward-looking statements, which are subject to a number of risks, uncertainties, and assumptions that are difficult to predict and are based upon assumptions as to future events that may not prove accurate.
Slide 3: Agenda
Agenda Recent developments Restructuring Operations review Strategy & Outlook Summary 3
Slide 4: Recent developments
Recent developments Will secure runway through 2020 after comprehensive refinancing Will significantly improve debt structure and cash flow Will have limited covenants and significantly improved room to manoeuvre Re-organisation into a lean organisation • Safe and cost efficient management of fleet
Slide 5: Agenda
Agenda Recent developments Restructuring Operations review Strategy update Summary 5
Slide 6: Restructuring
Restructuring 1. Restructuring goal 2. Financial restructuring 3. Operation cost/efficiency restructuring 4. Supply side restructuring 6
Slide 7: 1. Restructuring goal: re-establishing the Prosafe investment case
1. Restructuring goal: re-establishing the Prosafe investment case 1 Premium asset base, purpose built for key markets Extensive fleet renewal program successfully completed, 2 further securing Prosafe’s “license to operate” Capable technical organisation with broad support 3 amongst clients – renew
Slide 8: 2. Financial restructuring: recapitalisation and net debt
2.Financial restructuring: recapitalisation and net debt Improved cash flow 2017-2020 of approx. USD 1,023 million • Reduction of debt/new build investment USD 530 million • Reduction of amortisation of USD 470 million • Interest saving from swap restructuring of approx. USD 23m 8
Slide 9: 2. Financial restructuring: significantly improved debt profile
2. Financial restructuring : significantly improved debt profile Chart + table with Current changes.. amortisation profile1 Amortisation profile after recapitalisation1 USDm USDm 280 2016-20: USD 968m 2016-20: USD 205m 280 240 240 200 200 160 160 Amortisation relief of USD 128m 120 (2 instalments on
Slide 10: 2. Financial restructuring: Pro-forma balance sheet per Q2 post refinancing
2. Financial restructuring: Pro-forma balance sheet per Q2 post refinancing Reported Adjusted (Unaudited figures in USD million) 30.06.16 Adj. 30.06.16 Goodwill 226,7 226,7 Vessels 1 559,0 1 559,0 New builds 654,9 654,9 Other non-current assets 4,3 4,3 • Reduced debt Total non-current assets 2 444,9
Slide 11: 2. Revised covenants - room to manoeuvre
2. Revised covenants - room to manoeuvre Liquidity minimum MUSD 65million (from closing of transaction) Interest coverage ratio • Minimum 1.0 X (from closing of transaction until 31 Dec’ 2019) • Minimum 1.5 X (from 1 Jan’ 2020 onwards) Leverage ratio • Suspended until 31 Dec’ 2020 Minimum market val
Slide 12: 2. Refinancing status
2. Refinancing status Approvals Cosco deal agreed/signed 4 Bonds approved EGM approved the refinancing Bank lenders representing 89 per cent of outstanding bank debt have approved or provided in principle agreement for the refinancing The Board has decided to conduct a repair issue of up to 504 mill
Slide 13: 3. Substantial cost/efficiency improvements - on target
3. Substantial cost/efficiency improvements - on target Target of sustainable cost reductions (efficiencies) of USD 30-40 million per annum • Target to reduce headcount by 35-40 per cent by Q4 2016/Q1 2017 • Effects more visible from Q3 16 onwards, and full effect on measures from Q1 2017 onwards Im
Slide 14: 3. Cost Reduction – offshore
3. Cost Reduction – offshore Now seeing cost per day (CPD) for vessels in operation being reduced by 20-25 per cent compared to 2014 Opex (CPD k/d) NCS UKCS Brazil (figures in USD) DP Moored DP 2014 75-80 50-55 60-65 2016e 60-65 40-45 45-50 Stacking CPD (k/d) High-spec Low-spec (figures in USD) vess
Slide 15: 3. Cost reduction - onshore
3. Cost reduction - onshore Onshore costs in 2014 and 2015 average USD 40m p.a • Overall onshore costs are trending down – cost saving initiatives • Slim lining of organisation – significant headcount reductions From 2017 onshore cost down by USD 10-12 million per annum (30%) 15
Slide 16: 3. Lower Capex – return to maintenance
3. Lower Capex – return to maintenance Strategic projects - new-builds and major conversions all completed Focus will return to maintenance capex / 5 year Special Periodic Survey Short to medium term target of maintenance/fleet capex of USD 20-30 million per annum 16
Slide 17: 3. Cost and capex reduction summary
3. Cost and capex reduction summary Target set in Q1 2016 : USD 30-40 million per annum in cost cuts / efficiencies Full effects visible from Q1 2017 onward 2011-2015 annual Revised target levels Target savings 2017 average levels Offshore opex1) USD 180m USD 140 – 150m USD 30-40m (20%) Onshore opex
Slide 18: 4. The Prosafe development: consolidation story
4. The Prosafe development: consolidation story Taking the lead in consolidation, scrapping and restructuring Taking the lead «Restructuring»: «Consolidation»: 1. Renewal 1. Acq. of Discoverer ASA 2. Conversion to TSV «Creation»: 2. Acq. of Safe Scandinavia 3. Scrapping 3. Acq. of MSV Regalia Merger
Slide 19: Agenda
Agenda Recent developments Restructuring Operations review Strategy update Summary 19
Slide 20: Highly competitive vessels with increased earnings capacity
Highly competitive vessels with increased earnings capacity Safe Scandinavia 20y life Regalia Safe Boreas State-of-the-art North extension in 2014 and 20y life New build extension delivered Sea capable fleet TSV conversion in 2009 2015 2016 Fleet renewal program Safe Zephyrus Safe Caledonia Safe Bri
Slide 21: Operations overview
Operations overview Geographic overview Key comments In Operation: Regalia, Shell, Brent Charlie, UKCS Safe Boreas, Talisman, Montrose A, UKCS Safe Concordia, Petrobras, P56, Brazil Safe Scandinavia (TSV), Statoil, Oseberg Øst, NCS Safe Zephyrus, Det Norske, Ivar Aasen, NCS Safe Zephyrus M
Slide 22: Contract coverage
Contract coverage Safe Zephyrus LSS 6m itera LL a = I a 7 a a Safe Notos | Fe Safe Eurus [ | ote stole I i a so Safe Astoria [ij iz || im l= | Sere concorcic TE Hl il [] a | | | | | Sete | 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 mContract #Optio
Slide 23: Orderbook – superior track record in North Sea awards
Orderbook – superior track record in North Sea awards Prosafe has won 17 out of 23 new awards in the Status end Q2 16 (gross value) Firm contracts USD 703 North Sea since 2012, demonstrating continous + Options (1) USD 564 superior competitiveness in this key region = Total USD 1267 Diversified trac
Slide 24: Capital expenditure 2016
Capital expenditure 2016 Agreed deferred delivery to 31 December 2019 for Safe Eurus – therefore reduced capex for 2016. In addition Prosafe can cancel. Aggregate capital expenditure – adjusting for Safe Eurus delivery - for 2016 is in line with previous indications of approx. USD 500 million Remain
Slide 25: Agenda
Agenda Recent developments Restructuring Operations review Strategy update Summary 25
Slide 26: Back to normal: accommodation market demand drivers
Back to normal: accommodation market demand drivers Share of market 10-30% 60-80% 0-10% Market visibility High Low Medium Lead time Long Short Medium Project sanctioning, Age of installed topsides, Shutdowns and Key drivers hookup and commissioning subsea tieback projects platform removal 26
Slide 27: Activity level forecasted to recover from 2018
Activity level forecasted to recover from 2018 2014 – 16; “Hook-ups” 2016 – 20; “Back to normal” Goliat Returning to traditional demand (maintenance and modification) with shorter lead times compared to hook-up projects 1 Continuous growth in installed base with significant number of new fields in p
Slide 28: Geographical demand
Geographical demand Semi-submersible vessels have been deployed in a wide range of geographical locations, although primarily in highly regulated, harsh and/or deep water environments such as UK North Sea and Norwegian Continental Shelf. Prosafe has conducted 76 semi-submersible accommodation vessel
Slide 29: Increasing lifetime trigger need for modifications
Increasing lifetime trigger need for modifications History has shown that fields Lifetime for selected fields in Norway seldom cease operation at the end of the designed field life • But rather increase life time with 10- 25 years Platforms increasing lifetime beyond design life trigger need for mod
Slide 30: Indicative: global accommodation market anticipated to rebalance by 2020
Indicative: global accommodation market anticipated to rebalance by 2020 High fleet growth combined with weaker market – “low end” vessels at risk by 2020 Accommodation Competitive Competitive vessels by owner fleet: fleet: 33 Axis 29 POSH YiuLian OOS 25 FOE COSL 23 Pemex Cotemar 20 17 17 Floatel 16
Slide 31: Agenda
Agenda Recent developments Restructuring Financial results Operations review Strategy update Summary 31
Slide 32: Summary
Summary Will secure runway through 2020 after comprehensive refinancing Will significantly improve debt structure and cash flow Will have limited covenants and significantly improved room to manoeuvre Re-organisation into a lean organisation • Focus continues on safe and cost efficient management of
Slide 33: Appendix
Appendix 33 ’ Prosafe
Slide 34: Recapitalisation summary
Recapitalisation summary • Equity capital raise of USD 130m Capital raise • USD 40m to be used to buy-back part of the Company’s senior unsecured bonds • The Board has decided to conduct a subsequent offering of up to USD 15m (repair issue) • NOK 2.4 billion in aggregate face value of the Company's
Slide 35: Income statement
Income statement (Unaudited figures in USD million) Q2 16 Q1 16 Q2 15 6M 16 6M 15 2015 Operating revenues 115.4 103.0 92.5 218.4 216.7 474.7 Operating expenses (53.8) (57.7) (51.0) (111.5) (102.8) (211.8) EBITDA 61.6 45.3 41.5 106.9 113.9 262.9 Depreciation (29.1) (23.4) (18.7) (52.5) (35.7) (86.5)
Slide 36: Balance sheet
Balance sheet (Unaudited figures in USD million) 30.06.16 31.03.16 31.12.15 30.06.15 Goodwill 226.7 226.7 226.7 226.7 Vessels 1 559.0 1 581.6 1 578.6 1 611.5 New builds 654.9 635.3 228.5 211.1 Other non-current assets 4.3 4.7 4.9 6.0 Total non-current assets 2 444.9 2 448.3 2 038.7 2 055.3 Cash and
Slide 37: Operating revenues
Operating revenues (USD million) Q2 16 Q1 16 Q2 15 6M 16 6M 15 2015 Charter income 109.1 56.2 80.0 165.3 191.8 425.4 Mob/demob income 0.5 13.9 0.8 14.4 1.8 5.4 Other income 5.8 32.9 11.7 38.7 23.1 43.9 Total 115.4 103.0 92.5 218.4 216.7 474.7
Slide 38: Covenants Q2 2016
Covenants Q2 2016 Liquidity minimum MUSD 65* • Cash Q2: MUSD 68 Book equity minimum 25 percent • Book equity Q2: 26 per cent Leverage ratio maximum 6.0 • Net debt/adjusted EBITDA Q2: 3.6 * In April, Prosafe obtained a reduced minimum liquidity covenant of USD 20 million until the end of the third qu