The UAE’s Topaz Energy and Marine has inked a $330 million debt refinancing deal which parent company Renaissance Services says increases liquidity for investment in its offshore support vessel arm and frees up $60 million of trapped equity.
In a statement to the Muscat securities market today, Renaissance said Standard Chartered, DVB Bank and First Gulf Bank have refinanced $203 million of Topaz’s debt in the first tranche of refinancing.
Topaz, which is split into a 100-vessel marine unit slated for a listing and an engineering unit focused on the UAE, is recovering from a difficult year last year. Profit fell off 77% in H1 2011, the company aborted a planned listing on the London Stock Exchange, and Renaissance revealed a long-running $2.9 fraud by an employee, “ethical misconduct and control weaknesses” in the business, and weak performance in the company’s loss-making Topaz Engineering division.
The Marine unit remains strong, winning over $500 million in new charters in 2011 alone. The Topaz fleet, with an average age of 6.5 years compared to an industry average of 13 years, operates primarily in the MENA and Caspian regions. The company also has taken hold of the engineering business and has a path to return to profit.
Renaissance took wide-ranging action after revealing the problems at Topaz last summer, and expects its restructured oil and gas engineering business to break even within a year, despite failing to meet its own target of generating a “minimum” $160 million backlog by the end of last year, with a current engineering backlog totalling $85 million.
The announcement follows a statement in November that the company was seeking $380 million in refinancing, with $125 million of the funds to be raised from a consortium of creditors will go toward financing vessels under construction and investing in new ones.
Vishal Goenka, Group Chief Financial Officer of Renaissance, said:
“We are pleased with the support our banking partners have shown in times of difficult economic conditions globally. The successful completion of the deal is testament to the confidence the banks place in Topaz Marine, which is underpinned by the Company’s track record of performance and corporate governance, as well as its prospects for future growth. We are further encouraged by the interest in the second phase of this transaction expressed by regional and international banks which reaffirms the market’s appreciation of the company’s business model.”