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Prosafe and Floatel sign merger agreement

Prosafe and Floatel International have entered into a merger agreement to create a bigger company to ride through the prolonged industry downturn and challenging operating landscape for offshore accommodation.

Oslo-listed Prosafe owns and operates semi-submersible accommodation vessels, and Floatel delivers offshore accommodation to clients in the oil and gas industry worldwide.

In a merger of equals, Prosafe will acquire Floatel with consideration in Prosafe shares, whereby Floatel’s principal shareholders, FELS Offshore, will become large shareholders in Prosafe. Floatel is an associated company of Keppel Offshore & Marine (Keppel O&M) while FELS Offshore is wholly-owned by Keppel O&M.

“The need for consolidation in oil services is well known. We consider this transaction not only strategically sound, but also necessary to adapt to the significant changes in our markets and competitive landscape in recent years,” said Glen Ole Rødland, chairman of the board at Prosafe.

As part of the proposed merger, Prosafe will acquire all ordinary shares of Floatel based on a 55:45 exchange ratio between Prosafe and Floatel respectively. This will be based on the issuance of new shares in Prosafe equal to 45% of all Prosafe shares on a fully diluted basis, and new conditional preference shares to the shareholders of Floatel relative to their shareholding in the company.

Applying the exchange ratio to FELS Offshore’s shareholding interest of 49.92% in Floatel, FELS Offshore would hold approximately 22% of all the shares in Prosafe on a fully diluted basis after the transaction is completed.

The amount of dividends under the issuance of Prosafe preference shares will depend on the final judgement or settlement in the litigation between Westcon Yards and Prosafe Rigs concerning the conversion of the tender support vessel Safe Scandinavia.

The dispute arose due to a substantial cost overrun of Westcon’s price estimate for the conversion of the Safe Scandinavia to a tender support vessel.

The deal is subject to regulatory clearances and approval from creditors and shareholders, as well as the continued listing of Prosafe on the Oslo Stock Exchange. The transaction is planned for completion by the third quarter of this year.


“2014 was a paradigm shift that triggered an unprecedented downturn and lasting changes in the oil industry. We also face far tougher competition than before, due to a considerable overcapacity of both drilling rigs and supply vessels that are now being used as temporary accommodation. This situation is expected to continue,” Rødland said.

“A combination of Prosafe and Floatel will also be able to offer a better product to the customers, through a more flexible and geographically diversified fleet. We will to a greater extent offer the right capacity at the right time in all central regions for offshore oil and gas,” he said.

Rødland emphasised that the main point of the deal is to create a company that is better equipped to compete in the global market, especially in less mature regions where demand for flotels is still growing.

Prosafe currently owns and operates a total of nine vessels while Floatel’s fleet counts five units.

A merged company will at the outset have the bulk of its activity in the North Sea and Brazil. Prosafe’s current contracts on the Norwegian continental shelf expire during the first half of 2019 while Floatel’s contracts in the same region expire in the third quarter of 2020 including options.

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