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REM and Solstad to merge to weather offshore downturn

REM and Solstad to merge to weather offshore downturn
Norwegian offshore vessel owners REM Offshore and Solstad are merging to weather the downturn in the sector.

The agreement announced on Thursday will see REM Offshore merging with a subsidiary of Solstad and REM chairman and controlling shareholder Åge Remøy becoming a key shareholder in Solstad.

The merged companies will operate a combined total of 62 vessels. The combined fleet of the two companies of CSV vessels will be operated by Solstad from its head office, while the combined fleet of PSV vessels will be operated from the current REM head office.

"The offshore service vessel (OSV) industry is undergoing a period of great uncertainty," says Lars Peder Solstad, ceo of Solstad.

“Reduced spending across the upstream value chain has contributed to the current overcapacity, adversely impacting dayrates and utilisation. The OSV industry's fragmented structure is further compounding these negative effects. Solstad and REM both see the need to create larger entities with financial and operational strength to weather the downturn.”

Solstad added there remained a strong rationale for further consolidation.

REM Offshore’s Remøy said he was satisfied that substantial activities would allocated to the company’s workforce of nearly 500.

Move comes after REM bondholders rejected a restructuring plan on 21 July with key bondholder Aker Capital not supporting the proposal.

Øyvind Eriksen, president and ceo of Aker said: "Solstad and Aker have put forth an industrial solution for the restructuring of Rem Offshore. The merger is a necessary structural measure in today's offshore service vessel (OSV) market, which will enable the combined company to achieve significant synergies through more efficient operations and a lower cost base.

“The combination of Solstad's, REM's and Aker's industrial expertise, M&A capabilities and financial strength will provide a strong platform through Solstad for further development of the OSV industry," he added.

The two companies said a formal plan for the merger would be published shortly after both release their interim results. Shareholders are expected to be held on 1 October, with completion of the merger targeted for the start of December.