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Teekay Offshore takes $43.7m writedown on cancelled flotels

Teekay Offshore takes $43.7m writedown on cancelled flotels
Teekay Offshore has taken a writedown of $43.7m for its second quarter financials results arising from the termination of its order for two new cylindrical flotels at China’s Cosco shipyard.

Teekay Offshore aborted its newbuilding contracts for a pair of Unit for Safety and Maintenance (UMS) accommodation vessels, negatively impacting its second quarter results, and accruing a first half loss of $102.65m as against the profit of $104.74m in the year-ago period.

The $43.7m writedown is part of Teekay Offshore’s wider effort to strengthen its balance sheet in the long run, the company explained.

The company’s income from conventional tanker business fell during the second quarter due primarily to the sale of vessels in the fourth quarter of 2015 and the sale-leaseback of another two vessels during the first quarter this year.

For its shuttle tanker segment, income from operations were also impacted due to the expirations of long term contract of affreightment and a time-charter out contract over the past year.

Peter Evensen, ceo of Teekay Offshore, pointed out that despite the loss, the company continues to have strong support from its financial stakeholders.

“With strong support from our financial stakeholders, Teekay Offshore successfully completed all of its previously announced financing initiatives in June 2016, including $400m of new or extended bank facilities, $200m of equity capital, the deferral of certain bond maturities, and the cancellation of approximately $400m of UMS-related capital expenditures.

“These initiatives, together with expected operating cash flow and previously arranged debt facilities, are expected to cover all of our medium-term liquidity requirements and fully-finance all of Teekay Offshore’s $1.6bn of committed growth projects.”