Investors eye distressed asset opportunities in offshore

As the low oil price pushes offshore companies to brink, and in some cases beyond, it gives the chance to pick-up assets and companies at bargain basement prices.

“The prolonged period of low oil prices, combined with reduced investment and contract awards, is taking its toll on oil service companies in the North Sea and elsewhere,” said Birgitte Karlsen, a partner in the London offices of Wikborg Rein

“For some, this may be a time of opportunity when bargains can be had, generating attractive rewards for cash-rich investors. But it is important to be aware of the risks involved in trying to acquire distressed businesses.”

Just last week Oslo-listed seismic vessel operator Dolphin Group filed for bankruptcy.

“There is currently a definite upside to buying distressed businesses in the offshore sector which the right buyers may be able to exploit, provided they are fully aware of the risks involved before entering into negotiations,” Karlsen said.

Finn Bjørnstad, a partner in Wikborg Rein’s Oslo offices said: “In terms of the kind of deals available “If the target company is not listed, the buyer will have significant flexibility as to how to approach and structure an acquisition. The acquisition may include both debt and equity, and new equity may be used to buy back debt at a discount.”