SINGAPORE (June 4): Floatel International, an associated company of Keppel Offshore & Marine (Keppel O&M) which is part of the Keppel group of companies, has agreed to a merger with Prosafe SE.

Prosafe, listed on the Oslo Stock Exchange, is a leading owner and operator of semi-submersible accommodation vessels (flotels) while Floatel delivers offshore accommodation to clients in the oil and gas industry worldwide.

The proposed merge would create the world’s largest offshore accommodation provider with improved services and geographical presence.

The merged entity will also be able to sustain a prolonged cyclical downturn and challenging markets for offshore accommodation.

Under the merger agreement, Prosafe will acquire all of the ordinary shares in the capital of Floatel based on a 55:45 exchange ratio between Prosafe and Floatel respectively.

To achieve this, Prosafe will issue new Prosafe shares equal to a 45% stake to shareholders of Floatel.

In a Tuesday morning filing, Keppel says the exchange ratio was arrived at on an arms’ length basis between Floatel and Prosafe, using an asset-based future earnings valuation methodology, taking into consideration the age, specifications and earnings potential of their respective fleet assets.

Currently, Prosafe owns and operates nine vessels, each with a capacity of 300-500 beds, and has options for delivery of two newbuilds over the next five years. Floatel's fleet includes five units, each with capacity of 440-550 beds.

The merged company will at the outset have the bulk of its activity in the North Sea and Brazil.

The combined firm contract backlog as of March 31 is approximately US$225 million ($307 million). In addition, Prosafe recently announced a three-year contract for the Safe Eurus in Brazil which adds about  US$80 million to the contract backlog, while Floatel has recently been awarded a four-month extension at Martin Linge which adds a further US$22 million to the contract backlog.

For the year ended December 31, 2018, the combined company had revenues of more than US$600 million and an EBITDA of more than US$300 million.  

Floatel’s other substantial shareholders are FELS Offshore, a wholly-owned subsidiary of Keppel O&M and OCM Wonder PF/FF Holdings.

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

The transaction is subject to the fulfilment of conditions, including clearances from the competition authorities in Norway and the UK and creditor and shareholder approvals of both Floatel and Prosafe respectively, and the continued listing of Prosafe on the Oslo Stock Exchange.

If all conditions are met, the transaction is expected to be completed by 3Q19 and is subject to a long stop date of Dec 31.