Abu Dhabi based Gulf Marine Services (GMS) has entered into a framework agreement with the middle east’s leading self-propelled SESV operator, Zakher Marine International (ZMI).
The two organizations have accepted to form mutual teams to manage resources, consolidate functions and leverage economies of scale to reduce costs. GMS said there were “several possibilities” for both firms link up in “key areas”, which would enable them to decrease spending on third parties.
The goal is to advance on some gains to clients while also bettering the business’s own bottom line. These profits are anticipated to reveal in 2021 and ahead. GMS and Zakher would proceed to work and fight as their own business entities.
“GMS has made substantial progress on cost management over the last twelve months. Accretive gains will continue, but this strategic move offers genuinely substantive progress.”
– Tim Summers
Executive Chairman – GMS
“Under this agreement, we will work with [Zakher] to explore leveraging the combined scale of our respective supply chains, in order to lower costs and maintain higher operational availability and uptime for our customers.”
GMS operates with 13 SESVs, while Zakher has a line of 35 offshore support vessels, with 16 SESV barges.
Seafox International, another operator in the region had launched a proposal for GMS at the end of April but published on May 28 that it was leaving the plan. GMS revealed appreciation to its stockholders and banks that had asserted support for its current team. Seafox is forbidden from making another effort on GMS for the next six months.
While GMS has warded off its undesired suitor, it still has significant obstacles to handle. The company announced its yearly report today and highlighted its vulnerability to short-term liquidity risks and the possibilities of default if it is powerless to renegotiate its mortgage.
Documents on this are anticipated to be finished by June 30, which would reduce covenant tests and lengthen the time period for principal repayment, GMS added.
The requirement to perform this restructuring “casts notable uncertainty” on GMS’s capacity to remain as a “going concern”, although directors assume that the papers will be concluded on time.