Nick Terdre - Contributing Editor
When Emtunga Offshore was declared bankrupt last year, it seemed like the end of an era. But a significant part of the accommodation module specialist is back in business as Leirvik Emtunga LQ, a wholly owned subsidiary of former rival Leirvik Module Technology of Norway.
“We believe we have the best of the two worlds, and will now set out to convince our customers of the strengths and advantages we can offer,” says Christofer Edström, CEO of Leirvik.
Emtunga’s demise was prompted by the failure of Norway’s MPF Corp., which was building what would have been the world’s first FPSO with drilling capability. When MPF filed for insolvency protection in September last year, Emtunga was hard hit, as this was its only customer at the time.
“Unfortunately we had nothing to fall back on,” says Edström, who was sales and marketing manager for Emtunga Offshore. “Our owner, 3i, demanded high revenues from us, which meant that we had become too expensive. They weren’t willing to support us until we got a new job.”
In fact a contract was around the corner – the company had a letter of intent (LOI) from a North Sea operator for living quarter modules. But when 3i applied to put Emtunga under bankruptcy protection, “it was like taking the wheels off a car,” says Edström. “No one was going to give us a new order after that.” The operator then withdrew its LOI.
Merger discussions
Things might have been different had the owner taken a longer-term view, in Edström’s opinion. He also thinks it did not really understand the business – it had acquired Emtunga as part of the Pharmadule group, whose main activity was building modular pharmaceutical facilities. In 2007 Emtunga was split out into a separate company.
Late last year, 3i tried to sell the business, but although talks were held with two prospective buyers (one being Leirvik), both subsequently withdrew. So in mid-December the board filed for bankruptcy. Activity ceased at the Arendal facility on the bank of the River Göte in Gothenburg.
However, Edström and some colleagues decided to contact Leirvik to see if something could be salvaged. Having competed with Emtunga over the years, Leirvik was fully aware of the Swedish company’s capability since making its first offshore delivery in 1974, and its track record worldwide.
A business plan was drawn up, and Emtunga’s name, intellectual property rights, archives, databases, and work procedures were bought from the bankrupt company’s estate. A dozen of the former management were hired and Leirvik Emtunga was born.
The new company has returned to its roots in Emtunga, a small town in central Sweden. Here it has rented a workshop in premises shared with two other contractors, specialists in welding and outfitting, which will collaborate on Leirvik Emtunga’s assignments. Emtunga traditionally subcontracted these activities, so there is no change from the former modus operandi.
Work already is under way on the first assignment – a mud system operators’ cabin ordered by Modular Systems and Solutions for installation on StatoilHydro’s Oseberg C platform.
“Leirvik was always a tough competitor, so they could appreciate what we achieved historically,” says Edström. In fact, the two companies now complement each other well, for while Leirvik has specialized in tailor-made single-lift modules built of aluminum, Emtunga has developed its competence in modularized quarters built of steel.
“Many of our traditional customers prefer local assembly, in which case we ship modular sections to local sites anywhere in the world.” The modular sections will be transported from the workshop to the port of Varberg, 70 km (43.5 mi) south of Gothenburg. “We have extensive experience in the execution model which includes establishing worksites, managing and supervising local assembly and mechanical completion, and commissioning activities,” says Edström.
For customers wanting a single-lift delivery in steel, a project assembly worksite will be established in Varberg where the modular sections will be assembled on a base-frame, and mechanical completion and commissioning will be performed.
For the time being Leirvik Emtunga expects demand to remain weak, and will focus on holding down costs. But the company has many bids out, and the outlook is not all bleak - nearly all the projects discussed last year still are on the table, and few actually canceled, Edström says. In some cases the discussions are getting firmer, and he is sure some will go ahead in the not too distant future.
Four of the new company’s employees now work at Leirvik’s yard in western Norway where they have been slotted into existing projects as the two companies work to strengthen their ties.
For more information, contact Christofer Edström, Leirvik Emtunga LQ. Tel +46 733 35 15 01, fax +46 +46 512 103 58,[email protected], www.emtunga.com
