HOUSTON– EMAS CHIYODA Subsea Ltd.(ECS) is seeking to restructure through Chapter 11 bankruptcy protection, filed today. The company had racked up substantial amount of debt, and it said that the filing would allow it to continue operations and make operational changes.
“ECS’ operational and financial performance is dependent on the macro outlook and expansion plans of oil majors. While ECS has an order book of over $1 billion, the commencement dates of many of these projects remain in flux, affecting utilization levels and negatively impacting financial performance,” the company said in a statement.
Chiyoda Corp. formed EMAS CHIYODA Subsea withEMAS AMC, Ezra Holding Ltd.’s subsea services holding, in March 2016. The 50/50 joint venture was to combine EMAS AMC’s service capabilities and its installation and construction vessel fleet with Chiyoda’s front-end engineering design and engineering, procurement and construction experience to offer a more integrated approach. In June, Japanese shipping company Nippon Yusen Kabushiki Kaisha agreed with the co-venturers to acquire a 25% stake of EMAS CHIYODA.
At last year’s Subsea Tieback Forum & Exhibition,EMAS AMC COO Daniel Sack spoke toOffshore about the joint venture, as it was then expected to close in days.
In connection with the filing, the company received a loan of up to $90 million from Chiyoda Corp. and Subsea 7. Subject to bankruptcy court approval, the financing will be made available to support ECS’ continuing business operations and make necessary operational changes.
The company has filed certain customary first day motions with the bankruptcy court as it transitions into Chapter 11. The company filed in Houston, where the Houston Chronicle says it employs a staff of around 200 in its City Centre 5 offices. The Chronicle said Ezra opened its doors in Houston in 2011, with EMAS CHIYODA then moving to the City Centre location last year.
Singapore’s The Strait Times said that among ECS’ court documents was a list of creditors; the 40 largest unsecured claims included Singaporean bank DBS, with claims of around $84.6 million, and OCBC Bank with $13.1 million. Keppel Shipyard also had a claim for $2.8 million, among other contractors. At the time of this writing, the bankruptcy document repository provided by EMAS was not properly functioning.
In February, Chiyoda and NYK said they incurred “extraordinary loss” from ECS’ reduced value and wrote down investments upwards of $300 million and $115 million, respectively.
The Singaporean paper also pointed to a few other recent indications of ECS’ financial health. Bibby Offshore filed for arbitration against ECS, claiming it was owed $14.7 million from $18.1 million of contracts performed in Trinidad in 2016. Also, Forland Subsea AS said a unit of EMAS AMC had defaulted on a charter payment for theLewek Inspector.
ECS was awarded work at least as recent as January through itsconsortium with Larsen & Toubro Hydrocarbon Engineering to supply and install four wellhead decks in the Safaniya oil field in the Persian Gulf.
EMAS-AMC AS, ECS’ Norway based wholly owned subsea subsidiary, has been placed under members’ voluntary liquidation in Norway. A separate independent, it has not filed for bankruptcy protection.