Norway will soon be able to claim a giant in the offshore shipping industry, after Norwegian tycoons Kjell Inge Røkke and John Fredriksen announced a merger this week based on casualties of the crisis that hit the offshore industry after oil prices collapsed.
The deal stems from Røkke’s Aker concern and Fredriksen’s Hemen Holding investment firm jointly agreeing to refinance crisis-hit Farstad Shipping, based in Ålesund on Norway’s west coast. Farstad has been saddled with heavy debts and little revenue-producing work since the fall in oil prices resulted in a massive slowdown in offshore oil and gas activity.
As part of the refinancing, Farstad will be merged with Solstad Offshore, in which Røkke’s Aker already has a large ownership stake, and Fredriksen’s Deep Sea Supply. “This will be big, both in terms of the number of offshore vessels involved, the geographic scope and capital,” analyst Karl Johan Molnes of Norne Securities told newspaper Aftenposten. The newly merged firm will become Norway’s largest, with a fleet of 154 offshore vessels, and one of the world’s largest as well. It will be called Solstad Farstad.
The Solstad and Farstad families will wind up with relatively small ownership stakes in the merged firm, which will have 4,000 employees headquartered in Skudeneshavn, just north of Stavanger where Solstad was based. Lars Peter Solstad will be its chief executive. The deal culminates more than a year of financial drama and uncertainty over both firms, which had to lay up vessels when business slowed down. “We haven’t turned off the lights and gone home,” Farstad’s CEO told Aftenposten. “Now we’ll head out and sail.”