Petrofac has signed an agreement to sell the JSD 6000 deepwater derrick lay vessel project to Shanghai Zhenhua Heavy Industries (ZPMC).
The transaction comprises the sale of all JSD 6000 related assets held by Petrofac, including the owner furnished equipment, for a gross consideration of $190 million and a 10% interest in a new special purpose vehicle set up to own the vessel once commissioned.
The announcement comes after the termination of the building contract by Petrofac in October 2015, following which ZPMC informed that it will take legal action against the company.
Petrofac will now provide technical support for the construction of the vessel, which is expected to complete in 2022. Petrofac will not contribute to the cost of construction, commissioning or testing of the vessel, the company informed.
The total consideration of $190 million is offset by a net amount of $23 million retained by Petrofac under the previous hull and marine contract with ZPMC.
The remaining $167 million net cash consideration will be received as follows: $92 million within 20 business days; a further $70 million in stages as assets are physically transferred; and a final amount of $5 million upon commissioning of the vessel.
The proceeds from the sale will be used to reduce gross debt.
Petrofac’s CEO Ayman Asfari said: “This agreement materially completes our disposal of the project, in line with our stated intention to exit the deep-water market. It is a further positive step in the execution of our stated strategy to focus on our core strengths, deliver organic growth and reduce capital intensity.”