Dubai shipping company Polarcus' banks have wasted no time in taking over its seismic survey vessel fleet after the company defaulted on a bank loan on Tuesday.

Polarcus had said earlier in the day that no enforcement proceedings had begun following the lenders' decision not to further extend financial waivers on a working capital facility.

But just hours later, the Oslo-listed company issued a statement saying that the banks had enforced share pledges to take over the seven now-former subsidiaries owning the vessels, all built between 2009 and 2012.

Default and enforcement notices were sent to each company.

The banks have also replaced the directors of each former subsidiary with a nominee of their own.

Not endangering operations

"The lenders have made it clear to the company that their intention is not to jeopardise or destabilise the Polarcus organisation," the Dubai company said.

The banks have still not made any demand for payment of money owed, or sought to enforce any other collateral they hold.

"The lenders have confirmed that they are open to entering into a standstill period which will allow continue operations and awarded projects to be undertaken without disruption and discussions are underway in this regard," Polarcus said.

All avenues to be explored

The Oslo-listed shipowner had earlier said it intends to pursue "all available options" with a view to ensuring its sustainability.

In the meantime, it has halted all payments of interest and amortisation to finance providers.

"In light of the sustained economic challenges globally, the company has been in detailed discussions with its bank lenders to explore financial solutions," it said.

Workers axed

The lenders had granted waivers for some financial obligations until 25 January. This included the requirement to reduce the $25m drawn down from the working capital loan.

But the banks have now said they will not grant any more extensions, triggering a default on the facility and a cross-default of other bank loans and convertible bond loans.

Seismic survey ship operators are at the sharp end of oil majors' exploration budget cuts as a result of Covid-19.

Polarcus began taking action to protect its liquidity during the pandemic last year.

Last June, it said it was axing 20% of workers, mainly through redundancies.

Market share retained

At the end of March, it had signalled cuts to shave $15m off its expenditure to "navigate the market uncertainty caused by the combined impact of the Covid-19 pandemic and oil price volatility".

Operational staff, onshore and on vessels, had already been cut at that point, to manage the expected fluctuation in activity levels.

These efforts, together with a "consistently high level" of project performance, have enabled the company to hold on to market share in a challenging market, it said on Tuesday.

Operations are cash positive before debt servicing.

As of 26 January, Polarcus' contract backlog was $130m.

Trade creditors will continue to be paid in full, the company said.

ABG Sundal Collier has been brought in as financial advisor as the owner looks to restructure the balance sheet.

Clarksons lists two of the company's seven ships as in service, with the rest either idle or laid up.

In September, Polarcus stacked a seismic survey ship redelivered by Russian charterer Sovcomflot (SCF Group).

The 4,400-dwt Ivan Gubkin (built 2012) has reverted to its previous name of Polarcus Amani after being returned to the company.

Finance

Banks take over Polarcus seismic vessel fleet hours after owner defaults