Subsea 7 combines its renewables business unit with OHT
Subsea 7 recently announced an agreement to combine its renewables business unit with OHT, subject to the customary approvals, conditions and relevant employee consultations. The combined company will be renamed Seaway 7 ASA and will initially retain OHT’s listing on Oslo’s Euronext Growth market, with a view to a future listing on Oslo Børs.
John Evans, Chief Executive Officer, Subsea 7 says, “This transaction represents an important next step in Subsea 7’s Energy Transition journey that will accelerate and enhance value creation for our shareholders. As a listed company with a comprehensive fleet and experienced management team, Seaway 7 is positioned to forge an enhanced growth trajectory as a global leader in offshore wind. Subsea 7 looks forward to working closely with Seaway 7 as it launches this next exciting chapter in its evolution.” Torgeir E. Ramstad, Chief Executive Officer of OHT adds, “This is a very significant event in the growing renewables industry. Subsea 7 is a highly respected company and we are delighted that it sees OHT as a natural partner in creating a new global leader in renewables. We are committed to translating the leading capabilities that the combined company will offer into benefits for clients within the offshore fixed wind industry.”
Subsea 7’s Renewables business unit brings to the combination a long track record of executing large and complex offshore wind projects, drawing on its engineering expertise, well-established project and supply chain management, and efficient installation. Since 2009, it has installed over 700 foundations, more than 30 substations and over 800km of submarine cables using its fleet of two heavy lift vessels, two cable lay vessels and an installation support vessel. With over 500 employees in offices in France, Germany, Netherlands, Poland, Taiwan, the UK and the US it has a presence in each of the offshore wind industry’s key existing and future growth markets, and well-established relationships with the industry’s leading developers. Subsea 7 will retain its business in floating wind, which will not be part of this transaction. OHT brings to Seaway 7 a fleet of five heavy transportation vessels, increasingly deployed to transport large offshore wind structures. It also has two high-end installation vessels currently under construction. The first, due for delivery in 2022, is a state-of-the art customised wind turbine foundation installation vessel equipped with dynamic positioning and a unique ‘smart deck’ for efficient installation of monopiles as well as jacket foundations. The second, due for delivery in 2023, is a jack-up heavy lift vessel capable of efficiently installing the largest wind turbines as well as wind turbine foundations. The timing and pricing of OHT’s new builds are attractive in the context of significant market expansion from 2025.
Drawing on an expanded and diversified asset base, Seaway 7 will offer a full range of specialist standalone transport and installation (T&I) services, as well as integrated T&I and EPCI solutions that combine the installation of turbines, foundations, substations and cables. The addition of heavy transportation capabilities provides further value chain integration opportunities as well as mitigating risks associated with delivery schedule management. The offshore wind industry is a high-growth market that is expected to drive sustained, strong demand for the services of contractors. Between 2020 and 2030, the annual installation of wind power, measured in gigawatts, is anticipated to grow at a compound average rate above 20%. While the foundation installation market is currently competitive, the markets for cable lay and turbine installation are more favourable and installation capacity in all markets is expected to be absorbed by 2025. The market dynamic of all three sectors is expected to improve materially from 2025 onwards. Seaway 7 will leverage strengthened capabilities and a differentiated asset base to capture an increased share of this high-growth market and reinforce its position as a global leader in the offshore wind industry.
Subsea 7 will own 72% and OHT’s shareholders 28% of the company. Completion of the combination is subject to approval by the shareholders of OHT at an extraordinary general meeting. The Board of Directors of OHT has agreed to recommend the transaction to its shareholders. Songa Corp and Lotus Marine, with stakes of 51.1% and 25.6% respectively, have agreed to approve the transaction. Approval by Subsea 7’s shareholders is not required. The Board of Seaway 7 will comprise four directors nominated by Subsea 7 and one nominated by OHT’s largest shareholder, Songa Corp. It will be chaired by Rune Magnus Lundetræ. Seaway 7 will be managed by a highly experienced executive team led by Stuart Fitzgerald as Chief Executive Officer. Torgeir Ramstad and Steph McNeill will also hold executive roles. As majority shareholder, Subsea 7 will consolidate Seaway 7 in its financial statements and the entity will benefit from financial, operational, administrative and strategic support from the Subsea 7 Group. It is anticipated that the transaction will be accretive to Subsea 7’s earnings from 2024 after delivery of the two newbuild vessels. The Works Council representing the employees of Seaway Heavy Lifting in the Netherlands will be consulted on this transaction in compliance with Dutch law. Transaction completion is anticipated by the end of the third quarter of 2021, subject to approval by OHT’s shareholders, regulatory approvals and other customary completion conditions.