Electromagnetic Geoservices ('EMGS') has announced a significant step in the Company's strategic development through the establishment of a new business platform within the offshore subsea construction market. EMGS has entered into a set of agreements for a transaction whereby a newly formed subsidiary of the Company will acquire the OSCV Siem Day (the 'Vessel') from Siem Day II AS (the 'Seller'). The Siem Day, built in 2013 by Vard, Brattvåg, is a subsea construction vessel of the design type OSCV 11L.
The acquisition represents a strategic diversification for EMGS, complementing the Company's existing electromagnetic ('EM') operations and expanding into the growing subsea construction segment. Importantly, this diversification aims to enhance the combined Company's resilience and long-term value potential.
Transaction Structure and Financing
Under the Transaction, EMGS will enter into a five-year bareboat charter agreement with the Seller at a rate of USD 42,000 per day until 31 December 2025, increasing to USD 45,000 per day thereafter. The charter includes purchase options exercisable at the third and fourth anniversaries of the charter commencement, as well as an unconditional purchase obligation at the end of the charter period. The total acquisition price of USD 108.90 million is structured to minimize upfront cash outlay, with an initial payment of USD 10.89 million due at charter commencement, and the remaining balance gradually offset against charter payments, culminating in a final payment at the time of purchase.
The Transaction will not require new capital from existing shareholders. The initial payment is expected to be financed through an increase of the Company's existing bond loan, where the Company's two largest shareholders and bondholders have committed to fully underwrite the additional amount. There will be no issuance of new equity in connection with this Transaction.
Strategic and Financial Upside for Shareholders
The Vessel is chartered on market rates until 31 December 2025. The day rate under this existing charter agreement, which will be novated to EMGS, is expected to be sufficient to cover the Company's charter payments under the bareboat agreement as well as the budgeted daily operating expenses. Following the expiry of the current charter on 31 December 2025, EMGS plans to operate the Vessel on term contract whilst remaining open to shorter term opportunities. Spot charter rates are currently estimated to range between USD 100,000 and USD 140,000 per day, according to an industry report by independent brokers.
The long-term strategy for EMGS is to pursue growth in the subsea sector through the addition of further vessels. By acquiring a high-quality asset already under contract and with opportunities in a dynamic subsea market beyond 2025, EMGS will provide its shareholders with direct exposure to potential value appreciation from a new, profitable business area. The existing EM business will continue to operate in parallel, ensuring that EMGS maintains and develops its core competencies while diversifying into new market opportunities in a related sector.
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Source: EMGS
