QUARTERLY FACTSHEET
LSE: NSA
25 November 2015
Company Overview
Nimrod Sea Assets Limited (LSE:NSA) (“NSA” or
the “Company”) is a non -cellular Guernsey
company limited by shares and incorporated on 8
October 2012. The ordinary shares of the Company
were admitted to trading on the Specialist Fund
Market (“SFM”) of the L ondon Stock Exchange
(“LSE”) on 24 March 2014.
The Company’s total issued share capital currently
consists of 130,000,000 ordinary shares of no par
value (the “Shares”) which were admitted to
trading at an issue price of USD 1.00 per share.
The Company's investment objective is to obtain
income return and capital appreciation for its
Shareholders by participating in vehicles which
acquire, charter and sell Marine Assets associated
with the offshore oil and gas industry. To pursue
its investment objective, the Company obtains
exposure to Marine Assets by acquiring interests
in special purpose holding companies (“Marine
Asset Companies”).
The majority of the Marine Assets to which the
Company will have exposure at any time are those
that are needed for the inspection, repair,
maintenance
and
operation
of
installed
infrastructure and production equipment for use in
the offshore oil and gas industry.
Company Facts
Listing
Ticker
Market Capitalisation
Current/Future Anticipated
Dividend
Dividend Declaration Dates
Currency
Launch Date/Price
Specialist Fund Market of London
Stock Exchange
NSA
USD 83.2m (as at 30 September
2015
2 cents per Ordinary Share from
June 2015 until March 2016.
June, September, December,
March
USD
Incorporation
24 March 2014 / USD 1.00 per
Share
Guernsey
Consultancy Service Provider
Stamford Maritime Limited
Corporate and Shareholder Adviser
Nimrod Capital LLP
Administrator
JTC (Guernsey) Limited
Auditor
Deloitte LLP
Market Makers
SEDOL, ISIN
Jefferies International Limited
Winterflood Securities Limited
BK0SC85, GG00BK0SC854
Year End
31 March
Stock and Shares ISA
Eligible
Website
www.nimrodseaassets.com
The Company aims to provide Shareholders with a total return, which will comprise distributions of income to be made
throughout the life of the Company and, potentially, capital growth.
Following the significant deterioration of the oil market over the last year, t he Company has previously made
announcements regarding the payment of distributions ( RNS number: 7405Q, 5576R and 9410A) as well as the
strategy to be adopted regarding uninvested capital (RNS number: 9410A). The Board has previously announced that
it anticipates declaring a quarterly dividend of 2 cents per Ordinary Share from the end of June 2015 until March 2016.
This will be funded by income received net of expenditure, and where necessary, added to from the Company's capital
resources. The dividends of 30 June 2015 and 30 September 2015 have been paid.
Alongside these dividend distributions the Board has conducted extensive reviews of the existing portfolio, investment
policy and the investment pr ocess and future opportunities. Conditions have remained uncertain, and the Board
considers that, unless market conditions improve significantly, i t is unlikely to make any further new investments.
Consequently the Board anticipates returning unrequired uninvested capital after March 2016. Save for unanticipated
market changes or events, the Company currently anticipates returning a further 20 cents per share at that stage. The
Company will consider the best m ethod of returning this sum to S hareholders.
The Company is focused on maximising the return to Shareholders from its existing assets and on ensuring it has the
correct resources to do this.
Executive Directors’ Market Overview
Market Overview
In its Interim Financial Report for the period from 1 April 2015 to 30 September 2015 (the “Period") the Company
reported an overall net loss of USD 19,173,616 which included a net movement in unrealise d losses on its investment
portfolio of USD 17,337,082. The overall trading loss also includes costs borne in operating DSV Alliance of USD
1,784,104. DSV Alliance AS with effect from 18 June 2015 has directly operated this vessel because the previous
charterer is in administration. (For an update on this project please refer to the Investment Summary below). This is
disappointing and reflects the severity of the continued downturn in the offshore oil and gas market which has seen
new lows in crude prices, ongoing geopolitical tensions, and further vigorous cost reductions by Exploration and
Production operators (“E&P”). This has, unsurprisingly, had further negative impact on both asset values and the
ability of the Company’s counterparties to honour their commitments to the Company.
The Board has prudently decided to mark asset values down further to reflect the change in circumstances and the
uncertainty around counterparties who are experiencing an unprecedented drop in demand. The revised values imply a
Net Asset Value of 68.96 cents per share.
Market Update
The Board has spent a great deal of time analysing the current market and therefore, as announced previously,
anticipates it will return a portion of uninvested capital to Shareholders. In the current environment the Executive
Directors see no realistic prospect of deploying the funds as originally intend ed and they believe the market may
worsen further due to the oversupply of vessels and undersupply of work (which has been dramatically scaled back)
and do not currently expect this situation to change in the foreseeable future.
This downturn has been dr iven not only by the immediate cessation or postponement of works by E&P companies, but
also the effect of Russian sanctions which has consequently increased the available North Sea fleet. Petrobras has
started to redeliver foreign flagged vessels which wi ll result in new vessels entering other regional markets in the
midst of a major cyclical downturn.
Given these market conditions, the banks providing senior debt to the industry have become extremely risk averse.
The Company is still unable to receive di vidends from the Bukit Timah investment, despite the charterer remaining in
full compliance with their obligations, and the declining value of the Odin Viking (Norseman AS) has seen the
Company inject fresh capital by way of a capital call into this invest ment. All banks involved in the Company’s various
investments report consistently that they are becoming more negative on the sector and it is therefore not expected for
this situation to change.
A sudden rebound in commodity prices, which is not forecast in any event, will not make an immediate short -term
difference to the economics for the offshore vessel owners. Tendering, planning and engineering takes time to arrange
and very large numbers of engineers have been made redundant. This, in conjunction wit h the over supply of vessels
in every asset class, means that a rebound in terms of vessel owners’ financial stability and performance will take time
to resolve. This timing effect for a rebound in offshore activity will be, in the view of the Executive Di rectors, well
outside the original Prospectus’ investment period of 18 to 24 months. Further, we do not believe asset prices have
reached their lowest point, or that prospective charterers have the degree of certainty in their forward order books for
them to commit realistically to offshore support vessels.
The scale of this market downturn can be
appreciated from the adjacent graph which
highlights that E&P companies have reduced
expenditure more than twice as much as in the
Global Financial Crisis of 0 8/09 and of course the
rebound in the oil price has not occurred in the
current period as it did then.
Investment Portfolio
The value of the Company’s investments needs to
be understood in a market context where the only
sale and purchase activity relating to vessels is
where the seller is normally distressed or
desperate to sell. There are few representative
deals that fall un der the normal shipping parlance
of “willing buyer, willing seller”; but that in turn
obviously reflects the poor state of the demand side of the market and the abundance on the supply side.
In the view of the Executive Directors, vessel values are fund amentally too low, but it is also clear that, regrettably,
they do not see a recovery for at least two years while the industry stabilises (only a major geopolitical event, as in
1990-1, could accelerate this). Traditionally more offshore maintenance work is implemented in summer as weather
constraints lessen for E&P operators; 2015 has been very poor and our enquiries tell us that next year could be worse.
For an industry with high fixed costs and high leverage this would likely see further bankruptcies am ongst vessel
operators.
Source: Pareto Securities, Bourbon Offshore
Source: Bourbon Offshore
During the period under review the Company concluded two restructuring events as reported below.
Project Investment Summary
Percentage of
ownership
Purchase cost
(USD)
Percentage of
*investable funds
as at Purchase
Value as at 30
September 2015
(USD)
Marine Asset Company
Vessels Owned
Bukit Timah Offshore DIS
Swiber Elise-Marie
Swiber Anne Christine
Swiber Mary-Ann
26%
8,585,125
7.1%
6,900,836
Odin Viking
43%
9,068,500
7.2%
5,729,322
20.50%
7,261,000
6.1%
5,997,736
51%
9,639,000
8.0%
8,580,902
99.50%
10,061,689
8.3%
2,000,000
1,550,000
Norseman Offshore IS
(note: an additional USD344,000 had been
injected into this investment by way of a
capital call)
Volstad Marine DIS II
Oceanic Endeavour
Altus Subsea IS
Altus Invictus
DSV Alliance AS
DSV Alliance (previously
Red7 Alliance)
Aberdeen Offshore DIS
FS Cygnus
75%
12,750,000
10.6%
Jane Offshore Ltd
EDT Jane
50%
8,022,500
6.6%
6,648,300
65,387,814
53.9%
37,407,096
Totals
*investable funds as at the launch of the company
The valuations stated above and below are as per the latest information available to the Board as at 17 November 2015, being
the latest practicable date prior to publication of this Factsheet..
Investment Summary
Marine Asset Company ("MAC")
Purchase Cost (USD)
Value as at 30 September 2015
Percentage of *investable funds as at
Purchase
Asset type
Build Date
Counterparty/Charterer
Length of Charter
Timing of dividends from MAC to NSA
Investment Update
Bukit Timah Offshore DIS
8,585,125
6,900,836
7.1%
Marine Asset Company ("MAC")
Purchase Cost (USD)
Value as at 30 September 2015
Percentage of *investable funds as at
Purchase
Asset type
Build Date
Counterparty/Charterer
Length of Charter
Timing of dividends from MAC to NSA
Investment Update
Norseman Offshore IS
9,068,500 (note: an additional $344,000 had been injected into this MAC by way of a capital call)
5,729,322
7.2%
Marine Asset Company ("MAC")
Purchase Cost (USD)
Value as at 30 September 2015
Percentage of *investable funds as at
Purchase
Asset type
Build Date
Counterparty/Charterer
Length of Charter
Timing of dividends from MAC to NSA
Investment Update
Volstad Marine DIS II
7,261,000
5,997,736
6.1%
*investable funds as at the launch of the company
Anchor Handling Tug Supply Vessels
2009 - 2010
Newcruze Offshore Marine Pte Ltd, guaranteed by Swiber Holdings Ltd (“Swiber”)
10 years to 2019/20
Bi-annual from December 2016 subject to Lender approval.
This investment has underperformed due to the banking consortium preventing dividend payments
from being distributed despite Swiber continuing to maintain an immaculate payment record and
recent stable vessel valuations. Such a stance by the banks unfortunately reflects market sentiment
and we are not confident of this position changing in the short-term.
High Specification North Sea Anchor Handler Tug Supply Vessel
2003
Viking Supply Ships A/S (“Viking Supply”)
8 years to 2020
Bi-annual from July 2016 subject to meeting Lender covenants.
The vessel is a high specification unit that has been dramatically affected by the drop in work
following the Russian sanctions, and the asset has suffered a large drop in independent shipbroker
valuations (from USD 45,000,000 at investment to USD 28,900,00 in August 2015). We have injected
USD 344,000 of equity by way of a capital call. Viking Supply continues to honour all its obligations to
the Company, but we are unlikely to receive a dividend for the foreseeable future.
Seismic Vessel
2008
CGG Eidesvik Ship Management AS (“CGG Eidesvik”)
8 years to 2018 with 2 x 5 year extension options
Bi-annual
This seismic investment continues to perform as forecast. The seismic market is extremely weak but
we believe we have an excellent counterparty, who is proactively restructuring their business to cope
with the new reality of cost conditions. The vessel is one of the most capable in its class with up to
date technology installed.
Marine Asset Company ("MAC")
Purchase Cost (USD)
Value as at 30 September 2015
Percentage of *investable funds as at
Purchase
Asset type
Build Date
Counterparty/Charterer
Length of Charter
Timing of dividends from MAC to NSA
Investment Update
Altus Subsea IS
9,639,000
8,580,902
8.0%
Marine Asset Company ("MAC")
Purchase Cost (USD)
Value as at 30 September 2015
Percentage of *investable funds as at
Purchase
Asset type
Build Date
Timing of dividends from MAC to NSA
Investment Update
DSV Alliance DIS
10,061,689
2,000,000
8.3%
Marine Asset Company ("MAC")
Purchase Cost (USD)
Value as at 30 September 2015
Percentage of *investable funds as at
Purchase
Asset type
Build Date
Counterparty/Charterer
Length of Charter
Timing of dividends from MAC to NSA
Investment Update
Aberdeen Offshore DIS
12,750,000
1,550,000
10.6%
Remote Operated Support Vessel
2011
Marine Engineering Diving Services FZC (“MEDS”)
7 years to 2021
Bi-annual
The Altus Invictus had been working at the start of the year on the South Stream project in the Black
Sea. Due to political tensions this project was cancelled, at short notice and at huge cost to all
involved, and MEDS suffered from delayed payment from the overall contractor that has led to
severe cash flow issues. As already announced we are working with MEDS to bring payments up-todate. As a maintenance focused vessel which has recently secured work (although at a day rate
lower than we would have liked) we believe long term this will remain a good investment if MEDS can
trade through this downturn.
Dive Support Vessel
1984
Not applicable
In September the Company and the Bank of London and the Middle East (“BLME”), the mortgage
provider, reached agreement regarding the immediate future of the vessel. The Company will provide
some further working capital which is now first priority recoverable when the vessel is sold. We are
hoping for some short-term charters while market conditions are so poor to allow us to recover some
value in a managed fashion. The vessel has been laid up in the UK at a very competitive cost, but
has the ability to mobilise quickly for available, or even emergency, works.
Platform Supply Vessel
2014
Fletcher Supply Ships Limited (“Fletcher”)
6 years to 2021
No dividends expected until market conditions improve.
The FS Cygnus was changed to a new pay-as-you-earn charter model as part of a wider
restructuring of Fletcher Shipping Limited. The vessel is now on charter to Enquest but the rate is
well below that required to earn an economic profit for shareholders and there is no expectation of a
dividend in the future without a dramatic change in the day rates for this class of vessel. No segment
of the entire offshore vessels market has been harder hit than Platform Supply Vessels (“PSV’s”) with
day rates in the North Sea well below Operating expenditure.
While this situation cannot last forever, it can clearly last significantly longer as there are 79 North
Sea PSVs in lay-up at the time of writing. As new PSVs come off long-term charters owners are
reluctant to contract at current rates for long periods and therefore the pool continues to grow. E&P
companies are using this to drive their costs down in the short-term despite widespread industry
acknowledgement that current North Sea PSV rates are unsustainable.
*investable funds as at the launch of the company
Marine Asset Company ("MAC")
Purchase Cost (USD)
Value as at 30 September 2015
Percentage of *investable funds as at
Purchase
Asset type
Build Date
Counterparty/Charterer
Length of Charter
Timing of dividends from MAC to NSA
Investment Update
Jane Offshore Ltd
8,022,500
6,648,300
6.6%
Multi Purpose Support Vessel
2013
EDT Offshore Ltd (“EDT”)
10 years to 2025
Bi-annual
The EDT Jane had poor utilisation over the Summer in what is normally the busiest time of the year
which is placing severe financial strain on EDT. EDT remains in full compliance with the charter
agreement despite the vessel having had very low utilisation. This is a maintenance focused asset
which has recently secured work, although at day rates lower than we would have liked, and we
believe long term it will remain a good investment if it can trade through this downturn.
*investable funds as at the launch of the company
Summary
The charterers of the vessels are regrettably all suffering from a market that is as weak as anyone can remember it, and unfortunately there is
still some residual tonnage being delivered next year which will further increase capacity. Despite current market conditions, the Company
owns substantive assets and we remain hopeful that most of these companies can trade through this down turn and asset values and day
rates will revert to a more normalised environment.
The support of the shareholders in these challenging times is greatly appreciated.
Contact Details
Company
Nimrod Sea Assets Limited
Dorey Court, PO Box 156
Admiral Park, St Peter Port
Guernsey
GY1 4EU
Corporate and Shareholder Advisor
Nimrod Capital LLP
St Helen’s Place
London
EC3A 6AB
Tel: +44 1481 702 400
www.nimrodseaassets.com
Tel: +44 207 382 4565
www.nimrodcapital.com
Disclaimer
This document is issued by Nimrod Sea Assets Limited (the "Company") to, and for the information of, its existing shareholders and does not in any jurisdiction constitute investment advice or an invitation to invest in the
shares of the Company. The Company has used reasonable care to ensure that the information included in this document is accurate at the date of its issue but does not undertake to update or revise the information,
including any information provided by Stamford Maritime Limited or the Executive Directors, or guarantee the accuracy of such information.
Neither Stamford Maritime Limited nor the Executive Directors have made and do not make any express or implied representation or warranty as to the accuracy or completeness of the information provided by it and, to the
extent permitted by law neither the Company, Stamford Maritime Limited nor the Executive Directors nor their directors or officers shall be liable for any loss or damage that anyone may suffer in reliance on such information.
The information in this document may be changed by the Company at any time. Past performance cannot be relied on as a guide to future performance. The value of an investment may go down as well as up and some or all
of the total amount invested may be lost.