Gulf Marine Services rejects Seafox proposal


Gulf Marine Services rejects Seafox proposal

Having had a weekend to think it over, Gulf Marine Services PLC (LON:GMS) has rejected the proposed takeover by Seafox International.

The board said it is confident in the company’s future as an independent company and described the offer by Seafox as “opportunistic”.

The Seafox proposal values the company’s equity at only US$32mln, Gulf Marine Services (GMS) said, which the board believes “fails to reflect the significant operational and financial progress made over the last 12 months and GMS’s materially improved long-term prospects”.

Tim Summers, the executive chairman of GMS, claimed the oilfield support services provider is “in much better shape” than it was a year ago.

“The company is performing well notwithstanding the difficult environment; we have reduced costs and we will continue to reduce them further in 2020,” Summers said.

“We have agreed in principle a deal with our banks that provides the company with long-term financial stability. The board remains highly confident in the future success of the company. Now is not the time for shareholders to sell at a price that is far below the true worth of GMS,” Summers claimed.

Seafox begged to differ. It thinks GMS’s secured backlog of orders of US$240mln as at the end of March could melt away very quickly in the current difficult environment for the oil and gas industry.

In the last sustained period of depressed oil prices, GMS saw its secured backlog fall by over 75% in just one year from US$615.9mln in November 2015 to just US$137.3mln in November 2016, Seafox noted.

The company sounded unimpressed by the apparent progress on refinancing, noting that GMS has renegotiated with its lenders nearly every year since it floated and that its net debt of US$390mln is more than 7.5 times the adjusted underlying earnings (EBITDA) the company racked up in 2019.

Seafox is keen to support GMS strategically rather than solely financially; however, in the event that an offer is made on the same terms as the proposal (i.e. 9 US cents a share) or otherwise and that offer is not accepted, Seafox would not be supportive of any future equity raise by GMS.

Shares in GMS fell 6.9% to 5p in early deals.

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