| Item 1.01 | Entry into a Material Definitive Agreement |
Sale and Purchase Agreement.
On May 31, 2020, SEACOR Offshore Asia LLC (the “Purchaser”), an indirect wholly-owned subsidiary of SEACOR Marine Holdings Inc. (the “Company”), entered into a Sale and Purchase Agreement (“SPA”) with China Shipping Fan Tai Limited, a company incorporated under the laws of the British Virgin Islands, and China Shipping Industry (Hong Kong) Co., Limited, a company incorporated under the laws of the Hong Kong Special Administrative Region (together, the “Sellers”), pursuant to which the Purchaser acquired the 50% membership interest in SEACOSCO Offshore LLC (“SEACOSCO”) held by the Sellers that the Company did not already own. Upon the closing of the transaction, the Company will own 100% of the membership interests in SEACOSCO.
The price payable by the Purchaser for the membership interests is $28.15 million (the “Purchase Price”), $8.445 million of which is payable at or prior to the closing of the transaction with annual installment payments of $1.0 million, $2.5 million and $2.5 million payable in the first, second and third year after the signing date, respectively, and the remaining $13.705 million due four years after the signing date. The deferred portion of the Purchase Price accrues interest at a fixed rate of 1.5%, 7.0%, 7.5% and 8.0% for the first through fourth years after the signing date, respectively. SEACOSCO is the owner of eight platform supply vessels (“PSVs”) built by COSCO Shipping Heavy Industry (Guangdong) Co., Ltd. (the “Shipyard”).
The parties to the SPA have each made customary representations, warranties and covenants. In addition, the Sellers will obtain a second lien mortgage on the PSVs to secure the payment of the deferred portion of the Purchase Price, and the Company will provide a limited deficiency guarantee solely with respect to the short-fall in vessel collateral value, if any, in the event the Sellers exercise their remedies under the mortgages (the “SPA Limited Deficiency Guarantee”).
The PSVs were acquired by vessel owning subsidiaries (“SPVs”) of SEACOSCO pursuant to existing deferred purchase agreements with the Shipyard (“DPAs”) under which an aggregate of approximately $105 million is currently outstanding. The DPAs provide for amortization of the purchase price for each vessel over a period of 10 years from delivery at a floating interest rate of three-month LIBOR plus 4.0%. SEACOSCO has taken delivery of seven of the eight PSVs, each with a 2018 or 2019 year of build, and expects to take delivery of the final PSV in 2020. The payment obligations of the SPV under the DPA for each vessel is secured by a first lien mortgage on the vessel and a pledge of the SPV’s equity, and the Company will provide a limited deficiency guarantee solely with respect to the short-fall in vessel collateral value, if any, in the event the Shipyard exercises its remedies under the mortgages (“DPA Limited Deficiency Guarantee”).
The closing of the transaction is subject to certain conditions, including the Company obtaining the consent of its lenders under that certain credit agreement, by and among, the Company, SEACOR Marine Foreign Holdings Inc., an indirect wholly-owned subsidiary of the Company, and certain vessel-owning subsidiaries of the Company, and a syndicate of lenders administered by DNB Bank ASA, New York Branch, dated as of September 26, 2018, as amended from time to time.
The foregoing descriptions of the SPA, SPA Limited Deficiency Guarantee and DPA Limited Deficiency Guarantee do not purport to be complete and are qualified in their entirety by reference to the full text of the SPA, SPA Limited Deficiency Guarantee and the form of DPA Limited Deficiency Guarantee, copies of which are filed as Exhibit 10.1, 10.2 and 10.3 hereto, respectively, and the terms of which are incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under anOff-Balance Sheet Arrangement of a Registrant |
The descriptions of the SPA, SPA Limited Deficiency Guarantee and the DPA Limited Deficiency Guarantee included in Item 1.01 are incorporated into this Item 2.03 by reference.
| Item 7.01 | Regulation FD Disclosure |
On June 4, 2020, the Company issued a press release announcing the execution of the SPA. A copy of the press release is included as Exhibit 99.1 to this Current Report on Form8-K and is incorporated herein by reference.
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