M&O restructuring needs safe harbour

THE maritime and offshore (M&O) sector has endured almost a decade of distress since the global financial crisis. Overzealous ordering of newbuild vessels during the boom years, made available by cheap credit and the lure of increasing global demand, has left many sectors of the maritime industry over-saturated.

Following a study of 44 offshore supply vessel companies, global consulting firm AlixPartners predicted a significant number of insolvencies in South-east Asia in the next 12 to 18 months and highlighted the fact that the current vessel scrap rate is only around 13 per cent of what is required to combat the vessel glut.

Additionally, events in 2016 and 2017 have resulted in looming debt stacks in the face of dwindling cash flows across the sector, particularly in Singapore and Asia-Pacific in general, where the key M&O players have - for the most part - yet to face immediate refinancing pressure. In fact, Marine Money magazine has suggested that between six and eight M&O businesses based or headquartered in Singapore will be seeking a restructuring solution soon. However, there are complexities involved in M&O restructuring which need to be considered.