Following Seafox's announcement on 30 April 2020 of its unsolicited and non-binding approach to acquire the entire issued and to be issued share capital of Gulf Marine Services PLC ("GMS" or the "Company") (the "Seafox Proposal"), the Board has consulted widely with GMS's stakeholders and reviewed the Seafox Proposal with its financial advisers.
The Board today confirms that it has unanimously rejected the Seafox Proposal for the reasons set out below.
GMS is performing well
· Management and the Board have been strengthened
· The Company has been refocused and streamlined
· New business has been successfully secured with eleven new contracts since the start of 2019 and the backlog stands at US$240 million
· The cost base has been significantly reduced - the 2019 cost saving programme delivered US$13 million on an annualised basis against an original target of US$6 million
· Adjusted EBITDA for Q1 2020 is ahead of the Company's 2020 Business Plan
The Board is confident in future value creation as an independent company
· 80% of the 2020 Business Plan revenues are covered by firm contracts, and this rises to 83% if contracted options are exercised
· All available vessels in the fleet are currently contracted - secured utilisation for 2020 of 76% versus 69% in 2019
· 2021 contracted utilisation already stands at 49%, which is significantly ahead of the 2020 utilisation (27%) at the same time last year
· The cost savings programme has delivered further gains during 2020 and is currently running ahead of plan
· In principle agreement with lenders has been reached on revised terms for a restructuring of our bank debt including access to existing term loan facilities and new working capital facilities, which will provide a firm financial platform to move the business forward through 2020 and beyond. Full documentation is expected to be completed such that new facilities are available to the GMS group by 30 June 2020
The Seafox Proposal is wholly opportunistic
· The Seafox Proposal comes at a time of significant macro uncertainty caused by Covid-19. This has resulted in depressed share prices globally, particularly in the Energy sector, and it has, the Board believes, resulted in the Company's shares trading at all-time lows recently
· Seafox voluntarily chose to announce the Seafox Proposal the day before GMS updated the market on its 2019 results and on the significant recent progress within the business
· The Seafox Proposal has been made just a short time before the planned conclusion of the documentation of our amended bank facilities
The Seafox Proposal fundamentally undervalues GMS
· The Seafox Proposal values the Company's equity at only US$32 million
· The Board believes the Seafox Proposal fails to reflect the significant operational and financial progress made over the last 12 months and GMS's materially improved long-term prospects
· The Board believes that the true value of GMS is well in excess of the value of the Seafox Proposal
Tim Summers, Executive Chairman of GMS said:
"Operationally and commercially, GMS is in much better shape today than it was 12 months' ago. The Company is performing well notwithstanding the difficult environment; we have reduced costs and we will continue to reduce them further in 2020. 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."