Out of the US$360 ($464.7) million contract balance, US$250 million will be repaid under an interest-bearing credit facility of up to 10 years granted by Seatrium and this will be funded by cash generated from the vessel. Hilado notes that this arrangement results in the remaining contract being discounted but he believes that the interest rate offsets the discount.
Citi Research is maintaining its "buy" call for Seatrium after today’s announcement that the offshore and marine player has reached a settlement with Maersk Offshore Wind affiliate Phoenix II over a commercial dispute. The conflict was over the latter’s decision to unilaterally cancel a contract for a nearly completed wind turbine installation vessel (WTIV) built by Seatrium.
Analyst Luis Hilado highlights that the resolution is beneficial overall for Seatrium since it addresses potential perception risk created by the initial termination notice by Maersk as well as providing more colour on earnings moving forward.
