Lamprell posts for sale sign amid severe liquidity issues

Lamprell (LON: LAM) faces “urgent and severe liquidity constraints,” the company has admitted, with an immediate need for $ 75 million, due in June and July this year.

It has made various efforts to seek equity and bank finance but has not been successful. As a result, it is seeking buyers for both the group and its assets.

One offer has already been set out. Blofeld Investment Management, which owns 25.06% of Lamprell, has made a non-binding indicative cash offer.

Lamprell did not disclose what the offer was. However, it did describe this as at a “very significant discount” to its share price. Such an offer, the company said, would need to provide interim funding or bridge financing.

The two sides have been in talks for more than two months but have been unable to reach an agreement.

The irony is that Lamprell’s fortunes, in line with the wider industry, are much improved. The company said it expects revenues this year to be around $ 400-500mn. This is up from $ 389mn in 2021.

Unrestricted cash has fallen from $ 25.8mn at the end of 2021 to $ 12.4mn.

Lamprell has not published its audited 2021 results. The audit process is in its final steps, the company said. It has until June 30 to do so or its shares will be suspended.

Obligations arising

Much of Lamprell’s problems stem from its IMI joint venture, with Saudi Aramco, Bahri and Hyundai Heavy Industries (HHI). Under this, Lamprell committed to invest $ 140mn and it has paid $ 85mn.

Lamprell said it was reviewing its financial involvement in the venture but this would not be fast enough to help tackle its liquidity issues.

Furthermore, Lamprell is building two jack-ups for IMI. It completed one rig in May 2022 and the second should be delivered in the first quarter of 2023.

It is due to pay $ 51mn for equipment to a supplier in July, with another $ 8mn due in December. Lamprell had signed a financing facility to support this work but additional funds from this only become available if Lamprell raises alternative cash.

An initial payment of $ 26.4mn is due in June under this financing. Lamprell is seeking a one-month extension, but is unsure whether this will be approved.

While it has identified $ 75mn due in the short term, more sums are also due. Lamprell sees requirements to pay $ 164mn to the end of 2023. This includes capital expenditure of $ 55mn on renewables capacity, a similar amount to the IMI venture, $ 38mn in pension entities and $ 16mn in maintenance.

That $ 55mn on renewables capacity will allow it to service works such as the Moray West Offshore Wind Farm.

In April it was announced by NOV that Lamprell would be its provider for fabrication, assembly and outfitting for a £ 10bn North Sea floating wind project from Cerulean Energy.

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