Thursday 10 September 2020

Reach Subsea ASA (”Reach”) and P&O Maritime Logistics have agreed on a revised charter agreement for the vessel Topaz Tiamat. Under the revised agreement, Reach will operate the vessel for the remainder of the 2020 season on pay-as-you-go terms, and demobilise from the vessel by December 2020.

As Reach originally had chartered the Topaz Tiamat for a firm period lasting until August 2021, the vessel has in accordance with IFRS 16 been accounted for as a right of use asset, with a corresponding lease liability. The accounting implications of the revised charter agreement are that 1) total assets will be reduced by approximately NOK 90 million, 2) the deconsolidation of Topaz Tiamat will result in a one-off accounting gain, and 3) in accordance with the original charter agreement, P&O Maritime Logistics will purchase the launch and recovery system (“LARS”) that Reach has installed onboard the Topaz Tiamat for approximately NOK 25 million.

Jostein Alendal, CEO of Reach, comments: “We have had a great co-operation with P&O Maritime Logistics and have together successfully introduced a new state of the art subsea vessel to the market, which from next year will move on to a new assignment in another part of the world. With this new charter agreement in place, we have made a substantial improvement to our financial robustness and cost position for the upcoming winter season. However, we need to find a replacement vessel for the two ROVs currently onboard the Topaz Tiamat for 2021 and beyond, but we believe this is a good time for finding a competitive vessel replacement for the coming years.”