Aker was too quick to pull the trigger when it a couple of years ago injected money in a large-scale offshore merger, acknowledges Aker CEO Øyvind Eriksen in the company's third quarter interim report.
He writes that the timing of the investment in the Norwegian carrier Solstad Offshore was wrong.
Aker entered the market for offshore vessels in 2016 when several carriers were experiencing trouble. Subsequently the group spearheaded a merger of Solstad, Rem Offshore, Farstad and Deep Sea Supply, a process in which shipping magnate John Fredriksen also participated.
At the time, the parties expected that the market would improve within the foreseeable future. But this has not happened.
Solstad Offshore is a great company, but in hindsight we invested in the company too early in the cycle,
"Counter cyclical capital allocation and M&A have added a lot of value to Aker's shareholders in recent years. We acknowledge, however, that we do not always get it right. Solstad Offshore is a great company, but in hindsight we invested in the company too early in the cycle," writes CEO Øyvind Eriksen in the report, where the value of the investment in the carrier was booked as NOK 287 million (USD 34 million).
At the end of October, Solstad Offshore announced that it had entered talks with its creditors to find a long-term financial solution. The company's debt stood at NOK 21.9 billion by the end of September this uear, and while the oil companies are once again earning money, this has not yet spread to the offshore carriers.
The Aker Group is lead by billionaire Kjell Inge Røkke and covers comprehensive activities within the oil industry led by oil company Aker BP. In the third quarter, the value of all investments increased by 10.8 percent relative to the prior quarter.
English Edit: Lena Rutkowski