Sevan Marine is selling the semi-completed hulls number 4 and 5 on an “as-is, where-is” basis to Logitel Offshore for US $41m, with the latter to market them as accommodation units.

The total purchase price is to be rendered as a seller’s credit. Sevan will grant an additional loan of $10m to be applied by Logitel towards its first milestone payment regarding hull number 4 to the yard, which will complete the hulls as high-end accommodation units.

The total $51m credit is structured as a bullet loan, with a 3% coupon, repayable within 24-36 months. The loan can be converted by Sevan into shares in Logitel Offshore.

Upon the sale of the hulls, Sevan will be released from substantially all accrued, contingent and future liabilities related to the hulls, it said. The transaction remains subject to certain customary closing conditions.

Logitel is a Singapore-based stand- alone company established in cooperation with Sevan strictly for the purpose of promoting floating accommodation units based on the Sevan design. Logitel has entered into agreements with a “reputable yard” for the construction of one plus one accommodation unit based on the hulls, with options for two more. These agreements are non-recourse to Sevan.

Work on hull number 4 is due to start shortly, while work on hull number 5 is expected to begin before the end of this year, subject to certain initial milestone payments being made.

The accommodation units will be North Sea compliant and equipped with DP3 and mooring systems.

While focusing on the core FPSO/FSO segment, Sevan has also been seeking to develop new markets for its design. As part of that initiative Arne Smedal, co-founder of Sevan and vice chairperson of its Board of Directors, has also established CeFront Technology AS in cooperation with Sevan.

Sevan and CeFront have entered into a cooperation agreement regarding, among other things, the development of new applications and projects based on the innovative circular design. Thus, said Sevan, it has secured continued and preferential access to know-how and experience in addition to its own in-house resources, while retaining all patents and other intellectual property rights pertaining to the Sevan technology.

As a result of these two transactions, Sevan estimates that the operating expenses will be reduced with approximately USD 4.5 million per year. In connection with the organizational changes, a restructuring charge (including relevant severance benefits as per existing contracts) of approximately USD 3 million will be incurred in 2013.

The purchase price, $41m in total, equals the book value of the hulls as of 31 December 2012. The transaction is expected to be completed during Q2 2013. Sevan will also earn a licence fee of $5m for each of the hulls, payable six months after commencement of any charter for the respective units. A license fee of $10m has been agreed for any future accommodation unit based on the Sevan design.

Logitel Offshore (100% owned by CeFront) will hold exclusive rights for the use of the Sevan design within the accommodation and logistics market for an initial period, with options to extend under certain conditions. It will also enter into a service agreement with Sevan in connection with the construction of the units to procure the necessary support from Sevan.

Carl Lieungh, Sevan’s CEO, said the company had “actively marketed the hulls for FPSO projects in recent years, but for various reasons it has proven difficult to convert keen customer interest into firm contracts. The Logitel transaction reduces down side risk in Sevan while increasing the upside potential and free cash flow, and brings with it the option to become a Logitel shareholder. We look forward to working with CeFront, while at the same time focusing our resources on the opportunities in the FPSO/FSO segment”.