Posted on January 11, 2023
Dutch shipping group Vroon, which has been a family-run business for more than 130 years, has succumbed to financial pressures that were exacerbated by global events and economic pressures in the past year. The company, which had been working to grow its offshore services as well as operating a fleet of tankers and livestock carriers, reports it will complete a delayed financial restructuring which will see control handed over to its lenders and parts of its fleet sold.
“Restructuring is necessary because of a debt level due to consecutive economic setbacks that is simply too high to be paid off through normal operational and financial performance,” the company said announcing its new agreements. “Although the current (financial) performance of the company is resulting in a positive cash flow and a sufficient level of liquidity, the unsustainable high debt requires action. This was already communicated last year and as such is nothing new,” according to the company.
The family controlling Vroon had reportedly been in reorganization talks with its lenders since 2018 and in January 2022 agreed to plans for the restructuring saying it would go forward with a debt-to-equity swap and the potential sale of some vessels. However, at the time they called the offshore business an important part of the operation. In exchange for reducing the company’s $1.1 billion in outstanding debt down to approximately $400 million, the banks and lenders were to become the majority shareholders, but the plan did not proceed in 2022.
The company says the delayed plan is now moving forward and further that it has decided to spilt the business selling its offshore operations. Over the next 18 months, they plan to sell 40 offshore supply vessels with some of the speculation being that it could in part be sold as a going business. At least 18 of the offshore vessels are currently run through a company based in Italy which media speculation says might be sold with the ships. Other parts of the offshore operation are based in the Netherlands, UK, and Singapore.
Vroon reports that it intends to keep its deep-sea fleet of livestock carriers, product tankers, high-heat tankers, and emergency response and rescue vessels, saying that this would form the basis of the “new” Vroon. They are saying after the divestitures coupled with the debt reductions the company will be on a solid financial basis with a long-term perspective.
In addition, saying the company requires a new strategy, Herman Marks announced he would also be stepping down as CEO. Having been with the company for 22 years, Marks had been serving as CFO when it was announced as part of the restructuring that managing director Coco Vroon would step down. Marks it was said would lead the restructuring having succeeded Coco Vroon. The current CFO, Rob Schuyt, will now become interim chief executive for the company.
Vroon reports it is targeted March 31, 2023, for completing the agreements and setting the delayed restructuring in motion.