Bourbon SA, owner of the biggest fleet of supply and crew ships for the oil industry, jumped the most in 17 months after unveiling a plan to sell and lease back vessels to lower debt.
The shares rose as much as 9.9 percent and were trading up 1.665 euros to 22.485 euros at 1:05 p.m. in Paris. The stock has risen 8.3 percent since the start of the year.
Bourbon will sell as many as 85 vessels to unspecified financial investors through 2014 for about $2.5 billion and then rent them under 10-year contracts, the company said in a presentation. The move will result in a “sharp reduction” in net debt and financial costs by the end of 2015 while lowering earnings before interest, taxes, depreciation and amortization.
Without the vessel sales, debt would have risen to levels “we would rather not have” and free cash flow generation would be restricted, Chairman Jacques de Chateauvieux said on a conference call. Bourbon will have the right of first refusal to buy back the vessels without being obliged to do so.
Under a $2 billion expansion plan, Bourbon had planned to operate 600 owned and chartered ships by 2015, up from 458 at the end of last year. The board decided to commit the final 500 million euros of the expansion plan for 41 vessels to be delivered in the coming months and 81 by the end of 2015, the Paris-based company said today. The vessels to be sold will represent almost a third of the fleet not counting crew boats.
Bourbon’s strategy and outlook for operations is “reassuring,” Christine Ropert, an analyst at Gilbert Dupont in Paris, said in a research note today. She kept a buy rating on the shares.
Net debt rose to 2.06 billion euros at the end of 2012 from 1.96 billion euros the previous year. The shipowner has sought diversification of financing away from French banks and could borrow from the financial market by 2015, Chief Financial Officer Laurent Renard said today.
Net income was 41.9 million euros in 2012 compared with 6.8 million euros a year earlier, the company said in a statement. Sales rose 18 percent to 1.19 billion euros.
Bourbon kept a target to boost sales by 17 percent a year.
“The stability of the price per barrel at around $110 has encouraged our clients to make substantial investments in the market where growth prospects point to sustained demand for vessels in 2013,” it said in the statement. Bourbon customers include Total SA, Exxon Mobil Corp. and Royal Dutch Shell Plc.
Rates at which Bourbon rents vessels to oil companies had “good increases” last year, Chief Executive Officer Christian Lefevre said on the call. The rates rose in the second half for all vessel types compared with the two preceding six-month periods.
“Africa is a big growth zone,” he said. The company has expanded operations from Angola to Ivory Coast, Ghana and East Africa.
By contrast, Brazil, where offshore discoveries hold promise for international oil companies, has proved “difficult,” Lefevre said. Project delays mean vessel demand is “stagnating.”