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1 July 2021
Termination of UK New Build WDV ST-269 Letter of Intent
Triumph Subsea Services would like to advise that it has formally cancelled the Letter of Intent that was issued to InfraStrata plc on the 9th December 2020. The Letter of Intent was for one firm and one optional ST designed 200m x 35m Windfarm Development Vessels (WDV). The WDV is a turn-key solution for floating windfarm installations, cable laying and providing marine services for offshore carbon capture and green hydrogen projects. Following Triumph's business model of building and operating vessels with maximum local content these UK built vessels would have provided numerous employment opportunities for the UK supply chain. These opportunities would also have existed during the vessels execution of UK renewables projects as the vessels would have been crewed and operated by UK personnel.
For clarity and in respect of the NDA signed between the parties, Triumph will only emphasis points that are already in the public domain and or have actually been declared and posted by InfraStrata on the London Stock Exchange website.
Triumph’s decision to cancel the LoI has not been taken lightly, however due to various reasons such as the three points referenced below, left Triumph with no other option.
Quoting a section of InfraStrata’s stock exchange release from the 10th December 2020:
“With the parties having signed this LoI, the next steps towards a binding contract will involve, inter-alia, analysis of the detailed design packages, agreement of timelines and milestones from fabrication to delivery and, finally, placing of the necessary financing structures by Triumph and its partners with Harland & Wolff. Once contracted, each vessel would be expected to generate revenues for Harland & Wolff of between £340 million and £360 million over the 24-30 month period of fabrication, followed by additional revenues if further through-life support contracts are secured.”
To this date Triumph have not received any formal commercial quotation and or vessel build schedule, therefore based on not receiving this vital information that forms part of a shipbuilding contract, no contract could be agreed or signed. Furthermore without a formal commercial quotation and build schedule no discussion could proceed forward with any of the financial institutions that had been supporting Triumph with this project. Triumph did however have a Teams call and video presentation with Harland & Wolff on the 11th of March 2021 wherein an ad-hoc presentation was shown to Triumph, the presentation consisted essentially of a Very Rough Order Magnitude price and an equally rough schedule. The VROM and rough schedule was significantly different to the £340 million and £360 million over the 24-30 month periods agreed as per the LoI.
Quoting a section of InfraStrata’s stock exchange release from the 30th June 2021:
"Given the level of inquiries in renewables, some of which are highly advanced, we have taken a conscious decision to prioritise projects that have the highest probability of success and revenue generation potential. To that extent, the Letter of Intent (LoI) for the fabrication of the Windfarm Development Vessel (WDV) for Triumph Subsea Services Ltd (Triumph), announced in December 2020, has been set aside for the time being as we do not have a high enough level of confidence in this project progressing to speculatively invest heavily in it at this time. Clearly, we will continue to evaluate the position as we move forward and will only consider the best fit of projects for the yards that provide the optimum economic outcomes for the Company.”
The above statement is completely erroneous, misleading and a false representation of the truth. The initial misleading fact is that Triumph is unaware of the LoI being “set aside”, Triumph has cancelled the LoI and has no intention of executing any vessel builds with InfraStrata and or any of its shipyards. The other key point is that this was posted on the London Stock Exchange website at 0700hrs on 30th June 2021, this was before the validity expiration of the LoI and without stating that Triumph had actually issued a termination letter to InfraStrata. Furthermore if InfraStrata considers putting together a formal quotation and schedule as “investing heavily”, then they should reconsider if they want to be in the shipbuilding, renewable or energy sectors as putting together formal quotations is a key component to actually getting to the point of being in an ‘effective contract’.
Quoting a section of InfraStrata’s stock exchange release from the 4th May 2021:
o Placing to raise an expected minimum of £9 million (before expenses) in two tranches, the First Placing of approximately £3.6 million and the Second Placing of an expected minimum of approximately £5.4 million.
o Open Offer of up to 13,567,696 Ordinary Shares to raise up to £4.1 million (before expenses), assuming full take up from Shareholders.
o The net proceeds from the Fundraising will be used to carry out material fabrication works as the Company has now secured its first major contract through the £26m Saipem contract recently won, as well as to:
o satisfy the performance bond required for phase I of the Saipem contract;
o provide capital expenditure for, inter alia, site improvements to ensure that the works can be carried out to the requisite standard; and
o additional working capital to support enlarged business activities.”
The requirement to execute ‘Placing and Open Offer’ to raise funds to be able to execute a contract the size of Saipem’s clearly demonstrates that InfraStrata may not have been financially capable of executing the contract with Triumph.
Triumph is more than willing to have a discussion with the BOD of InfraStrata and the five main institutional investors. Alternatively, the shareholders of InfraStrata could request an EGM and invite Triumph to attend and discuss the LoI termination.
As a UK entity, Triumph believes it is a grave shame and travesty that key strategic maritime assets such as the H&W shipyard and other fabrication yards within the InfraStrata portfolio are not being utilized to their full potential, nor are they being used to assist the UK Government in its decarbonisation and Net Zero aspirations.
Triumph still remains fully committed to building our vessels in the UK and therefore we welcome discussions with any UK shipyards and or consortium of UK yards that are able to execute the build of vessels.