Rieber Shipping Hopes for Recovery, but is Prepared to Wait

CEO Irene Waage Basili of Norway's Rieber Shipping says hopes marine seismic market could begin to recover in 2017, but is prepared for current market weakness to last another 2-3 years.

** Statement followed firm's announcement of agreement with Rasmussengruppen AS to establish a new, 50/50 owned marine geophysical company called Shearwater GeoServices AS

** CEO says as of today there is no increase in seismic tender activity, but sees rising interest from investors who believe this could be a good time to invest in the seismic industry

** CEO says Shearwood will focus on marine contract market and not on speculative multiclient investments (collecting data without contract)

** CEO says pre-funding level has to increase before Shearwood starts making multiclient investments

** Recently competitors PGS and TGS have announced higher-than-expected sales due to increased multiclient sales

** Broker Swedbank said in a note that establishment of a new seismic player could represent yet another data point supporting its view that the seismic market has passed the trough in this cycle

** Swedbank said a more fragmented vessel market is positive for TGS and Spectrum, which rent ships for their operations, and negative for vessel owners such as PGS , Polarcus, CGG and WesternGeco

** Rieber Shipping's shares are up 14 pct compared with a decline of 0.7 pct in Oslo's benchmark share index

INJECTING $60 MILLION
** Rieber Shipping will put its four 3D marine seismic vessels into Shearwood

** Rasmussengruppen will inject $45 million in cash and Rieber Shipping $15 million

** The injected cash will be used to withstand current weak market

** As of today none of the four ships are on contracts

** CEO says has some interesting leads but competition is tough

** The total value of the four seismic vessels is set to $228.5 million

** CEO says all debt related to the four vessels, around $190 million, will be transferred to Shearwater

** The four vessels were originally on long term contracts to Dolphin Group which earlier this year went bankrupt due to the weak market

** The seismic equipment on the vessels was owned by Dolphin. Shearwater will buy this equipment, which will add to the $190 million debt

** Says will not comment on the price for the seismic equipment

** In addition to cash injection from Rasmussengruppen and Rieber, a new bank deal is negotiated for the four vessels

** The new terms include a 75 percent reduction in instalments compared to the original repayment profile until June 2019 and an extension of the term of the loans until year-end 2022

** Acquisition of seismic equipment is financed by DNB and SR-Bank

** The sale of the vessels to Shearwater implies an impairment charge of approximately 130 million Norwegian crowns ($16.07 million), which will be booked in third quarter 2016

** CEO Irene Waage Basili of Rieber Shipping says she will act as interim CEO at Shearwater until a permanent CEO is picked

Reporting By Ole Petter Skonnord