Bergen Group sells Hanoytangen, explaining Chang departure

The snowball effect that started from royally botched Fjord Line cruise ferry project management has now culminated in Bergen Group (OSE: BERGEN) selling its last crown jewel. The company has decided to divest Hanøytangen which is the deepest dry dock in Europe to Semco Maritime. At the same time the adjacent buildings are sold to Hellik Teigen Group. The 40 or so employees continue with the new owners. Bergen Group management recently moved to Hanøytangen and now heads away.

The perfect storm continued even after Rosenberg divestment, which brought in a lot of cash. The company scrambled to sell Fosen yards, in the end for pennies, just to try to get out of it. Since then Bergen Group touted the long-term prospects of Hanøytangen and made investments into the dry-dock but realising gains such would require further large investments. Decommissioning activity was supposed to be a long-term growth area that could sustain nice yields for investors. The company had said it was looking for a long-term financing solution; most of the 800 million NOK in liabilities is short term. Once Scanmet-option was left unused, the writing was on the wall that the only option was another disposal.

Now what is left? As per stock market regulations, Bergen Group will have to explain this shortly. Balance sheet assets are going to diminish greatly to somewhere in the vicinity of 100 million NOK. The selling price is 245 million NOK and a 145 million NOK impairment will be taken. Total non-current assets as of December 31 2014 were 516 million.

Compared to most recent accounts and just adding the sales price into the short term side, short-term assets will cover all liabilities as listed annual accounts for 2014 by about 120 million NOK, which consequently was about the same as the market value in Friday close. Annual sales of remaining activities of Bergen Group services is somewhere in the vicinity of 400 million NOK. The segment EBITDA most recently has come somewhere below 20 million NOK a year.

That is all well and good and may look like an attractive valuation but it remains to be seen what is shown in Q1 accounts. A net gain from Hanøytangen transaction of some 30 million NOK goes into Q2 accounts based on what was allocated to disposal of net operational assets. Safe Bristolia contract will be finalized, part of it was in Q4 accounts and the remainder is finished within weeks.

The exit from shipbuilding activities has also constantly cost more than the company has been projecting and further potential liabilities have arisen, such as those that were from hull builders for Fosen . Most recent litigation is an 82 million NOK suit from Maritime Construction Services pertaining to a project on Borgland Dolphin in Hanøytangen AS. While services sector has some long-term frame agreement, such as with the Navy, offshore services prospects have dimmed as well. Therefore any entry now is highly speculative.

Now we also know why the biggest shareholder Brian Chang left his post in the Board of Directors last week. It seems he has no particular interest in a mere maritime services company. What Yantai Raffles founder Mr. Chang plans to do with his shares remains to be seen. You wonder if continued listing is worth it. Any change will naturally involve the long-time leader and the other major shareholder Magnus Stangeland.