Gulf Marine Services PLC (LON:GMS) shares shed around two-thirds of their value in early deals as it warned it was likely to breach banking covenants at the end of 2018.
In a trading update, the support vessel provider to the oil & gas and renewable energy sectors said delays in signing recently awarded contracts meant their mobilisation would be delayed until next year, putting it in potential breach of the covenants.
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Gulf Marine added that an oversupply of vessels in the industry, contract award delays, and a volatile oil price meant a recovery in day rates was unlikely to occur in 2019, which in turn would impact the group’s rate of deleveraging and its ability to service its scheduled increased debt repayments from 2020 onwards.
As a result, the company said while it could continue to trade in the near term, it was considering several ways of addressing its long-term capital structure as well as discussing the expected covenant breach with its banking syndicate “with the aim of establishing an appropriate long-term capital structure for the business”.
Shares were down 68% at 10.4p.