Stolt Offshore S.A. announced that following a review of information which became available in recent project reporting and a subsequent major project review led by CEO Tom Ehret, it has identified substantially poorer than anticipated performance and cost overruns on three major EPIC contracts and several smaller projects.
In addition, it is expected that activity levels will be slightly lower than previously anticipated. As a result of these factors,
Stolt Offshore at this time expects its full year loss to be in the range of $100 million to $125 million, subject to further review at the time of completion of the previously announced Blueprint for financial recovery in July. A substantial portion of this loss will be taken in the second quarter.
In light of this revised forecast, Stolt Offshore is working closely with its main banks in seeking to amend its two primary bank credit facilities to reflect the Company's current financial position, including a waiver of certain financial covenant tests until November 30, 2003. As an interim step, Stolt Offshore's banks have agreed to a 30-day "standstill" whereby they will take no actions on any potential non-compliance with its financial covenants while internal bank approvals are sought and documentation is finalized. Without a waiver of certain financial covenants, Stolt Offshore would be out of
compliance with its bank credit agreements. In order to help Stolt Offshore get such waivers from the banks, Stolt-Nielsen S.A., Stolt Offshore's parent company, has offered to provide a $50 million capital infusion in the form of a subordinated loan to Stolt Offshore and extend the existing $50 million liquidity line it currently provides to November 30, 2004.