Danish offshore wind services provider Esvagt has bailed out a struggling Norwegian shipyard supplier amid the COVID-19 pandemic.
Esvagt issued an “economic rescue package” to the Havyard, which is building three service operation vessels for the company, it said in a statement.
Esvagt also said it is rolling out a combination of initiatives to help its business navigate the impact of the COVID-19 pandemic.
Its board of directors and upper management have agreed to a 15% pay reduction, with general management taking a 10% pay cut.
Esvagt’s onshore employees have been offered a volunteer arrangement consisting of a 5% pay reduction.
The company said: “The pay reduction runs for a year, and together with postponement of investments and a few vessel decommissions, this contributes to Esvagt having the necessary liquidity.
“Additionally, a renegotiation of contracts with partners and suppliers will ensue.”
Esvagt chief executive Peter Lytzen said: “We have to balance our responsibility to keep our employees; to ensure the company’s continued healthy operation and at the same time tend to our obligations.
“We do not wish to send people home, and we can’t, because we have a responsibility as a subcontractor to society’s crucial energy infrastructure.”
Lytzen said its oil and gas business is “challenged” in two essential areas.
He explained: “The fact that oil storage is full and oil and gas prices are low means that no investments are being made in well drillings. This has an impact on the ERRV spot market, which is a considerable part of our business.
“At the same time, our rates are affected by exchange losses from the Norwegian krone and the British pound; two markets where Esvagt has a substantial presence.”
Lytzen added: “All in all, these are elements that put Esvagt’s liquidity under pressure.”