Offshore Fabricator Pays $20M for Shipyard
Known as a manufacturer of specialized structures and vessels used in the oil, gas and marine industries, Gulf Island Fabrication Inc. is extending its reach into the Gulf Coast market through the acquisition of LEEVAC Shipyards LLC.
Houston-based Gulf Island announced the acquisition in a Jan. 4 statement.
Dated Dec. 23, the asset purchase agreement indicated a purchase price of $20 million for the shipyard assets
Meeting Market Demands
Headquartered in Covington, LA, LEEVAC Shipyards is a shipbuilder with a 102-year history of designing, manufacturing and launching a variety of vessels for every aspect of the maritime industry.
Gulf Island, founded in 1985, is seeking to expand its facilities and services to increase fabrication capacity and to invest in employee training and technology to meet the changing needs of an evolving energy industry, according to its website.
Through this acquisition, Gulf Island will obtain “substantially all” of LEEVAC’s assets, including LEEVAC’s leasehold interests at its marine fabrication facilities in Jennings, LA, and Lake Charles, LA, as well as substantially all of LEEVAC’s machinery and equipment.
Additionally, the transaction also generated an agreement for Gulf Island to lease LEEVAC's marine fabrication facility in Houma, LA.
Kirk Meche, Gulf Island’s president and chief executive officer stated that “the closing of the acquisition of the LEEVAC assets achieves one of the management team’s key strategic initiatives: “expanding our marine fabrication and vessel repair and maintenance presence in the Gulf South market and diversifying our fabrication capabilities.”
Meche told NOLA.com | The Times-Picayune that his company does not plan to change operations and staffing levels at the acquired shipyards and at LEEVAC's Covington headquarters.
“I want to personally welcome the former LEEVAC employees who have joined our team,” Meche added.
Chris Vaccari, president and chief executive officer of LEEVAC, will become part of Gulf Island’s management team.
“To compete in today's marine fabrication marketplace and serve an increasingly more sophisticated customer, you must have access to the best talent, tools, and facilities,” he said, “and I believe this transaction creates a group of shipyards that will better meet the demands of the market."
Meche told NOLA.com that his company began to investigate the acquisition of LEEVAC almost two years earlier.
Much of Gulf Island’s work was focused on oil and gas fabrication throughout its history, but ship repair work, he said, provided a chance to diversify and protect the company against future declines in the energy industry.
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The deal fulfills Gulf Island's management team goals for—"expanding our marine fabrication and vessel repair and maintenance presence in the Gulf South market and diversifying our fabrication capabilities”—said LEEVAC CEO Chris Vaccari.
According to the news site, Gulf Island had been struggling to sign new work as oil prices dipped. In November, the company released roughly 400 workers from its San Patricio County, TX, site following the completion of a major fabrication project.
The $20 million purchase price was subject to a working capital adjustment under which Gulf Island received at closing a dollar-for-dollar reduction for the assumption of certain net liabilities and settlement payments from sureties on certain ongoing fabrication projects that were assigned to Gulf Island in the transaction.
After taking into account these adjustments, Gulf Island received approximately $1.6 million in cash at closing. In addition, the transaction added approximately $112 million of incremental contract backlog.
About Gulf Island Fabrication
Gulf Island is a fabricator of offshore drilling and production platforms, hull and/or deck sections of floating production platforms and other specialized structures used in the development and production of offshore oil and gas reserves.
These structures include jackets and deck sections of fixed production platforms; hull and/or deck sections of floating production platforms (such as tension leg platforms “TLPs”, “SPARs”, “FPSOs”, and “MinDOCs”), piles, wellhead protectors, subsea templates and various production, compressor and utility modules, offshore living quarters, towboats, liftboats, tanks and barges.
The company also provides offshore interconnect pipe hook-up, inshore marine construction, manufacture and repair of pressure vessels, heavy lifts such as ship integration and TLP module integration, loading and offloading of jack-up drilling rigs, semi-submersible drilling rigs, TLPs, SPARs, or other similar cargo, onshore and offshore scaffolding, piping insulation services, and steel warehousing and sales.
It has six subsidiaries located in Houma, LA; Houston; and Aransas Pass, TX.