Annual report pursuant to Section 13 and 15(d)

Note 4 - Investments, at Equity, and Advances to 50% or Less Owned Companies

v3.19.1
Note 4 - Investments, at Equity, and Advances to 50% or Less Owned Companies
12 Months Ended
Dec. 31, 2018
Notes to Financial Statements  
Equity Method Investments and Joint Ventures Disclosure [Text Block]
4.
INVESTMENTS, AT EQUITY, AND ADVANCES TO
50%
OR LESS OWNED COMPANIES
 
Investments, at equity, and advances to
50%
or less owned companies as of
December 31
were as follows (in thousands):
 
   
Ownership
 
2018
   
2017
 
MexMar
   
49.0%
    $
53,840
    $
60,980
 
SEACOSCO    
50.0%
     
28,002
     
 
OSV Partners
   
30.4%
     
11,087
     
10,006
 
SEACOR Marlin    
49.0%
     
7,579
     
 
MEXMAR Offshore International    
49.0%
     
4,900
     
 
Offshore Vessel Holdings    
49.0%
     
4,900
     
 
Dynamic Offshore Drilling    
19.0%
     
2,263
     
4,958
 
Nautical Power
   
50.0%
     
     
6,408
 
Other
   
20.0%  — 50.0%
     
9,202
     
9,817
 
     
 
    $
121,773
    $
92,169
 
 
Condensed Financial Information of MexMar.
Summarized financial information of MexMar as of and for the years ended
December 31
was as follows (in thousands):
 
   
2018
   
2017
 
Current assets
  $
38,113
    $
71,990
 
Noncurrent assets
   
215,207
     
194,990
 
Current liabilities
   
27,610
     
23,931
 
Noncurrent liabilities
   
115,948
     
147,043
 
 
   
2018
   
2
017
   
2016
 
Operating Revenues
  $
57,003
    $
67,003
    $
70,521
 
Costs and Expenses:
                       
Operating and administrative
   
25,932
     
29,405
     
37,613
 
Depreciation
   
16,295
     
15,977
     
13,958
 
     
42,227
     
45,382
     
51,571
 
Operating Income
  $
14,776
    $
21,621
    $
18,950
 
Net Income
  $
5,584
    $
9,233
    $
6,476
 
 
Condensed Financial Information of Falcon Global, Sea-Cat Crewzer and Sea-Cat Crewzer II.
Summarized financial information as of and for the years ended
December 31
was as follows (in thousands):
 
       
201
7
(1)
   
201
6
 
Operating Revenues
      $
5,075
    $
21,611
 
Costs and Expenses:
                   
Operating and administrative
       
3,752
     
12,837
 
Depreciation
       
2,324
     
3,694
 
         
6,076
     
16,531
 
Operating (Loss) Income
      $
(1,001
)
  $
5,080
 
Net (Loss) Income
      $
(2,699
)
  $
778
 

(
1
)
Includes
2017
activity through date of acquisition or consolidation. 
No
activity in
2018
due to acquisition in
2017.
 
Combined Condensed Financial Information of Other Investees (excluding MexMar, Falcon Global, Sea-Cat Crewzer and Sea-Cat Crewzer II).
Summarized financial information of the Company's other investees, at equity, as of and for the years ended
December 31
was as follows (in thousands):
 
   
2018
   
2017
 
Current assets
  $
61,287
    $
61,360
 
Noncurrent assets
   
352,421
     
247,038
 
Current liabilities
   
32,302
     
14,603
 
Noncurrent liabilities
   
209,752
     
138,789
 
 
   
2018
   
2017
   
2016
 
Operating Revenues
  $
54,853
    $
77,409
    $
77,571
 
Costs and Expenses:
                       
Operating and administrative
   
53,967
     
46,748
     
51,136
 
Depreciation
   
10,148
     
12,198
     
13,181
 
     
64,115
     
58,946
     
64,317
 
Loss on Asset Dispositions and Impairments, Net
   
(89
)    
     
(21,323
)
Operating (Loss) Income
  $
(9,351
)   $
18,463
    $
(8,069
)
Net (Loss) Income
  $
(20,383
)   $
6,451
    $
(19,229
)
 
As of
December 
31,
2018
and
2017,
cumulative undistributed net earnings of all
50%
or less owned companies included in the Company's consolidated retained earnings were
$28.5
million and
$46.1
million, respectively.
 
MexMar.
MexMar owns and operates
16
offshore support vessels in Mexico. During the year ended
December 31, 2018,
MexMar returned previously provided capital advances of
$9.8
million, which was used by the Company to invest in
two
new joint ventures, MexMar Offshore International LLC ("MexMar Offshore International") and Offshore Vessel Holdings ("OVH").  During the year ended
December 
31,
2017,
MexMar returned advances of
$7.4
million in cash to the Company. During the year ended
December 
31,
2016,
the Company made advances of
$7.4
million in cash and sold
two
offshore support vessels for
$34.0
million in cash to MexMar.  During the years ended
December 
31,
2018,
2017
and
2016,
the Company received
$0.3
million,
$0.3
m
illion and
$0.3
million, respectively, of vessel management fees from MexMar. During the year ended
December 31, 2016,
the Company charged MexMar
$5.1
million to charter certain vessels under bareboat and time charter arrangements.
 
SEACOSCO.
On
January 17, 2018,
the Company announced the formation of SEACOSCO Offshore LLC ("SEACOSCO"), a Marshall Islands entity jointly owned by the Company and affiliates of COSCO SHIPPING GROUP ("COSCO SHIPPING"). SEACOSCO entered into contracts for the purchase of
eight
Rolls-Royce designed, new construction platform supply vessels ("PSVs") from COSCO SHIPPING HEAVY INDUSTRY (GUANGDONG) CO., LTD (the "Shipyard"), an affiliate of COSCO SHIPPING for approximately
$163.3
million, of which
70%
will be financed by the Shipyard, and secured by the PSVs on a non-recourse basis to the Company. SEACOSCO took delivery of
two
vessels in the quarter ending
March 31, 2018,
took title to another
five
of the PSVs in the quarter ending
June 30, 2018,
and expects to take title to
one
vessel in
2019.
Thereafter, the Shipyard, at its cost, will store the
six
undelivered PSVs at its facility for periods ranging from
six
to
18
months. The Company owns an unconsolidated
50%
interest in SEACOSCO.  During the year ended
December 31, 2018,
the Company contributed capital of
$29.6
million in cash.  The expected remaining capital commitment for vessel construction of approximately
$2.0
million will be due in the
first
quarter of
2019.
The Company will be responsible for full commercial, operational, and technical management of the vessels on a worldwide basis. Currently, there is
one
vessel on a firm
five
-year charter.
 
OSV Partners.
SEA
COR OSV Partners GP LLC and SEACOR OSV Partners I LP (collectively "OSV Partners") own and operate
five
offshore support vessels.  OSV Partners had been in non-compliance with certain financial covenants under its term loan facility since
December 31, 2017 
On
September 28, 2018,
such facility, was restructured to, among other things, extend its maturity to
September 28, 2021,
and in connection therewith, the Company participated in a
$5.0
million preferred equity offering of OSV Partners and subordinated loan in the amount of
$5.0
million, investing
$1.1
million in such preferred equity (and committing to invest an additional
$1.1
million in such preferred equity if called by the general partner of OSV Partners prior to
September 30, 2020)
and providing
$2.1
million of such loan. The lenders to OSV Partners have
no
recourse to the Company for outstanding amounts under the facility, and the Company is
not
obligated to participate in any future investment in or loan any money to OSV Partners. During the year ended
December 
31,
2017,
the Company participated in a
$6.0
million preferred equity offering of OSV Partners and invested
$2.3
million in support of the venture. During the year ended
December 31, 2016,
the Company contributed capital of
$1.2
million in cash to OSV Partners. During the years ended
December 
31,
2018,
2017
and
2016,
the Company received
$0.6
million,
$0.6
million, and
$0.5
million, respectively, of vessel management fees from OSV Partners.
 
SEACOR Marlin.
The Company created a new subsidiary, SEACOR Marlin LLC ("SMLLC") and contributed the Seacor Marlin supply vessel into SMLLC.  On
September 13, 2018,
the Company sold
51%
of SMLLC to MOMI, a wholly-owned subsidiary of MexMar, for
$8.0
million in cash, which generated a gain of
$0.4
million.  The Seacor Marlin supply vessel was pledged as collateral under the MexMar credit facility, for which the Company receives an annual collateral fee.  
 
MexMar Offshore International. 
On
December 20, 2018,
UP Offshore, a leading provider of offshore support vessel services to the energy industry in Brazil, was acquired by MEXMAR Offshore, a new joint venture company that is
49%
owned by SMHI, and
51%
owned by a subsidiary of CME. Of UP Offshore's
14
vessel fleet,
12
vessels are located and registered in Brazil and
two
are located and registered in the United Kingdom.
11
of UP Offshore’s vessels are platform supply vessels ("PSVs"),
two
are remotely operated vehicle ("ROV") support vessels and
one
is an offshore terminal vessel. MEXMAR Offshore acquired UP Offshore for nominal consideration, refinanced its existing debt to fund capital expenditures on
two
vessels and a
$10.0
million loan to fund working capital requirements.
 
Offshore Vessel Holdings. 
On
December 28, 2018,
the Company invested
$4.9
million for a
49%
share in OVH  joint venture. The joint venture will be used to invest in offshore assets or business internationally.
 
Dynamic Offshore Drilling.
Dynamic Offshore Drilling Ltd. ("Dynamic Offshore Drilling") was established to construct and operate a jack-up drilling rig that was delivered in the
first
quarter of
2013.
During the year ended
December 
31,
2017,
the Company recognized an impairment charge of
$8.3
million, net of tax, for an-other-than-temporary decline in the fair value of its equity investment upon Dynamic Offshore Drilling's unsuccessful bid on a charter renewal with a customer.  During the year ended
December 31, 2018,
the Company recognized equity losses in Dynamic Offshore Drilling of
$2.7
million and determined that its
$2.3
million investment in the joint venture is
not
impaired.
 
N
au
tical Power.
In the quarter ending
September 30, 2018,
the joint venture repaid the Company's
$6.4
million investment in Nautical Power, LLC ("Nautical Power") in cash. 
 
Falcon Global.
Falcon Global was formed to construct and operate
two
foreign-flag liftboats. During the
three
months ended
March 31, 2017,
the Company and its partner each contributed additional capital of
$0.4
million, and the Company made working capital advances of
$2.0
million to Falcon Global. In
March 2017,
the Company's partner declined to participate in a capital call from Falcon Global and, as a consequence, the Company obtained
100%
voting control of Falcon Global in accordance with the terms of the operating agreement. The impact of consolidating Falcon Global's net assets effective
March 31, 2017
to the Company's financial position was as follows (in thousands):
 
Cash
 
$
1,943
 
Marketable securities
   
785
 
Trade and other receivables
   
(291
)
Investments, at Equity, and Advances to 50% or Less Owned Companies
   
(19,374
)
Property and Equipment
   
96,000
 
Accounts payable
   
3,201
 
Other current liabilities
   
1,153
 
Long-Term Debt
   
58,335
 
Other Liabilities
   
(1,000
)
Noncontrolling interests in subsidiaries
   
17,374
 
 
Sea-Cat Crewzer II.
Sea-Cat Crewzer II owns and operates
two
high-speed offshore catamarans. On
April 28, 2017,
the Company acquired a
100%
controlling interest in Sea-Cat Crewzer II through the acquisition of its partners'
50%
ownership interest for
$11.3
million in cash (see Note
2
).
 
Sea-Cat Crewzer.
Sea-Cat Crewzer owns and operates
two
high-speed offshore catamarans. On
April 28, 2017,
the Company acquired a
100%
controlling interest in Sea-Cat Crewzer through the acquisition of its partners'
50%
ownership interest for
$4.4
million in cash (see Note
2
).
 
Other.
The Co
mpany's other
50%
or less owned companies own and op
erate
eight
vessels. During the year ended
December 31, 2018,
the Company received dividends of
$1.7
million from these
50%
or less owned companies.  In addition, during the year ended
December 31, 2018,
the Company recognized impairment charges of
$1.2
million, net of tax, to reduce its investment carrying value in a certain
50%
or less owned company to zero. During the year ended
December 
31,
2017,
the Company received dividends of
$2.6
million, made capital contributions and advances of
$0.8
million and rec
eived repayments on advances of
$0.2
million with these
50%
or less owned companies. In addition, during the year ended
December 
31,
2017,
the Company recognized impairment charges of
$0.5
million, net of tax, for an other-than-temporary decline in the fair value of its investment in a certain
50%
or less owned company. During the year ended
December 
31,
2016,
the Company received dividends of
$0.8
million from these
50%
or less owned companies and made capital contributions of
$0.5
million to these
50%
or less owned companies. In addition, during the year ended
December 
31,
2016,
the Company recognized impairment charges of
$0.5
million, net of tax, for an other-than-temporary decline in the fair value of its investment in a certain
50%
or less owned company and recognized
$2.7
million, net of tax, for its proportionate share of impairment charges recognized by certain of its
50%
or less owned companies related to offshore support vessels used in their operations.  During the years ended
December 
31,
2018,
2017
and
2016,
the Company receiv
ed
$0.3
million,
$0
.7
million, and
$0.8
million, respectively, of vessel management fees from these
50%
or less owned companies.
 
Two of the Company's
50%
or less owned companies obtained bank debt to finance the acquisition of offshore support vessels. The debt is secured by, among other things, a
first
preferred mortgage on the vessels. The banks also have the authority to require the Company and its partners to fund uncalled capital commitments, as defined in the partnership agreements. In such event, the Company would be required to contribute its allocable share of uncalled capital, which was
$0.8
million in the aggregate as of
December 31, 2018.
 
The Company guarantees certain of the outstanding charter receivables of
one
of its managed
50%
or less owned companies if a customer defaults in payment and the Company either fails to take enforcement action against the defaulting customer or fails to assign its right of recovery against the defaulting customer. As of
December 31, 2018,
the Company's contingent guarantee for the outstanding charter receivables was
$0.3
million.