The parent company of Stockton-based cabling specialists Reef Subsea has filed for bankruptcy, raising questions over the future of around 80 North East jobs.
Reef Subsea AS, the Norwegian parent company of Thornaby-based Reef Subsea UK Ltd (RSUK), revealed it had filed for bankruptcy this week.
But RSUK, which posted a pre-tax loss of £15.9m in 2013, maintained it is a separate legal entity and remains under the control of its own directors.
A spokesperson said: “For the avoidance of doubt, Reef Subsea UK Limited is not in administration.”
Last year Reef Subsea AS restructured to form three independent business – X-Subsea, Reef Power & Umbilical and Technocean Subsea.
Reef’s chairman Mel Fitzgerald has been reported in the Norwegian press, as saying recent market deterioration caused by low oil prices had scuppered the turnaround efforts.
Speaking to the Norwegian newspaper, Dagens Næringsliv, Mr Fitzgerald, said: “We have worked intensively in recent years to restructure the company and reduce costs and competition.
“The recent deterioration in the market has made that we have not succeeded. We have tried to find solutions together with the central shareholders, but unfortunately we have not managed to get agreement that restructures the company.”
In its 2013 accounts RSUK said it was looking forward to becoming a “major player and market force” in 2016 and 2017, despite pre-tax losses of £15.9m.
Only weeks ago the Teesside firm announced it had completed work on the Gwynt y Môr Offshore Wind Farm – its largest contract to date.
In its 2013 accounts, Reef Subsea UK said the contract had been made difficult initially by poor conditions, a feature which had contributed to the significant losses.
Commenting on news of Reef Subsea AS’ bankruptcy, Neil Gordon, chief executive of industry body Subsea UK, said: “This hugely disappointing news will regrettably not be the only casualty in the oil and gas industry in the coming months when we expect to see more job losses and companies battling to survive.
“Those companies which are highly leveraged, which have capital intensive strategies, high-cost vessels and will be most affected if projects continue to be postponed or cancelled and they are unable to quickly re-shape and reposition themselves to adapt to the current market challenges.
“However, the fundamentals in subsea globally remain relatively strong and there will be opportunities for those companies who have a spread of international business and can demonstrate innovation and new technology which add value and increase efficiency. The UK subsea industry is globally renowned for its expertise, technology and entrepreneurialism and it will need to use these to adapt and innovate in the next year or two.”
Reef’s Stockton operation was launched in 2012 with the backing of its Norwegian group.
The business started with 40 staff and has since grown to around 80.
Last year the Reef Subsea AS group was bought by Norwegian private equity firm HitecVision in a £15.2m deal.