Friday, Ziton announced its plan to raise up to EUR 100 million in fresh capital through an equity emission.
Bearing in mind the Danish wind service operator's miserable 2019 and debt woes that forced the company earlier this year to ask its creditors for forbearance on debt interest amortization payments, it's easy to imagine that this money will be used to patch the leaky hull. That, however, is not the case, says Ziton Chief Executive Thorsten Jalk. Rather, he says, it's about gaining economic leeway to hoist an even larger sail.
"It's no secret that we have experience with both peaks and valleys. But with the position we've created on the market, we expect that we're here to stay. In this context, it's important that we strengthen our balance to gain the requisite capital to secure future growth," Jalk says.
"We received the forbearance we requested before the Covid-19 pandemic, so we have no acute crisis needing to be solved. Rather, it's a question of securing our future on an accelerating market, for which both new and existing customers ask about our strategy on the global market," the CEO adds.
Open in China
The offshore wind service group has already dipped its toes into distant markets. However, unlike many of its rivals, Ziton's first move is not toward Taiwan nor the US Eastern Seaboard, but rather setting up an office in Beijing – a consequence of the fact that the company, once called DBB Jackup, like many other offshore wind pioneers, is experienced in ways that are relevant for most markets.
"China is one of the countries where we see potential within operations and maintenance. It will become an enormous offshore wind market, but they're not very experienced, and that's where we can offer our know-how in cooperation with a partner," the CEO says.
Precisely China is highlighted as an almost impossible market to penetrate due to factors such as Chinese local partnership requirements. That, though, is not so different from other markets that place localization demands that also lead to joint efforts between skilled players from, not least, Denmark alongside a local labor force – a constellation that, for example, in Taiwan is evident throughout the value chain.
Offshore wind is not salmon farming
Such experience is becoming increasingly relevant – and having offshore experience is not enough in itself. Many service operators, particularly Norwegian companies, are in the process of transitioning their businesses these years, just like Denmark's wind carriers did some years back. Now, though, is not like before, Jalk states.
"The big problem is that people just call it offshore. Offshore experience can also be said to stem from working with salmon farming along the Norwegian west coast, but that certainly doesn't mean such operators know anything about offshore wind," he says and continues:
"We wouldn't have simply moved into oil and gas, because that's indeed a highly specialized area requiring a completely particular organization. The same thing applies vice versa. It's interesting that we are seeing many newcomers migrate from oil and gas due to the recurrent bottleneck outlook. But on the other hand, companies must also be cautious to not saturate the market with vessels."
Ziton's big problem in recent years has also been ensuring a sufficient utilization rate for its vessels. In 2019, the rate was as low as an excruciating 30 percent – although this was not caused by an oversupplied market as much as because of poor weather and problems with a crane aboard one of the ships.
Fleet utilization was back up to 70 percent in the group's fiscal Q2'20, and Jalk expects the percentage to rise due to, among other things, the fact that Ziton has also solved a series of other tasks during the Covid-19 pandemic which offshore wind farm owners normally handle themselves. That's why the CEO is also calm about asking the market for EUR 100 million.
"Now we'll see the size of the market's appetite. But we've only promised [owner BWB Partners, -ed.] to fetch EUR 10 million in new equity, so we're not stressed," Jalk says and adds:
"I'm confident that it will be a quick process, so we can take the next step on a consolidated basis. It's important to have some tranquility so we can develop instead of snuffing fires."
English Edit: Daniel Frank Christensen