Platform supply firm Fletcher Shipping forced into administration

A drop of more than 80% in the price of leasing offshore platform supply vessels has forced a north-east Scottish firm into administration.

Fletcher Shipping, of Portlethen, owned four ships for leasing, with support in the past three years from the Scottish government-funded Scottish Loan Fund.

It had two other ships on order for nearly £17m, using a loan from Santander bank.

But it ran into cash flow problems early this year as the oil price fell.

Administrators at PwC said the daily spot price for hiring offshore vessels dropped from £18,000 to only £3,000.

Prices reflected oil production firms cutting costs and exploration.

The administrators transferred Fletcher Shipping assets to a new company, FS Shipping, in a so-called 'pre-pack' deal.

This was financed with £18m, raised through Grovepoint Capital.

The main assets of Fletcher Shipping, founded in 2007, were the FS Pegasus, FS Aquarius, FS Pisces and FS Taurus.

The pre-pack deal means the operations continue uninterrupted, while shareholders lose out and creditors only recover some of their lending to the collapsed firm.

'Harsh downturn'

According to administrators, the transaction had no employment impact, as the vessels crews were contract staff working for other firms.

Keith Fletcher, founder of Fletcher Shipping, said: "It is testament to the strong reputation of the crews and personnel at Fletcher Shipping that we have secured the confidence of new investors who have helped us recapitalise our business.

"We have worked hard to keep our fleet working throughout the recent downturn in the North Sea - a downturn which has affected the vessel market more harshly than I have witnessed in 30 years of business.

The Scottish Loan Fund is part of the Scottish Investment Bank, which is the investing arm of Scottish Enterprise, the Scottish government's economic development agency.

The loan fund is run by Maven Capital to meet gaps in the market for funding company growth.

Fletcher Shipping had a £5m investment from public funds over 2012 and 2013, as part of a consortium with the Royal Bank of Scotland and Maven Capital client funds.

At the time of announcing the funding package, the head of the Scottish Investment Bank, Kerry Sharp, said: "Fletcher Shipping is exactly the kind of company the Scottish Loan Fund was established to support. It has excellent potential."