ANNOUNCEMENT: Seafox International Limited (“Seafox”) 01-03-2019

ANNOUNCEMENT: Seafox International Limited (“Seafox”)

1st March 2019
Gulf Marine Services plc (“GMS”)

In this document we address GMS’ mistakes, are we a competitor, how efficient is GMS, suggested action plan and revised resolutions, in light of the announcement by the current Chairman to step down. We are also attaching the biographies on Mr Mazrui and Mr Halbouny.


  1. Backlog / Revenues: GMS’s decline started in 2016 when ADNOC fired the company by early termination of 30/40% of GMS’s business and contracts. This led to substantial destruction of shareholder value. 
  2. Costs: We believe that GMS’s inability to understand the new reality is similar to an investment bank still operating with a pre-2008 financial crisis cost structure. In our view, we are better-positioned than most financial investors to determine whether core opex for a particular asset is right or not. As a matter of fact, our industry knowledge suggests that core opex needs to drop by at least 15%, catering costs by 25% and SG&A costs are just unacceptable. 
  3. Governance: GMS’s public announcements have missed almost all guidance for the last 4 years, including EBITDA, Net Debt, FCF and repeatedly the timing of market recovery. 
  4. Debt: GMS has renegotiated its debt facility almost every year since IPO as a result, in our view, of a lack of planning, at a significant cost to the company and its shareholders. 


  1. In October 2018, the CFO announced suddenly his decision to resign, with no apparent succession planning. In December 2018, this was followed by an announcement that led to a 1 day drop in share price of 75%.
  2. In January 2019, Seafox became an investor in GMS, requesting an overhaul to the Board, further cost cutting and a long-term solution to the capital structure.
  3. The Board scrambled with announcements to defend itself, reaffirming that we are effectively correct in our assessment (Chairman steps down, vague announcement on further cost cutting, etc..).
  4. So now we are being asked as one of the largest shareholders to trust the Board’s recent decisions and recommendations, yet again? Our opinion is categorically NO: leaving aside all of the mistakes, and a reactive, not proactive, Board what is worrying is the company’s announcement that the new CFO starting date is “early summer”. By trying to find a solution before the general meeting, the Board appears to have agreed to hire a CFO who is yet to agree with his current employer a release date (Ergomed PLC 13th Feb 2019 RNS Number : 8274P). The GMS announcement included that the new CFO will be appointed to the Board. Whilst possibly customary, it appears to us to be a clear attempt by the Board to try and reduce the number of Board positions available to shareholders as the outgoing CFO was not a Board Member since IPO.


  1. We are an investment vehicle that invests in OFS. One of our holdings is the ownership of a company (MOS Superholdings) that owns 2 self-propelled vessels that compete with GMS, the other 9 vessels are converted non self-propelled drilling rigs with an average age of 30 years, mainly in the accommodation segment. This does not make us a direct competitor despite the minor overlap. Our investment in GMS is not held through MOS Superholdings, but directly by us in a different vehicle. Perhaps the confusion came from the vessels carrying the same name. As a matter of fact, a separate vehicle used to own 51% of Seafox 5 with Keppel, one of the largest Singaporean listed companies owning the other 49%. We sold our investment in Seafox 5 at 1.5X at the end of last year. We are in the business of making financial returns. 
  2. Seafox investors invested their capital at the same time as the GMS IPO, and so far we have returned to our shareholders over 35% in USD, with still meaningful investments. This compares to GMS returning 14% in USD, including dividends, over the same period. 
  3. We have no intention to merge any of our portfolio companies into GMS. 
  4. There are a number of global precedents of activist and investors owning shares of different companies in the same space. 


  1. Our portfolio companies’ H1 2018 EBITDA stood at $40.8m (EBITDA margin of 53%), compared with GMS H1 2018 EBITDA of $25.4m (EBITDA margin of 45%), despite the fact that we operate in a different segment, that warrants lower margins, a lower number of vessels and an older fleet. We believe our catering costs are lower by at least 25%. 
  2. On Slide 13 of the 2018 Interim results, GMS states that its small vessels core opex is $9k per day, the equivalent in our portfolio companies is $6.5k per day – i.e. $2.5k saving on just a single asset leading to a saving of $0.9m p.a. per vessel. 
  3. All of this should lead, excluding SG&A reductions, to a savings of $10 – 12m p.a. 


  1. One Board Member – namely Mr Halbouny, in a Board of 9 members. We have also proposed that Mr Mazrui be appointed as a non-executive director. It should be noted that Mr Mazrui is not affiliated with Seafox, except his belief in the improved changes we are trying to implement. Mr Mazrui currently owns 5.3% of GMS shares. 
  2. Mr Knight’s suggested appointment is withdrawn as explained below. 
  3. The current Board has had 3 years to stabilise GMS. They haven’t. It is time to overhaul the Board. 
  4. The Ithmar requisition has nothing to do with the Seafox request. 
  5. Guidance under the UK Corporate Governance Code suggests that at least half the members of the Board should be independent. Many other FTSE 350 companies do not comply with all aspects of the Code especially following such disappointing results and performance. Many companies value the presence of representatives of their major shareholders on the board.


  1. Given the announcement that the Chairman of GMS has elected to resign and that any Chairman appointment will go through the Nomination Committee and selected Advisor, we are withdrawing our proposed resolution for the appointment of Mr Knight as Director, as previously announced. In the event that the resolution needs to be put in the meeting we will abstain. Rather, we respectfully request that the Board and the Nomination Committee consider Mr Knight as one of the potential group of candidates for the role of Chairman of GMS. We would note that GMS has already agreed in principle to put him forward as an Independent Board member in a letter dated 14th November 2018, and we quote “specifically Andrew Knight – we are happy to put this before our Nomination Committee with the expectation he would be appointed to the Board”. 
  2. Appointment of Mr Mazrui as a Non-Executive Director. Mr Mazrui serves as Chairman of the Emirates Insurance Company, as well as board member of Investcorp Bank, Dun & Bradstreet, 16131-Active.29684359.9 among others. Mr. Mazrui has cemented his standing as a leader of the Arab Oil & Gas industry through key strategic business partnerships: Baker Hughes since the 80s, Schlumberger and Cameron International since the 90s. Former positions included Managing Director of National Bank of Abu Dhabi and a Member of Management Committee Currency Board of the UAE Central Bank. Mr. Mazrui has been listed as one of the world’s most influential and respected Arab businessmen. Given this track record, we believe Mr Mazrui is uniquely qualified to be on the Board. Biography enclosed in Appendix. 
  3. Appointment of Mr Halbouny as a Non-Executive Director. Mr Halbouny is a Partner of Man Capital LLP, the investment arm of the Mansour group, based out of London. Prior to that a former investment banker with one of the leading investment banks in MENA. He brings a wealth of knowledge and contacts in the region. He has been an active board member of Seafox for the past 3 years and has significant knowledge of the sector and is fully aware of the operational improvements required in order to make GMS more effective. Effectively, he would be our representative, on a Board of 9, with full financial and operational knowledge that will be crucial to help deliver the improved numbers. Biography enclosed in Appendix.


Overhauling the Board to create shareholder value for all. We are an activist / investment vehicle looking for returns and with deep knowledge of the sector. GMS stated that 2019 EBITDA will stay at c$60m and that there is no market recovery in sight. With an estimated $30m interest, capex and tax of $13m, this leaves c$17m to deleverage a c$380m debt. In our view, this is unacceptable for shareholders. EBITDA needs to improve to at least $75m through the cost cutting that we can bring, a significantly reduced interest bill as a result of our relationships with lenders so that the stock rerates upwards allowing the company to deliver for shareholders. It is not just about one nomination but a full overhaul of the board. 

We may make further public announcements in respect of the above, which we trust GMS will upload to its website to achieve full shareholder transparency.



Abdullah Mohammed Al Mazrui is an Emirati businessman and entrepreneur from Abu Dhabi who founded his family business, Mazrui International, in 1974. This privately-held diversified company operates across numerous industries and asset classes with a current footprint spanning the Middle East and Europe. It is one of the region’s premier family businesses. The group’s companies, a wide physical presence on the business landscape are market leaders in several different sectors, including: Oil & Gas, Construction & Building Materials, Retail, Real Estate, Industrial, Education and Healthcare. Mr. Mazrui has cemented his standing as a leader of the Arab Oil & Gas industry through key strategic business partnerships: Baker Hughes since the 80s, Schlumberger and Cameron International since the 90s. Recent Joint Ventures with ENI Versalis, Woodserv, and Ramco reflect his influence and standing in the Oil & Gas sector. Mr. Mazrui holds other major investments and relationships. He currently serves as Chairman of Emirates Insurance Company and Aramex. He was previously a Member of the Arab Bankers Association, London, a Director of Abu Dhabi Education Council and Abu Dhabi Economic Council. He was also previously a Member of the Advisory Board of INSEAD Business School, Abu Dhabi and EDHEC Business School, France. Former roles also include Managing Director of National Bank of Abu Dhabi and a Member of the Management Committee Currency Board of the UAE Central Bank. Mr. Mazrui has been listed as one of the world’s most influential and respected Arab businessmen. He received a Bachelor of Arts, Honors, from Chapman University of California, USA. 


Hisham Halbouny is a Partner at Man Capital LLP, the London-based investment arm of the Mansour Group. Mr. Halbouny leads MAN Capital’s global private equity investment platform where he focuses on identifying and executing investments as well as working with management on postinvestment strategy. Additionally, he works closely with the Group’s existing portfolio companies, focusing on capital structure optimization, corporate finance, M&A and operational value-added activities. 

Mr. Halbouny holds various board and committee seats. Mr. Halbouny has been an active Board Member with Seafox Group for over 3 years. He has been closely involved with various initiatives with the company particularly those relating to operational efficiencies, margin enhancement, and strategic decision making. He worked closely with the company's management team on an OPEX and cost reduction plan which resulted in a significant uplift to the company's operating profits. His three years on the Board have provided him with invaluable experience in the oil services sector both in the GCC and the North Sea. 

Prior to joining Man Capital, Mr. Halbouny was a Managing Director at EFG Hermes, where he co-led the GCC Investment Banking operations out of Dubai. During his 11-year tenure with EFG-Hermes, he leveraged his strong regional network to expand the division's regional presence and executed several high-profile mergers and acquisitions, debt and equity transactions as well as numerous regional initial public offerings. 

Prior to joining EFG Hermes, Mr. Halbouny was an analyst in the structured finance team at Société General bank.