Buying the mooring technology it had been borrowing — the acquisition of SOFEC (2006)

A price tag that read 15 November 2011

What $54.4 million bought was not a mooring-equipment company but a single day: 15 November 2011. Modec did not choose that date. On 15 November 2004 a stock warrant held by FMC Technologies, Inc. was exercised, the joint-venture agreement was dissolved, and the contract fixed the expiry seven years later. How long Modec could go on using a mooring system it structurally could not remove had been decided by the way somebody else’s joint venture ended.

And yet, until those last two years, borrowing had not been a disadvantage at all. In the seventeen years since the technology and sales agreement of January 1989, Modec had held no mooring patents, carried neither development costs nor dedicated engineers for them, and won FPSO work with its people concentrated on hull design and construction management. In the year to December 2006, when it booked $852.3M (¥99bn) of consolidated revenue, the parent company employed ninety people. Borrowing kept it light, and borrowing gave it an expiry date. The bill for everything kept light by borrowing from outside arrives in one lump on the day the lender decides to wind that business up.