Singapore’s Ezion restructuring debts

SINGAPORE: Singapore-based oil services company Ezion Holdings Ltd said trading in its shares would be suspended temporarily as it is in talks with stakeholders such as bank lenders and creditors about its financing and capitalisation structure.

The company, which owns a fleet of liftboats, said it is reviewing its options to strengthen its financial position and preserve value for its stakeholders.

Singapore’s offshore and marine industry has been hit by low oil prices, weak charter rates and delays to projects, forcing many firms to restructure debt and cut costs.

Industry peers Swiber Holdings Ltd and Swissco Holdings Ltd have sought refuge in court, while Ezra Holdings Ltd filed for US bankruptcy protection.

Ezion has been considered to be among the stronger players in the industry, although analysts have drawn attention to its challenging business environment and high debt.

It is one of the largest operators in Southeast Asia for liftboats – self-propelling rigs that support offshore energy work such as platform maintenance.

“The operating environment remains tough and it may take some time before a significant recovery can be seen,” Low Pei Han, an analyst with OCBC Investment Research, said in a note.

The company’s shares last traded at S$0.188. Its market capitalisation has shrunk to about S$408 million (RM1.28 billion) from a 2014 peak of about S$3 billion.

Ezion had total debt of about US$1.4 billion as of end June.

Besides banks loans, the company has a series of bond issuance, of which the earliest matures in August next year.

“While the initial responses from our principal lenders appear positive, the details will need to be finalised,” Ezion said. “The outcome of the above discussions will very much determine if Ezion will survive the current crisis and emerge stronger than before.”

Ezion said charter rates for its rigs have been dropping significantly and that was expected to continue for the next 12 months. The collection of receivables was also slow and significant impairments may be needed if the situation worsens.

The company said its difficulties presented many challenges to its cash flow that “will threaten the fundamental viability of the group’s business if these challenges persist.”

Ezion also reported a loss of US$2.6 million for the second quarter compared with a profit of US$8.1 million a year earlier. – Reuters