Bond default: Fate of Perisai lies with secured creditors

Perisai Petroleum Teknologi failed to repay holders of $125 million of its notes due yesterday, marking the fourth corporate bond default here in 12 months.

There had been no bond default in Singapore since 2009 until the dominos started falling last November, when telecom firm Trikomsel missed payments. Fishing group Pacific Andes Resources Development followed in January, and Swiber collapsed in July.

Perisai, an upstream oil and gas services provider listed in Malaysia, had tried to persuade note holders to grant it a debt extension, but that proposal was shot down yesterday when investors refused to agree to the much looser bond covenants that came with the offer.

Only 28 per cent of a total of $107 million worth of votes cast favoured Perisai's offer at a note holder meeting at China Square Central.

Perisai's head of corporate planning, Mr Lai Swee Sim, who chaired the meeting, said the results of the vote would be published in the next 14 days.

The fate of Perisai and its note holders - almost all of them retail investors - now lies in the hands of the secured creditors, who will decide if the firm can continue as a going concern.

OCBC is said to be owed about US$280 million ($382 million) in secured debt, although the bank declined to confirm its exposure, citing the Banking Secrecy Act.

About 40 people, including dismayed note holders, were at the meeting. A DBS private bank client who had bought $500,000 of the unrated high-yield notes after qualifying as an accredited investor because of her property's value, said: "They sold us the product but when there was trouble and I asked my relationship manager for help, she didn't know what was happening."

DBS was the arranger for Perisai's $102 million junk note issue in 2014, after Perisai raised only $23 million in 2013 despite the backing of four other banks, including Credit Suisse and OCBC, and a yield of 6.875 per cent.

A DBS spokesman said it would try to find a resolution for clients: "This may include appointing professional advisers to help our clients understand the intricacies of any revised restructuring proposal which may be put forward by the company so that they can make an informed decision."

Liquidity for the Perisai notes has dried up, with no dealers pricing them as of last night, according to Bloomberg.

A version of this article appeared in the print edition of The Straits Times on October 04, 2016, with the headline 'Bond default: Fate of Perisai lies with secured creditors'. Print Edition | Subscribe