ASL Marine to issue shares as debt strains mount in sector

Strains are spreading in Singapore's debt market as more firms in the maritime sector with borrowings coming due grapple with the slump in global trade and energy prices.

Shipbuilder and repairer ASL Marine Holdings last Friday proposed raising $25 million by offering stock to existing shareholders. It also said it may seek additional loans to repay Singapore dollar notes due in March.

Swissco Holdings, which supplies rigs and support vessels to oil and gas explorers, on the same day received a notice from its notes trustee stating that a potential event of default had occurred due to the firm's failure to pay interest due earlier this month.

More companies in the city state's shipping and oil and gas services industries are facing difficulty meeting debt obligations.

Shipping trust Rickmers Maritime said last week that it received a letter from lawyers representing some investors that are seeking to enforce repayment.

Container throughput in Singapore shrank 8.7 per cent last year and the slide in crude prices over the past two years has hit companies in the country that service offshore oil and gas rigs.

S&P Global Ratings has said it does not see any earnings "upside potential" for companies within Singapore's oil and gas sector.

"Since we don't expect any marked rebound in commodity prices, oil services will remain under pressure," said Mr Bertrand Jabouley, a Singapore-based director for corporate ratings for the Asia- Pacific at the ratings firm.

Singapore-listed ASL Marine, which started operations as a trader of scrapped steel material in 1974 and operates a shipyard on Indonesia's Batam island that repairs rigs and other offshore vessels, said in its Friday filing that it "believes its bankers will continue to support the company and grant the company's request for the additional facility loans".

It also said it is of the view that the net proceeds raised from the rights issue "will be sufficient to meet the present funding requirements".

ASL Marine's $100 million bonds maturing in March 2017 have slumped 22 cents since June 1 to 70 cents on the Singapore dollar, the lowest since issuance in 2013, according to DBS Group prices.

The company had $21.6 million of cash and cash equivalents as of June 30 and $592.2 million of total debt repayable, according to a previous filing.

ASL Marine's managing director Ang Kok Tian could not be reached when a call was placed to his office.

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A version of this article appeared in the print edition of The Straits Times on October 25, 2016, with the headline 'ASL Marine to issue shares as debt strains mount in sector'. Print Edition | Subscribe