Ezion Holdings called for a temporary trading suspension yesterday shortly after announcing dismal second-quarter results and pending the outcome of talks aimed at addressing its cash flow shortage.
The move follows the liftboat operator's request for a trading halt last Thursday. The shares last traded at 19.7 cents - 2.3 cents or 10.5 per cent lower than the previous day's close.
The firm reported yesterday that it had slipped into the red with a second-quarter net loss of US$2.57 million (S$3.5 million) from a net profit of US$8.1 million a year earlier.
Revenue for the three months to June 30 sank 19.5 per cent to US$67.4 million, dragged down by a reduction in charter rates and reduced demand for service rigs and offshore support vessels.
CLSA analysts noted: "Utilisation rates remain depressed, suggesting weak market demand despite a year-on-year rise in oil prices."
Ezion also suffered unrealised foreign exchange losses amounting to about US$5.8 million, due to the strengthening of the Singapore dollar against the greenback.
Ezion posted a loss per share of 0.3 US cent against earnings per share of 0.39 US cent last year. No dividend was declared for the period.
AT A GLANCE
NET LOSS: US$2.57 million
REVENUE: US$67.4 million (-19.5%)
Its half-year numbers were no better. Ezion sank to a loss of US$15.3 million from net profit of US$23.6 million last year while revenue fell 18 per cent to US$136 million.
A report by Debtwire last Thursday said that Ezion has appointed RSM Singapore as an adviser for a planned debt restructuring.
The debt includes six tranches of Singdollar bonds. The earliest due is a $60 million issue, due for maturity in August next year, according to the report.
Ezion chairman Wang Kai Yuen and chief executive Chew Thiam Keng told shareholders in a letter yesterday that its latest earnings "reflected a difficult first half of the year".
"However, the present difficulties have presented many challenges to the group's cashflow that will threaten the fundamental viability of its business," they warned.
"While the initial responses from our principal lenders appear positive, the details will need to be finalised. The outcome of the discussions will very much determine if Ezion will survive the current crisis," the letter said.
They said that trading of Ezion stock is temporarily suspended "pending resolution of the discussions with various stakeholders".
UOB KayHian analyst Foo Zhiwei noted many offshore marine companies have "large debt burdens that are unsustainable".
"Given that the operating environment isn't improving anytime soon, it's very difficult for them to repay and remain a going concern unless banks are willing to take haircuts on the loans."
CLSA, which downgraded its call to sell from buy, noted: "The weak set of numbers has further intensified scrutiny on Ezion's refinancing ability. This is an overhang we had flagged previously and is escalating due to its lacklustre profitability."