Ezion posts US$2.6m loss for Q2; suspends trading as it talks to lenders, creditors

Ezion Holdings asked for trading in its shares to be suspended "in view of the group's business and financial situation."
Ezion Holdings asked for trading in its shares to be suspended "in view of the group's business and financial situation." PHOTO: EZION HOLDINGS

SINGAPORE - Liftboat operator Ezion Holdings said on Monday (Aug 14) it swung to a second-quarter net loss of US$2.6 million from a net profit of US$8.1 million a year ago.

The mainboard-listed company also asked for trading in its shares to be suspended "in view of the group's business and financial situation." Its shares last traded at 18.8 Singapore cents.

It said the company "is in discussions with its stakeholders such as bank lenders and creditors in relation to its financing and capitalisation structure." It is also "taking steps to review its options to strengthen its financial position and preserve value for its stakeholders."

For the three months to end June, revenue fell 19.5 per cent to US$67.4 million due, it said, to a fall in charter rates and a drop in the utilisation rate of the group's service rigs (liftboats) and offshore support vessels ( mainly towing tugs and barges).

Ezion also suffered unrealised foreign exchange losses amounting to about US$5.8 million, mainly due to the strengthening of the Singapore dollar against the US currency, which resulted in foreign exchange losses on the group's notes payable.

For the first half-year, Ezion sank US$15.3 million into the red from earnings of US$23.6 million, as revenue fell 18 per cent to US$67.4 million.

Ezion also reported that group total liabilities amount to US$1.61 billion as at June 30.

A report by Debtwire last Thursday quoting two unnamed sources said that Ezion has appointed RSM Singapore as financial adviser for a planned restructuring of its debt, according to two unnamed sources. This debt includes six tranches of Singdollar bonds. The earliest due is a S$60 million issue, due for maturity in August next year. Separately, S$120 million of 3.65 per cent notes due Aug 5, 2020, are backed by a committed funding facility provided by DBS Bank.

Commenting on its financials on Monday, Ezion said depressed charter rates look likely to continue for the next 12 months, while collection of receivables continues to be slow.

"If the situation worsens, significant impairments may be needed," it said.

It added the group is cognizant of the need to incur additional capital expenditure to upgrade, modify and mobilize the existing fleet of service rigs which have secured contracts.

Ezion said it is endeavoring to put at least six service rigs back to work by end 2017 or early 2018. However, their successful deployment could be badly disrupted due to the shortage of cashflows as a result of existing low charter rates and slow payments by clients.

"Hence, the group has been in discussions with financial institutions to secure additional funding to deploy these service rigs, but some of the financial institutions appear to remain extremely cautious in providing additional funds".