SINGAPORE - In a landslide vote, holders of six series of notes and perpetuals gave Ezion Holdings the green light for the proposed refinancing of about S$575 million of securities, a move that gives the group extra runway to tide over what could be the last leg of a multi-year downturn in the offshore and marine industry.
Ezion disclosed after trading closed on Monday that between 93.5 per cent and 98.82 per cent of holders of Series 3 to 7 notes and Series 8 perpetuals, present at an earlier consent solicitation exercise (CSE), voted in favour of its proposal to push out maturity of and cut coupon rates on these securities.
The CSE held on Monday also saw holders of between 83.33 per cent and 96.14 per cent of the principal values of each series of these securities represented at the vote.
This effectively meant Monday's majority vote had met the required 75 per cent quorum under Singapore's debt restructuring regime. Ezion has thus won the green light to press on with the refinancing of these securities.
The refinancing proposal called on holders of these securities to agree on slashing coupon rates to 0.25 per cent per annum from rates ranging between 4.6 per cent and 7 per cent.
These stakeholders were further offered two options that provide for securities to be swapped into shares at a conversion price of S$0.2763.
Ezion had tabled two other options that provide for holders of notes and perpetuals, who wish to opt out of equity swaps, to pick up Series A and Series C notes, respectively.
With Series A and Series C notes, principal redemption of these securities will be pushed out for seven years and 10 years, respectively.
In exchange for this extra runway, Ezion has extended holders of securities going with these two options a 6 per cent redemption premium for Series A bonds and a 7.5 per cent redemption premium for Series C bonds.
But the debt-laden O&M group will stand to deleverage only with the equity swap options, and Monday's vote outcome pointed to some progress on this front.
Holders of S$333 million of notes and S$119.5 million of perpetuals have elected or are deemed to have elected the options extending equity swap flexibility.
Conversely, holders of S$92 million of notes and S$30.5 million of perpetuals, have elected or are deemed to have elected for Series A and Series C non-convertible bonds, respectively.
In either case, Ezion has beyond doubt won a landslide vote in favour of what investor watchdog group, Securities Investors Association (Singapore) (Sias), considered as "the largest and most complex" of refinancing proposals in the industry.
Sias founding president, Mr David Gerald, added that the vote outcome reflected the stakeholders' confidence in its recovery.
Ezion's chief executive Chew Thiam Keng added that their "votes of confidence" have given the company "the much-needed safe harbour as we sail into the winds of sectorial recovery".
The successful refinancing of the S$575 million securities provides the key to unlock a US$100 million working capital line from the group's senior lenders so that it can mobilise its fleet for work.
Mr Chew acknowledged though in his Monday statement, that Ezion still needed support from two other key stakeholder groups - bank lenders and shareholders.
The next task at hand is to secure support from its bank lenders - DBS Bank, United Overseas Bank, OCBC Bank, Maybank, RHB, CIMB and Caterpillar Finance - towards a six-year refinancing proposal for over US$1 billion of loans.
UOB Kay Hian's equity analyst, Mr Foo Zhiwei, suggested the loan refinancing will likely call for minimal principal repayments in the next six years and a lower interest rate for the facilities.
Ezion also has to hold an extraordinary general meeting to get its existing shareholders's approval for the massively dilutive new share issuances to holders of the S$575 million securities.
Beyond that, Mr Foo added that Ezion has already forewarned in its consent solicitation circular that in the worst-case scenario, it has to take on US$900 million more impairment losses on its assets and trade receivables.
These impairment losses are required to make way for new equity injections from white knight or strategic investors, although it will also see net asset value per share decline by 91 per cent from 84 Singapore cents to 8 Singapore cents.
Correction note: An earlier version of the article contained several errors. We are sorry for the errors.