Ezra flags 'going concern' risk from hundreds of millions in charter hire liabilities, loan and bank guarantees for Emas Chiyoda

Beleaguered offshore and marine group Ezra Holdings said late Thursday night (March 2) that it may still face a "going concern" issue despite the Chapter 11 filing bankruptcy filing in the US of associate Emas Chiyoda Subsea (ECS Group).
Beleaguered offshore and marine group Ezra Holdings said late Thursday night (March 2) that it may still face a "going concern" issue despite the Chapter 11 filing bankruptcy filing in the US of associate Emas Chiyoda Subsea (ECS Group).PHOTO: EZRA HOLDINGS

SINGAPORE - Beleaguered offshore and marine group Ezra Holdings said late Thursday night (March 2) that it may still face a "going concern" issue despite the Chapter 11 filing bankruptcy filing in the US of associate Emas Chiyoda Subsea (ECS Group).

Ezra said this is because the ECS filing does not deal with its charter hire liabilities relating to vessels chartered by the ECS Group.

Ezra said it has guaranteed a substantial proportion of these liabilities, which amount to approximately US$400 million (S$564.9 million).

In addition, Ezra said it has guaranteed approximately US$500 million of loans owed by the ECS Group to financial institutions.

Ezra said it has also has substantial contingent liabilities in relation to performance and/or bank guarantees it granted and/or procured for projects undertaken by the ECS Group. Ezra sais the amounts are not quantifiable as at the date of this announcement. Ezra said it understands that the ECS Group intends to continue with those projects so the potential liability in relation to these guarantees is unclear.

"However, the ECS Chapter 11 filing, together with the Norwegian liquidation, may constitute events of default under the charter parties, loan agreements and projects of the ECS Group and the moratorium afforded under the ECS Chapter 11 filing does not stay claims against the company (Ezra) in relation to these guarantees," said Ezra.

Ezra said that "In the event claims are made against the company in relation to any or all of these guarantees, the company will face an immediate going concern issue."

The Norway liquidation refers to ECS Group putting its wholly owned subsidiary, EMAS-AMC AS, under voluntary liquidation in Norway. EMAS-AMC AS was hit with a a termination of agreement by Gulen Base over the development, construction and lease agreement for Halsvik spoolbase due to its "material payment default". Ezra is a guarantor for the performance by EMAS-AMC AS of its obligations under that agreement.

Ezra said it is currently seeking advice on the ECS Chapter 11 filing and the Norwegian liquidation, as well as assessing the impact of such filings on the group.

Ezra at 8:34am on Friday (March 3) requested for another trading halt - after asking for its earlier halt to be lifted late Thursday night - "to allow investors and shareholders more time to read and process the earlier announcement."