More woes for Swissco as Ezion seeks to wind up unit

Rig and vessel chartering group Swissco denies that it owes joint venture partner Ezion any corporate guarantee fees and says its counterclaims against Ezion outweigh and fully offset the latter's claims.
Rig and vessel chartering group Swissco denies that it owes joint venture partner Ezion any corporate guarantee fees and says its counterclaims against Ezion outweigh and fully offset the latter's claims.PHOTO: SWISSCO HOLDINGS

Joint venture partner claims it is owed $740k by Swissco subsidiary

Days after it said it would put itself under interim judicial management, troubled rig and vessel chartering group Swissco Holdings is now fighting off legal claims by joint venture partner Ezion Holdings.

Ezion wants to wind up Swissco subsidiary Scott and English Energy unless a US$522,113 (S$738,905) payment is made.

Swissco said in a statement to the Singapore Exchange yesterday that Scott and English (S&E) Energy had last week received three statutory demands from Ezion Investments relating to claims arising from various joint ventures entered into between S&E and Ezion for the ownership and management of certain rigs.

Ezion has asserted that it is owed the sums of US$236,696, US$151,336 and US$134,081, being corporate guarantee fees allegedly due from S&E to Ezion for procuring certain corporate guarantees in respect of liabilities of the joint ventures.

Ezion said last week it is entitled to apply for S&E to be wound up unless the payment is made within three weeks.

Swissco in turn has denied that it owes Ezion any corporate guarantee fees. It added that it has counterclaims against Ezion that outweigh and fully offset the Ezion claims.

In October, Swissco reported that three of its drilling rigs, which it shared with Ezion in a 50-50 joint venture, were out on hire although the charterer had not been making payments.

Ezion later offered to buy out Swissco's stakes, and Swissco agreed, subject to negotiation.

Separately, Swissco last week also received two letters from certain parties which hold redeemable exchangeable preference shares (Reps) in two of its subsidiaries, S&E Offshore Investments and S&E Offshore Investments 2.

The letters allege a breach of the joint venture agreements dated Oct 10, 2014, arising from the group's decision to scrap certain rigs as well as disputes and legal proceedings commenced by X-Drill Holdings, as announced by Swissco last month.

As a result, a "liquidation event" has arisen and Swissco's units are required to redeem the outstanding Reps at the contractually stipulated price plus a redemption premium of 35 per cent per annum, the parties said.

Swissco said it is in the process of taking legal advice on Ezion's claims and S&E's counterclaims, as well as on the letters from the Reps holders.

On Monday, Swissco told The Straits Times it was preparing to put itself under interim judicial management as it could no longer operate as a going concern after bank lenders decided not to extend its lifelines.

It later reported US$280.3 million in current liabilities for the three months ended Sept 30, against just US$27.2 million in current assets.

Swissco shares last traded at 5.2 cents on Oct 10 before trading was suspended. Ezion shares closed unchanged at 31 cents yesterday.

A version of this article appeared in the print edition of The Straits Times on November 18, 2016, with the headline 'More woes for Swissco as Ezion seeks to wind up unit'. Print Edition | Subscribe