Nine prominent business people have pooled together $60 million in rescue financing for listed offshore and marine (O&M) group Marco Polo Marine.
The founders behind Super Group, Soilbuild, Goldbell and Yanlord were named in association with the equity injection deal. Oxley Holdings deputy chief executive Low See Ching and Singapore-listed Vibrant Group and Penguin International have also thrown their hats into the ring.
Some, if not all of those named, are business acquaintances of Marco Polo Marine chief executive Sean Lee.
It has taken Mr Lee eight months and meetings with over 100 investors to arrive at these deals, in part due to the long downturn in the oil and gas sector. "A lot of investors walked away when they heard it's oil and gas," he said.
But the Lee family persevered and took the lead to make way for new investors. They will dilute their equity, which now stands at 62 per cent, to just 6 per cent. Over two billion new shares valued at 2.8 cents apiece will be issued to the nine named investors.
Mr Lee said this was a clear sign of his family's commitment to turn the company around. One source also noted the equity deals carry low risk for incoming investors, considering that as a pre-condition, the group liabilities have to be pared down to not more than $12 million.
Those in the sector would have been in a better position to recognise values in such deals but Mr Lee had to bet mainly on potential investors outside the industry because practically almost everyone exposed to O&M has been hit by the downturn.
As such, Marco Polo's nine new equity investors are mostly associated with non-O&M sectors - Super Group for its instant beverage fame, Soilbuild for construction, Yanlord for real estate in China.
That said, Mr Lee has managed to rope in Penguin International, a crew boat-focused owner-operator and builder. He noted how these two businesses are complementary - Marco Polo's steel boats and Penguin's aluminium craft would complete the offering for charterers.
But before the new equity can come in, Marco Polo has to deal with the damage sustained in this downturn.
The group slipped into negative equity net of liabilities of $150.8 million after taking total impairment and allowances of $299.3 million.
It has also run up $258 million of debts compared to the $60 million to be injected as new equity, so it badly needs to deleverage.
The proposals tabled for the group of companies are pleading for 69 per cent, 71 per cent and 95 per cent debt forgiveness from its bank lenders, noteholders and for its contingent liabilities, respectively.
They also offered a part-settlement of these liabilities with an equity swap. New stock will be issued to these stakeholders at 3.5 cents a share.
In addition, trade debts will be termed out by three more years.
The group has six senior lenders - UOB, DBS, OCBC, CIMB, Sumitomo Mitsui Finance & Leasing and Caterpillar Financial Services. UOB is the largest senior lender, accounting for over $90 million of the group's bank loans.
Mr Lee described the noteholders as mostly institutional investors, and they include two business units of UOB and DBS.
For the existing shareholders who also face dilution, Marco Polo is proposing to issue over 269 million free warrants, each carrying the right to subscribe for one share at the exercise price of 3.5 cents.
The group intends to hold an extraordinary general meeting next month to table the restructuring plan for shareholders' approval.
Marco Polo last traded at 5.9 cents before trading suspension.
