The investors

Shareholders and bondholders on the losing end

Oil and gas contractor Swiber Holdings has filed a winding-up application, and its directors have resigned to pursue their own interests.
Oil and gas contractor Swiber Holdings has filed a winding-up application, and its directors have resigned to pursue their own interests.ST PHOTO: MARCUS TAN

Shareholders and bondholders of Swiber Holdings could be left out in the cold, with the offshore services firm being wound up and liquidated, said market watchers.

Corporate lawyer Robson Lee, a partner at Gibson Dunn, said that when a Singapore firm is wound up, secured creditors are not subject to the order of priority prescribed under the Singapore Companies Act, which places liquidators and employees high up in the list.

"If there are specific assets of the company that are legally secured for purposes of repaying bondholders, the trustee for the bondholders can proceed to realise the security (to repay) the bondholders.

SHOCKING NEWS

I was shocked to see the news about Swiber. I thought they would hang in there longer - Singapore-listed companies don't just default and wind up suddenly.

MS JENNY TAN, who works in the financial service sector. She sold, at a loss, all of her shares in Swiber Holdings earlier this year.

"But if the bondholders are unsecured, they would have to queue in line like all other creditors."

He added that "any residual assets" will then be distributed proportionally to shareholders.

Swiber's winding-up bid means its outstanding bonds would represent the latest default to hit the bond market here, after Trikomsel and Pacific Andes Resources Development failed to make payments on three notes worth $415 million in the past few months.

An iFast Corporation report noted yesterday: "While we are not experts at appraising Swiber's liquidation value, the firm's fleet of vessels (possibly the most liquid assets of sizeable value) are likely to go towards repayment of bank borrowings (secured by vessels and equipment), which unfortunately could leave very little for unsecured bondholders to lay claim to."

Shareholders may also not be able to recoup their investment.

But Ms Jenny Tan, who works in the financial service sector, was lucky enough to have sold all of her shares in Swiber Holdings earlier this year, even though it was at a loss.

"I just saw an opportunity to exit the sector," said Ms Tan, 27, referring to the offshore and marine sector, which has been languishing amid low oil prices. "But I was shocked to see the news about Swiber. I thought they would hang in there longer - Singapore-listed companies don't just default and wind up suddenly."

Jacqueline Woo

A version of this article appeared in the print edition of The Straits Times on July 29, 2016, with the headline 'Shareholders and bondholders on the losing end'. Print Edition | Subscribe