The High Court gave the green light to place energy services firm Swiber Holdings and one of its units under judicial management yesterday as both firms try to survive under a debt load of US$1.58 billion (S$2.2 billion).
Judicial Commissioner Kannan Ramesh ordered the judicial managers to provide creditors with a schedule of the costs it will incur over the next 180 days within 30 days. A judicial manager's costs could affect returns to creditors.
The judicial managers must also provide creditors of both companies with progress reports unless a creditors' meeting is called within 60 days.
JC Kannan also suggested that a creditors' committee be formed.
Swiber, the biggest Singapore company to fall victim to the energy-market turmoil, applied in July to place itself under judicial management after initially filing for liquidation. Judicial management allows for a company to be nursed back to health under court supervision.
Swiber said at the time that it had US$85.1 million in total assets and US$624.2 million in total liabilities, leaving it with net liabilities of US$539.1 million.
Mr Ashok Kumar of law firm BlackOak, who is representing Swiber and Swiber Offshore Construction, told the hearing yesterday that 27 potential investors from global and regional companies and funds have been identified.
As much as US$294 million in working capital for the continued operation of Swiber could be raised from selling unencumbered non-core assets such as insurance claims, fleet vessels and property, he said.
If Swiber Offshore Construction manages to restructure its trade debts from suppliers, a positive cash flow of about US$53 million from its key projects may be generated, he added.This would be critical to sustain the unit's continued operations and support rehabilitation plans, Mr Ashok said.
Seven ongoing projects that could raise US$1.67 billion and prospective projects with an estimated value of US$608 million have been identified. Key personnel and leadership to complete the projects remain largely intact.
Other potential sources of revenue are ongoing arbitration proceedings which, if the companies are successful, will render some value, he said.
While it is difficult to predict what the returns will be, these are likely to be better under judicial management than a liquidation. The interim judicial managers warned last month that if Swiber is liquidated, unsecured creditors, including bondholders, could expect to recover only two cents on the dollar from Swiber and four cents on the dollar from Swiber Offshore Construction.
Mr Ashok said yesterday that none of the creditors objected to the two firms being placed under the judicial managers, which are led by Mr Bob Yap, head of advisory at KPMG.
But they were concerned about what their returns were going to be and how a restructuring would benefit unsecured creditors.
They also want more details on expressions of interest received from the 27 investors and their identities; and other prospective projects that are ongoing, he said.
Mr Ashok said it was "too early to provide a meaningful estimate of returns in a judicial management scenario but a forecast of returns will be made when the statement of proposals is put before creditors".
Legal claims against Swiber totalled US$223.6 million as at Sept 29, down from US$241.5 million a week ago. DBS, Swiber's largest creditor, had a total exposure of S$721 million as at July 31.