An informal meeting with bond holders called by Swissco Holdings ended in acrimony yesterday when the firm said it could not pay out a $2.85 million coupon due next Friday and had no plans for its next course of action.
Bond holders who had each sunk about $250,000 into the notes two years ago were told that Swissco faced a US$147.5 million (S$202.7 million) bank debt maturing from now until 2020. They also heard how the firm has cash holdings of just US$1.2 million and a monthly cash burn of US$1.5 million.
Four of its seven drilling rigs are off-charter, while three that are 50 per cent owned by Ezion are out on hire but the charterer has not been making payments, Swissco said.
It added that most of the $100 million raised from the 5.7 per cent bond issue that matures in 2018 was used to pay down vessel loans.
For now, it is seeking new charters for idle vessels and trying to sell other vessels.
The issue of refinancing also arose at the meeting. Swissco said its appeal to bank lenders for a moratorium on principal and interest payments had not been rejected.
But the management could give no details of a concrete debt restructuring scheme, despite the repeated question: "What is the plan?"
EY partner Angela Ee, who is advising on the refinancing, said: "Ideally, we would have liked to come to this meeting with a plan, but it's an issue of time."
About 100 bond holders and bank relationship managers attended the meeting, which at times fell into charged silence as Swissco bosses mulled over questions from the visibly frustrated crowd.
Chief executive Tan Fuh Gih was absent as he was trying to meet a potential investor overseas.
Pressed for a reason as to why they had not tightened their belts sooner instead of paying out US$10.5 million dividends this year and last, Swissco management blamed it on "the Swiber effect".
They said that after offshore oil services firm Swiber Holdings collapsed in July, one customer who had agreed to acquire certain Swissco vessels was no longer able to pay as its bank facility was pulled.
Swissco had also been trying to get a fund injection from a strategic investor, but that fell through as oil and gas counters tumbled after the Swiber scare.
This reply only drew more ire, as Swissco had given its assurance on July 28, after Swiber fell, that "the winding up of Swiber will not have any effect on the group's results".
One bond holder asked if Mr Tan and his family, who together control the largest stake in Swissco, were planning to inject cash into the company. Ms Ee said: "They haven't yet but as part of the overall plan we will continue to reach out to them to see if they can inject in more."
Another investor asked if Swissco could provide collateral to sweeten the restructuring offer for bond holders. Ms Ee replied: "We need to see what other unencumbered assets there are in the company."
Swissco called for a trading halt before the meeting, ahead of which the counter fell 3.7 per cent or 0.2 cent to close at 5.2 cents.