Ezion Holdings, which is asking creditors for support to push back debt deadlines, has been served with an originating summons issued by the High Court from a substantial bond holder, the firm said on Tuesday.
Bond holder Ravi Murarka owns a substantial share of the liftboat operator's tranche of $120 million bonds backed by DBS Bank.
Last month, he served Ezion a redemption notice, citing the bond clause that he can demand to be paid back in full "in the event that the shares of the issuer cease to be listed or traded".
He is now seeking a court declaration that Ezion's shares have "ceased to be traded" on the Singapore Exchange, within the meaning of that clause.
Ezion chose to suspend trading of its shares on Aug 14 to discuss a debt reorganisation plan with lenders, as it faced a cash crunch from depressed charter rates and slow payments by clients.
In its bourse filing on Tuesday, Ezion reiterated its position that "the shares have not ceased to be listed or traded, and that the shares have only been suspended from trading".
The company is seeking legal advice on the summons, and has up to three weeks to submit an affidavit in response.
Ezion chief executive Chew Thiam Keng told The Straits Times yesterday: "This action relates specifically to Series 009 (DBS-backed notes). It does not affect the other securities series for which discussions on the proposed refinancing proposal are progressing smoothly."
Ezion is in the process of restructuring six series of notes and perpetual securities totalling $575 million.
The DBS-backed bonds are not part of the restructuring.
Mr Murarka's case is the first time that any bond holder has filed a summons against a Singapore issuer to protect his rights as a bond holder.
Unlike in other developed markets where institutional investors are more aggressive in enforcing their rights as bond holders, in Singapore it is individual investors who have pressured issuers the hardest during the numerous debt restructuring talks that have taken place in the past year.
The results have not always been positive.
Rickmers Maritime was wound up this year after it failed to placate bond holders who had pressed for a more equitable restructuring.
On the other hand, bond holders of Ezra Holdings agreed to waive their rights to demand immediate repayment from any events of default arising from Ezra's ongoing debt restructuring attempts, only to see the company file for Chapter 11 bankruptcy protection in the United States in March.
Ezion has previously said that it intends to launch a consent solicitation exercise by the middle of this month, in order to complete refinancing with secured lenders before November.
Today, Ezion is meeting holders of the DBS-backed notes to update on developments.
It has not defaulted on any bond payments yet. Mr Chew has estimated that 70 per cent of Ezion's bonds are held by private banking clients, and the rest with insurers and funds.
