Ezion shares still on hold over restructuring news

Anxiety continues to mount over Ezion Holdings' chunky debt numbers, with trading in the stock still on hold amid news that the firm is planning to restructure a staggering US$1.48 billion (S$2 billion) in loans.

A report by Debtwire on Thursday said that Ezion has appointed RSM Singapore as financial adviser for a planned restructuring of its debt, according to two unnamed sources.

This debt includes six tranches of Singdollar bonds. The earliest due is a $60 million issue, due for maturity in August next year. Separately, $120 million of 3.65 per cent notes due Aug 5, 2020, are backed by a committed funding facility provided by DBS Bank. This means Ezion has the option of drawing down the DBS facility to repay bond holders, should it need to do so.

The Debtwire report cited a source who said Ezion's principal bankers - DBS Bank, OCBC, Maybank, UOB and CIMB - are not represented so far. A bond holder added that Ezion bond holders have not appointed any advisers.

When asked by The Straits Times to confirm the appointment, Ezion did not respond by press time, while RSM declined comment.

The offshore services firm had requested a trading halt on Thursday, before announcing that it will sell 50 per cent of its shareholdings in wholly owned Teras Conquest 8 and Teras Lyza to its Malaysia partner Sea Explorer for US$10 million in cash consideration.

Ezion noted that the sales will enhance its strategic business relationship with Sea Explorer while allowing it to "improve the efficient use of its capital and cash flow". It will retain full commercial and operational control of the assets. Trading in the stock, last seen at 19.7 cents - 2.3 cents or 10.5 per cent lower than the previous day's close - has yet to resume. Ezion is due to report its quarterly financials before the middle of the month.

OCBC credit analyst Andrew Wong noted that Ezion's current borrowings had exceeded its cash during the first quarter, which indicates "some level of stress on their balance sheet", although that does not factor in how strong the firm's relationships with its lenders are.

It remains up in the air what this could mean for bond holders, added Mr Wong. "The company has yet to confirm the report or that an adviser has been appointed."

A version of this article appeared in the print edition of The Straits Times on August 12, 2017, with the headline 'Ezion shares still on hold over restructuring news'. Print Edition | Subscribe