SINGAPORE - Oilfield service provider Ezion Holdings has entered into a share subscription agreement with subsidiary AusGroup as part of its plan to capitalise loans of up to A$39.3 million (S$40.6 million) for the latter.

AusGroup will issue 140.8 million new shares at 5.8 cents to Ezion, representing 10.3% of its enlarged share capital, as Ezion capitalises S$8.2 million of the shareholder loan, the companies said in a release issued on Monday (Jun 12).

The loan capitalisation was proposed by AusGroup as settlement of a shareholder loan from Ezion.

"Having considered the recent financial performance of AusGroup and the prevailing market conditions, the board is of the view that the loan capitalisation is in the interests of the company and its shareholders given the loan capitalisation would enable the expeditious settlement of the shareholder loan," Ezion said in the release.

Ezion is currently AusGroup's largest shareholder with a 17.83 per cent stake. Following the completion of the loan capitalisation, Ezion will own 272.8 million shares, representing 20per cent of AusGroup's enlarged share capital.