Ezra bond holders positive on firm's debt restructuring plan

CEO Lionel Lee said Ezra had been looking to do an equity issue prior to July 28.
CEO Lionel Lee said Ezra had been looking to do an equity issue prior to July 28.

While some other firms in the energy sector have clashed with bond holders over debt restructuring plans, offshore contractor Ezra Holdings had a "calm and positive" response at an informal meeting yesterday.

Ezra is seeking leniency and more leeway from holders of its $150 million notes due in 2018 while it works out a refinancing plan with banks.

"I think a lot of them came with the emotions of their other bondholder meetings with other issuers, so they asked us questions like 'are you going to pay my coupon and ask me to take a haircut or defer payment', so we had to come back again and again to say we are not asking for any of that," Ezra finance director Tay Chin Kwang told The Straits Times after the meeting.

Management sought to convince bond holders to waive certain financial covenants as well as their right to demand immediate repayment from any events of default arising from Ezra's ongoing debt restructuring attempts.

But Mr Tay told the bond holders that these were only "perceived rights" they would be giving away.

Ezra chief executive Lionel Lee called the overall response "calm and positive" and explained why the company was seeking to waive certain financial covenants rather than "reset" them. This is because the industry is in a long downturn and covenants have been repeatedly tested even after two consent solicitation exercises over the past year.

"We want to make sure that we don't have to come back to bond holders every two or three months, because each exercise like that takes three months to get through," he said. Mr Lee said Ezra had been looking to do an equity issue prior to July 28 when rival firm Swiber collapsed.

"But the liquidation of a few of our competitors both here and overseas basically stopped our rights issue because no bank was willing to look at the oil and gas space," he said.

When pressed by bond holders, management said a rights issue is not entirely off the cards, but will have to wait until market conditions improve.

Bond holder C. T. Ong noted that Ezra had delivered on a $3.66 million coupon on Monday, adding: "We can feel the management's sincerity, so we are prepared to tide through this difficult period with them."

Ezra shares closed 0.4 cent or 8.33 per cent lower at 4.4 cents yesterday.

A version of this article appeared in the print edition of The Straits Times on October 26, 2016, with the headline 'Ezra bond holders positive on firm's debt restructuring plan'. Print Edition | Subscribe