Marco Polo gets nod to defer bond payments

Bond holders vote to delay payouts from shipbuilder for 3 more years

Ship-building and charter firm Marco Polo Marine has won bond holders' approval to defer a $50 million payment to them for another three years.

Marco Polo said yesterday 172 voters, representing 86 per cent of the $50 million bonds which would have been due next Tuesday, have given their nod to proceed with the proposed debt-restructuring plan.

As part of the deal, bond holders will get an additional 1.5 per cent interest each year on the bonds, and an upgrade from unsecured to secured lenders.

The firm granted bond holders a first ranking mortgage over 155,858 sq m of land in Batam, Indonesia, on which its shipyard business is located, as well as a second ranking mortgage over another 152,750 sq m piece of land.

OCBC holds a first ranking mortgage over the second land plot.

Marco Polo chief executive Sean Lee said in a statement that he is grateful for bond holders' support: "We are gratified that note holders share our confidence in Marco Polo Marine... We are cautiously optimistic that the group's sound fundamentals will enable it to ride the economic storms raging in the sector."

CHOICE PICK

This is one of the better ones, better than Swissco and Perisai. Marco Polo was forthcoming with its restructuring plans and has shown that its cash flows are sustainable.

BOND HOLDER JEFF CHAN, who had bought the 5.75 per cent notes back in 2013, on his satisfaction with the outcome of the bond-holder vote yesterday.

The Straits Times understands that Marco Polo's largest bond holders are entities owned by United Overseas Bank and DBS Bank, which together hold more than half the total bond value. The two banks acted as joint lead managers of the bond issue back in 2013.

Yesterday, bond holders representing $44.25 million or 88.5 per cent of the principal amount cast their votes, with 97.18 per cent voting in favour of the proposal.

Bond holder Jeff Chan, who bought the 5.75 per cent notes back in 2013, said he is satisfied with the outcome: "This is one of the better ones, better than Swissco and Perisai. Marco Polo was forthcoming with its restructuring plans and has shown that its cash flows are sustainable."

As the worst oil-price rout in 30 years drags on, many offshore and marine players who had taken advantage of the low-interest rate environment to tap the Singdollar bond markets back in 2013 and 2014 have been swept up in a debt-restructuring frenzy.

Rig and vessel charterer Swissco Holdings surprised the market on Monday when it said just days ahead of a scheduled $2.85 million bond coupon payment that it had only US$1.2 million (S$1.7 million) in cash and no plan for its next course of action.

Perisai Petroleum Teknologi, which declared itself insolvent on Wednesday, failed to repay $125 million notes last week after its debt-extension proposal was shot down because it, too, lacked the skeleton of a restructuring plan.

Marco Polo Marine shares closed unchanged at eight cents yesterday, after a short trading halt pending the results of the consent solicitation exercise.

A version of this article appeared in the print edition of The Straits Times on October 15, 2016, with the headline 'Marco Polo gets nod to defer bond payments'. Print Edition | Subscribe