AusGroup offers to exchange outstanding debt for shares

Ezion Holdings, which operates liftboats (above), now owns 20 per cent of AusGroup, following a debt-to-equity swap completed in July. Ezion picked up about 140.7 million AusGroup shares, a move that will help deleverage the latter's balance sheet.
Ezion Holdings, which operates liftboats (above), now owns 20 per cent of AusGroup, following a debt-to-equity swap completed in July. Ezion picked up about 140.7 million AusGroup shares, a move that will help deleverage the latter's balance sheet.PHOTO: EZION HOLDINGS

Oilfield service provider may issue up to 95.7m new shares to note holders

Oilfield service provider AusGroup is inviting investors of its $110 million bonds to exchange outstanding notes they hold for new shares in the company.

The offer opened yesterday and expires at 5pm on Sept 28, the mainboard-listed firm said in a pre-market filing yesterday.

The settlement date is expected to be Sept 29.

AusGroup may issue up to 95.7 million new shares to note holders without exceeding the general share issue mandate. The new shares will likely list on the mainboard at 9am on Oct 2.

AusGroup said note holders should be aware that it could alter the terms of the offer. The final terms will be outlined in a letter to note holders and its accompanying documents.

AusGroup said the purpose of the exchange offer is to build on the success of its restructuring, and to improve its balance sheet by reducing debt and increasing paid-up capital.

It is also aimed at reducing interest costs, improving its ability to raise funds from financial markets and enhancing its ability to win new contracts.

The notes pay an annual interest of 7.95 per cent and are due to mature next year. Proceeds from the notes were used to acquire the Port Melville facility in the Northern Territory and to build fuel storage tanks to support oil and gas exploration and extraction activities in the region. Following a restructuring, AusGroup returned to the black in the fourth quarter thanks to the performance of core projects in the Northern Territory and Western Australia liquid natural gas (LNG) processing sector.

It posted a net profit of A$2.4 million (S$2.6 million) for the three months to June 30, from a loss of A$165.1 million a year earlier.

The restructuring involved moving from supporting capital expenditure expansion in the mining sector to catering to operational expenditure and maintenance services in the energy (LNG processing), industrial and mining sectors.

In June, it entered into a subscription deal that involved Ezion Holdings picking up about 140.7 million AusGroup shares. Converting the debt owed to Ezion will help deleverage AusGroup's balance sheet. Following the debt-to-equity swap which was completed in July, Ezion now owns 20 per cent of AusGroup.

AusGroup shares ended unchanged at 4.7 cents.

A version of this article appeared in the print edition of The Straits Times on September 12, 2017, with the headline 'AusGroup offers to exchange outstanding debt for shares'. Print Edition | Subscribe