Creditors give go-ahead for Nam Cheong's plan to restructure debt

Troubled marine firm Nam Cheong has got the green light from creditors to proceed with its debt restructuring plan.

The vote in favour was overwhelming, with creditors who were present representing 94.139 per cent of the total value owed backing the restructuring.

This equates to a favourable vote from creditors representing US$338.7 million (S$443 million) in money the firm owes.

All institutional lenders of Nam Cheong's group of companies named in the Singapore scheme, accounting for US$159.29 million of bank loans to the group, were represented.

Also present at the vote were holders of medium-term notes totalling $365 million.

Observers at yesterday's meeting said the favourable vote was within expectations.

"Retail investors, accounting for the bulk of the notes issued, seemed resigned from Day One," was one comment.

"Many don't see alternatives on the table - it's either you take something or go with nothing."

iFast bond specialist Ang Chung Yuh said note holders may have been discouraged to vote against the scheme because they come behind bank lenders when it comes to payouts and could incur heavier losses if the company goes into liquidation.

Scheme creditors also reached a decision between two recovery options offered for what is deemed a sustainable portion of Nam Cheong's outstanding debts.

Creditors accounting for US$319.8 million in value owed opted for the seven-year term loan. The rest went with a cash-out option pegged at a recovery rate of between five US cents and 20 US cents for every US$1 sustainable debt held.

Nam Cheong said 30 per cent of the RM50 million (S$16.8 million) pledged as new equity by its anchor shareholder, Mr Tiong Su Kouk, will be used to fund the cash payout. The other 70 per cent will remain as working capital.

Mr Tiong deposited the money into an escrow account ahead of the creditors' meeting this week.

The three schemes filed for Nam Cheong's debt revamp have to be sanctioned by courts in Malaysia and Singapore.

Nam Cheong's scheme document reflected US$866 million of contingent liabilities tied to contracts with shipyards in China.

Drew & Napier deputy chief executive Sushil Nair, as the legal adviser for this debt revamp, said at yesterday's meeting that the settlement of the shipyard claims will be an issue the Singapore High Court will consider when sanctioning the schemes.

A version of this article appeared in the print edition of The Straits Times on January 25, 2018, with the headline 'Creditors give go-ahead for Nam Cheong's plan to restructure debt'. Print Edition | Subscribe