Ezion flags Q4 and FY18 net loss on impairments of shareholder loans to joint ventures

SINGAPORE - Offshore and marine company Ezion Holdings said on Monday (Feb 4) that it is expecting a fourth-quarter and full-year 2018 net loss amid uncertainty on whether its joint ventures can repay shareholder loans.

The liftboat company is also expecting a "significant decrease" in net asset value due to a review in the fair value of its vessels.

As at end-September 2018, Ezion's non-current assets rose to US$1.7 billion (S$2.3 billion) from US$1.6 billion a year earlier due to certain joint venture bank loans taken up at the group level, which translated to an increase in shareholder loans to joint ventures.

As the market conditions of the global oil and gas industry remains uncertain, the group carried out an assessment on the recoverability of the shareholder loans to joint ventures, the company said in a Singapore Exchange announcement. The value of the impairments has not been determined, but Ezion expects a net loss for the quarter and year ended December as a result.

Ezion is also reviewing the fair value of its vessels to comply with newly adopted accounting rules, and expects that doing so will result in consolidated net asset value significantly decreasing.

The company said it has been unable to achieve "meaningful deployment" for some of its jack-up rigs, in light of depressed market conditions and "continued struggles" of the industry. This is along with payment delays and defaults by customers who have been granted credit terms or are on settlement plans.

"The group is taking steps to recover the outstanding amounts and/or regain control of the relevant vessels," the announcement read.