Distressed marine group Ezra Holdings has entered into a binding proposal with another firm that involves spinning off assets into a separate trust and the possible injection of new businesses into the Singapore-listed company.
Financial consultancy specialist Asia Fund Space will also invest $1 million into the reorganised Ezra in exchange for 92 per cent of its enlarged share capital.
The combined stake to be held by existing shareholders will be diluted to just 4 per cent of the enlarged capital before the injection of new businesses into Ezra.
Its creditors will hold the remaining 4 per cent.
Asia Fund Space has also offered free shares in a separate real estate-focused holding company to Ezra's creditors, shareholders and management.
Initially, Ezra's assets - mainly comprising shares in associates and subsidiaries, including Emas Offshore and Emas Chiyoda Subsea - will be transferred to a trust or another newly formed entity for the benefit of existing creditors.
The aim is to allow the reorganised Ezra to start as a clean shell company so the new equity to be pumped in by Asia Fund Space can be ring-fenced for rebuilding one or more new businesses.
Once these steps have been taken, the equity stakes pledged to Ezra's existing stakeholders will be adjusted.
The market value of the combined holdings of each stakeholder - creditors and shareholders - will ultimately range between $2 million and $2.5 million.
Asia Fund Space is also looking to issue shares in a second holding company to Ezra's creditors, shareholders and management.
This is to be set up for the purpose of a real estate property business that Asia Fund Space is looking to acquire in Myanmar.
It is seeking US$25 million (S$33 million) equity from investors for this company. It is offering 4 per cent of the enlarged capital in the entity to Ezra creditors, 1 per cent to shareholders and 2 per cent to the management.
Ezra Holdings is expected to seek court approval in the United States and Singapore for the reorganisation plan with Asia Fund Space.
It would have to table its reorganisation plan under a scheme of arrangement in Singapore and seek its creditors' approval.
The plan is also subject to approval by Ezra shareholders at an extraordinary general meeting.