Marco Polo Marine expresses doubt on ability to continue as going concern as it seeks to restructure debt

Marco Polo Marine's drydocks in Batam, Indonesia.
Marco Polo Marine's drydocks in Batam, Indonesia. PHOTO: MARCO POLO MARINE

SINGAPORE - Mainboard-listed Marco Polo Marine said on Thursday (Sept 22) there may be a "substantial doubt about the group's ability to continue as a going concern".

Its statement to the Singapore Exchange accompanied its launch of an exercise seeking consent from bond holders to delay repayment by three years of notes worth S$50 million that are due next month.

The company is seeking to amend the maturity date of the series 001, 5.75 per cent fixed rate notes from Oct 18, 2016, to Oct 18, 2019.

Noteholders are asked to vote on the company's debt restructuring proposal at a meeting on Oct 14.

Marco Polo is one of several companies in Singapore's offshore and marine sector left bleeding by the slump in oil prices and seeking to restructure their debt.

In much detail, the marine logistics services provider said the group had experienced unaudited net losses of S$7.5 million for the nine months ended June 30, 2016, and expects to record net losses for the fiscal year ending Sept 30, 2016, mainly because of the lower utilisation rates of its vessels and lower charter rates, as well as lower revenues from its shipbuilding business.

Marco Polo Marine also said it expects to be highly leveraged for the next several years and may not be able to generate sufficient cash flows to meet its debt service obligations, including payments under the notes.

As of June 30, 2016, it had approximately S$186.5 million of current interest-bearing borrowings (including the S$50 million notes) and S$67.3 million in non-current interest-bearing borrowings.

It said if it successfully implements its restructuring of the S$50 million notes, it will still have substantial indebtedness and expects to reclassify the outstanding principal amount of the notes from current borrowings to non-current borrowings. It may also incur additional bank borrowings.

"The issuer's substantial indebtedness could adversely affect its results of operations and could have important consequences for noteholders and for the group," said the company.