OCBC seeks to put KS Energy under judicial management

OCBC Bank has asked the High Court to place KS Energy and its principal subsidiary KS Drilling under judicial management but the troubled offshore and marine group is suggesting an alternative solution.

The move came after the bank sent letters of demand to KS Energy, KS Drilling and six other subsidiaries for a US$230.7 million (S$314 million) secured term loan and a S$5 million unsecured bridging loan, both owed by KS Drilling.

KS Drilling is an 80.09 per cent-owned subsidiary of KS Energy.

KS Energy said it gave US$150 million in guarantees for the term loan, although the other subsidiaries' guarantees are "much less".

OCBC wants to appoint Deloitte & Touche staff Andrew Grimmett and Lim Loo Khoo as interim judicial managers, pending the court hearing, KS Energy said yesterday.

The court hearing for the interim judicial management application will take place next Monday while the pre-trial conference is set for Sept 10.

KS Energy has responded to OCBC's application with an alternative proposal that will allow the bank to "fully monitor and supervise" all its business operations. These measures will give the lender "all the transparency, control and protection it requests without having the adverse effects on the pledged assets that a judicial management scheme brings", KS Energy said.

It added that the rigs pledged to OCBC are in "no jeopardy from other parties", and disputed the need for an interim judicial management application as there is no risk to assets.

KS Drilling's liability under the term loan is secured by securities, including mortgages over some of its jack-up and land rigs in favour of OCBC.

"The proposed judicial managers are not better placed than the present management to continue the company's business so as to safeguard its and its creditors' interests," KS Energy said.

"There is no evidence of the company behaving fraudulently at the expense of the creditors."

KS Energy group chairman and chief executive Richard Wiluan said the group had been facing unprecedented challenges, after the oil price collapse and supply chain disruptions caused by the pandemic.

He added that KS Energy has taken initiatives, including cutting costs, over the past two years to improve its financial position, "resulting in a 72 per cent reduction in loss for the first six months ended June 30 compared with the previous corresponding period", he added.

Mr Wiluan took the helm after his father, Indonesian tycoon Kris Wiluan, stepped down in mid-August as group chairman and CEO.

The older man faces 112 charges of alleged false trading and market rigging for share purchases made between 2014 and 2016.

KS Energy has said that those were personal deals and separate from the group's financial woes.

Early this month, the firm said it was standing by Kris Wiluan's suitability as chairman and CEO.

Trading in KS Energy stock has been suspended since Aug 12.

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