Ezra Holdings associate company Perisai Petroleum Teknologi is unlikely to climb out of default, as it cannot win the 75 per cent note-holder approval it needs today to defer payment of $125 million worth of Singdollar notes.
More than 50 holders of about 32 per cent of the notes - due today - have served a notice to Perisai demanding immediate repayment of their principal and interest, effectively rejecting the waivers and four-month extension sought by Perisai in its consent solicitation put out on Sept 10.
The acceleration notice was served directly to the upstream oil and gas services provider last Friday, according to documents seen by The Straits Times.
Note holders were spurred into action after trustee DB International Trust allegedly "failed to institute any action against the issuer" despite a request from note holders to do so almost three weeks ago.
Perisai has not reported the developments to either the Singapore Exchange or Bursa Malaysia, where its equity is listed. Almost all of Perisai's 6.875 per cent notes were sold to retail investors in 2013 and 2014.
What happens next will test the usefulness of investor-protection articles here, such as the bond trust deed and its provisions.
Note holders opposed to Perisai's appeal to loosen its bond covenants have struggled to exert influence from the start because they can act only through the trustee, which is paid to represent their interests.
But the trustee cannot serve notice to the company unless it receives a request signed by holders of at least 25 per cent of the outstanding notes, and it is not easy for note holders to find each other.
While a bond issuer like Perisai can easily obtain a list of bond holders and nominees from the Central Depository, it is a struggle for note holders to obtain the same.
That problem was overcome after Perisai convened two informal noteholder meetings in August where note holders coalesced, but their notice to the trustee had not reached Perisai at the end of last week.
One note holder hoping to accelerate payment said: "If many of the provisions to protect bond holder rights in the trust deed do not have a deliverable process, what good is the trust deed?"
If Perisai becomes the fourth Singdollar corporate bond to default in 12 months, its troubles may tug at associated offshore services firm Ezra. Heavily-leveraged Ezra is Perisai's single largest shareholder, with a 22.5 per cent stake through EMAS Offshore and another unit.
Ezra shares fell 8 per cent or 0.5 cent to 5.7 cents last Friday after The Straits Times reported that it is linked to Perisai through a US$43 million (S$59 million) put option.
If creditors call at its door, Perisai is likely to exercise the put option to sell its 51 per cent stake in SJR Marine and a mobile offshore production unit to EMAS for US$43 million - exercisable on Nov 26.
Ezra said it was monitoring the developments. As at May 31, Ezra held cash and cash equivalents of just $43.6 million, and is also due to pay holders of its $150 million notes a $3.66 million coupon on Oct 24.