Swiber defaults on bonds interest payment

Offshore services firm cannot make payment due today, its woes spread to industry peers

Oil and gas contractor Swiber Holdings has defaulted on bonds interest payment.
Oil and gas contractor Swiber Holdings has defaulted on bonds interest payment. ST PHOTO: MARCUS TAN

The provisional liquidator of beleaguered Swiber Holdings said yesterday that the offshore services group is unable to make a coupon payment due today.

The semi-annual payment is for the $150 million series 001 Trust Certificates, which carry a coupon rate of 6.5 per cent and are due for maturity in August 2018. The trust certificates were issued in 2013 by subsidiary Swiber Capital as part of its $500 million multi- currency Islamic trust certificates issuance programme.

The default - the latest to hit the local bond market after Trikomsel and Pacific Andes Resources Development failed to make payments on three notes late last year - came as little surprise. Swiber filed last week to wind up and liquidate itself before changing tack last Friday to be placed under judicial management.

The group faces letters of demand totalling US$50.5 million (S$67.6 million), well up from the US$4.76 million at its first disclosure of the claims just weeks before, on July 8.

Mr Terence Lin, assistant director of bonds and portfolio management at fund researcher iFast, said: "Given the company's situation, no creditor - including bondholders - should expect any interest payments or principal repayments.

"A company that is under judicial management or liquidation will also not be allowed to service debt."

Meanwhile, Swiber's woes have spread to its peers in the hard-hit offshore and marine sector.

Pacific Radiance, which owns and operates offshore vessels, plans to make a provision of "doubtful receivables" of about US$10.1 million for services rendered to Swiber's units.

Separately, Vallianz Holdings - in which Swiber holds a 25.2 per cent stake - has taken pains to outline the ways it has reduced its dependence on its controlling shareholder.

Vallianz's stock was hammered following Swiber's move, slumping over 40 per cent to 2.1 cents last Thursday, although it has since recovered slightly to 2.5 cents.

Vallianz said yesterday its order book is made up of "mainly contracts with third-party customers that are not related to Swiber".

The firm added it has been cutting its dependence on Swiber entities as a source of revenue as it grew its chartering and brokerage business with major energy companies.

"The board is of the view that the situation is manageable and operations are continuing as usual," said Vallianz, adding it was working with legal advisers to evaluate the impact of the Swiber collapse.


Vallianz says it has cut dependence on Swiber

A version of this article appeared in the print edition of The Straits Times on August 02, 2016, with the headline 'Swiber defaults on bonds interest payment'. Subscribe