Offshore and marine (O&M) group Ezion Holdings could raise up to $50 million through a placement of shares and options to its first strategic investor in this prolonged industry downturn.
Temasek-linked Pavilion Capital Fund Holdings (Pavilion) agreed on Wednesday to take a 4.43 per cent stake in Ezion by buying 96.2 million shares at 20.8 cents apiece, or $20 million in total, through a share placement.
Pavilion will also receive, for a nominal sum of $1, 137.6 million options that may be converted into Ezion shares at 21.8 cents a share. If the options are fully exercised, Ezion will get an additional $30 million in gross proceeds. This will raise Pavilion's stake to 10.13 per cent of Ezion's enlarged share capital. Net proceeds from the options, if fully exercised, will be about $29.4 million.
The proposed investment in Ezion marks Pavilion's second foray into the O&M space in the current sector downturn.
In February, Pavilion Capital Holdings, a related firm, emerged as a new shareholder of Marco Polo Marine, though that interest was subsequently pared.
Ezion intends to draw between $11.6 million and $13.6 million of the net proceeds from the share placement for expansion of its business, including capital contributions or investments into joint ventures or partnerships.
Another $6 million to $6.1 million will go to repaying secured lenders for certain contributions towards corporate overheads and coupon payments for some $115 million notes issued by Ezion.
A balance of up to $1.9 million will be used to meet working capital requirements.