Marco Polo Marine could be the next firm in the troubled offshore marine sector heading for the rocks, caught between the devil and the deep blue sea.
Analysts believe the marine logistics company, which has been struggling to work out a debt revamp plan, is fast running out of room and time to fend off creditors.
Marco Polo said on Monday that various banks and financial institutions have been discussing a preliminary proposal since April 23.
But this proposal, which includes fresh funding from a few strategic investors who have signed non-binding term sheets as part of the proposed refinancing and debt restructuring plan, has been met with "resistance" from some lenders.
Marco Polo added that although it does not believe the proposed refinancing and debt restructuring plan is about to fail, it is also "not confident at this juncture that it would be able to eventually bridge the gap between the expectations of the lenders and the conditions set by the strategic investors as part of the proposed refinancing and debt restructuring".
Trading in the stock has been suspended for two days, with the share price last seen at an all-time low of 5.9 cents. CIMB Research analyst Cezzane See said that whatever happens to Marco Polo following the suspension will depend on whether it is able to strike a deal with a larger group of stakeholders, including trade creditors and bond holders.
"If negotiations are unsuccessful, it could lead to a judicial management exercise," noted Ms See.
Last October, Marco Polo won bond holder approval to defer a $50 million payment for a further three years although it defaulted on a recent interest payment on the notes due April 18.
KGI Securities analyst Joel Ng noted that it could receive a lifeline if its founding Lee family has enough cash to support a rights issue. "But if they can't raise capital and get support from the banks, then the inevitable will happen, and it will likely be judicial management," said Mr Ng, calling it a "high possibility".
He cited Marco Polo's weak balance sheet - the company, which has a net gearing of 1.5 times, has recorded negative cashflow over the last 10 quarters, while about 70 per cent of its total assets have already been pledged as collateral.
"It remains to be seen what will happen, but investors just have to be prepared for the possibility of taking a haircut on their investments," said Mr Ng.
