Sinking seafood supply chain manager Oceanus Group received a lifeline as its two main creditors agreed to restructure its debt significantly.
Its two major creditors - Ocean Wonder International and BW Investment - agreed to convert $54.2 million owed to them into new Oceanus shares ranging between 0.3 cent and 2.167 cents per share.
Together, the two major lenders loaned $71.9 million, making up more than 80 per cent of Oceanus' debt. The rest of the debt not to be converted into shares had been made interest-free since July 1.
The creditors also agreed to extend the termination date of the loan agreements from Dec 31 this year to December 2018.
But Ocean King Group, the third key creditor, which lent the company $7.23 million, has yet to agree to the conversion of shares.
The company said in a press release yesterday that if Ocean King Group agrees to the restructuring terms, its total debt balance, which includes accrued interest, will fall from $81.4 million to $20 million.
SEEKING FURTHER SUPPORT
This is a big step forward for Oceanus in our tireless efforts to clean up the group's books over the past year... We are still in active negotiations with Ocean King Group and hope to obtain the same support from them, which will allow us to start a new chapter on a clean slate.
MR PETER KOH, Oceanus executive director and chief executive.
"This is a big step forward for Oceanus in our tireless efforts to clean up the group's books over the past year," said Mr Peter Koh, executive director and chief executive, yesterday. He thanked Ocean Wonder and BW Investment for "their support and faith in us".
"We are still in active negotiations with Ocean King Group and hope to obtain the same support from them, which will allow us to start a new chapter on a clean slate."
The company fell into dire straits after the mysterious mass deaths of its abalone stock in 2012. Mr Koh told The Straits Times earlier this year that he has revamped the company's business model.
Instead of competing with sea farmers, as it once did, it now works with them by supplying them with abalone spawns. It then buys full-grown abalone from them for redistribution.
Creditor BW Investment and Mr Koh said yesterday they would aid the firm's interim cash flow needs.
Mr Koh will contribute $500,000, while BW Investment will contribute $250,000 for professional advisers' fees related to the restructuring and for operational costs.
A six-month moratorium will be imposed on the new shares issued.
The firm said following the completion of the proposed restructuring, it intends to issue new shares to engage new investors and management.
Oceanus shares closed flat at 0.3 cent yesterday.