The oil price rebound has come too late with another firm in the offshore sector joining the debt restructuring frenzy amid the most brutal industry downturn in 30 years.
Singapore-listed rig and vessel chartering group Swissco Holdings said yesterday that it is seeking to restructure $100 million worth of bonds, including a $2.85 million coupon payment due on Oct 16.
It has appointed Ernst & Young to advise on the refinancing, and is in discussions with bank lenders as well as funds and individuals who hold redeemable exchangeable preference shares in two Swissco subsidiaries.
A meeting with bond holders will be held on Monday. The 5.7 per cent bonds only mature in 2018 and Swissco has not said that it cannot pay its next coupon.
But KGI Fraser Securities analyst Joel Ng noted that Swissco had only US$9.6 million (S$13.2 million) in cash on its balance sheet as at the end of June: "Some of that may be needed for working capital, so it may be a bit tight for them to pay up the coupon. Cash flow has been quite weak for the last two years."
Swissco shares closed 0.1 cent lower at 5.5 cents yesterday.
Mr David Palmer, chief executive of Pareto Securities Asia, said the oil price rout has bottomed. But it will take months, if not years, before relief reaches the rig and offshore support vessel markets, which lag behind the larger market.
CANNOT CARRY ON AT SAME LEVEL
The current capital structure of the industry is unsustainable with record debt levels. Right now, financial institutions are looking for the return of capital rather than a return on capital.
MR DAVID PALMER, chief executive of Pareto Securities Asia, on the low expectations of banks in the current sector downturn.
He said: "The current capital structure of the industry is unsustainable with record debt levels. Right now, financial institutions are looking for the return of capital rather than a return on capital. The banks will inevitably sponsor and facilitate consolidations and mergers."
AusGroup, Marco Polo Marine and container ship operator Rickmers Maritime are all seeking debt extensions from bond holders, while Perisai Petroleum Teknologi wants to engage with bond holders on an "alternative proposal" after its debt extension proposal was shot down and it missed payments on $125 million notes on Monday.
Perisai said later that night that it had received an indicative offer of financing from a bank last Friday, and is trying to work out a financing package with banks and associate company Emas Offshore.
The bank offer makes available a sum of about US$20 million to bond holders, Perisai said, though it did not clarify if this was a cash sum.
A formal letter of offer will be subject to satisfaction of certain conditions that Perisai and Emas are working on, the companies said.
Perisai said it is working with Emas to resolve various issues among themselves, including a put option that was granted by Emas to Perisai in 2012.
Analysts said that 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. The put option is exercisable on Nov 26.
Separately, Perisai note holders are meeting at Rajah & Tann at 10.30am on Saturday to discuss the next step. A Rickmers note holder meeting will take place an hour before that.
Oil-related companies face $325 million of Singdollar bonds maturing by the year end, $390 million next year and $700 million in 2018, according to Bloomberg.
Mr Palmer said: "Banks and bond holders are increasingly coming to the understanding that there is little, if any, equity left in companies and it is testing their patience and faith."