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SINGAPORE: Ezra Holdings Ltd., an indebted Singapore-based provider of offshore oil services, said it’s working with advisers on restructuring and that it could be faced with a “going concern issue” if its revamp isn’t favorably completed.
“In light of the severe and protracted downturn in the global oil and gas industry, the group will continue to work with its advisers to review all options to restructure its businesses, operations and balance sheet,” Ezra said in a statement to the Singapore stock exchange Friday. The company also said it was assessing its investment in Emas Chiyoda Subsea Ltd. and may have to write down $170 million in relation to the venture.
The filing by Ezra shows the latest stress for the offshore oil and gas services sector in Singapore, where companies including Swiber Holdings Ltd. and Swissco Holdings Ltd. have sought debt restructuring while others have had to lay off workers amid plunging profits. Decisions by global oil explorers to delay investments have rippled through Singapore, home to the world’s two largest builders of oil rigs and smaller services providers, and also hurting banks that have provided funding to these companies.
There can be no certainty any restructuring option will be successfully concluded, Ezra said. “In the event the restructuring is not favorably completed in a timely manner, the company and the group will be faced with a going concern issue,” Ezra said.
Net liabilities
The group recorded a net current liability position of $887.2 million for the financial year ended Aug. 31, it said in the statement.
DBS Group Holdings Ltd., DNB Bank Asia, Oversea-Chinese Banking Corp. and United Overseas Bank Ltd. were Ezra’s principal bankers, according to the services provider’s 2015 annual report.
Ezra’s S$150 million 4.875 percent notes due April 2018 were indicated at around 29 cents on the local dollar as of Feb 2., according to data compiled by Bloomberg. The unrated notes fell for a seventh straight month in January amid the company’s efforts to address its debt situation.
Ezra halted trading in its shares in Singapore on Feb. 1 pending an announcement. The company, whose stock plunged more than 50 percent in each of the past three years, had a market value of S$141 million as of the trading suspension.
Crude oil’s drop through much of the last two years prompted explorers such as Royal Dutch Shell Plc and Statoil ASA to cut spending, hurting companies across the oil-services industry including Singapore-based Ezra, Swiber and Ezion Holdings Ltd.
Last year, Swiber filed for liquidation after facing payment demands from its creditors. The firm subsequently dropped the liquidation in favor of a plan to operate under judicial management, which would allow it to continue business under court supervision while it attempts to turn itself around.
Ezra, founded in 1992, offers seabed-to-surface engineering, construction, marine and production services to oil and gas companies. The company reported a net loss of $339.6 million in the quarter ended Aug. 31, widening from a loss of $7.8 million a year earlier, according to a Nov. 29 filing. - Bloomberg
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