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SINGAPORE: Nam Cheong Ltd. has temporarily ceased all repayment of its borrowings as it steps up efforts to restructure, after a slump in oil prices weakened demand for offshore support services.
The Kuala Lumpur-based maker of small ships that support offshore oil rigs won’t be making any interest payment on its S$75 million note due on July 23, it said in a statement to the Singapore stock exchange Thursday.
As of March 31, Nam Cheong’s outstanding bank borrowings and notes stood at about RM1.84 billion (us$428 million).
The company’s struggles reflect widening cracks in the region’s offshore and marine services industry, triggered by a slump in oil prices and a cutback in spending on exploration.
Rickmers Maritime, a container-ship operator, in April decided to wind up the business, while oilfield services group Ezra Holdings Ltd. in March filed for bankruptcy protection in the U.S.
Nam Cheong has started talks with shipyards to cancel or defer vessels under construction and is also looking to sell existing ships on its fleet.
PriceWaterhouseCoopers LLP has been appointed as the financial adviser. About 74 vessels it has ordered mainly from Chinese shipyards may not be fulfilled, Nam Cheong said.
The company may also lose deposits it made when these orders were placed and may have to pay some $770 million for the unpaid amount for these contracts.
The company had cash and cash equivalent of 131.4 million ringgit at the end of March, while its total liabilities stood at 2.79 billion ringgit, according to data compiled by Bloomberg. - Bloomberg
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