Serious Ezra Holding's Judgement Day - Chapter 11 bankruptcy protection in the US

Hot stock: Ezra's bankruptcy filing in US sends new shock waves through local banks, O&G stocks
Monday, March 20, 2017 - 15:32
by
ANGELA [email protected]

NEWS that offshore and marine (O&M) firm Ezra Holdings has sought Chapter 11 bankruptcy protection in the US sent new shock waves through the Singapore banking as well as oil and gas (O&G) sectors on Monday.

At 2.59pm, DBS was trading at S$18.95, down 19 Singapore cents or almost one per cent. OCBC was at S$9.61, down 5 Singapore cents or 0.52 per cent, while UOB was hovering around S$21.79, down 16 Singapore cents or 0.73 per cent.

Ezra filed for US Chapter 11 bankruptcy on Saturday, citing difficulties in raising funds due to the prolonged challenges facing the O&G industry.

The company is ladened with unsecured loans and claims owed to banks, including Singapore's three local banks - over US$280 million to DBS Bank, in excess of US$200 million to OCBC Bank and under US$23 million to UOB. Ezra also has S$150 million worth of outstanding notes, the principal of which is due for redemption in May.


Court documents also showed DBS and OCBC have over US$47 million secured claims each against Ezra; UOB ranked at a distant third with over US$10 million secured claims against the holding company.

"I see ongoing distress which could lead to further defaults in the local bond market, in particular in oil and gas and shipping," Thomas Dillenseger, Hong Kong-based managing director at restructuring firm Alvarez & Marsal, told Bloomberg.

The news also ignited fresh jitters in the O&G sector in Singapore. Keppel Corp traded around S$6.84, down 3 Singapore cents or 0.44 per cent, and Sembcorp Industries was trading at S$3.21, down 3 Singapore cents or 0.92 per cent.

Ezra shares traded at an all-time low of 1.1 Singapore cents last Wednesday before trading was halted. The stock has fallen almost 80 per cent this year following falls of more than 50 per cent in each of the past three years, giving it a market value of only S$32 million compared to S$2 billion in its heyday.

Meanwhile, shares in marine firm Nam Cheong fell 30 per cent after the company said its auditors highlighted uncertainty over its ability to continue as a going concern. It was trading around S$0.036, down 1.3 cents or 26.53 per cent. More than 26 million shares changed hands.

Swiber, Ezra and a few others have failed. There is another upcoming failure in O&M. Some of these companies are so badly crashed by their debts that even a 50% upside of oil price from current level will not bail them out.

We are experiencing a consolidation in the trade. After which, the ecology in the trade is healthier for the remaining ones that are less indebted. With less competitors and stock prices oversold, I believe soon to come, we will experience some massive up swings, eg. 30-50% upsides within a day, for those who survived.

Ezra Holdings calls for trading halt in its shares

Mar 21, 2017
Ezra Holdings calls for trading halt in its shares
Ezra Holdings' subsea construction vessel Lewek Constellation. PHOTO:EZRA HOLDINGS

Beleaguered Ezra Holdings called for trading in its shares here to be suspended yesterday, a day after it filed for bankruptcy in the US.

The group's yard operating arm Triyards Holdings, the last of its three Singapore-listed units still trading last week, has also requested a trading halt.

Ezra shares last traded on March 15 at an all-time low of 1.1 cents, down 77.6 per cent this year, while Triyards shares finished at 28.5 cents last Friday, dropping 1.7 per cent from Thursday's close.

Shares of the group's other Singapore-listed entity, Emas Offshore, have been in suspension since earlier this month. The stock last traded at five cents on March 3.

Ezra announced on Sunday it had filed for bankruptcy protection under Chapter 11 of the US Bankruptcy Code to facilitate its financial restructuring.

Its debt-laden joint venture Emas Chiyoda Subsea sought the same process late last month.

"The prolonged challenging operating environment in the oil and gas industry made it difficult for Ezra to carry out fund-raising as a company listed on the SGX-ST," said Ezra.

Documents showed Ezra has declared estimated assets of between US$500,000 (S$699,000) and US$1 billion against estimated liabilities of between US$100 million and US$500m. The group also has $150m of 4.875 per cent notes due in May next year.

But Ezra's total debt numbers could be higher. The group faces over US$1 billion of short-term debt, going by its 2016 earnings report, and it has at least US$900m in total exposure to guarantees extended to charter hire liabilities and loans for Emas Chiyoda.

According to court papers, Ezra's largest unsecured creditors include DBS Bank with claims totalling US$281.4m, OCBC Bank at around US$207m and UOB with US$22.8m. In terms of secured debt, OCBC and DBS each have claims of more than US$47.2m, while UOB has US$10.2m.

DBS Group Holdings Ltd chief executive officer signalled that the bank may be past the worst of its problems from loans to troubled oil and gas-services companies. While the sector is "still challenged", the formation of new nonperforming assets and bad-loan charges for the industry are expected to be "significantly lower this year", Piyush Gupta told reporters after his bank's fourth-quarter earnings release.

http://www.businesstimes.com.sg/com...-bank-may-be-past-worst-of-energy-loan-issues

Maybe he knows govt going to bail out this sector soon.

Triyards plunges on Ezra's restructuring proceedings.