Ezion Holdings Limited (Ezion) held the analyst briefing on 4-Mar to share the results of several rounds of restructuring and refinancing plans involving banks, creditors, and shareholders over past 6 months. On the debt side, secured lenders, securityholders, and unsecured lenders agreed to the new refinancing plans that extended the maturity and reduced the interest rates. On the equity side, shareholders accepted the issuance of warrants.
Key takeaways from the briefing
Resolution for secured lenders: Total refinanced amount was c.US$1.5bn. Over 6 years, Ezion will pay a minimal fixed principal amount on schedule. Banks will also lower the interest rate (Libor + cost of funds) and extend further support with additional working capital line of up to c.US$118mn. The extended amount will be exclusively and strictly funded the existing operating assets, meaning that the fund is prohibited from dividend payout, loan repayment, or even procurement of new vessels.
Resolutions for securityholders: Total refinanced amount was S$575mn. The maturity profile will be extended by 6 to 10 years. Securityholders accepted 0.25% interest rates and lifting of all covenants. The majority of the holders opted for Option 1 – convertible bonds (S$452.5mn) and the rest opted for Option 2 – straight bonds (S$122.5mn). The conversion price will be reset every 6 months.
Resolutions for unsecured lenders: Total refinanced amount was c.US$18mn. The unsecured lenders will exit via the exercise of stapled warrants to convert outstanding amounts to equity, and the exercise price will be reset every 6 months. Meanwhile, they accepted a reduction of interest rates as well.
Resolutions for shareholders: Shareholders will be issued 3 warrants for every 5 shares with an exercise period of 5 years. The exercise price will not be reset.
Outlook moving forward:
Figure 1: Impact of the proposed financing
Source: Company, PSR
Business updates and outlook: As shown in Figure 2, the current fleet size that has been deployed is 24 units. Moving forward, the group will mainly focus on the deployment of lifeboats and aims to expand the fleet size of the segment. Meanwhile, mobile offshore production units (MOPU) will be in demand the foreseeable future as major oil companies have been cutting down the capex on exploration and development. If Ezion gets new funding externally, it may convert some rigs and vessels into MOPU. In terms of geographic opportunities, management sees demand from the wind farm on the east and south coast in China and the gradual recovery in oil and gas sector in Southeast Asia.
Figure 2: Group fleet as of Dec-17