Ezra Seeks Waivers on Bond Covenants Amid ‘Strong Headwinds’

  • Company offers incentive fee to win approval at Nov. 9 meeting
  • Ezra adds to list of cash-strained borrowers in industry

Ezra Holdings Ltd. is seeking waivers from bondholders on some of its debt covenants as the Singapore-listed oil-service provider said it continues to face “strong headwinds” from low oil prices, weak charter rates and industry overcapacity.

Ezra started its consent solicitation process on Tuesday, and has scheduled a meeting to consider the proposals on Nov. 9, according to its filing to the Singapore Exchange. It’s offering noteholders S$250 ($180) for every S$250,000 of face amount as early-consent fee by 5 p.m. local time on Nov. 2, and half the fee after that date.

“The sustained downturn in oil company expenditure continues to result in lower industry activity,” Ezra said in the filing. “Declining charter rates and excess capacity have affected the financial performance and fleet utilization of sub-sea and offshore players.”

The slump in oil prices has hurt Singapore, which relies on the marine and offshore industry for about 19 percent of manufacturing jobs. The local-currency bond market has had four default cases involving S$1 billion of bonds. At least eight companies in the shipping and oil and gas services industry, including Rickmers Maritime, Marco Polo Marine Ltd. and AusGroup Ltd., have asked for leniency from creditors on their debt loads.

Price Slide

Ezra sold S$150 million of the April 2018 notes in 2013. The 4.875 percent notes were indicated at about 40 cents on the dollar, according to prices from DBS Bank Ltd. versus 80 cents three months ago. The company’s shares have lost 44 percent in Singapore this year to 5.5 cents.

Ezra is seeking bondholders’ consent to waive any breach or potential breach arising from any non-compliance with some financial covenants for the half-year ended February 2016 through April 24, 2018, when its existing debentures mature, according to the filing. The company is also asking investors to waive the occurrence of any event of default or potential event of default related to the non-compliance, and as a result of the group seeking to readjust its indebtedness.

As part of the group’s policy, Ezra said it will reassess the value of its assets as of Aug. 31, and if necessary, impair or write them down as appropriate. Ezra says it may need to reassess its investment in Perisai Petroleum Teknologi Bhd., a company listed on Bursa Malaysia.

Perisai failed on Oct. 3 to obtain the approval from bondholders to extend the maturity of its S$125 million notes by four months to Feb. 3, 2017. Perisai said it is insolvent, after defaulting on the notes and several loan facilities, according to its Oct. 12 filing to Bursa Malaysia.

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