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Ezra Files U.S. Bankruptcy as Offshore Services Woes Spread

Updated on
  • Company joins Swiber, Swissco in fending off hostile creditors
  • Decline in oil prices led to project delays, amassed debt

Ezra Holdings Ltd., a Singapore-listed offshore services group, filed for bankruptcy protection in the U.S. from hostile creditors as the energy support sector struggles from three years of weak oil prices.

Ezra and two affiliates, Ezra Marine Services Pte. and EMAS IT Solutions Pte., filed for Chapter 11 protection March 18 in U.S. Bankruptcy Court in White Plains, New York. Ezra listed consolidated long-term assets with a value of $1.3 billion and current assets of $623 million for the fiscal year ended Aug. 31, 2016, according to court papers.

The move by Ezra, whose stock has plummeted 98 percent in the past three years, reflects the distressed state of offshore oil and gas services firms as their debt piled up amid contract delays or cancellations. Crude prices slide led explorers to cut spending, pushing service providers in Singapore such as Swiber Holdings Ltd. and Swissco Holdings Ltd. to embark on a court-led restructuring of their debt last year. Some other companies sought leniency from creditors.

Ezra’s “creditors may take a haircut of up to 50 percent and bondholders may see some conversion to equity,” Joel Ng, an analyst at KGI Securities Pte. in Singapore, said by phone Monday. “The current situation is lot better than a few quarters ago.”

Biggest Creditors

Ezra’s 20 largest creditors without collateral securing their claims are owed about $607.6 million as of Feb. 28, according to court papers. DBS Group Holdings Ltd. and Oversea-Chinese Banking Corp. are the two biggest creditors listed in the filing, with unsecured claims amounting to more than $457 million. The two Singapore lenders were also listed as the biggest creditors of secured debt, with more than $94 million in combined claims.

“Suitable provisions” have been made for DBS’s exposure, which the bank classified as nonperforming in the third quarter of 2016, the lender said in an email to Bloomberg News.
OCBC has reviewed several related accounts for close monitoring, and made provisions for “potential further deterioration in the oil and gas portfolio,” Koh Ching Ching, a spokeswoman for the bank, said in an email. The bank declined to comment on specific customer loans.

Ezra’s filing comes less than a month after its EMAS Chiyoda Subsea Ltd. venture was placed under bankruptcy in Texas, owing creditors about $966 million. Before that, Ezra had said it faced a $170 million writedown for amounts owed by the venture and the possibility of a “going concern issue” if its restructuring wasn’t favorably completed.

Read more: Bloomberg Gadfly on Singapore’s bankruptcy laws

The company’s S$150 million 4.875 percent 2018 notes were indicated at 5 cents on the dollar on March 20, according to DBS Group prices, versus 30 cents at the start of the year.

“The prolonged deterioration of the financial performance of Ezra’s business divisions and the inability to carry out fundraising in the oil and gas industry resulted in Ezra facing a cash crunch and an inability to pay their debts as they come due,” Robin Chiu, Ezra’s chief restructuring officer, said in court papers. The group had a net loss from continuing business operations of about $850 million for the fiscal year ended August 31, 2016, Chiu said.

Ezra isn’t the only borrower generating bondholder anxiety in Singapore. Companies excluding banks must repay S$38 billion ($27 billion) of local bonds through the end of 2020, according to data compiled by Bloomberg. Six firms have defaulted on S$1.2 billion worth of notes since November 2015.

Ezra’s stock was unchanged at 1.1 Singapore cents on March 15 before it was halted from trading and has dropped 78 percent this year. A S$2 billion company at its peak a decade ago, Ezra’s market value has shrunk to about S$32 million.

Shares of Triyard Holdings Ltd., about 61 percent owned by Ezra, were also halted from trading. Triyard is expected to issue a statement later Monday, according to external public relations company Bell Pottinger.

Informal Meeting

Ezra will hold an informal meeting as soon as “reasonably practicable” to provide further information on the Chapter 11 filing to holders of its debt, it said in a statement. The company says it intends to work with the Securities Investors Association (Singapore).

It will carry out a “transparent restructuring process” under the supervision of the U.S. Bankruptcy Court, Ezra said in another statement to Singapore Exchange. “The Ezra Chapter 11 filing is intended to optimize the scope and extent of the restructuring options available and to protect the interests of all stakeholders of the company, including its creditors and shareholders, from hostile actions.”

Ezra Group Distress Deepens With Refinancing Delays at EMAS Unit

The company has received demands for payments including from Forland Subsea AS for chartering a vessel, VT Halter Marine for a loan agreement, and Serimax North American for a promissory note.

The case is In re Ezra Holdings Limited, 17-22405, U.S. Bankruptcy Court, Southern District of New York (White Plains).

— With assistance by Chanyaporn Chanjaroen, Andrea Tan, Joyce Koh, Ranjeetha Pakiam, Dawn McCarty, and Lianting Tu

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