Yinson Holdings has walked away from a deal to rescue struggling Singapore offshore vessel operator Ezion Holdings, a regulatory filing shows.
As a consequence, the Malaysian specialist of floating production, storage and offloading vessels will reportedly forfeit a $20m deposit paid earlier this year as part of the initial deal.
“The major secured lenders collectively and the subscriber have not been able to reach an agreement in relation to new terms to replace earlier transaction agreements,” Ezion said in the filing.
Yinson had proposed to table a revised structure for Ezion by the end of August, but that deadline lapsed.
The earlier deal, announced in February, was to acquire $482m of loans from Ezion for $150m and convert them into new shares in the offshore vessel owner. The deal would have given Yinson a 63.4% stake.
However, the arrangement was said to have been “unfeasible” in the wake of the March 2020 oil crisis, with the industry turning more volatile and uncertain.
Higher debt haircut
“We understand that the lenders could not agree to Yinson’s revised proposal i.e. a higher debt haircut,” said Maybank offshore industry analyst Liaw Thong Jung.
In early April 2019, Yinson emerged as the mystery strategic investor looking to bail out Ezion in a debt conversion deal.
Ezion, whose shares are suspended on the Singapore Exchange, said it was now “evaluating and assessing” all available options and remains “engaged in discussions with its major secured lenders”.
Last month, Ezion reported a 64.6% plunge in second quarter revenue, which reached just $8.6m. The slump is due to a decrease in utilisation and charter rates for its jack-up rigs and lower utilisation of its liftboats as a result of continued delays in redeployment of the group's assets.
The company said it has also been hit by working capital constraints arising mainly from limited available financing options, since lenders remain adverse to lending to the group while it undergoes corporate restructuring.
Ezion currently has outstanding loans and borrowings of $1.56bn that are classified as “current liabilities”, caused by breaches of certain financial covenants.
Despite its current problems, Ezion recently emerged favourably in the latest annual Singapore Governance and Transparency Index, or SGTI.
It jumped from 282nd to 85th place in the annual report in what was an otherwise mixed report card for Singapore’s listed marine-related companies.
