Singapore OSV owner PACC Offshore Services Holdings (POSH) has said it is facing a big impairment charge after a joint venture defaulted on a loan.
The Robert Kuok-backed company said an unnamed lender has called in the $27.6m outstanding on ship financing loans and a revolving credit facility.
These were granted to its 50%-owned venture POSH Terasea and secured solely by five anchor-handlers owned by the JV: the 13,500-hp Salvanguard and Salviscount (both built 2004), and the 12,240-bp Salveritas, Salviceroy and 12,000-hp Salvigilant (all built 2007).
The JV company was formed in 2013 with Terasea, in turn a joint venture between Ezion Holdings and Seabridge Marine Services, which TradeWinds reported at the time is based in Canada and backed by Tiger Group Investments of Hong Kong.
"While the extent of the financial impact to the group arising from the above development cannot be fully ascertained, the maximum financial impact...would be impairment in the form of the company’s interest in POSH Terasea and any amount due from the JV to the company," POSH said.
These sums are $27.6m and $14.4m currently.
The parent group has a debt headroom of $90.4m and therefore "does not expect the above development to have any impact on its operating cash flow," it said.
"The company will continue to monitor the situation."
POSH regrets outcome
POSH added: “We regret the circumstances as POSH had been committed to exploring options with all parties to enable the POSH Terasea JV to meet its obligations towards lenders."
TradeWinds understands one option being explored before the default was for both sides to inject new capital. POSH was prepared to pump in money, but could not reach an agreement.
The lender now has to decide the next step, which could involve a winding up order for the JV.
POSH lost $8.6m for the three months ended 30 June 2019.
This was an improvement on the $12.7m lost in the first quarter.
It added that it was undertaking a “comprehensive review” of its business including divesting non-performing assets and investments.
