Ezion nears rehabilitation
Restructuring Secured lenders support US$1.5bn refinancing as creditors get equityBY KIT YIN BOEYCash-strapped Singaporean oil-
rig and support-boat company
EZION HOLDINGS has received the
support of its secured lenders
for a restructuring that will
slash its debt burden and reduce
interest costs.
DBS Bank, OCBC Bank,
United Overseas Bank, Malayan
Banking, CIMB Bank and
Caterpillar Financial signed
a binding agreement on a
US$1.5bn refinancing, which
will include minimal fixed
principal repayments over six
years and lower interest rates.
The lenders have also agreed
to provide revolving credit
facilities of another US$118m.
In return, the secured lenders
will receive new shares and
warrants. As a sweetener,major shareholder and Ezion
CEO Chew Thiam Keng and
his family have offered 100m
of their personal shares to be
pledged in favour of the secured
lenders.
The agreement with lenders
comes a few days after the
company made an early
redemption of a S$120m
(US$90m) 3.65% DBS Bank-
backed bond. Major bondholder
Ravi Murarka had demanded
that his investment in the bond
be redeemed, claiming that the
suspension of Ezion’s stock had
triggered a redemption clause,
and the repayment removed
the prospect of a potential court
battle.
Some elements still need
to be ironed out before Ezion
can exit the restructuring and
resume trading of its shares.The company has yet to sign a
binding term-sheet to refinance
US$18m with three unsecured
lenders, which it said was being
finalised.
Ezion will also need to hold an
extraordinary general meeting
to obtain approval from existing
shareholders for the issuance of
new shares to creditors.
Assuming creditors convert all
debt into shares, the company’s
issued share capital, on a diluted
basis, would rise to 6.227bn
shares from 2.074bn shares.
In a detailed statement to
the Singapore Exchange on
Wednesday, Ezion outlined a
restructuring plan involving the
issuance of shares and warrants
to all creditors, including its
legal and financial advisers – a
reflection of the company’s
acute lack of cash resources.Ezion had said in November
that its free cash flow in the
third quarter of 2017 was just
US$3.1m, with cash balances at
just U$47.2m.
Holders of six bonds of a
combined S$575m (US$433.3m)
agreed in November to waive
certain covenants, including any
event of default. The majority of
bondholders also voted on their
choices of restructuring options.
Close to 60% of holders of
series 003 to 007 senior bonds
chose to swap into 0.25% series
B convertible bonds due 2023,
while 16% chose series A 0.25%
non-CBs due 2024. Another
20.78% of holders of series
008 perpetuals voted to hold
amended notes which are also
convertible into shares.
Assuming bondholders
choose to convert all their notes
into shares, they stand to hold
about 35% of Ezion’s enlarged
share capital, while secured
lenders will have close to 4%
and others will take 5%, leavingVietnam steps up privatisations
Equities Deals draw mixed response over pricing and due diligence concernsBY S ANURADHAVietnam’s equity capital market
is enjoying a flurry of activity
since the beginning of the year
as the government steps up the
pace of privatisations to cut its
fiscal deficit.
Five state-owned companies,
VIETNAM RUBBER, PETROVIETNAM
POWER, PETROVIETNAM OIL, BINH SO
REFINERY and POWER GENERATION CORP
3 (Genco 3) raised a combined
D18.1trn (U$797m) from IPOs so
far this year.
This year’s IPOs are much
larger than the sub-US$100m
floats of the past. The increased
sizes reflect the government’s
efforts to slash its fiscal deficit,
which has exceeded 6% of GDP
between 2012 and 2016 and is
due to fall to under 3.5% of GDP
by 2020.
The government said
last Monday it had set up a
committee to oversee around
D5,000trn of state-ownedcorporate assets as part of an
initiative to boost privatisation.
The new Committee for
State Capital Management at
Enterprises would be more
comprehensive than the State
Capital Investment Corporation,
Vietnam’s main state investment
arm, officials said. This is
designed to simplify the sale
of equity stakes in state-owned
companies, which have suffered
delays and complications
because many fall under the
management of multiple
ministries.
A vibrant stock market
is providing a favourable
environment for privatisations.
The benchmark Vietnam Index
rose close to 50% in 2017 and is
up 5.7% year to date.
Regulators have also improved
listing procedures to woo
investors. The shares sold in the
recent IPOs will be listed within
90 days as opposed to years in
the past.Investor interest in Vietnam
has grown steadily, especially
after VINCOM RETAIL’s record D16trn
IPO last year, which attracted
investors beyond the usual
line-up of frontier-market funds.
A group of employees raised
D4.68trn through the sale of
94.5m Vincom Retail shares last
Monday.
Despite the positive backdrop,
demand has been mixed due
to concerns over pricing and a
lack of due diligence. Bankers
say only share sales in privately
owned companies are likely to
attract broad-based demand this
year.
Many international investors
remain uncomfortable with
state-owned companies.
“Due diligence remains a
big issue. Investors are not
sure about the accuracy of the
numbers provided in the offer
documents,” said a Singapore-
based ECM banker.
Recent global market volatilityhas also raised doubts over
whether the recently privatised
state-owned companies will be
able to sell stakes to strategic
investors, as originally planned.
“There is no way these
companies can function properly
without the technological and
financial inputs of the strategic
partners,” the banker said.
Stakes of 28.88% in PV Power,
44.72% in PV Oil and 49% in
Binh So are due to be sold to
strategic investors. All three
are subsidiaries of state-owned
PetroVietnam.
The recent IPOs have had
mixed results as a result of these
concerns. The Vietnam Rubber
deal, which closed on February
2, raised only D1.311trn, less
than a quarter of the target due
to the overall lack of interest in
the sector. Similarly, investors
bid for just 2.8% of Genco 3’s
IPO on valuation concerns and
what they said was inadequate
marketing. The auctionNews
8 International Financing Review Asia February 10 2018