Ezra seeks second covenant waiver

Company looks to take preventative action in event of Perisai Petroleum Teknologi bond failure.

Ezra Holdings is seeking investor permission to ease the covenants on a bond issue for a second time this year.

It is asking investors to waive any breach or potential breach with financial covenants on its SGD 150m ($108m) 4.875% bond due 2018.

The Singapore-listed company is due to hold meeting to discuss the consent solicitation with bondholders on 9 November 2016.

However, it said it will be convening an “informal meeting” with bondholders on 25 October 2016 to update them on the company’s current position and providing further information in relation to the consent solicitation.

Ezra is seeking the waiver in a bid to head off any breach or event of default that may be triggered due to a failure of associate company Perisai Petroleum Teknologi to meet bond obligations.

Earlier this month Perisai failed to meet interest and principal obligations when a SGD 125m 6.875% bond was due to mature.

The default triggered cross-defaults in a series of loan facilities, including term loans held in joint ventures with Emas Offshore, an Ezra subsidiary.

“The sustained downturn in oil company expenditure continues to result in lower industry activity and the timing of new awards to market remains uncertain,” Ezra said in a statement.

“Declining charter rates and excess capacity have affected the financial performance and fleet utilisation of subsea and offshore players.

“These difficult operating conditions have been further compounded by the influx of newly built vessels and a general over supply in the offshore support vessel market which has resulted in asset valuations being challenged.

“Consequently, the company and its subsidiaries have and are likely to continue to face strong headwinds in the foreseeable future.”

Ezra added that as part of the group’s policy, it will re-assess the value of its assets as at 31 August 2016 and if necessary, impair or write them down as appropriate.