Yinson Holdings has emerged as the mystery strategic investor looking to bailout troubled offshore company Ezion Holdings.
Ezion’s key bankers are said to be in advanced talks with Yinson about a conditional debt conversion agreement related to Ezion’s debt of up to $916m.
Under the proposed deal the debt will be capitalised and issued by up to 22.6bn of new Ezion shares at an issue price of SGD 0.055 (4 US cents) each.
“Tentatively, Yinson expects its cash outlay shall be in the region of $200m and that it will give it a shareholding of not less than 70% in Ezion at the point of completion of the proposed debt conversion and subscription," said Yinson.
“In any event, assuming all convertible securities are converted, Yinson expects its eventual shareholdings in Ezion shall be a controlling stake of at least 51%,” it said.
“Yinson is taking the opportunity to invest in the liftboat owner with a cleaner book value, gearing and balance sheet,” said UOB Kay Hian analyst Kong Ho Meng.
“Management sees the liftboat fleet as a high-value proposition that allows Yinson to diversify into the renewable energy in the long-term.
“This is due to the liftboats’ ability to stay mobile in harsh weather conditions which make them suitable for performing constant maintenance on offshore wind farms.”
Ezion’s liftboats are fully contracted, but have suffered from low utilisation, declining to as low as 50% in 2017-18, according to Kong.
“Constraints in utilising working capital facilities prevented the liftboats from being mobilised to execute contracts. Out of the 12 operating vessels in its fleet, 4-5 are waiting to be redeployed,” he added.
Trading in Ezion’s shares was suspended voluntarily early last month, while a potential strategic investors carried out due diligence on the company.
The liftboat owner said the suspension was recommended by the board in view of the engagement between the then mystery investor and Ezion’s secured lenders.