Ezion Holdings requested a voluntary suspension of trade in its shares on Friday, citing advanced discussions with a potential strategic investor which has begun some due diligence.
“Given the current dynamic situation that the company is in, a trading suspension would avoid any irregular movement in share price and prevent any irregular trading activities that may result from the leakage of any information which the company has no control over,” Ezion said in a filing to SGX on Friday.
It added the suspension would also avoid “market confusion” as the company focuses on the potential investor to strengthen its financial position, improve cash flow and preserve value for stakeholders.
In a separate filing, Chairman Wang Kai Yuen and CEO Chew Thaim Keng issued a letter to shareholders saying that the potential investor would also need to reach an agreement with secured lenders.
“We have received feedback that the discussions between the secured lenders and one particular investor group have been progressing well.
However, no conclusive agreement has been reached to date,” the letter said.
“As the outcome of this discussion will have a very major impact on the group, we have decided therefore to suspend the trading of the
company’s shares to avoid any irregular trading activities from price sensitive discussions that have started and are ongoing,” the letter said.
In addition, Wang and Chew said that market conditions for the company have remained “very challenging” and that the industry also faces “systemic problems.”
They noted some of the shipyards, equipment suppliers and services providers Ezion works with are facing similar issues, and it has affeted Ezion’s deployment plans “significantly.”
“We were not able to fully utilize the additional working capital lines extended to us by the banks due to the scale and complexity of the refinancing exercise,” the letter said, noting each secured lender had its own documentation and internal clearance requirements. That was due to having many vessels in multiple jurisdictions, with multiple legal counsels involved, it said.
“This is coupled with the general caution of the secured lenders towards the industry. These combined, have severely affected the reactivation and deployment plans of the group that has resulted in the reduction of revenue and increasing costs,” Chew and Wang said.
Ezion reported on Friday its fourth quarter loss after tax widened to US$390.83 million (S$529.65 million) from a loss of US$331.13 million in the year-earlier quarter as utilization and charter rates fell and amid an industry credit crunch.