Offshore oil and gas services provider Yinson is in advanced talks to take over US$916 million of debts from troubled Singapore liftboat charterer Ezion’s lenders, the Singapore company said late on Sunday. The debt will be converted into equity, giving the Malaysia-listed company an 85.9 percent stake in Ezion, it said.
Under the deal, Malaysia-listed Yinson’s indirect wholly owned subsidiary Yinson Eden will capitalize the debt in exchange for 22.57 billion Ezion shares at S$0.055 each and a proposed grant of 3.36 billion options for S$1.00, Ezion said in a filing to SGX late on Sunday.
Each option offers the right to subscribe for one new share at S$0.0605 each, which, if fully exercised, would have gross proceeds of S$203.31 million, the filing said. If fully exercised, Yinson Eden would have an around 87.5 percent stake in the company, Ezion said.
If the options are exercised, the proceeds will be used for business expansion or to pursue new business opportunities, such as investments in joint ventures or working capital, Ezion said.
Ezion cautioned that the deal was subject to “numerous conditions,” with no guarantee of completion.
Ezion said the deal will reduce its borrowings and debt service obligations and give it access to additional funds if Yinson exercises its options.
Even with banks and financial institutions being generally cautious of the offshore oil and gas industry, improving the company’s financial position will help it access the funds it needs to deploy its assets and increase its market share in the liftboat business, Ezion said.
Ezion said market conditions have resulted in a “severe negative impact” on its financial position, with a lack of funding hurting its ability to deploy vessels.
“The market conditions remained very challenging for the group due to the uncertainty in the oil prices that has affected the group’s clients as well as the persistent oversupply of certain marine assets like tugs, barges, workboats and jack ups,” Ezion said. “Some of the shipyards, equipment suppliers and service providers which the group is working with are similarly affected and their problems have also affected the
deployment plans of the group significantly.”
Yinson Holdings is a Malaysian integrated offshore production and support services provider, offering chartering services and vessel management. It is the sixth largest independent floating production storage and offloading (FPSO) leasing company globally, with a presence in the Malaysian, Vietnamese, Singapore, Norwegian, U.S. and African markets, the filing said.