Ezion Holdings reported Friday a second quarter loss after tax of US$363.91 million, swinging from a profit after tax of US$96.10 million in the year-ago period, after taking impairments.
The company said it recognized an additional impairment of US$303.5 million, mainly on loans to associates, loans to joint ventures, plant and equipment and trade and other receivables.
In addition, Ezion said it recognized a loss on derecognition of an associate of US$6.7 million, and loss allowances for expected credit losses on financial guarantees to a joint venture of US$12.2 million.
Revenue for the quarter ended 30 June rose 5.5 percent on-year to US$24.40 million on an increase in net utilization of liftboats, Ezion said in a filing to SGX.
“The outlook for the offshore marine industry remains challenging and competitive in view of the oversupply of offshore logistics vessels and jack-up rigs in the industry,” Ezion said, noting that lenders remain adverse to lending to the sector.
The projected cashflows of the company have been “severely affected” by limited financing options for the industry, which have left the group unable to access needed funding to deploy its assets, Ezion said.
“The group could not activate certain of its assets on time and had missed the window to deploy them according to the planned schedule,” Ezion said, adding it also had to dispose of some assets into a distressed market.
Ezion also pointed to an unforeseen extended delay in completing the proposed investment from Yinson Eden. At the beginning of April, Ezion said Yinson was in advanced talks to take over US$916 million of debts from the troubled Singapore liftboat charterer’s lenders. Under the plan, the debt will be converted into equity, giving the Malaysia-listed company an 85.9 percent stake in Ezion.
“In view of the additional problems and material losses arising from the unexpected prolonged negotiations between the designated lenders and Yinson, the group is exploring with Yinson on actions and solutions that will best serve the interests of all stakeholders,” Ezion said Friday.
In the second quarter results announcement, Ezion said the group had net liabilities of US$630.1 million and the company had net liabilities of US$998.1 million as of end-June.
But it added it still believes an assumption the group is a going concern is appropriate because it is still generating positive operating cash flows, it is able to meet short-term obligations and it completed a refinancing exercise leaving the earliest bullet repayment on borrowings not due until 2023.
For the first half, Ezion reported a loss after tax of US$376.77 million, swinging from a profit after tax of US$55.74 million, on revenue of US$52.41 million, down 13.9 percent on-year.
Ezion issued a cautious outlook.
“There has been a slight improvement in the overall market conditions for the marine offshore oil and gas industries as there has been a gradual increase in drilling and marine activities which lifted demand for the industries. However, with limited financing options, the group was unable to capitalise on the uptrend in the market,” Ezion said.
“Should the prolonged delay in the completion of the Yinson subscription and unavailability of funds from the lenders continue, the group’s deployment plan for its assets may be further hindered and the group may incur further losses going forward,” Ezion added.
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