PACC: JV’s event of default triggers cross-default

Singapore five-dollar note Photo by Leslie Shaffer

PACC Offshore Services Holdings, or POSH, said Saturday that the event of default for its 50 percent-owned joint venture, POSH Terasea (PTPL), had triggered a cross-default.

On Thursday, POSH said PTPL had an event of default on a facility with an outstanding amount of around US$27.6 million, with the loan secured solely by PTPL’s five anchor-handling tug supply vessels.

That triggered a cross-default under a second loan facility by another financial institution, POSH said in a filing to SGX Saturday.

“The second loan facility comprises ship financing loans and a short term facility. The second lender is one of the only two financial institutions who have extended facilities to PTPL,” POSH said.

The second facility was around US$7.1 million Thursday and is secured by mortgages on two anchor handling tugs owned by PTPL, the filing said. The second lender has declared an event of default has occurred, and if it continues through 25 September, it will exercise its rights to appoint a receiver for the two tugs, the filing said.

POSH said that while it can’t fully ascertain the financial impact, it expected the potential maximum impact was up to US$42 million.

PTPL is 50 percent-owned by POSH and 50 percent-owned by Terasea, which itself is a 50:50 joint venture between Ezion and Seabridge Marine Services.

In a statement Friday, Ezion said the event of default and the cross defaults wouldn’t affect it materially.

“POSH Terasea has been operating in market conditions that have seen prolonged weakness and remain very challenging due to, amongst other things, the uncertainty in the oil prices that has affected the national oil companies and multinational oil majors’ capital expenditure in exploration and drilling,” Ezion said.

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