Ezion to sell three rigs to Mexican company at a loss

Ezion Holdings agreed to sell three oil rigs to Mexico-based marine support service company TK and HR Services for US$1.00 each, and the transfer of US$659,000 in liabilities, the troubled offshore and marine services company said in a filing to SGX Tuesday.

The Atlantic Tiburon 1, Atlantic Tiburon 2 and Atlantic Tiburon 3 rigs have a total carrying value and net tangible asset value of US$2.91 million, Ezion said, adding it expects to incur a loss on disposal of US$2.25 million.

The proposed disposal “will enable the group to improve the efficient use of its capital and cash flow,” Ezion said. The rigs generated net losses of US$1.57 million in 2018, compared with the full year net loss of US$376.8 million.

The scrap value of the rigs as of end-June was around US$1.1 million, which isn’t enough to cover the US$600,000 cost to scrap the rigs and settle their liabilities, Ezion said.

Assuming the disposal had been completed at end-2018, Ezion’s net tangible liabilities per share would have increased to 6.96 U.S. cents from 6.87 U.S. cents, the filing said.

The deal is expected to be completed by 30 November, subject to Ezion obtaining the release of the mortgages on the rigs, the filing said.

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