Viking Offshore and Marine’s shares are set to resume trade Monday after providing assurances it can operate as a going concern and after new major shareholders provided working capital and loans.
In February 2021, Viking Offshore said it entered a placement and loan agreement with Blue Ocean Capital Partners (BOC) and Ng Yeau Chong for the proposed placement of shares equivalent to 80.475 percent and 6.525 percent, respectively, of the company’s enlarged share capital and interest-free shareholder’s loans of a total S$1 million. Ng is the company’s CEO and executive director, according to its website.
Earlier this month, Viking Offshore said it issued 477.94 million placement shares to BOC and 35.85 million to Ng, and 49.44 million conversion shares were issued as to creditors as debt-to-equity. BOC is wholly owned by Lin Wei Daniel.
The deal was secured after two other definitive agreements with potential investors had lapsed due to difficulty meeting conditions and aligning the interests of creditors and investors, with the pandemic and volatile oil prices complicating negotiations, according to Viking Offshore’s annual report.
Viking Offshore provides services to the oil and gas industry, including heating, ventilation and air-conditioning (HVAC) and refrigeration services, winches and power packs, and systems integration for telecom, fire detection and instrumentation systems. The company also participates in offshore and marine asset ownership and chartering via its fully owned Viking Asset Management unit.
Shares suspended in 2019
The shares had been suspended in mid-June 2019 after the company’s auditor had issued a disclaimer of opinion, saying there was “material uncertainty” casting doubt on Viking Offshore’s ability to remain a going concern as loans and borrowings in default and due for repayment within 12 months exceeded its cash and bank balances of S$3.6 million as of end-2018; the company had total borrowings of S$33.85 million, with S$24.97 million classified as current liabilities, the auditor noted.
The auditor also had noted in 2019 that the company had been served with a winding-up order from one of its lenders.
Viking Offshore had sought and received a moratorium in 2019 from Singapore’s High Court, providing it protection from creditors while it reorganised its liabilities.
Outlook still challenging
The resumption of trade for its shares doesn’t mean Viking Offshore faces easy sailing.
The Chairman and CEO’s report from the annual report published in June said, “by no means are we out of the woods.”
“While oil prices are seeing some recovery, the ongoing challenges in the offshore and marine industry will continue. The pandemic situation
around the world is far from over,” Chairman Andy Lim and CEO Ng said in the statement.
“Our existing operating business units need to navigate the difficult business climate with aggressive order intakes, improved productivity, and prudent spending management,” while also working with the new shareholders to conduct a strategic review, the report said.
The report said the company was divesting out of the asset management services segment, which would primarily focus on recovering outstanding receivables from defaulted charterers and would seek to monetise the assets.
Order intake in the offshore and marine services segment was lower in 2020 across all business lines, consistent with the industry trend, with projects also deferred due to slower marine traffic amid the pandemic, the report said. Travel restrictions also impacted securing and executing service jobs, the report said.
For 2020, Viking Offshore reported revenue of S$17.2 million, down from S$21.3 million a year earlier on lower order intake and lower order book carried forward from 2019. The company posted a 2020 net loss after tax of S$26.1 million.
Shareholders’ stakes shrink
The deal to issue placement shares to new investors and conversion shares to creditors shrank the stakes of the previous major shareholders.
Chairman and Executive Director Andy Lim, who was previously the controlling shareholder of Viking Offshore and is the founder and chairman of private equity firm Tembusu Partners, ceased to be a major shareholder, according to a filing to SGX Friday.
Lim’s total stake, including shares held via 99 percent-owned Associated Leisure, fell to 1 percent, or 5.46 million shares, from 24.85 percent or 273.04 million shares after the consolidation of every 50 existing shares into one consolidated share, the warrants adjustment of every 50 warrants into one adjusted warrant and the issuance of the placement and conversion shares, according to a filing to SGX Friday.
The number of warrants and unissued shares held by Lim was also lowered in the adjustments, the filing said.
Singapore tycoon and founder of Labroy Marine, Tay Boy Tee, who became a substantial shareholder in Viking Offshore in 2013, when he acquired shares in a placement deal, saw his stake shrink to 0.29 percent from 7.28 percent previously, a separate filing to SGX Friday said.
In addition, Viking Engineering has ceased to be a substantial shareholder of Viking Offshore after the consolidation adjustments, according to a filing to SGX Friday.
The direct interest held by Viking Engineering, and the deemed interest held by its 50:50 shareholders Johansson Bo Robert and Sune Gustaf Sigvard Andersson, fell to 0.31 percent, or 1.72 million shares, from 7.83 percent, or 85.99 million shares, previously, the filing said.