Ezion 2Q21 swings to profit despite revenue decline; three investors express interest in company

Singapore five-dollar note Photo by Leslie Shaffer

Ezion Holdings reported Tuesday its second quarter swung to a US$8.4 million profit from a year-earlier loss of US$26.85 million as foreign exchange losses and cost of sales declined.

In addition, Ezion said it has received expressions of interest from three potential investors.

Revenue from continuing operations for the three months ended 30 June dropped 38 percent on-year to US$4.07 million, mainly due to the divestment of two liftboats, the liftboat operator said in a filing to SGX.

Cost of sales fell 81 percent on-year to US$1.96 million, mainly on lower depreciation expense and lower operating costs due to the divestment of liftboats and lower activity from its liftboats, Ezion said.

Foreign exchange losses included in the other income section fell to US$1.57 million for the second quarter from US$6.54 million in the year-ago period, the filing said.

Going concern

In the going concern section, Ezion noted it had net current liabilities of US$1.46 billion at the group level, with contractual interest obligations from outstanding loans and borrowings amounting to US$33.39 million not settled during the period.

“The group forecasts that the cash flows from continuing businesses are sufficient to meet working capital needs in the next 12 months, but not to meet the loan and interest obligations,” Ezion said.

The company said it remained committed to seeking third-party investors to re-capitalize the company and to negotiate a debt restructuring plan with existing lenders, adding that the feasibility of such plans supported the continuing use of the going concern assumption in preparing the financial statements.

In its outlook, Ezion noted it disposed of the subsidiary owning its remaining wind-turbine installation vessel as one of its secured lenders had power of attorney over the subsidiary.

“In response to the above disposal, the group will focus on projects that do not require the provision of a wind turbine installation vessel,” Ezion said. “It will continue to leverage on its existing experience and operational track record to access and explore new opportunities in the renewable energy sector in asset-light capacities, including project management, technical and engineering consultancy or procurement.”

Expressions of Interest

Ezion said it had received three letters from third parties expressing interest in investing in the company, mainly based on leveraging on the company’s listed status and the operational track record of its wholly owned subsidiary Teras Offshore.

“The group is currently in discussions with these potential investors to seek clarity on the proposals as well as explore avenues to improve the terms of the various proposals,” Ezion said. “If there is a feasible proposal, the group will seek feedback from its secured lenders as well as other stakeholders, including medium-term noteholders, perpetual securityholders and shareholders on the terms of the proposal in due course. In the event the group is unable to obtain the support of the relevant groups of stakeholders, the group would then explore liquidation as a viable option.”