Ezra Holdings bond holders are still unsure if their investments can be recovered despite the firm concluding an informal meeting with investors yesterday.
The debt-laden offshore services group met with bond holders for the first time since it filed for Chapter 11 bankruptcy protection in the United States last month.
The firm has $150 million of 4.875 per cent notes due in April next year, and faces debt of up to US$2 billion (S$2.8 billion).
Emotions were largely kept under control in the two-hour session, attended by about 100 people, despite a few terse moments.
It was moderated by Mr David Gerald of Securities Investors Association (Singapore).
Ezra's management, including founder and chairman Lee Kian Soo and managing director Lionel Lee, and its advisers were there to provide updates and take questions from investors.
Mr Goh Thien Phong, the firm's adviser and a partner at PwC, said the company is still working through possible rescue solutions, which may include bringing in new investors or doing an equity swop.
He added that Ezra's bankers continue to be supportive of the company.
A key concern among bond holders that surfaced during the meeting revolved around Ezra's corporate guarantees, which accounted for some 85 per cent of its overall liabilities.
Mr Lee Kian Soo explained that the corporate guarantees were accumulated over the years, when the group entered into contracts or loans.
A bond holder, who wanted to be known only as Mr Tan, told The Straits Times after the meeting that he was disappointed Ezra did not unveil any new developments in terms of its restructuring efforts.
"I was hoping they would say something about getting a 'white knight', but they didn't, which I guess wasn't surprising given the current market situation," he said.
"But at least the management has been forthcoming, unlike others that threatened their bond holders."
He added that he is mentally prepared to write off his Ezra investment, which he bought two years ago, but remains hopeful the firm might be able to come up with a viable solution to turn itself around.
"All we can do now is to wait," he said.
The Singapore Exchange (SGX) had said earlier that it was taking steps to aid Ezra bond holders, including getting the firm to convene yesterday's meeting.
It noted that there are 373 holders of Ezra notes that are custodised with the Central Depository.
The SGX has compiled details of these bond holders for the note's trustee, HSBC Institutional Trust Services (Singapore), which will act in the interests of the bond holders and take action upon instruction.
Industry observers have said that a workable solution for Ezra would be for its creditors - both the banks and bond holders - to agree to various restructuring proposals, which could include deferring the repayment dates of liabilities, waiving some of the liabilities or converting part or all of them into equity.
"A likely scenario, in our view, is that (Ezra's) shareholders will get wiped out while creditors will swop for equity," said KGI Securities analyst Joel Ng, noting that similar developments are taking place at highly leveraged energy companies in the United States.
But the worry is that a sufficiently large injection of equity may be unlikely, given the still-downbeat market conditions.
This article was first published on April 18, 2017.
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