Otto Marine files to wind up Hoe Leong

The troubles in the local offshore and marine sector continue with Otto Marine petitioning the High Court to wind up Hoe Leong Corporation for not repaying debts totalling US$1.5 million (S$2 million).

Mainboard-listed Otto Marine said the debt was accrued in 2014. Hoe Leong had paid US$580,000 and US$920,000 is still outstanding, Otto Marine told the Singapore Exchange in a filing yesterday.

Hoe Leong chairman and chief executive James Kuah told The Straits Times the amount owed was correct, but said his company had not missed any payments.

"We have been making payments all the time... The last payment was made on Aug 1. The next payment would have been Sept 1."

Mr Kuah said he was shocked to learn yesterday morning of the winding-up petition, which was made on Tuesday.

Home-grown Hoe Leong, which is also listed on the mainboard, makes and distributes heavy equipment spare parts. It also sells offshore support vessels.

Mr Kuah said the debt concerned a joint venture that was dissolved in 2014.

He said the disputed amount has been provided for and will not affect the company's financial status. "We are not worried about this," said Mr Kuah.

In a separate SGX filing yesterday, Hoe Leong said Otto Marine's application was "an abuse of the process". It said it had delivered 13 cheques totalling US$1.25 million to Otto Marine.

Otto Marine has been taking legal action against its debtors as the downturn in the offshore sector bites.

It started three arbitration proceedings this month alone. Its subsidiary, Karp Marine, launched arbitration proceedings against Grupo Evya SA de CVe for a debt of US$10.5 million. This relates to a bareboat charter party contract.

Last week, subsidiaries Swordfish 5 and Go Offshore started arbitration proceedings against Vettal Mega Services for $6 million worth of charter contracts. Otto Marine has also gone after Robert Knutzen Shipholdings for a sum of over US$2.8 million, plus applicable interest for overdue payment.

Last month, its Batam-based shipyard subsidiary, PT Batamec, caused the arrest of the vessel Ratina Blessing, registered under RS Marine Investments.

Otto Marine said the vessel was held for money owed for ship-repair-related charges.

Otto Marine is in the midst of a takeover offer by its executive chairman, Malaysian tycoon Yaw Chee Siew.

Mr Yaw offered 32 Singapore cents per share to take the company private in June.

If he succeeds, Otto Marine will become the first company from the hard-pressed sector to be delisted.

Otto Marine shares yesterday closed flat at 31 cents, as did Hoe Leong, at 1.5 cents.

Last Friday, Hoe Leong reported a loss of $4.1 million for the second quarter to June 30, compared with a $1.7 million profit for the same period a year earlier.


This article was first published on August 19, 2016.
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