Swissco reels from joint venture losses, heavy impairments

Swissco reels from joint venture losses, heavy impairments

Singapore - Swissco Holdings dived into a net loss of US$296 million (S$420 million) for the third quarter under the weight of massive impairment charges and losses from its associates and joint ventures.

The debt-stricken oilfield-vessel operator, which is headed for judicial management, recorded a loss per share of 43.84 US cents for the three months ended September. A year ago, it had a net profit of US$11.2 million, or 1.66 US cents per share.

For the nine months ended September, its net loss was US$300 million, or 44.52 US cents per share.

Revenue fell 63.5 per cent to US$3.8 million during the quarter. No revenue came in from two wholly owned rigs that have been off-charter since 2015; the company has not received charter collections from three joint-venture rigs with Ezion Holdings. All its sales came from the offshore-support vessel segment, which suffered from lower utilisation and lower charter rates as a result of the downturn in the oil-and-gas industry.

Swissco recognised US$181 million in impairments during the quarter as it marked certain assets down to recoverable value amid doubts about its ability to remain a going concern.

The impairments included US$153.6 million from rigs and vessels and US$27.4 million on receivables and a loan to a joint venture.

The company said: "Given the current state of the group's discussions with its bank lenders, note holders and holders of the Redeemable Exchangeable Preference Shares (REPS), the group has decided to adopt a prudent approach to mark its assets to recoverable value by undertaking significant impairments on its fleet of vessels and rigs, as these assets have lost much of their value in the current depressed economic situation."

Share of results of associates and joint ventures fell to a loss of US$107.3 million from a year-ago profit of US$10.7 million due to impairment losses on rigs. Swissco had said on Monday that it will file for judicial management in the next few days, after having failed to win support for a bond-restructuring plan. If the application goes through, Swissco's judicial managers may try to preserve all or part of the company as a business, negotiate a scheme of arrangement with creditors, or wind up the company.

The company was in negative equity of US$29.1 million as at end-September, with US$291.6 million in liabilities and just US$262.5 million in assets. Current liabilities stood at US$280.3 million, compared to US$27.2 million of current assets.

Swissco said: "The group has reached an impasse with its major lenders. A significant gap persists between the group's aim of sustaining its business in the long term and the position of these lenders. As such, the group is unable to get an agreement on the terms of the restructuring plan."

This article was first published on November 16, 2016.
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