Ezra shares dive on $240 million subsea JV impairment

SHARES in Ezra Holdings closed 37.5 per cent lower on Monday in heavy trading as investors scrambled to digest news of a US$170 million (S$240 million) writedown tied to the group's subsea joint venture (JV).

Ezra's share price opened at S$0.029.

The stock traded at a low of S$0.028 but mostly hovered between S$0.03 and S$0.033 throughout Monday.

It closed at S$0.03, down 1.8 cent or 37.5 per cent from its previous close.

The listed offshore and marine group was the most active counter on Singapore Exchange, with over 267.6 million shares changing hands.

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One broker said the high volume reflects pent-up trading desire in the stock following a trading halt that had been in force since before the market opened on Feb 1.

Ezra had called for the trading halt after two separate announcements by its partners in the JV, Emas Chiyoda Subsea (ECS).

Chiyoda Corporation and Nippon Yusen Kabushiki Kaisha (NYK Line) on Jan 31 issued warnings of writedowns totalling 51 billion yen (S$640 million) on their stakes in and loans to ECS.

Ezra followed suit on Feb 1, flagging US$170 million in potential writedown comprising investment in shareholders' loans and inter-company balances owed by ECS and its subsidiaries.

The lifting of the trading halt had spurred further speculation over Ezra's next moves.

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Ezra had acknowledged on disclosing the US$170 million writedown that it could face "going concern issue" if restructuring options are not completed in a timely manner.

Despite the immediate heat the stock faced, the lifting of the trading halt would be necessary if a rights issue is among the restructuring options tabled for the group, one broker said.

Ezra did not detail its restructuring options in its Feb 1 disclosure but the group stressed that it is "in regular discussions with a number of its substantial creditors and has had dialogues with its key stakeholders,

including its financial lenders and trade creditors".

Subsea intelligence provider Strategic Offshore had pointed out to the possibility of a white knight investor for ECS.

But Jeremy Punnett of Stamford Maritime noted that the group needs the backing of its bank lenders to write down the massive debt on its books in order to pull through a protracted industry downturn.


This article was first published on February 7, 2017. Get The Business Times for more stories.