SINGAPORE (March 21): EMAS Offshore says it will be negatively impacted by the United States’ Chapter 11 filing by the company’s ultimate holding company Ezra Holdings to facilitate the restructuring of the group.

EMAS Offshore is therefore currently seeking advice on the US bankruptcy filing, as well as assessing the impact of such filing on the group and on the group’s ongoing initiatives to refinance its financial obligations and liabilities and the procurement of additional working capital facilities.

Ezra owns 75.25% of EMAS Offshore as well as 60.91% of Triyards Holdings. The contagion effects from Ezra’s bankruptcy could also have negative implications for other financially weak offshore marine & engineering players such as Ezion, Nam Cheong, Pacific Radiance as well as Ausgroup, according to Lim & Tan in its Tuesday daily review note.

In a Monday filing, EMAS Offshore says Ezra’s Chapter 11 filing constitutes events of default under the relevant facilities, bank facilities and charterparty agreements. In addition, the moratorium afforded under the filing does not stay claims against the group in relation to the facilities and agreements guaranteed or secured by Ezra.

“However, the group is not aware of any demand made by financial institutions in relation to any of the bank facilities as a result of the Ezra Chapter 11 filing,” added EMAS Offshore.

As at Nov 30 2016, the group had an aggregate amount of US$170 million ($238 million) owing to Ezra, of which US$125 million was subject to a deferred payment over a period of three years. In addition, the group has an aggregate of US$566 million of loans owing to financial institutions of which an aggregate of US$242 million of loans are guaranteed or secured by securities provided by Ezra and an aggregate of US$193 million of loans are jointly guaranteed or secured by securities provided by Ezra and the group.

The group also has substantial charter hire liabilities valued at US$231 million as at Nov 30 2016, relating to charterparty agreements entered into by the group of which an aggregate of US$119 million are guaranteed solely by Ezra and an aggregate of US$58 million are jointly guaranteed by Ezra and the group.

EMAS Offshore says the group will work closely with its principal bankers to review all options to continue its ongoing initiatives.

But as previously disclosed by EMAS Offshore in its unaudited financial information for the first quarter of financial year ended Nov 30 2016 and the announcement made on March 2, in the event that these efforts do not achieve a favourable and timely outcome, the group will be faced with a going concern issue.

Shares of EMAS Offshore last traded at 5 cents before they were suspended for trading.