CFA Society Singapore
(Apr 2): Malaysia-listed oil-services firm Yinson Holdings Bhd has come to the rescue of Ezion Holdings.
The loss-making Singapore liftboats operator will be acquired by a unit of Yinson after it struck a deal with Ezion's lenders.
On Monday, Yinson Eden Pte Ltd (YEPL) entered into the conditional debt conversion agreement and conditional option agreement with Ezion.
YEPL will acquire the benefits and rights of up to US$916 million ($1.24 billion) of Ezion’s loans for approximately US$200 million.
The debt will then be capitalised into 22.5 billion shares valued at 5.5 cents each.
Upon completion of the debt conversion, YEPL will hold a minimum 70% stake in Ezion’s enlarged share capital.
YEPL will be granted a waiver from undertaking a mandatory general offer and will have the option to subscribe to 3.4 billion new shares at 6.5 cents each totalling $203.3 million.
YEPL intends to retain the listing status of Ezion.
Ezion currently owns 66 vessels including 13 liftboats, 18 rigs, five OSVs and 30 tugs and barges.
Of these assets, the liftboats are key to Ezion's venture into the offshore windfarm sector.
With the debt resizing, analysts say Ezion will have a cleaner balance sheet, with interest savings of US$20 million p.a.
Lim Chern Yuan, Yinson’s CEO, says the group is optimistic about the turnaround of Ezion’s business.
Lim also says the acquisition of Ezion’s lifeboats is in line with the group’s ambition to venture into the renewable energy sector.
However, Maybank KimEng says turning around Ezion will be major coup for Yinson can pull it off.
The research house also sees some short-term earnings headwinds for Yinson once the deal is completed while a likely US$400 million goodwill write-down will raise its gearing to 0.9 from 0.5.