Ezra may write down US$170m investment in Emas Chiyoda, flags "going concern issue"

EZRA Holdings, which is struggling to meet its debt obligations, warned on Friday that it may need to write down US$170 million in relation to its investment in Emas Chiyoda Subsea, flagging at the same time it will be faced with "a going concern issue" if restructuring options are not completed in a timely manner.

The Singapore-listed oil and gas service provider said it was assessing the impact of the writedown and anticipated downgrade of investments in ECS and subsidiaries and loans extended to ECS Group by its joint venture partners, Chiyoda Corporation and Nippon Yusen Kabushiki Kaisha. The group had recorded a net current liability position of US$887.22 million for the financial year ended Aug 31, 2016.

Ezra said on-going initiatives to review options to preserve value for the group are continuing.

"In light of the severe and protracted downturn in the global oil and gas industry, the group will continue to work with its advisers to review all options to restructure its businesses, operations and balance sheet.''

It warned that as part of the restructuring, it receives, from time to time, letters of demand as well as reservation of rights letters from its counterparties, including a statutory demand issued by one of the company's lenders. It noted that the interest payment on its S$150 million 4.875 per cent notes due 2018 will be due in April 2017.

Ezra also 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". However, there can be no assurance that any discussions or any restructuring options will materialise or be successfully concluded.

It warned that in the event the restructuring is not favourably completed in a timely manner, the company and the group will be faced with a going concern issue.

Ezra halted trading in its shares in Singapore on Feb 1, 2017 pending the announcement. The company has seen its stock value plummelled over the past two years and is now trading around S$0.048 before trading was halted.