EZRA Holdings is planning to raise up to US$300 million through a rights issue and the issue of convertible bonds to repay existing debt.
This is part of a broader strategy to expand its capital and investor base, deleverage and secure the group's long-term growth prospects, said CFO Eugene Cheng in an announcement on Saturday.
Some US$150 million will come through the issue of up to 2.03 billion new ordinary shares, with 200 rights shares offered for every 100 existing ordinary shares held by eligible shareholders. Funds raised from this will mainly go towards redeeming the firm's S$225 million fixed rate notes.
The group's founder Lee Kian Soo, and his son Lionel Lee, who is also the group CEO and managing director, have undertaken to fully subscribe to their respective entitlements. Both hold a total stake of 24.7 per cent in Ezra.
The remaining 75.3 per cent is fully underwritten by Credit Suisse and DBS. Ezra also plans to raise another US$150 million through the issue of convertible bonds, which is expected to take place after the pricing of the rights issue.
This will give the firm an opportunity to broaden its investor base, reduce its debt financing costs and introduce more liquidity into its balance sheet, said Mr Cheng.
The firm and its advisers believe that the issue will "generate high level of interest" as it provides investors with an opportunity to participate in the medium to long term prospects of the offshore oil and gas industry, he added.
"Notwithstanding the attractiveness and availability of the convertible bonds as an alternative, we are also simultaneously looking at other financing options that are typically available to us, for example, unlocking capital in certain existing vessel assets via sale and leaseback type transactions," said Mr Cheng. "Ultimately, we intend to redeem the perpetual securities before their step up date and balance our long term capital structure with cost-efficient financing."
Both the rights issue and convertible bonds issue will be subject to approval from the Singapore Exchange. Ezra is also separately working with banks for additional financing lines.