IN a dramatic turn of events, Swiber Holdings announced late on Friday night it will be withdrawing its winding-up application - a backpedal no less stunning than its shock announcement only two days earlier that it had petition the courts for a liquidation.
The company will instead place the group under judicial management, something which investors, analysts and critics have said it should have done in the first place.
In a filing with the Singapore Exchange, provisional liquidator Cameron Lindsay Duncan said that on Thursday, Swiber had discussions with its major financial creditor, which indicated that "they are supportive of an application for the company to place itself into judicial management instead of liquidation."
As a result, Swiber and its subsidiary Swiber Offshore Construction (SOC) have taken out applications on Friday to place the company and SOC under judicial management and interim judicial management.
"As a consequence, the company has applied to discharge the provisional liquidation order and to withdraw the winding up application made on July 27, 2016," said Mr Duncan. He also revealed that an additional US$24.6 million was received from claimants, thus increasing the total to about US$50.5 million. Swiber had previously announced it had received demands for payment totalling US$25.9 million.
"The company is currently seeking legal advice on the claims received by it and will make further announcements as and when appropriate," he wrote.
Separately, Swiber said that "an error" was made in an earlier announcement regarding director and group chief financial officer Leonard Tay's resignation, and he remains as its CFO.
It also clarified that Mr Tay, group vice-chairman Francis Wong, and director Nitish Gupta continue to remain as directors of certain subsidiaries of the group.
Nothwithstanding Swiber's about-turn, analysts say the question still remains: How did a listed company boasting a billion-dollar-bracket order book end up fending off letters of demand in millions of dollars?
Industry watchers suggest a key contributor to Swiber's cashflow problems could have been its approach towards building its offshore marine business.
Swiber has been particularly successful in clinching projects from India's Oil & Natural Gas Corporation (ONGC), which, The Business Times understands, were often announced under Singapore Exchange (SGX) filings as awards from South Asia. With India being touted as an O&M bright spot as work dried up elsewhere in the world under this protracted O&M downturn, Swiber, along with many other O&M players, found itself increasingly reliant on new contracts from India.
But Mike Meade of brokerage M3 Marine, drawing from Swiber's past record in bidding for projects, believes the listed company may not have taken into consideration the risks tied to the stringent conditions in ONGC contracts when seeking to consistently out-bid its competition with low-priced offers.
He noted that the O&M player had gone with low bids to secure market share, even when the market was high. This inadvertent burden on its bottomline could have strained its operating cash flow.
Since the downturn, Swiber had also taken up turnkey engineering, procurement, construction, installation and commissioning contracts (EPCIC) for offshore platform packages with ONGC. It had focused on transportation and installation (T&I) for oil-and-gas structures since its 2006 initial public offer; executing these EPCIC jobs would have involved extensive engineering, procurement and construction (EPC) - work outside its comfort zone. An industry analyst estimates that about 80 per cent of EPCIC contract values go towards EPC.
Executing EPCIC projects would have strained Swiber's balance sheet because the company would have had to pump in cash to foot sub-contracting bills while waiting on lumpy payments from end clients.
It doesn't help that the demand for T&I services - historically Swiber's main source of cash flow - has fallen drastically.
BT understands that Swiber has two EPCIC projects with ONGC, including the published US$310 million contract for eight platforms. It has subcontracted the fabrication work on the Daman project to an oilfield-services unit of PetroVietnam, with the structures having been due for delivery in Q1 2015.
Outside India, Swiber had announced three contracts totalling US$215 million under a June 7 SGX filing, and a field development project valued at US$710 million off West Africa. The deferral of the latter contract was widely considered a huge drain on Swiber's finances, given that it accounted for at least 70 per cent of its order book at the time of the award.
In addition, a client had unilaterally cancelled a contract off Vietnam worth US$21 million.
- DBS had no prior specific allowance for Swiber exposure: UBS report