Swiber's sudden failure puts focus on bondholders yet to be paid

[SINGAPORE] Swiber Holdings Ltd's abrupt failure, just weeks after paying down some debts, flags the uncertain fate of investors in S$460 million of bonds that the offshore oil and gas services company has yet to honour.

The company's decision to redeem two of its local-currency securities when they matured in June and July, and the firm's failure to disclose its precarious financial position, are being questioned after it filed for liquidation on July 27, Terence Lin, assistant director of bonds and portfolio management at the Singapore-based fund researcher iFast Corp, said in an e-mailed statement.

"While we've previously recognised Swiber as being one of the more leveraged Singapore dollar-bond issuers, we envisioned that a more orderly restructuring effort would have occurred rather than an outright winding-up," said Mr Lin, whose firm is representing a noteholder and plans to form a group to meet with the provisional liquidators.

"A winding-up of the company would leave little for unsecured lenders. Cash was probably drained to pay for the June-July bond maturities."

Singapore's bond market has been stunned by defaults with PT Trikomsel Oke and Pacific Andes Resources Development Ltd. having failed to make payments on three notes totaling S$415 million since late 2015, the first cracks to emerge since 2009.

Oil-related firms face S$1.4 billion of Singapore dollar securities maturing through 2018, with S$325 million due by year-end, according to Bloomberg-compiled data on July 18.

Three calls to Swiber's general line went unanswered Friday.

Swiber made the winding up application this week to a Singaporean court, with a hearing set for Aug 19, according to stock exchange filings Thursday. The court named Cameron Lindsay Duncan and Muk Siew Peng of KordaMentha Pte Ltd as joint provisional liquidators.

"Our task now is to preserve the value of the company," Mr Duncan, a Singapore-based partner at debt restructuring specialist firm KordaMentha, said by phone Thursday.

"We have met with all the stakeholders" to discuss the situation, he said. He declined to comment on whether the liquidators have met with any of the bondholders or their representatives.

Swiber was founded in 1996 and operates 13 construction vessels to support the oil and gas industry, according to its website. It redeemed S$130 million of notes on June 6 and S$75 million of debentures on July 6, according to company filings, and made an early repayment of its perpetual bonds, a hybrid security with no preset maturity, in September 2015.

Swiber has four local-currency debentures and one yuan-denominated note outstanding, according to Bloomberg data.

The group had US$1.43 billion of liabilities on March 31 and US$1.99 billion in total assets on March 31, according to its latest quarterly accounts.

It has received US$25.9 million in demands from creditors as of July 26. DBS Group Holdings Ltd and United Overseas Bank Ltd are among its 10 principal bankers, according to its 2015 annual report.

BLOOMBERG