Temasek unit mulls over UOB's stake in Marco Polo Marine

Singapore

SINGAPORE state investor Temasek Holdings is said to be mulling equity stakes in listed groups Marco Polo Marine and Ezion Holdings.

The Business Times understands that Heliconia Capital - a Temasek Holdings-funded investment firm - is eyeing UOB Bank's 10.29 per cent stake in Marco Polo, while Temasek is separately reviewing the possibility of pumping capital into liftboat-focused Ezion Holdings.

Heliconia, Temasek and UOB have declined comment on what they dismissed as "market rumours".

Industry observers believe that if Temasek is serious about investing in O&M firms, Marco Polo and Ezion would be understandable choices since they're among the first listed entities to emerge from debt revamps.

As for UOB - a major bank lender to Marco Polo and the broader sector - analysts say the bank is not in the business of holding equity in O&M clients.

One analyst said UOB's exit would offer Heliconia the opportunity for a stake in Marco Polo at a good bargain. The commercial terms of the equity transfer deal that is believed to be in the works cannot be confirmed as of press time.

Upon completion of Marco Polo's debt restructuring last week, UOB's stake of 10.29 per cent in deemed and direct interest worked out to over 362.18 million shares, according to a Jan 29 disclosure on the Singapore Exchange. Marco Polo had offered as part settlement of its bank loans and other liabilities an equity swap pegged at 3.5 Singapore cents per share.

In addition, new shares pegged at 2.8 Singapore cents were issued to nine investors that have pledged S$60 million in equity.

If it pursues UOB's stake in Marco Polo, Heliconia may not be alone - given that valuations of O&M assets and stocks have tested record lows and now offer potentially high yields to anyone "mopping up cheap assets".

In addition to Marco Polo, Temasek is said to be also sold on the value proposition of Ezion's liftboat-focused business and was at one stage considering an equity position in it. Many consider Ezion to be in a better position in the O&M downturn as there is only a handful of contractors active in the liftboat operations within South-east Asia. Most other small- to mid-cap O&M counters including Marco Polo have large exposure to the offshore support vessel (OSV) sub-sector, which is weighed down by vast overcapacity.

Without naming the investors involved in the potential equity deals, Ezion chief financial officer Paul Goon said the company "is heartened that strategic investors recognise the fundamentals of the company and are interested to invest, but it will be focusing on completing its refinancing and restructuring exercise for now".

BT has learnt however, that talks initiated between the two parties earlier in Ezion's debt refinancing exercise have stalled for now partly because Ezion has resisted tabling direct haircuts for its creditors and noteholders.

While a "no haircut" pitch may facilitate Ezion's debt refinancing, it would not sit well with yield-driven investors.

Ezion's noteholders have voted for the group's debt refinancing proposal, which is said to be undergoing final approval by its bank lenders.

By contrast, Marco Polo's debt restructuring exercise was premised on 69 per cent, 71 per cent and 95 per cent debt forgiveness from its bank lenders, noteholders and for its contingent liabilities, respectively. Post-debt revamp, its outstanding liabilities have been slashed to just S$12 million, from S$258 million previously.