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Hot stock: Ezra's bankruptcy filing in US sends new shock waves through local banks, O&G stocks

Monday, March 20, 2017 - 15:32

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News that offshore and marine (O&M) firm Ezra Holdings has sought Chapter 11 bankruptcy protection in the US sent new shock waves through the Singapore banking as well as oil and gas (O&G) sectors on Monday.

NEWS that offshore and marine (O&M) firm Ezra Holdings has sought Chapter 11 bankruptcy protection in the US sent new shock waves through the Singapore banking as well as oil and gas (O&G) sectors on Monday.

At 2.59pm, DBS was trading at S$18.95, down 19 Singapore cents or almost one per cent. OCBC was at S$9.61, down 5 Singapore cents or 0.52 per cent, while UOB was hovering around S$21.79, down 16 Singapore cents or 0.73 per cent.

Ezra filed for US Chapter 11 bankruptcy on Saturday, citing difficulties in raising funds due to the prolonged challenges facing the O&G industry.

The company is ladened with unsecured loans and claims owed to banks, including Singapore's three local banks - over US$280 million to DBS Bank, in excess of US$200 million to OCBC Bank and under US$23 million to UOB. Ezra also has S$150 million worth of outstanding notes, the principal of which is due for redemption in May.

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Court documents also showed DBS and OCBC have over US$47 million secured claims each against Ezra; UOB ranked at a distant third with over US$10 million secured claims against the holding company.

"I see ongoing distress which could lead to further defaults in the local bond market, in particular in oil and gas and shipping," Thomas Dillenseger, Hong Kong-based managing director at restructuring firm Alvarez & Marsal, told Bloomberg.

The news also ignited fresh jitters in the O&G sector in Singapore. Keppel Corp traded around S$6.84, down 3 Singapore cents or 0.44 per cent, and Sembcorp Industries was trading at S$3.21, down 3 Singapore cents or 0.92 per cent.

Ezra shares traded at an all-time low of 1.1 Singapore cents last Wednesday before trading was halted. The stock has fallen almost 80 per cent this year following falls of more than 50 per cent in each of the past three years, giving it a market value of only S$32 million compared to S$2 billion in its heyday.

Meanwhile, shares in marine firm Nam Cheong fell 30 per cent after the company said its auditors highlighted uncertainty over its ability to continue as a going concern. It was trading around S$0.036, down 1.3 cents or 26.53 per cent. More than 26 million shares changed hands.

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