Creditors give nod to Nam Cheong's schemes filed in Malaysia

Singapore

SCHEME creditors on Monday granted Nam Cheong's two operating companies the green light to proceed with the debt restructuring plan tabled together with its Singapore-listed holding company.

The said operating companies - Nam Cheong International (NCI) and Nam Cheong Dockyard (NCD) - on Monday convened two separate court meetings with their scheme creditors comprising nine bank lenders in all.

At the court meeting for Nam Cheong Dockyard, creditors representing 80.954 per cent or over US$23.84 million in loan value owed, voted for the restructuring plan. In a separate court meeting for Nam Cheong International, creditors representing 95.407 per cent or over US$58.58 million in loan value owed voted for the restructuring plan.

Only one creditor or bank lender voted against each of the two schemes.

The majority votes in favour of the two schemes effectively imply that creditors now stand to convert the non-sustainable portion of the debt into equity and the sustainable portion into a seven-year term loan. The term loan will be repaid in stages from 2021 to 2024.

Nam Cheong did not name the nine scheme creditors involved in Monday's votes. The scheme document filed with Singapore's High Court as obtained by The Business Times stated however, that five banks have extended loans to NCI and four others have exposure to NCD. RHB Bank is exposed to both NCI and NCD. DBS, CIMB, Hong Leong and OCBC have loans sitting on NCI books. Ambank, Maybank and Bank of China are bank lenders to NCD.

Nam Cheong is seeking to restructure through three schemes, two filed for NCI and NCD in Malaysia and one for its holding company in Singapore. BT understands that these nine bank lenders are likely to participate in a vote for the Singapore holding company's scheme that will be held on Jan 24. Court documents filed with the Singapore holding company's scheme showed the nine lenders accounted for US$159.29 million in estimated outstanding bank loans to the holding company and its subsidiaries and joint ventures. Holders of S$365 million in medium term notes also get to exercise their votes this Wednesday.

Nam Cheong is offering its scheme creditors a debt-to-equity conversion pegged at US$1 debt to 30 shares for non-sustainable portion of its unsecured debts. Its scheme creditors get to choose between two options for the sustainable portion, either converting into a seven-year term loan facility or cashing out at a recovery rate of between five US cents and 20 US cents for every US$1 sustainable debt held.

The NCD and NCI schemes are conditional upon the scheme filed in Singapore by the holding company obtaining approval of the requisite statutory majority of 75 per cent in value of the creditors present and voting in person or by the proxy at Wednesday's scheme meeting.

Nam Cheong is seeking extra time from its scheme creditors to tide over a prolonged offshore and marine downturn that has damaged the fundamentals of its erstwhile thriving build-to-stock offshore support vessel business.

Court documents showed the group has US$866 million in contingent liabilities due from the outsourcing of the construction of these build-to-stock vessels to shipyards in China.

Nam Cheong's chief executive Leong Seng Keat told BT on Monday: "The negotiation and discussion with the nine subcontracted yards in China is progressing well and the parties are working towards gradually concluding this in the near term, starting with the four shipyards in the Fujian group and following by the remaining five shipyards in the non-Fujian group.

"Nam Cheong will take delivery of these vessels first on a bareboat charter basis, with the remaining payment to the yards, estimated at about US$98 million, to be made gradually over the next five years."

He explained that the group plans to eventually take delivery of 10 vessels from China.