Ezion Holdings reaches agreement with white knight

TROUBLED offshore and marine group Ezion Holdings has on Feb 28 reached a new conditional debt conversion and conditional option agreement with would-be white knight, Malaysia-listed Yinson Holdings.

As at Dec 31, 2019, Ezion had net liabilities of US$867.4 million.

Under the conditional debt conversion agreement with Yinson's indirect wholly owned subsidiary Yinson Eden, US$482.3 million of Ezion's debt will be wiped out by Yinson Eden in exchange for the company getting 23 billion new ordinary shares in Ezion at an issue price of 3.17 Singapore cents per share. (see amendment note)

Yinson Eden has entered into agreements with Ezion's major secured lenders to assume Ezion's debt.

Yinson Eden will also pay Ezion about US$47 million in cash.

The issue price represents a discount of 26.3 per cent to the volume-weighted average price of 4.3 Singapore cents for trades done on Feb 26, 2019.

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It is subject to adjustment, with a minimum price of 2.88 Singapore cents per share. If adjusted, up to 25.4 billion new shares will be issued.

Under the conditional options and convertible notes subscription agreement, Ezion will grant US$150 million worth of unlisted and transferable share options to Yinson Eden.

Each option will carry the right to subscribe for one new share at an expected exercise price of 3.49 Singapore cents per option share. The option exercise price represents a 18.8 per cent discount to the last traded price.

Yinson Eden will also subscribe to US$20 million of 8.1 per cent convertible notes issued by Ezion.

Ezion intends to propose a scheme of arrangement to compromise at least US$740 million of the company's debt, which will result in the group's debt not exceeding US$403 million.

The various transactions with Yinson Eden are conditional upon the company owning at least 63.46 per cent of Ezion at the end of the transactions and scheme of arrangement.

Separately on Feb 29, 2020, Ezion posted a narrower fourth-quarter loss of US$167.1 million, compared with a loss of US$390.8 million the year before.

The group recorded lower other operating expenses of US$71.8 million, down 80.3 per cent from US$362.1 million, largely due to impairments and write-offs incurred in 2018.

Share of losses of associates and jointly controlled entities narrowed sharply to US$158,000 from US$32.3 million for the three months ended Dec 31, 2019.

Revenue for the three months fell 55.6 per cent to US$13.2 million, while gross loss was US$6.4 million compared with a gross profit of US$2.1 million a year ago.

Loss per share was 4.48 US cents, compared with 10.54 US cents the year before.

Amendment note: An earlier version of this article incorrectly stated in Singapore dollars the amount of debt to be assumed by Yinson Eden under the conditional debt conversion agreement. The amount is in fact in US dollars.