Ezion to sell liftboat for US$13m; gain on disposal is US$650k

EZION Holdings on Friday said it will sell the Teras Conquest 7 liftboat for a cash consideration of US$13 million.

The gain on disposal for the transaction for the nine-month period from Jan 1, 2020 to Sept 30, 2020 is US$650,000 after accounting for transaction costs.

Based on Ezion's financial statements for the third fiscal quarter of FY 2020 ended September, the net book value of the vessel stood at US$12.3 million. The excess of the consideration over the book value of the vessel is US$700,000.

Using the same set of financial statements, the company added that the net losses generated for the nine-month period of its fiscal year ended September was US$37.2 million.

Ezion said its wholly-owned subsidiary Teras Conquest 7 had entered into a memorandum of agreement (MOA) with Elite Point - a Singapore-incorporated firm that is in the business of chartering ships, barges and boats with crew. The MOA was executed by the Singapore branch of CIMB Bank Berhad.

The consideration was arrived at after arm's length negotiations after taking into account several factors including the market price of vessels with similar specification and age, the values of the vessel and its existing charter contract, as well as its operating history and present and future burn rates.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

As part of the transaction, Elite Point will place a deposit US$650,000 into a bank account with an escrow agent within three banking days after the date of execution of the MOA and the escrow agreement. Elite Point will transfer the balance of the consideration into the same account within seven banking days after Teras Conquest 7 provides notice of the date of which it intends to tender the notice of readiness for delivery of the vessel. Any balance will be transferred to the seller upon delivery of the vessel.

Ezion said the disposal will allow the group to immediately reduce its outstanding liabilities via the partial repayment of secured bank loans.

The company said the amount received from the disposal will be utilised to repay the secured bank loan of the group. The mortgages of the vessel will also be discharged pursuant to the disposal.

The disposal will not have any impact on the issued and paid-up share capital of Ezion.

Trading in Ezion shares has been voluntarily suspended since March 2019.