Ezion to buy assets held in JV with Swissco for more than US$60m

EZION Holdings on Tuesday said it plans to take full control of existing joint ventures previously held with a unit of Swissco Holdings, and to acquire assets held within one such joint venture for more than US$60 million.

This comes as the joint venture firms have not been able to meet their obligations due to, in part, the financial situation faced by Swissco's unit. Swissco is currently under judicial management.

"Consequently, the JV companies were not able to operate effectively. It is therefore necessary for the group to purchase the remaining 50 per cent shares of the JV companies to enable the continued operation of the JV companies and engagement with the existing customers of the JV companies," Ezion said in a regulatory filing.

The group plans to acquire the 50 per cent equity interest in Strategic Offshore Limited (SOL), a company incorporated in Malta, for S$3.5 million. It will also buy the 50 per cent equity interest in Strategic Excellence Limited (SEL), a company incorporated in Bahamas, for S$1.5 million.

SOL, an investment holding company, is a joint venture by Scott and English Energy Pte Ltd (S&E) - a wholly-owned subsidiary of Swissco Holdings - and Ezion's unit, Ezion Investments Pte. Ltd. SEL is also a joint venture company between the same two parties, and owns rigs and sells charter services.

Ezion then plans to buy assets - including vessels, charter contracts, receivables and charter payment guarantees - from the units of SOL for a total of US$61.9 million. It has set up three units in Labuan, Malaysia, to make these acquisitions.

"After the acquisition, the group will be able to work closely with the existing customers of the JV companies to maximise the utilisation of the assets owned by the JV companies and improve the earnings of the group in the long term by, among other things, working towards cost-reduction through the realisation of economies of scale with the group's own fleet of assets."