You are here

Ezion to offload 2 loss-making firms to cut costs, streamline assets

OFFSHORE and marine service provider Ezion Holdings is divesting two companies by Nov 30 to streamline its assets and cut costs, its board said in a bourse filing on Friday night.

The troubled liftboat operator, which has suspended trading in its shares, will sell its half-stake in Strategic Offshore Ltd, a dormant indirect joint venture, for a nominal sum of US$1 in cash.

Ezion is also jettisoning its 30 per cent stake in Rotating Offshore Solutions Pte Ltd (ROS) through a share buyback deal and share purchase agreements with two ROS shareholders.

After the divestment, Ezion is slated to get some S$3 million, as well as deferred cash payments amounting to 0.25 per cent of ROS' annual sales revenue from 2020 to 2023.

Market voices on:

The disposals are meant "to streamline the group's asset base and reduce the group's operational costs to enable the group to improve the efficient use of its capital and cash flow", according to Ezion.

The board disclosed that the loss-making Strategic Offshore has a net liabilities position of US$4.94 million and does not contribute any revenue to Ezion's results.

Strategic Offshore is being sold to ES Assets Management Pte Ltd, an unrelated oil and gas asset management company incorporated in Singapore.

Meanwhile, ROS has a net asset position of US$18.9 million, based on unaudited management accounts, but "has been incurring losses for the past financial years, and the company did not receive any dividends" from its investment, said Ezion.

ROS shareholders Murugesan Srinivasan and Victor Lim Boon Chye are each paying S$250,000 in cash upfront for a 5 per cent stake in ROS, as well as the deferred consideration.

ROS is also buying back an effective interest of 20 per cent for S$2.5 million in cash.

Ezion's board said the Strategic Offshore sale would not have affected the group's pro forma net liabilities or loss per share, but the ROS divestment would have increased net liabilities per share from 6.87 US cents to 6.98 US cents as at Dec 31, 2018, while loss per share would have widened from 10.91 US cents to 11.06 US cents, had the deal been done on Jan 1, 2018.

"Although the company's shares are currently under voluntary suspension, shareholders, securityholders and investors are advised to read this announcement and any past and future announcements by the company carefully when dealing with the shares and securities of the company," the board added.