Ezion turns profitable on fair value gain from debt revamp

LIFTBOAT-FOCUSED Ezion Holdings returned to profitability in second quarter mainly on fair value adjustments arising from its refinancing exercise, which more than offset a gross loss from its operations.

Ezion posted a profit after tax of US$86.96 million for the quarter ended June 30, 2018, reversing from a loss after tax of US$2.57 million for a year-ago period.

Second-quarter earnings per share was 2.84 US cents, compared to a loss per share of 0.3 US cents for the same quarter the previous year.

Revenue for the June quarter was 65.7 per cent lower at US$23.13 million.

First-half profit after tax was US$40.55 million, compared to a loss after tax of US$15.30 million for H1 FY2017.

Ezion said that it experienced continued delays in redeployment of its liftboats during Q2 due to working capital constraints before the finalisation of the refinancing of its bank borrowings.

In addition, it also saw reduction in fleet utilisation for its jack-up rigs and tugs and barges, and charter rates for its overall fleet.

Consequently, second-quarter revenue fell 65.7 per cent, and this resulted in a gross loss of US$10.91 per million, reversing from a gross profit of US$6.69 million for the same period the previous year.

But this was more than offset by fair value adjustments of US$91.12 million resulting from the closure of a refinancing exercise, which has called for the issuance of convertible bonds and warrants to holders of notes and perpetuals.

Before fair value adjustments, the group saw its loss after tax widen by 61.9 per cent to US$4.16 million for the three months to June 30, 2018.

The group had issued over 1.25 billion shares at 24.87 Singapore cents and more than 222.03 million shares at 27.63 Singapore cents during the second quarter to security holders exercising the equity swaps.

As at the end of June, it had also placed over 96.15 million of new shares at an issue price of 20.8 Singapore cents to Temasek-linked Pavilion Capital, which emerged as new equity investor for the group in April after the conclusion of its months-long debt refinancing exercise.

Ezion closed at 7.3 Singapore cents before the release of its second quarter results on Wednesday, down 0.1 Singapore cent.