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Ezra enters binding restructuring proposal with Asia Fund Space

DISTRESSED offshore and marine group Ezra Holdings has entered into a binding proposal with Asia Fund Space (HK) Ltd (AFS) that will see existing assets spun off under a separate trust and the possible injection of one or more new businesses into the Singapore-listed company.

Financial consultancy specialist Asia Fund Space will also invest S$1 million into the reorganised Ezra in exchange for 92 per cent of its enlarged share capital. The combined stake to be held by existing shareholders will be diluted to just 4 per cent of the enlarged capital, before the injection of new businesses into the Singapore-listed entity. Ezra's creditors will hold the remaining 4 per cent equity in the company.

The incoming investor has also offered free shares in a separate real estate-focused holding company to creditors, shareholders and management of Ezra.

For a start, existing assets of Ezra, mainly comprising shares in associates and subsidiaries including Emas Offshore Ltd and Emas Chiyoda Subsea, are to be transferred to a trust or other newly formed entity for the benefit of the company's existing creditors.

The intent of this move is for the reorganised Ezra to start as a clean shell company so that the new equity to be pumped in by AFS can be ring-fenced for the purpose of rebuilding one or more new businesses. Post acquisition and injection of the new businesses, the equity stakes pledged to the company's existing stakeholders will be adjusted. The market value of the combined shareholdings of each stakeholder group - creditors and shareholders - will ultimately range between S$2 million and S$2.5 million.

AFS is also looking to issue shares in a second holding company to Ezra's creditors, shareholders and management. This second entity is to be set up for the purpose of a real estate property business that AFS is looking to acquire in Myanmar. The financial consultancy is seeking US$25 million equity from investors for this real estate holding company. It is offering 4 per cent, one per cent and 2 per cent of the enlarged capital in this second entity respectively to Ezra's creditors, shareholders and management.

Ezra Holdings is next expected to seek approvals from the courts in the US and in Singapore for the agreed re-organisation plan with AFS.

The company would have to table its re-organisation plan under a scheme of arrangement in Singapore and seek its creditors' approval.

The plan is also subject to approval by Ezra's shareholders at an extraordinary general meeting.