High Court grants OCBC's application to place KS Energy, key unit under IJMs

IT was heavily contested by the beleaguered KS Energy but in the end, OCBC won, with the Singapore High Court on Monday granting the lender's application to place the oil services firm and a key operating subsidiary under interim judicial management (IJM).

Towards this end, the court appointed Deloitte & Touche's Andrew Grimmett and Lim Loo Khoon as the interim judicial managers, pending the hearing on the JM application. A pre-trial conference has been fixed for Sept 10.

OCBC had applied to place Singapore-listed KS Energy and its unit KS Drilling under JM earlier this month after it sent letters of demand to the firms as well as six other subsidiaries for a US$230.7 million term loan and a S$5 million bridging loan to KS Drilling.

KS Drilling is an 80.09 per cent-owned subsidiary of KS Energy, which has provided US$150 million in guarantee for the term loan.

OCBC had said that it was "imperative" for IJMs to be urgently appointed to act for both firms pending the JM hearing as there were "serious doubts and concerns" regarding the firms' current management on the back of the recent filing of criminal charges against the firm's former chairman and chief executive Kris Wiluan, according to court documents. The bank also cited "alarming cash burn rates and losses" suffered by the companies in recent years for its application.

The Indonesian tycoon faces 112 charges of alleged false trading and market rigging for share purchases made between 2014 and 2016. KS Energy has said that those were his personal share purchases and were separate from the group's current financial problems.

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

The court's decision is a setback for the troubled firm, which had earlier wished to go down another route. It had proposed various measures to allow the bank to fully monitor and supervise all its business operations. These measures would have given OCBC all the transparency, control and protection without the adverse effects on the pledged assets that a JM scheme brings, said KS Energy in an announcement last Friday.

KS Energy's group chairman and chief executive officer Richard Wiluan pledged full commitment to working with OCBC to resolve the bank's concerns in a manner that will maximise the interest of all creditors and the company.

He noted that the group had been facing "unprecedented" challenges, just like its peers, after the oil-price collapse and supply-chain disruptions amid the Covid-19 pandemic.

In the last two years, KS Energy has taken initiatives to improve its financial position, "resulting in a 72 per cent reduction in losses for the first six months ended June 30, 2020, as compared to the previous corresponding period", Mr Wiluan added.

He took the helm after his father, Kris Wiluan, stepped down in mid-August as group chairman and chief executive.

Trading in the shares of mainboard-listed KS Energy has been suspended since Aug 12.

Sarjit Singh Gill SC and Daniel Tan from Shook Lin & Bok are lead counsel for OCBC.