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KS Energy disposes of distribution business, enters bond agreements with OCBC
KS Energy on Friday announced an internal reorganisation, along with a proposed bond purchase and bond issuance, with the completion of all three moves being conditional upon each other.
KS Energy's entire 55.35 per cent stake in KS Distribution will be transferred to its wholly-owned subsidiary KS Resources, such that its interest in KS Distribution will now be held via KS Resources.
The company on Friday entered a bond purchase agreement to buy S$30 million in bonds outstanding from OCBC. These KSE bonds are from a purchase agreement dating back to May 26, 2017, under which OCBC purchased a portion of S$65.5 million fixed-rate secured bonds due 2020.
On Apr 6, 2017, KS Energy took a S$5 million bridging loan from OCBC. The company now wishes to repay this in full. On Friday, KS Energy and KS Resources thus entered a bond subscription agreement with OCBC, under which KSR shall issue and OCBC shall subscribe for S$35 million in fixed-rate unsecured bonds due 2021.
The issuing of S$30 million in KSR bonds, fully paid, will cover the S$30 million purchase of KSE bonds, while another S$5 million in KSR bonds, fully paid, will fulfil the OCBC loan repayment.
Separately, KS Energy also announced that it has on Friday entered into a mutual release deed with KS Distribution, Actis Excalibur, KS Energy executive chairman and chief executive officer Kris Taenar Wiluan, KS Energy executive director Richard James Wiluan, KS Resources, Aqua-Terra Oilfield Equipment & Services and SSH Corporation on a without prejudice basis.
The two men, KS Distribution, and Actis are currently involved in legal proceedings pertaining to actions brought by Actis - on behalf of KS Distribution, Aqua-Terra Oilfield Equipment & Services and SSH Corporation - against the two men for alleged breaches of fiduciary duties and directors' duties, as well as various other claims by Actis against KSD, and counterclaims against Actis.
KS Energy also separately announced the proposed disposal of its 100 per cent stake in KS Resources to ACH Distribution for an aggregate cash consideration of S$1.643 million. ACH Distribution has concurrently entered into a separate sale and purchase agreement for the remaining 44.65 per cent stake in KS Distribution, which was held by Actis Excalibur.
KS Energy said the move is in line with its intention to dispose of the distribution business, "which is accounted for as a joint venture and which has been suffering losses in recent years due to instability in the oil prices and slower growth in the global economy". Undertaken as part of the restructuring of the group and its debt liabilities, the disposal will strengthen the company's financial position, added KS Energy.
"With the proposed disposal, the group will focus on its current businesses of capital equipment charter, the provision of drilling and rig management services and specialised engineering and fabrication," it said. The gross proceeds of S$1.643 million will be used to finance debt repayments.