KS Energy says rigs in 'no jeopardy', even as OCBC seeks judicial management for firm

Singapore

OCBC has filed applications with the High Court of Singapore to place KS Energy and its principal subsidiary, KS Drilling, under judicial management (JM), although the troubled offshore and marine group is suggesting an alternative solution.

This came after the bank sent letters of demand to KS Energy, KS Drilling and six other subsidiaries for a US$230.7 million secured-term loan and a S$5 million unsecured bridging loan, both owed by KS Drilling.

KS Drilling is an 80.09 per cent-owned subsidiary of KS Energy, which said it gave US$150 million in guarantees for the term loan, although the other subsidiaries' guarantees are "much less".

OCBC is looking to appoint Deloitte & Touche's Andrew Grimmett and Lim Loo Khoo as the interim judicial managers, pending the hearing on the JM application, said KS Energy.

The hearing for the interim JM application has been fixed for Aug 31, and the pre-trial conference for the JM application, Sept 10.

In response to the bank's court applications, the oilfield supply and services provider proposed to put in place measures to let OCBC "fully monitor and supervise" all its business operations.

These measures will give the lender "all the transparency, control and protection it requests without having the adverse effects on the pledged assets that a JM scheme brings", KS Energy said.

It added that the rigs pledged to OCBC are in "no jeopardy from other parties", and disputed the need for an interim JM application, on the grounds of there being no risk of dissipation or deterioration of assets.

KS Drilling's liability under the term loan is secured by securities, including mortgages over some of its jack-up and land rigs in favour of OCBC.

KS Energy said: "The proposed judicial managers are not better placed than the present management to continue the company's business so as to safeguard its and its creditors' interests.

"There is no evidence of the company behaving fraudulently at the expense of the creditors."

KS Energy group chairman and chief executive officer (CEO) 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 loss for the first six months ended June 30, 2020, as compared to the previous corresponding period", he added.

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

The older Mr Wiluan 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.

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