Nam Cheong's restructuring plan generally well received
Singapore
MARKET observers on Friday commended troubled shipbuilder Nam Cheong Limited for being proactive in engaging noteholders on its restructuring plan, while some bondholders say that they are likely to vote in favour of the scheme as it beats the alternative liquidation scenario.
Nam Cheong, meanwhile, said late on Thursday night that it was disposing its office lots at Suntec City to a third-party purchaser.
In a plan unveiled to noteholders on Thursday evening, Nam Cheong proposed that its creditors swap 35 per cent, or US$116 million, of its unsecured debt for equity with a haircut, at 17 new shares for every US$1. Its shares last traded at two Singapore cents.
For the remaining US$220 million, it plans to repay the sum in full in seven years, with the first instalment starting in the fourth year and then progressively stepped up.
The firm is also offering two other options for those who prefer not to wait so long: to cash out their debt, albeit with a haircut of 80-95 per cent, or to convert this portion into new shares as well, at a higher ratio of 34 new shares for every US$1.
A bondholder whom BT spoke to welcomed the proposal. "At least the company is trying to do something for us. Otherwise we will probably end up with nothing," said the remisier who holds S$250,000 in Nam Cheong's S$200 million bonds due in 2019.
He also took comfort in Nam Cheong's majority shareholder Tiong Su Kouk's move to inject RM50 million (S$15.9 million) via a rights issue. "It shows some confidence (in the company)," he said. "You won't throw your money into a hole that can't be repaired."
Another bondholder who holds S$250,000 of the same 2019 notes said that whatever has been put on the table "is not terribly exciting". He prefers not to have debt converted to equity, but "I still think voting for it beats the alternative".
David Gerald, president and CEO of Securities Investors Association (Singapore), or SIAS, who had helped to moderate the bondholders' meeting on Thursday evening, said that most of the bondholders were quite composed at the event, though one or two were quite emotional.
It is too early to say whether most of the bondholders will support the scheme, he said. To be passed, the scheme needs to be approved by 75 per cent of its creditors. "There were a few who were not happy, but the majority is happy with what Nam Cheong is doing," Mr Gerald told BT. "We'll have to wait and see. There was no violent reaction to the restructuring plan being shared (on Thursday)."
Terence Lin, assistant director of bonds and portfolio management at iFast Corp, commended the company for being "very proactive" so far in communicating with bondholders.
Mr Lin, who has also been in touch with Nam Cheong's bondholders, said: "It's probably one of the better proposals that have come out from any restructuring."
Meanwhile, Nam Cheong said on Thursday night that its wholly owned subsidiary Nam Cheong Property Pte Ltd is selling its office lots at Suntec Tower Three for S$25 million to a third-party purchaser.
Although the sale will be a loss on disposal, the company said that it would benefit the group as all proceeds from the proposed disposal will be used to settle an outstanding amount under a credit facility granted by DBS Bank and secured by the Suntec property.
The office lots were initially intended to be used as the corporate office of the group but the company subsequently decided to continue to lease it to third parties to obtain rental income. However, due to the severe and protracted downturn in the global oil and gas industry, the company has taken steps to review its options to restructure its business, operations and balance sheet to preserve the value of the company for its stakeholders, it said.
