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Singapore's Ezra looks to raise funds through equity
[SINGAPORE] Singapore-based oilfield service firm Ezra Holdings is exploring equity fundraising options to refinance its debt, aiming to improve its balance sheet and battle out the industry gloom, a senior executive said on Wednesday.
Oilfield service companies are suffering from lower rates and fewer jobs in many segments due to the sharp fall in crude oil prices since mid-2014.
Stocks and debts from these companies have come under pressure, especially those of smaller firms that have borrowed heavily to expand their fleets in the past few years.
Ezra's stock has been among the worst performers in the last six months on the ST FT Oil & Gas Index that tracks 16 stocks on the Singapore Exchange. The yield on its S$200 million bond due this September has risen over 10 per cent, more than double its coupon of 5 per cent.
"We are moving to more equity, equity-linked types of solutions," Eugene Cheng, Ezra's chief financial officer, told reporters when asked about the company's debt refinancing plan. "The reality is that in the current market environment, it's always good to achieve deleveraging today if possible." Mr Cheng said Ezra is reviewing various options, but declined to say more.
The company reported a net debt-to-equity ratio of 1.1 as of Feb 28, down from 1.2 three months earlier. It posted negative free cash flow of US$108.6 million for the first half of the financial year 2015 - a slight improvement on an annual basis from 2014.
Ezra posted a net profit of US$138,000 for the quarter ended Feb 28, down from nearly US$20 million a year earlier due to the absence of contribution by the EOL Group, a former associate that has since been consolidated and become a subsidiary.
More than half of Ezra's revenue comes from subsea services - installing infrastructure on the sea bed for oil and gas fields - which is expected to bring stable revenue and margin despite the market gloom, Ezra said.
Chief executive Lionel Lee said there hasn't been any client request to renegotiate contracts in its subsea division, in contrast to the "tonnes" of requests in offshore service vessels.
Ezra shares were trading flat at S$0.435, but have fallen 17 per cent so far this year, and 60 per cent in 2014.