Swiber subsidiary in MOU for US$10.25m sale of vessel

BELEAGUERED offshore and marine group Swiber Holdings has managed to engage in a potential sale of one of its subsidiaries' vessels, thus alleviating it from stresses on its cash flow.

The main board-listed group said on Monday after market close that its indirect wholly-owned subsidiary, Swiber Atlantis, had entered into a memorandum of agreement on the same day with WAG SPV I, LLC to dispose of a vessel known as Sea Horizon.

The consideration for the proposed disposal is US$10.25 million, and it is expected to be completed by Nov 22.

It is payable on completion of the proposed disposal and will be satisfied in cash. This is less than the average valuation range from two valuations of US$11 million to US$13 million. The net book value of the vessel is US$10.05 million as at March 31, 2016.

The vessel is currently mortgaged to DBS Bank. Hence, the proceeds from the proposed disposal will be used by Swiber to pay down the amounts owing under the DBS facilities, it said.

Swiber had previously asked, and obtained, a waiver from the Singapore Exchange to obtain approval of the shareholders for the proposed disposal.

As security for the fulfilment of the memorandum, the purchaser shall place a deposit of 10 per cent of the sale price with an escrow agent, said Swiber.

The vessel was built in 1977 and is the oldest vessel in the group's fleet of 11 barges. It has ceased operations and is not capable of being utilised unless significant rectification works are performed, and has been put in "off-hire" status as at June 20, 2016, at a shipyard in Singapore where it has since remained, said Swiber.

"The group therefore incurs costs to maintain the vessel which does not contribute any revenue to the group," it said.

Swiber had previously placed itself under judicial management. It was then hit by mounting claims from creditors and trade suppliers.

A few days ago, the Commercial Affairs Department requested access to information concerning the group's three affiliates, Swiber Offshore Construction Pte Ltd (SOC), Pape Engineering Pte Ltd and Swiber Corporate Pte Ltd, from Jan 1, 2012, till now.