Tycoon Kris Wiluan loses bid to keep IJMs away from debt-hit KS Energy

Singapore

INDONESIAN tycoon Kris Wiluan of embattled oil services firm KS Energy has described OCBC's attempt to use the criminal charges filed against him as a basis for its judicial management (JM) application as "disingenuous", court documents have revealed.

He said this is because the share price of Singapore-listed KS Energy was never the basis of any discussions with OCBC regarding the loan facilities or its restructuring.

Furthermore, Mr Wiluan alleged that the lender was fully aware of the probe by the Commercial Affairs Department (CAD) way back in 2017, as one of its representatives was interviewed by the CAD then.

KS Energy was placed under interim judicial management (IJM) on Monday.

OCBC, in its application to place the company and a key operating subsidiary KS Drilling under IJMs pending a JM hearing, said the bank's confidence and trust in the firm's senior management to run the business has been significantly affected by the "alarming developments", namely the 112 charges of alleged false trading and market rigging against Mr Wiluan.

OCBC said in its affidavit: "The bank had granted the facilities to the KSE (KS Energy) Group companies on the reputation and standing of Mr Kris Wiluan. With his being charged after an investigation by the CAD lasting approximately three years, the bank has lost all trust and faith in the management.

"The offence that he has been charged with is especially egregious because the bank had accommodated the restructuring exercises during that period without any knowledge that he may have been trying to artificially prop up the value of KSE's shares."

Mr Wiluan said he intends to defend the charges vigorously, and that they do not suggest that he or anyone from the company's management have defrauded the group's creditors.

He said in his affidavit dated Aug 30: "I had no such intention of market rigging or market manipulation. I believed in KSE's business because I have been in the oil-and-gas business for some 40 years of my life.

"I had thought the shares were undervalued ... I purchased those shares in a transparent manner and made timely public disclosures. I continue to hold the shares that I had purchased and have not sold even one share nor profited from these purchases in any way."

Trading in shares of mainboard-listed KS Energy, an offshore and marine firm that provides drilling and rig services as well as specialised engineering and fabrication, has been suspended since Aug 12.

The charges that Mr Wiluan, a Indonesian citizen and Singapore permanent resident, faces are 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.

OCBC further asserted that since the 71-year old stepped down on Aug 13, the group "now appears to be in the hands of his son and son-in-law as opposed to professionals".

Mr Wiluan's son, Richard Wiluan, is the current chairman and chief executive of KS Energy; the son-in-law, Samuel Paul Oliver Carew-Jones, is the firm's executive director and chief financial officer.

Together, father and son own nearly 66 per cent of KS Energy.

OCBC said: "The bank is not adverse to the idea of a restructuring of the debts of the Group. However, the bank is loath to deal with family members for a total debt of this size. The bank would like professionals to take over management..."

Mr Wiluan deemed OCBC's suggestion that the current management were not professionals because they are family members "extremely insulting and disappointing", given that they have been with the group for over 10 years.

The bank also cited an "alarming cash burn rates and losses" suffered by the companies in recent years as grounds for its JM application.

KS Energy had announced last Friday that it was pushing to go down another route - proposing instead various measures to let OCBC fully monitor and supervise all its business operations.

Mr Wiluan said that there is "simply no urgency or necessity" for the appointment of IJMs, which may result in "irreparable damage". He added that it was a real concern that the court-appointed managers would only be able to garner offers at forced-sale prices.

He suggested that this could have been the reason that Wearnes - a potential investor to the group introduced by OCBC early this year - pulled out of making an offer as it had envisaged the group going into JM, which would make it cheaper to purchase.

After a nearly three-hour long hearing on Monday, High Court Justice Aedit Abdullah granted OCBC its application to place KS Energy under IJMs; Andrew Grimmett and Lim Loo Khoon of Deloitte & Touche were appointed to the role.

A pre-trial conference has been fixed on the JM application for Sept 10. Sarjit Singh Gill SC and Daniel Tan from Shook Lin & Bok are lead counsel for OCBC.

OCBC applied to place Singapore-listed KS Energy and its unit under JM earlier this month, after it sent letters of demand to the firms and six other subsidiaries for a US$230.7 million term loan and a S$5 million bridging loan to KS Drilling.

KS Drilling is an 80.09-per-cent owned subsidiary of KS Energy, which provided US$150 million in guarantee for the term loan.