Ezion Holdings announced last night that it has entered into a subscription agreement in which Triyards Holdings will issue 29.5m non-listed warrants to Ezion for a consideration of S$1. Each warrant shall carry the right to subscribe for one share of Triyards at an exercise price of US$0.563/share. Assuming the warrants are fully exercised, the shares will represent ~9.09% of the existing share capital of Triyards.

An exercise condition, however, is that Triyards must have entered into shipbuilding contracts of at least US$150m, as well as engineering services work within 120 days from 10 Nov 2014 with either Ezion or customers referred by Ezion. Triyards had previously built liftboats for Ezion and it is hence not surprising to see this latest development. Maintain BUY on Ezion with fair value estimate of S$2.31 under review.

Source: OCBC Research - 11 Nov 2014