With Swissco Holdings filing for judicial management, Ezion Holdings has sent letters of offer to Swissco to acquire the business related to their three 50-50 JV rigs. This includes 1) the rigs, 2) all titles, rights, claims (including accounts receivables), and 3) obligations arising out of the bareboat charters.

The proposed aggregate consideration includes 1) the outstanding bank loans owed by the JVs, 2) any amount advanced or to be advanced by Ezion for repaying bank loans, 3) S$9m cash consideration (Swissco’s share is S$4.5m).

Swissco has accepted the offers, subject to written contracts, negotiation and execution by both parties. This is not a surprise as the writing had already been on the wall with signs that Swissco’s debt restructuring may not go through.

Pending more details such as the amount of rig impairments and the final purchase value, we maintain our HOLD rating with S$0.35 fair value estimate on Ezion.

Source: OCBC Research - 15 Nov 2016