this one may go down to 1 cent or 0
Ezra calls for trading halt amid writedowns at joint venture
By Gwyneth Yeo / theedgemarkets.com.sg | February 2, 2017 : 12:21 PM MYT
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SINGAPORE (Feb 2): Ezra Holdings has requested for a trading halt before trading hours on Wednesday, as Chiyoda Corporation and NYK Line issued warnings of one-off write downs against their stakes in Emas Chiyoda Subsea, the subsea joint venture with Ezra.
According to media reports, NYK Line had provided for a JPY 13 billion ($162.7 million) loss for its 25% stake in ECS, based on the future recoverable value of its shareholdings and its loans to the JVCo.
Separately, Chiyoda said that it expected to lower its consolidated financial forecast for FY17 to March due to the downgrade of its 35% shareholding in ECS and the value of its loans to the company. The group estimated that its risk exposure in ECS would run up to about JPY38 billion.
ECS, formerly Ezra’s subsea division known as Emas AMC, was first carved up in March 2016 and a 50% stake was sold to Chiyoda for US$180 million. The two parties subsequently reduced their stakes to 35% for Chiyoda and 40% for Ezra in September to allow NYK Line to acquire a 25% stake. Ezra’s 10% stake was valued at US$36 million.
By December, Ezra announced that it was in discussions regarding ECS’ financial obligations, following announcements from its trade creditors, Forland Subsea AS and Ocean Yield ASA, that the company was unable to fulfill its obligations for two standing bareboat charters. Eventually, an offshore support vessel was deployed to complete an ongoing project in Congo for Forland.
With the 30-day extension sought for Ezra’s results announcement, Lim and Tan Securities’ research team now believes that Ezra could be expected to announce further impairment from ECS. The group’s last reported net asset value was 7.93 US cents.
“The group is currently, in discussions with various stakeholders and consolidating its funding requirements. In the event that this effort does not achieve a favourable and timely outcome, Ezra will be faced with a going concern issue,” said the brokerage in a note on Thursday.
Shares in Ezra last traded at 3.4 cents before the trading halt on Wednesday.
