SINGAPORE – The EMAS Offshore Ltd. (EOL) board of directors warns that the Chapter 11 filing of parent company Ezra Holdings Ltd. may negatively impact EOL and its subsidiaries, which could possibly lead it to face a going concern issue.
On March 19, Ezra and some of subsidiaries voluntarily filed a petition for reorganization to obtain protection from the US Bankruptcy Court to facilitate its financial restructuring. As a result, EOL informed that the group is currently seeking advice on theChapter 11 filing, and is assessing the filing’s impact, particularly in regard to its ongoing initiatives to refinance its financial obligations and liabilities, as well as procure additional working capital facilities. EOL said it will work closely with its principal bankers to review all options to continue these ongoing initiatives.
In the event that these efforts do not achieve a favorable and timely outcome EOL said the group will be faced with a going concern issue.
As of November 2016, EOL, its subsidiaries, and its holdings owed an aggregate amount of around $170 million to Ezra, of which $125 million was subject to a deferred payment over a period of three years. In addition, the group has an aggregate of about $566 million of loans owing to financial institutions. Of this, an aggregate of about $242 million of loans are guaranteed or secured by securities provided by Ezra and an aggregate of around $193 million of loans are jointly guaranteed or secured by securities provided by Ezra and the group.
The group also has substantial charter hire liabilities valued at around $231 million as of last November relating to charter party agreements. Of this $231 million, an aggregate of around $119 million are guaranteed solely by Ezra and an aggregate of about $58 million are jointly guaranteed by Ezra and the group.
The Ezra Chapter 11 filing may constitute a default under the relevant facilities and/or the bank facilities and the charter party agreements, EOL said. The moratorium afforded under the Ezra Chapter 11 filing does not stay claims against the group in relation to these relevant facilities and/or bank facilities and charter party agreements guaranteed or secured by Ezra. EOL said that it is not aware of any demand made by financial institutions in relation to any of the bank facilities as a result of the Ezra Chapter 11 filing.