This is an excerpt from Phillips Research’s report on Ezion Holdings. Read the full report here.

Shares Investment also recently published a detailed write-up featuring Ezion Holdings (Ezion).  For our article, please click here.

By Chen Guangzhi

In the recent analyst briefing held by Ezion Holdings Limited (Ezion) on 4 March 2018, Ezion is pleased to announce that it has resolved the restructuring and refinancing plans involving all the stakeholders. This will pave a six year runway for Ezion to concentrate on improving its business operations and lessen its debt burden, with an estimated total savings of US$58 million per annum from bank loans and securities. Share capital is expected to rise to approximately 6.6 billion shares upon the entire conversion of all instruments.

According to Phillip Research, secured lenders total refinanced amount was US$1.5 billion and Ezion will pay a minimal fixed principal amount for the next six years. Banks will lower the interest rate and include additional working capital line of up to US$118 million, which means the fund will be restrained from dividend payout, loan repayment and procurement of new vessels.

Security holders accepted 0.25% interest rates together with lifting of all covenants and its maturity profile will increase by 6 to 10 years. Total refinanced amount was $575 million and the conversion price will reset every six months.

Every shareholder will receive three warrants for every five shares that they own, with an exercise period of five years. Considering the full conversion of all instruments, charter rates to remain flat at current levels, no further units being deployed and no new capital injections, net gearing ratio is expected to fall from 4.5 times to 1.5 times in six years times.

Lastly, sitting on a current deployment fleet size of 24 units, Ezion intends to focus on the deployment of lifeboats and strategic plans to enlarge its current fleet size of the segment. From a geographical perspective, the board expects higher demand from wind farm on East and South coast of China and improvement in the oil and gas sector in Southeast Asia. Ezion is in view that mobile offshore production units (MOPU) will be in demand and is seeking for a strategic partner to further scale its business, together with the opportunity of a capital injection which may see it convert some rigs and vessels into MOPU. Ezion is expected to resume trading on 16 April 2018.