Singapore Corporate News - 9 Apr 2008

Ezra Q2 net profit rises 3% to $19 million

EZRA Holdings, an offshore support and marine services provider, reported a 3 per cent year-on-year rise in net profit to $19.0 million for its second quarter ended Feb 29.

Revenue for the second quarter was $69.5 million, up 92 per cent.

The Q2 results, together with a one-time gain in the first quarter, brought first-half net profit attributable to shareholders to $207.4 million, up almost nine-fold from the previous corresponding period's $23.1 million. The first quarter's exceptional gain was $197.9 million, from the partial divestment of a stake in its Oslo-listed subsidiary, EOC Limited. This was partially offset by an increase in unrealised exchange loss of $11.4 million.

First-half revenue doubled from $68.2 million to $136.7 million. Earnings per share for the six months came to 43.96 cents, up from 4.15 cents.

EOC, now 48.9 per cent owned by Ezra, contributed $5.5 million to Ezra's bottom line since its listing on the Oslo Stock Exchange in October 2007.

Ezra proposed a special tax-exempt dividend of five cents a share.

Ezra Holdings offers a range of anchor handling, towing and supply vessels, anchor handling tugs and fast crew utility boats for charter in oilfields.

'There remains a worldwide acute shortage of all types of offshore support vessels, and our young, well-equipped fleet of anchor handling vessels and heavy lift and pipelay barges continues to fetch premium rates in the market,' said Lionel Lee, managing director of Ezra. 'Current renewal and new charter rates for our anchor handling, towing and supply vessels and anchor handling tugs are 20 to 25 per cent higher than previously,' he added. Mr Lee is optimistic that charter rates will remain firm in the medium term as more offshore oilfields move into the production phase.

Ezra hopes to cash in on the trend towards offshore oil production by providing an expanded range of services for setting up and maintaining wellheads and other oil production equipment.

Besides adding vessel capacity and technical capabilities, Ezra hopes to extend its geographical reach within the next five years, as well as strengthen existing customer links in South-east Asia, Africa, China and the North Sea.

'Demand remains strong in the offshore oil and gas sector and even though the group already has sizable contracts in hand, we will continue to add to this orderbook as we grow our capacity and range of service offerings,' said Mr Lee.

Shares of Ezra dipped from a 52-week high of $3.88 on Nov 14, 2007, to a 52-week low of $1.59 on March 20 this year. They have since rebounded, closing at $2.41 per share yesterday.

Mercator expands charter-in fleet

MERCATOR Lines (Singapore) is continuing on its steady expansion track while taking advantage of emerging opportunities with a 10-year time charter-in for a 91,800 dwt gearless post-Panamax vessel to Italian shipping company Augustea Atlantica for US$27,000 a day, including overtime.

The dry bulk carrier is scheduled for delivery between April 1, 2010 and Oct 15, 2010. The vessel puts Mercator in a good position to take advantage of the latest developments in shipping. It is designed to take advantage of the Panama Canal's expansion plans which will enable the key transit route to take bigger ships when it is completed in 2014. At the same time, the increasing demand for commodities from Asian nations like China is driving a market for bigger capacity bulk carriers.

The Panama Canal Authority in 2006 got the go-ahead to carry out a US$5.3 billion expansion which is expected to double the canal's capacity to take larger ships through its lock system. The size of vessels currently transiting the canal is limited to 294.1 m long and 32.3 m wide, the so-called Panamax class of vessels. Post-Panamax vessels are designed to fit the canal's expanded dimensions.

'The expansion of our charter-in fleet is aligned with our strategic fleet expansion strategy of responding to the changing market trends of our industry,' said Mercator managing director and chief executive Shalabh Mittal. 'With the expansion of the Panama Canal, the allowance of transit for larger vessels will allow our customers to capitalise on economies of scale - higher productivity and greater efficiency in the ideal, most profitable and environmentally responsible way.'

'By responding to the growth opportunity of the Panamanian route, we are keeping abreast of our customers' evolving shipping requirements and further sharpening our competitive edge,' he added.

The transaction is not expected to have any material impact on Mercator's net tangible assets per share, earnings per share and operating results for the current financial year ending March 31, 2009.

Mercator shares closed flat at 31.5 cents yesterday.

Abax Lotus sues Bio-Treat for collapse of credit deal

A HONG KONG-based hedge fund has sued Bio-Treat Technology and its subsidiary guarantors to recover US$4.2 million allegedly owed to it as damages for the collapse of their credit agreement.

According to court documents obtained by BT, Abax Lotus, a fund run by Abax Global Capital, filed its complaint with the New York State Supreme Court on March 10. The complaint - filed through legal counsel Skadden, Arps, Slate, Meagher & Flom LLP - alleges that the credit agreement signed on Jan 23 collapsed because Bio-Treat failed to follow through on terms agreed.

Under the agreement, Bio-Treat was said to have agreed to issue Abax Lotus up to 543 million yuan (S$106.6 million) of US dollar settled senior secured notes due 2013, bundled with detachable warrants which, if fully exercised, would have raised up to about $130 million for Bio-Treat and leave Abax Lotus with some 16 per cent stake in Bio-Treat.

The securities purchase agreement (SPA) is also said to have provided that Bio-Treat would issue and deliver the notes and warrants on or about Feb 17.

Abax Lotus said it terminated the agreement on Feb 29 'after several unsuccessful attempts to communicate with Bio-Treat' and demanded payment of liquidated damages of US$4.2 million as provided under the SPA, as well as its expenses associated with Bio-Treat's failure to carry out its obligations. Bio-Treat allegedly did not pay by March 7 as required by the SPA.

The thrust of Abax Lotus' allegation is that Bio-Treat failed to 'take all actions necessary to promptly effectuate the purchase and sale of the notes and warrants'.

Abax Lotus asserts that Bio-Treat breached its promise to make a formal application with the Singapore Exchange within five business days of Jan 23 for the listing and quotation of the warrants.

Another sticking point was the rights issue proposed by Bio-Treat on Feb 18 to raise another $156 million. Abax Lotus said this conflicted with Bio-Treat's commitment to 'safeguard the value of Abax's prospective investment in Bio-Treat' by not entering into any competing financing transactions prior to the issuance of the notes and warrants to Abax Lotus.

'Relatedly, Bio-Treat agreed to give Abax the right of first refusal to any financing it contemplated prior to the date on which the notes and warrants matured,' Abax Lotus said in its complaint. Bio-Treat and its subsidiary guarantors also agreed not to offer or sell any shares for 90 days after the closing of the transactions with Abax, and should it withdraw from the SPA, it would not enter into a financial arrangement with anyone other than Abax for six months.

'The renounceable rights issue violates the SPA in several respects,' Abax Lotus asserts.

Bio-Treat denied these allegations in a reply to the complaint through its legal counsel Duane Morris LLP dated March 31.

The Chinese wastewater treatment company had intended to use proceeds from the Abax Lotus deal and the rights issue to pay for put options exercised by convertible bondholders on Jan 18, which is the first opportunity investors had to cash in the $206 million convertible bond (CB) programme issued in January 2006. So far, Bio-Treat has not issued a circular to shareholders detailing the rights issue.

According to a report by Debtwire last week, Bio-Treat paid only about a third of the put options that had fallen due and remained in default of the CB after it further failed to pay the balance by the deadline of Feb 18. Bio-Treat has deferred making the remaining payment to June.

Sources also told Debtwire last week that Bio-Treat is seeking to raise $80 million via a five-year CB issue that is being arranged by DBS, ahead of the proposed rights issue that would be taken entirely by its largest shareholder Precise Wise.

Besides Bio-Treat, the nine other defendants are Ocean Force International, Bio-Treat International, Bio-Treat Resources, Newsussex International, Biopower International, Sky Billion, Trademart Developments, World Pioneer Investments and True Global.

Neither Bio-Treat nor Abax would comment on the proceedings. Bio-Treat had also declined to comment on the CB issue.

STX Pan Ocean awards ship-building contract

STX Pan Ocean Co has awarded a contract for the construction of two oil carriers to STX Shipbuilding Co, after the latter submitted the cheapest bid of US$150 million for each vessel in a public tender.

HLN Technologies wins US$3.7m contract

HLN Technologies has secured a US$3.7 million contract to supply an unnamed technology company with aluminium plating for use in the manufacture of wafer fabrication chambers.

Advance Modules responds to SGX query

ADVANCE Modules Group said that it may face 'challenges' in meeting all its short-term obligations due to its tight cash position and is continuously in talks with various trade creditors to revise or extend its payment deadlines. The Singapore Exchange had asked the group on Monday to provide its views on whether it could meet its short-term obligations, after it announced a pre-tax loss of RM8.8 million and a 60 per cent fall in revenue to RM24.1 million in 2007 last week.