Swiber to wind up, biggest Singapore casulty of oil slump; banks hit with crushing debts


Swiber Holdings

SINGAPORE – Singapore oil field services firm Swiber Holdings Ltd filed an application to wind up the company and said a Singapore court had appointed provisional liquidators, making it the biggest local name to fall victim to the slump in oil prices.

In a statement to the Singapore Exchange, Swiber said the hearing to wind-up the company has been set for August 19. Swiber, which operates a fleet of 51 vessels, did give any specific reason for the move but said it was facing letters of demand for US$25.9 million (S$34.9 million) and had warned earlier this month of delays in raising US$200 million in preference shares.

Local oilfield services companies have been burdened by weak oil prices, which have strained their liquidity, with charter rates tumbling and clients either delaying or cancelling projects. “If highly leveraged offshore and marine companies are unable to raise capital from equity markets, then they will be left with very little other options other than to file for liquidation or for judicial management,” said Joel Ng, an analyst at KGI Fraser Securities.

Over the next year-and-a-half, bonds totalling nearly S$1.2 billion from energy and offshore marine issuers in Singapore will mature, with S$615 million due over the next five months, according to IFR, a Thomson Reuters publication.

Another firm, Technics Oil & Gas Ltd, and its unit were placed under judicial management this month.

Investors had turned more positive on Swiber after it redeemed two bonds in June and July totalling S$205 million.

Swiber said this month a preference share sale agreement for US$200 million had been delayed and that it was seeking legal advice. But a flood of letters of demand, including statutory demands, had flowed in since Monday, claiming a total US$25.9 million, as of July 26, adding more pressure on the company.

Swiber said some of its executive directors, including its chief financial officer, had resigned.

From just 10 vessels in 2006, Swiber has expanded to own and operate a fleet comprising 38 offshore vessels and 13 construction vessels. It has more than 2,700 employees across Southeast Asia and other countries, according to its website.

Swiber’s longest dated bond due 2018 started falling sharply in mid-March. The provisional liquidators of the company, which has a market value of S$50 million, have asked for trading in Swiber’s shares to be suspended.

The High Court of Singapore appointed KordaMentha Pte Ltd’s Cameron Lindsay Duncan and Muk Siew Peng as the joint and several provisional liquidators of the company.

Sources: Reuters

Related:

Swiber to wind up, biggest Singapore casualty of oil slump | Reuters

 

Private bank clients may lose big amid Singapore’s oil and gas credit woes

 

Slump in oil prices affects S’pore lenders

 

Feeling the heat: OCBC’s total oil and gas exposure was US9.32bil, nearly half of which to the offshore oil services segment. – Reuters

 

Banks hit by poor demand for loans from oil and gas sector

SINGAPORE: Two of Singapore’s top banks flagged mounting concerns about loans to the oil and gas sector, on the same day that a prominent local oilfield services firm announced it was winding up, under the weight of crushing debt.

The dour outlook from Oversea-Chinese Banking Corp and United Overseas Bank, Singapore’s second- and third-largest lenders by assets, respectively, came as Swiber Holdings said it had filed for liquidation, making it the biggest local name to fall victim to the slump in oil prices.

OCBC and UOB, along with Singapore’s No.1 lender DBS Group Holdings, have long maintained prudent lending standards and adequate capital levels to become some of the safest banks in the world.

But oil’s 60% slump over the past two years is beginning to impact them, as the lenders’ main activity is centred on South-East Asia, a region for which oil and gas is a key industry. Banks are being hit by both poor demand for loans from the sector and by more loans turning sour.

“The loan demand is very weak,” OCBC CEO Samuel Tsien told a quarterly earnings briefing, adding that the oil and gas services sector continues to be under pressure.

“Our distressed indicators for this portfolio continue to deepen, but have not broadened,” Tsien said.

Over the next year-and-a-half, bonds totalling nearly S$1.2bil (US$881mil) from energy and offshore marine issuers in Singapore will mature, with S$615mil due just over the next five months, according to IFR, a Thomson Reuters publication.

OCBC’s total oil and gas exposure was S$12.6bil (US$9.32bil), nearly half of which to the offshore oil services segment.

UOB expected that over the next one to two years the key concern for the bank would be companies in the oil and gas sector, its CEO Wee Ee Cheong told a briefing,

OCBC posted a 15% drop in quarterly profit, hit by lower insurance income, though UOB surprised with a 5.1% jump in earnings on higher trading income.

However, net interest income was weak at both banks, which also saw bad-debt provisions climb.

OCBC said its customer loans contracted 2% from a year ago due to lower trade loans and reduced offshore borrowings of Chinese companies due to more favourable onshore borrowing rates in China.

Shares of UOB were down 1.6% in late afternoon trade, while OCBC fell 0.6 percent. Shares of DBS, which will report results on Aug 8, were down 2.6%. – Reuters

Related posts:

Rightways: Oil Prices: What’s Behind the Drop? Simple Economics

Apr 6, 2016 Some think it will be years before oil returns to $90 or $100 a barrel, a price that was pretty much the norm over the last decade. Credit Michael …
Rightways: Job cuts: rightsizing the oil and gas industry
Sep 30, 2015 Many oil majors have announced job cuts to manage costs that had spiralled upwards during the boom days in the industry. Oil majors now …
Nov 23, 2014 Malaysia’s economy is very much dependent on the oil and gas sector. … One notable impact of falling crude oil prices is on the government’s … rightways-tan1.blogspot.com


Rightways: Oil & Gas lead to wealth crunch, Malaysian Ringgit …Dec 2, 2014 PETALING JAYA: With the oil and gas (O&G) sector being the hardest hit in thecurrent market rout,  tycoons who own significant stakes in these …rightways-tan1.blogspot.com

Rightways: Oil enters a new era of low prices: Opec vs US shale Nov 29, 2014 Beginning July this year, the oil and gas dynamics changed with the United States becoming a large producer, thanks to the shale oil and gas.right-waystan.blogspot.com
Rightways: Will shale oil survive the price fall?

Jan 14, 2015 This could be the beginning of a shakeout of shale oil enterprises. … PETALING JAYA: With the oil and gas (O&G) sector being the hardest hit …right-waystan.blogspot.com
Rightways: Modern finance and money being managed like a Ponzi

Mar 5, 2016 Rail cars and oil tankers sit on railway tracks as water vapour and …… in far better shape than many smaller independent oil and gas producers.
Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: