Swiber Holdings

(03-08-2016, 10:20 AM)specuvestor Wrote: ^^ interesting note... I had assumed that AMTC walked away cause Swiber cannot be saved... but who exactly is AMTC LTD... maybe 1MDB related

http://www.singaporelawwatch.sg/slw/head...iB0y3.dpbs

So the key is probably to find out who are the owners of the redeemed bonds. Follow the incentives.

Haha that's what I was speculating, 1mdb assets frozen followed suddenly by swiber voluntary winding up. Coincidence??

Sent from my MotoG3 using Tapatalk

Looks like indeed DBS has been in discussion with Swiber all along, which is the normal protocol, but suddenly blackout after 5 July

http://www.bloomberg.com/news/articles/2...ber-afloat

The following is a chronology of events according to court papers and exchange filings, beginning in late May when officials from Swiber were pushing for a deal with AMTC.
Timeline:

May 25: Key Swiber executives meet with AMTC to finalize an investment deal first initiated in February. They propose that AMTC doubles its planned investment to $200 million by subscribing to redeemable perpetual preference shares in a unit.

May 27: AMTC enters into a memorandum of understanding to invest in Swiber and confirms it has funds for the proposed deal, with the first tranche due on May 31, and the second 30 days later.

May 30: Swiber executives meet with DBS to seek a bridge loan to redeem a bond due on June 6 while waiting for the AMTC investment to come through on May 31. A day later, DBS agrees to review the loan request.

June 2: AMTC writes to Swiber to ask for more time to pay the first $100 million. On the same day, DBS offers Swiber an $85 million one-month loan to redeem S$130 million of bonds.

June 9: Swiber’s unit signs a subscription agreement with AMTC, with completion due on June 16. At the same time, AMTC asks for longer to undertake due diligence, to which Swiber agrees.

June 22: Swiber engages Cameron Duncan from restructuring firm KordaMentha Pte to assess its financial status and cash-flow position amid concern that the AMTC cash infusion will be delayed because of the extended due diligence.

June 25: AMTC completes its due diligence and undertakes to remit $200 million by June 28.

June 27: AMTC requests more time to complete the remittance; Swiber declines to extend the deadline.

June 28: Sensing that the AMTC investment is not forthcoming, Swiber executives meet with DBS to seek another loan to repay S$75 million of bonds maturing on July 6.

July 2: Swiber sends letter of demand to AMTC.

July 4: Swiber Chairman Goh meets with DBS senior management to inform the bank of its inability to redeem the S$75 million of bonds.

July 5: Goh and other executives meet with DBS officials and are offered a $61 million overdraft facility; the bank lays out conditions including requiring Swiber to appoint a special accountant from KPMG LLP.

July 14: Swiber executives meet AMTC in London again, this time to discuss a 100 million-pound bridge loan while waiting for its subscription to preference shares, without success.

July 20: Swiber holds a board meeting and decides on liquidation if the AMTC money doesn’t arrive by July 26.

July 26: Letters of demand from various creditors, trade suppliers and sub-contractors amount to $25.9 million.

July 28: 1:04 a.m., Swiber announces liquidation application to the Singapore Exchange, which says it will conduct a “thorough investigation into the developments.”

July 29: Swiber’s lawyers from BlackOak LLC apply for judicial management for a court-supervised rescue plan and drop the liquidation plan after talks with lenders.

Aug. 2: Swiber defaults on bond coupon payment; gets court approval to appoint officials from KPMG as interim judicial managers.

From the article there are two additional info:

1) Swiber has only 8 mil cash left as of Aug 16.
2) Swiber used its shares and Vallianz shares as collateral.

So it seems if Swiber's business really turns sour, DBS and noteholders will be badly hit, DBS wont be able to regain full capital and be stuck with stocks of little worth. I wonder what will DBS do with Swiber stake in Vallianz;its net worth is only about 20mil currently. Maybe DBS will end up becoming a wrong term investor of vallianz

This one is as good as KAPUT ! Whipping a dead horse .

[removed for privacy]

http://www.straitstimes.com/business/swi...-by-demand

Advise: Do your own due dilligence

This one is interesting from a banker who is 50% leveraged. Which mean total invest is $750,000. She plays big at age 34 !

"Another investor, who asked to be known only as Laura, 34, and a banker, said: "My banker said DBS could lend me money to invest, so I'm 50 per cent leveraged on Swiber bonds. Now they've defaulted, I'm asked to pay the bank $250,000 by next Tuesday to cover the margin."

A good lesson from this case : The bond market is not for everyone, including the issuer (borrower), the investors (all types including fund managers, insurance companies, wealthy individuals, etc.), and the bank which sponsors the issuer to the bond market. A lack of financial prudence on the part of the issuer, and a fundamental misjudgement by the bank/sponsor and the investors on the character of the issuer's senior management, the business risks and refinancing risk of the issuer, will invariably lead to a catastrophic failure we now witness in the Swiber case.

2 relevant questions:
1. Why did/should DBS (and other banks involved) sponsor a multiple of fairly large size unsecured bond issues for Swiber at all - and all within a fairly short period of time! - bearing in mind based on the usual prudential banking and credit standards (including external credit ratings by agencies like S&P, Moody's), Swiber cannot be reasonably rated as a safe and proven corporate borrower for the kind of large overall debt size borrowed ??

2. Should DBS (or other banks or institutions), as the sponsor - which presumably also underwrote the bond issues - 'push' the distribution/sell-down of the bonds to its wealth management customers - including providing financing to them!- through its in-house private/privilege banking departments, which are themselves very much driven by selling commissions ??

This simple fact remains : When a bank does not do business with the very basic interest of ensuring financial prudence for its customers - whether as borrowers/issuers or savers/investors - in mind, the customers can suffer a lot. So just doing big deals with customers to grow the bank's business and revenue is simply not good enough!

Boosting yields of fixed income securities such as bonds and Pref shares using 50% leverage or more has been a common selling tactic in the last couple of years. I personally know a few who had been offered such products by usually private banks. For that reason, the banks' exposure to these oil and gas counters could even be larger than that reported so far with additional exposure through clients who purchased these bonds using loans borrowed from the banks themselves.

I also would not be too surprised if some well-heeled clients with significant larger exposures decide to take legal action against the banks that sold them these products.

(07-08-2016, 10:56 AM)Debronic Wrote: Boosting yields of fixed income securities such as bonds and Pref shares using 50% leverage or more has been a common selling tactic in the last couple of years. I personally know a few who had been offered such products by usually private banks. For that reason, the banks' exposure to these oil and gas counters could even be larger than that reported so far with additional exposure through clients who purchased these bonds using loans borrowed from the banks themselves.

I also would not be too surprised if some well-heeled clients with significant larger exposures decide to take legal action against the banks that sold them these products.

well there are accredited investors, so if they cant analyse, then who can???

if they want to bet, then must afford to lose, dont act like some sore loser, cry mother cry father.. even a young investor  know what's caveat emptor

To specuvestor, i think the reason why dbs continued to lend is either 
1) they didnt expect swiber to play such a game
OR
2) they know swiber will declare bankrupt so they were trying hard to throw it some life support

but then again it is hard to please people, some say dbs play a social role, so dbs should save swiber with more loans . On the other hand, this same group of people say dbs is not being prudent in making loans to a leveraged organisation.