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20-04-2014, 10:51 PM
(20-04-2014, 09:50 PM)LionFlyer Wrote: https://opera.mas.gov.sg/ExtPortal/Publi...a578c9ec2a
pg 76. Net cash (used in) investing activities jumped significantly (more than 3 fold) compared to previous year.
GOSH JV currently mired in the corruption case with OSA/PERMEX
http://www.citigroup.com/citi/news/2014/140228b.htm
We and one of our joint ventures, Servicios Marítimos Gosh, S.A.P.I. de C.V. (“GOSH”), have
chartered a total of eight vessels to Oceanografía, S.A. de C.V. (“OSA”), six of which have, in turn,
been chartered by OSA to the Petroleos Mexicanos group of companies (collectively, “PEMEX”),
which is a Mexican state-owned petroleum company involved in the oil and gas sector. Two
persons who hold interests (which may either be direct or indirect interests) in OSA also hold
interests in two of the shareholders of GOSH (who each have interest of 25% in GOSH). Save for
the foregoing, there are no relationships between the parties.
As at the Latest Practicable Date, the administration of OSA has been placed under the control
of the Mexican government, in connection with the Mexican government’s investigations of OSA
over alleged fraud arising from billings charged by OSA to PEMEX. Whilst the charters of two
vessels by OSA from our Group have expired, the six vessels chartered by OSA from GOSH
continue to be deployed on charter to PEMEX. Save for major decisions which require unanimous
agreement among us and our joint venture partners of GOSH, on a day-to-day basis, our Group
manages the commercial and technical operations of GOSH (including the chartering of vessels).
To the best of our knowledge, none of the vessels of our Group and GOSH are involved in the
fraud allegations. None of our Directors and Executive Officers are involved in the fraud
allegations.
As at the Latest Practicable Date, there was outstanding charter hire for the charter of the vessels
due from OSA to our Group and GOSH in the amounts of US$1.9 million and US$16.4 million
respectively.
The abovementioned amount owing to GOSH relates to invoices prior to the establishment of an
irrevocable trust arrangement with OSA and PEMEX on August 8, 2013, pursuant to which PEMEX
will pay all charter hire invoiced by OSA into an irrevocable trust for the benefit of GOSH and our
Company. Although since the establishment of the trust, payments of such charter hire (arising
from invoices for the continuing deployment of the six vessels on charter to PEMEX) have been
made to the trust and subsequently distributed for, amongst others, payment of vessel operating
expenses, repayment of loan and interest owing by GOSH to our Company (which loan is further
described below) and payments to GOSH, there can be no assurance that there will be no
attempts by the creditors of OSA and the Mexican government to dispute the trust arrangement
and claim against charter hires paid or payable to the trust. In addition, the risk of default,
non-payment or non-performance by our customers or third parties described above would apply
equally to PEMEX and there is no assurance that PEMEX would not default in making payments
of such charter hire to OSA through the trust for any reason, including any attempt by PEMEX to
set off any such charter hire payable by it against any other amounts owing to it by OSA.
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As our Group recognises our proportionate economic interests in GOSH and therefore accounts
for our proportionate share of the results of GOSH accordingly, in view of the uncertainties arising
from the state of affairs of OSA under the Mexican government’s administration, we have made
an allowance of US$8.2 million for the year ended December 31, 2013, being our proportionate
share of GOSH relating to the US$16.4 million outstanding charter hire owing by OSA to GOSH.
Of the US$1.9 million outstanding charter hire due from OSA to our Group, we have made an
allowance of approximately US$0.5 million for the year ended December 31, 2013, being the
amount attributable to services and invoices pertaining to the said year, and we currently expect
to make an additional allowance of up to approximately US$1.4 million for the year ending
December 31, 2014, being the amount attributable to services and invoices rendered for the year.
Please also see “Management’s Discussion and Analysis of Financial Conditions and Results of
Operations – Material Events After December 31, 2013” and “Management’s Discussion and
Analysis of Financial Conditions and Results of Operations – Review of Operating Results – Year
ended December 31, 2013 compared to year ended December 31, 2012”. Although we intend to
apply to the administrator of OSA to recover such amounts owing, there can be no assurance that
we may be able to recover the amount, in full or in part, if at all.
Our Company has also granted a loan (of which the outstanding amount as at December 31, 2013
was US$109.8 million) to GOSH for the acquisition, modification and mobilisation of the six
vessels of GOSH which have been chartered to OSA. The loan was granted in view of the
unacceptable terms offered by the local banks in Mexico. There are no fixed repayment
instalments and the charter hire that is paid into the trust (referred to above) are paid back to our
Group and the net amount (after deducting commission, vessel operating expenses and taxes) is
applied against the loan. As security for the loan, we have share pledge agreements with the two
Mexican shareholders of GOSH (representing 50.0% interests in GOSH) and mortgages over the
six vessels owned by GOSH. Please see “Summary – Valuation” for further details on the
valuation of the vessels owned by GOSH. To safeguard our interest, we have in March 2014
initiated legal actions to recover full repayment of the outstanding loan and interest payable to us,
including legal actions to enforce our rights under the share pledge agreements to require the sale
of the shares held by the two Mexican shareholders to such person as we may nominate whereby
the proceeds from such sale will be paid to us to reduce our loan to GOSH (as further described
in “Management’s Discussion and Analysis of Financial Conditions and Results of Operations –
Material Events After December 31, 2013” and “Business – Legal Proceedings”). There can be no
assurance that the security interest we have in respect of this loan will enable us to recover the
amount owing, in full or in part, if at all or that the enforcement of such security interest will not
give rise to any impairment in our investment in GOSH.
As matters pertaining to the administration and investigation of OSA are ongoing, we do not make
any assurances that there will not be other claims, losses or liabilities in connection with GOSH
or our other operations in Mexico
