Ezion Holdings

[mulyc]

Hopefully we see a price recovery tomorrow. It been sold down too aggressively IMHO.

[dydx]

How can a business which is saddled with bloated big-ticket offshore O&G related fixed assets - which cannot be easily deployed for revenue/income generation on a profitable basis under the current and foreseeable market conditions - and still disproportionately huge borrowings can confidently survive? At best, the management - having to face with the momentous task of turning the business around without a strong shareholder/backer and the necessary experience - could be just marking time and is unlikely to be as motivated as before. On balance, still a very investment risk.

[CY09]

Post impairment, there is a high chance that the lifeboat business is profitable. Based on cash flow pov, Ezion has been cash flow positive before wc changes. Their ops cash flow is about 60 MIL annually, so based on market cap of about 300 MIL, current cash flow to share price is attractive

With banks and bondholders forced to give low interest loans, the business can be profitable. It is important that Ezion mgmt does things right by not indulging in reckless capex.

[tonylim]

I was at the AGM on 30/04.
Management said the demand for liftboats is great , CEO Mr. Chew repeated few times it is not enough to meet the demand because many oil wells are choked and need services . The 3 new liftboats which Ezion is going to take delivery by end 2018 will be deployed , the existing lifeboats still under old contract will be renewed upon contract expiry.
He said 2018 will not be a good year because of old contracted rates , but 2019 will definitely be much better .

[tonylim]

Post impairment,  there is a high chance that the lifeboat business is profitable. Based on cash flow pov, Ezion has been cash flow positive before wc changes. Their ops cash flow is about 60 MIL annually, so based on market cap of about 300 MIL, current cash flow to share price is attractive

With banks and bondholders forced to give low interest loans, the business can be profitable. It is important that Ezion mgmt does things right by not indulging in reckless capex.

Hi CY09 , What is pov and wc changes ? Thanks.

[CY09]

Pov = point of view,

Wc change = working capital change

[tonylim]

Pov = point of view,

Wc change = working capital change

Despite efforts by management to deter short selling , the selling still persists . I trust Mr. Chew 's statement that 2019 will be a better year .
What is your take , please share if you would like to , thanks.
( I bought some to average today )

[CY09]

Ezion is heavily in debts to the tune of 1.5 billion. They have 6 years to turn this around with the low interest loan package they have eked out.

With a cash generation ability of 60 mil per year and possibly 100 mil with full deployment of fleet. Current shareholders of Ezion should not be expecting any dividends until probably 10 years time. The optimistic scenario is to hope that charter rates of liftboats double from current depressed rate to bring in cashflow of 200+ mil per year and the company is saved. I am hoping the current Ezion mgmt is not dumb enough to buy more PPE. Just make do with current fleet and do not continue leveraging.

Mr Chew's rah rah speech during AGM was just noise to me. He is the same person who was optimistic of the liftboat segment 3-4 years back and took massive CAPEX which brought Ezion to its knees; during this time he drew an annual remuneration package close to 2 million. If Ezion does turnaround, it is not due to capability of the current mgmt but simply due to the industry's turnaround. I have started investing in Ezion because I believe the industry is turning around and not because of the "brilliant" management of Ezion.

I think Pavilion did quite a thorough due diligence on Ezion and the price of their entry is likely where Ezion will be when the industry turns around.

For info, the current NAV of Ezion is only 13 Singapore cents and not 17.5 cents as posted by other members.

There were about 600 million new shares that were issued post 17 April 2018. On 18 April 2018, there was 2.341 Billion shares. As of end April 2018, there is already 3.093 billion shares. Pavilion Capital and RSM were given a total of 200 million shares. This leaves about 400 million shares unaccounted for. I believe shareholders are not foolish enough to exercise their warrants now given the depressed prices. Hence, my personal suspicion is that quite a substantial bond holders cut their losses by converting their bonds into shares and then selling at a loss. This is why Ezion's shares have been sold down as of late.

[tonylim]

Many thanks for sharing .
I stayed back after the AGM , CEO gave his personal opinion about the collapse of share price since 17/4 . He was saying bond fund were not allow to hold shares . They were warrants converted by bond fund who need to sell immediately after conversion . I checked there were no warrants issued to bond holders but only to ordinary shareholders . Please enlighten if you know about this warrants to bond fund . I really don't understand or misunderstood what he said . Thanks.

[CY09]

During the refinancing exercise, bondholders were offered a chance to convert to i) straight bond or ii)bonds which could be converted to 24.8 cents during the first 6 months and 27 cents subsequently. A majority of bondholders voted for option ii). They were also offered some shares as early consent fee but i doubt it numbered so much to 600 million shares

Post refinancing, Ezion total share issue has risen from 2 billion to 3.093 billion now. I know 200 MIL were due to pavilion and rsm.

I don't know how good was Ezion CEO explanation. Bondholders who subscribed to option ii) are still owning a bond of low interest except it has the ability of a debt to equity swap at 24.8 or 27.6 cents per share

http://www.ezionholdings.com/?p=section&...iclepk=166

From the link, we can see that 25% of bondholders have cut loss (exchanging debt at 24.8 cents and selling at current market price). I will not be surprised if more bondholders cut their losses (or have started cutting loss).

The interesting fact is that it is beneficial for ordinary shareholders because liability is converted to equity at above book value (current book value= 13.5 cents)