Ezion Holdings

[tonylim]

Hi CY09 ,

I have been looking for below link which you have shared , many thanks.

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

[CY09]

For the full year Ezion reported:

Assets - USD$ 1.9 billion
Equity- USD 290 million (s$380 million), nett of exchangeable preference shares
Ordinary Shares of 2,073,843,405

Balance Sheet

Secured Loan- USD 1.5 billion (s$1.95billion)
Non-convertible bond of s$122.5 million
Convertible bond of s$452.5 million
Perpetuals of s$150 million

Assuming its convertible bonds and perps are all converted at $0.2487 per share, this means potentially 2,442,500,000 more shares. This will also mean converting s$452.5 million of liability to equity. At this juncture, total equity will be s$832.5 million.

Adding the 100 million shares given to RSM, the injection of s$20 mil for 96.2 million shares by Pavilion, 38,111,034 interest shares, 11,442,000 shares for consent fee, total shares of Ezion is 4,762,096,439 shares. 

Ezion will have s$852.5 million of equity for ordinary shareholders assuming full conversion by i) Convertible Bond Holders and ii) Perp Holders and assuming no further write downs. This means Ezion's shares are worth 17.9 Singapore cents based on current balance sheet 

Taking a 30% margin of safety, the intrinsic value of Ezion is 12.6 cents

Assumption

The above assumption assumes Ezion survives while servicing its s$2.1 billion (USD 1.6 billion) of its debts over the next 6 years. How likely is that? In my opinion, it is likely. However, it is unlikely Ezion will pay down fully its entire debt in the next 6 years.

A lot boils down to Ezion's cash flow mgmt now. Secured Lenders are giving Ezion are very low interest loan (probably 4% interest). So if Ezion can secure USD $200 million cashflow annually, Ezion can survive based on cash flow projection. My advice to Ezion mgmt is watch carefully its cash flow, stop excess CAPEX and paying yourself million dollars salary which will hurt the cash flow of the company

[tonylim]

For the full year Ezion reported:

Assets - USD$ 1.9 billion
Equity- USD 290 million (s$380 million), nett of exchangeable preference shares
Ordinary Shares of 2,073,843,405

Balance Sheet

Secured Loan- USD 1.5 billion (s$1.95billion)
Non-convertible bond of s$122.5 million
Convertible bond of s$452.5 million
Perpetuals of s$150 million

Assuming its convertible bonds and perps are all converted at $0.2487 per share, this means potentially 2,442,500,000 more shares. This will also mean converting s$452.5 million of liability to equity. At this juncture, total equity will be s$832.5 million.

Adding the 100 million shares given to RSM, the injection of s$20 mil for 96.2 million shares by Pavilion, 38,111,034 interest shares, 11,442,000 shares for consent fee, total shares of Ezion is 4,762,096,439 shares. 

Ezion will have s$852.5 million of equity for ordinary shareholders assuming full conversion by i) Convertible Bond Holders and ii) Perp Holders and assuming no further write downs. This means Ezion's shares are worth 17.9 Singapore cents based on current balance sheet 

Taking a 30% margin of safety, the intrinsic value of Ezion is 12.6 cents

Assumption

The above assumption assumes Ezion survives while servicing its s$2.1 billion (USD 1.6 billion) of its debts over the next 6 years. How likely is that? In my opinion, it is likely. However, it is unlikely Ezion will pay down fully its entire debt in the next 6 years.

A lot boils down to Ezion's cash flow mgmt now. Secured Lenders are giving Ezion are very low interest loan (probably 4% interest). So if Ezion can secure USD $200 million cashflow annually, Ezion can survive based on cash flow projection. My advice to Ezion mgmt is watch carefully its cash flow, stop excess CAPEX and paying yourself million dollars salary which will hurt the cash flow of the company

Once again , many thanks for sharing

CEO repeated few times that EZION is not facing Chapter 11 , even if the depressed charter rates remain , EZION can still survive for another 6 years . Hope he knew what said and meant business !

[dreamybear]

Thanks CY09 for spending the time to consolidate and share the very detailed breakdown of the numbers.

Incidentally, I came across a KGI report (https://www.kgieworld.sg/resources/ck/fi...180424.pdf) whose analyst estimated a fair value of 10 cents. A detailed breakdown on how the figure was arrived can be found on page2.

I think, like what the analyst say, caution still warranted ....

[specuvestor]

For the full year Ezion reported:

Assets - USD$ 1.9 billion
Equity- USD 290 million (s$380 million), nett of exchangeable preference shares
Ordinary Shares of 2,073,843,405

Balance Sheet

Secured Loan- USD 1.5 billion (s$1.95billion)
Non-convertible bond of s$122.5 million
Convertible bond of s$452.5 million
Perpetuals of s$150 million

Assuming its convertible bonds and perps are all converted at $0.2487 per share, this means potentially 2,442,500,000 more shares. This will also mean converting s$452.5 million of liability to equity. At this juncture, total equity will be s$832.5 million.

Adding the 100 million shares given to RSM, the injection of s$20 mil for 96.2 million shares by Pavilion, 38,111,034 interest shares, 11,442,000 shares for consent fee, total shares of Ezion is 4,762,096,439 shares. 

Ezion will have s$852.5 million of equity for ordinary shareholders assuming full conversion by i) Convertible Bond Holders and ii) Perp Holders and assuming no further write downs. This means Ezion's shares are worth 17.9 Singapore cents based on current balance sheet 

Taking a 30% margin of safety, the intrinsic value of Ezion is 12.6 cents

Assumption

The above assumption assumes Ezion survives while servicing its s$2.1 billion (USD 1.6 billion) of its debts over the next 6 years. How likely is that? In my opinion, it is likely. However, it is unlikely Ezion will pay down fully its entire debt in the next 6 years.

A lot boils down to Ezion's cash flow mgmt now. Secured Lenders are giving Ezion are very low interest loan (probably 4% interest). So if Ezion can secure USD $200 million cashflow annually, Ezion can survive based on cash flow projection. My advice to Ezion mgmt is watch carefully its cash flow, stop excess CAPEX and paying yourself million dollars salary which will hurt the cash flow of the company

Thanks CY09

I don’t follow the details that closely but based on your numbers above, shouldn’t the equity base enlarge to s$380m+452.50m+150m+20m= s$1002.5m ?

[CY09]

150 Mil of the preps are already equity to start with. During the refinancing exercise, perp holders are now given the right to convert the capital value of their preps into ordinary shares at $0.248. Hence should they convert, it is merely equity converting to equity.

In addition, Ezion has announced as of yesterday, there are 3,160,825,860 shares in circulation. As compared to 27th April when there was 3,093,877,742 shares, it seems more bonds and preps has been converted into ordinary shares.

http://infopub.sgx.com/FileOpen/_Form%20...eID=503069

Ezion website link on stock facts: http://ezion.listedcompany.com/stock_fundamentals.html

[specuvestor]

oh yes I forgot Perps are classified as equity

End Dec NAV is US$305m - US$23.5m Exchangeable pref shares = US$281.5m. With average share count 2.074b so NAV per share is roughly US$0.136 (apply own FX)

The conversion of debt to equity on the balance sheet has minimal impact on NAV but will be significant on NAV per share because the exercise price is about 1/3 higher. The RNAV is a matter of opinion and if one thinks the cycle has bottomed, at 1/2X book it should be interesting for a longer term view.

[tonylim]

Will this stop the dropping of the price after 12 May ? Any comment , thanks .


ANNOUNCEMENT NO CONVERSION OF SECURITIES DURING CLOSED PERIODS relating to Refinancing Series B 0.25 per cent. convertible bonds due 2023 (ISIN No. SG38F9000006)  (the “Series B Bonds”); and Amended Series 008 subordinated perpetual securities (ISIN No. SG6UH9000009)  (the “Series 008 Securities”)  

The board of directors (the “Board”) of Ezion Holdings Limited (the “Company”) refers to the terms and conditions of the Series B Bonds (the “Series B Conditions”) and the terms and conditions of the Series 008 Securities (the “Series 008 Conditions”). Unless otherwise defined herein, all capitalised terms used in this announcement shall have the meanings given to them in the Series B Conditions and the Series 008 Conditions, as the case may be.

Arising from the operational requirements of The Central Depository (Pte) Limited, the Board wishes to announce that:

• the Conversion Period for the Series B Bonds and Series 008 Securities will be suspended during the Closed Period to determine securityholders’ entitlements to the interest/distribution payment under the Series B Conditions and Series 008 Conditions; and

• the Closed Period for the Series B Bonds and the Series 008 Securities will be from (and including) 12 May 2018 to (and including) 20 May 2018.

During the relevant Closed Period, the Conversion Right with respect to the Series B Bonds and the Conversion Right with respect to the Series 008 Securities will be suspended, and any Conversion Notice received by the Conversion Agent during the applicable Closed Period will not be effective. The applicable Conversion Date for Conversion Notices received by the Conversion Agent during the applicable Closed Period will be deemed to be the first business day after the expiry of the Closed Period, and holders of the Series B Bonds and/or the Series 008 Securities who submit such a Conversion Notice during the applicable Closed Period will not need to resubmit a new Conversion Notice with respect to the Series B Bonds and/or the Series 008 Securities after the applicable Closed Period is over ''

http://infopub.sgx.com/FileOpen/Ezion_An...eID=503193

[karlmarx]

Assuming that it is true that the market for O&G assets and services is recovering, is there something about Ezion which makes it a better investment than the other O&G plays? After all, there are other O&G plays with much lower gearing than Ezion.

In addition, will its huge loan be repriced according to market interest rates, which is rising? This could keep a lid on profits, assuming the market for O&G assets and services remain stable.

And while the worst may be over, the recovery could be more than several years away. The shipping industry is a good example; it has been 10 years but still a very challenging market for the industry players.

There is also the issue of the assets depreciating. So if the recovery does not come soon enough, Ezion will not have very marketable assets when it eventually does. So there is the possibility that Ezion may not be a big winner when the recovery eventually comes. If the recovery takes too long, Ezion will have to spend to renew its fleet.

Given the higher than industry-average gearing (or simply very high gearing), probability of higher financing costs, possibility of a longer than expected recovery, and the possibility of holding less marketable assets if the recovery takes too long, what is the price you will pay for Ezion?

Personally, just for the sake of sharing, I will not be interested at any price. To me, the probability for Ezion to fail (i.e. kaput) or become a 'zombie' (i.e. exist only to service its financiers while shareholders get zilch) is high(er). If any investment has a high(er) probability to fail, then the question of price is moot because price paid cannot reduce your loss if the investment fails. For example, whether you paid $2 or $0.20 for Midas, it is now still zero. If Ezion turns out to be a zombie, then your loss is your opportunity cost. Which could be a long time.

Of course, if O&G market recovers to pre-2014 levels, within the next year or so, then Ezion shareholders will rejoice. But to me, personally, that's a dangerous game to play. Because an investment thesis built solely on market cycles is basically speculating. It is like buying black on the roulette wheel because it has been red for the past 8 spins. If your investment thesis is based on timing market cycles, there are instruments to do that. It could be oil futures, coal futures, or whatever it is you are timing. It is even better than buying shares of companies exposed to such markets, since, whether and how much to leverage is something you can choose. Or if shares are your thing, how about an unlevered (or less levered) O&G company?

Personally, I prefer investments where the value is already present. Not something I have to hope and wish for.

Again, I just want to reiterate that these are merely my personal opinion. And it also applies to a wider range of companies that also exhibit similar characteristics. I post my comments here only because there is some discussion going on here. My apologies to interested parties. No offense intended. I'll be happy for you if the upturn comes sooner rather than later.

[tonylim]

Came across this post in another forum.
It is about the deal between Ezion and Alan Wang of Asdew . What price is Asdew paying ?


Agreement with Asdew. 30th days from start of trading is 14 days away.

14.3 Put Option
Pursuant to the Subscription Agreement, Asdew irrevocably and unconditionally grants to the
Company the right to require Asdew to subscribe for the Private Subscriber Option Shares (the
?Put Option?) and the Company shall have the right to exercise the Put Option at any time after
one (1) month and before the end of 60 months after the Trading Resumption, the Private
Subscriber Option Shares at the sum amounting to the aggregate of the number of Private
Subscriber Option Shares being subscribed for multiplied by the lower of S$0.2487 or a price
at a 20.0% discount to the last full day VWAP of a Share on the date of the notice given by the
Company to Asdew to exercise the Put Option, subject always to a minimum issue price of
S$0.144 (?Put Option Issue Price?). The Company shall not be entitled to exercise the Put
Option if (a) the last full day VWAP of a Share on the date of the notice purported to be given
by the Company to Asdew to exercise the Put Option is less than S$0.18 or (b) the price
representing a 20.0% discount to the last full day VWAP of a Share on the date of the notice
purported to be given by the Company to Asdew to exercise the Put Option is less than
S$0.144.
The exercise of the Put Option shall be in minimum tranches of S$1 million per tranche of
Private Subscriber Option Shares being subscribed for by Asdew.
The discount of 20.0% was commercially negotiated with Asdew on an arm?s length basis and
the Board is of the view that it is not prejudicial to the interests of Shareholders taking into
account the financials of the Company and the fact that Asdew is injecting cash into the
Company.