The service rigs and offshore logistics support services provider said the present difficulties faced by the group have presented many challenges to the cashflows that will threaten the fundamental viability of the group’s business.
Due to the prolonged slump of the global offshore market, Ezion has been impacted by significantly depressed charter rates for most of its service rigs compared to the pre-2014 period, and the depressed rates look likely to continue for the next 12 months.
Furthermore, collection of receivables by Ezion continues to be slow, and huge impairments may be needed if the situation worsens.
“The group may face even greater difficulty going forward if the situation does not significantly improve or a comprehensive solution to address the group’s cashflow requirements is not found,” Ezion stated.
“It is therefore our intention to solve the problem comprehensively from all aspects and we will need to work together with all our stakeholders to discuss financing options. While the initial responses from our principal lenders appear positive, the details will need to be finalised,” the group said.
“We have temporarily suspended the trading of Ezion Holdings Limited’s shares pending resolution of the above discussions with various stakeholders,” it said, adding that it is now reviewing all capital expenditure to reduce costs without affecting the safe operations of its fleet.
Ezion claims that it is the biggest operator of liftboats in Asia and runs an offshore logistics vessels division operating mainly towing tugs and barges.
“The group is endeavoring to put at least six service rigs back to work by end-2017/early-2018. However, the successful deployment of these service rigs could be badly disrupted due to the shortage of cashflows as a result of existing low charter rates and slow payments by clients,” Ezion explained.
Meanwhile, Ezion reported a loss of $15.3m for the first half ended 30 June 2017 as against a profit of $23.62m in the same period of last year.
First half revenue fell by 18% year-on-year to $135.98m due chiefly to reduction in charter rates and utilisation levels of the group’s service rigs and OSVs.