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Malaysian OSV builder Nam Cheong seeks financial restructuring

Malaysian OSV builder Nam Cheong seeks financial restructuring
Malaysian offshore vessel builder and owner Nam Cheong is the latest Singapore-listed offshore firm to seek restructuring.

In a statement to the Singapore Exchange Nam Cheong said it had taken steps to review options to restructure its business, which were part of ongoing measures “to ride out the challenging market”.

Nam Cheong said it was holding discussions with its principal lenders to address “significant” debt maturities, which could involve refinancing and restructuring of loans.

The company has MYR948.7m ($215.7m) in liabilities which are classified as current as at 31 December 2016, which includes a MYR278.6m medium term note issue due for repayment on 28 August this year.

“The group is in discussions with a number of its creditors and key stakeholders, including its financial lenders and vendors, in relation to the restructuring options for these obligations,” Nam Cheong said.

Restructuring bond issues has proved difficult for a number of Singapore-listed maritime and offshore companies with Rickmers Maritime recently filing for winding up, while Swissco was placed under judicial management, after the companies failed to agree financial restructuring plans creditors and noteholders.

The Malaysian company is also reviewing cashflow projections and cost cutting measures, and discussion with various parties to contain operating costs. It added that it was reviewing efforts to improve its financial position.

Nam Cheong’s business strategy was around building OSVs to stock where it built vessels speculatively finding buyers close to delivery to gain better prices, and taking the vessels into own fleet on the short term if buyers could not be found.

With the sharp downturn in the offshore market over the last two years the company has been left it with a large number of newbuildings due to be delivered with no buyers. In addition customers with firm orders have delayed or cancelled deliveries.

According to a VesselsValues report in March Nam Cheong has 56 OSV newbuildings due for delivery worth $746m, the largest orderbook in vessel number terms of any OSV owner worldwide. The new deliveries are set to swell its owned fleet from 18 to 74.

On 17 March Nam Cheong’s auditors cast going concern doubts on the company.