Marco Polo Marine takes $220m hit on impairments and allowances

Singapore’s Marco Polo Marine, which is in the midst of a refinancing and debt restructuring exercise, consequently saw its third quarter results plunged to a loss of SGD304.23m compared to the smaller loss of SGD6.41m in the same period of last year.

“With the prolonged slump in the O&G sector, being conservative the group decided to make impairment adjustments of SGD196.5m on its OSV assets to reflect current distressed market value,” Marco Polo Marine said.

“Impairment adjustments on 10 units of OSVs booked under property, plant and equipment accounted for SGD153.3m, two units of OSVs completed but not delivered and one unit of incomplete OSV, booked under inventories added SGD43.3m.”

The company also made impairment on the carrying value of investment in JV companies of SGD56.7m, trade receivables plus forfeited deposits of SGD11m, as well as impairment on recoverable amount for the first 10% deposit paid to a terminated rig project of SGD35.1m, bringing total impairment and allowances to SGD299.3m.

The terminated rig project is the unresolved dispute between Marco Polo Marine and compatriot Sembmarine that arose in November 2015. Marco Polo Marine unilaterally terminated the rig order worth $214.3m at Sembmarine’s PPL Shipyard and demanded a refund from PPL of the initial 10% downpayment.

PPL Shipyard, on the other hand, is seeking payment for a second 10% payment plus interest from Marco Polo Marine.

In July this year, the Singapore High Court granted applications for a scheme of moratorium made by Marco Polo Marine and its subsidiary Marco Polo Shipyard until 31 August, so as to faciliate the companies to finalise a scheme of arrangement with their creditors.

“The company is in advance negotiations with potential investors to raise fresh funding as part of the group’s proposed financing and debt restructuring,” Marco Polo Marine said.

“The long term prospects of the group, in particular, its ability to continue its business and operations in the next 12 months, are dependent on the ability of the group to achieve a successful refinancing and debt restructuring,” the company said.