17 November 17 The Business Times by TAN HWEE HWEE
MARCO Polo Marine has emerged as the first listed group to win support from both its noteholders and creditors towards taking severe haircuts in order to make way for new equity injection in this offshore and marine (O&M) downturn.
On Thursday, the listed parent company and its key subsidiary, Marco Polo Shipyard Pte Ltd (MPSY), secured majority votes from scheme creditors in favour of the restructuring of S$258 million in total liabilities.
Of these, S$202 million are bank loans and some S$50 million relates to Marco Polo's Singdollar notes issuance.
The proposals for the scheme creditors call for 69 per cent and 95 per cent debt forgiveness from bank lenders and for contingent liabilities; in addition, trade debts are to be termed out for three more years.
The listed company has also offered as part settlement to issue new shares at 3.5 Singapore cents per share to the scheme creditors.
At the court meeting for the listed parent company, five of the seven scheme creditors representing S$187.4 million or 75.5 per cent of the admitted claims for voting backed the restructuring plan. Separately, all 40 of MPSY's creditors answering for S$4.68 million of the admitted claims for voting granted unanimous approval to its restructuring plan.
In either cases, Marco Polo and its shipyard subsidiary have met the statutory requirement of securing at least 75 per cent in majority votes from their scheme creditors.
These came after holders of S$50 million notes represented at Wednesday's consent solicitation exercise (CSE) voted in favour of extending 71 per cent debt forgiveness to the parent company and a partial debt-to-equity swap settlement.
Marco Polo has thus made progress in the restructuring of the S$258 million liabilities, which is a precondition set for S$60 million new equity to be injected by nine investors.
The positive outcome of its CSE and court meetings also buoyed hopes of a turning point in the restructuring for Singapore's battered O&M sector since two high-profile solvencies involving stock market darlings Ezra Holdings and Swiber Holdings.
One analyst suggested that in Marco Polo's case, however, noteholders and bank lenders may have come to realise that they stand to yield better recovery by riding through the rest of the storm with the listed group.
That has called for steep haircuts and in this respect, M3 Marine's managing director, Mike Meade, noted that the values tabled under Marco Polo Marine's schemes have also been more aligned with a successful corporate work-out in the US.
The family of chief executive Sean Lee agreed to dilute their equity stake to 6 per cent from 62 per cent to allow for debt-to-equity swaps and new investors to pick up significant shareholdings in the company.
To Mr Meade, this is closer to what was tabled for Tidewater's debt restructuring where existing shareholders had to make way for some US$1.6 billion of Tidewater's then US$2.1 billion liabilities to be converted into 95 per cent equity in the reorganised company.
The Business Times understands that Marco Polo's restructuring plan has won the backing of at least two of the big three local banks answering for the bulk of senior loans.
UOB as the largest bank lender to Marco Polo and an institutional investor in the S$50 million Singdollar notes issuance, declined comment when approached by BT, citing requirements of Singapore's Banking Act.
DBS, also Marco Polo's institutional noteholder and bank lender, did not respond to BT's request for comment as at press time.
OCBC's head of group corporate communications Koh Ching Ching said without naming specific clients: "We have undertaken steps to proactively classify several accounts in the oil and gas sector for close monitoring and assisted customers to reschedule and restructure their loans.
"We continue to help our customers by advising them to deleverage or bring in additional capital from other assets they have so they can ride out this industry cycle." OCBC maintained that it has sufficient provisions set aside for its O&M exposure and that "the overall quality" of its loan portfolio remains stable.