Struggling offshore players rush to beat the clock as massive debts mature

Who will be the next Ezra?

More offshore firms will take a leaf out of Ezra’s book and come knocking on the market’s doors to raise funds for their massive maturing debts.

According to KGI Fraser analyst Joel Ng, current high bond yields make it “prohibitively expensive” for companies with gearing levels above 150% to refinance their debt in the debt capital markets.

To add insult to injury, banks are now less willing to finance new vessels unless they came with secure contracts.

“This leaves raising funds through equity markets as the feasible option, in our view, to pay off their debts and to fund capex commitments that were made when oil prices were high,” Ng said.

Ng believes that highly-leveraged offshore players such as Swiber, Marco Polo Marine, and Otto Marine are likely to raise funds soon.

“Otto Marine and Marco Polo both have above industry average short term debt/cash at hand ratios (4.8 - 12.5x) that makes them highly susceptible to funding issues if they are unable to refinance their short term debts or generate enough cash flows from operations. Meanwhile, Swiber has already raised US$46m in Feb-15 via rights issue but faces S$305m/660m of debt maturing in FY16/17,” Ng said.

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