SINGAPORE (Nov 10): DBS says Ezion investors should wait for more clarity on refinancing outcome as a successful exercise will help Ezion pull through this prolonged downturn, and vice versa.
While it might be positive for the long run and Ezion stands a fair chance to pull through, the overhang remains until the completion of the exercise in several months’ time, warns Ho.
Meanwhile, trading has been suspended until further notice. The counter last traded at 19.7 cents.
In 3Q17, Ezion reported a small loss of $7.4 million on low utilisation and charter rates. Cash balances further deteriorated to US$47 million ($64 million) from US$93 million in 2Q17.
Following three rounds of informal meetings with creditors, Ezion has fine-tuned its refinancing proposal on the consent solicitation exercise on Nov 20.
If more than 75% approval is obtained from all six tranches of bond and perp holders, Ezion will proceed to seek shareholders’ approval in Jan.
In a Friday report, analyst Ho Pei Hwa says successful refinancing will be key to ride this downturn.
Ezion is engaging strategic shareholders that may contribute to company’s financial strength and/or business synergies.
Ho says a successful refinancing exercise will minimise the repayment stress over the next six years, allowing management to focus on reshaping the business.
DBS is maintaining Ezion at “fully valued” with 13 cents target price, based on 0.15x FY17 book value.
“We value Ezion based on 0.15x FY17 book value, in line with valuation multiple of 0.1-0.2x ascribed to other highly geared SGX-listed asset owners in the O&G space, arriving at a target price of $0.13,” says Ho.
