Singapore’s Big Loser for the Week: Swiber Holdings Limited

Swiber Holdings Limited (SGX: AK3) fell around 10% since last Friday to close at S$0.27 on New Year’s Eve. Comparatively, during the same period, the Straits Times Index  (SGX: ^STI) put on 0.3%. This makes Swiber a big loser in Singapore’s market for the week.

According to its own webpage, Swiber is “a leading, global Engineering, Procurement, Installation and Construction services provider that offers a wide range of integrated offshore construction services, enhanced with marine support and engineering capabilities across the Asia Pacific, Middle East and Latin America regions”.

On 30 December 2014, the firm proposed to carry out a renounceable rights issue exercise on the basis of one rights share for every two existing ordinary shares. The exercise will see Swiber issue up to 305.7 million rights shares at S$0.15 each.

The net proceeds, which will come up to around S$45 million, will be used for working capital purposes such as payment of trade payables and general expenses.

As of 30 September 2014, Swiber had US$218 million in trade payables and US$1.2 billion in total debt. My Foolish colleague, Stanley Lim, had previously pointed out that high borrowings at the company is a major concern for investors. The fact that it has negative cash flow is also something to be worried about. It is therefore not surprising that the firm has to raise more cash now through a rights issue.

The firm is currently going at around 2 times its historical earnings.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.