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Singapore’s Big Loser Of The Week: Ezra Holdings Limited’s Fall From Grace

Ezra Holdings Limited (SGX: 5DN), an offshore contractor and provider of integrated offshore solutions, is one of the big losers in Singapore’s stock market this week by virtue of its shares falling by 11% since last Friday to end Thursday at S$0.265.

This week, the firm announced that it has received approval from its shareholders during a recent extraordinary general meeting to undertake a renounceable rights and convertible bonds issue as part of its refinancing strategy.

Ezra will be issuing up to 2.03 billion new ordinary shares on the basis of  up to 200 rights shares for every 100 existing ordinary shares held by its shareholders. Around US$150 million is expected to be raised from the rights issue.

Meanwhile, the convertible bonds issue will see Ezra issuing S$200 million worth of fixed rate convertible bonds which are due in 2020. The conversion price in which the bonds can be converted into shares are yet to be determined.

Collectively, the rights and convertible bonds issue will help Ezra raise US$300 million in capital which will be mainly used to “repay the S$225 million Fixed Rate Notes due in September 2015 and the S$150 million perpetual securities callable in September 2015”.

Eugene Cheng, Ezra’s Group Chief Financial Officer, commented on the capital raising activities:

“With the rights issue, we will strengthen our balance sheet and reduce our gearing significantly. Also, the Group is focused on pursuing other primary alternatives of capital raising initiatives, including the sale and leaseback of key assets. The option for a convertible bonds issue provides an added alternative.

“We will redeem our bonds due in September and we intend to call the perpetual securities through our capital raising efforts. This will address any refinancing concerns that the market has regarding our September maturities.”

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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.