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It’s The End Of The Road For Swiber Holdings Limited: What About Its Shareholders?

Swiber Holdings Limited (SGX: BGK) shocked the market earlier today when it announced at 1:04am that it had filed an application on Wednesday afternoon to wind itself up.

The High Court of Singapore has appointed provisional liquidators to take charge of the process. This marks one of the largest bankruptcy cases in Singapore in recent years. At its peak in 2007, Swiber had a market capitalization of over S$1.5 billion.

In separate announcements recently, the company stated that it has received letters of demand for payments totaling US$25.9 million and has failed in its attempt to raise US$200 million from a preference share sale agreement.

Somewhat conveniently, some members of Swiber’s management team have decided to abandon ship at this moment.

Executive director and vice chairman Francis Wong, executive director and group chief financial officer Leonard Tay, and executive director Nitish Gupta, have all resigned. They cited a search for new opportunities and the pursuit of personal interests as reasons for quitting.

While the aforementioned trio of Swiber’s ex-leaders can look forward to greener pastures, the fate of some other stakeholders in the company is likely to be – unfortunately – different.

According to Swiber’s 2015 annual report, the company has close to 2,700 employees worldwide and, as of 14 March 2016, some 10,250 shareholders. These two groups (and it’s possible that some individuals would straddle both groups), would most likely be left with nothing.

According to its latest financials (as of 31 March 2016), Swiber has total liabilities of US$1.43 billion and total assets of US$1.99 billion. Based on its website, Swiber owns 51 vessels. But, given the slump in oil prices over the past few years, it is unclear how much of Swiber’s asset base can be successfully converted into cash during its liquidation process.

All told, Swiber has total debt and outstanding bonds of around US$1.1 billion. Despite having a positive book value (total assets minus total liabilities) as alluded to earlier, there’s still this massive block of debt and bonds standing in front of the company’s assets waiting to claim their share.

And in the scheme of things, debt and bondholders get to claim a bankrupt company’s assets before shareholders do. So, shareholders of Swiber should really expect the worse.

Shares of Swiber have been suspended from trading. The last traded price for the company’s shares is S$0.109; this gives Swiber a market capitalisation of around S$50 million. What a far cry from the S$1.5 billion seen in 2007.

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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 writer Stanley Lim doesn’t own shares in any companies mentioned.