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Will Swiber Holdings Limited Face The Wrath Of Stock Market Regulators Soon?

Yesterday evening, local bourse operator and regulator Singapore Exchange Limited (SGX: S68) reprimanded the embattled oil and gas services provider Swiber Holdings Limited  (SGX: BGK) for misleading investors regarding a US$710 million project.

In Singapore Exchange’s view, Swiber should have provided a balanced and fair announcement for the project but did not. The bourse operator also said that it has referred the case to the “relevant authorities.”

Does this mean that Swiber would soon face the wrath of regulators regarding this matter? If so, what are the possible implications?

The background

Back in December 2014, Swiber announced that it had secured a US$710 million project in West Africa. It stated that the project would commence work in the first-quarter of 2015 and was expected to be completed by the middle of 2017.

But, it was only in July 2016 – more than one-and-a-half years after the “commencement” date of the project – that Swiber revealed the project would be delayed. Moreover, it was only after Singapore Exchange queried Swiber on the project-delay announcement that Swiber made known the fact that multiple requirements needed to be fulfilled before the project could even be confirmed.

For instance, no contract document was ever signed for the US$710 million deal – Swiber only inked a Letter of Intent (LOI) with its client. Furthermore, the dollar-size of the project was just an estimate and would need to be reassessed after the conclusion of a FEED (Front End Engineering Design) study and the completion of a field development plan.

So to sum it up, Swiber said in December 2014 that it had secured a US$710 million project even though no firm contracts were signed and the project was subjected to certain conditions before any greenlight would be given.

The implications

If the authorities are to take up this case, Swiber might be in for more trouble ahead. The company has been defaulting on coupon payments for its bonds over the past few months and is currently under judicial management. With this latest development, Swiber might soon need to face more legal challenges.

Given that Swiber is now afloat mainly due to the courtesy of its bond and debt holders – in particular DBS Group Holdings Ltd (SGX: D05) – will these parties continue to support Swiber in light of the new development?

If yes, does it mean that more money needs to be injected into the company for it to weather the storm? If the answer’s no, what will happen to Swiber and its bond and debt holders?

Only time will tell.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of Singapore Exchange. Motley Fool Singapore writer Stanley Lim doesn’t own shares in any companies mentioned.