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Ezion Holdings Ltd - Will it have to make another cash call?

23/1/2014 – Ezion Holdings is raising S$50 mln through its S$500 mln Multicurrency Debt Issuance Programme, with its Series 005 notes announced on January 17.

A day earlier, on January 16, it announced it had received a Letter of Intent from an undisclosed customer for a contract worth US$94 mln to build a service rig, which is to be delivered by the first quarter of 2016.

The notes will carry a 4.85% fixed interest rate and will be released today (January 23, 2014), with a five year tenor.

This debt programme was announced in May, 2012.

DBS Bank has been appointed sole lead manager and book runner.

The announcement explains that the funds raised will be used for general corporate purposes, including financing of investments in offshore and marine assets and general working capital of the company and its subsidiaries.

Investor Central. Asian insights for global investors. We ask the tough questions of Asian companies which global investors need answers to.

Question
Question

1. Will it have to make another cash call?

It's raising S$50 mln through the note issue at a time when it has US$209 mln in cash reserves, and positive cash flows of US$82.8 mln in the quarter ended September 30.

But its Q3FY13 results published on November 14, 2013, indicated the company had secured debts due in the next 12 months of US$199.4 mln.

A further US$810 mln of secured and unsecured debt is due in years to come.

In other words: its current cash balance is already as much as all of its debt due in the next year.

In view of this, it seems the next note issuance is just the next contract away.

Should investors be worried?

Question
Question

2. Who is placing this order for the service rig?

The announcement only let on that it was a national oil company based in Southeast Asia, but rumour has it it's Malaysia's PETRONAS.

After all, they are on a huge capex binge.

Why not just confirm it?

(Total number of questions in the full story: 6)

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