Equity holders to Ezra are likely fully wiped out as the counter was suspended since 15 Mar, & will in any eventuality remain indefinitely suspended throughout the restructuring process.
Given that total liabilities exceeds total assets by a factor in excess of 2.5x, and likelihood of markedly lower realizable value of these assets in any event of crystallization, it is opine that not merely the shareholders will be wiped out, the bondholders will in all likelihood face total loss (if not near so).
Meanwhile primary lenders namely DBS, OCBC & UOB all local Singaporean banks will need to immediately recognize impairment of their books in excess of S$1billion, which is expected to hit the banks' 2Q & FYE17 earnings. Contrary to various research reports & analysts' views to-date, the impact to asset quality & earnings to these lenders are crystallized (i.e. real) despite possible prior provisioning. The prolonged global oil & gas downturn and beaten oil price due to loss of efficacy in OPEC supply cut in light of record shale drilling activities coming online have also all but sealed the avenues for a possible turnaround for balance sheet-stretched entities such as Ezra. Hence contrary to the cheerleading assurances by the Singapore government & bank-owned research arms, it is opine that Ezra has effectively ceased to be a viable ongoing concern. The application for bankruptcy protection in the US merely serves towards capitalizing on the more generous creditors' protection program for the purpose of buying time in attempt to flog off assets in an "as-orderly-as-possible" manner. That, as earlier discoursed will likely not happen given that potential suitors if any would not be in a hurry to jump in without a basement bargain price; which brings us back to the scenario of total wipe out of equity/bond-holders. The lenders with possibly slightly better levers in the (fire) sale process will in all likelihood exit a pennies to the dollar on asap basis given the total lack of expertise & depreciating/stigmatized assets held in the belly-up co.
Given that total liabilities exceeds total assets by a factor in excess of 2.5x, and likelihood of markedly lower realizable value of these assets in any event of crystallization, it is opine that not merely the shareholders will be wiped out, the bondholders will in all likelihood face total loss (if not near so).
Meanwhile primary lenders namely DBS, OCBC & UOB all local Singaporean banks will need to immediately recognize impairment of their books in excess of S$1billion, which is expected to hit the banks' 2Q & FYE17 earnings. Contrary to various research reports & analysts' views to-date, the impact to asset quality & earnings to these lenders are crystallized (i.e. real) despite possible prior provisioning. The prolonged global oil & gas downturn and beaten oil price due to loss of efficacy in OPEC supply cut in light of record shale drilling activities coming online have also all but sealed the avenues for a possible turnaround for balance sheet-stretched entities such as Ezra. Hence contrary to the cheerleading assurances by the Singapore government & bank-owned research arms, it is opine that Ezra has effectively ceased to be a viable ongoing concern. The application for bankruptcy protection in the US merely serves towards capitalizing on the more generous creditors' protection program for the purpose of buying time in attempt to flog off assets in an "as-orderly-as-possible" manner. That, as earlier discoursed will likely not happen given that potential suitors if any would not be in a hurry to jump in without a basement bargain price; which brings us back to the scenario of total wipe out of equity/bond-holders. The lenders with possibly slightly better levers in the (fire) sale process will in all likelihood exit a pennies to the dollar on asap basis given the total lack of expertise & depreciating/stigmatized assets held in the belly-up co.
No comments:
Post a Comment