Swiber Holdings (SGX:BGK) shocked the Singapore Markets on 28-Jul, when it filed for liquidation, marking one of the biggest bankruptcy cases in the Offshore Marine business segment in the recent years. If you are affected or are just fascinated by the developments in the O&M segment, read on.
Here are some of the important facts:
1. Resignations
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.
2. Market Capitalization
Swiber has a market capitalization of S$50 million. A far cry from the S$1.5 billion, during its peak around 2007. Trading of Swiber shares was halted on Wednesday, 27 July, when the stock last traded at 10.9 cents, down 48% this year.
3. Liquidation
According to SGX stockfacts, Swiber has total liabilities of S$ 1.9 billion and total assets of S$ 2.6 billion. However, given the slump in oil prices and the depressed O&M business environment, it is still unclear if the physical assets can be successfully converted to cash.
4. Debt
Among its debtors, which includes Citibank, BOA, UOB and Deutsche Bank, DBS appears to bear the heaviest burden with an estimated exposure of S$700 million. Swiber also has several outstanding bonds with a total principal amount of $550 million, yet to be redeemed.
Summary
My personal take away, as a small time investor from this event, is that the stock market can be really brutal! Surely, the management, being privy to sensitive corporate information, would have foreseen the project cancellations, tight cashflow and potential issues with mounting debt. Yet it seems like they choose the easy way out with a resignation and throwing the bond/shareholders to the wolves.
The creditors at the bottom of the ladder (shareholders) will feel the brunt of Swiber's liquidation. Even in the best case scenario, where by existing assets can be converted to cash at value, its is highly likely that Swiber's bond and shareholders will be left with little to nothing.
