Swiber opts for judicial management, drops liquidation plan

SINGAPORE — In a surprise move late yesterday evening, financially troubled oilfield services firm Swiber Holdings said it applied to discharge the provisional liquidation order and withdraw the winding-up application it made on Wednesday, opting instead to be placed under judicial management.

“On 28 July, 2016, the board of directors and the provisional liquidators have had discussions with the company’s major financial creditor who indicated that they are supportive of an application for the company to place itself into judicial management instead of liquidation. Today, the company and its subsidiary, Swiber Offshore Construction (SOC) have taken out applications to place the company and SOC under judicial management and interim judicial management,” Swiber said in a regulatory filing with the Singapore Exchange. In a major embarrassment, Swiber also said it had wrongly announced on Thursday the resignation of Mr Leonard Tay Gim Sin as group chief financial officer as he remains in the role.

Judicial management allows a company more room to reorganise its affairs under court supervision and may offer a better outcome to creditors and shareholders than a liquidation. Under the Companies Act, no other proceedings and no execution or other legal process shall be commenced against the company or its property, except with the consent of the judicial manager or with leave of the court.

The latest development came after investor rights advocate Securities Investors Association Singapore (Sias) earlier yesterday questioned Swiber’s decision to liquidate the company instead of putting it into judicial management, which would give the oilfield services firm a better chance to achieve a more advantageous realisation of the company’s assets.

“Sias questions why the company has chosen to liquidate rather than judicial management, which potentially could see some light at the end for shareholders. With a liquidation process, it’s almost the end,” said Sias president and CEO David Gerald.

Swiber did not say who the major financial creditor was but on Thursday, DBS revealed it had a S$700 million exposure to the oilfield services firm, comprising loans, bonds and off-balance sheet items. Singapore’s largest bank said it expected to recover only half of that amount and that it will incur a net allowance charge of S$150 million.

Swiber had shocked investors on Thursday when it announced it had filed an application to wind up the company after facing letters of demand from creditors for about US$25.9 million (S$35 million). Yesterday, the provisional liquidator said since that announcement, the company and its subsidiaries Swiber Offshore Construction, Swiber Offshore Marine and Southsea Offshore have received further claims totalling about US$24.6 million. As of yesterday, the total sum of claims received by the group is about US$50.5 million.

Swiber’s troubles have hurt those with exposure to the company as well as those in the oil and gas sector. DBS shares fell 3 per cent to S$15.41 yesterday, while shares in UOB, which said it had some but manageable exposure to Swiber, shed 2.7 per cent to S$18.20.

In the oil and gas sector, Ezra Holdings shares fell 3.8 per cent to close at S$0.05, while those of Ezion Holdings plunged 4.8 per cent to S$0.30. Sembcorp Marine shares fell 1.7 per cent to S$1.41 and those of Keppel Corp closed down 1.3 per cent to S$5.25. Vallianz Holdings, whose controlling shareholder is Swiber, rose 4.8 per cent to S$0.022, after a 40 per cent plunge on Thursday.