Icon Offshore at historic low on corporate exercise plan

by SULHI KHALID/ pic by TMR

INVESTORS sold Icon Offshore Bhd’s shares after digesting its proposed RM370 million debt restructuring and raising of up to RM250 million in fresh capital via rights issue with warrants.

The stock fell three sen or 35.3% to a historic low of 5.5 sen at market close yesterday with some 47.3 million shares transacted, making the counter the seventh most actively traded security on the exchange.

“Investors are selling the stock as the corporate proposal will lead to a dilution of their stakes and many probably do not want to pump in fresh funds into Icon (Offshore) as the oil and gas (O&G) business cycle has yet to recover in a sustainable manner,” an analyst at a local brokerage said.

The loss-making offshore support vessel operator, controlled by the government via Ekuiti Nasional Bhd’s (Ekuinas) unit, Hallmark Odyssey Sdn Bhd, and Urusharta Jamaah Sdn Bhd, will undertake a share consolidation to pave way for right issuance exercise.

In an exchange filing yesterday, Icon Offshore announced the appointment of Datuk Seri Hadian Hashim (picture), 61, as MD effective Sept 3, 2019. Acting CEO Captain Hassan Ali, 62, to cease the role and become the COO as of Aug 31.

As part of the restructuring plan under Corporate Debt Restructuring Committee scheme, the group also embarks into executing supplemental agreements with its various lenders with part of its debt converted to new shares in the company.

“The proposed rights issue with warrants will enable the company to raise funds, largely to repay RM170 million of its debt in cash, which is an integral condition to the proposed debt restructuring,” it said in a statement.

Other uses of the proceeds include working capital requirements and capital expenditure.

The group highlighted that it is part of Icon Offshore’s capital management plan to improve the group’s capital structure, as well as to facilitate the proposed rights issue with warrants exercise.

“The debt restructuring and rights issue are intended to reduce the company’s borrowings and better align its cashflow from operations to its debt obligation, which will in turn bring positive impact to the company’s financials in the long run,” it said.

Ekuinas, which holds 42.3% stake in Icon Offshore, has pledged to subscribe up to RM183 million of the proposed rights issue warrants via Hallmark Odyssey.

Urusharta Jamaah, a specialpurpose vehicle, set up by the Ministry of Finance to manage Lembaga Tabung Haji’s underperforming asset, owns an 8.8% stake in Icon Offshore.

Icon Offshore narrowed its net losses for the first quarter ended March 31, 2019 (1Q19) to RM7.6 million as it recorded a vessel impairment of RM419 million in 1Q18.

Icon Offshore was also in the spotlight last month after it received a charter deal extension of RM36 million from charterer, Zell Transportation Sdn Bhd.

Icon Offshore provides a wide range of logistical support services throughout the entire offshore O&G life cycle, from exploration and appraisal, field development, and operation and maintenance to decommissioning.