Ezra 1 (May 08 - Dec 09)

[Musicwhiz]

Saw this posted on SI Forum - from Bloomberg News:-

My comments are in blue.

Nov. 7 (Bloomberg) -- Ezra Holdings Ltd., a Singapore-based provider of offshore oil and gas services, may buy back shares in the next 12 months after its stock fell 76 percent this year, said Lionel Lee, the company's managing director.

``We have a mandate for a share buy back,' said Lee in an interview in Singapore. The company is also considering delisting
its shares from the Singapore Exchange, he added.

Companies such as Oracle Corp. and Mazda Motor Corp. have announced plans to buy back shares after the global financial
crisis pushed down stock valuations.

Ezra may use some of its cash reserves for the buy back, Lee said. The company had S$153 million ($102 million) in cash as of September 30, according to Bloomberg data. He declined to say how much the company has allocated for a share buy back. Fourth-quarter profit dropped 84 percent from a year earlier to $6.7 million, Ezra said on Oct. 22.

Erza rose as much as 3 cents, or 3.8 percent, to 82.5 Singapore cents, and was trading at 81 cents at 10:49 a.m. on the
city's exchange.

Delisting plans ? I wonder what would be the rationale for that ?

I must say the MD has confused me on this one - share buybacks are a good idea to enhance EPS, but why the talk about delisting ? Unless they plan to list in another country which can better appreciate their business and provide better valuations. Norway immediately comes to mind as EOC Limited, their 48.9% associate, is already listed there.

The company has S$153 million cash but the company is valued at S$466 million right now. Unless they leverage further to buy up shares at this price to privatize, I don't think it's a good idea.

[winston]

I listened twice to the interview with Lionel on Bloomberg.

I did not hear Lionel mentioned delisting.

He said that the Big Oils have not pulled back any of their spending.

He said that he is conserving his bullets for any M&A activities although he has the mandate to do buybacks.

He said that there is no firm plans to buy someone or be bought out by someone. Nothing has been cast in stone YET.

[Musicwhiz]

I listened twice to the interview with Lionel on Bloomberg.

I did not hear Lionel mentioned delisting.

He said that the Big Oils have not pulled back any of their spending.

He said that he is conserving his bullets for any M&A activities although he has the mandate to do buybacks.

He said that there is no firm plans to buy someone or be bought out by someone. Nothing has been cast in stone YET.

Thanks Winston. Any link to the interview ? It's hard to navigate Bloomberg.

[puntmaster]

wow ! you guys are really good, really on the ball.

thanks for the updates. keep it up.

[winston]

Hi MW,

The following is the link:-

http://www.bloomberg.com/apps/news?pid= ... 1Y6eJ8LA6w

The video is on the right hand side, just below "Related Video & Graphics".

Take care,
Winston

[winston]

CLARIFICATION PURSUANT TO BLOOMBERG INTERVIEW AND ARTICLE OF 7
NOVEMBER 2008

We refer to the television interview of Mr Lionel Lee, managing director of the Company, by Bloomberg on 7 November 2008 and the article, “Ezra may buy back, delist Shares after stock slumps, Lee says” published by Bloomberg on the same day. Mr Lionel Lee was quoted to have said that “Ezra Holdings Ltd…may buy back Shares in the next 12 months after its stock fell 76% this year” and that “the Company is also considering delisting its Shares from the Singapore Exchange”.

The Company wishes to clarify as follows:

(1) the comment given by Mr Lionel Lee was a general response to a speculative question after the interview with Bloomberg on whether the Company was open to considering various options or corporate actions to embark on a Share buy back or a privatisation process if the Share prices were low;

(2) Mr Lionel Lee responded as a passing remark a Share buy back or a delisting may be considered if and when the Share prices are very low (this being a natural consideration for any listed company, provided it is in the best interest of the Company and depending on the financial position of the Company and market conditions prevailing at the relevant time); and

(3) no intentions have been formed by the Company currently to undertake any Share buy backs or delistings from the Official List of the Singapore Exchange Securities Trading Limited.

By order of the Board
Lee Chye Teck Lionel
Managing Director
Singapore
7 November 2008

[winston]

Fortis Obam N.V. bought 3m shares on Tuesday, Nov 4 to raise it's stake from 4.8 % To 5.3 %.

So were they also buying on Wednesday, Thursday and Friday ? Anyway, 3m is only a small % of the daily volume of about 30m to 40m.

BTW, I'm very afraid when I see a company who passes 5% from 4.9%. Sometimes, they want to let you know that they are buying so that they can dump it on you .

In this case, it was not reported immediately so maybe they intend to hold it. In addition, they went up all the way to 5.3%. So they may be trying to average down...

[millionairemind]

November 27, 2008, 5.58 pm (Singapore time)

Ezra may cancel order for 5 vessels
By JAIME EE

Ezra Holdings said on Thursday that it was reviewing five multi-functional support vessels orders due to the 'the uncertainty arising from the current financial crisis'.

It is already reviewing a S$69 million order from Keppel Singmarine. The contract had been placed in May with delivery expected in 2010, the company said.

'We are taking a prudent approach by revisiting our capital expenditure plans and exploring our options, even though relevant financing for this vessel has been secured,' said Ezra's managing director, Lionel Lee.

[Musicwhiz]

My objective take on the latest announcement and situation:-

Obviously this is NOT good news for Ezra, as their plans will have to be "reviewed" and possibly scuttled due to the ongoing credit crisis and economic problems dogging the industry and world. This means a future revenue stream may be curtailed, and much of the previously lofty valuation for Ezra was based on the supposed future revenue stream from deep water segment. Now that oil is trading substantially lower than USD 80, and thus not commercially viable for oil companies to do E&P in deeper waters, this would hinder (but not halt) investments in rigs and semi-subs which can drill and extract oil from deeper waters. This may merely be a deferment of capex for the oil majors rather than a total stoppage, because oil is a finite resource after all and most of the "easy" oil has been discovered.

Looking back at Ezra, it is likely they have already paid the downpayment for their 5 options, and that should be the only cash flow impact (which would already have been reflected in prior periods' cash flow statements). Cancellation of the contracts may also caused an incurrence of a penalty of X% of the full contract amount, but may ease cash flow in the next few quarters as the full amount need not be committed progressively (through progress payments), and finance costs should be eased in the long-run as bank lines and bank loans need not be drawn down. This will, I believe, have a positive impact on their cash flows moving forward, and will free up more cash for them to "hoard" while waiting for the crisis to blow over.

Some mitigating factors to consider in arriving at my conclusion above (please judge if these sound logical):-

a) Contracts for existing vessels (AHTS) are locked in at mostly higher charter rates and are for 1-3 year durations, thus revenue stream should be relatively stable even in the absence of additional revenues from their planned MSFV;

b) Their FPSO contract (owned by 48.9% owned EOC Limited) for Lewek Arunothai will continue to contribute good profits and will flow through to the Group through their associate;

c) Construction and fabrication activity should remain firm as a result of the 3 contracts which Saigon Shipyard clinched (announced some time back). Margins could come under pressure though as these contracts tend to be of lower margin than their charter ones;

d) Energy Services division should continue to provide Ezra with some competitive edge in packaging solutions for oil companies in order to provide the whole breadth of services. As a result, their prospects for clinching more contracts for support or fabrication services should remain fairly decent, even amidst the economic downturn.

Thus, my take on this news is that it may actually be positive for the Group in the long-term (but negative in the short-term) as it frees up capex and cash in order to re-deploy into other more useful areas. In fact, the freed up cash may also be available for M&A activities, which should be fruitful for the Group at this time as valuations for most smaller oil and gas companies are at trough levels. If not, they could always pay shareholders a generous dividend with the cash "saved".

Just my 2-cents.

[iam802]

Quick question.

Is it Ezra canceling the order or Keppel Singmarine canceling?

If it is Ezra canceling the order, is it due to the difficulty in getting the financing loan to see the project through?

I am a bit loss as to what leads to the cancellation.