Disposal of Vessel

Source: www.gulfoilandgas.com 3/5/2021, Location: Asia

The Board of Directors of Ezion Holdings Limited wishes to announce that a memorandum of agreement (the “MOA”) had been entered into between Teras Conquest 9 Pte Ltd (“TC9PL”), a wholly owned subsidiary of the Company, and SLH (Tianjin) Ship Leasing Co. Ltd (the “Purchaser”) for the sale of a liftboat “Teras Conquest 9” (the “Vessel”) at a cash consideration of US$18,500,000 (the “Consideration”) (the “Disposal”).

The Group understands that the MOA was executed by United Overseas Bank Limited as attorney-in-fact of TC9PL, pursuant to powers of attorney granted to United Overseas Bank Limited as mortgagee under certain financing agreements in respect of the Vessel.

The Purchaser is a company incorporated in the People’s Republic of China and is mainly involved in the business of marine engineering for offshore platforms, electric instrument systems, hull engineering for luxury cruise ships and manufacturing of marine power distribution and lighting system equipment, as well as the chartering of marine vessels to support offshore operations. The director(s) and shareholder(s) of the Purchaser are not related or connected to the Company, the Directors or the Group.

The Group understands from United Overseas Bank Limited that the sale consideration of US$18,500,000 was arrived at after arm's length negotiations, on a "willing buyer and willing seller" basis taking into account, amongst other factors:
(a) the funds and time required to reactivate the Vessel;
(b) the operating history of the Vessel;
(c) the market price of vessels with similar specification to the Vessel; 2
(d) the prospect of hire for the Vessel in the current market conditions; and
(e) the future burn rates of the Vessel.

A deposit of US$1,850,000 shall be placed with TC9PL within five (5) banking days upon the execution of the MOA. The balance of Consideration of US$16,650,000 shall be paid at least five (5) banking days prior to the expected delivery date of the Vessel.

The Consideration received from the Disposal will be utilised to repay the secured bank loans of the Group. The mortgage over the Vessel will be discharged pursuant to the Disposal.

The Disposal will allow the Group to stop the incurrence of further operating costs and liabilities and will also allow the Group to reduce its outstanding liabilities via the partial repayment of the secured bank loans. The Disposal will not have any impact on the issued and paid-up share capital of the Company.

Based on the unaudited financial statements of the Group for the nine months period ended 30 September 2020 (the “3Q2020 FS”), the net book value of the Vessel is US$16,575,000.

Based on the 3Q2020 FS, the excess of the Consideration over the book value of the Vessel is US$1,925,000.

Based on the 3Q2020 FS, the net losses generated for the nine months period ended 30 September 2020 by the Vessel is US$41,962,000.

The gain estimated to be generated from the Disposal is US$1,350,000, after considering expected transaction costs, including but not limited to shipbrokers fees, regulatory and compliance costs and fees for legal documentation.

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