This article first appeared in The Edge Financial Daily on August 20, 2019 - August 26, 2019

KUALA LUMPUR: Offshore support vessel (OSV) operator Icon Offshore Bhd is making a cash call to raise up to RM250 million in fresh capital and to restructure RM370.66 million of debt, partly by an issue of new shares.

Its single largest shareholder Ekuinas Nasional Bhd, which holds its 42.3% stake through Hallmark Odyssey Sdn Bhd, is committed to subscribing up to RM183 million of the proposed rights issue that is sweetened by free warrants, Icon Offshore said in a statement. The commitment of RM183 million is equivalent to 73.2% of the RM250 million intended to be raised.

Its second shareholder is Urusharta Jamaah Sdn Bhd, a wholly-owned unit of the finance ministry, holding an 8.8% stake.

To pave way for the rights issue, Icon Offshore, whose share price is trading below 10 sen, will also undertake a share consolidation exercise, according to its filing with Bursa Malaysia yesterday evening.

On top of that, Icon Offshore said it is also restructuring its debt by executing supplemental agreements with its various lenders. Both corporate exercises are part of its debt restructuring plan under the Corporate Debt Restructuring Committee (CDRC) scheme.

Icon Offshore was admitted into the CDRC on March 29, 2018. Since then, it has proposed the debt restructuring which included, among others, extending the repayment period of certain borrowings and converting certain borrowings into equity instruments to the financiers.

The proposed debt restructuring exercises are expected to reduce the group’s gearing ratio to 1.14 times from 9.16 times.

As at end-March, Icon Offshore had short-term liabilities of RM601.08 million and long-term borrowings of RM47.63 million respectively, against cash equivalents of RM47.37 million. Its non-current assets stood at RM618.79 million, while it suffered from an accumulated losses of RM854.43 million as the company has been in the red for four consecutive years.

In a statement yesterday, Icon Offshore’s acting chief executive officer Captain Hassan Ali said the exercises are part of the group’s ongoing efforts to strengthen the balance sheet and position it on a stronger financial footing, moving forward.

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