SINGAPORE (Oct 25): Ezra Holdings is asking holders of its $150 million notes due April 2018 for waivers for any breach in the event of non-compliance with its financial covenants from now to the maturity of the note as well as any event of default as a result of non-compliance. The waivers also include beginning negotiations or taking steps to defer, readjust or reschedule the debt.

These waivers are requested to help facilitate negotiations for Ezra and EMAS Offshore with lenders to secure additional working capital facilities, amending debt repayment profile and extending repayment obligations. This would also allow the company to focus on business and operations in light of the challenging market conditions.

In its presentation to noteholders, Ezra said offshore spending is down 25% in 2016 and expects it to be down another 10% in 2017. Together with the flat demand from OECD (Organization for Economic Cooperation and Development) countries, and with China&rsquo s growth slowing, Ezra cautions noteholders that operating conditions remain difficult.

However, Ezra assures noteholders that it has focused on strategic initiatives such as a partnership with Chiyoda Corporation and Nippon Yusen Kabushiki Kaisha to from EMAS Chiyoda Subsea. Capital raising and asset sales have also been undertaken to deleverage the company as well as cut operating costs and administrative expenses and improving operational efficiencies.

Ezra has obtained shareholders&rsquo approval to divest PV Keez to Petrolfirst Infrastructure 2, which is expected to strengthen its financial position.

The company expects the offshore oil and gas environment to remain challenging, with possible further deterioration before stabilising in the medium-term. Ezra cites the Swiber liquidation and news that Tidewater, a major offshore support services provider, filing for chapter 11 bankruptcy as key events that stalled their plans.

Ezra stresses that the waivers are pre-emptive, as frequent waiver requests are impractical, and includes other rights such as those concerning a cross-default or liquidation. Ezra highlights the current downturn, which is out of its control, might require impairments or write down of its assets, which conflicts with its ability to comply with the financial covenants. Together with Perisai Petroleum&rsquo s default of its $125 million notes due 2016, Ezra might need to assess its investment and accounting impact should Perisai fail to renegotiate a favourable outcome.

Shares in Ezra are down 0.7 cent at 4.1 cents.