Published June 18, 2009

Jaya Holdings in talks over credit facilities

CEO says some lenders not keen to roll over or extend existing lines

By LEE U-WEN

	Email this article
	Print article
	Feedback

JUST hours after it requested a share-trading halt yesterday, offshore and shipbuilding group Jaya Holdings said that it was in talks with lenders that want to review credit facilities.

Jaya, which is listed on the Singapore Exchange (SGX), said that the move was 'due to the current global economic climate'.

Chief executive Chan Mun Lye said in a statement that Jaya's board has appointed nTan Corporate Advisory to help 'review and develop the group's strategic options with the objective of enhancing value for all stakeholders'.

nTan will also advise and assist the group on ways to rationalise and optimise its operations, financial arrangements and capital structure.

Additionally, Jaya has appointed law firm Baker & McKenzie.Wong & Leow to act for the group.

Jaya, with its advisers, will meet lenders to seek their support for a standstill on repayments, pending consensual restructuring of the group's operations and financial arrangements, Mr Chan said.

Jaya said at 12:35 pm yesterday that it had sought a halt in trading of its shares from 2pm. It gave no reason. At 5.44 pm, eight minutes after its statement was broadcast on the SGX website, the company requested the trading halt be lifted at 9am today.

Mr Chan said: 'The company wishes to assure all of its stakeholders, in particular trading partners, suppliers, customers, shareholders and employers, that the group is and will continue to undertake its day-to-day operations and activities as normal. There has been no break or cessation in the business activities of the group.

'The tight credit market conditions mean the group needs to ensure appropriate continued financing for its build programme. The conditions and the negative outlook in the shipping sector have caused some lenders to express reluctance to roll over and/or extend existing credit facilities granted to the group.'

Jaya posted a fall in net profit for its third quarter ended March 31, 2009 to $22.2 million, from $39.1 million a year ago, due to lower proceeds from vessel disposals and foreign exchange hedging losses.

Revenue dipped 9 per cent to $70.1 million, due to lower shipbuilding receipts, which were partly offset by higher chartering income.

Mr Chan said that the group has proved that its business model is a viable one - the dual approach to shipbuilding and chartering focused on the offshore oil and gas sector has resulted in a 'strong track record of profitability'.

Jaya's shares last traded at 57.5 cents yesterday. The counter hit a month-high of 67 cents on June 5, up from a low of 19 cents on March 12.

'The board would advise shareholders and the investing public to exercise extreme caution in the dealing of the shares of the company,' Mr Chan said yesterday.