Three of of Swiber Holdings vessels had been seized in an arrest moved by a syndicate of banks in Singapore on 22 December.
All three vessels were arrested at ASL Shipyard, the litigant in the arrest is United Overseas Bank (UOB), acting as security agent for the syndicate of banks that had extended financing to the vessel owner in relation to a sale and leaseback deal.
The Business Times reported that court documents obtained by it show that the anchor handling tug supply vessels: Swiber Else-Marie, Swiber Mary-Ann, and Swiber Ann-Christine, were arrested over an outstanding mortgage claim of over US$43.4 million (S$62.7 million).
All three vessels were arrested at ASL Shipyard. The Business Times also confirmed that the owner of the three vessels is Bukit Timah Offshore AS (BTO), a vehicle set up by RS Platou Finans Shipping AS under the Norwegian KS system back in 2008, to facilitate the sale and leaseback transaction with a totally owned subsidiary of Swiber Holdings.
Under 10 years’ bareboat charters, the deal set on BTO to buy the vessels for the purpose of leasing them to Swiber.
Captain Mike Meade, M3 Marine managing director, said that a typical sale and leaseback deal through the Norwegian KS system is backed by as much as 80 percent bank borrowings, with the remaining 20 percent raised through equity.
Capt Meade also noted that bareboat charter payments pledged under sale and leasebacks in 2008 would have been ‘well above the current market rate’.
Swiber Mary-Ann was valued at US$8.54m (S$ 12.34m) as at 28 Dec, down from US$18.93 (S$27.35m) back in end of July 2010 while Swiber Else-Marie was valued at US$8.19m (S$ 11.83m), down from US$18.99m (S$27.44m) back in August 2010.
This lifts the question of whether UOB would need to increase its provisions against exposure to the Swiber fallout. To date, UOB has not put a number to its Swiber exposure although a court filing from the latter’s judicial management application showed that the bank had extended over S$35 million in facilities to the distressed O&M group.
The Business Times wrote that the court-appointed judicial managers for Swiber and Swiber Offshore Construction Pte Ltd (SOC), as then-interim judicial managers back in September, had requested BTO to take re-delivery of the three vessels arrested by UOB.
A spokeswoman said that this request was put forth to the vessel owner ‘because SOC was not in a position to continue with the charter of the vessels’.
This indicated that since September, BTO may have lost the income from the bare boat charter from Swiber, that is supposed to service the bank financing on the three vessels. Under such circumstances, seizing the vessels is just one of the first steps creditors would take to reduce an outright nonpayment.
In the event the owner capitulates, creditors may have to pick the responsibility of selling or chartering out the vessels in order to recover the outstanding debt.
However, the resale market for offshore supply vessels has been under pressure from vast overcapacity in the sub-sector. Vesselsvalue pointed that market values for Swiber Mary-Ann and Swiber Else-Marie is only less than half from the time they entered the global operating fleet.
The arrest list of the Supreme Court’s Sheriff exhibited that four Swiber vessels were under arrest at 29 Dec. The fourth vessel, Swiber Valiant, was listed as a fully-owned vessel under the O&M group’s JM application in July 2016.
The JM filing on July also showed at least one other active sale and leaseback on Swiber’s fleet, for Swiber Sandefjord. Sentosa Offshore AS, the shipowning vehicle set up for the sale and leaseback of Swiber Sandefjord, filed for liquidation on Sept 21.