Forland starts the creditor run on EZRA…

After a debacle where EZRA had to clarify Forland’s legal position the obvious emerged today that EZRA has received a call under the charter to fufil their guarantee of the Lewek Inspector. Of course EZRA only own 40% of EMAS Chiyoda but must fulfil the 100% guarantee, something I suspect will go down like a cup of cold sick with the EMAS banks.

Forland knows it isn’t get paid here, certainly not for the full charter, but they are hoping that in the scheme of things USD 4.4m is so small the banks will waive it through rather than risk default. I think they have left it a few weeks to late but I could be wrong. I don’t see millions flying out here under any circumstances. The “White Knight” EZRA is looking for appears to be much closer to a White Elephant and I will be genuinely amazed if they get an equity injection here without the banks taking a massive writedown, and this appears increasingly unlikely because as the Solstad deal today showed the really complex deals take weeks to put together.

As I have said before EMAS and Forland suffer from the same problem: leverage. Forland is unlucky to have key customer risk and EMAS doesn’t have enough customers.

What is happening now at EZRA is a total shutdown of trade creditors. Unless they can pay cash on delivery now no one will extend them credit. If EZRA and its bankers have a rabbit to pull out of a hat they need to make it appear now: and it needs to be a really big juicy rabbit here because when its “cash on delivery” terms the working capital needs go through the roof and its just not practical for a company of this scale. If this farce lasts until the end of the week I will be surprised.


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