“Caustic are the ties that bind” Trivium
As you can see from the photo the Lewek Connector is a fine looking vessel, its good for a number of things, unfortunately all of them are connected with relatively deepwater oil and gas construction and maintenance. Such is the plight EZRA and Ocean Yeild (“OY”) now find themselves in.
The plain fact of the matter is OY was forced to accept the current four month charter for USD 40 k per day from a position of weakness not strength. OY are some of the smartest people in ship finance so you can be sure this is as good as a deal can be. For what its worth I suspect the deal is with a debt free subsidiary that managed to get some sort of assignment earnings related to the work the vessel is needed for, and therefore guaramtee them at least some payment. Then when EZRA goes into administration that company will still trade and OY will be paid. I just don’t believe OY went to this much trouble not to get paid.
However, with the OY charter in place it was going to be near impossible for EZRA/ EMAS Chiyoda to actually raise any equity. Raising capital just to pay OY and others is a very difficult sell and it highlights the same problem the banks have: when a company is in this much trouble everyone effectively has equity risk. The banks need to do what OY has done and forgive some claims if EZRA and EMAS Chiyoda is to have any chance. The amount of time it has taken to make minimal progress doesn’t ‘t fill me with hope. You would think any potential “White Knights” would have been flushed out by now and the size of the trade creditor claims must surely be offputting for even those with high risk appetites.
The deal highligts how few options ship owners have in this market. Similar vessels are going for USD 20k per day, barely covering OPEX, when they can find work. OY have no operational infrastructure and when the charter finally ends, unless they are extraordinarily lucky, they will simply have to pay a ship management company USD 10-12k per day and lose the charter hire. Given ~12% of OY’s EBITDA is generated by this asset you can see why they are having to look at every available option. However, you can delay the inevitable in this market… but not for ever.
In the background other creditors circle for material amounts of money and Bibby appear to be having some success in the US courts. Affiliated Marine (who apear to be a catering suplier), and Waskey Bridges, an engineering firm, have joined them in seeking to have the vessels arrested on the basis of a maritime lien. It feels like the last stages of Downfall.