EZRA and Bibby…the bigger issue remains.

If Stupidity got us into this mess, then why can’t it get us out?

Will Rogers

As the above document makes clear it looks like Bibby have managed to get an arrest warrant on the Lewek Express and have therefore secured  a maritime lien on the vessel barring legal arguments from EZRA/ EMAS Chiyoda. I am not a lawyer, and clearly don’t want to comment on the legal intracies, my view is clearly Bibby performed the work and EMAS Chiyoda are simply refusng to pay because they do not have the money, or do not want to pay to make the Angostura project appear more profitable than it was while they try and raise capital. Bibby cleartly have the moral right here.

I didn’t realise that working in conjunction with a vessel would generate a maritime lien but having read the deposition and having spoken to a lawyer I think it could here. Its certainly arguable as the favourable judgement shows. The core action here is against the vessel (“against the world”) and not against EZRA as charterer to EMAS Chiyoda. The bush lawyer in me says if successful it could re-define how offshore projects are contracted, but that also means a long legal battle here, with appeals all but certain. Bibby are basically arguing that the contract to deliver the tie-in scope in Angostura could not be delivered without the diving and it doesn’t matter who owns the ship the action is in rem against the vessel not the owner. It makes a lot of sense and if held EZRA and their banks have a real issue as this lien outranks the mortgage holders and owners rights.

But the bigger issue (given EZRA has USD 1bn in short term debt) is this: How could EZRA/ EMAS Chiyoda credibly claim to be raising capital with these sorts of issues remaining unresolved? Do they need to pay USD 15m on a project or not? Will Forland wind them up or not? You can’t warranty your way out of those sorts of issues or bury them in transaction schedules.

Aside from that you cannot run a project company without a myriad of subcontranctors and any company extending credit to this mess must undertand they risk not getting paid. It’s terminal now, whatever the machinations over the next few weeks, without massive infusions of cash (working capital) to settle such claims. No overarching deal has been announced with a strategic investor, instead there have just been a series of announcements where one-by-one creditors break off with different strategies and EZRA gets a trading suspension.

The moral positon that Bibby (and the other subcontractors) need to be paid is clear but it just highlights how absurd the current situation is.DBS and OCBC must be having a sense of humour failure over a supplier potentially getting the first USD 15m of any sale of the Lewek Express.

I simply don’t believe this rumour that Siem/ Subsea 7 is going to buy the NYK stake. Why? If you are too long on ships and contracting capacity  (as Siem/ Subsea 7 are) why buy more and expose yourself to the running cost as a minority? Siem clearly went long on Golar last week and I don’t see reasons to buy assets, no backlog, and a the certainty of a capital injection in this market.

2 thoughts on “EZRA and Bibby…the bigger issue remains.

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