A survey carried by Singapore’s Business Times shows the precarious financial state of many of Singapore’s offshore listed firms. In the wake of the demise of Swiber Holdings last month, most offshore-related firms on the Singapore Exchange have been severely rattled.
Business Times drew on data released as of August 19 on Bloomberg, latest company results, and analyst reports.
Of the 14 companies on the list, 12 have short-term debt of over S$100m ($73.5m), 10 have negative/low cash flow, and nearly all are highly geared.
The 12 companies highlighted as having high short-term debt levels are ASL Marine, Ausgroup, Ezra Holdings, Ezion Holdings, KS Energy, Mencast, Marco Polo, Nam Cheong, Pacific Radiance, Vallianz and Vard Holdings.
“[T]ime may just not be on the side of many small and mid-cap industry players,” the report warned.
Speaking during a live Q&A last week on our new interactive forum, Splash Chat, Mike Meade, founder of Singapore offshore brokerage commented on the plight of many local offshore-related firms. “The reality is the balance sheets of these companies cannot meet their debt / bond commitments. Working capital was used to grow bad businesses and with reduced revenues they don’t have the cash to survive let alone pay debt,” Meade said.
His point of view was backed up by another speaker during the offshore Q&A. Venkatraman Sheshashayee, ceo of Miclyn Express Offshore, commented: “For too long, short term assets have been used to fund long term liabilities.”