8 March, 2018
Last week, Otto Marine Limited ("Otto Marine"), which was formerly listed on the Singapore Exchange Limited ("SGX"), filed an application to place itself under judicial management ("the JM Application") and for the appointment of an interim judicial manager.
The company sits at the apex of the Singapore-headquartered Otto Marine Group, which has some 70 subsidiaries, associate companies and indirect subsidiaries, employing more than 622 employees worldwide. The Otto Marine Group is in the business of investment holding, construction, repair and servicing of vessels, chartering and leasing of vessels, and offshore services. The sole director and effective shareholder of Otto Marine is Malaysian tycoon Datuk Seri Yaw Chee Siew.
The JM Application follows losses of approximately USD183 million in 2015 and a voluntary delisting from the SGX in October 2016. Based on the company's draft management accounts as at 31 December 2017, it had sustained accumulated losses of about USD81 million for the present financial year. In Court papers filed in support of the JM Application, the company has estimated total liabilities of about USD877 million and declared itself unable to pay its debts, citing, amongst others, a winding up application filed by UOB and various unsatisfied statutory demands.
From the court papers, Datuk Seri Yaw himself appears to be the single largest creditor of the company, with USD208 million owing to him or his affiliated entities.
Judicial management is a temporary, court-supervised rescue plan aimed at giving a financially troubled company time and space to rehabilitate itself while continuing to operate. According to court papers, Otto Marine has stated that if placed into judicial management:
- There is a reasonable probability of rehabilitating the company or of preserving all or part of business as a going concern;
- The entry of the company into judicial management will be likely to result in the approval under Section 210 of the Companies Act of a compromise or arrangement between the company and its creditors; and/or
- That otherwise the interest of the company's creditors would be better served than by resorting to a winding up.
In order to achieve the abovementioned objectives, Otto Marine claims, amongst other things, that it has secured a letter of intent from a third party "white knight" investor which cannot be named, although there are online reports that the investor is Malaysia's Barakah Offshore Petroleum Bhd.
In addition, the company has also asked that an interim judicial manager be appointed pending the hearing of the JM Application, citing an urgent need for the interim judicial manager to take control of the company and the entire Otto Marine Group, and claiming that a delay could be too late for certain companies within the group.
There was a hearing of Otto Marine's interim judicial management application on 23 February 2018, which has been adjourned until 12 March 2018, with the hearing date for the JM Application to be fixed by the High Court.
For further information, please contact:
Prakash Pillai, Partner, Clyde & Co
prakash.pillai@clydeco.com
