Impairment of Receivables

A subsidiary of Siem Offshore Inc. (the “Company”) has outstanding receivables due from Daya Materials Berhad (“Daya”) with a face value equivalent to USD29.5 million consisting of a convertible bond of RM83.1 million related to the outstanding seller’s credit from the sale of the OCSV Siem Daya 1, approximately USD 6.6 million related to outstanding charterhire and RM6.3 million of accrued interest.
Due to its recent failure to meet minimum equity requirement of the Malaysian regulators following losses recorded in 2016 and 2017, Daya became obligated to deliver a regularization plan to the Malaysian regulators to restructure Daya and place it on a solid financial foundation.
One of the proposed steps in the regularization plan provides that the Company will receive approximately USD4 million as partial payment of its receivables, retain a small convertible bond and convert the remainder into new shares of Daya at various conversion rates.
Following the implementation of the plan, the Company will be the largest shareholder of Daya with a shareholding in excess of 20% and will be granted an observer position on the board of Daya.
There is still uncertainty whether the regularization plan will be implemented as it is subject to regulatory and shareholder approval. The plan is expected to be completed in the spring of 2019.
As a result of the financial uncertainty concerning Daya, the Board of Directors of the Company has decided to record an additional impairment of USD19 million against its receivables from Daya in the Company’s annual accounts for 2017. 

Published 19-04-2018 in the Investor category