By Rujun Shen

SINGAPORE, Oct 20 (Reuters) – Offshore companies companies within the Asian oil hub of Singapore are turning to higher-cost various funding avenues to offset a shortfall in bank-led financing, straining their liquidity that’s already squeezed by weak oil costs, business executives say.

The firms, which personal offshore assist vessels (OSVs) performing duties equivalent to towing rigs and establishing offshore oil fields, are looking for funds from the sale and leaseback of belongings and from fairness companions, amongst different methods, to construct up money balances and even keep afloat.

Charter charges and utilisation of the worldwide OSV fleet have fallen about 20 p.c this yr, leaving ship house owners, particularly people who borrowed closely to gas fleet growth, wanting money at a time when banks are cautious about lending to the sector due to its unsure prospects.

Ezra Holdings, as an example, is looking for to promote and lease again its flagship building vessel, Lewek Constellation, even after taking steps to scale back leverage this yr, in response to the corporate.

“Pretty much any company in the offshore space is looking for where to raise capital, whether they need it, or whether they are just raising liquidity to make sure they have cash coming to the downturn,” mentioned Tobias Backer, head of transport and offshore at ICON Investments, another finance supplier.

Alternative financing might be fulfilling as much as half of the capital wants of oil service companies now, versus simply 5-10 p.c when banks had been actively lending a few years in the past, Backer mentioned. ICON counts Ezra, Pacific Radiance and Swiber Holdings amongst its purchasers.

Leverage on the oil companies firms has risen. The median debt to fairness ratio of 18 Singapore-listed OSV house owners was up by a couple of third from a yr earlier at 1.08 on the finish of the second quarter, Thomson Reuters information confirmed.

Sale and leaseback offers give ship house owners the specified leverage, albeit at a price. The price of funding via a sale and leaseback can be about three proportion factors increased than a senior financial institution mortgage, bankers mentioned.

“It’s more costly, but the fact that you can get 100 percent cash back makes it attractive,” mentioned Yeo Zhi Bin, analyst at brokerage CIMB.

The murky oil market outlook, although, has made some financiers cautious of dangers on such offers.

“If the vessel doesn’t offer employment, the operator has not much of track record, it is going to be hard to attract people to provide medium or long term financing,” mentioned Gregg Johnston, accomplice at regulation agency Stephenson Harwood in Singapore. (Reporting by Rujun Shen; Additional reporting by Tripti Kalro in BENGALURU; Editing by Muralikumar Anantharaman)

(c) Copyright Thomson Reuters 2015.

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