Issuer:   Loyz Energy Limited
Rating:  Unrated
Status:  Senior, unsecured
Relevant DSRA:    Applicable
Issue Size:   TBD
Format/Docs:  Reg S Bearer / Issuer’s SGD 250 million Multicurrency Medium Term Note Programme
Price Guidance:  9% (the number)
Tenor:  2.5-Year
Redemption at Option of Noteholders upon Change of Shareholding Event:   Yes, at par in accordance with the Programme
Redemption at Option of Noteholders upon Cessation or Suspension of Trading of Shares:   Yes, at par in accordance with the Programme
Redemption for Taxation Reasons:   Yes, at par in accordance with the Programme
Denomination:  SGD250K
Governing Law:    Singapore Law
Listing:  SGX-ST
Clearing:    CDP
Selling Restrictions:  Sections 274 and/or 275 of the Singapore SFA Joint

– Loyz Energy Limited New 2.5y SGD announced post investor meetings.
– Initial price guidance: 9% the number
– Issue size: TBD
– Timing: As early as today’s business

EZRA  4 ¾ 03/21/16     99.60,  5.05%
SWIBER 5 ⅛ 06/06/16     99.60,  5.39%
SWISSCO 5.7 04/16/18    100.25, 5.62%
PERISAI CAPITAL LABUAN 6 ⅞ 10/03/16   99.65 , 7.07%

We have only 2 bonds in Singapore that were launched with a higher coupon than 9% and they are Swiber 9.75% Perp (callable in Sep 2015) and Central China Real Estate 10.75% maturing Apr 2016.

There are 2 bonds trading above 9% in yield right now besides defaulted papers and the ones with no prices ! Swiber 9.75% perpetual is at 10% and Ezra 8.75% perpetual is at 9.9%.

Come Loyz indicating 9% for 2.5 years.

Loyz Energy Ltd. is an oil and gas exploration and production company.  The Company carries out exploration activities in Asia-Pacific. Loyz Energy Ltd USED TO retail and distribute all kinds of sanitary hardware, appliances, accessories, and fixtures used in bathrooms, toilets, and kitchens but disposed the entire equity interest in Sim Siang Choon Hardware to Mr Sim Siang Choon in Mar 2013 for S$9 mio to concentrate as an E&P (exploration and production) company.

Market Cap SGD 81.6mio

If we look at the ownership, Mr Sim retains a 12.36% stake in the company with the major shareholder being the Managing Director of Ezra, Mr Lionel Lee, owning 26.56% in a private capacity.

The accounts are too new to be meaningful and the young company has turned in maiden sales of crude oil from its concession in Thailand (political risk).

If their net attributable profit for 4Q14 (Apr-Jun 2014) is SGD 0.8 mio, I wonder how they will have to work much harder to pump out that oil at its lower price to pay the 9% coupon to bond holders.

0.8 mio *4 = $3.2 mio per annum
9% on $50 mio = $ 4.5 mio per annum

They are quite cash strapped till now because a bond issue would give them ample breathing room. In September, they had problems with a $ 4 mio loan as evidenced in the excerpt below.

A LEGAL tussle appears to be brewing between Singapore-listed oil and gas company Loyz Energy and Advance Capital Partners over a S$4 million loan.
     In an announcement to the Singapore Exchange (SGX) on Friday, Loyz Energy said the company had on Sept 10 been served a writ of summons issued by plaintiff Advance Capital Partners claiming that Loyz Energy had failed to repay a S$4 million loan. Loyz Energy said that it considers the claim to be without merit.
     Then in a subsequent announcement to the SGX, also on Friday, Loyz Energy said that it had filed an application to strike out the writ of summons on the basis that the writ, among other things, discloses no reasonable cause of action. Loyz’s application is fixed for hearing on Oct 8.
     Loyz Energy is said to have on July 11 this year received a six-month loan of S$4 million from Advance Opportunities Fund (AOF), which is understood to be managed by Advance Capital ……

I hope Singaporean retail investors will be generous and lend them the cash although it is more likely that shareholders should be pledging their shares to buy into this bond issue with a refund of the PB rebate, because there will not be much dividends left for them after the coupon is paid (b4 tax).

I am bullish crude like I said 2 wks ago.

Yet we should be realistic,  that in such times where prices threaten to sustain near their lows. I suspect only the strongest companies will survive and there is no room for even household names like Sim Siang Choon in the playing field in the absence of government or parental support (possibly Ezra ?).

In that case, wouldn’ t the Ezra perp be a better bet ?