OIL services firm KS Energy &ndash which is under judicial management &ndash has filed for its winding up, with the High Court scheduled to hear the application on Feb 24.

 

The Singapore Exchange mainboard-listed company made the application on Jan 27, days after it announced that the deal to transfer its listing status for S$3 million to logistics company Jacobson Global Logistics (Singapore) was off.

 

Creditors or shareholders of KS Energy who want to support or oppose the winding up application may appear at the hearing, said the winding up notice published in the government gazette on Friday (Feb 10).

 

Judicial managers for KS Energy have applied to be discharged, and instead be appointed as the joint and several liquidators of the company.

 

The managers had stated in their announcement in January 2022 that the agreement to transfer the listing status could offer potentially better returns for shareholders. But in the event of liquidation, shareholders are unlikely to have any distribution after payment to the creditors.

 

Due to the unfulfilment of all the conditions required for the agreement to be valid, the listing transfer deal was aborted. Other companies in distress have in the past also attempted to transfer their listing status, but without much success.

 

KS Energy and a key operating subsidiary KS Drilling were placed under judicial management in October 2020 despite objection from its Indonesian founder tycoon Kris Wiluan. The court application was made by OCBC, which sought to recover some US$235 million in debt.

 

Wiluan had led KS Energy for decades. He was fined S$480,000 by the State Courts in 2021 on three counts of market rigging involving the shares of KS Energy.

 

At its peak, KS Energy had a market capitalisation of just under S$1 billion and some 1,000 employees. The counter has been suspended since August 2020, when its market value stood at S$17 million.

KS Energy, a mainboard-listed company under judicial management, has entered an agreement to transfer its listing status to logistics company Jacobson Global Logistics (Singapore) via a scheme of arrangement.

 

The consideration for the transfer is S$3 million, to be satisfied via the issuance of new shares in Jacobson Global, KS Energy' s judicial managers said in a Thursday bourse filing.

 

Based in Singapore, Jacobson Global is engaged in freight, transport arrangement and wholesale trade of a variety of goods. It was founded in 1994 and has 10 offices across South-east Asia, says its website.  

 

If KS Energy' s assets are liquidated, it is unlikely that there will be any residual value available for distribution to the shareholders after payment to the creditors, the judicial managers said. They therefore believe the deal with Jacobson Global offers potentially better returns for shareholders.

 

The companies have committed to an exclusivity period expiring on Dec 31 this year. KS Energy will issue further details of the scheme to shareholders and creditors in due course.

 

Other troubled companies have in the past also attempted to transfer their listing status, but without much success. 

 

In 2020, Technics Oil and Gas, then under judicial management, entered an agreement to transfer its listing status to healthcare player Singapore Knee, Sports and Orthopaedic Clinic. However, both parties eventually terminated the agreement and Technics was delisted.  

 

Another company under judicial management, China Great Land Holdings, likewise entered an agreement to transfer its listing status to an education business in 2020. But there was uncertainty over whether the transferee was suitable for listing China Great Land subsequently delisted.

 

KS Energy&rsquo s executive director and CEO Richard James Wiluan, along with the company&rsquo s independent directors Chew Choon Soo, Lawrence Stephen Basapa and Soh Gim Teik have resigned on Oct 13.

 

The news comes after the appointment of judicial managers, Andrew Grimmett and Lim Loo Khoon of Deloitte & Touche, on the same day.

 

On Oct 13, KS Energy announced that the company and KS Drilling will be placed under judicial management. The High Court previously granted OCBC Bank&rsquo s application to place KS Energy and KS Drilling under judicial management on Aug 31.

 

According to an SGX filing, the costs of the application will be paid out of the assets of KS Energy and KS Drilling.

 

Further to the appointment, Grimmett and Lim will &ldquo continue to work with and engage creditors and stakeholders of the company and KS Drilling, and in particular, will prioritise seeking investors and interested parties for the group and its operations&rdquo .

KS Energy and its unit will need their creditor bank' s backing for scheme of arrangement: judge

 

IN granting OCBC' s application to place embattled KS Energy and its key unit under interim judicial management (IJM), High Court Justice Aedit Abdullah said there is a " very clear case of balance sheet insolvency" at the oil services group and that a JM order would seem highly likely, " short of a miracle" .

 

He said in a brief grounds of decision seen by The Business Times (BT) on Friday: " While miracles can sometimes happen, even in commercial settings, some evidence would typically need to be provided of a ' white knight' on the verge of coming to the rescue."

 

In particular, the judge said, figures and specific proposals should be placed before the court to show that KS Energy will be able to answer an application for JM.

 

In this case, however, the companies would require the cooperation of the creditor, OCBC, which is seeking the IJM orders. The likelihood of any rescue independent of that creditor is " highly unlikely" , he added.

 

Furthermore, the judge noted that counsel for KS Energy and KS Drilling have rightly recognised that any attempt at a scheme of arrangement without OCBC' s support would likely fail.

 

Any refusal of an order for IJM would merely be " postponing the highly likely or inevitable outcome, and in the meantime, would put the companies' assets at risk of further deterioration because of the current insolvency" , Justice Aedit noted.

 

OCBC applied to place the mainboard-listed company and its unit under JM last month. Sarjit Singh Gill SC and Daniel Tan from law firm Shook Lin & Bok are lead counsel for the bank.

 

According to the summary document seen on Friday, OCBC holds 61.1 per cent of KS Energy' s total liabilities and 86.1 per cent of KS Drilling' s total liabilities. These facilities include a term loan for up to US$282.3 million and a bridging loan of S$5 million - both to KS Drilling.

 

KS Drilling is an 80.09 per cent-owned subsidiary of KS Energy, which had provided a guarantee of up to US$150 million for the term loan, and a further guarantee of up to S$5 million for the bridging loan.

 

BT previously reported that OCBC had said that it was " imperative" for IJMs to be urgently appointed to act for both firms pending the JM hearing, as there were " serious doubts and concerns" regarding the firms' current management on the back of the recent filing of criminal charges against the firm' s former chairman and chief executive Kris Wiluan, an Indonesian.

 

In its application, the bank also cited " alarming cash burn rates and losses" suffered by the companies in recent years.

 

Mr Wiluan faces 112 charges of alleged false trading and market rigging for share purchases made between 2014 and 2016.

 

KS Energy previously said that those were his personal share purchases and were separate from the group' s current financial problems.

 

In the brief grounds of decision, Justice Aedit said he had borne in mind that the charges against Mr Wiluan " cannot be taken as indicative of guilt" , and that the relevance of these charges to the IJM applications sought was " at best only indirect" .

 

" The charges relate to market manipulation, which, while a serious offence if made out, would not pose a direct threat to the assets of the company, unlike charges of fraud or criminal breach of trust," he added.

 

Trading in the shares of KS Energy has been suspended since Aug 12.

INDONESIAN tycoon and chief executive of offshore and marine company KS Energy, Kris Taenar Wiluan, was slapped on Wednesday morning with 112 charges in relation to violations of Section 197 of the Securities and Futures Act, which deals with false trading and market-rigging transactions.

 

Wiluan, founder of Indonesia' s Citramas Group, was accused of directing his employee, Ho Chee Yen, to instruct a trading representative from CIMB Securities (Singapore) to execute trades in the shares of KS Energy through the trading account of Pacific One Energy, a company controlled by Wiluan, on various occasions between December 2014 and September 2016, to " push up" the share price of the mainboard-listed company.

 

For her alleged role, Ho, 56, faces 92 counts of violating the Securities and Futures Act.

 

Wiluan, 71, who was ranked Indonesia' s 40th richest man by Forbes in 2009 with a personal net worth of US$240 million, was also accused of instructing Ngin Kim Choo, a CIMB Securities trading representative servicing the trading account of Pacific One, to execute trades in KS Energy' s shares, " with a purpose to push up" its prices, on several occasions between May and July 2016, and in June 2015.

 

Ho was accused of " abetting by intentionally aiding" Wiluan by relaying his instructions to Ngin Kim Choo and Yeo Jin Lui, another trader with CIMB Securities, to execute trades in KS Energy shares, between December 2014 and September 2016, through Pacific One' s trading account " with a purpose to push up the price of the securities" .

 

Represented by Senior Counsel Jimmy Yim and Mahesh Rai of Drew & Napier, Wiluan is out on court bail of S$250,000. Ho, who is represented by Chia Kok Seng of KSCGP Juris, is out on court bail of S$70,000. Both have also surrendered their passports.

 

In a statement to The Straits Times on Wednesday, Wiluan said: " My purchase of KS Energy shares were conducted with utmost transparency. As the shares were undervalued, my intention was to help smaller public shareholders who had acquired KS shares with their personal savings. I have not sold those purchased shares and have not profited in any way from these transactions.

 

" All my share purchases in KS Energy were disclosed at the time of the transactions and publicly announced to SGX (Singapore Exchange). I have never intended to create any false trading or market rigging transactions and have always abided by the rule of law. I am deeply saddened by these charges," Wiluan added.

 

In 2017, Wiluan and his son Richard James Wiluan were interviewed by the Commercial Affairs Department (CAD) in its investigations into the potential contravention of Section 197 of the Securities and Futures Act. At the time, the older Wiluan posted police bail and was released after his interview while his son was released without requiring bail.

 

The company told SGX in April 2017 that: " Both have informed the board that they have and will continue to cooperate fully in the investigations, including granting access to all their electronic data, IT equipment and data storage devices from January 2015." KS Energy added that it has not been approached by the CAD regarding its investigations.