KrisEnergy Bondholder Woes

Came across a Straits Time Article about Krisenergy seeking bondholder’s consent to accept a new bond and the bondholder’s unhappiness. The article is linked here.

Summary 

Basically KrisEnergy is asking existing bondholders to accept a new bond which is of a 5 year tenure and at a lower interest than the existing bond. In addition, bondholders get to enjoy some increase in interest rate repayment if oil prices move above US$70 during these 5 year period.

In addition, KrisEnergy shareholders (mainly Keppel Corp) will inject $140 mil into the company by subscribing to zero coupon secured notes.

My Opinion


In my opinion, it is highly unlikely for oil to turn around within these 5 years. This is because there is already a production surplus where supply outstrips demand. There are many oil tankers out at sea holding inventory, it will take years for this surplus to be used up.. Furthermore, oil producing …

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