POSH not receiving payments from Mexico

PACC Offshore Services Holdings Ltd. (POSH), a Singapore-based supplier of offshore support vessels to the international oil & gas industry, is having problems with collecting cash in Mexico.

One of the company’s joint ventures, Servicios Marίtimos Gosh, S.A.P.I. de C.V. (“GOSH”) has chartered six vessels to Oceanogafia, S.A. de C.V. (“OSA”), which are in turn, chartered by OSA to PEMEX, the Mexican state-owned petroleum company.

Since February 28, 2014, the administration of OSA had been placed under the control of the Mexican State Administrator (“SAE”) in connection with the Mexican government’s investigations of OSA over alleged fraud arising from billings charged by OSA to PEMEX.

Under an irrevocable trust arrangement entered into between OSA and PEMEX on 8 August 2013, PEMEX will pay all charter hire invoiced by OSA into an irrevocable trust (“GOSH Trust”) for the benefit of GOSH and the Company. Since the establishment of the GOSH Trust, charter hire payments from PEMEX have been made to the GOSH Trust.

In an SGX filing issued today, POSH says it has recently been informed that SAE has obtained a court order for PEMEX to stop paying charter hire on vessels chartered from OSA to all trusts including the GOSH Trust and instead to make such payments directly to SAE.

Since then GOSH, through its trustee, has filed an injunction in the Mexican Courts to nullify the order. A hearing on the matter is to be held on 28 May 2014. In addition, GOSH has also met with SAE in order to find a resolution to the matter. In the meantime, GOSH has stopped work on the vessels chartered to OSA.

POSH says it will be making an additional provision for their share of the receivables in GOSH which may be affected by the Order, amounting to approximately US$4.6 million, in the Group’s 1st quarter FY2014 results.