Sembcorp Marine - OCBC Investment 2015-12-03: Standstill agreement for West Rigel rig

Sembcorp Marine - OCBC Investment 2015-12-03: Standstill agreement for West Rigel rig SEMBCORP MARINE LTD S51.SI 

Sembcorp Marine: Standstill agreement for West Rigel rig 

  • Sembcorp Marine (SMM) announced this morning that a standstill agreement has been reached between North Atlantic Drilling (NAD) and Jurong Shipyard (SMM’s subsidiary), for the delivery of the 6th generation harsh environment semisubmersible drilling rig, the West Rigel, until Jun 2016. 
  • During the standstill period until Jun 2016, NAD will continue to market the unit for an acceptable drilling contract and Jurong will also have the right to sell the unit at an acceptable price. 
  • In the event that nothing materializes during this period, a joint asset holding company will be formed to own the rig (23% by NAD and 77% by Jurong). NAD will continue to market the rig for the joint company for an acceptable drilling contract while Jurong will market it for sale. 
  • This is likely not a surprise to the street as there were already talks of NAD reevaluating delivery of this rig, as mentioned in our report yesterday. 
  • Maintain SELL with S$1.79 fair value estimate on SMM. 


Low Pei Han OCBC Securities | http://www.ocbcresearch.com/ 2015-12-03
OCBC Securities SGX Stock Analyst Report SELL Maintain SELL 1.79 Down 2.00


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