Sembcorp Marine - OCBC Investment 2022-04-28: Transformational Step For The Future

SEMBCORP MARINE LTD (SGX:S51)

Sembcorp Marine - Transformational Step For The Future

Signs definitive agreements for proposed combination of Keppel O&M and Sembcorp Marine.
Process to take time; EGM for shareholder approval in 4Q22.
Shareholders to own a premier global player offering offshore renewables, new energy and cleaner solutions in the O&M sector.

It was also announced that Keppel Corporation (SGX:BN4) and Sembcorp Marine (SGX:S51) have signed definitive agreements for the proposed combination of Keppel Offshore and Marine (O&M) and Sembcorp Marine. The combined entity will be consolidated with the restructured Keppel O&M through a separate scheme of arrangement of Keppel O&M. Following this, Keppel O&M and Sembcorp Marine will become wholly-owned subsidiaries of the combined entity.
Concurrently, Keppel O&M will sell its legacy rigs and associated receivables to an asset company that will be 10%-owned by Keppel Corporation and 90%-owned by other investors, and transfer other out-of-scope assets to Keppel Corporation.

Keppel Corporation and its shareholders would own 56% of the combined entity and Sembcorp Marine shareholders would own 44% on completion. This takes into account the respective capital structures of the two companies, and the S$500m cash that Keppel O&M will pay to Keppel Corporation and other adjustments. Keppel Corporation will then distribute in-specie 46% of the combined entity shares to Keppel Corporation’s shareholders and retain a 10% stake, which will be placed in a segregated account.
Following this distribution-in-specie, Temasek will hold 33.5% and be the largest shareholder of the combined entity.

Besides regulatory approvals, the brand identity to reflect its focus on offshore renewables, new energy and cleaner solutions in the O&M sector.

OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2022-04-28

SGX Stock Analyst Report SELL DOWNGRADE HOLD 0.11 UP 0.090