The Sembcorp Marine (SembMarine) rights issue of shares to recapitalise the company was undersubscribed, with valid acceptances and excess applications received for 9.4 billion rights shares, or 90.2 per cent of the nearly 10.5 billion rights shares available.

According to application results on Monday, SembMarine's parent company Sembcorp Industries (Sembcorp) subscribed for 7.5 billion or 72 per cent of the available shares by setting off a $1.5 billion loan it extended to SembMarine in June last year.

The muted interest in the rights issue could be due to the fact that SembMarine shares were trading close to 20 cents in the last few days before the issue closed. With a negligible difference between the open market and rights prices, there was little incentive for shareholders to take up the rights.

The 1.03 billion unsubscribed rights shares will be mopped up by Startree, as per the sub-underwriting agreement.

Startree is a wholly owned subsidiary of Sembcorp's biggest shareholder Temasek, which will now hold a direct stake in SembMarine.

Sembcorp and SembMarine shareholders voted strongly in favour of the $2.1 billion recapitalisation for SembMarine and demerger proposal for the two groups last month. SembMarine had said the funding would help it ride out the industry downturn, strengthen its balance sheet and reposition it for long-term viability.

THE BUSINESS TIMES