Investors have backed the demerger of Sembcorp Marine from parent Sembcorp Industries under a $2.1 billion plan that will see Temasek take a big direct stake in the offshore marine firm.
Three resolutions relating to the recapitalisation plan aimed at putting SembMarine on a more secure footing were well supported at two extraordinary general meetings (EGMs) yesterday.
SembMarine has been bleeding badly amid an oil price crash and fallout from the Covid-19 pandemic.
Once the proposed transactions are completed, Sembcorp Industries will be free to focus on its energy and urban development business, while Temasek will become a direct investor in SembMarine, with a 30.1 per cent to 58.1 per cent stake, depending on final subscription levels.
The outcome of the votes was even more keenly watched after the surprise news on Monday that Temasek has dropped its $4.1 billion bid for control of Keppel Corp.
The Sembcorp Industries EGM recorded a vote of 99.67 per cent, or holders of 302.6 million shares, in favour of its move to distribute its shares in specie.
There was a similar level of support at the SembMarine meeting earlier in the day, with 98.76 per cent, or holders of 1.4 billion shares, backing the rights issue, while 87.72 per cent, or holders of 121.3 million shares, greenlit what is called a whitewash resolution.
This waives investor rights to receive a mandatory takeover offer from Temasek.
The resolution from Sembcorp Industries and the two from SembMarine required simple majorities but all three were inter-conditional.
SembMarine noted that the rights issue backed by shareholders would "depend on the outcome of the Sembcorp Industries-distribution resolution" tabled to its investors.
Both firms called for trading halts yesterday morning ahead of the EGMs. After the halts were lifted around noon, Sembcorp Industries shares rose by as much as 3.9 per cent before ending down 2.63 per cent at $1.85.
SembMarine stock rose 2.86 per cent before losing the gains to close down 2.86 per cent at 34 cents.
KGI Securities analyst Joel Ng told The Straits Times that Temasek's axing of its $4.1 billion offer for Keppel could see capital redeployed to SembMarine and to buy Keppel Offshore & Marine assets.
"If not for the impact of Covid-19 on the valuation of Keppel, and the huge impairments it sustained, the $4.1 billion deal could have gone forward. But the end goal is still to consolidate Singapore's offshore marine sector," Mr Ng said.
OCBC Investment Research has a "sell" rating on SembMarine, saying that recovery is still a long way off as there were "no significant new contracts secured in the first half of 2020, and net order book as of end June stood at $1.9 billion".
"The repairs and upgrading business had outstanding orders worth $280 million. We continue to see multiple headwinds on low order book clarity, high debt and capital expenditure requirements."
Sembcorp Industries group president and chief executive Wong Kim Yin said the company can now move forward as a focused energy and urban player. "We will be able to dedicate our resources to repositioning our businesses and capturing these growth opportunities.
"These include opportunities in the renewable energy sector where SCI (Sembcorp Industries) is already one of Singapore's largest home-grown renewable energy players.
"We are also encouraged that we can provide support to Sembcorp Marine... that will enable it to better ride through the downturn and position itself for recovery. Our shareholders can now expect to receive shares in a stronger recapitalised SembMarine."
In the days leading up to the EGMs, SembMarine had stressed that funds from the recapitalisation would be key to fixing its "critical" liquidity needs and that the rights issue would provide "much-needed recapitalisation" to ride out the offshore marine industry downturn, strengthen its balance sheet and re-position the firm for long-term viability.
