Keppel Corporation yesterday said it will recognise a loss of $318 million over its exposure to KrisEnergy in its first-half 2021 financial results, after the latter said last Friday that it has submitted a winding-up petition.
The loss is measured by estimating the recoverable amounts of various assets of the troubled oil and gas group, less its obligations in connection with the revolving credit facility, carrying amounts of investment, contract asset and receivable from KrisEnergy, as well as other costs to realisation of the assets.
Keppel said it benefits from a "comprehensive first ranking security package" over KrisEnergy's assets. It is implementing detailed recovery plans developed in consultation with its financial adviser and legal adviser to preserve the said assets and maximise recoveries.
The group will use the security package to appoint Mr Patrick Bance, Mr Mitchell Mansfield and Mr Kent McParland from Borrelli Walsh as joint and several receivers over the assets of KrisEnergy group members, including KrisEnergy (Asia) assets and shares.
Once the receivers are appointed, they will pursue all necessary action to maximise recoveries for the benefit of Keppel, the group added.
Keppel, which is KrisEnergy's largest shareholder, said the recoverable amounts will be reassessed at the end of each financial reporting period.
"When considering the declaration of interim and final dividends for the current financial year, the company will take into account, inter alia, available profits and cash flows after ring-fencing this impairment loss on this non-core investment," Keppel added.
Separately, KrisEnergy on Monday said it has received notices from DBS Bank and Madison Pacific Trust regarding a revolving credit facility and a Cambodia loan facility, respectively.
DBS cancelled the total commitments under the revolving credit facility and declared that all loans are now payable on demand.
Madison Pacific notified KrisEnergy of an event of default under the Cambodia loan facility. Keppel's wholly owned subsidiary Kepinvest Singapore is the lender.
DBS and Madison Pacific have also provided notice that they are entitled to take enforcement action and intend to do so in the future.
In its announcement last Friday, KrisEnergy said it has not been able to propose an alternative restructuring plan to DBS, the provider of a US$200 million (S$265 million) revolving credit facility, and Keppel, which holds the key economic risk in the revolving credit facility.
Therefore, the revolving credit facility will not be extended as stipulated conditions have not been fulfilled.
Shares of Keppel closed at $5.29 yesterday, down six cents, or 1.1 per cent.
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