Sembcorp Industries (Sembcorp) and Sembcorp Marine (SembMarine) are calling on their shareholders to vote in favour of a proposed $2.1 billion recapitalisation for the offshore and marine engineering group, as well as a demerger from each other that will result in Temasek having a direct stake in the marine arm.
In a regulatory filing yesterday, both companies asked their respective shareholders to submit their proxy forms to vote in favour of the resolutions tabled at extraordinary general meetings (EGMs) in order for the transaction to proceed.
At the upcoming EGMs on Aug 11, shareholders will vote on three resolutions: Sembcorp's move to distribute its SembMarine shares in specie; SembMarine's undertaking of the rights issue; and a whitewash resolution that will waive investors' rights to receive a mandatory takeover offer from Singapore investment company Temasek.
All three resolutions require a simple majority, but are inter-conditional.
SembMarine said the rights issue will provide the company with the "much-needed recapitalisation" to ride out the industry downturn, strengthen its balance sheet and reposition the company for its long-term viability.
It also warned that shareholders who opt not to take up their rights entitlement will see their shareholdings diluted after the rights issue.
SembMarine said: "If shareholders do not approve the transaction, SembMarine's strenuous efforts to recapitalise and strengthen its balance sheet will be negated and the critical need to address our liquidity requirements will fail."
It added that only a few of its bank facilities will be affected by a change in control. The banks behind the facilities collectively account for some $6.03 billion of loan and trade facilities that have been extended to SembMarine thus far.
SembMarine noted that these banks are supportive of the transaction and have indicated the continuation of bank facilities to be extended to the company.
It said that with the proposed recapitalisation, it expects the banks to refinance existing borrowings and provide additional facilities. But should the transaction fall through, the banks are expected to refinance existing borrowings without providing additional financing.
SembMarine also addressed market chatter on a potential merger with industry conglomerate Keppel or a privatisation move, saying it was not aware of any such proposals.
CONSEQUENCES OF NON-APPROVAL
If shareholders do not approve the transaction, SembMarine's strenuous efforts to recapitalise and strengthen its balance sheet will be negated and the critical need to address our liquidity requirements will fail.
Although Sembcorp has not been bogged down by financial losses, it remains focused on unlocking value for shareholders through this transaction. It said the demerger would transform the company into a "focused energy and urban business" and allow it to allocate capital and resources solely to these areas.
Both Sembcorp and SembMarine said they were unable to comment on the share price of the companies after the transaction.
Both are set to convene their virtual EGMs next Tuesday. The SembMarine meeting will be held at 10am, while the Sembcorp meeting will take place at 11.30am.
Shareholders may participate in the EGMs by observing and/or listening to the proceedings via live audio-visual webcast or livestream (audio only), and by submitting questions in advance. Due to the Covid-19 pandemic, shareholders will not be allowed to attend the EGMs in person.
SembMarine shareholders who wish to register for the EGM and submit questions or proxy forms must do so by 10am tomorrow, while the deadline for Sembcorp shareholders is 11.30am tomorrow.
Sembcorp shares closed up one cent, or 0.6 per cent, at $1.84 yesterday, while SembMarine shares fell one cent, or 2.6 per cent, to 37.5 cents.
THE BUSINESS TIMES