SINGAPORE - Sembcorp Marine (SembMarine) on Wednesday (July 3) said a search warrant was executed on Estaleiro Jurong Aracruz (EJA), its subsidiary in Brazil, in ongoing investigations related to Operation Car Wash in Brazil, the country's biggest anti-graft crackdown which sent former president Luiz Inacio Lula da Silva to jail.
Present investigations also involve Martin Cheah Kok Choon, EJA's former president, the offshore and marine firm said.
It said it understands the search relates to investigations against Guilherme Esteves de Jesus, a former consultant engaged by EJA in Brazil who has been arrested by the Brazilian Federal Police. He is facing ongoing criminal charges which have not been concluded.
"The company has co-operated fully with the Brazilian Federal Police and provided materials within the scope of the warrant," said SembMarine in a filing with the Singapore Exchange.
The company added that it has a strict compliance programme and continuously works to ensure its policies and procedures are in place to prevent any violation of anti-corruption laws applicable to its operations.
"The company wishes to reiterate that the group is committed to the highest standards of compliance with anti-corruption laws and does not condone and will not tolerate any improper business conduct," it said.
SembMarine added that it will continue to monitor developments in Brazil and other jurisdictions regarding the matter and will make appropriate announcements when there are any material developments.
Its shares faced a selloff in early morning trade following the announcement. After 30 minutes of morning trade, the counter had slid 7.14 per cent or 11 cents to S$1.43 at 9.33am. By 10.26am, the shares had regained more than half their morning losses and were trading at $2.41, down six cents or 2.43 per cent.
CGS-CIMB, in a report on Tuesday, maintained its "add" call on the company with a lowered target price of $1.75 as net gearing for the firm improves in the second quarter to 1.3 times with the completion of semi-submersible crane vessel Sleipnir.
Analyst Lim Siew Khee said the $2 billion subordinated loan from Sembcorp Industries, backed by Temasek, is "the best outcome" following years of speculation on equity raising, privatisation or bailout options for SembMarine's highly geared balance sheet. The move eliminates risks of dilution and major change in corporate shareholding structure.
"If SembMarine retires about $1.5 billion of its loans, net gearing could aesthetically be reduced to 0.7 times (including Sleipnir's collection) by end-2019," Ms Lim added.
