Sembcorp Marine is selling a semi-submersible rig to an undisclosed buyer in a US$500 million (S$672 million) deal that will leave it with some red ink.
CIMB analyst Lim Siew Khee noted that SembMarine will incur a $24 million loss if the sale materialises, taking into account the firm's 77 per cent share in the transaction will be US$385 million.
She estimates SembMarine's net gearing will fall to 0.9 times if sale proceeds are used to pare debt. This compares with 1.3 times as of the end of the third quarter and before the receipt of another US$500 million from an announced US$1.3 billion deal between SembMarine and Borr Drilling for the sale of nine jack-up rigs.
SembMarine was commissioned by a unit of Seadrill to build the rig at US$568 million in 2012.
The two parties entered into a standstill agreement for the contract after offshore drilling demand worldwide took a hit with the collapse in oil prices in 2014.
If a new owner or charter contract could not be found for the rig, it was agreed that a joint asset company would be formed with 77 per cent held by SembMarine, and Seadrill unit NAD on 23 per cent.
NAD and Seadrill have filed for bankruptcy protection in the US.
Ms Lim considered the sale of the rig to be a step forward in resolving the overhang from "risky" rigs on SembMarine's outstanding order book. She maintained an "add" call on the firm although she conceded that it still faces exposure from any spillover from corruption probes in Brazil. More specifically, SembMarine has US$5.5 billion of rig-building contracts with Sete Brasil, a rig-owning unit of Petrobras that is a party involved in some of these probes.
SembMarine stock took a hit yesterday after news broke over Keppel Offshore & Marine's US$422 million fines as a settlement for a cross-border probe on bribes paid to secure Sete Brasil rig-building contracts, among others.
SembMarine shares closed down seven cents at $1.87.