Sembcorp Marine's (Sembmarine) controversial $1.5 billion rights issue received a better-than-expected response from shareholders.
The company said in an announcement last Friday that shareholders took up 84 per cent of their rights shares, including Temasek subsidiary Startree Investments' 42.6 per cent pro-rata rights.
Applications for the 16 per cent excess shares were oversubscribed, with a total of 33.5 per cent rights shares applied for.
In all, the company received total subscriptions for 22.17 billion shares, compared with the rights offering of 18.83 billion shares.
Temasek will receive its pro-rata allotment of 8.03 billion shares and excess allotments of 4.59 billion shares, for a total of 12.62 billion shares.
Sembmarine launched its $1.5 billion rights offer in June to raise money to complete its 17 ongoing but delayed projects, most of which it must deliver over the next 15 months.
It also needed to replenish working capital and enhance its liquidity position to meet its projected operational funding requirements until at least the end of next year.
But the move initially drew flak from minority shareholders who, among other things, questioned its necessity given a $2.1 billion rights issue less than a year ago.
On an enlarged capital basis, Temasek's shareholding, post the latest rights issue, has increased from 42.6 per cent to 46.6 per cent.
Under Rule 14.1 of Singapore's Takeover Code, as an entity controlling more than 30 per cent of the company, Temasek must make a mandatory general offer (MGO) for Sembmarine shares as it has increased its shareholding by more than 1 per cent.
An MGO means that Temasek must make an offer to buy all Sembmarine shares, but shareholders do not have to sell.
Minority shareholders are unlikely to accept Temasek's offer at eight cents per share.
Shares of Sembmarine closed last Friday at 8.4 cents each, up 0.1 cent for the day or 1.2 per cent.
With less than 50 per cent shareholding, Temasek's MGO will be conditional upon receiving acceptances that takes its shareholding past 50 per cent.
As this is unlikely to happen, Temasek's final stake will likely remain below 50 per cent and Sembmarine will remain a listed entity.
The rights shares are expected to be credited on or around Wednesday, and trading of these shares will start at 9am that day.
Temasek is expected to make an MGO on Wednesday.
With the rights issue achieved, there is cautious optimism that Sembmarine is positioned to regain some of the lustre lost over the past five years amid a very difficult market environment in the global energy sector.
Also, oil prices have risen sharply in recent months, prompting more offshore exploration activity.
Meanwhile, Sembmarine itself has diversified into offshore renewables such as wind energy projects.