Shareholders of Sembcorp Marine voted in favour of a renounceable rights issue to raise $1.5 billion in funds to support the company's operations at an extraordinary general meeting yesterday.
More than 98 per cent of shareholders approved of the exercise, under which they will receive three rights shares priced at eight cents each for every two existing shares held.
Startree, an indirect wholly owned subsidiary of Temasek, had given an irrevocable undertaking to SembMarine to subscribe for its 42.6 per cent entitlement to the rights shares.
The funds raised will be used to service debt and help SembMarine boost its working capital.
As at June 30, the group had net current liabilities totalling $694 million arising mainly from loans maturing in the next 12 months.
In its circular to shareholders, the rig builder alluded to the collapse in oil prices in 2015, a global transition to renewable energy and "severe" disruptions wrought by Covid-19 for the financial strain on the company.
For the first half of the year, SembMarine reported losses totalling $647 million, which is 11 per cent higher than losses posted for the whole of 2020.
Revenue declined by 7 per cent year on year in the first half to $844 million due to production delays caused by the pandemic.
SembMarine said that the recapitalisation of the company will enable it to execute existing projects and continue to competitively bid for new "high-value and large-scale" contracts, particularly in the rapidly growing clean and renewable energy segment.
The rights issue was first announced on June 24, on the same day the company revealed it had entered into a non-binding memorandum of understanding with Keppel Offshore & Marine to explore a potential combination of the two businesses.
However, this potential combination is not subject to the completion of the rights issue.
This is not the first time SembMarine has sought funds from its shareholders.
Last year, it raised $2.1 billion in a rights issue, of which $1.5 billion was used to pay off a loan from Sembcorp Industries, its then parent.
Shares of SembMarine closed yesterday at 10.7 cents, up 3.88 per cent.