Keppel signs revised terms on Sembmarine transaction; posts 24% rise in revenue to $6.8 billion

Sembcorp Marine will now directly acquire 100 per cent of Keppel O&M from Keppel. PHOTOS: KEPPEL CORP, SEMBCORP MARINE

SINGAPORE - Keppel Corporation signed revised agreements with Sembcorp Marine on the proposed combination of its offshore and marine (O&M) arm with rig builder Sembcorp Marine, in a move that would simplify implementation, provide greater deal certainty and accelerate the completion of the transaction.

Sembcorp Marine will now directly acquire 100 per cent of Keppel O&M from Keppel. There will no longer be a need to form a separate structure to hold both Keppel O&M and Sembcorp Marine.

As a result of the revised terms, the value of the equity shares in Sembcorp Marine that Keppel would receive from the proposed transaction would be lowered by about $378 million, from approximately $4.87 billion to approximately $4.5 billion, Keppel said in a statement.

The simplified structure would only require majority approval by Keppel’s and Sembcorp Marine’s shareholders. Court approval and the transfer of listing status from Sembcorp Marine to a separate entity will also no longer be required. 

Consequently, both Keppel and Sembcorp Marine are targeting to complete the proposed combination by the end of 2022, much earlier than planned.

Explaining the rationale for the revised agreements, Mr Loh Chin Hua, chief executive of Keppel, said: “The revised terms will enhance deal certainty and expedite the completion of the proposed combination, allowing Keppel to further accelerate the execution of our Vision 2030 strategy to be one integrated business, providing solutions for sustainable urbanisation.”

Keppel on Thursday also announced a 24 per cent rise in revenue to $6.8 billion year on year for the first nine months of 2022. Excluding discontinued operations, the conglomerate’s revenue grew 15 per cent to $5 billion over the same period.

In its latest business update, the company noted that net profit for the same period also rose year on year due to stronger performance from the energy and environment as well as asset management segments.

Still, net profit for the third quarter of 2022 fell year on year due to the absence of the gain from the en bloc sale of a project in China.

Keppel attributed the growth in revenue to higher contributions from Keppel Infrastructure, Keppel O&M, telco M1 and asset management arm Keppel Capital.

It also noted that its net gearing increased to 0.79 times as at Sep 30, 2022, from 0.68 times on Jun 30, 2022. As at Sep 30, 70 per cent of Keppel’s borrowings were on fixed rates, with an average interest cost of 2.88 per cent and weighted tenor of about three years.

The company attributed the higher gearing ratio to the payment of 2022’s interim dividend and the repurchase of shares as part of its share buyback programme.

Mr Loh noted that it is well ahead of the company’s three-year asset monetisation target and is on track to exceed the $5 billion mark before the end of next year. It has announced asset monetisations worth close to S$4.4 billion to date.

Keppel shares rose 0.8 per cent to close at $6.65 on Thursday, before the update was released. THE BUSINESS TIMES

  • Additional reporting by Kang Wan Chern

Follow ST on LinkedIn and stay updated on the latest career news, insights and more.