Sembcorp Marine Rights Issue

Sembcorp Marine wishes to thank Shareholders for demonstrating their support for the Company by participating in the Rights Issue, at the EGM and through the subscription process, and enabling the successful completion of the Rights Issue.

 

Background

Sembcorp Industries and Sembcorp Marine jointly announced on 8 June 2020 a transaction involving the recapitalisation of Sembcorp Marine through a S$2.1 billion renounceable rights issue (the “Rights Issue”), followed by a demerger of the two companies via a distribution in specie (the “SCI Distribution”) of Sembcorp Industries’ stake in the recapitalised Sembcorp Marine to Sembcorp Industries shareholders.

The boards and management teams of Sembcorp Industries and Sembcorp Marine believe that the Rights Issue and the Distribution (collectively, the “Transaction”) will strengthen the two companies’ financial positions and will unlock shareholder value, and is in the best interests of our respective shareholders.

 

Results of the Rights Issue

Sembcorp Marine (the “Company“) announced on 7 September 2020 that, as at the close of the Rights Issue on 2 September 2020, valid acceptances and excess applications were received for 9,434,192,612 Rights Shares, representing approximately 90.2% of the 10,462,690,870 Rights Shares available under the Rights Issue.

This included 7,500,000,000 Rights Shares, representing approximately 72% of the 10,462,690,870 Rights Shares available under the Rights Issue, comprising the SCI Pro Rata Rights Shares and SCI Excess Rights Shares for which SCI had subscribed in accordance with the SCI Undertaking Agreement.

Details of the valid acceptances and excess applications received for Rights Shares are as follows:


Pursuant to the Sub-Underwriting Agreement, Startree, a wholly-owned subsidiary of Temasek, has subscribed for the balance of 1,028,498,258 unsubscribed Rights Shares.

For more details on the results of the Rights Issue, please refer to our 7 September 2020 announcement at this link.  

 

Issue and Listing of Rights Shares

The 10,462,690,870 Rights Shares were allotted and issued on the Main Board of the SGX-ST on 11 September 2020 pursuant to the Rights Issue. 

Based on the foregoing, the net proceeds raised by the Company from the Rights Issue are approximately S$2.1 billion. Of the net proceeds, an amount of S$1.5 billion (representing the consideration for 7,500,000,000 Rights Shares subscribed for by SCI pursuant to the SCI Undertaking Agreement) has been allocated and will be utilised to repay (by way of set off) the outstanding principal of S$1.5 billion under the Subordinated Credit Facility in accordance with the stated use and the percentage allocated as disclosed in the Offer Information Statement. Following the foregoing utilisation, the amount of unutilised net proceeds would be approximately S$0.6 billion.

The Rights Shares will, upon allotment and issue, rank pari passu in all respects with the then existing Shares, except that they will not rank for any dividends, rights, allotments or other distributions the record date for which falls before the date of allotment and issue of the Rights Shares.

Following the allotment and issue of the 10,462,690,870 Rights Shares, the number of issued Shares (including 416,840 treasury shares) increased from 2,092,955,014 Shares as at 10 September 2020 to 12,555,645,884 Shares.

Please refer to our 10 September 2020 announcement at this link for the full details.

 

Trading of Rights Shares

Trading of the Rights Shares commenced with effect from 9.00 a.m. on 11 September 2020. For information on the trading of odd lots, please refer to our 10 September 2020 announcement at this link

 

Settlement of the SCI Distribution

The allotment and issue of the Rights Shares took place before 9.00 a.m. on 11 September 2020, the same day as the settlement date of the SCI Distribution and the date of crediting of the Shares to the Securities Accounts of SCI Shareholders pursuant to the SCI Distribution .

On completion of the SCI Distribution, Sembcorp Marine has ceased to be a subsidiary of SCI. Following the Transaction, Temasek’s wholly owned subsidiary Startree Investments is now a direct and significant shareholder of the Company. 

Please refer to our 15 September 2020 announcements on the changes in interests relating to Temasek and its subsidiaries as well as SCI

 

Transaction Overview and Rationale

Key Highlights of the Transaction

1. S$2.1 billion renounceable Rights Issue by Sembcorp Marine

    • 5 for 1 at S$0.20 per share
      • 31.0% discount to TERP1 based on 5-day2 VWAP3  of S$0.744
      • 35.1% discount to TERP based on last close of S$0.85
      • 76.5% discount to last close of S$0.85 on 3 June 2020
    • Sembcorp Industries has irrevocably undertaken a subscription of its pro rata entitlement of S$1.27 billion and an additional S$0.23 billion of Rights Shares – a total commitment of S$1.5 billion
    • Sembcorp Industries will be setting off its outstanding S$1.5 billion subordinated loan extended to Sembcorp Marine in June 2019 (the “Subordinated Loan”) for the Rights Issue subscription; the Subordinated Loan will convert into equity on Sembcorp Marine’s balance sheet
    • Temasek has sub-underwritten the balance of the Rights Issue with no sub-underwriting fees

      2. Distribution of Sembcorp Marine shares to Sembcorp Industries shareholders

      • After the completion of the Rights Issue, Sembcorp Industries undertook a distribution of its stake in the recapitalised Sembcorp Marine to Sembcorp Industries shareholders on a pro rata basis as dividends
      • Entitled Sembcorp Industries shareholders received 4.911 Sembcorp Marine shares for each Sembcorp Industries share held, fractional entitlements disregarded, with no cash outlay. For more details, please refer to Sembcorp Industries’ 11 September 2020 announcement here and 7 September 2020 announcement at this link.
      • The transaction resulted in the demerger of Sembcorp Marine from Sembcorp Industries.  Please see our 15 September 2020 announcement at this link for more information on the shareholding changes of  Sembcorp Industries.   
      • Upon completion of the Transaction, Temasek is now a direct and significant shareholder of both Sembcorp Industries and Sembcorp Marine. Please refer to our 15 September 2020 announcements  at this link for details on the shareholding changes of Temasek and its subsidiaries.   

      Footnotes:
      1 TERP – Theoretical ex rights price
      2 Based on the 5-day period up to and including the last close as of 3 June 2020
      3 VWAP – Volume weighted average price
      4  73.0% discount to the 5-day VWAP, based on the 5-day period up to and including the last close as of 3 June 2020

       

      The Transaction will enable Sembcorp Industries and Sembcorp Marine to better focus on their respective industries. With greater flexibility following the demerger, both companies can pursue their own sustainable growth paths on the back of changes to their industries in recent years.

      Following completion of the Transaction, both Sembcorp Industries and Sembcorp Marine will have strong shareholder bases to support the respective companies’ strategies and business models for the long term.

      Sembcorp Industries will continue to be focused on its core areas of energy and urban development, and be poised to capture opportunities in sustainable energy transition, while Sembcorp Marine builds on its core engineering solutions for the offshore, marine and energy industries.

      Sembcorp Marine, which has been doubly hit by the COVID-19 pandemic and recent collapse in oil prices, will also be able to better address its urgent need to recapitalise, meet liquidity requirements, and strengthen its balance sheet to ride through the prolonged downturn in the offshore and marine industry.

       

      Summary of Benefits to Shareholders

      In summary, Sembcorp Marine shareholders will benefit from the Rights Issue in the following ways:

      1.  Sembcorp Marine will strengthen its liquidity position and balance sheet, enabling it to execute its existing projects and compete for high-value projects going forward.

      2. The demerger with Sembcorp Industries will enable the Company to pursue a focused strategy and build further its core engineering and execution capabilities.

      3. Sembcorp Marine will have a strong long-term future as a global leader in innovative engineering solutions for the offshore, marine and energy industries, with an increasing focus on clean energy.

      4. Following Sembcorp Industries’ Distribution, Sembcorp Marine has Temasek as a direct and significant shareholder.

       

       

      Related Links

       

      Rights Issue, Transaction Rationale and Related Updates

      Q&As