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Mon, September 07, 2020 – 9:07 PM
Sembcorp Marine’s (SMM) share rights issue to recapitalize the company was unsubscribed, with valid acceptances and over-requests received for 9.4 billion rights shares, or 90.2% of the nearly 10.5 billion shares of rights available.
Based on the results of Monday’s application, SMM’s parent company, Sembcorp Industries (SCI), subscribed for 7.5 billion or 72 percent of the available shares by canceling a S $ 1.5 billion loan it extended to SMM in June. 2019.
The modest interest in the rights issue could be due to the fact that SMM’s shares were trading close to S $ 0.20 in the last days before the issue closed. With a negligible difference between the open market and rights prices, there was little incentive for shareholders to take over the rights.
Startree will eliminate the 1.03 billion shares with unsubscribed rights, according to the subscribe agreement. Startree is a wholly owned subsidiary of Sembcorp’s largest shareholder, Temasek, which will now have a direct stake in SMM.
SCI and SMM shareholders voted strongly in favor of the S $ 2.1 billion recapitalization for SMM and the proposed spin-off for the two groups in August. In a previous presentation asking investors to support the recapitalization, SMM said the financing would help it weather the industry recession, strengthen its balance sheet and reposition it for long-term viability.
It also noted that the change of control would affect only some of its banking facilities and that the banks support the transaction. SMM said it would expect banks to refinance existing loans and provide additional facilities if the recapitalization is successful.
Shares of SMM closed at S $ 0.199 on Monday, up 0.2 Singapore cents or 1.02 percent.
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