SembCorp Marine

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Rainbow 
4 June 2020 Halted SembCorp & SembMarine

https://links.sgx.com/1.0.0/corporate-an...fca6bf466c
https://links.sgx.com/1.0.0/corporate-an...5ed58b39b5

Stay home and stay safe, valuebuddies.

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Rainbow 
4 June 2020 Halted SembCorp & SembMarine

https://links.sgx.com/1.0.0/corporate-an...fca6bf466c
https://links.sgx.com/1.0.0/corporate-an...5ed58b39b5

Stay home and stay safe, valuebuddies.

Reply
Rainbow 
4 June 2020 SembMarine - update Brazil

Federal Justice Court of Curitiba accepted money laudering complaint offered by Federal Public Minstry.
The above charges filed by MPF are at personal capacities.
https://links.sgx.com/FileOpen/Announcem...eID=615126

Stay home and stay safe, valuebuddies.

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Rainbow 
4 June 2020 SembMarine - update Brazil

Federal Justice Court of Curitiba accepted money laudering complaint offered by Federal Public Minstry.
The above charges filed by MPF are at personal capacities.
https://links.sgx.com/FileOpen/Announcem...eID=615126

Stay home and stay safe, valuebuddies.

Reply
Due to the project-based nature of its revenue, SCM was always going to use alot of working capital. For eg. its rigs and drill ships were mostly on a 10-20% downpayment + 80% upon delivery kind of schedule. There was a time when the future was extremely bright and it then committed itself to 2 new shipyards - a greenfield EJA in Brazil, and its mega Tuas Boulevard Yard to consolidate all other yards in Spore. It wasn't going to be a problem with this high CAPEX despite its working capital handicap. Times were that good.

With that good times a thing of the past, past commitments eventually have to be paid up now. Once again, Temasek is here to do NS. With Keppel Corp's partial offer in context, probably no surprises what is going to happen next after SCM is been spin off to its shareholders via dividend in specie.

SEMBCORP INDUSTRIES AND SEMBCORP MARINE PROPOSE S$2.1 BILLION RECAPITALISATION OF SEMBCORP MARINE, AND DEMERGER TO FOCUS COMPANIES ON THEIR GROWTH SEGMENTS

S$2.1 billion renounceable Rights Issue by Sembcorp Marine will strengthen its cash position and balance sheet

o Sembcorp Marine will undertake a 5-for-1 Rights Issue (5 Rights Shares for every 1 Sembcorp Marine share held) at a Rights Issue Price of
S$0.20 per share

o Rights Price represents a 31.0% discount to the TERP1 based on 5-day2 VWAP3 of S$0.74

o Sembcorp Industries has undertaken to subscribe for up to S$1.5 billion of Rights Shares by setting off the S$1.5 billion outstanding under its Subordinated Loan extended to Sembcorp Marine. Temasek has agreed to sub-underwrite the remaining S$0.6 billion

https://links.sgx.com/FileOpen/SCI%20AND...eID=616787
Reply
Due to the project-based nature of its revenue, SCM was always going to use alot of working capital. For eg. its rigs and drill ships were mostly on a 10-20% downpayment + 80% upon delivery kind of schedule. There was a time when the future was extremely bright and it then committed itself to 2 new shipyards - a greenfield EJA in Brazil, and its mega Tuas Boulevard Yard to consolidate all other yards in Spore. It wasn't going to be a problem with this high CAPEX despite its working capital handicap. Times were that good.

With that good times a thing of the past, past commitments eventually have to be paid up now. Once again, Temasek is here to do NS. With Keppel Corp's partial offer in context, probably no surprises what is going to happen next after SCM is been spin off to its shareholders via dividend in specie.

SEMBCORP INDUSTRIES AND SEMBCORP MARINE PROPOSE S$2.1 BILLION RECAPITALISATION OF SEMBCORP MARINE, AND DEMERGER TO FOCUS COMPANIES ON THEIR GROWTH SEGMENTS

S$2.1 billion renounceable Rights Issue by Sembcorp Marine will strengthen its cash position and balance sheet

o Sembcorp Marine will undertake a 5-for-1 Rights Issue (5 Rights Shares for every 1 Sembcorp Marine share held) at a Rights Issue Price of
S$0.20 per share

o Rights Price represents a 31.0% discount to the TERP1 based on 5-day2 VWAP3 of S$0.74

o Sembcorp Industries has undertaken to subscribe for up to S$1.5 billion of Rights Shares by setting off the S$1.5 billion outstanding under its Subordinated Loan extended to Sembcorp Marine. Temasek has agreed to sub-underwrite the remaining S$0.6 billion

https://links.sgx.com/FileOpen/SCI%20AND...eID=616787
Reply
I dont think subscribing to shares at $0.20 per piece is really NS. If I was an OPMI, I will have been contended if SCI debt had remained on the books. This is because we are in bad times now.

When good times or normal times resume, a highly leveraged company with a smaller share base is better vis-à-vis a lower leveraged company with a larger share base
Reply
I dont think subscribing to shares at $0.20 per piece is really NS. If I was an OPMI, I will have been contended if SCI debt had remained on the books. This is because we are in bad times now.

When good times or normal times resume, a highly leveraged company with a smaller share base is better vis-à-vis a lower leveraged company with a larger share base
Reply
(08-06-2020, 08:36 PM)CY09 Wrote: I dont think subscribing to shares at $0.20 per piece is really NS. If I was an OPMI, I will have been contended if SCI debt had remained on the books. This is because we are in bad times now.

When good times or normal times resume, a highly leveraged company with a smaller share base is better vis-à-vis a lower leveraged company with a larger share base

"You Can Be a Stock Market Genius"....
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster
Reply
(08-06-2020, 08:36 PM)CY09 Wrote: I dont think subscribing to shares at $0.20 per piece is really NS. If I was an OPMI, I will have been contended if SCI debt had remained on the books. This is because we are in bad times now.

When good times or normal times resume, a highly leveraged company with a smaller share base is better vis-à-vis a lower leveraged company with a larger share base

"You Can Be a Stock Market Genius"....
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster
Reply
8 June 2020 5 SembMarine 5 for 1 rights and demerger
Both SembMarine and Sembcorp requested to halt to be lifted today at 8:30am
https://links.sgx.com/1.0.0/corporate-an...b24d9a5939
https://links.sgx.com/1.0.0/corporate-an...db3738fb65

A) Recaptialisation of SembMarine
a. 5 rights shares for every 1 existing SembMarine share at S$0.20 per rights share
b. SembMarine last closed $0.74 on 3 Jun 2020
c. Gross proceed $2.1b ($1.5b is to repay Sembcorp, $0.6b is for working capital and general corporate purposes, including debt servicing)

B) Demerger of SembMarine from SembCorp
a. Distribution in specie of SembMarine shares held by SembCorp post completion of rights issue
b. Each SembCorp shareholders would receive between 427 and 491 SembMarine shares for every 100 SembCorp shares owned
c. After demerger, SembCorp get rid of the $1.5b subordinated credit facility granted to SembMarine in Jun 2019
(click for details)

Stay home and stay safe, valuebuddies.
Reply
8 June 2020 5 SembMarine 5 for 1 rights and demerger
Both SembMarine and Sembcorp requested to halt to be lifted today at 8:30am
https://links.sgx.com/1.0.0/corporate-an...b24d9a5939
https://links.sgx.com/1.0.0/corporate-an...db3738fb65

A) Recaptialisation of SembMarine
a. 5 rights shares for every 1 existing SembMarine share at S$0.20 per rights share
b. SembMarine last closed $0.74 on 3 Jun 2020
c. Gross proceed $2.1b ($1.5b is to repay Sembcorp, $0.6b is for working capital and general corporate purposes, including debt servicing)

B) Demerger of SembMarine from SembCorp
a. Distribution in specie of SembMarine shares held by SembCorp post completion of rights issue
b. Each SembCorp shareholders would receive between 427 and 491 SembMarine shares for every 100 SembCorp shares owned
c. After demerger, SembCorp get rid of the $1.5b subordinated credit facility granted to SembMarine in Jun 2019
(click for details)

Stay home and stay safe, valuebuddies.
Reply
(08-06-2020, 08:36 PM)CY09 Wrote: I dont think subscribing to shares at $0.20 per piece is really NS. If I was an OPMI, I will have been contended if SCI debt had remained on the books. This is because we are in bad times now.

When good times or normal times resume, a highly leveraged company with a smaller share base is better vis-à-vis a lower leveraged company with a larger share base

Hi CY09,
The current large and deeply-discounted rights issue has to be viewed in the context of the entire suite of corporate actions been done and expected to be done.

First and foremost, Sembmarine obtained a 2bil loan from parent SCI in June 2019. The bulk of SCI's money came from a 1.5bil bond issue with Temasek "participating". This bond issue is considerably huge in Singaporean context and it can be roughly seen as Temasek backstopping it. In general, a parent will seldom lend money to its subsidiary. This is because if the parent does (lend money) and the subsidiary goes down, the parent be implicated with the loans. The loans by Temasek to SCI and then to SCM, suggests that SCM was never able to get 2bil on its own, to retire its existing debt.

The current rights issue not liable by SCI (the other 39%) are also back stopped by Temasek. After SCM is finally distributed as a distribution in specie to SCI's shareholders, SCI still has to pay the bill of the 1.5bil to its bondholders (which includes Temasek). Depending on future conditions, SCI might or might not be able to repay them back on its own or roll it over. Eventually, SCI could require another rights issue to retire some of the loans and we know who will be backstopping it.

In the future, we could probably see some sort of merger between Keppel OM and Sembmarine to rationalize costs and be ready for the new O&G context. Somehow, I feel the paradigm has changed from the hey days of 2010 and the current status quo is probably not going to suffice. It (merger) is also only happening because Temasek has a parallel generous partial offer for Keppel Corp. This means that having the soft loan from SCI-SCM is also not going to last for too long because of what has happened in the last 3 months.

Oil cycles are deep and long and it remains to be seen if Temasek is going to make much money in future with this "cheap" 20cents/offer. I suspect SCM would have gone down long ago due to its earlier CAPEX commitments and suffered a fate similar to many other O&G companies, if it is not for Temasek's help in the past and the future.
Reply
(08-06-2020, 08:36 PM)CY09 Wrote: I dont think subscribing to shares at $0.20 per piece is really NS. If I was an OPMI, I will have been contended if SCI debt had remained on the books. This is because we are in bad times now.

When good times or normal times resume, a highly leveraged company with a smaller share base is better vis-à-vis a lower leveraged company with a larger share base

Hi CY09,
The current large and deeply-discounted rights issue has to be viewed in the context of the entire suite of corporate actions been done and expected to be done.

First and foremost, Sembmarine obtained a 2bil loan from parent SCI in June 2019. The bulk of SCI's money came from a 1.5bil bond issue with Temasek "participating". This bond issue is considerably huge in Singaporean context and it can be roughly seen as Temasek backstopping it. In general, a parent will seldom lend money to its subsidiary. This is because if the parent does (lend money) and the subsidiary goes down, the parent be implicated with the loans. The loans by Temasek to SCI and then to SCM, suggests that SCM was never able to get 2bil on its own, to retire its existing debt.

The current rights issue not liable by SCI (the other 39%) are also back stopped by Temasek. After SCM is finally distributed as a distribution in specie to SCI's shareholders, SCI still has to pay the bill of the 1.5bil to its bondholders (which includes Temasek). Depending on future conditions, SCI might or might not be able to repay them back on its own or roll it over. Eventually, SCI could require another rights issue to retire some of the loans and we know who will be backstopping it.

In the future, we could probably see some sort of merger between Keppel OM and Sembmarine to rationalize costs and be ready for the new O&G context. Somehow, I feel the paradigm has changed from the hey days of 2010 and the current status quo is probably not going to suffice. It (merger) is also only happening because Temasek has a parallel generous partial offer for Keppel Corp. This means that having the soft loan from SCI-SCM is also not going to last for too long because of what has happened in the last 3 months.

Oil cycles are deep and long and it remains to be seen if Temasek is going to make much money in future with this "cheap" 20cents/offer. I suspect SCM would have gone down long ago due to its earlier CAPEX commitments and suffered a fate similar to many other O&G companies, if it is not for Temasek's help in the past and the future.
Reply
The bad news continue to come in. With the pending recapitalization (or bail out) and subsequent consolidation of existing Singapore yards into the mega Tuas yard, would there be a value investing opportunity in SCM?

Sembcorp Marine reports 1H 2020 net loss of $192 million, hit by COVID-19 shutdown of production activities since April 2020

We will continue to right-size our resources and optimise our costs to preserve critical skills and competencies within the Sembcorp Marine Group, in particular, Singapore-based engineering and PMET talent. This will ensure that we have the needed resources to respond to new opportunities when the industry recovers.

We remain focused on adapting and gearing up our skills, technologies, and production capabilities and capacity to meet changing market needs and compete for high-value orders in new segments.

If the proposed Sembcorp Marine Rights Issue and Demerger from SCI are approved by shareholders, we will chart a new chapter going forward. We will increasingly diversify into new growth areas like offshore wind, and expand deeper into our established segments, such as the gas value chain. We will improve and transform our solutions through continuous R&D, supported by strategic investments in intellectual property, technologies and engineering and construction capabilities; and we will deliver industry-leading project executions.

PR: https://links.sgx.com/FileOpen/SCM%201H2...eID=623804
A Long ppt presentation: https://links.sgx.com/FileOpen/SCM%201H2...eID=623805
FS: https://links.sgx.com/FileOpen/SCM%201H2...eID=623803
CEO's speech: https://links.sgx.com/FileOpen/SCM%201H2...eID=623806
Reply
The bad news continue to come in. With the pending recapitalization (or bail out) and subsequent consolidation of existing Singapore yards into the mega Tuas yard, would there be a value investing opportunity in SCM?

Sembcorp Marine reports 1H 2020 net loss of $192 million, hit by COVID-19 shutdown of production activities since April 2020

We will continue to right-size our resources and optimise our costs to preserve critical skills and competencies within the Sembcorp Marine Group, in particular, Singapore-based engineering and PMET talent. This will ensure that we have the needed resources to respond to new opportunities when the industry recovers.

We remain focused on adapting and gearing up our skills, technologies, and production capabilities and capacity to meet changing market needs and compete for high-value orders in new segments.

If the proposed Sembcorp Marine Rights Issue and Demerger from SCI are approved by shareholders, we will chart a new chapter going forward. We will increasingly diversify into new growth areas like offshore wind, and expand deeper into our established segments, such as the gas value chain. We will improve and transform our solutions through continuous R&D, supported by strategic investments in intellectual property, technologies and engineering and construction capabilities; and we will deliver industry-leading project executions.

PR: https://links.sgx.com/FileOpen/SCM%201H2...eID=623804
A Long ppt presentation: https://links.sgx.com/FileOpen/SCM%201H2...eID=623805
FS: https://links.sgx.com/FileOpen/SCM%201H2...eID=623803
CEO's speech: https://links.sgx.com/FileOpen/SCM%201H2...eID=623806
Reply
Rainbow 
The Company would like to inform Shareholders that SCI has announced today that the SCI Distribution Resolution was duly approved and passed by the SCI Shareholders at the SCI EGM. Accordingly, the Transaction (including the Rights Issue) can now proceed.


In addition, the Record Date for the Rights Issue of 5.00 p.m. on 14 August 2020 for the purpose of determining the provisional allotments of Rights Shares of Entitled Shareholders under the Rights Issue is hereby confirmed. For further details, please refer to the Company’s announcement dated 5 August 2020.

Stay home and stay healthy, valuebuddies.
Heart
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Rainbow 
The Company would like to inform Shareholders that SCI has announced today that the SCI Distribution Resolution was duly approved and passed by the SCI Shareholders at the SCI EGM. Accordingly, the Transaction (including the Rights Issue) can now proceed.


In addition, the Record Date for the Rights Issue of 5.00 p.m. on 14 August 2020 for the purpose of determining the provisional allotments of Rights Shares of Entitled Shareholders under the Rights Issue is hereby confirmed. For further details, please refer to the Company’s announcement dated 5 August 2020.

Stay home and stay healthy, valuebuddies.
Heart
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SCI (owns 61%) takes up 72% of the rights, while Temasek mops up 9.8% of the remaining.

Share of OPMIs = 100 - 61 = 39%.
Rights not taken up by OPMI = (72 - 61) + 9.8 = 20.8%
% of shares not taken up by OPMI = 20.8/39 = 53%.

Basically only slight less than 50% of OPMIs decided to help to bail SCM out.

https://links.sgx.com/FileOpen/Announcem...eID=630853
Reply
SCI (owns 61%) takes up 72% of the rights, while Temasek mops up 9.8% of the remaining.

Share of OPMIs = 100 - 61 = 39%.
Rights not taken up by OPMI = (72 - 61) + 9.8 = 20.8%
% of shares not taken up by OPMI = 20.8/39 = 53%.

Basically only slight less than 50% of OPMIs decided to help to bail SCM out.

https://links.sgx.com/FileOpen/Announcem...eID=630853
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