Sembcorp Marine proposes $1.5bn recapitalisation as part of demerger from parent company

Singapore’s shipbuilding and repair yard group Sembcorp Marine has proposed a recapitalisation plan through a S$2.1bn ($1.5bn) rights issue which will be backed by parent Sembcorp Industries and state-run Temasek Holdings.

As part of the plan, Sembcorp Marine will emerge from its parent company, with Sembcorp Industries shareholders to receive Sembcorp Marine shares as dividends.

Sembcorp believes the proposed rights issue and distribution will strengthen the financial positions of both Sembcorp Marine and Sembcorp Industries and enable them to better focus on their respective 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,” the company said in a release.

Sembcorp Marine reduced its workforce at its yards by over 95% as part of its Covid-19 mitigation measures last month.

“We believe that the rights issue will give us much needed financial strength to ride through the prolonged industry downturn and prepare for recovery. This recapitalisation will improve our cash position, fund ongoing financial commitments, strengthen our balance sheet and ensure long-term viability. We thank the board, management and staff of Sembcorp Industries for their steadfast support through the years and look forward to working with all shareholders to generate sustainable returns,” said Wong Weng Sun, president and CEO of Sembcorp Marine.

Upon completion of the transaction, Temasek will be a direct and significant shareholder of Sembcorp Marine with a stake exceeding 29%.