Seatrium Limited (formerly SembCorp Marine and KOM)

(19-01-2016, 08:31 PM)Art or Science Wrote: Suppose that SM had already recognised 2.5b for the 4 drillships - the impairments would still be quite a lot, given SM net debt situation and with ard 2b loan

The brazilian ship yard, which IIRC cost ard $800m, was probably built with drillships and rigs for brazil and probably other American countries in mind. And with brazil economy now in the doldrums and the ongoing corruption saga, jobs would be hard to come by.

I would say what exactly is impairment? Recent news articles point out that there may be a reversal of 2bn revenue. Without going through all the accounting treatments, if progress billings have matched cost expended so far, then provisions should be only for profits recognised to date. That would be far from 2bn.

Thanks Grubb. 

Sete Brazil owe SM $80m - recalled that it was reported last year. If this is the only amount then far from 2bn. But prob have to account for the inventory / work in progress and write those off as obsolete esp since these drillships are tailormade for Brazilian yards/waters. Not sure If the inventoet can be made for other marine equipment though or the drillship to be remodel to fit other yard. Maybe I'm thinking too much. 

(20-01-2016, 07:15 AM)Art or Science Wrote: Thanks Grubb. 

Sete Brazil owe SM $80m - recalled that it was reported last year. If this is the only amount then far from 2bn. But prob have to account for the inventory / work in progress and write those off as obsolete esp since these drillships are tailormade for Brazilian yards/waters. Not sure If the inventoet can be made for other marine equipment though or the drillship to be remodel to fit other yard. Maybe I'm thinking too much. 

The "owe" is based on billing, excluding the work-in-progress as highlighted.

With the global competition, the billing has moved from progressive payment, to down-payment:payment-on-delivery schedule. Nothing in detail is disclosed by both SembM and Keppel, but a reasonable guess as 10%:90% or 20%:80% payment schedule, IMO. I hope the payment schedule isn't as 5%:95% as in the other drillship for SembM.

(not vested in both)

Thanks CF and also Clement for the news.

If the progress of drillship still stays the same as per the news reported last year, and no payments from Sete Brasil, then SM prob have quite a lot to lose, I reckon..

https://sg.finance.yahoo.com/news/abando...00402.html

<Extract of report>

Meanwhile, OCBC noted that the amount outstanding from Sete Brasil to Sembcorp Marine has increased to $160m as of end Dec last year, and this figure is relatively stable as of end Mar, given the deliberate slowdown in construction for the drillships. Currently, about 82% of the first drillship has been completed, followed by 70% for the second, 51% for the third and 22% for the fourth. These projects remain cash positive.

Sete Brasil's key shareholders vetoe against bankruptcy. To be decided in another meeting within 30 days.

http://www.upstreamonline.com/live/14216...uptcy-vote

https://translate.google.com.sg/translat...rev=search

http://www.businesstimes.com.sg/companie...picks=true

Quote:SEMBCORP Marine made impairment and provisions of S$609 million for rigs, including S$329 million for Sete Brasil drillship projects, for the fiscal year ended Dec 31, 2015, with the view that this down-cycle will be "more protracted than previous cycles".

This dragged the group into a net loss of S$290 million for the year, from a net profit of S$560 million in fiscal 2014. Revenue slipped 15 per cent to S$4.97 billion mainly due to lower revenue recognition from rig building projects.

Before the impairment and provisions, the rig builder racked in S$384 million in net profits (down 31 per cent year on year).

"Several of our customers have requested for delivery deferments in light of delays in chartering out their rigs. Given the current depressed environment in the upstream sector, we have tried to accommodate their requests, while preserving our commercial interests," the group said.

Results are a bit worrying. Sembmarine has parked 1.9Bil of working capital into work in progress. And now revenue is less than cost of sales for its rigs and offshore platforms segments. Wonder will this lead to a major selldown tomorrow.

Results are VERY worrying but not as worrying as Chesapeake. It'll likely survive and probably thrive in the long term.
In the meantime, I'll be staying far far away. Everyday that Oil/Gas stays low, it means trouble for the oil/gas related plays as well as the
banks that finance them. Even if oil goes up eventually, it takes time for that to translate to new rig orders/income.

(The only silver liming is if the parents will buy them back, not counting on that to happen.)

(15-02-2016, 11:50 PM)CY09 Wrote: Results are a bit worrying. Sembmarine has parked 1.9Bil of working capital into work in progress. And now revenue is less than cost of sales for its rigs and offshore platforms segments. Wonder will this lead to a major selldown tomorrow.

The higher cost of sales I think thats becos of inventories write down and provision for order cancellations for work in progress. Dont think this will persist after another few quarters.

Not vested.

Sete Brasil, is partially supported by the state-backed fund. I reckon, the risk is mainly from scale-down/restructure of biz, rather than bankruptcy of Sete. What do you think?

(not vested in both KC, and SM)

Sete Brasil lenders said to tap $1.4b state-backed fund

SAO PAULO (Feb 16): Sete Brasil Participacoes's creditors, including Banco do Brasil and Itau Unibanco Holding, received 2.68 billion reais ($938 million) from a government-backed fund and will likely tap about 1.58 billion reais more, according to a person familiar with the matter.

Creditors withdrew the money from the fund created with government assets in 2008 after Sete Brasil couldn't repay US$3.8 billion ($5.3 billion) in outstanding debt, said the person, who asked not to be identified because the matter is private. Data from Brazil's securities regulator show the fund reported a 2.11 billion-real withdrawal on Feb 10 and an additional 566.5 million reais on Feb 12.

The group of six creditors will soon take out the remaining balance to cover part of Sete's debt, the person said. The fund, which was created to guarantee lending for ship and oil-rig construction in Brazil, had assets of about 1.58 billion reais on Feb 12, regulatory data show. By tapping the money, the banks are essentially transferring the onus of collecting the debt to the naval fund, which is operated by state-controlled lender Caixa Economica Federal, the person said.
...
http://www.theedgemarkets.com/sg/article...acked-fund