Seatrium Limited (formerly SembCorp Marine and KOM)

[weijian]

hi noon,
There isn't any merits to buy back something more expensive for what you just sold for.

Nonetheless, I believe company is doing sharebuyback to satisfy their ESOS (Employee Stock Option Scheme) now. They did a buyback in Aug this year and then transferred most of those shares to ESOS.

5th Aug2021 buyback: https://links.sgx.com/1.0.0/corporate-an...a48f8b8914

20th Aug2021 transfer to ESOS: https://links.sgx.com/FileOpen/Notice%20...eID=679814

[weijian]

Between the devil and the deep blue sea. If Sembmarine intends to acquire Keppel FELS in the next few years, it looks high probability there will be another equity fund raising

Sembmarine unit agrees to defer US$800m receivables from Borr Drilling for 2 years

The latest agreement, which was made at Borr Drilling's request, would mean that the balance amount would mature only on May 1, 2025.

In extending the payment, Sembmarine said Borr Drilling has agreed to pay PPLS an extension fee, and also make earlier payments of part of the capitalised interest previously due in the first quarter of 2023.

https://www.businesstimes.com.sg/compani...or-2-years

[CY09]

https://borrdrilling.com/news/borr-drill...s-to-2025/

On the topic of Borr, it is not just SCM who has its receivables delayed. Borr has also deferred its payment to KOM. Borr is still struggling to put into employment the new built shallow water rigs it received delivery from KOM and it has deferred taking the delivery of the other 5 rigs from KOM until 2023.

On the industry front, about 10% of modern shallow water rigs are still unemployed and in warm stack. Transocean has also not been actively ordering new Deepwater rigs and is struggling to put its idle rig into employment too. KOM has not received new orders from rig owners and is holding completed rigs by stacking them pending delivery. While SCM has been "ordered" to acquire Keppel, the industry sentiments does not seem right for SCM to acquire. Even if SCM acquires, i dont think KOM is even worth any value, the company is also in negative equity value. A token amount of $1 or even $1million is the highest price point one can pay for KOM assets in my view.

Given how bad the situation is, SCM should not be even thinking of taking over KOM. Of course, I am not Temasek, so their strategic thinking is different. As a layman, I would think it is better to shut off KOM completely, take all the local expertise absorb into SCM and then trim SCM foreign workforce

[weijian]

Even if SCM acquires, i dont think KOM is even worth any value, the company is also in negative equity value. A token amount of $1 or even $1million is the highest price point one can pay for KOM assets in my view.

Hi CY09,

Just to clarify, KOM is wholly owned by Keppel Corp and its accounting is at least not revealed publicly. I assume that your statement of "negative equity value" for KOM is more figurative than literal?

Negative equity value is actually subjective because we can easily do a capital injection to re capitalize it. And there you go, what really matters are KOM's intangible know-how and hence earning power, which may not be reflected accurately on an accounting balance sheet.

Personally, my opinion is that the merger of SCM and KOM is a sign that we are closer to the bottom of the O&G cycle than not. Even if Temasek gives their blessings, it is still not a given because both of them still need to get approval from the authorities in the places that they operate. You may also think that it is also a done deal in Singapore since it has "Temasek's blessings" but wait! Some years back, SATS (40% owner by Temasek) agreed a deal to acquire SCC (Spore Cruise Terminal) from Temasek...but it was eventually "stopped" by CCS (probably because SATS owned MBCS).

https://www.seatrade-cruise.com/news-hea...t-go-ahead

[CY09]

https://links.sgx.com/FileOpen/MREL_1.%2...eID=676343

I got it from Page 31 of this. Went to see the offshore and marine segment and notice it has 598 million negative equity

[angelzsoul]

Hi guys,

Sorry to hijack this thread.

I recall that when Sembcorp marine have "big" rights issue in 2021, they have convened an EGM to determine if shareholder approval.
(https://links.sgx.com/FileOpen/Notice%20...eID=677227)

But for some companies like recently St******, no EGM will be convened.

Just wondering, under SGX rule, is it a norm/must to have this EGM? Or Sembcorp marine just did it out of good CG?

Thanks!

[ghchua]

But for some companies like recently St******, no EGM will be convened.

Just wondering, under SGX rule, is it a norm/must to have this EGM? Or Sembcorp marine just did it out of good CG?

Thanks!

It depends. Normally, companies will have a share issue mandate resolution at their AGM for shareholders to approve. If they intend to issue shares that exceed the limit being approved at AGMs, then yes, they need to do another EGM for shareholders to approve. Otherwise, it is not necessary, since they are utilizing the share issue mandate approved at AGMs.

For St****** case, since shareholders had already approved the share issue mandate of up to 100% of the issued share capital on a pro rata basis at the AGM, no EGM is needed for approval since they did not exceed the limit.

[angelzsoul]

But for some companies like recently St******, no EGM will be convened.

Just wondering, under SGX rule, is it a norm/must to have this EGM? Or Sembcorp marine just did it out of good CG?

Thanks!

It depends. Normally, companies will have a share issue mandate resolution at their AGM for shareholders to approve. If they intend to issue shares that exceed the limit being approved at AGMs, then yes, they need to do another EGM for shareholders to approve. Otherwise, it is not necessary, since they are utilizing the share issue mandate approved at AGMs.

For St****** case, since shareholders had already approved the share issue mandate of up to 100% of the issued share capital on a pro rata basis at the AGM, no EGM is needed for approval since they did not exceed the limit.

Thanks!

I have taken a look for 2019 and 2020, and the figure was 50% of the issued share capital. The figure jumped to 100% in 2021 AGM. Seems like it has been planned for some time  .

Anyway, just to check if my understanding is right...
"the aggregate number of Shares to be issued pursuant to this Resolution (including Shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution), shall not exceed 100% of the total number of issued Shares (excluding treasury shares and subsidiary holdings, if any) (as calculated in accordance with sub-paragraph (ii) below), of which the aggregate number of Shares to be issued other than on a pro rata basis to shareholders of the Company (including Shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution) shall not exceed 20% of the total number of issued Shares (excluding treasury shares and subsidiary holdings, if any) (as calculated in accordance with sub-paragraph (ii) below);"

==> for the bold part, does this mean if current shareholders are not offered the chance of rights offering, (eg. private placement), the company can only issue < 20% of the total issued shares IF they DON'T WANT to have EGM?

==> Lastly, is there an average/norm figure for the share issue mandate? I am quite shock to see DBS having 50% for their 2021 AGM. Isn't that quite dilutive too? And there are only ~7% against this part of the resolution.

[ghchua]

Hi angelzsoul,

Just to provide a context on the discussion here. The 100% pro rata limit is not a norm. It is normally only 50%. But because of Covid-19, SGX Regco had came out with a Enhanced Share Issue Limit to support issuers amid the challenging business and economic climate. Now back to your questions.....

==> for the bold part, does this mean if current shareholders are not offered the chance of rights offering, (eg. private placement), the company can only issue < 20% of the total issued shares IF they DON'T WANT to have EGM?

Yes. You are correct.

==> Lastly, is there an average/norm figure for the share issue mandate? I am quite shock to see DBS having 50% for their 2021 AGM. Isn't that quite dilutive too? And there are only ~7% against this part of the resolution.

The norm is as stated above by me, 50% pro rata, 20% for non pro rata. However, companies do have a leeway to reduce the limit as needed. Most companies will tell you just do the norm, as standby so that we can issue shares as and when we need it, without the trouble of seeking shareholders approval. Some companies like Isetan Singapore do not even have a share issue mandate tabled at AGMs, which means they are effectively telling you that they do not see the need to issue any shares at all.

[valuebuddies]

Offshore drilling contractor Transocean expects rig dayrates to keep growing, boosted by high oil prices and growing demand, the company's CEO said Tuesday, as the company posted its fourth-quarter results.

Transocean CEO Jeremy Thigpen said: "As we move into 2022, we are more optimistic than we have been in the past seven years. Energy demand remains resilient driving oil prices to seven-year highs.

"As a result, we are experiencing a growing list of opportunities from customers across the globe who value our high-specification floating fleet and our strong and consistent operating performance. With customer demand growing, and utilization for active high-specification assets pushing higher, we expect the upward trend in dayrates to continue as we progress through the year.”

https://www.oedigital.com/news/494530-tr...ng-in-2022

At present situation, where the world is facing unprecedented energy crisis, with ongoing war in one of the world largest oil and gas production region, coupled with underinvestment in the oil and gas due to the "green" idea, it is indeed surprising to see that oil price is still at 100 a barrel. The world will soon realise the mistake of phasing out the fosil fuels just too quickly without getting enough of sustainable green energy. With oil price rising rapidly, demands for oil rigs will flow in, especially for SembMarine who has been very "customers friendly" with delaying payments arrangment. At current price, which is slighly above Temasek's offer price, I believe that SembMarine will due for a good run in years to come.