SINGAPORE - Shareholders have given their blessing to the demerger of Sembcorp Marine (SembMarine) from its parent company, Sembcorp Industries (Sembcorp) following votes in favour of three resolutions at two extraordinary general meetings (EGMs) held on Tuesday morning (Aug 11).
The greenlight is now given for the $2.1 billion recapitalisation plan for SembMarine, the group's offshore marine arm bleeding badly from the industry's prolonged downturn amid an oil price crash. The plan will see Temasek Holdings taking a big direct stake in the company. Parent Sembcorp will become free to focus on its energy and urban development business.
The outcome of the voting was even more keenly watched after the surprise news on Monday of Temasek dropping its $4.1 billion bid for control of Keppel Corp.
Sembcorp shareholders voted overwhelmingly in favour of its move to distribute its shares in specie. Earlier this morning, SembMarine shareholders also voted overwhelmingly in favour of the two resolutions on SembMarine's undertaking of the rights issue and a whitewash resolution that will waive investors' rights to receive a mandatory takeover offer from Temasek.
At the Sembcorp EGM, 99.67 per cent, or shareholders of 302.6 million shares, voted for the distribution of shares in specie. At the SembMarine EGM, 98.76 per cent, or shareholders of some 1.4 billion shares, voted for the rights issue, while 87.72 per cent, or shareholders with a collective 121.3 million shares, voted for the whitewash resolution, the companies said in filings to the Singapore Exchange.
The resolution from Sembcorp, along with the other two from SembMarine, required a simple majority, but all three resolutions were inter-conditional. SembMarine said that the rights issue, approved and passed by its shareholders, will "further depend on the outcome of the Sembcorp distribution resolution" that has been tabled to investors.
Sembcorp group president and chief executive Wong Kim Yin said the company is "grateful for the support demonstrated by its shareholders today.
He said: "Sembcorp Industries can now move forward as a focused energy and urban player. Sembcorp Industries has a strong portfolio, anchored in sectors providing essential solutions and in growing markets such as Asia.
"With increased strategic focus, we will be able to dedicate our resources and efforts to repositioning our businesses and capturing these growth opportunities. This includes opportunities in the renewable energy sector where Sembcorp Industries is already one of Singapore's largest home-grown renewable energy players.
"We are also encouraged that we can provide support to Sembcorp Marine for its rights issue that will enable it to better ride through the downturn and position itself for recovery. Our shareholders can now expect to receive shares in a stronger recapitalised Sembcorp Marine."
Mr Wong added the company will make further announcements in due course on the proposed distribution, including among others, the distribution ratio and the SCI record date.
In the days leading up to the EGM, both companies had called on their shareholders to vote in favour of the resolutions tabled at the EGM in order for the transaction to proceed.
SembMarine stressed that funds from the recapitalisation would be key to fixing its "critical" liquidity needs, and that the rights issue would provide the company with the "much needed recapitalisation" to ride out the offshore marine industry downturn, strengthen its balance sheet, and re-position the firm for long-term viability.
"If shareholders do not approve the transaction, SembMarine's strenuous efforts to recapitalise and strengthen its balance sheet will be negated and the critical need to address our liquidity requirements will fail," SembMarine said.
Both Sembcorp and SembMarine had called for trading halts on Tuesday morning ahead of the EGMs. After the trading halts were lifted at around 1.10 pm, Sembcorp and Sembmarine shares climbed before erasing all their gains.
After hitting a session high of $1.975, Sembcorp shares closed down five cents or 2.6 per cent at $1.85. In more volatile trading, Sembmarine shares closed down one cent or 2.9 per cent at 34 cents.
