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Bond Market News

Keppel and Sembcorp Marine Plan on Combining O&M Businesses

Singapore’s Keppel Corporation Limited (Keppel) and Sembcorp Marine Ltd (Sembcorp) have entered a non-binding memorandum of understanding (MoU) to combine Keppel Offshore and Marine (O&M) and Sembcorp Marine in a 50-50 Joint Venture which would give rise to a Combined Entity. Sembcorp Marine’s shareholders will receive shares in the Combined Entity, while Keppel will receive shares and a cash consideration of up to S$500mn ($372.5mn) (or a cash component with the economic equivalent effect). The two companies aim to create a stronger entity which would be better placed to capitalize gas and other production facilities to compete for larger contracts while accelerating pivot to energy transition including offshore renewables. In addition, Keppel has also signed a non-binding MoU with Kyanite Investment Holdings Pte Ltd, a wholly owned subsidiary of Temasek, to sell Keppel O&M’s legacy rigs and associated receivables to a separate Asset Co. Keppel said that “The two proposed transactions will be inter-conditional and pursued concurrently.” The news comes amid a reduction in the oil exploration activities in the recent years which was exacerbated by the Covid-19 crisis and is subject to the approval by regulatory authorities and shareholders.

Semcorp’s 3.593% 2026s and 2.45% 2031s were up 0.01 and 0.13 to trade at 108.3 and 100.56 respectively. Keppels 3% 2026s and 4% 2042s were largely stable.

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