LNG

Sembcorp Marine of Singapore, ranked among the leading facilities in the world for LNG vessel repairs and upgrades, is the subject of a rights issue of S$2.1 billion ($1.5Bln) to recapitalise the shipyard group.

Sembcorp Marine shipyards in the Asian city state have built a reputation for LNG-powered vessels, bunkering ships and floating LNG storage.

The boards and management teams of Sembcorp Marine and its parent company, Sembcorp Industries, believe that the proposed rights issue and demerger will strengthen the financial positions of both and unlock shareholder value.

“With greater flexibility following the demerger, both companies can pursue their own sustainable growth paths on the back of changes to their industries in recent years,” it added.

Sembcorp Marine proposes to build on its core engineering solutions for the offshore, marine and energy industries.

One of its projects is the 12,000 cubic metres capacity LNG bunkering vessel ordered from Sembcorp’s Tuas Boulevard Yard.

On completion, currently scheduled for early 2021, the dual-fuel bunkering vessel will be chartered to Singapore’s Pavilion Gas for deployment for fueling ships with LNG in the Port of Singapore.

The vessel is the largest of its kind being built locally, in terms of size and LNG tank capacity and is Sembcorp’s first LNG bunker vessel construction project.

Other ongoing upgrades and conversion projects in LNG at Sembcorp’s Admiralty yard include the floating storage and regasification unit (FSRU) “Karmol LNGT Powership Africa” destined for Mozambique and other work.

Parent company Sembcorp Industries will continue to be focused on its core areas of energy and urban development and be poised to capture opportunities in the sustainable energy transition.

“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,” said the statement.

Both Sembcorp companies will be seeking their respective approval of their shareholders at extraordinary general meetings (EGMs), which are expected to be convened around the of August or early September 2020.

The rights issue is also conditional on Sembcorp Marine shareholders passing a resolution to waive their rights to receive a general offer from Singapore wealth fund Temasek and in connection with the proposed distribution.

Sembcorp Industries has given an undertaking to vote in favour of the rights issue resolution at Sembcorp Marine’s EGM.

The current Sembcorp Marine order book comprises a fairly broad spectrum of product types, including several new-build floating production, storage and offloading vessels, offshore production platforms, as well as battery-operated roll-on, roll-off passenger vessels and LNG bunkering and conversions work.

The Sembcorp construction and conversion work for LNG mainly affects projects involving joint ventures of Japanese shipping company, Mitsui OSK Lines (MOL).

Sembcorp noted in its most recent earnings the Ministry of Manpower in the city state announced movement restriction measures that prevented migrant workers from leaving their dormitories for work.

The workforce of the shipyards normally amounts to 20,000 persons but was substantially reduced to 850 person.

The reduced workforce was deployed to manage critical works and support yard essential services such as emergency response teams, facilities and utilities management and yard security.

Karmol “LNGT Powership Africa” is part of a joint venture involving MOL and the Turkish floating power plant company Karpower International and the vessel is destined for Mozambique.