KEPPEL will take over 13 legacy rigs held by Rigco following a selective capital reduction exercise to be completed by the latter.
Keppel currently holds a 10 per cent equity stake in Rigco, S$139 million in perpetual securities and about S$4.3 billion in vendor notes issued by Rigco.
The exercise will cancel all of Rigco’s shares that are not held by Keppel as of Tuesday (Nov 19), the date of the announcement. This will result in Rigco becoming a wholly owned subsidiary of Keppel.
Keppel said with Rigco becoming its wholly owned subsidiary, it will be able to effectively manage when and how the legacy assets are monetised.
Loh Chin Hua, chief executive of Keppel, said securing control over the management and monetisation of the legacy rigs can reduce its risks as a substantial creditor to Rigco, as well as “better realise the potential of its assets”.
Keppel will also have control of S$843 million worth of cash in Rigco as at end-September, which it can use to complete the unfinished rigs.
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Post-capital reduction, the group will be able to accelerate the monetisation of rigs and unlock funds that can be used to reduce debt, reinvest for growth and reward shareholders, said Loh.
But Keppel noted that it has “no intention of re-entering the offshore and marine business”. It would instead focus on the monetisation of legacy assets.
Additionally, Keppel is planning to establish a new offshore infrastructure private fund to own and manage the legacy rigs, as well as hold its 49 per cent stake in Floatel International. It also aims to use the fund to attract third-party capital.
“This will provide Keppel with greater strategic flexibility to respond to market opportunities via directly managing the rig assets through the fund, while potentially earning asset management fees as a general partner of the fund,” said Keppel.
The selective capital reduction exercise is not expected to result in any material adverse impact on the group’s net tangible assets per share or earnings per share for the current financial year, said the company.
Shares of Keppel closed 0.3 per cent or S$0.02 higher at S$6.58 on Monday.
