Sembcorp Marine Limited (the “Company”) wishes to announce that it has today entered into a sale and purchase agreement with PPL Holdings Pte Ltd (PPLH) and E-Interface Holdings Limited (EIHL) to acquire the remaining 15% in the issued and fully paid-up share capital of PPL Shipyard Pte Ltd (PPLS”) (the Acquisition) for an aggregate cash consideration of US$115,058,934.
PPLS is in the business of designing, constructing, repairing and improving of oil rigs, ships and other ocean-going vessels. Following the acquisition, it becomes a wholly-owned subsidiary of the Company.
Rationale for the Acquisition
The Acquisition will result in the Company having full control of PPLS. This will enable the Company to optimally manage the businesses, finance and resources of PPLS, and fully align the latter’s corporate strategies to the Company to generate sustainable returns.
In 2001, the Company took a positive view on the long term business potential of PPLS and the offshore rigs sector and made an initial 50% investment in PPLS. In 2003, the Company increased its stake in PPLS to 85% and also agreed on the terms for the sale by PPLH and EIHL of their balance 15% shares in PPLS, wherein the selling price was based primarily on the net tangible assets of PPLS at the point of sale.
Over the years, the investment in PPLS has helped propel the Company to be a global player in the design and construction of jackup and semi-submersible rigs. Since 2001 until 2015, PPLS has made cumulative profits of over S$1.6 billion. Cumulative cash dividends for the same period received by the Company from PPLS amounted to approximately S$540 million. The total purchase consideration for the Company’s 100% investment in PPLS (including this Acquisition consideration) is approximately S$186 million.
Information to be announced under Rule 1010 of the Listing Manual
The aggregate cash consideration of US$115,058,934 was arrived at based on terms agreed at the time the Company bought over 85% of the shares in PPLS from PPLH in 2003. The terms take into account the net tangible asset value of the Sale Shares as at 30 June 2016 of approximately US$113,153,250.
The effect of the Acquisition on the net tangible assets per share and the earnings per share of the Company is immaterial, assuming that the transaction had been effected at 31 December 2015 and 1 January 2015 respectively.
The consideration will be satisfied through a combination of internally generated funds and debt facilities.
Financial Effects of the Acquisition
The Acquisition is not expected to have any material effect on the net tangible assets and earnings per share of the Company for the current financial year ending 31 December 2016.