Sembcorp Marine Ltd (the “Company” together with its
subsidiaries, the “Group” or “Sembcorp Marine”) refers to the commentaries on its Circular dated
31 January 2023 on the Proposed Combination with Keppel O&M. In particular, we refer to
comments that the Company is fearful its “death knell" could sound if the Proposed Combination
Such comments do not capture the full picture presented in our Circular. Shareholders are advised
to read in full the Company’s Circular to Shareholders. Our Circular presented a balanced position
on the potential consequences should the Proposed Combination not proceed.
Para 3.3 of the Circular stated:
If the Proposed Combination does not proceed, as a standalone entity, SCM can continue to
pursue its normal course of business and operations. However, it will not be able to benefit
from greater scale and synergies from the larger operational scale, broader geographical
footprint and enhanced capabilities that the Proposed Combination is expected to bring.
Our Circular also highlighted, for completeness and transparency, the risks factors associated with
operating as a standalone entity. In particular, Para 3.3 went on to say:
SCM would have to navigate an even more competitive landscape where many offshore
players have sought consolidation or were otherwise challenged by the radically changed
fundamentals of the business and needs of customers. The challenging and competitive global
operating environment… may weigh on the SCM Group’s overall liquidity, and there is no
assurance that as a standalone entity, the SCM Group would continue to receive the necessary
support from its banks, financiers and significant shareholder, Temasek.
Both limbs of this important paragraph should be read together for a complete picture of the outlook
if the Proposed Combination is voted down.
Shareholders’ attention is also drawn to the Company’s Interim Business Update for 3Q/9M2022
which was issued on 15 November 2022 https://www.sembmarine.com/stock-exchangeannouncements/sembcorp-marine-interim-business-update-for-3q-9m2022, which describes the
operations and financial position of the Company and its subsidiaries (together the “Group”) on a
In particular, Shareholders should note the following points in the Interim Business Update:
? The Group reported significant newbuild contract wins in October 2022. As at 30 September
2022, the Group had recorded a net order book of S$7.11 billion.
The Group continues to see improvement in orders visibility, underpinned by high oil and gas
prices, renewed concerns of energy security in the wake of geopolitical tensions, and
acceleration of the energy transition towards renewables.
? Sembcorp Marine remains well positioned strategically to seize opportunities in the oil and gas
E&P, offshore wind/renewables and new energy segments.
? With the completion and deliveries of projects and related delivery payments, offset by working
capital needs for projects under execution, the Group anticipates its operating cash flows and
overall cash balance to continue to stabilise. With the ongoing support from its lenders, the
Group expects to have the necessary liquidity to fund its operations for the foreseeable future.
Further to the Interim Business Update, the Company wishes to update Shareholders that its net
debt to equity ratio as at 31 December 2022 has improved further to 0.26 times from the ratio of
0.53 times as at 30 September 2022. Such improvement is mainly attributed to cash collections in
4Q2022 from long term receivables and progress and delivery payments for projects from our
customers. These will be used to pay payables and other working capital needs in FY2023.
As stated in Para. 14 of the Circular, the Independent Directors of the Company, having considered
all relevant factors, are recommending that Shareholders vote in favour of the resolution relating to
the Proposed Combination. All Directors are beneficial shareholders in the Company and will vote
in favour of the Proposed Combination.
Circular, Notice of EGM and EGM Proxy Form
The full Circular (together with the Notice of EGM and the EGM Proxy Form) may be accessed on
the Company’s website and on the SGXNET. Shareholders should read the Circular in full for
information on the Proposed Combination and the EGM.