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Keppel in talks to support KrisEnergy's preferential offering (Amended)

Thursday, November 3, 2016 - 11:17

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Keppel Corporation is in talks to support KrisEnergy in the latter's capital-raising exercise.

KEPPEL Corporation is in talks to support KrisEnergy in the latter's capital-raising exercise.

Keppel Corp - which has a 39.9 per cent stake in KrisEnergy through wholly-owned indirect subsidiary Devan International - plans to "provide an irrevocable undertaking" to vote in favour of KrisEnergy's capital raising exercise.

Earlier on Thursday, KrisEnergy unveiled plans to raise S$140 million via a preferential offering. These senior secured zero coupon notes due 2024 will come with 1.25 billion free detachable warrants. Each warrant will carry the right to subscribe for a new KrisEnergy share at an exercise price of S$0.11 each. This is on the basis of 93 notes with 837 warrants for every 1,000 existing KrisEnergy shares.

The preferential offer is subject to various conditions, including a whitewash waiver from authorities.

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The waiver is important because assuming the irrevocable undertaking is executed, and Devan takes up its maximum subscription of notes cum warrants, Keppel's stake in KrisEnergy will potentially rise to 67.33 per cent and it will need to make a general offer for rest of KrisEnergy it does not own.

Keppel said that it remains confident of KrisEnergy's long-term fundamentals and believes that the company will continue to extract quality returns on its investment.

"There is considerable value in KrisEnergy's near-term production developments in Thailand, Indonesia and Cambodia, which have limited exploration risks but require capital to generate future cash flows," it said. "The company is of the view that the preferential offering will enable KrisEnergy to ride out near-term funding challenges and create long-term value."

It is also in discussions with KrisEnergy to establish Keppel Offshore and Marine as a preferred partner to provide KrisEnergy with offshore and marine solutions.

Amendment note: An earlier version of the story said Keppel Corp is planning to raise its stake in KrisEnergy to 67.33 per cent. This has been revised to show that this scenario would occur if Keppel subscribes over its own entitlement in KrisEnergy's preferential offering, and chooses to exercise the warrants.

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