Hot stock: Sembmarine hits 2-month high after update on Borr Drilling repayment

SHARES of Sembcorp Marine reached a two-month high amid heavy trading after the group announced on Monday (Oct 10) that it inked a definitive agreement with Borr Drilling to defer US$800 million in receivables.

The deferment will result in Borr Drilling making earlier and higher amounts of interest payments and partial principal repayments to Sembmarine-owned PPL Shipyard (PPLS) from 2022 to 2024, the offshore and marine engineering group said in a bourse filing.

The counter was the most heavily traded by volume on the Singapore bourse as at 10.30 am, with 43.1 million shares changing hands. It also rose as much as 1.7 per cent or S$0.002 to S$0.119 at the time. There were no married deals, according to ShareInvestor data.

The last time Sembmarine’s shares closed near this level was Aug 11.

Sembmarine said in its announcement that Borr Drilling has also met the required conditions. This includes raising certain amounts of equity and completing the refinancing of its other secure creditors.

The owed sum was from a sales agreement in October 2017. Borr Drilling and its subsidiaries bought nine of PPLS’s Pacific Class 400 jackup drilling rigs at an aggregate consideration of about US$1.3 billion.

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Sembmarine unit agrees to defer US$800m receivables from Borr Drilling for 2 years

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The group does not expect the deferment agreements with Borr Drilling to have any material impact on its net tangible assets or earnings per share in FY2022.