KEPPEL Corporation on Tuesday said it will recognise a loss of S$318 million in respect of its exposure to KrisEnergy in its H1 2021 financial results, after the latter on June 4 said it has submitted a winding-up petition.

The group has noted that its interim and final dividends will be ring-fenced from this KrisEnergy impairment, which is a non-core investment. 

CGS-CIMB said in a research note on Tuesday that Keppel is likely to cover the payment with asset recycling proceeds, including some S$597 million from the divestment of Keppel Bay Tower.

"We also estimate about S$309 million of divestment and restructuring gains that will offset the above losses," the research team said. It believes this event could mark the "last vestige of 'legacy' issue" that has plagued Keppel Corp for years since the 2015 oil price crash. 

In a bourse filing on Tuesday morning, Keppel said the impairment loss is measured by estimating the recoverable amounts of various assets of the troubled oil and gas group, less its obligations in connection with the revolving credit facility, carrying amounts of investment, contract asset and receivable from KrisEnergy, as well as other costs to realisation of the assets.

Keppel said it benefits from a "comprehensive first ranking security package" over KrisEnergy's assets. It is implementing detailed recovery plans developed in consultation with its financial adviser and legal adviser to preserve said assets and maximise recoveries.

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The group will use the security package to appoint Patrick Bance, Mitchell Mansfield and Kent McParland from Borrelli Walsh as joint and several receivers over the assets of KrisEnergy group members, including KrisEnergy (Asia)'s assets and shares.

Once the receivers have been appointed, they will pursue all necessary action to maximise recoveries for the benefit of Keppel Corp, the group added. Keppel said the recoverable amounts will be reassessed at the end of each financial reporting period.

Separately, KrisEnergy on Monday said it received notices from DBS and Madison Pacific Trust regarding a revolving credit facility and a Cambodia loan facility respectively.

DBS cancelled the total commitments under the revolving credit facility and declared all loans are now payable on demand. Meanwhile, Madison Pacific notified KrisEnergy of an event of default under the Cambodia loan facility. Keppel's wholly-owned subsidiary Kepinvest Singapore is the lender.

Both DBS and Madison Pacific have also provided notice that they are entitled to take enforcement action and intend to do so in the future.

In its June 4 announcement, KrisEnergy said it has not been able to propose an alternative restructuring plan to DBS, the provider of a US$200 million revolving credit facility, and Keppel Corporation, which holds the key economic risk in the revolving credit facility. Therefore, the revolving credit facility will not be extended as stipulated conditions have not been fulfilled.

Shares of Keppel closed at S$5.29 on Tuesday, down 1.12 per cent.

READ MORE: KrisEnergy restructuring plan no longer viable as Apsara oil field shows 'disappointing' results