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Keppel says no further impairment required for associate Floatel

KEPPEL Corp on Sunday night noted that based on information from its associate company Floatel International's fourth quarter results, the group has assessed that no further impairment is required. 

In its unaudited financial statements for the financial year ended Dec 31, 2019, Keppel accounted for its share of loss in Floatel amounting to about S$51 million, which included the impairment losses recognised by Floatel on its vessels. 

Based on an assessment of the recoverability of the group's total investments in Floatel (comprising equity interest, preference shares and loan), Keppel also recognised a fair value loss of about S$11 million in respect of its investment in Floatel preference shares.

As at end December, Keppel's carrying value of its investments in Floatel was about S$477 million. 

In a regulatory filing on Sunday, Keppel noted that Floatel's Q4 results were prepared on the assumption of a going concern. According to Floatel's Q4 results, its financial situation was "unsustainable, as liquidity was under pressure and there was a material uncertainty as to whether it and its subsidiaries would be able to service their secured financial liabilities and net working capital requirements for the coming 12 months", Keppel said.

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This cast significant doubt on Floatel's ability to continue as a going concern, and in a situation where going concern could no longer be assumed, there would be a risk for significant write down of Floatel's assets, Keppel noted. 

The group added that the long-term viability of Floatel's business depended on Floatel finding a solution to its financial situation. That said, Floatel has initiated discussions with key creditors, and its directors are of the view that there are "reasonable expectations of success". 

Most recently on Feb 14, Keppel announced that Floatel and Oslo-listed Prosafe have dropped their attempt to merge, in a combination that would have created the world's largest offshore accommodation provider.

As at 10.24am on Monday, shares in Keppel were trading flat at S$6.69. 

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