Sembcorp, Sembmarine shareholders vote overwhelmingly in favour of demerger at EGM

SHAREHOLDERS of Sembcorp Marine (SMM) and Sembcorp Industries (SCI) have voted overwhelmingly in favour of the three inter-conditional resolutions at the extraordinary general meetings (EGMs) for the proposed S$2.1 billion recapitalisation for the offshore and marine (O&M) engineering group, and a demerger from each other that will result in Temasek Holdings having a direct stake in the marine arm.

On Tuesday, SMM shareholders voted on SMM's undertaking of the rights issue and a whitewash resolution that will waive investors' rights to receive a mandatory takeover offer from Temasek.

At the EGM, 98.76 per cent, or shareholders of some 1.4 billion shares, voted for the rights issue, while 87.72 per cent, or shareholders with a collective 121.3 million shares, voted for the whitewash resolution, the company said in a regulatory filing.

The Temasek Concert Party Group, as well as parties not independent of the Temasek Concert Party Group, were required to abstain from voting in respect of their shares on the whitewash resolution. These include SCI, DBS Group Holdings, and Rigel Technology.

Meanwhile, SCI shareholders voted on the company's proposal to distribute its SMM shares in specie. 99.67 per cent of SCI shareholders, or shareholders of some 302.6 million shares, voted for the proposed distribution.

Similarly, the Temasek Concert Party Group, as well as the SCI non-independent directors, were required to abstain from voting on the distribution in respect of their shares in the company.

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SCI said the company would make further announcements in due course on further details of the proposed distribution, including the distribution ratio and the record date.

Wong Kim Yin, chief executive of SCI, said the company will now be able to dedicate its resources and efforts in repositioning its businesses and capturing growth opportunities as a "focused energy and urban player".

"We are also encouraged that we can provide support to SMM for its rights issue that will enable it to better ride through the downturn and position itself for recovery. Our shareholders can now expect to receive shares in a stronger recapitalised SMM," he added.

In the days leading up to the EGM, both companies had called on their shareholders to vote in favour of the resolutions tabled at the EGM in order for the transaction to proceed.

SMM stressed that funds from the recapitalisation would be key to fixing its "critical" liquidity needs, and that the rights issue would provide the company with the "much needed recapitalisation" to ride out the industry downturn, strengthen its balance sheet, and re-position the firm for long-term viability.

"If shareholders do not approve the transaction, SMM's strenuous efforts to recapitalise and strengthen its balance sheet will be negated and the critical need to address our liquidity requirements will fail," SMM said.

KGI analyst Joel Ng told The Business Times that it was "expected" the resolution will pass, given that it would be beneficial for both companies to have Temasek Holdings as a direct shareholder.

With Temasek pulling the plug on its pre-conditional S$4 billion partial offer for Keppel Corp following the latter's S$697.6 million net loss for the second quarter ended June, Mr Ng said Temasek now has a "war chest of S$4 billion" and is likely to redeploy the capital in Sembcorp.

"This is a long-term plan to consolidate Singapore's O&M industry in terms of having a better cost structure to be able to take advantage of bigger opportunities," he said, adding that industry consolidations have been taking place in China, South Korea and Europe.

Both SCI and SMM had called for trading halts on Tuesday morning ahead of the EGMs. Shares of SCI last traded at S$1.90, while SMM shares last traded at S$0.35.