SINGAPORE - Sembcorp Marine (Sembmarine) shares resumed trading on Wednesday after a one-day halt, with the counter seeing very heavy trading on an enlarged share base upon completion of its merger with Keppel Offshore & Marine (Keppel O&M).
By the close of trading on Wednesday, some 2.89 billion Sembmarine shares had changed hands, with the counter hitting an intra-day high of 13 cents before finally closing down 1.2 cents, or 9.5 per cent, at 11.5 cents.
The counter dropped soon after the market opened as Keppel shareholders who had received their in-specie entitlements dumped the stock. It stabilised for most of the day before a late slide.
The $4.5 billion merger of Sembmarine and Keppel O&M, a unit of Keppel Corporation, was completed on Tuesday, making the latter a wholly owned subsidiary of the company.
Under the terms of the deal, Sembmarine allotted and issued roughly 36.8 billion new shares to Keppel Corp and its shareholders. Every 1,000 Keppel shares will be entitled to 19,100 in-specie Sembmarine shares.
With this, the total issued share capital of Sembmarine now stands at 68.2 billion shares – excluding treasury shares – versus 31.4 billion shares previously.
The new shares represent 54 per cent of the total issued share capital of the company, said Sembmarine.
Market experts said that while the initial selldown of Sembmarine was expected, they foresee the stock stabilising at current levels for a while. Some ventured that it could start rising if it is included in some indexes, prompting index-based funds to accumulate the stock.
The company posted a full-year loss for 2022 of $261 million.
CGS-CIMB expects the enlarged Sembmarine to be profitable in 2024, assuming the group takes at least one year to reap synergies and as the new board formalises the business strategy. It has a price target of 12 cents on the stock, but noted a potential catalyst for further upside from a successful integration with Keppel O&M and stronger order wins.
In other announcements on Tuesday, Mr Chris Ong, the chief executive of Keppel O&M, was appointed CEO of the combined entity. Former Shell executive vice-president Mark Gainsborough was named chairman of the board and an independent director, while Mr Yap Chee Keong was appointed deputy chairman and independent director.
The appointments had been proposed earlier.
Other members of the new Sembmarine board include non-executive and non-independent director Nagi Hamiyeh, as well as independent directors Jan Holm and Lai Chung Han.
