Sembcorp Industries and Sembcorp Marine had proposed a S$2.1 billion recapitalisation and demerger. We all know that Sembcorp Marine has been hit badly by the COVID-19 pandemic and recent collapse in oil prices. The demerger will allow Sembcorp Marine to better address its urgent need to recapitalise, meet liquidity requirements, and strengthen its balance sheet to ride through the prolonged downturn in the offshore and marine industry. What is the impact to shareholders? Let us take a look below.

Recapitalisation of Sembcorp Marine

As part of the recapitalisation for Sembcorp Marine, the company will issue S$2.1 billion renounceable rights to strengthen its cash position and balance sheet. 5 rights shares will be issued for every 1 Sembcorp Marine share held at an issue price of S$0.20 per share. The rights price represents a 31.0% discount to the TERP (“Theoretical ex rights price”) based on 5-day VWAP (“Volume weighted average price”) of S$0.74....