Following SMM’s analysts call today on rights issuance and proposed MOU to combine with KEP O&M, we learnt that :-
1.        Banks refinancing could be tight, hence the rights. Although there is no breach in covenant.
2.        S$1.5bn  will not be used for the S$500m consideration of Combined Entity (read: more debt to be raised)
3.        Total debt that is due as of FY20 was S$3.5bn (S$2.1bn due within a year, S$1.1bn 1-5 years), of which some had been refinanced in 1Q21. The S$1.5bn will be used for partial debt repayment
4.        and completion of Transocean rigs (deferred payment of S$621m)
5.        Temasek may be waived to vote for the Combi Entity
Share price could follow previous rights issuance and fall towards TERP (S$0.12) . Our Last call on SMM: Hold (TP of S$0.226 pre rights).

Siew Khee LIM
Head, Singapore Research
Strategy | Industrials | Energy | Utilities | Transportation  
CGS-CIMB Research