Rig builder Keppel Corp. said on Nov. 3 it would subscribe to a bond offer by KrisEnergy Ltd., potentially increasing its majority holding and throwing a lifeline to the debt-laden oil and gas explorer.
Keppel said it would subscribe to a preferential offering of zero-coupon secured notes coupled with warrants--up to SG$140 million (US$101 million)--that KrisEnergy announced earlier on Nov. 3.
Keppel would back the offering by taking up its allotted portion and the amount not taken up by other shareholders.
Its shareholding in KrisEnergy could rise to 67.33% from the current 40% if no other shareholder takes up the preferential offering and Keppel chooses to exercise all the warrants.
Subscribing to the offer will help Keppel preserve its investment and let it benefit from any potential recovery in the market, said Yeak Chee Keong, an analyst at brokerage Maybank Kim Eng.
Shares of KrisEnergy closed 1.4% higher after rising as much as 12.4%. Keppel ended up 0.4%, while the benchmark Straits Times Index closed 0.2% lower.
KrisEnergy is among a growing list of Singapore-based firms struggling to meet debt commitments due to tumbling global oil prices.
On Nov. 3, KrisEnergy said it hoped to extend the maturities of its SG$130 million bond due in 2017 and SG$200 million bond due in 2018 by five years. It proposed reducing the bonds' coupons to 4% from 6.25% and 5.75%, respectively.
KrisEnergy also said it agreed with DBS Bank Ltd. to amend terms and covenants of its revolving credit facility, including extending the maturity to June 2018.
The proposed restructuring, if successful, would yield "a stable and sustainable capital structure, reduced short-term cash debt service obligations and greater liquidity," KrisEnergy said.
The firm reported a net loss for the third quarter, compared to a profit a year earlier. (US$1 = SG$1.3833)
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