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MANFREDTMK Master	02-Apr-2022 17:21        MANFREDTMK About Contact  Quote this Post!
x 0   x 0  Alert Admin	Bro, not at all, you are perfect, everything you calculated is perfectly correct. We are merely examining the results of different scenarios and its impact on the effective price. It's good to know the range so that we know where we stand to determine the exit price. By Wednesday, we should see some relief PHInsider63      ( Date: 02-Apr-2022 16:49) Posted: Bro. No worries. Ignore my framework cos mine was a simpler version likened to be primary school std whereas this merger is like Masters a degree level. Super complex. But I do totally grasp what Better explained. My gut feel is the price will react when the mechanism is announced but I guess the starting point might be from the day of the Q1 review. MANFREDTMK      ( Date: 02-Apr-2022 16:38) Posted: Bro, hope you don't mind if I interrupt. Your calculations are all correct. But you are implicitly assuming that the deal is done fairly with no discount. This is the ideal scenario. For the last 8 days, I have been talking about my concern that Keppel will press for a discount of 10 to 20%. This to me, is the major impasse that will kill the deal unless Temasek do something to sweeten the deal. Otherwise, it won't be 12 cents. 10 to 11 cents more likely
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PHInsider63 Veteran	02-Apr-2022 16:49        PHInsider63 About Contact  Quote this Post!
x 0   x 0  Alert Admin	Bro. No worries. Ignore my framework cos mine was a simpler version likened to be primary school std whereas this merger is like Masters a degree level. Super complex. But I do totally grasp what Better explained. My gut feel is the price will react when the mechanism is announced but I guess the starting point might be from the day of the Q1 review. MANFREDTMK      ( Date: 02-Apr-2022 16:38) Posted: Bro, hope you don't mind if I interrupt. Your calculations are all correct. But you are implicitly assuming that the deal is done fairly with no discount. This is the ideal scenario. For the last 8 days, I have been talking about my concern that Keppel will press for a discount of 10 to 20%. This to me, is the major impasse that will kill the deal unless Temasek do something to sweeten the deal. Otherwise, it won't be 12 cents. 10 to 11 cents more likely PHInsider63      ( Date: 01-Apr-2022 18:41) Posted: Thanks for the book values info. The numbers are impt. Based on my understanding and prior knowledge in doing merger, albeit at smaller scale, the following should happen. As stated and reiterated by the latest announcement, a Common Entity will be formed (or a Newco). Based on book value of: KOM 2b SM 4b A plain vanilla merger model will be 66.7% (SM) and 33.3% (KOM). Which means Newco will be formed by 66.7% of SM shh and 33.3% of KC shh in which (as mentioned) KC will decide and intend to distribute to their shareholders. If this happens, Temasek holding will be: 36.67% + 6.66% (20% original KC shares diluted accordingly) = 43.33% KC shareholders may get a special dividends from sales proceeds of junk rigs from Asset CO (as mentioned in the announcement will be an external party). So, assuming my stake is 15m shares, my shares will be folded to 10m shares. But with an enlarged CE, this will be a new landmark chapter. Now if this happens, the price will be determined at existing book value of SM at 0.12. And the price needs to move up during this month. Note. This is based on a plain Vanilla model. Of course M&A of this scale will be far more complex. No matter what, KC and SM shh, all of us should have a truce because this will be a good news for all. Both parties will benefit. I expect small dividend from SM prior to merger on the region of 0.005 or $160 m. Temasek will get $88m. On the other hand, KC rid the problematic KOM and also stand to obtain dividends from sale of junk rigs to Asset co and shares of CE
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PHInsider63 Veteran	02-Apr-2022 16:45        PHInsider63 About Contact  Quote this Post!
x 0   x 0  Alert Admin	Thanks bro for taking the effort to pen it down. Got it and makes sense The last point is imperative. Hence the exchange ratio is the crux the latest announcement was probably talking about. About using SM dollars to fund the deal through issuance of new shares, yes the higher the price the fewer the shares and lower the dilution. You mentioned much earlier if I recollected correctly, is $0.20. Is this possible and what do you think the basis for using $0.20? better      ( Date: 02-Apr-2022 15:33) Posted: 1) Yes, SM will be the acquiring entity as it is already listed. Any other way will be much more complicated as you have to delist/ buyout SM and then list the combined entity again later after merger. Much too troublesome. 2) No newco need to be formed. After SM acquires KOM through issuing shares and maybe partial pay in cash, SM will be called the " combined entity" . However, the tabled merger deal needs to get the approval of KC and SM' s shareholders with Temasek having to abstain from voting. Temasek has to abstain from SM' s voting because they own 20% of KC. They must abstain from KC' s voting because they own 55% of SM.  KC cannot keep SM shares and must distribute them to their shareholders as Temasek usually prefer direct shareholding vs grandfather/ Korean style shareholding. Like A owns 30% of B and 51% of C and C owns 21% of B, so A effectively has majority control of B (Korean style). 3) It is likely to involve $1-2 billion cash injection from Temasek, just a matter of how they are going to do it.  4 reasons for that: a) To maintain their ownership of the combined entity at above 50% b) Before KC transfer KOM' s assets to SM, they would very likely extract all the cash/ liquidity from KOM.  KOM probably need about $1 billion cash/ running capital to see through their existing projects ex legacy rigs. If it is just a simple $2bil+ $4bil combination, the cash in SM will have to be used for the running capital of KOM existing projects. While that is possible, it might be a bit stretched and would not give the combined entity much room to mega projects. c) On KC&rsquo s side, they need to pay off $4+billion of debt this year, most of them related to KOM. Without some cash on the table to sweeten the deal for KC and existing SM shareholders (with a special dividend of sort), the deal might not be approved during the voting. d) SM is currently trading at below book value. KC will likely want to sell KOM at at least book value.   That is an impasse for the merger. That means either SM have to issue a lot more shares to KC (SM share price being the exchange rate) or KC have to agree to sell KOM at below book value. As Temasek owns 55% of SM, it is of course to their interest to issue as little SM shares as possible to KC.  The cash from Temasek can be used to repriced SM share price so the numbers can work out for both KC and SM shareholders. That&rsquo s my dominant merger scenario is some version of my original Option 2 scenario explained in my previous post   PHInsider63      ( Date: 02-Apr-2022 05:45) Posted: Thanks bro better Based on what was contributed and if those hold water, am I right to state: 1. SM will remain as the listco and the acquiring entity. 2. A newco aka Common Entity will be formed to merge KOM and SM assets under SM. In other words, SM will issue shares and or partial pay in cash to KC to buy KOM priced yard 3. Temasek May also inject cash into the newco / CE to take up a separate Stake in the newco / CE as their stake in SM will be diluted unless they inject cash directly into SM to prevent dilution.
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MANFREDTMK Master	02-Apr-2022 16:38        MANFREDTMK About Contact  Quote this Post!
x 0   x 0  Alert Admin	Bro, hope you don't mind if I interrupt. Your calculations are all correct. But you are implicitly assuming that the deal is done fairly with no discount. This is the ideal scenario. For the last 8 days, I have been talking about my concern that Keppel will press for a discount of 10 to 20%. This to me, is the major impasse that will kill the deal unless Temasek do something to sweeten the deal. Otherwise, it won't be 12 cents. 10 to 11 cents more likely PHInsider63      ( Date: 01-Apr-2022 18:41) Posted: Thanks for the book values info. The numbers are impt. Based on my understanding and prior knowledge in doing merger, albeit at smaller scale, the following should happen. As stated and reiterated by the latest announcement, a Common Entity will be formed (or a Newco). Based on book value of: KOM 2b SM 4b A plain vanilla merger model will be 66.7% (SM) and 33.3% (KOM). Which means Newco will be formed by 66.7% of SM shh and 33.3% of KC shh in which (as mentioned) KC will decide and intend to distribute to their shareholders. If this happens, Temasek holding will be: 36.67% + 6.66% (20% original KC shares diluted accordingly) = 43.33% KC shareholders may get a special dividends from sales proceeds of junk rigs from Asset CO (as mentioned in the announcement will be an external party). So, assuming my stake is 15m shares, my shares will be folded to 10m shares. But with an enlarged CE, this will be a new landmark chapter. Now if this happens, the price will be determined at existing book value of SM at 0.12. And the price needs to move up during this month. Note. This is based on a plain Vanilla model. Of course M&A of this scale will be far more complex. No matter what, KC and SM shh, all of us should have a truce because this will be a good news for all. Both parties will benefit. I expect small dividend from SM prior to merger on the region of 0.005 or $160 m. Temasek will get $88m. On the other hand, KC rid the problematic KOM and also stand to obtain dividends from sale of junk rigs to Asset co and shares of CE. better      ( Date: 01-Apr-2022 17:29) Posted: Notes about the merger: The negotiation of the merger terms is between Temasek and Keppel corp. Temasek is the majority shareholders (55%) of SCM and obviously KC owns Keppel OM. Temasek in turn owns 20% of KC.  If I am Temasek, there are 2 possible routes. First, Temasek can offer to give up their 20% KC shares to take over Keppel OM and then merge it with SCM at book value. Book value for Keppel OM (excluding cash holding) is about $2billion. SCM' s book value is about $4billion. In this case, Temasek will own 70% of SCM. This would be a non-cash transaction. The second route is for Temasek to first offer to buy SCM shares that they do not already own in say 2 yrs time at 20 cents. As a majority shareholder, Temasek would not want to dilute its SCM shareholding by issuing excessive new SCM shares to KC. A future takeover offer similar to the one they made to KC 3 yrs ago would peg the exchange rate (SCM' s share price) at 20 cents and also allow KC to claim that they have sold Keppel OM at book value and not below. In this case, only about 10 billion new SCM shares need to be issued. Temasek can also offer to buy 5 billion new SCM shares at 20 cents, thus giving SCM $1 billion in cash to provide additional liquidity to SCM for continuing Keppel OM' s existing projects given that Keppel OM is going to be merged into SCM without any cash. I suspect about $1+ billion of the $3+ billion cash in KC' s book is currently used for Keppel OM' s running capital. KC also has $4+billion associated debt that is due this year. Although they do have the overdraft facilities to fund it, tapping their overdraft will incur a relatively high interest rate. The shares that KC receives will then be distributed to their shareholders which Temasek will receive 20%. Based on the above scenario, Temasek will own 52+% of SCM after merger. Keppel OM' s unsold rigs/ legacy asset of about $3.2 billion will go into the asset co. and probably Temasek and other related investors will buy about 80% of it at maybe 10-20% discount off their book value.
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MANFREDTMK Master	02-Apr-2022 16:06        MANFREDTMK About Contact  Quote this Post!
x 0   x 0  Alert Admin	The reverse is true. The JV becomes a captive business of the CE, a tremendous gain, not loss ahbui8      ( Date: 02-Apr-2022 15:41) Posted: Oh I think I get it, mean Keppel side is right, Keppel SH can get share fm the combined entity, and Keppel will own another 50% fm Keppel and the combined entity JV. This clearly show SM is on the losing side 😂 ahbui8      ( Date: 02-Apr-2022 13:52) Posted: Bro to me still a 50:50 lei, please enlighten me if I wrong. It' s clearly stated Keppel will hold 50% mean Keppel SH no matter what will get 50%. Combined entity hold another 50%, mean SM will pay a max of 500m to get KOM to become the combined entity.  To sweeten the deal unless TH come out with cash to get extra stake fm both JV. Example come out with 2B cash to get 10% fm Keppel and 10% fm the combined entity
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ahbui8 Master	02-Apr-2022 15:53        ahbui8 About Contact  Quote this Post!
x 0   x 0  Alert Admin	Yes I get it, make it simple combined entity will be in oil rig and marine business, JV will be in renewable energy business. To me Keppel is on the winning side on this merge. better      ( Date: 02-Apr-2022 15:38) Posted: The JV company is talking about arrangement AFTER the merger, not ABOUT the merger. ahbui8      ( Date: 02-Apr-2022 13:52) Posted: Bro to me still a 50:50 lei, please enlighten me if I wrong. It' s clearly stated Keppel will hold 50% mean Keppel SH no matter what will get 50%. Combined entity hold another 50%, mean SM will pay a max of 500m to get KOM to become the combined entity.  To sweeten the deal unless TH come out with cash to get extra stake fm both JV. Example come out with 2B cash to get 10% fm Keppel and 10% fm the combined entity
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ahbui8 Master	02-Apr-2022 15:41        ahbui8 About Contact  Quote this Post!
x 0   x 0  Alert Admin	Oh I think I get it, mean Keppel side is right, Keppel SH can get share fm the combined entity, and Keppel will own another 50% fm Keppel and the combined entity JV. This clearly show SM is on the losing side 😂 ahbui8      ( Date: 02-Apr-2022 13:52) Posted: Bro to me still a 50:50 lei, please enlighten me if I wrong. It' s clearly stated Keppel will hold 50% mean Keppel SH no matter what will get 50%. Combined entity hold another 50%, mean SM will pay a max of 500m to get KOM to become the combined entity.  To sweeten the deal unless TH come out with cash to get extra stake fm both JV. Example come out with 2B cash to get 10% fm Keppel and 10% fm the combined entity. better      ( Date: 02-Apr-2022 00:02) Posted: Wrong, the merger term is not 50:50.  Below is from 2021 memorandum of understanding.     Under the MOU between Keppel and Sembcorp Marine, it is envisaged that Keppel and the Combined Entity will enter into a strategic partnership, pursuant to which Keppel will hold 50% of a 50-50 joint venture that will be established between Keppel and the Combined Entity (Strategic Partnership JV). This would allow Keppel to continue accessing Keppel O& M&rsquo s capabilities required for its projects, on terms to be agreed. The scope of the Strategic Partnership JV will be subject to final agreement between the parties concerned. In addition, subject to regulatory review, the Combined Entity will be the preferred EPC partner for Keppel&rsquo s projects where the Combined Entity has the relevant expertise     The above is saying that after KC sold their yards and intellectual properties to SCM through the merger, Keppel corp will enter into a 50-50 joint venture with SCM (which will be then called the combined entity) so that if Keppel corp wants to build a offshore data centre for example, they will execute it through the joint venture company which SCM will be the preferred EPC partner if they have the relevant expertise
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better Elite	02-Apr-2022 15:38        better About Contact  Quote this Post!
x 0   x 0  Alert Admin	The JV company is talking about arrangement AFTER the merger, not ABOUT the merger. ahbui8      ( Date: 02-Apr-2022 13:52) Posted: Bro to me still a 50:50 lei, please enlighten me if I wrong. It' s clearly stated Keppel will hold 50% mean Keppel SH no matter what will get 50%. Combined entity hold another 50%, mean SM will pay a max of 500m to get KOM to become the combined entity.  To sweeten the deal unless TH come out with cash to get extra stake fm both JV. Example come out with 2B cash to get 10% fm Keppel and 10% fm the combined entity. better      ( Date: 02-Apr-2022 00:02) Posted: Wrong, the merger term is not 50:50.  Below is from 2021 memorandum of understanding.     Under the MOU between Keppel and Sembcorp Marine, it is envisaged that Keppel and the Combined Entity will enter into a strategic partnership, pursuant to which Keppel will hold 50% of a 50-50 joint venture that will be established between Keppel and the Combined Entity (Strategic Partnership JV). This would allow Keppel to continue accessing Keppel O& M&rsquo s capabilities required for its projects, on terms to be agreed. The scope of the Strategic Partnership JV will be subject to final agreement between the parties concerned. In addition, subject to regulatory review, the Combined Entity will be the preferred EPC partner for Keppel&rsquo s projects where the Combined Entity has the relevant expertise     The above is saying that after KC sold their yards and intellectual properties to SCM through the merger, Keppel corp will enter into a 50-50 joint venture with SCM (which will be then called the combined entity) so that if Keppel corp wants to build a offshore data centre for example, they will execute it through the joint venture company which SCM will be the preferred EPC partner if they have the relevant expertise
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better Elite	02-Apr-2022 15:33        better About Contact  Quote this Post!
x 0   x 0  Alert Admin	1) Yes, SM will be the acquiring entity as it is already listed. Any other way will be much more complicated as you have to delist/ buyout SM and then list the combined entity again later after merger. Much too troublesome. 2) No newco need to be formed. After SM acquires KOM through issuing shares and maybe partial pay in cash, SM will be called the " combined entity" . However, the tabled merger deal needs to get the approval of KC and SM' s shareholders with Temasek having to abstain from voting. Temasek has to abstain from SM' s voting because they own 20% of KC. They must abstain from KC' s voting because they own 55% of SM.  KC cannot keep SM shares and must distribute them to their shareholders as Temasek usually prefer direct shareholding vs grandfather/ Korean style shareholding. Like A owns 30% of B and 51% of C and C owns 21% of B, so A effectively has majority control of B (Korean style). 3) It is likely to involve $1-2 billion cash injection from Temasek, just a matter of how they are going to do it.  4 reasons for that: a) To maintain their ownership of the combined entity at above 50% b) Before KC transfer KOM' s assets to SM, they would very likely extract all the cash/ liquidity from KOM.  KOM probably need about $1 billion cash/ running capital to see through their existing projects ex legacy rigs. If it is just a simple $2bil+ $4bil combination, the cash in SM will have to be used for the running capital of KOM existing projects. While that is possible, it might be a bit stretched and would not give the combined entity much room to mega projects. c) On KC&rsquo s side, they need to pay off $4+billion of debt this year, most of them related to KOM. Without some cash on the table to sweeten the deal for KC and existing SM shareholders (with a special dividend of sort), the deal might not be approved during the voting. d) SM is currently trading at below book value. KC will likely want to sell KOM at at least book value.   That is an impasse for the merger. That means either SM have to issue a lot more shares to KC (SM share price being the exchange rate) or KC have to agree to sell KOM at below book value. As Temasek owns 55% of SM, it is of course to their interest to issue as little SM shares as possible to KC.  The cash from Temasek can be used to repriced SM share price so the numbers can work out for both KC and SM shareholders. That&rsquo s my dominant merger scenario is some version of my original Option 2 scenario explained in my previous post   PHInsider63      ( Date: 02-Apr-2022 05:45) Posted: Thanks bro better Based on what was contributed and if those hold water, am I right to state: 1. SM will remain as the listco and the acquiring entity. 2. A newco aka Common Entity will be formed to merge KOM and SM assets under SM. In other words, SM will issue shares and or partial pay in cash to KC to buy KOM priced yard 3. Temasek May also inject cash into the newco / CE to take up a separate Stake in the newco / CE as their stake in SM will be diluted unless they inject cash directly into SM to prevent dilution. better      ( Date: 02-Apr-2022 00:02) Posted: Wrong, the merger term is not 50:50.  Below is from 2021 memorandum of understanding.     Under the MOU between Keppel and Sembcorp Marine, it is envisaged that Keppel and the Combined Entity will enter into a strategic partnership, pursuant to which Keppel will hold 50% of a 50-50 joint venture that will be established between Keppel and the Combined Entity (Strategic Partnership JV). This would allow Keppel to continue accessing Keppel O& M&rsquo s capabilities required for its projects, on terms to be agreed. The scope of the Strategic Partnership JV will be subject to final agreement between the parties concerned. In addition, subject to regulatory review, the Combined Entity will be the preferred EPC partner for Keppel&rsquo s projects where the Combined Entity has the relevant expertise     The above is saying that after KC sold their yards and intellectual properties to SCM through the merger, Keppel corp will enter into a 50-50 joint venture with SCM (which will be then called the combined entity) so that if Keppel corp wants to build a offshore data centre for example, they will execute it through the joint venture company which SCM will be the preferred EPC partner if they have the relevant expertise
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ahbui8 Master	02-Apr-2022 13:52        ahbui8 About Contact  Quote this Post!
x 0   x 0  Alert Admin	Bro to me still a 50:50 lei, please enlighten me if I wrong. It' s clearly stated Keppel will hold 50% mean Keppel SH no matter what will get 50%. Combined entity hold another 50%, mean SM will pay a max of 500m to get KOM to become the combined entity.  To sweeten the deal unless TH come out with cash to get extra stake fm both JV. Example come out with 2B cash to get 10% fm Keppel and 10% fm the combined entity. better      ( Date: 02-Apr-2022 00:02) Posted: Wrong, the merger term is not 50:50.  Below is from 2021 memorandum of understanding.     Under the MOU between Keppel and Sembcorp Marine, it is envisaged that Keppel and the Combined Entity will enter into a strategic partnership, pursuant to which Keppel will hold 50% of a 50-50 joint venture that will be established between Keppel and the Combined Entity (Strategic Partnership JV). This would allow Keppel to continue accessing Keppel O& M&rsquo s capabilities required for its projects, on terms to be agreed. The scope of the Strategic Partnership JV will be subject to final agreement between the parties concerned. In addition, subject to regulatory review, the Combined Entity will be the preferred EPC partner for Keppel&rsquo s projects where the Combined Entity has the relevant expertise     The above is saying that after KC sold their yards and intellectual properties to SCM through the merger, Keppel corp will enter into a 50-50 joint venture with SCM (which will be then called the combined entity) so that if Keppel corp wants to build a offshore data centre for example, they will execute it through the joint venture company which SCM will be the preferred EPC partner if they have the relevant expertise. ahbui8      ( Date: 01-Apr-2022 19:07) Posted: Bth both side, Keppel side expect 70:30 while SM side expect 67:33 😂 It' s clearly stated it' s will be 50:50 JV so it' s will be this way just like the MGO offer stated if really got MGO is at 8cts and is really happened offer at 8cts.
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PHInsider63 Veteran	02-Apr-2022 12:08        PHInsider63 About Contact  Quote this Post!
x 0   x 0  Alert Admin	Thanks bro. I shall wait. better      ( Date: 02-Apr-2022 10:36) Posted: Got it, would reply tonight. PHInsider63      ( Date: 02-Apr-2022 05:49) Posted: Or will the following scenario be possible? I agree that KC is rather desperate to rid the junk rigs. They seem to be in a selling spree, the recent of which is Keppel Log.
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better Elite	02-Apr-2022 10:36        better About Contact  Quote this Post!
x 0   x 0  Alert Admin	Got it, would reply tonight. PHInsider63      ( Date: 02-Apr-2022 05:49) Posted: Or will the following scenario be possible? I agree that KC is rather desperate to rid the junk rigs. They seem to be in a selling spree, the recent of which is Keppel Log. PHInsider63      ( Date: 01-Apr-2022 18:41) Posted: Thanks for the book values info. The numbers are impt. Based on my understanding and prior knowledge in doing merger, albeit at smaller scale, the following should happen. As stated and reiterated by the latest announcement, a Common Entity will be formed (or a Newco). Based on book value of: KOM 2b SM 4b A plain vanilla merger model will be 66.7% (SM) and 33.3% (KOM). Which means Newco will be formed by 66.7% of SM shh and 33.3% of KC shh in which (as mentioned) KC will decide and intend to distribute to their shareholders. If this happens, Temasek holding will be: 36.67% + 6.66% (20% original KC shares diluted accordingly) = 43.33% KC shareholders may get a special dividends from sales proceeds of junk rigs from Asset CO (as mentioned in the announcement will be an external party). So, assuming my stake is 15m shares, my shares will be folded to 10m shares. But with an enlarged CE, this will be a new landmark chapter. Now if this happens, the price will be determined at existing book value of SM at 0.12. And the price needs to move up during this month. Note. This is based on a plain Vanilla model. Of course M&A of this scale will be far more complex. No matter what, KC and SM shh, all of us should have a truce because this will be a good news for all. Both parties will benefit. I expect small dividend from SM prior to merger on the region of 0.005 or $160 m. Temasek will get $88m. On the other hand, KC rid the problematic KOM and also stand to obtain dividends from sale of junk rigs to Asset co and shares of CE
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PHInsider63 Veteran	02-Apr-2022 07:41        PHInsider63 About Contact  Quote this Post!
x 0   x 0  Alert Admin	Manfried bro. Morning. Please don flood out my following queries to Better bro. I wish to hear from him.
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PHInsider63 Veteran	02-Apr-2022 05:49        PHInsider63 About Contact  Quote this Post!
x 0   x 0  Alert Admin	Or will the following scenario be possible? I agree that KC is rather desperate to rid the junk rigs. They seem to be in a selling spree, the recent of which is Keppel Log. PHInsider63      ( Date: 01-Apr-2022 18:41) Posted: Thanks for the book values info. The numbers are impt. Based on my understanding and prior knowledge in doing merger, albeit at smaller scale, the following should happen. As stated and reiterated by the latest announcement, a Common Entity will be formed (or a Newco). Based on book value of: KOM 2b SM 4b A plain vanilla merger model will be 66.7% (SM) and 33.3% (KOM). Which means Newco will be formed by 66.7% of SM shh and 33.3% of KC shh in which (as mentioned) KC will decide and intend to distribute to their shareholders. If this happens, Temasek holding will be: 36.67% + 6.66% (20% original KC shares diluted accordingly) = 43.33% KC shareholders may get a special dividends from sales proceeds of junk rigs from Asset CO (as mentioned in the announcement will be an external party). So, assuming my stake is 15m shares, my shares will be folded to 10m shares. But with an enlarged CE, this will be a new landmark chapter. Now if this happens, the price will be determined at existing book value of SM at 0.12. And the price needs to move up during this month. Note. This is based on a plain Vanilla model. Of course M&A of this scale will be far more complex. No matter what, KC and SM shh, all of us should have a truce because this will be a good news for all. Both parties will benefit. I expect small dividend from SM prior to merger on the region of 0.005 or $160 m. Temasek will get $88m. On the other hand, KC rid the problematic KOM and also stand to obtain dividends from sale of junk rigs to Asset co and shares of CE. better      ( Date: 01-Apr-2022 17:29) Posted: Notes about the merger: The negotiation of the merger terms is between Temasek and Keppel corp. Temasek is the majority shareholders (55%) of SCM and obviously KC owns Keppel OM. Temasek in turn owns 20% of KC.  If I am Temasek, there are 2 possible routes. First, Temasek can offer to give up their 20% KC shares to take over Keppel OM and then merge it with SCM at book value. Book value for Keppel OM (excluding cash holding) is about $2billion. SCM' s book value is about $4billion. In this case, Temasek will own 70% of SCM. This would be a non-cash transaction. The second route is for Temasek to first offer to buy SCM shares that they do not already own in say 2 yrs time at 20 cents. As a majority shareholder, Temasek would not want to dilute its SCM shareholding by issuing excessive new SCM shares to KC. A future takeover offer similar to the one they made to KC 3 yrs ago would peg the exchange rate (SCM' s share price) at 20 cents and also allow KC to claim that they have sold Keppel OM at book value and not below. In this case, only about 10 billion new SCM shares need to be issued. Temasek can also offer to buy 5 billion new SCM shares at 20 cents, thus giving SCM $1 billion in cash to provide additional liquidity to SCM for continuing Keppel OM' s existing projects given that Keppel OM is going to be merged into SCM without any cash. I suspect about $1+ billion of the $3+ billion cash in KC' s book is currently used for Keppel OM' s running capital. KC also has $4+billion associated debt that is due this year. Although they do have the overdraft facilities to fund it, tapping their overdraft will incur a relatively high interest rate. The shares that KC receives will then be distributed to their shareholders which Temasek will receive 20%. Based on the above scenario, Temasek will own 52+% of SCM after merger. Keppel OM' s unsold rigs/ legacy asset of about $3.2 billion will go into the asset co. and probably Temasek and other related investors will buy about 80% of it at maybe 10-20% discount off their book value.
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PHInsider63 Veteran	02-Apr-2022 05:45        PHInsider63 About Contact  Quote this Post!
x 0   x 0  Alert Admin	Thanks bro better Based on what was contributed and if those hold water, am I right to state: 1. SM will remain as the listco and the acquiring entity. 2. A newco aka Common Entity will be formed to merge KOM and SM assets under SM. In other words, SM will issue shares and or partial pay in cash to KC to buy KOM priced yard 3. Temasek May also inject cash into the newco / CE to take up a separate Stake in the newco / CE as their stake in SM will be diluted unless they inject cash directly into SM to prevent dilution. better      ( Date: 02-Apr-2022 00:02) Posted: Wrong, the merger term is not 50:50.  Below is from 2021 memorandum of understanding.     Under the MOU between Keppel and Sembcorp Marine, it is envisaged that Keppel and the Combined Entity will enter into a strategic partnership, pursuant to which Keppel will hold 50% of a 50-50 joint venture that will be established between Keppel and the Combined Entity (Strategic Partnership JV). This would allow Keppel to continue accessing Keppel O& M&rsquo s capabilities required for its projects, on terms to be agreed. The scope of the Strategic Partnership JV will be subject to final agreement between the parties concerned. In addition, subject to regulatory review, the Combined Entity will be the preferred EPC partner for Keppel&rsquo s projects where the Combined Entity has the relevant expertise     The above is saying that after KC sold their yards and intellectual properties to SCM through the merger, Keppel corp will enter into a 50-50 joint venture with SCM (which will be then called the combined entity) so that if Keppel corp wants to build a offshore data centre for example, they will execute it through the joint venture company which SCM will be the preferred EPC partner if they have the relevant expertise. ahbui8      ( Date: 01-Apr-2022 19:07) Posted: Bth both side, Keppel side expect 70:30 while SM side expect 67:33 😂 It' s clearly stated it' s will be 50:50 JV so it' s will be this way just like the MGO offer stated if really got MGO is at 8cts and is really happened offer at 8cts.
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MANFREDTMK Master	02-Apr-2022 01:41        MANFREDTMK About Contact  Quote this Post!
x 0   x 0  Alert Admin	That makes more sense and clarifies everything, allaying the topmost concern for SM shareholders. Better is second to none👍 👍 👍 better      ( Date: 02-Apr-2022 00:02) Posted: Wrong, the merger term is not 50:50.  Below is from 2021 memorandum of understanding.     Under the MOU between Keppel and Sembcorp Marine, it is envisaged that Keppel and the Combined Entity will enter into a strategic partnership, pursuant to which Keppel will hold 50% of a 50-50 joint venture that will be established between Keppel and the Combined Entity (Strategic Partnership JV). This would allow Keppel to continue accessing Keppel O& M&rsquo s capabilities required for its projects, on terms to be agreed. The scope of the Strategic Partnership JV will be subject to final agreement between the parties concerned. In addition, subject to regulatory review, the Combined Entity will be the preferred EPC partner for Keppel&rsquo s projects where the Combined Entity has the relevant expertise     The above is saying that after KC sold their yards and intellectual properties to SCM through the merger, Keppel corp will enter into a 50-50 joint venture with SCM (which will be then called the combined entity) so that if Keppel corp wants to build a offshore data centre for example, they will execute it through the joint venture company which SCM will be the preferred EPC partner if they have the relevant expertise. ahbui8      ( Date: 01-Apr-2022 19:07) Posted: Bth both side, Keppel side expect 70:30 while SM side expect 67:33 😂 It' s clearly stated it' s will be 50:50 JV so it' s will be this way just like the MGO offer stated if really got MGO is at 8cts and is really happened offer at 8cts.
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better Elite	02-Apr-2022 00:18        better About Contact  Quote this Post!
x 0   x 0  Alert Admin	Regarding Keppel' s $3.2 billion worth of unsold/ legacy rigs, the plan is: Keppel has also signed a non-binding MOU with Kyanite Investment Holdings Pte Ltd (Kyanite), a wholly owned subsidiary of Temasek, with a view to sell Keppel O& M& rsquo s legacy completed and uncompleted rigs and associated receivables to a separate Asset Co, which would be majority owned by external investors.   Under the second MOU, Keppel O& M& rsquo s legacy rigs and associated receivables will be sold to a separate Asset Co that will be formed. Keppel will retain not more than a 20% stake in Asset Co as an investment, while external investors, which Kyanite intends to procure, will hold the balance of at least 80%. Keppel will receive the consideration for the legacy rigs and associated receivables substantially in the form of credit notes. Asset Co shall be independently managed from the Combined Entity and the General Partner of this Asset Co will maintain, complete and monetise the rigs over time. Asset Co will enter into a service agreement with the Combined Entity for the completion of certain uncompleted rigs and the provision of other service. The external investors will provide capital which can be used for finishing these uncompleted rigs, which would no longer be funded by Keppel. Keppel&rsquo s economic exposure in Asset Co will be reduced over time, as the rigs or Asset Co are sold or securitised when conditions in the rig chartering market improve. Basically, Keppel is bleeding from having to complete these legacy rigs that they cannot sell and wants to quickly offload them with Temasek' s help.
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better Elite	02-Apr-2022 00:02        better About Contact  Quote this Post!
x 0   x 0  Alert Admin	Wrong, the merger term is not 50:50.  Below is from 2021 memorandum of understanding.     Under the MOU between Keppel and Sembcorp Marine, it is envisaged that Keppel and the Combined Entity will enter into a strategic partnership, pursuant to which Keppel will hold 50% of a 50-50 joint venture that will be established between Keppel and the Combined Entity (Strategic Partnership JV). This would allow Keppel to continue accessing Keppel O& M&rsquo s capabilities required for its projects, on terms to be agreed. The scope of the Strategic Partnership JV will be subject to final agreement between the parties concerned. In addition, subject to regulatory review, the Combined Entity will be the preferred EPC partner for Keppel&rsquo s projects where the Combined Entity has the relevant expertise     The above is saying that after KC sold their yards and intellectual properties to SCM through the merger, Keppel corp will enter into a 50-50 joint venture with SCM (which will be then called the combined entity) so that if Keppel corp wants to build a offshore data centre for example, they will execute it through the joint venture company which SCM will be the preferred EPC partner if they have the relevant expertise. ahbui8      ( Date: 01-Apr-2022 19:07) Posted: Bth both side, Keppel side expect 70:30 while SM side expect 67:33 😂 It' s clearly stated it' s will be 50:50 JV so it' s will be this way just like the MGO offer stated if really got MGO is at 8cts and is really happened offer at 8cts.   PHInsider63      ( Date: 01-Apr-2022 18:41) Posted: Thanks for the book values info. The numbers are impt. Based on my understanding and prior knowledge in doing merger, albeit at smaller scale, the following should happen. As stated and reiterated by the latest announcement, a Common Entity will be formed (or a Newco). Based on book value of: KOM 2b SM 4b A plain vanilla merger model will be 66.7% (SM) and 33.3% (KOM). Which means Newco will be formed by 66.7% of SM shh and 33.3% of KC shh in which (as mentioned) KC will decide and intend to distribute to their shareholders. If this happens, Temasek holding will be: 36.67% + 6.66% (20% original KC shares diluted accordingly) = 43.33% KC shareholders may get a special dividends from sales proceeds of junk rigs from Asset CO (as mentioned in the announcement will be an external party). So, assuming my stake is 15m shares, my shares will be folded to 10m shares. But with an enlarged CE, this will be a new landmark chapter. Now if this happens, the price will be determined at existing book value of SM at 0.12. And the price needs to move up during this month. Note. This is based on a plain Vanilla model. Of course M&A of this scale will be far more complex. No matter what, KC and SM shh, all of us should have a truce because this will be a good news for all. Both parties will benefit. I expect small dividend from SM prior to merger on the region of 0.005 or $160 m. Temasek will get $88m. On the other hand, KC rid the problematic KOM and also stand to obtain dividends from sale of junk rigs to Asset co and shares of CE
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better Elite	01-Apr-2022 23:20        better About Contact  Quote this Post!
x 0   x 0  Alert Admin	Yes, that' s right. Temasek would likely have to come out with some cash to avoid over dilution and to sweeten the merger deal....otherwise the proposal might not be able to get SCM and KC' s shareholders' approval. MANFREDTMK      ( Date: 01-Apr-2022 18:10) Posted: For the second option, it appears to be a forward contract whose obligation becomes binding only after 2 years and will be redundant if prices rise above 20 cents then. This implies that we have to hold for at least 2 years if SM prices is trading below 20 cents. Is that what it meant? MANFREDTMK      ( Date: 01-Apr-2022 17:58) Posted: If the first option is taken, TH effectively own 70% of SM and NEWCO becomes redundant
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better Elite	01-Apr-2022 23:14        better About Contact  Quote this Post!
x 0   x 0  Alert Admin	Book value of about $4.7 billion after adding back the provision sounds about right. PHInsider63      ( Date: 01-Apr-2022 15:52) Posted: The Common Entity will be an unprecedented scale and significance. Both KC and SM will benefit from it. Total contracts expect to exceed S$10b. Will become a mega yard of world class standard rivaling the leaders and potentially becoming World leaders and beaters. A truce to supporter of SM and KC. The next issue is the ratio of combination. I expect 50-50. I need better to comment on this. Bro better What is the net book value of KOM (after removing the gangrenous rigs)? Book value of SM is about $4.67b right?
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