SCI might privatise the struggling company.
Sembcorp Marine enjoyed brisk trading and steep share price surge early Wednesday, after reports that its parent company Sembcorp Industries is mulling a privatisation deal.
As of 11:28 AM, Sembcorp Marine was one of the most heavily traded counters on the Singapore Exchange. Some 10.7 million shares have changed hands, causing the rig builder to gain 4% to $1.54 per share.
In contrast, its parent company Sembcorp Industries has fallen 6.69% to $2.37 per share.
A report by Reuters citing people familiar with the deal said that SCI is considering taking full control of its subsidiary to replenish finances strained by a collapse in oil prices.
Analysts at Maybank Kim Eng note that a privatisation deal makes sense because if conditions deteriorate further, SMM may require additional funding to sustain its operations.
“A Temasek-led privatisation will also relieve SCI of the additional strain that it may have to carry if it were to undertake the privatisation,” Maybank Kim Eng said.
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