Keppel signals support for KrisEnergy's final restructuring proposal

Keppel holds a 40% stake in the firm.

Keppel Corporation says that it is prepared to support the final restructuring proposal of debt-ridden oil and gas company KrisEnergy, according to an SGX filing. Keppel holds a 40% stake in the firm.

Keppel expressed belief that the final restructuring proposal is a ‘deliverable plan,’ noting that for the restructuring to be successful, KrisEnergy needs the support of its stakeholders as the final restructuring proposal is subject to receipt of inter-conditional approvals across stakeholder groups.

Keppel also expressed hopes to see a successful conclusion to the financial restructuring in the next few months.

“Based on Keppel’s financial advisor’s current analysis of the KrisEnergy group’s assets and operations and the final restructuring proposal, Keppel does not expect a consensual restructuring of KrisEnergy based on the final restructuring proposal to have a material impact on the net tangible assets or earnings per share of Keppel for the current financial year,” the bourse filing stated.

Keppel had provided support to the group in its financial difficulties, particularly in providing investments and coverage. On April, Keppel agreed to increase its exposure in KrisEnergy by providing an up to $118.12m (US$87m) CBA loan facility to develop the groups Cambodia Block A facility.

It also supported the initial application by KrisEnergy to the High Court of Singapore for moratorium protection on 14 August 2019 as a significant direct creditor of KrisEnergy.

As of 27 August, KrisEnergy Asia—a subsidiary of KrisEnergy) owed approximately $244.34m (US$180m) to DBS Bank under a revolving credit facility agreement (RCF), in which Keppel holds an indirect interest through a bilateral contract between KCL and DBS.

On 30 June, Keppel entered into an agreement with DBS to extend the term of the bilateral contract with the bank for the same period. The extension of the bilateral contract was to support KrisEnergy’s management whilst they discussed and obtained feedback from stakeholders on the initial debt restructuring proposals, according to Keppel.

“These measures were approved by the board of Keppel Corp in order to allow KrisEnergy management the time and opportunity to formulate, take into account feedback from stakeholders and further develop a deliverable debt restructuring plan and to preserve the key assets of the group for the potential benefit of all stakeholders,” the bourse filing read.