Keppel unveils outlook for legacy rig assets under Asset Co

The company is ‘hopeful’ that monetisation of the legacy rigs can take place sooner.

Keppel Corporation believes that the improving offshore rig market will monetise the legacy rigs that it transferred to Asset Co sooner.

“Asset Co is actively engaging clients on potential contracts for the legacy rigs,” the company said in a bourse filing.

Faster monetisation of the legacy rigs will also lead to an earlier repayment of the vendor notes issued by Asset Co to Keppel, according to the latter.

Keppel received  S$4.25 billion in vendor notes $120m in perpetual securities and a 10% equity stake in Asset Co with a value of about S$499,000 following the transfer of certain Keppel offshore and marine (Keppel O&M) assets, including the legacy rigs, to  Asset Co.

“The perpetual securities bear interest at a fixed rate of 10% per annum. The perpetual securities have no fixed redemption date, and Asset Co has a right to redeem the perpetual securities after at least five years from their date of issue,” Keppel said.

“As mentioned above, the vendor notes come with a coupon rate of 4% that translates into approximately $170m of interest income per annum. We will also benefit from a redemption premium equal to 5% of the outstanding principal amount if and when the vendor notes are redeemed. The overall value of our investment in Asset Co, comprising the vendor notes, perpetual securities and equity stake, amounts to S$2.50 per Keppel share,” Keppel added.